UNIVERSITY PARK — The demand for college and university lodging is more stable than the typical lodging demand, and markets dominated by a college are more stable in terms of not only occupancy rates, but also average room rates, according to Penn State researchers.
“At many recent hotel investment conferences and in recent issues of hotel trade magazines, hotel developers have proposed that a hot prospective location for hotel development is near colleges and universities,” said John O’Neill, professor and director of hospitality management, who conducted the study. “The primary reason often cited for this optimism is the relative stability of lodging demand generated by colleges. However, until now, this proposition has never been empirically tested, and no empirical research has shown hotel developers what variables about colleges they should study to determine the feasibility of hotel development in any given college marketplace.”
Lodging demand in college and university towns is more stable than both U.S. averages and demand in similarly sized cities. However, the study also concludes that overall, occupancy and room rates for college and university lodging are below average levels, according to O’Neill, who released the findings in the International Council on Hotel, Restaurant, and Institutional Education Penn State Research Report.
The study, published in December, showed that significant predictors of lodging demand growth in college and university markets include city employment and population trends, as would be expected, O’Neill said.
“Interestingly, university-grant funding and graduate student populations — two factors that have not been previously studied — are also strong predictors of lodging demand,” O’Neill said. “Among the primary recommendations of the study are that hotel feasibility analysts should evaluate both grant funding and graduate student population trends when studying prospective markets.”
The research study analyzes college and university-related lodging demand over a 24-year period. The project focuses on 27 college towns to isolate the dynamics of lodging supply and demand related to colleges. Also, the study compares the supply and demand in college and university towns to U.S. averages and to similarly sized cities not dominated by a college or university.