Plan will provide new dorm space for students, but could hurt tourist industry.

The use of the Sheraton Dover Hotel to house Delaware State University students is seen as a way for the school to modernize its living space, but could cost the area in terms of tourist dollars.

Cindy Small, executive director of Delaware Tourism, feels that without the hotel and its array of 15 meeting and conference rooms, conventions, family reunions and other local gatherings that might have been held in town could go elsewhere.

Other hotels do offer space for these functions, but with the exception of the Dover Downs Hotel & Casino, none are nearly as large or as versatile as the Sheraton Dover.

"Dover is a hub and spoke destination because we're so convenient to so many attractions," she said, listing Rehoboth Beach, Sussex County outlet stores, Winterthur and nearby cities such as Baltimore, Washington, D.C. and Philadelphia as reasons people would stay at the Sheraton.

The area also attracted customers because of the tax-free shopping offered and low hotel taxes, Small said.

Business representatives in places such as Washington who planned conferences and meetings often were surprised at the low prices and rates prevalent in the Dover area, she added.

"The Sheraton gave us a place to market," Small said. "We're concerned because we're going to lose a lot of the large groups that booked the Sheraton."

The loss of 153 hotel rooms, a bar and the restaurants in the hotel also will affect the city's three large tourist draws, namely Firefly and the two NASCAR races held in Dover each year, she said. It also will have a bearing on peripheral industries, such as the Dover Mall, eating establishments and local stores, she added.

"This will impact business in Kent County, there's no doubt about it," Small said.

Current dormitories not up to standard

At Delaware State University, however, the changing of hands at the Sheraton is seen as a boon for the university.

Although the formal lease agreement has yet to be completed, the school is set to take over the hotel on July 27, DSU Executive Vice President and Treasurer Amir Mohammadi said. The school's Board of Trustees approved the move June 13.

Beginning with the fall semester, more than 300 DSU students will be housed in the 135,500-square-foot hotel, a move that will relieve pressure on the dormitories and off-campus housing already used by the school.

Delaware State University's 2012 enrollment figures put the student population at 4,425; the school only has room for about 2,200 students.

"Not all of our student living space is very modern," Mohammadi said. "We have some buildings built in the 1950s and they are not air conditioned. Not all of the dorms have private bathrooms. They're not conducive to students' needs…The Sheraton will serve that need."

The move is part of the university's master plan that could include upgrading current living areas or tearing them down and building new ones, Mohammadi said.

"We're doing an assessment now to decide if we will demolish and rebuild or renovate," he said. "We're looking at all options."

Although Delaware State University receives funding through the state of Delaware, it relies heavily on private donations for its expansion plans. The $12 million price tag for leasing the Sheraton through 2028 will be paid with a combination of public and private funding, Mohammadi said. If the school decides to exercise an option to buy the building after two years, money for that will be raised the same way, he added.

Work on obtaining those funds already has begun, although Mohammadi would not provide specifics.

In addition to leasing the hotel, school officials considered four other options, some of which still may be adopted, he said.

The decision to lease the Sheraton was a mutual one between the school and owners K.W. Lands LLC.

"This is something we've been working on for the past eight or nine months," Mohammadi said. "Only a few people were aware of it. We were thinking far, far out of the box."

Contacted via email, K.W. Lands LLC executive Thomas Kramedas said he had no comment on the agreement, but would issue one in the near future.

Some issues unresolved

In addition to new dormitory rooms, the Sheraton offers 22,000 square feet of administrative office space and room for an already-approved Early College High School. Administrators for the school still need to decide if they might use that space, Mohammadi said.

The most obvious change Dover residents will note is the removal of the Sheraton signs and logos from the exterior of the building. Plans for internal changes, including the use of restaurant space as cafeterias, have yet to be finalized, he said.

The school also is looking at ways of keeping on hotel employees.

"We are working to address the needs for hiring staff," Mohammadi said. "We will need residence assistants, custodial and maintenance staff and hospitality staff.

"The university will have a number of jobs coming up, and if they meet the requirements, we encourage them to apply for those jobs."

Other changes still pending include addressing parking issues and pedestrian safety for students that walk the quarter-mile between the school campus and the hotel.

It will be a busy summer, Mohammadi said.

"Right now it's like we are constructing an airplane as we are flying it," he said.