Home Latest News Roosevelt Hotel Leased to NYC at $220mn for Three Years

Roosevelt Hotel Leased to NYC at $220mn for Three Years

Railways minister says funds will help clear hotel’s liabilities and provide much-needed revenue for treasury

by Staff Report

Courtesy Roosevelt Hotel

The government on Sunday announced the Pakistan International Airlines (PIA)-owned Roosevelt Hotel has been leased to the New York City Administration at $220 million for the next three years, ensuring the property does not have to be immediately sold.

“After various exhaustive exercises, we finally succeeded in finding a way to overcome the challenges to the country’s most precious asset in New York,” Railways and Aviation Minister Khawaja Saad Rafique told media in Lahore. “We have signed a contract with the NYC administration that will operate the hotel for a period of three years. Under this contract, we will receive $220 million that will enable us to clear the hotel’s various liabilities, as well as earning handsome revenue for our country’s treasury,” he said, adding the contract had also prevented the hotel from being declared a landmark that would have made potential future improvements or sale more difficult.

“Had the hotel become a landmark, we would have been restricted to utilizing it solely as a hotel,” he explained, adding that now it could be adapted for multi-purpose use. According to Rafique, the contract inked between PIA and the NYC government includes a guaranteed-income for one-and-a-half years, with the possession of 600 of its 1,025 rooms already placed at the NYC government’s disposal. The NYC authorities would take possession of the remainder, he said, within 30 days.

Further explaining the contract’s details, the minister said the room charges for the first year would be $202, increasing to $205 in the second year and $210 in the third year. The hotel, he said, would be returned to PIA after three years in the same condition as it is today.

Summarizing the hotel’s fall from grace, Rafique said it was shuttered in 2020 at the peak of the COVID-19 pandemic when its expenditures stood at $25 million annually. Prior to that, he said, the hotel had liabilities of $20 million, while the hotel union had been demanding dues of $66 million. “Keeping all this in view, our predecessors [PTI-led government] had decided to run the hotel under the public-private-partnership, which was the right decision,” he said, regretting it had not been achievable at the time. “The PDM government inherited this issue and finally resolved it,” he added.

The contract, said the minister, also protected Pakistan from liabilities of 479 employees as it called for only 77 to remain employed while laying off the remaining 402. “It is really a wonderful contract that has benefitted our government,” he claimed.

Outsourcing airports

During his media interaction, the minister said it had been decided to outsource the operations of airports in Karachi, Islamabad and Lahore. “Islamabad would be the first to be outsourced—the most feasible model being practiced by most developed countries,” he said, explaining the process would be conducted by the International Finance Corporation (IFC)—a subsidiary of the World Bank. “We have learnt that the IFC has been approached by over 20 foreign companies based in the U.S., Turkey, China, U.A.E. and other developed countries” to proceed on this, he said, stressing any contract would be finalized through a competitive bidding process. “We will give consultancy payment to the IFC in a way that suits us. The minimum of the total will be paid to the IFC, while the remainder will be made subject to the success of the outsourced project,” he said, adding that Pakistan would resume control of operations once the outsourcing contract expired.

The minister also announced that the Civil Aviation Authority (CAA) had completed runway upgrade and other development works at the Quetta, Lahore and Faisalabad airports. He said direct Haj flights had initiated from Quetta, adding that the Gwadar International Airport would become operation by the end of September. The government also plans to provide international airports at Sukkur and Dera Ismail Khan, he added.

Related Articles

Leave a Comment