Colleges and the hotel business



Great colleges are an almost perfect and imperceptible mix of people, programs and facilities. Among them, this mix works best when founded on a culture based upon a strong sense of self. This also differentiates further the subtleties that exist among them. It’s why in the end prospective applicants choose one institution over another. Students know it when they feel it. As consumers, students buy an educational program based on quality, perception and promise.

Most colleges and universities define themselves by promoting a residential learning experience. It’s not so much whether the students live in the dorms. For most institutions, the residential learning experience has two parts. The first is the educational program. The second is the blend of a thousand teachable moments that exist outside the classroom. These moments vary across institutions. Colleges may stress big time athletics, careerism, voluntarism or robust extracurricular programs. It’s the blend of classroom and extracurricular activity that creates the perception.

To shape this perception, American higher education institutions have historically maintained strict control over the mix that produces it. They rightly point to the resources placed on assuring a quality academic program. They speak of the institution’s ability to attract professors who are teacher scholars. And they provide academic facilities to allow professors to teach students well.

If you think about it, there are really two types of facilities. The first supports the academic program. At a recent board meeting where I serve as a college trustee, the president noted that his institution should ideally support 19 different kinds of learning environments. These classrooms, and equipment that they require to meet radically different and evolving pedagogical approaches, are expensive.

The second type of facility supports consumer demand. At lunch with a Boston area freshman attending a major research university on Saturday, I listened with a mix of awe and amusement as the student described his first visit to the four-star dormitory facility the University had recently constructed. This discussion raises important questions about why higher education institutions tap debt capacity to build “overkill” facilities that exceed anything a recent graduate will likely be able to afford after joining the workforce.

The discussion goes beyond gymnasium rock walls and sushi bars. Students must be provided with academic and social hearth spaces to fully experience college and university life. Yet this need raises an obvious question. Should higher education increase debt to provide for facilities that they need not own?

Put another way, should colleges continue to be in the hotel business?

It’s possible to think of the residential learning experience as an academic program attached to a social contract. If colleges educate the “whole” individual, they do so by striking an agreement with the student. In return for tuition and fees, students are offered a quality academic program that teaches them to speak, write, apply quantitative methods, use technology, work collaboratively, and in some places, develop an ethical and moral value system.

When entering a social contract, colleges and universities offer the student access to the environment that makes possible a quality academic program, including wellness, psychological services, study abroad, internships and numerous other options and opportunities. While the need to control facilities that house an academic program are obvious, it is less clear why colleges and universities should support through unceasing fundraising – or more likely rising debt – residential facilities.

The college dorm has already morphed into something different. It has a construction lifespan of only 30–50 years. What has not changed is the need for a social contract that links the academic program to the thousand teachable moments outside the classroom. Colleges and universities should focus their efforts on defining their relationship with their students.

Facilities and student affairs leadership makes specious arguments about protecting campus-wide construction standards. Institutions can find quality architects, developers and available capital. Their lawyers can negotiate to protect their interests.

At some colleges, dorms fully depreciated but still in reasonably good shape can be something of a cash cow. For these institutions, a decision to get out of the hotel business will be more about strategy than financial exigency. For other institutions, the willingness to assign student housing revenue to a developer to pay for new or retrofitted construction will be a leap of faith partly mitigated by lower labor costs and the absence of upkeep and associated depreciation. Further, colleges do not need to sacrifice control of land they own and upon which these facilities are developed. In the end, it’s only about the building.

In the post recessionary world, high sticker price tuition may continue to be viable over the long term at perhaps no more than twenty institutions in America. For the rest of higher education, there is now a pressing need to rethink how one does business in higher education. It makes sense to focus on the academic core. It makes far less sense to maintain allegiance to older principles of control when new partnerships can strengthen the financial bottom line.

Let’s agree to deepen the social contract that governs the teachable moments beyond the classroom. But, for goodness sake, let’s not break the bank when available resources are better placed with faculty and students.

It’s time to get out of the hotel business.