Pakistan leases Roosevelt Hotel in New York City for $220 million

By Staff Reporter

ISLAMABAD: Pakistan International Airlines (PIA) has leased its Roosevelt Hotel in New York City to the New York City Administration for three years for $220 million, a minister said Sunday.

Minister for Railways and Aviation Khawaja Saad Rafique said a contract was signed by the government and the NYC administration to lease out the country’s most valuable asset in the United States.

“After extensive efforts, we have successfully found a solution to safeguard our country’s most valuable asset in New York. We have signed a contract with the NYC administration, allowing them to operate the hotel for three years,” the minister said at a news conference held in the eastern city of Lahore. “In exchange, we will receive $220 million, which will help clear the hotel’s liabilities and generate substantial revenue for our national treasury.”

Rafique said the lease contract has protected the hotel from potential landmark status, which would have imposed restrictions on its use.

“By averting this threat, we can now explore the possibility of transforming the 19-storey building into a high-rise structure of up to 40-storey, expanding its business potential,” the minister added.

The three-year lease includes a guaranteed income for the first one-and-a-half years. Over the past few days, 600 out of the total 1,025 rooms have been handed over to the NYC government, with the remaining 425 rooms set to be transferred within the next 30 days.

The room charges will start at $202 for the first year and increase gradually to $205 in the second year and $210 in the third year. After the lease period, the government of Pakistan, represented by PIA and the Civil Aviation Authority, will regain control of the hotel in its current condition.

The hotel had been closed in 2020 due to the COVID-19 pandemic, incurring an annual expense of $25 million during its closure. Furthermore, the hotel faced an existing liability of $20 million, and the powerful NYC hotel union had demanded $66 million. By leasing the hotel, the government has effectively resolved these financial burdens.

The minister said the previous Pakistan Tehreek-e-Insaf government made the right decision to operate the hotel through a public-private partnership, however, due to certain obstacles, they were unable to execute the plan. “The subsequent PDM government inherited this matter and successfully resolved it.”

In addition to saving the government from the liabilities associated with 479 employees, the contract will result in a workforce reduction, with only 77 employees remaining employed at the hotel.

The aviation minister also shared plans to outsource the operations of three major airports in Karachi, Islamabad, and Lahore.

The move aims to adopt an efficient model widely practiced in developed countries, with Islamabad being the first airport to undergo the outsourcing process.

The International Finance Corporation (IFC), a subsidiary of the World Bank renowned for its expertise, will facilitate the competitive bidding process for selecting a suitable company to manage the airports.

“Outsourcing does not mean privatization … These airports will be handed over to international operators for a certain period, a practice followed by other countries worldwide. Once that period ends, the airports will be returned to Pakistan with all the value addition done by the companies,” Rafique said.

“No CAA (Civil Aviation Authority) employee would lose their job, but adjustments would be made without affecting their salaries or perks.”

Copyright © 2021 Independent Pakistan | All rights reserved

Pakistan leases Roosevelt Hotel in New York City for $220 million

Pakistan leases Roosevelt Hotel in New York City for $220 million

By Staff Reporter

ISLAMABAD: Pakistan International Airlines (PIA) has leased its Roosevelt Hotel in New York City to the New York City Administration for three years for $220 million, a minister said Sunday.

Minister for Railways and Aviation Khawaja Saad Rafique said a contract was signed by the government and the NYC administration to lease out the country’s most valuable asset in the United States.

“After extensive efforts, we have successfully found a solution to safeguard our country’s most valuable asset in New York. We have signed a contract with the NYC administration, allowing them to operate the hotel for three years,” the minister said at a news conference held in the eastern city of Lahore. “In exchange, we will receive $220 million, which will help clear the hotel’s liabilities and generate substantial revenue for our national treasury.”

Rafique said the lease contract has protected the hotel from potential landmark status, which would have imposed restrictions on its use.

“By averting this threat, we can now explore the possibility of transforming the 19-storey building into a high-rise structure of up to 40-storey, expanding its business potential,” the minister added.

The three-year lease includes a guaranteed income for the first one-and-a-half years. Over the past few days, 600 out of the total 1,025 rooms have been handed over to the NYC government, with the remaining 425 rooms set to be transferred within the next 30 days.

The room charges will start at $202 for the first year and increase gradually to $205 in the second year and $210 in the third year. After the lease period, the government of Pakistan, represented by PIA and the Civil Aviation Authority, will regain control of the hotel in its current condition.

The hotel had been closed in 2020 due to the COVID-19 pandemic, incurring an annual expense of $25 million during its closure. Furthermore, the hotel faced an existing liability of $20 million, and the powerful NYC hotel union had demanded $66 million. By leasing the hotel, the government has effectively resolved these financial burdens.

The minister said the previous Pakistan Tehreek-e-Insaf government made the right decision to operate the hotel through a public-private partnership, however, due to certain obstacles, they were unable to execute the plan. “The subsequent PDM government inherited this matter and successfully resolved it.”

In addition to saving the government from the liabilities associated with 479 employees, the contract will result in a workforce reduction, with only 77 employees remaining employed at the hotel.

The aviation minister also shared plans to outsource the operations of three major airports in Karachi, Islamabad, and Lahore.

The move aims to adopt an efficient model widely practiced in developed countries, with Islamabad being the first airport to undergo the outsourcing process.

The International Finance Corporation (IFC), a subsidiary of the World Bank renowned for its expertise, will facilitate the competitive bidding process for selecting a suitable company to manage the airports.

“Outsourcing does not mean privatization … These airports will be handed over to international operators for a certain period, a practice followed by other countries worldwide. Once that period ends, the airports will be returned to Pakistan with all the value addition done by the companies,” Rafique said.

“No CAA (Civil Aviation Authority) employee would lose their job, but adjustments would be made without affecting their salaries or perks.”

Copyright © 2021 Independent Pakistan | All rights reserved

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