Pakistan leases Roosevelt Hotel to NYC for 3 years, sealing $220 million deal
Iconic hotel which opened in 1924 was bought by PIA in 1999
Islamabad: In a significant development, the Pakistan government has leased out its iconic asset, the Roosevelt Hotel, to the New York City (NYC) administration for a period of three years.
The three-year agreement is set to generate a revenue of $220 million for the government, Minister for Railways and Aviation Khawaja Saad Rafique announced.
Pakistan International Airlines (PIA), the owner of the historic Manhattan hotel, signed an agreement with the New York City Health and Hospitals Corporation as the NYC authorities plan to provide residential facilities to house migrants in the hotel. The decision comes after the hotel faced financial strains and was closed in 2020 due to the impact of the COVID-19 pandemic.
Details of the three-year agreement
The leasing agreement aims to save the historic Roosevelt Hotel from potential landmark status, which would have restricted its usage and development options.
Under the contract, the NYC administration will operate the hotel for three years, providing residential facilities for migrants. “The possession of 600 out of the total 1,025 rooms has already been handed over to the NYC government, with the remaining 425 rooms to be transferred within the next 30 days”, Rafique told reporters. The room charges will be US$202 for the first year, US$205 for the second year, and US$210 for the third year, he said. The hotel will be returned to the government of Pakistan in the same condition as it is today after the three-year term.
Minister Rafique highlighted the significance of the deal, stating that it not only generates substantial revenue but also saves the government from the liabilities associated with the hotel. He mentioned that the annual expenditures of the hotel were $25 million even during the closure and existing liabilities of $20 million. The agreement also safeguards the government from the liabilities of 402 employees, as only 77 employees will continue working under the new arrangement.
Significance of Roosevelt Hotel
The Roosevelt Hotel, named after the 26th US President Theodore Roosevelt, has been a prominent landmark on the Manhattan skyline since its opening in 1924. The iconic hotel was leased by PIA’s investment arm, PIA Investment Ltd (PIA-IL), in 1979, which eventually purchased the building in 1999. The leasing agreement marks a new chapter in its history since its closure in 2020 after nearly a century in business. The New York City administration is considering converting the Roosevelt Hotel into an emergency shelter for migrants. NYC Mayor Eric Adams announced that the city’s first asylum seeker arrival center will be located at the Roosevelt Hotel to provide migrants with access to various services and support.
The leasing of the Roosevelt Hotel comes as part of the Pakistan government’s efforts to revitalise the aviation industry and address its financial challenges.
Outsourcing and new airports planned
With the leasing of the hotel in NYC, the Pakistani aviation minister also disclosed plans to outsource the operations of three major airports in Karachi, Islamabad, and Lahore. Minister Rafique said that the airport outsourcing process will be carried out through the World Bank’s International Finance Corporation (IFC), which has received interest from over 20 foreign companies based in the US, Turkey, China, Malaysia, and other countries. As an advisor, the IFC will conduct a competitive bidding process, and the whole process will be transparent, he added.
Detailing some of the major Civil Aviation Authority (CAA) projects, he said that runway upgrades and other development works at Quetta, Faisalabad, and Lahore airports have been completed. Gwadar International Airport worth Rs 51 billion, including Rs 34 billion Chinese grant, would start operations by the end of September 2023. Moreover, the government is working on international airports in Sukkur and Dera Ismail Khan to improve air connectivity.