PIA's Roosevelt Hotel in New York Closing its Doors Permanently

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Abbas Ali
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PIA's Roosevelt Hotel in New York Closing its Doors Permanently

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Roosevelt Hotel Govt likely to extend $125m funding to PIA-IL

August 12, 2020

ISLAMABAD:
The government is likely to extend a funding of $ 125 million to PIA-IL to pay for severance of employees and debts of Roosevelt Hotel, New York, as the Board of PIA-IL Roosevelt Hotel Corporation has recommended the closure of hotel, well-informed sources told Business Recorder.

The government argues that in the backdrop of Covid-19 pandemic, the hotel industry has been severely impacted across the globe. The PIA-IL owned Roosevelt hotel in Manhattan, New York, has also experienced extreme cash flow constraints since March 2020. Chairman PIA-IL has provided detailed information in this regard relating to the financial challenges in operations of Roosevelt Hotel; potential source of funds; union issue/ dues; tenants’ affairs; future outlook and Board’s decision for GoP’s consideration and action.

Some relevant points are as follows;(i) even partial operations of the hotel are not sustainable at the moment;(ii) Roosevelt Hotel Corporation has already obtained a loan of $ 105 million from JP Morgan (lender) on an interest rate of 5.05 per cent with maturity in April, 2021.

The annual interest payment is $ 6 million approximately;(iii) JP Morgan has sold its loan of $ 68.250 million to MSD PCOF Partners XXII, LLC(MSD);(iv) selling of JP Morgan portion of loan to MSD has further complicated the situation for Roosevelt Hotel Corporation due to the following reasons;(a) for several years MSD has been expressing its desire for a JV partner in development of Roosevelt site;(b) MSD as lender, may attempt to leverage its position in achieving its ultimate goal and ;(b) MSD is also owner of the air rights in Roosevelt vicinity.

In view of the existing position, PIA-IL management is of the opinion that MSD has acquired the major portion of Roosevelt loan (by design) in order to become the sole lender, and in case of possible default, it could quickly step in and seek a foreclosure.

The current position was considered by the Roosevelt Hotel Corporation Board in its meeting held on July 3, 2020 and the Board decided that GoP be apprised of the facts and Board’s recommendations be forwarded to GoP for consideration;: (i) Roosevelt’s operations be shut down;(ii) all union and non-union employees be severed against the severance payment of approximately $ 20 million;(iii) the current debt of $ 105 million secured against a mortgage on the property, and the counter guarantee by PIA-IL, be paid forthwith ;(iv) the debt of $ 105 million and the cost of severance, if any, are Roosevelt’s liabilities / responsibilities which need to be paid/refinanced irrespective of whether the hotel is closed or operational.

In the backdrop of prevailing situation, a meeting was chaired by Advisor on Finance to Prime Minister and Revenue Dr Hafeez Sheikh last month through a video link which was also attended by the Ministers for Aviation and Privatisation , PIA etc, wherein it was decided that based on recommendations of Board of Roosevelt Hotel Corporation, Aviation Division and Privatisation would submit a joint summary to the ECC for consideration.

Chairman PIA-IL in a letter on August 8, 2020 stated that financial health of PIA-IL with existing proceeds repayment of $ 56 million to PIA-IL is not possible. He has requested GoP to provide a funding of $ 125 million to pay to PIA-IL to meet employees’ liabilities and debt.—MUSHTAQ GHUMMAN

Source: brecorder.com
Last edited by Abbas Ali on Thu Oct 08, 2020 7:36 pm, edited 1 time in total.
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Re: Closure of The Roosevelt Hotel Recommended

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Hotel Scribe Paris Opera and The Roosevelt Hotel New York City owned by PIA subsidiary PIA Investments Limited (PIAIL).

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Hotel Scribe Paris Opera.

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The Roosevelt Hotel New York City.

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Re: Closure of The Roosevelt Hotel Recommended by PIA Investments Limited (PIAIL) Board

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Pakistan okays $105mln debt settlement for PIA-owned Roosevelt Hotel

ISLAMABAD:
Pakistan’s Economic Coordination Committee (ECC) on Wednesday gave a “principled go-ahead” to the settlement of outstanding loans of the Roosevelt Hotel in Manhattan, New York, which is owned by Pakistan’s national flag carrier.

