It's a way of improving access for academics and speakers from very far afield without them struggling to find a hotel. Often conferences held at Uni campuses require halls to be turned over to visitors which is why a lot of lets need students to leave during vacation - with the hotel, you avoid this and can provide better accommodation (in the sense of unbroken lets) to students.
Plus, nearly 400 rooms is not a huge increase in traffic - that's basically just a large lecture's worth of people!
Not sure it's an overwhelmingly awesome idea, but I don't see that it's a bad one.