UNIVERSITY PARK, Pa. — On June 29, the Penn State Board of Trustees approved for the University to enter into a purchasing agreement and ground lease for The Nittany Lion Inn and Penn Stater Hotel and Conference Center with a third-party company, Scholar Hotel Group.
Following a planning period this summer to negotiate terms, the University anticipates the purchasing agreement and ground lease will be finalized this fall. The contract, when signed, will keep the hotels and their services viable for the entire community as part of a ground lease agreement where Penn State would retain ownership of the land on which The Nittany Lion Inn and The Penn Stater Hotel and Conference Center are situated, and Scholar Hotel Group would own and operate the two properties for the duration of the contract.
“While specific plans between Penn State and Scholar Hotel Group are being defined, the University’s goal is to support students, faculty, staff, visitors and community members,” said Sara Thorndike, senior vice president for Finance and Business and treasurer. “Though still in the preliminary stages of this process, the University is focused on supporting employees who work at the Penn Stater. There will be a variety of employment opportunities for current hotel employees with the new operator or in other areas at Penn State.”
As has been previously shared, the University initiated an exploratory process in 2021 to examine potential efficiencies that could be realized regarding hotel operations, including the strategic, long-term value and benefits to the University community of reinvesting in and keeping the properties, potentially divesting either or both hotels, or a variation on these options.
The extensive analysis indicated there is strategic value in divesting from hotel operations at University Park.
“While both hotels have served the University community well for decades and hold a special place in Penn State history, after the in-depth evaluation to examine hotel operations, Penn State has made the determination that divesting from the hotel businesses will enable us to focus on our core missions that remain teaching, research and service,” Thorndike said.
The University’s hotels have been self-sustaining, using their own revenues to pay for expenses so that tuition, tax dollars and other funds have not been used to keep the hotels open or support operations. This decision will enable the investments that will support the continuous modernization needed for the hotels to remain viable; attract guests and conferences; and meet guest expectations, industry standards and competition in the local hospitality market.
As a model, other universities have successfully partnered with third-party operators to invest and modernize on-campus hotel properties to help them attract guests and conferences and continue to support community needs.
The selection of the Scholar Hotel Group, which was founded and is owned by a proud Penn State alumnus, for this critical partnership was done with the utmost diligence following thorough RFQ and RFP processes and with the University community at top of mind, according to Thorndike.
“Scholar Hotel Group is excited to work through the specifics with Penn State and is committed to providing the highest quality hospitality services and environments to the Penn State and local communities,” said Gary Brandeis, president and founder of the Scholar Hotel Group and who holds an accounting degree from Penn State.
The Scholar Hotel Group, a leader in the hospitality industry specializing in hotels on or near college campuses, currently owns and manages two properties on Beaver Avenue in the heart of downtown State College: Hyatt Place, a full-service hotel with 165 guest rooms and 5,000 square feet of meeting space; and the Scholar Hotel, a boutique-style hotel with 72 extended-stay guest rooms and 4,200 square feet of meeting space. Scholar also owns and operates the Collegian Hotel & Suites near Syracuse University in New York, and Scholar Hotel Morgantown near West Virginia University.
The analysis of the hotel properties stems from the Resource Optimization Initiative, which is a multi-year initiative to study the affordability of a Penn State degree and to identify how the University could create better financial controls to minimize costs, enhance University services and fulfill strategic initiatives.
The Penn Stater will remain open, and the University anticipates The Nittany Lion Inn will remain closed until 2024. For more information on this recent agreement, visit the Frequently Asked Questions online.