PALACIOS — The fate of a historic hotel in Palacios rests on a showdown between a Texas nonprofit and a group of Palacios women. And the hotel may be back on the chopping block Thursday.

Five Palacios women — members of the newly-formed Palacios Preservation Association — want to save the Luther Hotel, a Texas Historic Landmark, built in 1903 on land overlooking Tres Palacios Bay.

The nonprofit Ed Rachal Foundation purchased the land the hotel sits on with the caveat that the historic building be demolished before the sale is finalized, according to a provision in the sales contract.

A foundation representative declined to discuss the matter on Thursday, and other requests for comment were unsuccessful.

On Jan. 17, a judge granted the preservation group a restraining order on behalf of the Luther Hotel, temporarily stopping the demolition, which was slated for the same week. A new hearing is scheduled for Thursday in Bay City.

Luther Hotel

Palacios residents Margaret Doughty, Ana Sac Dao, Edith Gower and C. Murphy, advocate for the preservation of The Luther Hotel.

The preservation group obtained over 2,000 signatures from across Texas and the U.S. demanding the hotel be saved. If it comes down to it, the women said, they, along with many of those signers, will form a human shield around the hotel.

The Ed Rachal Foundation is a 501(c)3 nonprofit that has previously purchased land in Corpus Christi on which historic properties rested and then set about demolishing them to build there, according to reports in Corpus Christi Business News.

The History

The Luther Hotel was moved in 1905 by mule-drawn conveyance to its present site, just around the corner from its original 1903 home.

It has existed under three names — Bay View Hotel, Hotel Palacios and now Luther Hotel, according to a Texas Hill Country history article.

While it was in continuous operation for almost 120 years, its zenith was the World War II era, Edith Gower, one of the Palacios women involved in the rescue attempt, said.

“During the heydays of the war years, celebrities the likes of Shirley Temple and Rita Hayworth and big bands stayed at the hotel and entertained troops in the ballroom and out on the pier in the second pavilion, called the Roundhouse,” Gower said Jan. 19.

Luther Hotel

Edith Gower holds a sign advocating to save and preserve the Luther Hotel.

The hotel has history with World War I, as well.

“During World War I, Red Cross ladies met in Hotel Palacios three times a week to sew garments for soldiers,” Sandra D. Davidson, a historian, said. “In 1917, young ladies gathered to assemble Christmas gifts to send overseas.”

The Ed Rachal Foundation

Ed Rachal was born in Rockport in 1878. He was a Falfurrias-area rancher who had no children of his own, according to the foundation’s website. He and his wife valued education, science and literature.

This is Form 990 for 2019 covering the tax year ending August 2020. It was received by the IRS on June 15, 2021.

“Ed Rachal died in 1964 and the terms of his last will and testament stipulated that his estate be used exclusively for the benefit of charitable, scientific, literary or educational purposes within the State of Texas,” according to the foundation’s website.

To that end, the foundation was established. It buys land and constructs properties that will earn revenue for the foundation’s charitable endeavors.

According to its federal Form 990, the foundation had revenue of $47,927,944 in 2020 and expenditures of $35,599,027. Its excess revenue over expenses was listed as $12,328,917. About half its expenses went to charitable giving, some $17,823,048.

Its leadership team collectively earned $1,282,797 that year. In its filing, the group said its president and CEO, Paul D. Altheide, earned $504,969. Its chief legal officer, Myra K. Morris, earned $305,769. John P. Jordan, the foundation’s vice president, earned $193,173.

The list of properties the foundation has purchased in Corpus include the Castle House, the Hacienda Records Building and the Mount Carmel Assisted Living Home. The land the Mount Carmel home sits on will be deeded to the Ronald McDonald House Foundation after the historic home, designed to look like a Spanish mission, is demolished.

The Palacios women

For the ladies of the preservation association, the hotel is an important part of their personal histories.

Ana Sac Dao, another of the five women, moved to the United States from Vietnam when she was 13 years old. Every day, she would run along the bay, greeted by the hotel. She formed a relationship to it, she said. Her immigration sponsors stayed at the hotel when they visited her.

Gower and Margaret Doughty stayed at the hotel to celebrate Gower’s birthday in the 1990s. They had come from Houston. The hotel, they said, was their back-up plan — their second choice — and yet they ended up falling in love with it and retiring in Palacios.

Davidson said there is good reason to save the building.

“The Luther Hotel is one of the last original seaside hotels along the Gulf Coast and is a recorded Texas Historical Landmark. Its national value has deemed it worthy of inclusion on the National Register of Historic Places,” Davidson said. “It is the most well-known, immediately-identified historic structure in Palacios and is the center of any future historical district. It is truly the showpiece of the town.”

In a Jan. 19 letter to the Ed Rachal Foundation, National Trust for Historic Preservation Deputy General Counsel Elizabeth Merritt and Associate General Counsel Chris Cody wrote, “We write to you today to strongly urge you to explore alternatives to the demolition of this important historic place. The Luther Hotel is an irreplaceable historic resource that is a significant icon of the Palacios community. Its importance to the community and the public at large is evidenced, for example, by Preservation Texas including it on their 2022 Most Endangered Places list.”

Why the hotel was sold

The hotel’s last owner, Jack Finley, died about two years ago without a will, placing the hotel into probate. Finley has numerous descendants, about 30, many living in Alabama, according to documents from the preservation society.

The sale to the Ed Rachal Foundation was facilitated by an estate lawyer, according the members of the Palacios Preservation Association.


The Ed Rachal Foundation is not talking anymore, C. Murphy, of the preservation association, said.

Luther Hotel

The 120-year-old Luther Hotel is threatened with demolition. It is considered one of the most endangered buildings in Texas.

Counteroffers have been brought to the table. One such offer is from a man whose parents met at one of those WWII balls at the hotel. His dad was a soldier, his mom a local girl, Murphy said.

“He’s come back home and wants to save the hotel,” Murphy said.

Counteroffers are not being entertained, the women said.

The women said if another restraining order is not granted Thursday, then they and many of the other signers of the petition to save the Luther Hotel, will form a human shield around it before they let it be destroyed.

Tamara covers the public safety beat for the Advocate. She can be reached at 361-580-6597 or

Public Safety Reporter

Tamara covers crime and courts as the public safety reporter for the Victoria Advocate. She is a graduate of the University of Washington and a native of Minnesota.