Texas Hotel Pipeline: Frisco’s $5M Tax Rebate, Lockhart’s 500 Keys and Grapevine’s 221-Room Sandman

Frisco will hand back up to $5 million in hotel occupancy tax to get a 250-room hotel built at Toyota Stadium. A developer wants a 500-key hotel in a 535-acre district outside Lockhart. And in Grapevine, a 221-room Sandman Signature is set to start construction on Nov. 15. Here is what Texas’s newest hotel projects tell owners about where the next rooms are coming from, and who is paying for them.

Most of these projects are years from opening, and two of them still need approvals. (For the cost side of building new versus converting, see our conversions vs. new builds analysis.) But together they show a clear pattern for anyone who owns or is building hotels in Texas: cities are using hotel taxes, fee waivers and mixed-use zoning to pull new rooms toward stadiums, golf courses and highway sites.

Frisco: Half the Hotel Tax, Up to $5 Million

On Tuesday, Oct. 20, the Frisco City Council unanimously approved a Chapter 380 economic development agreement with the Hunt family, which operates Toyota Stadium, the home of FC Dallas, WFAA reported.

The proposed development includes a 250-room, full-service hotel, a 15,000-sq.-ft. convention center, about 30,000 sq. ft. of retail and restaurant space, and a multistory parking garage.

The incentive is the part hotel owners should read closely. Under the agreement, Frisco will pass through 50% of hotel occupancy taxes collected over 10 years, capped at $5 million. The city will also waive half of the construction development fees for the stadium improvements. The agreement lets the city and the developer pursue state grants, and the Hunt family will pay the consulting and legal costs of those applications.

“FC Dallas and the Hunt family are terrific partners,” Mayor Mark Hill said in a statement. “This is another example of a strategic partnership that sets Frisco apart from others and will continue to enhance our city for decades to come.”

The city did not announce a construction timeline, a brand or a cost, and the reports did not name which state grant programs are involved. Frisco is rebating tax to a private developer rather than owning the hotel itself, a lighter-touch model than the city-owned Signia by Hilton in Indianapolis.

Lockhart: A 500-Key Hotel in a District That Isn’t in the City Yet

About 30 miles south of Austin, the Lockhart City Council heard a proposal last week for the Lockhart Commercial District, a 535-acre project built around hospitality, industrial and creative uses, Bisnow reported on Oct. 22, citing the Austin Business Journal.

The plan could include a 500-key hotel and conference center, indoor and outdoor sports arenas and fields, a nine-hole golf course, a 5,000-person amphitheater, maker and industrial space, 15 acres of homes, and restaurants. The site is near Highway 183 and Silent Valley Road.

It is early. The land is not inside Lockhart’s city limits, so it still needs to be annexed. The developer, Lockhart Commercial Development LLC, is aiming to have the property annexed and entitled in 2027 and hopes to open a first phase in 2029, according to the report. Council members had many questions, and the project needs several more approvals.

Grapevine: 221 Rooms, Shovels Nov. 15

Grapevine’s project is the furthest along. Northland Properties’ 221-room Sandman Signature Grapevine at 3400 Grapevine Mills Blvd. N., near Grapevine Mills mall, is approved, and construction is set to start Nov. 15, 2026, Groundbreak DFW reported.

A Texas Department of Licensing and Regulation filing registered Oct. 1 lists a $30 million estimated cost and a construction timeline of Nov. 15, 2026, to Nov. 15, 2028. The six-story, 120,071-sq.-ft. building is planned with a 275-seat full-service restaurant, 4,200 sq. ft. of banquet and meeting space, a gym and an outdoor pool.

The hotel sits in Trammell Crow’s 28.7-acre Grapevine Village, which allows up to 750 hotel rooms across three hotels, along with 248 apartments. Northland closed on the 5.9-acre site in August. The Grapevine City Council denied the proposal on May 19 and then unanimously approved the zoning and final plat on June 2, Groundbreak reported. It would be Northland’s fourth hotel in Dallas-Fort Worth.

For Grapevine owners, the math is simple. A TDLR estimate of $30 million for 221 rooms works out to roughly $136,000 a key (our math). That is a permit-filing estimate, not a full development budget, but it is a useful marker for owners weighing a renovation against new competition.

