Manhattan’s Prophet of ‘Budget Chic’ Welcomes You to His New Hotels

030507 article counter Manhattan’s Prophet of ‘Budget Chic’  Welcomes You to His New HotelsThe refurbished Marrakech Hotel, located at Broadway and 103rd Street, represents a more upscale approach to lodging for owner Hank Freid.

He calls it “budget chic,” and it’s just the first phase of an ongoing, roughly $35 million upgrade of his Manhattan hotel properties—and maybe also of his own public image.

The once-dumpy but ever-cheap, 65,000-square-foot, 125-room Upper West Side inn now features such fashionable touches as fine European linens, high-speed wireless Internet, flat-screen TV’s—and, perhaps most haughtily, no sign of the homeless folks who used to sleep there.

“It really wasn’t a homeless shelter,” said Mr. Freid, 59, of the revamped venue’s prior incarnation. “It was a sort of transitional hotel.”

Before its recent Moroccan-themed makeover, which Mr. Freid’s company, Impulsive Group NYC, completed this past December, the hotel endured a rather dubious reputation.

Then known as the Malibu, the single-room-occupancy building, beginning in 2002, sheltered as many as 100 homeless persons with H.I.V. under a court-ordered city program that reportedly paid Mr. Freid luxury-rate rents (an average of about $2,400 a month per person) for what AIDS-housing advocates described as less-then-gracious accommodations. The complaints included cramped conditions, broken toilets, vermin, alleged building violations and an utter lack of on-site social services—and this was, in the words of one activist, “actually one of the nicer places” where the city placed people.

“The upkeep,” Mr. Freid admitted, “was a problem.”

Neighbors were none too pleased with the arrangement either, blaming the Malibu’s transient clientele for a perceived increase in area panhandling, prostitution and drug-pushing. “[W]hat’s happening at the Malibu Hotel is arousing strong concerns,” reported the local West 102nd & 103rd Streets Block Association newsletter that fall. Those concerns peaked with the 2003 murder of a 60-year-old government-placed Malibu resident, who was found bound and gagged in her hotel room.

It was a precarious predicament for the opportunistic businessman, who was just trying to make an easy buck amid the sluggish post–Sept. 11 economy ravaging the entire hotel industry.

NATURALLY, THE HOTELIER HIMSELF DESCRIBED HIS MOTIVES a bit more altruistically.

“After 9/11, business was terrible, and I sort of looked to give back to the community,” Mr. Freid told The Observer. “I contracted with the city to have people stay there while they were looking for permanent housing.”

For some program participants, the Malibu’s temporary crash pads turned into nearly three-year residences—a longer occupancy than many rental tenants with actual leases.

But the downturn in travel soon picked back up, and Mr. Freid figured that he could make more money catering to tourists again.

After several years at the center of controversy, during which Mr. Freid was called both a profiteer and a slumlord, the embattled hotelier abruptly cut ties with the city’s HIV and AIDS Services Administration in July 2005.

The Malibu’s otherwise-homeless guests were soon kicked to the curb.

Mr. Freid, meanwhile, took his millions of taxpayer dollars and embarked on a massive spending spree to improve and expand his real-estate holdings.

Again, critics in the community cried foul.

“It’s very ironic that, no matter what you did in that particular situation, they were so strong against it,” Mr. Freid said. “Originally, when I brought this into the community, they were against it. Then, when I looked to take it out of the community, they were against that.

“I was only trying to help, and it backfired on me,” he added. “So I went the other way.”

The transformation of the much-maligned Malibu into the bordering-on-boutique Marrakech, with its North African–style furnishings and brand-name-booze-only lobby lounge overlooking Broadway, was just the beginning.

MERE MONTHS AFTER THE MALIBU EVICTIONS, Mr. Freid purchased another less-than-luxurious property, the Portland Square Hotel on West 47th Street near Broadway, and announced similar plans to turn that two-star dive into something more stylish.

In its present state, the nine-story building offers little more than bare-bones accommodations at a discount rate. On the night of Feb. 24, a tiny six-foot-wide room on the eighth floor, featuring a twin bed (minus its twin) and drippy faucet, cost a mere $99 plus tax. The space was so cramped that this reporter feared a rude awakening via banging his head on the air-conditioning unit.

Yet the century-old hotel does offer some traditional Times Square–area charms.

A 2 a.m. visit to a shared restroom in the dark hallway revealed a locked door and two voices inside. “Thank you,” said a man with an Australian accent, who promptly exited and departed down a stairwell, followed by a woman in a long coat, with dyed-blonde hair, who left via the elevator. The discarded condoms in the bathroom’s trashcan were removed by morning.

In keeping with his current seedy-turned-chic strategy, Mr. Freid is doing away with the Portland Square’s less-desirable elements—and changing its name to the Sanctuary. His proposed $7.5 million overhaul, set to begin this spring, will combine smaller rooms to create more spacious ones, and hopefully do away with the hostel-style shared bathrooms altogether.

The overall improvements are expected to raise the nightly rates to a range of $265 to $1,800.

The hotelier’s redevelopment rampage continues at his Broadway Hotel and Hostel, also located along Broadway at 101st Street. Mr. Freid is renovating all 125 dormitories and adorning the place with a Mediterranean color palette. The pièce de résistance, he said, is a 2,500-square-foot lounge area with Internet terminals, flat-screen TV’s and a fireplace.

OUT OF ALL THE REVITIZATION EFFORTS, the hostel project is perhaps the biggest insult-added-to-injury for activists bemoaning the loss of housing for homeless people with H.I.V.

Some of those displaced by the Malibu’s transformation subsequently found shelter at Mr. Freid’s nearby hostel. But, yet again, the hotelier’s proposed upgrades will cost them their beds.

“We moved roughly 15 to [the hostel],” said Jennifer Flynn, director of the NYC AIDS Housing Network, “but we’re now down to four.”

Ms. Flynn questioned why the hotelier can’t somehow find space for his former homeless guests in at least one of the buildings, especially since their presence probably helped finance his capital improvements. Mr. Freid, however, downplayed his financial debt to the castaways. “It helped us keep our heads above water and maintain the building,” he said of the city’s subsidies.

Nowadays, with tourism on the rebound, operating a hotel in New York City just doesn’t require the creative funding methods that it used to.

“Years ago, you couldn’t get financing for hotels,” Mr. Freid said. “Today, bankers are putting out full-page ads.”