Roosevelt Hotel to be leased as PC initiates redevelopment

CCoP directs PC to initiate appointment process of FA to redevelop Roosevelt Hotel

ISLAMABAD: The saga surrounding the PIA owned Roosevelt Hotel in Manhattan was discussed once again during a meeting of the Cabinet Committee on Privatisation (CCoP), which has recommended that the process to redevelop the hotel be kickstarted. 

The CCoP directed the Privatisation Commission (PC) to initiate the appointment of a Financial Adviser to redevelop the historic hotel that had to shutter operations because of losses incurred during Covid-19.  The suggested redevelopment would involve the land of the hotel being utilised to redevelop the site into a mixed use of primarily office tower over retail and condominium. 

With a lot of fist thumping and disagreement over what should be done with the hotel, the plan for redevelopment may also be  a way for the government to quell rumours that the already financially punch-drunk PIA would be selling the hotel. 

The hotel’s origins

In use by Pakistan International Airlines (PIA) since the late 1970s, the Roosevelt Hotel occupies a unique place both in the history of the United States and Pakistan’s national airline. One of the grand-old buildings of 19th century New York, the hotel was bought by developer Paul Milstein in July 1978. In the bid for the hotel’s ownership, Milstein beat out a number of high-profile middle-eastern investors that wanted to form a consortium and buy the hotel. 

The very next year in 1979, Milstein ended up leasing the hotel to the PIA which had partnered with Prince Faisal bin Khalid bin Abdulaziz Al Saud in the transaction. The lease cost an estimated $35 million and was to run for 20 years. Prince Faisal and PIA were to pay $2.7 million to $4 million annually in rent, and they also obtained an option to acquire the hotel after 20 years at a set price of $36.5 million.

True to this, in 2000, the PIA and Prince Faisal bought the hotel for $36.5 million. However, in the course of the lease the hotel was regularly mismanaged and its facilities began to deteriorate and become outdated. 

Over the years, the question of selling the hotel arose a number of times. However, everytime the government of Pakistan shied away from actually pulling the plug and has spent millions of dollars on its renovations. Things really took a turn for the worse in 2020 when the Covid-19 pandemic hit. 

Hotel closure and suggestions galore

According to media reports, the hotel took a great hit from the general downturn that the hospitality industry saw during the course of the pandemic. An Aviation Division report from earlier even indicated that the hotel had to be shut down in December 2020 with the approval of cabinet to avoid a yearly loss of $37 million. 

Back in 2020, the Cabinet Committee on Privatization (CCoP) the approved leasing of the hotel site for setting up a joint venture project for prospective mixed used development, the best suited mode of privatisation as delineated in the PC Ordinance, 2000 and directed PC to initiate the appointment of Financial Advisor. 

However, litigation in Tethyan Copper Company (TCC) in a Reko Diq case, halted the process for appointment of FA. 

Current status

With the settlement of the Reko Diq case, the government is once again keen on doing something with the hotel but have also made it clear that the hotel is not up for sale. The timeline of major events in recent months is as follows: 

14th September: The government decides to revive the plan for leasing out the site of the Roosevelt Hotel in New York to set up a joint venture project for prospective mixed-use development and agrees to explore the option of reopening the hotel following protest from the employees union. 

18th December: Aviation and Railways Minister Khwaja Saad Rafique unequivocally denies that the government has any plans to sell the Roosevelt Hotel. The minister also rejected the reports that Pakistan’s flag had been removed from the Roosevelt Hotel and clarified that the national flag was hoisted there only when any head of state stayed there.

27th December: The government decides to hire a firm to give the Roosevelt Hotel in New York on lease. 

The current plan has actually been two-years in the making. Back in 2018, the CCoP directed the aviation division to make a presentation on the possibility of construction of high rise hotels on the land of Roosevelt Hotel New York on Public Private Partnership basis. In July 2020, the CCoP directed the PC to initiate the process of appointment of FA to undertake envisaged leasing of Roosevelt site for meeting up a Joint Venture project for prospective mixed use development.
However, as mentioned earlier, the plan met a hitch because of the Reko Diq case. With the case settled, the CCoP reaffirmed its earlier decision on Roosevelt Hotel, said the finance ministry.

 

- Advertisement -
Abdullah Niazi
Abdullah Niazi
Abdullah Niazi is senior editor at Profit. He also covers agriculture and climate change. He can be reached at [email protected]

1 COMMENT

LEAVE A REPLY

Please enter your comment!
Please enter your name here

- Advertisement -

Must Read

Dollar jumps, reserves fall, and IMF calls as Dar’s folly comes...

LAHORE: On a day of significant reckoning for Pakistan’s economy, the rate of the rupee fell sharply both on the interbank and on the...