why did they ever think a fancy hotel on a commuter-perceived school would ever be worth it
Well that was done under the previous administration so I am not sure. I think having on campus conference space is smart - for professional and academic gatherings. However, Mason is a residential campus now - so it does not seem that out of place.
As long as the facilities can be leveraged for other university needs - I am not too upset. Although the bar there was nice.