Universities consider hotels for student housing

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Tulane is among the schools mulling the use of hotel rooms for students in need of single-occupancy lodging.
Tulane is among the schools mulling the use of hotel rooms for students in need of single-occupancy lodging. Photo Credit: Fotoluminate LLC/Shutterstock

As universities across the U.S. weigh whether to reopen campuses for the fall semester, some schools are eyeing the use of hotel guestrooms as a safer and social distancing-friendly alternative to crowded dorms.

According to local news reports, Tulane University in New Orleans and the University of Northern Colorado in Greeley, Colo., are among those considering hotel rooms for students in need of single-occupancy lodging. Northern Colorado is also reportedly looking into using hotel conference rooms as potential classroom space. Likewise, Boston’s Northeastern University has said it is exploring the use of hotels as the school plans to “expand student housing into new buildings and communities to reduce residential density.”

Though specifics regarding these plans remain fluid, Nancy Mitchell, a restructuring partner at the New York office of law firm O’Melveny & Myers, which is advising higher education clients on risk management under its colleges and universities practice, said hotels could certainly play a key role in allowing students to come back to campus safely.

“Colleges and universities have a need for more rooms, fewer shared bathrooms and less common space,” Mitchell said. “And when we think about how college towns are set up, we know there tends to be a fair bit of hotel stock in many areas where these schools are located. Hotels are looking for ways to conserve cash and address their issues of no to very low occupancy right now, so we think it’s a natural match.”

It also wouldn’t be the first time colleges have tapped hotels as student housing, added Mitchell. New York University, for example, has previously relied on hotels to solve student housing shortages, though such measures are typically stopgaps. In the case of the Covid-19 pandemic, Mitchell predicts schools will be more interested in inking longer-term, one- or two-year lease agreements.

“I think everybody now realizes that this is going to be a longer-term situation than we maybe originally thought when the shutdown first happened,” Mitchell said. 

Mitchell said potential lease agreements between colleges and hotels could be modeled after those structured as part of California’s Project Roomkey, a statewide initiative, helmed by Gov. Gavin Newsom, to procure hotel and motel rooms to house the homeless during the pandemic. O’Melveny & Myers negotiated a Project Roomkey transaction with Motel 6, which resulted in several thousand hotel rooms that are now leased to counties throughout California.

“What we found was that hotels were very excited to do it, as it allowed them to keep their properties occupied and keep some of their employees employed,” Mitchell said. “And importantly, the transaction in California moved quite quickly. Even with due diligence, we think it could take less than a month to put similar partnerships in place.”

Being able to move quickly could be vital, as most schools are facing mounting financial pressure to resume normal campus operations.

“The question of whether or not parents of students are going to pay the same tuition for an online education as they would an in-person education is one that I know concerns many colleges and universities tremendously,” Mitchell said. “And they know that if they’re going to bring people back and want them to have that in-person experience, then they also have to keep students safe. Because there is that countervailing risk of litigation on the other side if you bring people back too quickly.”

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