City strikes deal with new owners of hotel that holds conference center

The San Marcos City Council has approved a deal with Atrium Hospitality Group — new owner of the Embassy Suites Hotel built by John Q. Hammons — that will improve the city’s ability to use the San Marcos Conference Center located at the hotel property.

In April, the city received notice that John Q. Hammons is selling its portfolio of hotels, including its interest in the Embassy Suites Hotel, to Atrium, Assistant City Manager Steve Parker explained. As part of the city’s original transaction with Hammons, the city has a deed of trust lien on the hotel property that secures a $1.5 million note. The amount due under the note was forgivable as long as Hammons did not default on the terms of the conference center lease agreement or related loan documents through 2026. The city’s $1.5 million lien was subordinate to a $29.5 million loan Hammons acquired to build the hotel and conference center.

The city was able to negotiate with Atrium to release the lien and put the $1.5 million into an escrow account, Parker said, meaning that if there is a default on the conference center lease agreement the city will have direct access to those funds. Parker added that the city feels a default is “highly unlikely.”

Atrium also agreed to increase the number of free rentals the city gets at the San Marcos Conference Center.

“Currently the city gets one free grand ballroom rental per year and one small room rental per month,” Parker said. “The city will now get an additional grand ballroom rental and 20 small room rentals per year.”

In addition, the hotel will be making about $1.5 million in upgrades to the conference center by the end of 2021, Parker said.

Parker also said the city and Atrium will be working together on advertising in the grand ballroom that promotes the name San Marcos Conference Center as well as the Embassy brand.