Having "swanky" residence rooms (which are paid for by the students and I'm sure they don't loose money on these) is a selling point.

In all honesty, as someone who grew up and goes to school in the Maritimes, not many people want to go to what is widely considered a retirement and tourism province for higher education when more compelling options exist like Halifax. So in order for UPEI to compete, they need to offer some other compelling reasons (for instance, they have a highly regarded veterinary program).

It is important to remember that these institutions are funded by enrolment.