San Marcos, Texas, November 29, 2025
Texas State University has entered into a $70 million agreement with Midway Hospitality to build a full-service boutique hotel on its San Marcos campus. This development aims to enhance local tourism, provide lodging for events, and boost the local economy. The hotel will feature 130 guest rooms, meeting spaces, a restaurant, and outdoor amenities. Construction is expected to start in 2026 and be completed by 2028, creating between 207 to 256 jobs and generating significant tax revenue for the city.
San Marcos, Texas
Texas State University has approved a $70 million development agreement with Midway Hospitality, L.P. to construct a full-service boutique hotel on the south side of its campus in San Marcos. The project aims to enhance tourism, provide additional lodging for university events, and stimulate local economic growth.
Project Details
The proposed hotel will be situated on a 3.88-acre site at 429 and 403 N. Guadalupe Street, adjacent to Tower Hall. The development includes:
- 130 guest rooms
- Meeting and event spaces
- A full-service restaurant and bar
- Outdoor amenities, potentially including rooftop areas and an amphitheater
Construction is expected to commence in 2026, with completion anticipated by 2028. The hotel is projected to create between 207 and 256 new jobs and generate over $2.4 million in property taxes over the next decade. Additionally, the facility is expected to provide Texas State University greater flexibility in hosting state and national conferences and events while simultaneously boosting tourism and driving economic growth.
Financial Incentives
The San Marcos City Council has approved an economic development incentive package to support the project. This includes:
- Annual reimbursements of up to 95% of both city sales and hotel occupancy taxes generated by the property
- Rebates on construction sales taxes
The incentive agreement is designed to spur private investment, elevate the city’s tourism offerings, and align with long-term growth plans. The agreement will remain in effect for 15 years following the hotel’s completion. After the term expires, Midway may sell its interest in the hotel to a public entity without any obligation to repay previously granted incentives.
Background Context
In August 2025, the San Marcos City Council approved a Chapter 380 Economic Development Agreement that will provide tax rebates to Midway in exchange for meeting specific development benchmarks. Under the terms of the agreement, Midway will receive annual reimbursements of up to 95% of both city sales and hotel occupancy taxes generated by the property. As the hotel’s revenue per available room – or RevPar – increases, the rebate percentage decreases. For example, a RevPar of $275 or higher will drop the rebate to 25%, while levels below $225 will maintain the maximum 95% rebate. The project is expected to create approximately 250 jobs, with an average salary of $50,000. The development must break ground by Dec. 31, 2026, and be completed within 30 months. Completion will be determined by the city’s issuance of a temporary or final certificate of occupancy. To qualify for the incentives, the developer must comply with all city ordinances, codes, and laws in effect at the start of the agreement – even though university-owned land is generally exempt from some local regulations. Midway is also required to make commercially reasonable efforts to comply with applicable ordinances from which the site may otherwise be exempt. The city will also reimburse sales taxes paid on construction materials purchased before the hotel’s opening, regardless of the project’s performance. Requests for reimbursement must be submitted using a city-approved form. All tax reimbursements must be used in accordance with Texas state law, such as for tourism marketing, promotion of the arts, sporting events, historical preservation, and directional signage to local attractions.
Impact on San Marcos
The addition of this hotel is expected to transform downtown San Marcos by providing much-needed lodging and event spaces. It will also support the university’s expansion and drive economic growth in the region. The facility is anticipated to attract overnight tourism, visitors, and events tied to the university and the city, thereby enhancing the local economy and community engagement.
FAQ
What is the total cost of the proposed hotel project?
The proposed hotel is estimated to cost $70 million.
How many guest rooms will the hotel have?
The hotel will feature 130 guest rooms.
When is construction expected to begin and complete?
Construction is expected to start in 2026 and be completed by 2028.
What financial incentives has the city provided for this project?
The San Marcos City Council has approved an economic development incentive package, including annual reimbursements of up to 95% of both city sales and hotel occupancy taxes generated by the property, and rebates on construction sales taxes.
How many jobs is the hotel expected to create?
The hotel is projected to create between 207 and 256 new jobs.
Key Features of the Proposed Hotel Project
| Feature | Details |
|---|---|
| Total Cost | $70 million |
| Location | 429 and 403 N. Guadalupe Street, San Marcos, Texas |
| Size | 3.88 acres |
| Guest Rooms | 130 |
| Amenities | Meeting and event spaces, full-service restaurant and bar, outdoor amenities including potential rooftop areas and an amphitheater |
| Construction Start | 2026 |
| Completion Date | 2028 |
| Projected Job Creation | Between 207 and 256 new jobs |
| Financial Incentives | Annual reimbursements of up to 95% of both city sales and hotel occupancy taxes, rebates on construction sales taxes |
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