By Wailin Wong | Shares
of Strategic Hotels & Resorts, the Chicago-based real estate
investment trust, are surging in tandem with an industry peer that
received an upgrade.

In late afternoon trading, Strategic’s stock was up 24 percent, to
$4.70. The company’s 52-week high is $4.77.

Strategic and FelCor Lodging Trust Inc., a Texas-based REIT, tend to trade together, said David Loeb, an analyst at Robert W. Baird & Co. FelCor’s shares hit a 52-week high Wednesday after an analyst upgraded its stock and price target.

Loeb added that investors are eying companies with high levels of debt because they can deliver quick earnings growth as the economy recovers. Strategic and FelCor are carrying sizable debt loads, Loeb said.

“I think this is a market where investors are looking to make highly leveraged bets on the economy, and if you’re looking to play an economic turnaround, hotels are an interesting sector,” Loeb said, though he warned that Strategic is “burning through cash” and continues to see pressures on its margins despite recovering revenue.

The positive sentiment around Strategic is a marked change from a year ago, when the stock was trading at less than a dollar. It hit a 52-week low of 66 cents in April 2009.

Strategic is the owner of the Fairmont and InterContinental Hotels in Chicago, as well as other luxury hotels worldwide.