The government has decided to revive the plan for leasing out the site of the Roosevelt Hotel in New York to set up a joint venture project for prospective mixed-use development and agreed to explore the option of reopening the hotel following protest from the employees union.
According to sources, the Cabinet Committee on Privatisation had approved the leasing of the Roosevelt Hotel, as the best-suited mode of privatisation and directed the Privatisation Commission (PC) on July 2, 2020 to initiate the process for appointing a financial adviser.
However, the PC halted the process for the appointment of the financial adviser because of the litigation by the Tethyan Copper Company (TCC) over the Reko Diq mines, the sources told The Express Tribune.
Read: 'Profitable for 99 years, Roosevelt suffered loss of $1.5 million last year only'
Later, the sources added, after out-of-court settlement with the TCC, the PC was asked to reinitiate the process after the Office of the Attorney General for Pakistan advised the Aviation Division to go ahead with the appointment of the financial adviser.
The Roosevelt Hotel is owned by the Pakistan International Airlines (PAI) through a PIA-Investment Limited. The PIA-IL holds its stakes through a subsidiary, registered in the British Virgin Islands. The hotel, located at a highly priced location, was closed in December 2020.
The Aviation Division had submitted a summary for the Economic Coordination Committee (ECC) of the cabinet on ‘Challenges to Roosevelt Hotel, New York, Property of PIA-Investment Limited (PIS-IL) and Way Forward’ with the request for an in-camera session on the subject.
The aviation secretary, in his capacity as Chairman PIA-IL Board, briefed the ECC in a recent meeting that the hotel business had been badly affected because of the Covid-19 pandemic around the world, forcing the PIA-IL to shut down the hotel.
Also read: Roosevelt Hotel closed for good
The Aviation Division further shared two serious issues facing PIA-IL management – one related to illegal demand from the union employees and the other was the issue of land marking of Roosevelt Hotel Corporation (RHC).
It was stated that the aviation secretary along with PIA-IL Board members held discussions with all concerned, led by Pakistan’s Ambassador to the US. The post-visit report was also submitted to the Prime Minister’s Office on May 23, 2022.
The Prime Minister’s Office then directed the aviation secretary to brief the PIA-IL board of directors on the RHC affairs, firm up the proposal and presented it at the competent forum for further deliberations.
Subsequently, after thorough deliberation on May 31, 2022, it was proposed that in view of foregoing onerous union demands, and to mitigate the risk of landmarking, the government should reconsider its earlier decision regarding permanent closure of the hotel.
The PIA-IL and the RHC were asked to explore the option of re-opening the hotel either on its own or through a third-party short-term leasing arrangements. After due diligence, the proposal would be taken up at the competent forum.
Meanwhile, the PIA-IL and the RHC would continue negotiations with the union, and try to restore the status quo. The PC was also requested to expedite its earlier decision of financial leasing of the hotel site for setting up a joint venture project for mixed-use development.
On July 16, the ECC directed the Aviation Division to submit details of the cost of reopening of the hotel. The aviation secretary informed the ECC that the tentative cost of re-opening was $3.29 million, adding that the exact cost could be available, once the bids were called.
The Aviation Division also proposed that representatives of the finance and the law divisions might also be included in the team of the PIA-IL management, which would hold negotiations with the union.
The ECC considered the summary submitted by Aviation Division on ‘Challenges to Roosevelt Hotel, New York, Property of PIA-Investment Limited (PIA-IL) and Way Forward’ and approved the proposals of exploring option to reopen the hotel.