The Smaller Cities Are Paying Too

Frisco is not alone. Two other North Texas cities approved hotel-anchored projects in October:

• Fate (Rockwall County): The City Council voted 6-0 to approve a Chapter 380 agreement for Fate Yards, about 274,000 sq. ft. of entertainment and commercial space at I-30 and Memorial Parkway, Blue Ribbon News reported from a city release dated Oct. 19. The developer committed to a “4-star hotel,” an indoor entertainment complex, a movie theater and a specialty grocer. Incentives are capped at $6.5 million and include up to $2.5 million for an internal bridge giving “direct access to the hotel,” up to $800,000 in roadway impact fee credits, about $3.2 million in fee waivers, and sales tax and hotel occupancy tax reimbursements. A clawback of about $1 million per anchor applies if it is not open for business within five years.
• Sherman (Grayson County): The Ridge at Stone Creek, a 46-acre plan off South Highway 75, includes a 250-room hotel and a 40,000-sq.-ft. convention center, plus shops and about 500 homes near the Stone Creek Golf Club, KXII reported after the Planning and Zoning Commission approved it. The City Council adopted the rezoning on Oct. 19, according to the city clerk’s public notice in the Herald Democrat. No construction date or cost has been announced.

The Risk: Lawmakers Are Reviewing How Hotel Taxes Are Used

Hotel occupancy tax rebates like Frisco’s and Fate’s could draw more attention at the Capitol. On Sept. 22, the Texas Senate Committee on Economic Development heard testimony on local hotel occupancy tax use, collections and project financing zones. The Texas Hotel & Lodging Association testified that the tax should stay dedicated to promoting tourism and the hotel and convention industry, THLA said.

THLA says these issues are likely to come before the Legislature in the regular session that begins Jan. 12, 2027, and that it will publish its full legislative agenda. Developers counting on a rebate should watch what lawmakers do with the rules.

What This Means for Texas Hotel Owners

1. Map the new supply near you. A 250-room full-service hotel at Toyota Stadium and a 221-room Sandman near Grapevine Mills will compete for the same group, sports and leisure business as existing hotels nearby. Add them to your comp set planning now, with their earliest realistic opening dates.
2. Know what your competitor is being paid. A hotel that gets half its occupancy tax back for 10 years has a cost advantage you do not. Read your city’s Chapter 380 agreements and council packets when a project is announced near your hotel.
3. Ask for the same deal. If you are planning an expansion or a new build, these agreements show what Texas cities are willing to offer: tax rebates, fee waivers and infrastructure help, in exchange for performance requirements and clawbacks.
4. Discount the early-stage projects. Demand drivers can change fast, as the data-center construction boom shows. Lockhart’s 500-key hotel needs annexation and entitlements first. Sherman’s hotel has zoning but no start date. Track them, but don’t underwrite them as certain.
5. Watch the 2027 session. Any change to how cities can use local hotel taxes could affect both the incentives and the tourism budgets that drive your demand.

The Bottom Line

Texas cities are not waiting for the market to deliver hotels. They are paying for them with tax rebates, fee waivers and zoning, and they are steering new rooms toward stadiums, golf courses and mixed-use districts. For owners, that means more competition in places you may not have expected it. For developers, it means public money is on the table, at least until the Legislature weighs in. For the property tax side of the same ledger, see our Texas hotel property tax guide, and for city-by-city numbers, our Texas Hotel Market 2026 and Houston Hotel Market 2026 pages.

Sources and further reading

• Frisco City Council approves agreement to pursue state grants for Toyota Stadium hotel, convention center — WFAA, 2026-10-21
• Developer Pitches Massive Hospitality, Maker Space District South Of Austin — Bisnow, 2026-10-22
• Sandman Signature Hotel Approved Near Grapevine Mills — Groundbreak Dallas-Fort Worth, 2026-10-21
• City of Fate Approves Chapter 380 Agreement Advancing Fate Yards Entertainment Development — Blue Ribbon News, 2026-10-19
• Sherman development to bring largest convention center in Grayson County — KXII, 2026-10-12
• City of Sherman public notice: Ordinance Nos. 6968 and 6972 adopted Oct. 19, 2026 — City Clerk, published in the Herald Democrat, 2026-10-24
• THLA Testifies Before Senate Committee on Local Hotel Occupancy Taxes — Texas Hotel & Lodging Association, 2026-09-29
• Texas Hotel Market 2026 — The Hotelier Times