Islamabad :“There is no agenda or program under consideration of the Government to sell or dispose off the iconic Roosevelt Hotel New York” says Minister of Aviation Mr. Ghulam Sarwar Khan, further adding that all the news circulating in certain quarters as speculation and nothing more than political point scoring.
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 that PIA had acquired this 19 storey building, in 1979 on 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. The property has 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 Manhattan area of New York. Right after fully acquiring the hotel, PIA undertook renovation of the hotel and it went into profitability straight away which continued till 2018.
However since 2019, the financial position of Roosevelt Hotel has been in the red, despite the fact that it is run by World’s premier Hotel Management Company ‘Interstate’.The main reason for its downfall is progressive decline of its infrastructure and diapleted room conditions, further reinforced by the global COVID-19 Pandemic. It is worth mentioning here that the last renovation of Roosevelt Hotel was done in 1995. Due to severe weather conditions and last renovationundertaken some 25 years ago, its financial performance was in turmoil.
As per estimations, the cost of bare minimum and basic renovation was USD 32 Million whereas full renovations required USD 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 to no flights to the city during peak COVID days and almost zero occupancy, 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.
It would be worth mentioning here that Roosevelt Hotel’s management had obtained a loan of USD 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 USD 105 Million Dollars, making regular and timely payments without any default.
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. It started eyeing at calling back the loan during these times and attempting a take over of the property. This was unacceptable to PIA and Government of Pakistan.
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 this regard and finally on the recommendations of Ministry of Aviation and Ministry of Finance, The Government of Pakistan authorized 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, he said that the Hotel is currently operational and has valid contracts till December this year with various other airlines. Multiple options are being considered for its future and all decisions are made collectively by Hotel’s Board and the Government of Pakistan. He further reiterated that no individual or Company or business concern can or will be able influence the decisions or its working. Every decision shall be taken collectively involving all tiers of the Government, with transparency and accountability.