How Graduate Hotels Found A Gold Mine In University Towns
The two-year-old Graduate hotel in Ann Arbor, Michigan, features colorful pennants that double as DO NOT DISTURB signs, lobby chalkboards emblazoned with mathematical equations that pay homage to the University of Michigan’s engineering prowess, and plaid bedspreads in the school’s signature blue and yellow. It also has 204 guest rooms with rates that outperform those of its competitive set by 40%.
Launched in 2014, Graduate Hotels spent the past year spreading its kitschy-cool brand of hospitality to college towns across the country: It now has 10 properties, from Oxford, Mississippi, to Berkeley, California, with eight more in development. “There’s generally a lack of interesting hotel product in our markets, yet [university] communities are incubators for innovation, job growth, and culture,” says AJ Capital Partners founder and CEO Ben Weprin, who developed the Graduate brand through his real estate investment group.
Weprin recognized that college towns were the hottest market hoteliers never bothered to notice when he tried to purchase a basic but centrally located inn in Ann Arbor—and the owner wouldn’t sell. When AJ Capital’s real estate team pored over the job and income statistics of the top 40 university markets, they found that unemployment typically hovers a quarter lower than in the top 25 U.S. cities, and packed university calendars attract visitors year-round. Today, Graduate’s nearly 3,200 guest rooms command rates around 20% above their competitors’ and capture an additional $50 a night per occupied room through food and beverage sales, thanks to Weprin’s focus on creating public spaces with local flair.
AJ Capital’s $1.5 billion in funding is now primarily funneled into Graduate. Outposts in Seattle and Iowa City are opening soon, followed by one near the Cornell Tech campus on New York City’s Roosevelt Island. Graduate faced down fierce competition to land that bid. “We are higher-education focused, we are shamelessly ambitious, and we can execute,” Weprin says.