In the latest twist in the saga surrounding the Roosevelt Hotel in Manhattan, Pakistan International Airlines has leased the building to a New York City firm for a period of three years.
The lease has been signed with the New York City Health and Hospitals Corporation which will provide residential facilities to ‘housing migrants’ in the hotel.
The hotel has long been a prized possession of Pakistan’s national carrier which has been bleeding money from every possible direction for years on end now. Back in December 2022, the Cabinet Committee on Privatisation (CCoP) had been in very serious discussions to sell the hotel in a bid to bolster the PIA’s finances and stop it from being privatised.
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in the course of the lease the hotel was regularly mismanaged and its facilities began to deteriorate and become outdated.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.
Up for sale?
The settlement of the Reko Diq case meant that the government was once again keen on doing something with the hotel but have also made it clear that the hotel is not up for sale.
For now, it seems that the next three years of the hotel’s fate have been sealed. The ECC had also allowed PIA-IL/ RHC to utilise the funds of $1.145 million from the available balance as bridge financing to commence the re-opening work at the hotel.
The committee had 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.
However, with a lot of fist thumping and disagreement over what should be done with the hotel, the plan for redevelopment seemed to be a way to quell the rumours that the government was trying to sell off the hotel.
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In the most recent wind in the adventure encompassing the Roosevelt Inn in Manhattan, Pakistan Worldwide Carriers has rented the structure to a New York City firm for a time of three years.
The rent has been endorsed with the New York City Wellbeing and Emergency clinics Organization which will give private offices to ‘lodging travelers’ in the inn.
The inn has for some time been a valued ownership of Pakistan’s public transporter which has been losing cash hand over fist from each conceivable bearing for a really long time now. Back in December 2022, the Bureau Board of trustees on Privatization (CCoP) had been in intense conversations to offer the inn in a bid to support the PIA’s funds and prevent it from being privatized
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