Day Trips: Luther Hotel, Palacios

photos by Gerald E. McLeod

The Luther Hotel in Palacios might be gone by the time you read this. Despite the community's best efforts to save the 120-year-old wooden structure overlooking Tres Palacios Bay, the new owners will probably replace the historic building with a modern resort.

A hearing on a temporary restraining order delaying the demolition of the hotel is set for Feb. 2 in the Matagorda County Courthouse in Bay City. The legal action is the Palacios Preservation Association's effort to get the owners and the buyer, Ed Rachal Foundation of Corpus Christi, to the bargaining table to at least consider the options for saving the landmark.

The stated mission of the Ed Rachal Foundation, created by the will of a South Texas rancher, is that the estate is "to be used exclusively for the benefit of charitable, scientific, literary or educational purposes within the State of Texas." Historic preservation is evidently not part of the mission statement.

No preservation engineers from the association have been allowed in the building since it closed at the end of July 2022, says Margaret Doughty, spokesperson for the preservation committee. In the meantime, demolition crews have fenced the property, boarded up the windows, and started dismantling the interior. The semi-famous phone booth that stood in the hotel's lobby was moved to the city's museum.

The Luther was old when I stayed there for my birthday in 1995. For some reason I especially remember the dark green shag carpet from a 1960s renovation in our small, second-story room. The hotel had a warm charm that only comes with age, and the staff were all very friendly.

The fate of the Luther became questionable in 2020 when its longtime owner, Jack Findley, passed away without a leaving a will. The Ed Rachal Foundation contracted to purchase the bayside property from the 30-60 heirs with the stipulation that the building be removed before the sale could be completed.

Palacios Preservation got invited to the party kind of late. Doughty says they found out about the sale when Preservation Texas sounded the alarm by calling the Luther Hotel "the Most Endangered Place in Texas" on Nov. 2, 2022.

By then the clock on a 90-day demolition moratorium issued by the Texas Historical Commission had already started ticking toward its Dec. 19, 2022, deadline. Without an extension to the moratorium, the temporary restraining order was obtained.

The Hotel Palacios was built in 1903 the year after the town was laid out by the Palacios Townsite Co. The first guests were farmers from up north looking to buy 160-acre plots to raise fruits and vegetables.

At some point the hotel's name was changed by a former owner. Over the years the town's Christmas decorations were placed on the hotel's expansive front lawn and Santa Claus arrived at the dock on a shrimp boat.

The town's and the hotel's heyday came during World War II when celebrities like Shirley Temple visited nearby Camp Hulen. The hotel once boasted of having the longest porch on the Texas coast. A wooden pavilion at the end of a pier hosted national entertainers.

Listed on the National Register of Historic Places and as a Recorded Texas Historic Landmark, the hotel received a Texas Treasure Business Award in 2013.

Maintaining the 100-plus-year-old building was a struggle that Jack Findley couldn't always keep up with. The hotel had survived several hurricanes, but Hurricane Harvey did it a double whammy by twisting the foundation and drenching the interior, according to a Texas Historical Commission assessment in October 2022. The staff report concluded that the building "remains in repairable condition."

Doughty said the building looked structurally sound the last time she was in it in April 2022. Right before it was closed, the building had failed a city fire code inspection.

"The fire code problems could have been resolved," Doughty said. "They did not require demolition."

It was a bit ironic that the weekend the hotel was closed, it was due to host a group of alumni from Palacios High School whose reservations were canceled without notice.

Palacios is a sleepy village of around 4,500. Seafood, agriculture, and the South Texas Nuclear Project are the main industries. Even though it's the closest access point to the Gulf of Mexico from Austin, the town has never taken off as a tourist destination like Corpus Christi or even Rockport.

The Ed Rachal Foundation hopes to change that. Their plans call for a modern, family-friendly extended-stay resort, something that the residents fear will change the character and charm of their small town.

The Luther Hotel in Palacios is closed and its future looks bleak. To find out more about the efforts to save the grande dame of Palacios, go to fb.com/lutherhotel.

Feb. 6 update:
“The Luther does not die this week,” Margaret Doughty told the Victoria Advocate. A judge in Bay City granted a temporary restraining order on Feb. 2, halting the demolition of the historic Luther Hotel in Palacios. The next hearing is scheduled for Feb. 16.

Doughty is a spokesperson for a group of concerned citizens trying to persuade the owners of the 120-year-old building to consider other options to demolition. The owners failed to produce subpoenaed documents delaying the Feb. 2 hearing.

1,638th in a series. Everywhere is a day trip from somewhere: Follow “Day Trips & Beyond,” a travel blog, at austinchronicle.com/daily/travel.