The Montana Board of Regents granted Montana State University an exception to a lease policy on Thursday, allowing it to move forward on a project that could see a privately owned hotel built on university property.
The regents unanimously approved the request, which would allow MSU to lease university land for a period longer than the 20-year limit.
In 2019, the university presented a plan to the regents to conduct a feasibility study on a standalone hotel that would be connected to the university’s hospitality programs.
After Bozeman-based Saddle Peak Hotel Advisors completed a study in May 2021, it found a campus hotel would be feasible for a developer to construct.
MSU spokesman Tracy Ellig said there wouldn’t be any taxpayer money involved in the construction of the hotel. The university would lease the land to a private developer, who would own and build the hotel.
“What developers are going to look for, they need to be able to make a commercially viable project for themselves. But what we want out of it is, they have to provide us hands-on opportunities for the education of our students,” Ellig said. “… The hotel has to be a little bit different than a regular commercial hotel.”
The hotel would benefit students enrolled in the four-year hospitality management degree and the two-year culinary arts degree, according to MSU’s request.
“Our greatest interest is being able to provide real world, hands-on experience for our students in these programs, but the other thing is, it can help both the university and then the community in terms of attracting conferences or hosting events,” Ellig said.
Roughly 25 students enrolled in the hospitality management program for its first year in 2017. Ellig said the program has more than doubled since then.
In the last two decades, there’s been a steady growth in tourism and hospitality throughout Montana. The university has heard from leaders in the sector that there is an increased need for not only more employees but more highly trained employees, Ellig said.
“The biggest driver behind this is that we have heard consistently from the tourism and hospitality industry of Montana that they need more well-trained managers, and we are trying to respond to that need,” Ellig said.
During Thursday’s Board of Regent’s meeting, Regent Brianne Rogers said she looked forward to seeing more detail when the project came back to the board for final approval.
“I’ll especially be looking for requirements in the lease terms to support educational space, hiring of a student workforce and other terms as appropriate to ensure that this investment supports robust educational outcomes,” Rogers said.
The university plans to put out a call for proposals, accept responses from interested developers and conduct interviews with development teams. If MSU selects a developer’s proposal, it’ll have to return to the Board of Regents for approval of the lease.
Ellig said any lease agreement would likely be more elaborate than a typical hotel lease and would detail ways the university would expect the hotel to support its hospitality programs.
The process could take about four months, Ellig said.
The university has identified several potential building spots along Seventh Avenue, south of Grant Street. Ellig said it was too soon to know how much land would be included in a lease.
MSU anticipates a lease agreement for a potential hotel would be 40 years with one 10-year renewal, according to its request.
“A very strong message we got from the feasibility report was 20 years is just too short a time period” for developers to recoup their investment, Ellig said.
When asked if there were concerns over needing the land for instructional space or dorms in the future, Ellig said there weren’t any and the university would consider the hotel a teaching space.
“It will be a working hotel but it will be a working hotel that involves the instruction of our students,” he said.