“ECC of the Cabinet has given principled go-ahead to the payment of all liabilities and responsibilities resulting from a debt of $ 105 million secured by the Pakistan International Airlines Corporation Limited (PIACL) owned Roosevelt Hotel in Manhattan, New York,” the finance ministry said in a statement.

The ECC meeting was chaired by the Adviser to the Prime Minister on Finance and Revenue, Dr. Abdul Hafeez Shaikh, who asked the Finance Division to engage with the Law Division, Aviation Division and Planning Commission to formalize the mode of payment and refinancing “as per schedule of the loan contracted by the Roosevelt Hotel to meet its financial challenges, and submit to ECC in its next meeting for formal approval.”
Media reported last month that the government planned to sell the hotel but the Cabinet Committee on Privatization (CCoP) decided against privatising it and said it would be run as a joint venture instead. The CCoP has also directed the Privatization Commission to hire a financial adviser to start the process in light of a report by accounting firm Deloitte in July 2019 recommending that “the highest and best use of the Roosevelt Hotel property is to redevelop the site into a mixed-use [property] (through joint venture) of primarily an office tower over retail and condominium.”

Source: Arab News
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Re: Closure of The Roosevelt Hotel Recommended by PIA Investments Limited (PIAIL) Board

Post by arshad.altaf »

1-Sell the hotel;
2-No, don't sell the hotel, it is a national heritage and it will be a national disgrace to sell it;
3-Don't sell the hotel as there won't be any buyer in the current atmosphere;
4-Oh, the hotel has a mountain of debt-in the tune of 100 million plus USD;
5-From the national kitty pay 105 million plus-paid;
6-Make the hotel into an office property and condominiums;
7-Who will finance it?;
8-Take another loan.
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Re: ECC Approves 142 Million Dollars to Address Financial Issues of Roosevelt Hotel

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Privatization Minister Muhammad Mian Soomro has said that Roosevelt Hotel loans will be cleared soon to prevent the lender from taking over the hotel.

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Re: PIA's Roosevelt Hotel in New York Closing its Doors Permanently on October 31, 2020

Post by Abbas Ali »

The Roosevelt Hotel New York City owned by PIA subsidiary PIA Investments Limited (PIAIL) is closing its doors permanently on October 31, 2020.

Message on hotel's official website https://www.theroosevelthotel.com/

"Due to the current economic impacts, after almost 100 years of welcoming guests to “The Grand Dame of New York” The Roosevelt Hotel is regretfully closing its doors permanently as of October 31, 2020.

We have been honored to serve alongside our wonderful staff and to be a part of our many guests’ and clients’ lives and celebrations, who have graced us over these past nine decades.

For those guests with future reservations, we are working on communicating alternative accommodations.

We have enjoyed being as much a part of our guests’ stories as we have been an integral part of the history of Midtown Manhattan since 1924."


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Re: PIA's Roosevelt Hotel in New York Closing its Doors Permanently on October 31, 2020

Post by NL »

They dragged their feet for too long and missed the good times to sell the property to someone to demolish the hotel and build a proper highrise in its place. An entire block in a prime location for highrise construction could have fetched alot more than needed to pay off that 100M loan.
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Re: PIA's Roosevelt Hotel in New York Closing its Doors Permanently on October 31, 2020

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Roosevelt Hotel website (https://www.theroosevelthotel.com/) has now stopped displaying message that informed readers about the end of hotel operations from October 31.

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Re: PIA's Roosevelt Hotel in New York Closing its Doors Permanently on October 31, 2020

Post by Abbas Ali »

Tweet by Senator Mustafa Nawaz Khokhar

"According to the details presented before the aviation committee of the senate, Roosevelt hotel has been making profit year on year for the last 15 years! Yes, COVID has hit the hospitality industry hard but this does not make the case for its disposal."



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Re: PIA's Roosevelt Hotel in New York Closing its Doors Permanently on October 31, 2020

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PIA's consolidated financial statements show that the Roosevelt Hotel contributed negligible amount in terms of annual cash flow to the airline.

https://epaper.brecorder.com/2020/10/10 ... -news.html

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Re: PIA's Roosevelt Hotel in New York Closing its Doors Permanently on October 31, 2020

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Cartoon in October 10 edition of English daily 'The Express Tribune' indicating COVID-19 role in the closure of The Roosevelt Hotel.

