Pretty much exactly how it works. Look at Capital One Arena. Only reason why Georgetown hosts is because that's where they play most, if not all, of the home games they have. What's even more peculiar about this is when the BB&T Classic would be at the arena, until the last three years or so of that event, the Hoyas refused to participate (whether or not it had to do with Maryland being in it is a different topic), GW would act as a co-host with the Terps.
In that case, it makes sense for the Hoyas to be the host but it would be nice to see GW as the host so that the Terps and/or Hoyas can actually play as close to home as possible, provided it'd be a first/second round set of games.