The 'Guangxin International Hotel' has been operating on the campus of the Wuchang University of Technology in Wuhan, a medium-sized school of around 13,000 students, for a number of years in central China's Hubei province, The Beijing Times reported.
According to a student who tipped off the paper, the "hotel" - situated atop one of the university's canteen buildings is in fact a brothel.
The student, surnamed Chen, told reporters that when he went to the hotel to check out some spa treatments that were being advertised, he was offered "special services".
An employee said some of their customers were students, who could receive a discount if they showed a university ID, or someone referred by a student, Hong Kong based South China Morning Post reported.
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Zhao Zuobin, president of the university, heads the Guangxin Science and Education Group, which previously owned both the hotel and the university.
According to documents filed with Wuhan's commerce bureau, in early 2013 the hotel was transferred to another company registered at the same address, the legal representative of which is Zhao's brother-in-law.
The university vowed to cooperate with police and publish their findings.