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Re: PIA's Roosevelt Hotel in New York Closing its Doors Permanently on October 31, 2020

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Authorities to investigate display of message informing readers about the closure of The Roosevelt Hotel from October 31 and later removal of that message from hotel's official website https://www.theroosevelthotel.com/.

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Urdu daily 'Express' (October 11, 2020, edition)

According to newspaper report:

The hotel's profit kept decreasing from year 2007 to 2016.

Hotel's profit and expenditures were equal in year 2017.

Hotel went into loss from year 2018.

Fourteen storey hotel has 1,047 rooms.

Hotel's 105 million dollars loan was paid to J.P. Morgan by the National Bank of Pakistan on Government of Pakistan directive in August 2020.

Hotel refurbishment needs 100 million dollars. The hotel urgently needs 32 million dollars to meet its expenses.

Fifty to seventy storey complex construction estimate is 500 million dollars on hotel land.

According to PIA spokesperson, Roosevelt Hotel is a very important asset of PIA. Government is studying various options for property's betterment.

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Re: PIA's Roosevelt Hotel in New York Closing its Doors Permanently on October 31, 2020

Post by Amaad Lone »

Everything in Pakistan becomes political.

If the hotel is losing money and it cannot cover its expenses even then they must run it.

Run it because somebody in the government wants the hotel to run.

Its not being run professionally.

Hotel should have been sold years ago when PIA debts could have been cleared.

Now because of those debts and interest payments, PIA has much more debt than 5 years ago.

Nobody understands, WHEN YOU DONT PAY OFF THE DEBT THE MARKUP WILL KEEP PILING UP.

Today PIA has 500 billion rupees in debt, how much was it 10 years ago??? The interest payments become a part of the loss.

Today in the depressed property market even if you sell the Roosevelt hotel for 1.5 billion dollars it will not even cover half the debt.
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Re: PIA's Roosevelt Hotel in New York Closing its Doors Permanently on October 31, 2020

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Aviation Minister Ghulam Sarwar Khan says Pakistan Government has no plan to sell The Roosevelt Hotel in New York City owned by PIA. Any decision on property’s future would be taken collectively by hotel board and government.

There is no agenda or program under consideration of the government to sell or dispose off the iconic hotel, he said.

PIA had acquired this 19 storey building, in 1979 on partnership, from its own profits and as a part of airline’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 with an area of 43,313 square feet, covering a whole city block centrally located in the heart of Manhattan, New York City.

After fully acquiring the hotel, PIA renovated the hotel and it went into profitability straight away that continued till 2018.

Since 2019, the financial position of the hotel has been in the red, despite the fact that it is run by world’s premier hotel management company 'Interstate Hotels & Resorts'. Interstate Hotels & Resorts merged with Aimbridge Hospitality in 2019.

The main reason for hotel's downfall is progressive decline of its infrastructure and dilapidated room conditions, further reinforced by the global COVID-19 pandemic.

The last renovation of the Roosevelt Hotel was done in 1995. Due to severe weather conditions and last renovation undertaken 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 initial 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 challenge and severely affected travel and hotel industry globally, with the Roosevelt Hotel, being in the eye of the storm, no exception.

Roosevelt Hotel’s management had obtained a loan of USD 160 million from American multinational investment bank and financial services holding company J.P. Morgan, 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, 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 Aviation Division and Ministry of Finance, The Government of Pakistan authorized National Bank of Pakistan (NBP) to take up this loan liability against the hotel, freeing it from any foreign influence or control.

On question of closing down of the 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 to influence decisions or its working. Every decision shall be taken collectively involving all tiers of the government, with transparency and accountability.

http://pid.gov.pk/site/press_detail/14911
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Re: PIA's Roosevelt Hotel in New York Closing its Doors Permanently on October 31, 2020

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Chairman National Accountability Bureau (NAB) Justice (Retired) Javed Iqbal has taken notice of the closure of the Roosevelt Hotel from October 31, 2020, and ordered Director General (DG) NAB Rawalpindi to investigate the matter.

The investigation will determine reasons for hotel's closure and identify individuals who failed to make it a profitable hotel.

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