The Roosevelt Hotel, an iconic establishment in Manhattan, has long been a symbol of luxury and architectural grandeur. Established in 1924 and named after President Theodore Roosevelt, the hotel has witnessed numerous transformations, especially under the ownership of Pakistan International Airlines (PIA). Recent developments have once again thrust the Roosevelt into the limelight, highlighting a history marked by mismanagement, financial challenges, and controversial decisions.
In 1979, PIA, through its investment arm PIA Investments Ltd., leased the Roosevelt Hotel with an option to purchase after two decades. This strategic move aimed to diversify PIA’s portfolio and establish a foothold in the international hospitality sector. By 1999, PIA exercised its option, acquiring the hotel for $36.5 million after a legal dispute with the previous owner, Paul Milstein, who claimed the property’s value had significantly appreciated. This acquisition was seen as a testament to PIA’s ambition to expand beyond aviation.
Despite its prestigious status, the Roosevelt Hotel faced significant challenges under PIA’s stewardship. Reports of mismanagement and neglect led to the hotel’s gradual decline. For the first decade and a half under PIA’s operation, the hotel incurred losses, falling into disrepair and necessitating substantial renovations. A major renovation between 1995 and 1997 cost approximately $65 million, aiming to restore the hotel’s former glory. However, these efforts were often undermined by inconsistent management practices and a lack of clear strategic direction.
The financial strain on PIA prompted multiple attempts by the Pakistani government to sell or repurpose the Roosevelt Hotel. In 2007, amid rising profitability of the hotel juxtaposed with PIA’s mounting losses, there was a proposal to sell the property. However, opposition from various political factions and concerns over the hotel’s true market value led to the abandonment of this plan. The global financial crisis of 2008 further complicated potential sale prospects, as the real estate market experienced significant downturns.
The onset of the COVID-19 pandemic in 2020 dealt a severe blow to the hospitality industry worldwide, and the Roosevelt Hotel was no exception. Facing substantial financial losses due to a sharp decline in tourism and travel, the hotel ceased operations in December 2020. This closure marked the end of nearly a century-long legacy of continuous service. In an effort to mitigate the financial fallout, PIA sought alternative uses for the property.
In 2023, the Pakistani government entered into a three-year lease agreement with New York City, valued at approximately $220 million. The city repurposed the hotel as a shelter and processing center for asylum seekers, addressing the surge of migrants during that period. The facility reportedly housed tens of thousands of migrants across its 1,025 rooms at an estimated cost of $200 per night. This arrangement, while providing immediate financial relief to PIA, was met with mixed reactions from various stakeholders.
However, this reprieve was short-lived. In February 2025, New York City Mayor Eric Adams announced the early termination of the lease agreement. Citing a significant decrease in migrant arrivals—from a peak of 4,000 per week in 2023 to about 350 per week—the city decided to close the Asylum Arrival Center and Humanitarian Emergency Response and Relief Center housed within the Roosevelt Hotel. Mayor Adams stated, “Thanks to the successful strategies we implemented in our city and policies we advocated for nationally, we’ll be closing this site that served new arrivals since the height of this crisis in 2023.” This decision also came amid growing criticism over the use of taxpayer funds for housing asylum seekers in such facilities.
The premature termination of the lease presents significant financial and operational challenges for PIA. The anticipated revenue from the lease was intended to offset some of the airline’s financial difficulties. With the lease ending ahead of schedule, PIA faces the dual challenges of lost income and the responsibility of determining the hotel’s future amidst a backdrop of previous mismanagement and failed sale attempts.
Over the years, various proposals have been put forth regarding the hotel’s fate. In 2024, the Privatisation Commission of Pakistan considered several options, including an outright sale, a joint venture, or a 99-year lease. The financial advisor, Jones Lang LaSalle Americas, recommended the joint venture option to maximize gains. However, concerns over potential governance issues and prolonged timelines led to indecision, and no concrete action was taken. The lack of consensus and bureaucratic red tape have consistently impeded decisive action, leaving the hotel’s future in limbo.
The Roosevelt Hotel’s journey from a symbol of luxury to a subject of financial and operational controversy highlights the complexities of managing such a historic property. PIA’s experience underscores the importance of aligning management practices with industry standards and the challenges that arise when diverging from an organization’s core competencies. As the hotel now stands at another crossroads, its future remains uncertain, reflecting broader issues of asset management and strategic planning within PIA and similar institutions.
The views expressed in this article are the author’s own and do not necessarily reflect Coverpage’s editorial stance.
