Penn State’s Board of Trustees on Wednesday unanimously approved entering into a purchasing agreement and ground lease for the school’s two University Park campus hotels: The Nittany Lion Inn and the Penn Stater Hotel and Conference Center.
Once finalized, Scholar Hotel Group would own and operate the hotels, while Penn State would retain ownership of the land on which the buildings are located.
Terms of the contract will be negotiated this summer and the agreements are expected to be finalized this fall, according to the university.
“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,” Sara Thorndike, senior vice president for finance and business, said in a statement. “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.”
Scholar Hotel Group owns and operates two other hotels in State College: Scholar Hotel State College, 205 E. Beaver Ave., and Hyatt Place, 219 W. Beaver Ave.
“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,” company president and founder Gary Brandeis, a Penn State alumnus, said.
The Penn Stater will remain open during the transition, while the Nittany Lion Inn, which has not operated as a hotel since 2020, is expected to remain closed until 2024.
Penn State began studying options for the future of the two hotels last year, with a working group examining “potential efficiencies that could be realized in hotel operations” for the 91-year-old Nittany Lion Inn and 28-year-old Penn Stater as part of a larger, multi-year initiative studying ways to control costs, grow revenue and support strategic initiatives across numerous aspects of the university.
The university hired consultant Rieth Jones Advisors “to compare and contrast possible options that may be available,” which included renovating the hotels or divesting and ground leasing them, according to a statement last fall.
Both hotels faced considerable maintenance backlogs and needs for renovations, while COVID-19 also resulted in unexpected costs and diminished revenue.
The Nittany Lion Inn has not had hotel guests since the start of the pandemic. Most recently, it was repurposed as a student residence hall and classroom facility as Penn State reconfigured buildings to meet health and safety needs. The Dining Room and Whiskers also have been closed.
The analysis of the hotels found strategic value in divesting from the hotels, Thorndike said.
“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.
Scholar Hotel Group was selected after a request for proposals process, according to the university.
Both hotels are self-sustaining operations, meaning they rely on their own revenues and do not use tuition or tax dollars.
“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,” according to the university.
