ISLAMABAD: The federal government, after passing six long years, has finally taken a
big decision to redevelop the site of Pakistan International Airlines’ owned asset
Roosevelt hotel, New York for commercial use, it was reliably learnt on Wednesday.
According to sources of the Ministry of Privatization, the federal cabinet has decided to
redevelop the site of PIA owned asset Asset-Roosevelt Hotel, New York into a mixed
use of primarily office tower over retail and condominium after closing the hotel.
Similarly, the federal cabinet has also given a go ahead to initiate the process of hiring
of the financial advisor (FA) which was pending from the last two years. Moreover, the
cabinet has also sought submission of a progress report from the Privatization
Commission within three months.
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 Abdul Aziz 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facilities began to deteriorate and become outdated.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,
every time 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.
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 privatization 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.
“Owing to the litigation in British Virgin Island (BVI) court’ in the context of Reko Diq &
Tethyan. Copper Co. (TCC), the matter of leasing out the Roosevelt Hotel was put on
hold in 2021,” said sources.
They added that the leasing of Roosevelt Hotel New York site will be used for setting up
a joint venture project for prospective mixed-use development.
Sources said that the Aviation Division has demanded from the Privatization
Commission to take a decision regarding the PIA owned asset Roosevelt Hotel New
York as early as possible. They said that
Earlier, the National Accountability Bureau (NAB) had launched an inquiry against the
sale of Roosevelt hotel on cheap rates in 2020.