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.