Following media reports on the closure of Roosevelt Hotel, National Accountability Bureau (NAB) Chairman retired Justice Javed Iqbal on Tuesday ordered the director-general of NAB Rawalpindi to launch an investigation into the PIA-owned asset in New York.
“The investigation will review why there was a need to close down Pakistan’s national asset Roosevelt Hotel located in central New York,” said a press release issued by the accountability watchdog. It also said that the bureau will investigate the reasons behind the alleged losses in thousands of dollars to the government.
NAB further said it will identify those responsible for allegedly neglecting their national duties to turn the Roosevelt hotel into a profit-making entity.
Roosevelt Hotel announces closure
Last week, PIA’s iconic Roosevelt Hotel announced that it will close its doors to customers permanently from October 31 due to financial constraints.
“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,” the notice on the hotel’s website said.
“We have been honoured 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,” it said.
The hotel said that it was working on alternatives for guests with a future reservation. “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.”
The statement was later removed from the website and the hotel’s front desk is not accepting reservations post-October 31. When contacted, the staff said that the hotel is being closed but refused to share further details in this regard.
‘No plans to sell Roosevelt Hotel’
On Monday, Aviation Minister Ghulam Sarwar Khan termed the reports regarding the sale of the hotel as “speculative” and “misleading” and said that the government has no plans to sell the hotel.
Profits began to slump in 2019, putting the financial position of the Roosevelt Hotel in the red, Khan said. He explained that the main reason for its downfall was a deteriorating infrastructure, which was further compounded by the pandemic.
The minister said the hotel was currently operational and had valid contracts till December this year with various other airlines. Multiple options were being considered for its future and all decisions were made collectively by the hotel’s board and the government of Pakistan, he added.
The Roosevelt Hotel
The hotel, constructed by Niagara Falls businessman Frank A Dudley, opened its doors for guests on Sept 23, 1924. It was managed by the United Hotels Company.
Named after the American President Theodore Roosevelt, the hotel has featured in several big-ticket Hollywood productions and over time acquired an iconic status in Manhattan.
In 1979, the national carrier leased the hotel through its investment arm, PIA Investments Ltd, with an option to purchase the building after 20 years. Saudi Arabia’s Prince Faisal bin Khalid bin Abdulaziz Al Saud was a key investor in the 1979 deal.
In 1999, after the completion of the 20-year period, PIA bought the hotel for $36.5 million.
In 2005, the airline agreed to buy out its Saudi partner in exchange of the prince’s share in Hotel Scribe in Paris at the cost of $40 million and PIA’s share in the Riyadh Minhal Hotel.
The national carrier since then has held a 99% share in the hotel while the Saudis hold only 1% stake.
As per estimations, the cost of basic renovation amounted to $32 million, whereas full renovations required $110 million.
Previously, Roosevelt Hotel’s management had taken a loan of $160 million from the JP Morgan Bank and had been making regular payments on its own. This year, the payable amount had reduced to $105 million. The lender, however, sold off its liabilities to another company which was interested in acquiring the hotel.
The PIA management was then able to convince the government to intervene by paying off the loans in one-go and securing the asset.