The current plan for the Roosevelt Hotel has been in the works for two years
he PIA’s Roosevelt Hotel in Manhattan was once again a topic of discussion at a meeting of the Cabinet Committee on Privatisation (CCoP), which has recommended the redevelopment of the hotel. Last month, the federal cabinet approved the CCoP’s recommendation to lease the hotel in the United States. The CCoP has instructed the Privatisation Commission (PC) to appoint a financial adviser to oversee the redevelopment of the historic hotel, which was forced to shut down due to losses incurred during the Covid-19 pandemic
During the pandemic, the hospitality industry suffered great financial losses globally. The already declining fiscal account of PIA couldn’t withstand another blow. After an annual loss of $37 million, the Roosevelt had to shut down in December 2020.
The Roosevelt Hotel, owned by Pakistan International Airlines since 1979, has a long and complex history. The grand 19th Century building in New York was purchased by developer Paul Milstein in 1978 and leased to the PIA and Prince Faisal bin Khalid bin Abdulaziz Al Saud the following year for $35 million. The lease included an option for the PIA and Prince Faisal to purchase the hotel for $36.5 million after 20 years, which they exercised in 2000. However, the hotel has been mismanaged and its facilities have deteriorated over the years, leading to suggestions of an imminent sale.
Although the Roosevelt is a symbol of PIA’s golden age, the cost of reviving it is unbearable for the PIA after the loss of revenue during the pandemic.
The cabinet’s announcement has finally brought an end to the uncertainty about the future of the Roosevelt and the rumours surrounding its sale. The announcement may also be intended to quell rumours of a sale, which could be problematic for a number of reasons. The sale of state-owned assets is often a sensitive issue, especially in countries where there is a perception that such sales are carried out in an opaque or corrupt manner. Additionally, the PIA has a long and illustrious history, and the sale of the Roosevelt Hotel could be viewed as a symbolic blow to national pride. By choosing redevelopment instead, the government may be hoping to avoid such negative associations.
It seems that the decision to redevelop the Roosevelt Hotel is driven by a combination of financial and political considerations. From a financial perspective, the hotel has struggled in recent years and the redevelopment plan is likely seen as a way to turn its fortunes around. However, there are also likely political motivations at play. The PIA is a state-owned enterprise and the government may see the redevelopment of the hotel as a way to demonstrate its commitment to supporting and reviving struggling national assets.
The proposed redevelopment would involve transforming the hotel’s land into a mixed-use complex, primarily consisting of an office tower, retail space and condominiums. The redevelopment plan may also be an attempt by the Pakistani government to counter rumours that financially troubled PIA would sell the hotel
The hotel has been mismanaged. Its facilities have deteriorated over the years, leading to suggestions of an imminent sale.
The grand hotel, named after President Theodore Roosevelt, has witnessed nearly a century of American history. It served as a backdrop in iconic movies such as The Irishmen and is a fixture in the Manhattan skyline. After its shutdown in 2020, the public has advocated for it to be designated a New York City landmark.
The closure of the Roosevelt rendered 431 employees jobless after their initial furlough in the early months of the pandemic. This was followed by protests from employees’ unions, which have added further pressure to the reopening of the hotel. Many businesses and government bureaucrats, including President Donald Trump, made offers to purchase it.
Hotel Roosevelt is just one of the many idle properties owned by the Pakistani government that have sat unused for years due to a collapsed managerial setup. In December, the federal cabinet decided to address two old Chancery buildings located on Massachusetts Avenue in Washington that have been vacant since April 2003.
It seems that a joint venture project will be established for the mixed-use development of the Roosevelt Hotel. After the appointment of a financial adviser, a firm will be hired to lease the hotel. However, it is unclear how long the hiring process will take and there are concerns from local authorities who want to turn the Roosevelt Hotel into a local heritage site. Earlier last year, during a press conference in Lahore, Aviation and Railways Minister Khawaja Saad Rafique had unequivocally denied any idea of selling the hotel. The government is adamant to retain ownership, but due to the high cost of reviving the hotel, plans to lease it prevailed.
Recommendations for leasing the Roosevelt Hotel began in July 2020, but the appointment of a financial adviser was delayed due to the ongoing Reko Diq case. Now that the case has been settled, there is no external pressure.
The PIA may have a brighter future if the lease transition goes smoothly and there is no corruption. At a press conference, Saad Rafique shared the government’s plans to revitalise the PIA, including negotiating the removal of sanctions in the European Union, forming joint ventures with other international airlines and increasing the number of planes in operation from 27 to 40. While the PIA may never see its golden age again, it can certainly strive to improve its situation.
The current plan for the hotel has been in the works for two years. In 2018, the Cabinet Committee on Privatisation (CCoP) had directed the Aviation Division to present the possibility of constructing high-rise hotels on the land of the Roosevelt Hotel in New York on a public-private partnership basis. In July 2020, the CCoP directed the Privatisation Commission (PC) to initiate the process of appointing a financial adviser to undertake the leasing of the Roosevelt site for a joint venture project for a potential mixed-use development. However, the plan was delayed due to the Reko Diq case. Now that the case has been settled, the CCoP has reaffirmed its earlier decision on the Roosevelt Hotel, according to the finance ministry.
The writer is a freelancejournalist