November 3, 2023 – By Chris Plasencia, Managing Director
In 2018, we wrote the following commentary on hospitality investment in college markets, which LODGING Magazine published in their May issue that year. Here we are, over five years later, on the back side of a generational pandemic and amid major economic upheaval, and these trends continue to hold true.
Now that we are in the thick of college football season, we thought it timely to rank each major college market within its respective conference, and ultimately to crown our own Top 25 college markets. Will these rankings line up with the final College Football Playoff standings? Definitely not! Will this be an entertaining and informative undertaking? We hope so! Please stay tuned for our upcoming series of data posts on college markets and where investment may just be the winning play.
College markets are growth markets
By 2025, the U.S. Department of Education projects total undergraduate enrollment of 19.8 million, an increase of 50% since 2000. Universities have grown commensurately to satisfy this increased demand, in part by increasing their physical footprint and expanding faculty. Hoteliers in such markets will continue to benefit not only from the direct population growth, but also from the indirect growth in the market spun off by a university’s presence.
College markets generate consistent demand
From student move-ins at the beginning of the academic year to graduations and reunions at the end of it, colleges originate a wide variety of room night-generating events. Sporting events in particular can justify room night minimums and sky-high ADRs at 100% occupancy levels. These events are usually scheduled well in advance and occur on a consistent basis, providing for clarity in the budgeting process. Due to the proliferation of summer classes and programs, demand is often relatively consistent year-round. Campus-related demand generators have the added benefit of being unusually well insulated from the vagaries of broader economic cycles.
College markets foster strong culture
These markets are known for their culture, arts and diversity, and they typically radiate a strong sense of place. These vibrant settings, with their restaurants, nightlife and walkability, are ideal locations for hotels, and they allow prudent hoteliers to seamlessly combine the surrounding community’s unique feel with that of their property.
College markets catalyze innovation in a strong workforce
Lured by educated workforces, high levels of on-campus R&D and a strong quality of life, industry is making a home in college markets now more than ever. The accompanying infusion of private capital and talent are a boon to the local economy and create quantifiable demand for hotel room product.
College markets capture public investment
Investment from both state governments and the federal government also makes its way to college markets, predominantly in the form of financial aid, subsidies and grants.
Be sure to check back with us over the course of the 2023 football season to follow our conference-by-conference breakdown of college markets as they relate to the hospitality industry.