US shareholder activists target hotels

[LOS ANGELES]

HOTEL owners and operators are catching the attention of US shareholder activists as surging property values spur investors to press for higher returns at companies seen as laggards.

Strategic Hotels & Resorts, owner of Manhattan's JW Marriott Essex House, is under pressure from Orange Capital to consider a sale. Morgans Hotel Group, an operator of boutique properties, is being targeted by both billionaire Ron Burkle and an activist firm after a shareholder ouster of its board. Chatham Lodging Trust last month rejected a takeover bid from a top investor that is considering more moves.

Hotel owners are the best performers this year among US real estate investment trusts as property prices approach peak levels in major markets. Blackstone Group's Hilton Worldwide Holdings last week raised US$2.35 billion in a record initial public offering for the industry. For companies that are underperforming or hold …