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The hotel pipeline hidden in plain sight

On college campuses, new hotels are actually getting built 

By Mark Knott and Jeff Turner 

Ask hotel developers how the new-build pipeline looks, and we hear the same story everywhere we go: construction costs are high; debt is expensive; margins are too tight to reach financial close. Plenty of good projects make it to a pitch deck and stop there. And the numbers back it up. U.S. hotel construction has declined for 15 consecutive months, and CBRE projects hotel supply will grow just 0.7% a year over the next three years.

Then we look at college campuses.

At Ball State University, a 97-room Tapestry Collection by Hilton hotel is set to open in early 2027 on a long-term lease next to the school’s new performing arts center. In Boulder, the 250-room Limelight Hotel opened last year on University of Colorado land. Texas State University has approved a 130-room boutique hotel on a 75-year ground lease. And at the University of South Florida, a 150-room hotel and conference center is part of Uptown Landing, a roughly $270 million public-private partnership (P3).

The brands have noticed. In June, Hilton launched Undergraduate by Hilton, a brand built for college markets, and sees long-term potential for 400 to 500 hotels.

This is the hotel pipeline hidden in plain sight. And it’s only getting started.

Why campus hotels get built

In our work with universities, we see campus hotels move forward for a simple reason: universities bring what most hotel projects are missing, namely:

• Land. Many of the universities we work with own well-located sites near stadiums, arenas, medical centers and downtowns. The private market rarely considers them, because it doesn’t know the university is open to a deal.
• Demand. A campus draws visitors all year: graduations, move-in weekends, game days, recruiting visits, academic conferences and alumni weekends. Families need a place to stay. So do visiting teams and conference guests.
• A bigger plan. A campus hotel is rarely a stand-alone bet. It’s one piece of a larger district with housing, dining and entertainment. Hotels and residences keep that district alive 24 hours a day, and the district gives the hotel a steady stream of guests.
• Shared risk. In a typical P3, the developer builds and operates the hotel on university land under a long-term ground lease and carries most of the risk. The university helps reduce that risk in other ways, such as committing room nights for its own events. As we like to say, the best P3 transfers each risk to the party best equipped to handle it.

Cities often want in, too. Hotels bring visitors, jobs and tax revenue. At Ohio State, the city is contributing $5 million for public parking at a planned hotel site near campus. When a university, a city and a private partner all see the benefit, deals that wouldn’t work on their own start to make sense.

The game has just started

Twenty years ago, student housing P3s were new. Few developers knew how universities worked, and schools were writing the playbook as they went. But today, student housing is a mature market. When a university issues an RFP for a new residence hall, a deep bench of experienced developers responds.

Campus hotels are where student housing was 20 years ago, but the way we see it, student housing is in the ninth inning while the hotel P3 market just started the ballgame. That’s the opportunity. The firms that learn the game now will help set its terms. The ones that wait will compete for what’s left.

How to get a seat at the table

There’s still room at the table, but getting a seat takes a different approach than most hotel deals. Here’s what we tell hotel investors and brands who ask us how to get in.

• Learn how universities buy. A university hotel deal doesn’t work like a private land deal. Expect public procurement, RFQs and RFPs, board approvals and longer timelines. Know the process before the solicitation goes out.
• Lead with the mission. Universities choose partners who understand what the school is trying to achieve. Show how your hotel serves the campus: jobs and internships for students, rooms for visiting families and teams, and space for conferences that raise the school’s profile. At schools with hospitality programs, a campus hotel can also become a hands-on training ground for students. Middle Tennessee State University, for example, is negotiating a public-private partnership for a 120-room campus hotel that will double as a real-world learning lab for its hospitality students.
• Show up where higher ed talks P3. University leaders gather at events like P3•EDU (Nov. 2 to 4 in Atlanta) and the P3 Higher Education Summit (Nov. 4 to 6 in San Diego).  At both conferences this year, Jeff will be holding sessions on the state of the higher education P3 industry next to university leaders and the private partners building these projects.
• Talk to people who know the market. At B&D, we’ve advised colleges and universities since 1993. If you’re watching a particular university market, there’s a good chance we’ve worked there.

The opportunity is now

New hotels are getting built, just not where most of the industry is looking. On campus, the land is there, the demand is there, and the partners are ready to talk. The pipeline is real. It’s early. And it’s moving.

Image courtesy of Sila Developments. All rights reserved.

Mark Knott is a vice president and national hospitality leader at Project Management Advisors (PMA), a B&D company. He advises hotel owners, developers and investors on developing, renovating and repositioning their properties. 

Jeff Turner is president of Brailsford & Dunlavey. He is an expert in public-private partnership work, and advises colleges, universities and other large institutions on planning and delivering complex real estate projects.