Managers of university investments, like most managers of huge piles of money, typically do not like being told what to do with their riches—particularly when demands are coming from, say, student activists insisting that their school stop investing in an extremely profitable company posting double-digit annual returns.
But students at universities investing in HEI Hotels and Resorts have recently forced their investment offices to listen. Yale’s recent announcement that it would end all future investments in the company makes it the third university to do so this year in response to allegations of labor abuses and demands for a fair union recognition process. The campaign presents a powerful, replicable model of students and workers uniting to challenge their respective institutions where they are vulnerable—and force them to act in favor of workers.
HEI is a private equity fund that purchases and operates hotels. The company has expanded rapidly since it was established in 2002. After purchasing a hotel, HEI “adds value,” according to Riddhi Mehta-Neugebauer, a researcher for the hotel and restaurant workers union UNITE HERE, by lowering labor costs which sometimes involves the violation of basic labor laws. This allows the company to profit when the hotel is subsequently sold. Last year in Irvine, California, for example, non-union workers at the HEI-owned Embassy Suites went on a wildcat strike, then filed and won a suit against their employer over denial of legally-mandated breaks when a state Labor Commissioner hearing officer ruled that HEI violated the law by denying the breaks and ordered HEI to pay back wages.
Since the fund’s inception, HEI has sought university endowments as major investors. Such funds are massive, especially at elite schools: Yale’s endowment is valued at $19.4 billion, Princeton’s at $17.1 billion, Harvard’s a whopping $32 billion. Always in search of high returns, many schools have made sizable investments in HEI. Yale students estimate their school’s holdings at $119 million.
Around the same time universities began investing in HEI, workers at HEI hotels around the country began union drives.
“Workers have said, ‘we want a fair process to choose whether or not we want a union,’” says Mehta-Neugebauer, referring to a “card check” process rather than a National Labor Relations Board election that has so far been denied. With no card check and labor abuse allegations mounting, workers and UNITE HERE called for students to demand that their universities stop investing in HEI until and unless these abuses were rectified.
Students have organized for an end to unethical investments on a variety of issues, from the divestment campaign over apartheid in South Africa to the push in recent years for divestment from companies profiting from the Israeli occupation of Palestine. But ending investments over a labor dispute is uncharted territory.
"Nobody else has ever done this," says Haley Kossek, a junior and a labor activist at Brown University, where student activists were successful in pushing the school to sever ties with HEI. Kossek says that despite Brown’s reputation for progressivism—including the existence of a committee on responsible investments—students had to grapple with a recalcitrant administration every step of the campaign.
“Whatever reputation Brown has for social liberalism does not in any way guide the way it invests its money,” she says.
Students held a number of creative actions, including a “clean-in” at the university’s investment office, where they arrived with cleaning supplies to “clean up Brown’s investments,” and a mock wedding ceremony where the Brown Investment Office was married to “HEI Corporate Greed.” After the clean-in, Brown’s president, Ruth Simmons, met face-to-face with activists; she then penned a letter stating that the labor abuse allegations, if true, would be of concern. A year later, the university announced that it would not reinvest in HEI.
Shortly after the Brown announcement, students at the University of Pennsylvania affiliated with the Student Labor Action Project successfully pressured their administration to state that the University has no current plans for future investments in HEI. And earlier this month, Yale students with the Undergraduate Organizing Committee won their own HEI campaign.
Yale senior Mac Herring was involved in the campaign since its inception. Like Brown activists, she says students initially went to the Advisory Committee on Investment Responsibility, but made little progress. When students brought HEI worker Jose Landino from the Hilton Long Beach Hotel in California to campus in 2008, they attempted to arrange a meeting with him and university investment staff; when the investment office refused, UOC members held a brief sit-in.
While Herring is “thrilled” Yale will no longer invest in the company, she says her school’s lack of investment transparency is still worrisome.
“What's scary to me is not the fact that Yale is invested in a company like HEI—what's scary is the fact that we'll never know what's going on with the [investment office’s] other $20 billion,” she says. A number of UOC activists have become involved with the Responsible Endowment Project, an effort to address the university’s unethical investments.
Other universities are maintaining active campaigns. Students at Notre Dame held a five-day hunger strike last year. Occupy Harvard has included an end to HEI investments in its statement of principles, and the university’s president recently released a statement promising to review the school’s investment in HEI.
Student labor activists have flexed their muscles in recent years against administrations and garment manufacturers like Nike and Russell Athletic, proving they are a force to be reckoned with. The HEI campaign takes that power a step further: students can not only end their universities’ contracts with ethically dubious corporations; they can, when fighting alongside workers, force their universities to end highly profitable investments in favor of what’s just. If HEI workers win their demands at their hotels, other unions could look to the HEI model to win future campaigns.
“The campaign recognizes the ways that students in their universities and workers on their shop floors have different points of leverage against powerful corporations and financial institutions,” says Kossek, the Brown student activist.
“It can redefine what administrators think is required of them when they’re making investment decisions," she says. "They can't just think about what’s profitable anymore. They have to think about what is ethical."