Improving the Quality of Hotel Feasibility Studies: Evaluating Potential Opportunities for Hotel Development and Acquisition in University Towns

Hotel developers and purchasers searching for new opportunities have been advised to consider hotels in university towns because, among other reasons, universities provide a stable source of lodging demand. This study analyzes the performance and stability since 1990 of hotels in 27 cities dominated by a major university. This study finds that lodging demand in university towns is more stable than U.S. averages. This study also evaluates factors that lodging feasibility analysts should consider when studying proposed hotel development or acquisition in markets dominated by a university. Significant predictors of lodging demand include city employment and population trends, as would be expected. Interestingly, university grant funding and graduate student population also should be considered by feasibility analysts because of their strong predictive capability. The results of this study may be generalizable for analysts evaluating university-related lodging demand in general, not just in university towns.