What are the details of New York's Pakistani Hotel deal?

''New York's 'Pakistani Hotel', $220 million deal and objection from Trump's Indian-origin advisor''

The Roosevelt Hotel is located between 45th and 46th Streets in the heart of Manhattan, New York

What are the details of New York's Pakistani Hotel deal?

Article Description

Author, Munza Anwar

Position, BBC Urdu, Islamabad

Dated, 05/12/2024

Pros of the Situation:

1. High-Value Deal ($220 Million): The deal indicates a significant financial transaction, showcasing the hotel's value and potential in the real estate market.

   

2. Increased Visibility: The controversy, involving both the hotel and a high-profile advisor, brings attention to the property, potentially attracting other investors or stakeholders.

   

3. Strategic Location: Being in New York, the hotel stands to benefit from the city's real estate and hospitality market, which is known for high demand and lucrative opportunities.

4. Cultural Significance: The name ‘Pakistani Hotel’ may appeal to a niche market, attracting culturally inclined tourists or investors interested in diversity.

Cons of the Situation:

1. Legal/Political Hurdles: The objection from Trump's Indian-origin advisor may lead to delays, legal challenges, or the deal being scrutinized more closely, affecting its completion.

2. Public Controversy: Political connections and objections may generate negative publicity, which could deter potential investors or customers.

3. Market Uncertainty: The controversy might introduce instability in negotiations, impacting the final sale price or conditions.

4. Cultural Sensitivity Issues: The involvement of political figures with cultural ties might complicate public perception and relations.

                                                                              

The Roosevelt Hotel, built 100 years ago in the heart of Manhattan, New York City, USA, is once again in the news.

This is due to criticism by the Indian-origin advisor appointed by the new institution recently announced by the newly elected US President Donald Trump to improve government performance, under which the Pakistani government expects to receive $220 million from the state of New York over three years.

It may be recalled that in May 2023, an agreement was signed between Pakistan International Airlines-Investment Limited (PIA-IL) and the New York City Government and the 1047-room Roosevelt Hotel owned by the Pakistani government was acquired on rent for a period of three years for $220 million.

However, a few weeks ago (November 14), newly elected US President Donald Trump, in order to reduce government spending and adopt austerity, chose Indian-origin billionaire businessman Vivek Ramaswamy for his government’s new ‘Department of Government Efficiency (DOG)’ along with X owner Elon Musk, who has strongly criticized the Roosevelt Hotel deal with X, calling it ‘crazy.’

Ramaswamy wrote that ‘This hotel, run with the help of taxpayers for immigrants, is owned by the government of Pakistan, which means that New York taxpayers are paying a foreign government to house immigrants in our own country.’

Elon Musk wrote ‘crazy’ in response to his post.

The BBC has tried to find out how this hotel located in New York came to be owned by Pakistan and why there was a need to rent it out.

Vivek Ramaswamy slams Roosevelt Hotel deal on X, calls it 'madness' Roosevelt: 

'Pakistani' hotel in New York

It has been a century since the establishment of the Roosevelt Hotel in New York. It was inaugurated on September 23, 1924. At that time, $12 million was spent on the construction of this hotel, named after US President Theodore Roosevelt. The hotel was also connected to New York’s Grand Central Station through a secret underground passage.

In 1979, PIA, together with Saudi Arabia’s Prince Faisal bin Khalid bin Abdulaziz Al Saud, acquired the hotel on lease. The terms of this lease also included a clause that after 20 years, if PIA wanted, it could also buy the hotel building.

Then in 1999, PIA took advantage of this clause and bought the hotel building for $36 million. Before PIA bought the hotel building, it had to fight a long legal battle with the hotel’s then owner, Paul Milstein.

Paul Milstein believed that the hotel was worth much more. Earlier in 2005, PIA bought 99 percent of Roosevelt's shares in a deal with a Saudi prince, leaving the Saudi prince with only one percent.

In 2007, PIA began the renovation and renovation work of the hotel, which cost $65 million. After that, PIA also seriously considered selling the hotel to cover its financial losses, but this decision was later abandoned.

In 1979, PIA acquired the hotel on lease in collaboration with Saudi Arabia’s Prince Faisal bin Khalid bin Abdulaziz Al Saud.

Why was the hotel leased?

PIA spokesperson Abdullah Hafeez told the BBC that when the Covid pandemic broke out in 2020, the government decided to close the hotel “because it was better to keep it closed than to run it.”

However, in 2023, an agreement was reached with the New York City Government and the Hotel Union, which was approved by the Pakistan Economic Committee (ECC) in May 2023, and 1025 rooms of the hotel were leased for three years.

The spokesperson said that the agreement with the New York government included that since the Roosevelt Hotel is very old, they (the City State of New York) would do at least as much repair work as was needed and an amount of $200 per room per night would be paid.

Speaking to the BBC, Pakistan’s then Federal Minister for Aviation Khawaja Saad Rafique said that the Roosevelt Hotel closed in 2020 due to Covid and he was told that since the hotel is almost 100 years old, it would have cost the Pakistani government a lot to run it.

According to him, ‘there was pressure at that time to sell the hotel’ but he refused because ‘if it was sold quickly, it would not have fetched a better price and there were also legal issues.’

Khawaja Saad Rafique says that ‘nature created an opportunity for us, the New York City administration wanted hotels for immigrants, they contacted us and thus a three-year agreement was reached, according to which the Pakistani government got $220 million as a lease.’

These were the immigrants who were decided to be granted citizenship and the Roosevelt was among the places chosen for these people to live (until they got citizenship). And thus the entire hotel was booked for three years.

The former minister says, “This deal did not cost the hotel any money and at the time the hotel was closed, it was costing about $25 million, including employee salaries, lease payments, interest and taxes, etc.”

According to him, “As a result of this deal, Pakistan will save six to seven million dollars even after paying all the expenses.”

It takes only five minutes to get to Times Square and Broadway from this hotel

Criticism of the agreement: ‘The new administration cannot cancel this deal’

Regarding Vivek Ramaswamy’s criticism of the agreement, Khawaja Saad Rafique says, ‘The new administration cannot cancel this deal.’

He says, ‘This agreement is binding for 14 months, which have passed and four months have already passed. Its total period is three years, but if either party, we or the New York administration, wants to vacate the hotel, then the agreement includes a four-month notice.’

It should be remembered that New York’s black mayor, Eric Adams, belongs to the Democratic Party, which is opposed to newly elected President Donald Trump.

The BBC has sent its questions to the mayor of New York and the city administration, but we have not received any response by the time of writing.

On former Republican presidential candidate Vivek Ramaswamy’s statement that ‘American people’s money is going to the Pakistani government’, former aviation minister Khawaja Saad Rafique says that it was the policy of the US government. ‘We did not tell them at gunpoint to take our hotel and house immigrants here.’

‘The New York administration itself contacted us, we got a good business deal, so we got support.’

He says that ‘the New York government took more than 80 hotels for immigrants at that time and our hotel was also one of them.’

According to an article published in the New York Post on October 9, 2024, about 150 hotels in the city are currently sheltering immigrants.

According to the article, the use of hotels ‘as shelters’ by the New York city administration to house immigrants will continue in the near future.

The New York Post claims that the organization created for the homeless is trying to reach agreements with hotels to provide 14,000 rooms to shelter migrants until at least next year.

Related Topics

#History #Pakistan #PIA_Plane_Crash #USA