The Penn Is Mightier

“I mean, there have been very successful versions of this done with various train stations and old office buildings—even meatpacking plants—and people want to live there,” Mr. Biafra continued. “Part of the old Heinz ketchup factory in Pittsburgh has been turned into living space now, and the line to move into one of those lofts is out the door. They are way too expensive for me or any of my friends. But the point is, you find something cool to do with an old building that may actually be better in the long run—even for the developer.

“It’s just a matter of whether you have any taste,” he added, “or any soul.”

Or tenant, as it turns out.

 

ACTUALLY, IT HAS occurred to the developer to rethink the whole demolition thing: Just last month, in fact, Vornado CEO Steven Roth announced during a conference call with investors that he might just hang onto the old hotel after all.

“First off, it is doing damn well as a hotel,” said Mr. Roth, noting the hotel’s increased occupancy, up from 63.7 percent nightly on average in 2003 to 84.4 percent in 2007, as well as increased revenues.

Last year alone, the hotel brought in nearly $38 million—some $10 million more than in 2006, according to the company’s latest annual report. More recent figures point to $5.4 million in pretax earnings during the first three months of 2008—up from $3.6 million over the same period last year.

The numbers, among other financial realities, have clearly swayed Mr. Roth. “We have two basic grand strategies with this grand asset,” he said. “One is, leave it as a hotel, renovate it as a hotel, increase the income coming out of the hotel; and you introduce a very substantial amount of retail in the base of that building—probably three floors’ worth, and connect it into the Manhattan Mall, so we have an extraordinarily interesting asset.”

The “other opportunity,” as Mr. Roth put it, would have Vornado stick to its guns, raze the building and build a huge tower—“if we can land a major tenant,” he added.

A big if.

It was no secret that Mr. Roth had been wooing financial giant Merrill Lynch to relocate from Lower Manhattan to the hotel site with promises of building a new company headquarters spanning 2 million square feet, complete with a 80,000-square-foot trading floor.

Ultimately, however, the deal fell through. “The credit crisis and Merrill’s management changes disrupted this deal,” according to Vornado documents.

The developer’s abrupt about-face seemed a sweet, albeit indirect, victory for “Save the Hotel” campaigner Mr. Jones, who had grown so frustrated by his fellow hackers’ reluctance to do much of anything beyond blogging about the issue that he ultimately abandoned the HOPE convention altogether.

“The economy accomplished it for us,” Mr. Jones said on Monday. “Thank you, George Bush!”

Late Sunday night, conference organizer Emmanuel Goldstein felt comfortable enough to announce tentative plans for the next HOPE event at the Hotel Penn in 2010.

In the meantime, participants hoped Vornado would make good on its makeover proposal. And, in fact, in recent months, the hotel has added some new touches to the lobby, including additional couches and a series of flat-screen TVs above the front desk.

But there is still much to be done.

“I do think they could afford to update the hotel to the point of having coffee in the rooms,” said Mr. Biafra in a sort of off-the-cuff oblique homage to his 1987 album, Give Me Convenience or Give Me Death.

“It’s one of those things that nobody did 10 years ago,” he said of the in-room coffee makers, now an industry standard. “But now that we have it, we can’t live without it.”

cshott@observer.com