Arlington Greenlights $54M Hotel Redevelopment

A dilapidated former motel and used car shop in Arlington is poised for a $54 million transformation into an upscale hotel, with taxpayers providing financial support.

Valencia Hotel Group and car dealership owner Sam Mahrouq, operating as Division Hotel Management LLC, plan to raze the former Caravan Motel and the Dollar Car Sales property on Division Street, clearing the way for a 145-room hotel on a 2.6-acre site, the Dallas Business Journal reported. Mahrouq’s LLC owns the property.The Arlington City Council unanimously approved a $4 million funding package on June 25 to support the development, called Caravan Court. It includes $3 million for demolition and $1 million for decade-long development support, alongside performance-based tax rebates for the developers.

City officials project the hotel will generate a $13 million financial impact over a 15-year period, along with increased tax revenue from hotel occupancy, property and sales taxes. The agreement stipulates that demolition must be completed by Sept. 30, with the hotel opening by the end of 2026.

Caravan Court will feature a “modern motor court” design with mid-century aesthetics. The historic Caravan Motor Hotel sign will be reused.

“Division Street is ugly,” District 4 Councilmember Andrew Piel said. “And to reinvigorate and reinvent Division Street has been a big white whale that the city has been chasing for 25 to 30 years. Finally, we have a legitimate, well-funded, high quality product that hopefully will be the start of a new reinvention of Division Street over time.”

The Division Corridor Plan, created in 2000, aimed to attract new restaurants, shops and upscale entertainment to the area.

Mahrouq’s firm, Mahrouq Enterprises International, owns several properties along the Division Street corridor. The city previously approved a $7 million grant for Mahrouq’s company Ikon Technologies to keep that business in Arlington while identifying opportunities for Division Street’s revitalization.

Valencia Hotel Group, based in Houston, owns and operates boutique hotels, including Hotel Valencia Santana Row in San Jose, California, and Hotel Valencia Riverwalk in San Antonio

—Quinn Donoghue