Roosevelt Hotel’s Rough Ride Toward Sale Could Be A Lot of Bull Moose

What a difference a duvet makes.

Four years ago, the proprietors of the old Roosevelt Hotel planned to put the place up for sale.

Revenues were down, as the city’s tourism industry still had not fully recovered from Sept. 11. But the owners were sitting on a veritable gold mine: a whole one-acre block with a fancy Madison Avenue location, rising right around the corner from Grand Central Station.

Forget the horrendous hospitality business. Talk about a prime spot for a new office tower!

All the big names were rumored suitors for the seemingly doomed hotel lot. Among them: Donald Trump, Harry Macklowe, Vornado Realty Trust, the Related Companies. Mr. Trump, for one, reportedly offered $244 million for the location.

The sale never happened.

Instead, the hotel simply made do with a mere $3 million worth of so-called “soft” renovations, including a spruced-up bar area, rooms outfitted with ergonomic chairs and old bedspreads replaced with far more fashionable duvets. (It has since made further upgrades, including even newer duvets.)

The improvements seemed to come at the right time, as tourism soon rebounded. “The hotel has generated more revenues in the last couple of years than it has in its existence,” said Kevin Croke, the Roosevelt’s director of sales and marketing.

The Observer camped there on Sunday night for $195, plus tax. On another night, the same room could cost as much as $700.

So why is ownership yet again mulling a sale?

Perhaps the duvets provide too simple a solution.

The off-again, on-again, long-rumored dumping of the 20-story Italian Renaissance-style limestone and marble building at 45 East 45th Street, erected in 1924 in tribute to former U.S. President Theodore Roosevelt, has been called, in the words of one prominent politician, a “national tragedy.”

Not in the United States—but in Pakistan.

For the past 27 years, the historic hotel has operated under the auspices of Pakistan International Airlines (PIA), whose biggest financial backer is, of course, the Pakistani government. Hence, why the Roosevelt’s swanky, 3,900-square-foot Presidential Suite seems so routinely occupied by visiting Pakistani President Pervez Musharraf (and also why the streets outside are, at similar times, filled with demonstrators).

At first, the Pakistani airline, in partnership with Saudi Prince Faisal bin Khalid, only leased the hotel. But, in 1999, the partners exercised an option to buy the property from Manhattan developer Paul Milstein for $36.5 million, a sum that Mr. Milstein unsuccessfully contested in court, asserting the site was ultimately worth a whole lot more—as much as $250 million.

Two years ago, the PIA increased its ownership stake, acquiring nearly full control of the hotel; its Saudi partner now holds a mere 1 percent of the stock.

That’s good news for the airline, because the hotel, which reportedly lost tens of millions of dollars over the first 16 years under Saudi-Pakistani control, is about the best thing going for it.

Turns out, Pakistan’s air-travel industry isn’t all that different from America’s, saddled as it is with rising oil prices, higher salary demands of its workforce and increasing competition. “The financial health of the airline has progressively deteriorated so that today the situation has reached alarming proportions,” PIA chairman Zaffar A. Khan has stated.

The airline’s most recent quarterly report pegs operating losses through the first nine months of 2007 at 5.9 billion rupees. (That’s roughly $96 million.)

Roosevelt Hotel’s Rough Ride Toward Sale Could Be A Lot of Bull Moose