RAWALPINDI: No proposal is under consideration to sell the PIA-owned Roosevelt Hotel in New York, Aviation Minister Ghulam Sarwar Khan said on Monday. “All reports circulating in the media are nothing more than speculation and political point-scoring,” he added.
The minister said the hotel’s management had taken out a loan of $160 million from JP Morgan bank and was making regular payments from its own revenue stream. The balance outstanding at the moment is $105m.
However, the hotel ran into financial trouble after the onset of the Covid-19 pandemic, giving the lender a pretext to sell off its liabilities to another company. That firm has now set its sights on purchasing the hotel. It even attempted a takeover of the property, but the Pakistan government put its foot down and decided to take the matter into its own hands, Mr Sarwar said.
Sarwar says multiple options being considered for the future of the asset
“The PIA management persuaded the government to intervene by paying off the loans at one go and get the asset secured for the nation.”
The government sought advice from the finance and aviation ministries. After receiving the advice, the government authorised the National Bank to take up this loan liability against the hotel and free it from any foreign influence or control.
“The Roosevelt Hotel is currently operational and has valid contracts till December this year with a number of airlines. Multiple options are being considered for its future and all decisions are made collectively by the hotel’s board and the Government of Pakistan,” the aviation minister said. He held out an assurance that no individual or business concern would be able to influence the government’s decision.
The Roosevelt Hotel is a prime real estate located in the heart of Manhattan, the financial hub of New York. PIA had acquired this 19-storey building in 1979 on partnership and as a part of its diversification strategy.
In 1999 it acquired 100 per cent shareholding from its own resources and without any help from the government. The hotel has more than a thousand rooms and has an area of 43,313 square feet, covering a whole city block.
After fully acquiring the hotel, PIA undertook its renovation. After refurbishment it started making profit after a long time and continued doing so till 2018. But the onset of the coronavirus disease brought doom to the hotel and tourism sector and Roosevelt Hotel was no exception.
The main reason for its decline is the obsolescence of its infrastructure and depleted room conditions.
Published in Dawn, October 13th, 2020