Student activists have spent decades making a moral case for colleges to divest from controversial companies, and the failures of that line of argument have far outnumbered successes. Hoping to turn the tide, United Students Against Sweatshops will begin a new sort of campaign today, making the case that some of the nation’s elite universities actually lose money by investing with a powerful hotel management company charged with unfair labor practices.

In a report issued today, USAS argues that Ivy League institutions invested with HEI Hotels & Resorts have squandered endowment funds on a company whose financial returns aren’t much better than its reputation for workers’ rights. HEI, which acquires hospitality real estate, runs three investment funds that are supported by some of the nation’s largest university endowments.

HEI raised more than $1 billion from universities from 2004 to 2008. Major investors in the company include Yale University, Princeton University, Harvard University and the University of Chicago.

HEI has been the target of increasingly frequent and strident student divestment campaigns in recent months, following a series of allegations from workers who allege that they were harassed and intimidated when they tried to organize unions.

The new strategy employed by USAS in its report is something of a double whammy for elite institutions, criticizing investment strategies that student activists would describe as both immoral and unwise. As colleges struggle to boost liquidity -- loosely translated into cash on hand -- their investments in the kind of complex and long-term real estate transactions that are HEI’s specialty are proving an albatross, the report states.

Drawing from public records and news reports, USAS highlights two HEI investments that appear particularly problematic. HEI purchased La Meridien Hotel in San Francisco in May 2006 for nearly $129 million, and the assessed value of the property was just $43 million by September 2009, according to a report the company made to the City and County of San Francisco. HEI also purchased the Embassy Suites Hotel in Irvine in June 2006 for $55 million, and the company has since placed its value at $40 million.

The report concedes that its analysis does not capture how individual universities' investments in the company may have performed. Confidentiality agreements preclude individual institutions from sharing how their investments performed in the HEI funds, the report says, and an HEI official did not respond to phone inquiries from Inside Higher Ed.

In interviews with other publications, HEI has disputed workers’ allegations of mistreatment. The National Labor Relations Board, however, decided late last year to advance a formal complaint filed by workers at the HEI-operated Sheraton Crystal City hotel, in Arlington, Va.

The USAS report comes at a time when a number of colleges are publicly questioning their continued relationships with HEI. Ruth Simmons, president of Brown University, sent a letter to HEI officials in February, expressing concern about the allegations of worker intimidation. She noted that the allegations were brought to her attention by Brown’s Advisory Committee on Corporate Responsibility in Investment Policies.

“Notwithstanding the fact that the Committee does not deem it their responsibility to opine about the method to be used in determining whether your hotel employees are represented by a particular union, they have advised me to state for the record that if there were to be any truth to the claims of the union and others that workers at some of your properties have been subjected to intimidation by managers due to their pro-union activities, this would be a matter of deep concern and contrary to our standards for investing,” Simmons wrote.

While declining to comment on the specifics of the USAS report Friday, a Brown spokeswoman said that Simmons had received a response from HEI officials, who expressed a desire to discuss labor issues with student activists on the campus. Simmons shared the response from HEI with students, and “she urged them to take [HEI] up on that,” said Sarah Kidwell, Brown’s director of news and communications.

Simmons's letter prompted discussion at Yale about whether it too should consider applying pressure on HEI or reconsidering its investments. The Yale Daily News reported in March that the university’s Advisory Committee on Investor Responsibility was again reviewing allegations made against HEI, but a university spokesman said Friday that he knew of no further recommendations coming from the committee since it decided last year not to recommend divestment.

Yale officials declined to respond to the specifics of the USAS report, saying the university won't discuss its investments.

Rod Palmquist, international campaigns coordinator for USAS, said the group hopes that the mounting protests against HEI, coupled with concerns about HEI’s investment portfolio, will ultimately persuade universities to apply greater pressure on the company to improve labor practices.

“As there is more momentum on these issues on Ivy League and other campuses,” he said, “hopefully that will send a strong message to the company that if they don’t do something soon, those investments are not guaranteed.”