No intention to sell Roosevelt Hotel in New York: Aviation Minister
ISLAMABAD: Minister of Aviation Ghulam Sarwar Khan has said there is no agenda or program under consideration to sell or dispose off the iconic Roosevelt Hotel in New York.
The federal minister dismissed all news circulating in certain quarters as speculation and nothing more than political point-scoring. Explaining the trajectory of PIA-owned Roosevelt Hotel, a prime real estate located in the heart of Manhattan, he said that PIA had acquired this 19-storey building in 1979 on partnership from its own profits and as a part of its diversification strategy.
In 1999, PIA acquired 100 percent shareholding from its own resources and without any aid from the government. The hotel was renovated and went into profitability until 2018. However, since 2019 the financial position of Roosevelt Hotel has been in the red despite being run by the world’s premier hotel management company Interstate.
The main reason for its downfall is declining infrastructure and dilapidated room conditions, further reinforced by the global COVID-19 pandemic. The last renovation was done in 1995 and due to severe weather conditions, its financial performance was in turmoil.
As per estimations, the cost of 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.
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. With limited to no flights to the city during peak COVID days and almost zero occupancy, Roosevelt’s cash flows and revenue streams were badly affected.
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 2020 the accumulated loan amount payable reduced to $105 million.
However citing the overall situation of travel and hotel industry, the lender sold off its liabilities to another company which was very much interested in acquiring the hotel for itself and attempting a takeover of the property.
This was unacceptable and PIA’s management convinced the government to intervene by paying off the loans and getting the asset secured for the country. Deliberations were made in this regard and the government authorised National Bank of Pakistan to take up this loan liability against the hotel, freeing it from any foreign influence or control.
On question of closing down of Roosevelt Hotel, the federal minister said that the hotel is currently operational and has valid contracts till December this year with various other airlines. He said that multiple options are being considered for its future and all decisions are made collectively by hotel’s management and the Government of Pakistan.
He further reiterated that no individual or company or business concern can or will 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, he said.