The Federal Aviation Minister Ghulam Sarwar has said that the Government has no plan for selling Roosevelt Hotel, a New York City landmark, owned by the Pakistan International Airlines (PIA).
Named after the American President Theodore Roosevelt, the hotel has featured in several big-ticket Hollywood productions and overtime acquired an iconic status in Manhattan.
He rejected all the news items circulating in certain quarters regarding the sale of Roosevelt hotel and termed it as speculation, a news release said.
Such misleading news was nothing more than political point-scoring, he added.
Explaining the trajectory of PIA’s Roosevelt Hotel, a prime real estate located in the heart of Manhattan, the financial hub of the world, he said the Pakistan International Airlines (PIA) had acquired the 19-story building in 1979 on the partnership, from its own profits and as a part of PIA’s diversification strategy.
Later on, in 1999 it acquired 100 percent shareholding from its own resources and without any aid from the government of Pakistan.
He said the property had more than a thousand rooms and having an area of 43,313 square feet, covering a whole city block centrally located at the heart of the Manhattan area of New York.
Right after fully acquiring the hotel, the minister said the PIA undertook the renovation of the hotel which led to profitability and continued till 2018.
However since 2019, the financial position of Roosevelt hotel has been in the red, despite the fact that it was run by the world’s premier Hotel Management Company ‘Interstate’, he added.
He said the main reason for its downfall was the progressive decline of its infrastructure and dilapidated room conditions, further reinforced by the global COVID-19 Pandemic.
The minister said the Hotel was currently operational and had valid contracts till December this year with various other airlines. Multiple options were being considered for its future and all decisions were made collectively by the hotel’s board and the government of Pakistan, he added.
He reiterated that no individual or company or business concern could or would be able to influence the decisions or its working. “Every decision shall be taken collectively involving all tiers of the government, with transparency and accountability.”
The last renovation of Roosevelt hotel was done some 25 years ago and at the moment, its financial performance was in turmoil.
As per estimations, the cost of the bare minimum and basic renovation was $32 million, whereas full renovations required $110 million. The initials plan for its renovation was devised with a few model rooms also made ready for review and approval.
However, the COVID-19 Pandemic posed a big challenged and severely affected the Travel and Hotel Industry Globally, with Roosevelt hotel, being in the eye of the storm, no exception.
In Manhattan alone, 183 Hotels have closed down. With limited or no flights to the city during peak COVID days and almost zero occupancies, Roosevelt’s cash flows and revenue streams were badly affected. The hotel management still tried to utilize the hotel by providing services to Medial staff at discounted rates, but with them gone now, the conditions are bad.
The Roosevelt hotel’s management had obtained a loan of $160 million from JP Morgan Bank, the payments of which were being made regularly by the hotel management from its own revenue stream.
By the year 2020, the accumulated loan amount payable reduced to $105 million, making regular and timely payments without any default.
Citing the overall situation of the travel and hotel industry, the lender sold off its liabilities to another company which was interested in acquiring the Hotel for itself. It started calling back the loan during these times and attempting a take-over of the property. This was unacceptable to the PIA and the government of Pakistan.
The PIA management, sensing the possible outcomes, convinced the government to intervene by paying off the loans in one go and getting the asset secured for the country.
Deliberations were made in that regard and finally on the recommendations of the Ministry of Aviation and Ministry of Finance, the government authorized the National Bank of Pakistan to take up this loan liability against the hotel, freeing it from any foreign influence or control.