A committee led by a deputy minister has proposed privatizing the Roosevelt Hotel in New York through open bidding after Saudi Arabia failed to formally express interest in acquiring the PIA-owned property.
The special committee, headed by Minister of State for Finance Ali Pervaiz Malik, has recommended to the Cabinet Committee on Privatisation (CCOP) that the hotel be sold through open and competitive bidding. However, the committee has left the decision to the Privatisation Commission regarding whether the hotel should be sold outright, developed into a joint venture, or leased for 99 years.
This recommendation, made by the Ali Pervaiz Committee, seeks to resolve the uncertainty surrounding the hotel’s future after two years of deliberation, spurred by a change in the US administration.
The committee was formed by Deputy Prime Minister Ishaq Dar in November, with Ali Pervaiz Malik as its head, and members including former central bank governor and PIA Holding Company chairman Tariq Bajwa, along with other officials and legal advisors.
The committee’s task was to evaluate the legal, financial, technical, and international aspects of the Roosevelt Hotel’s potential transaction structures, while considering the shifting political and economic climate in the United States.
Privatisation Commission sources revealed that the committee recommended the hotel be privatized through competitive bidding after the Commission informed them that no formal offers had been received from any foreign government to acquire the hotel.
This lack of foreign interest highlights the hesitation of international nations to invest significantly in Pakistan. In October, during an unsuccessful attempt to privatize PIA, no foreign government or international private airline expressed interest in purchasing shares in the national carrier.
The Roosevelt Hotel, located in one of the world’s most expensive areas, is owned by PIA. Before making their final recommendation, the Ali Committee asked whether any serious foreign interest had been expressed. The Privatisation Commission clarified that under a government-to-government arrangement, a foreign government must formally express interest before invoking the Inter-Governmental Commercial Transaction Act. As of late December, no such interest had been registered.
Sources mentioned that Pakistan had twice offered the hotel to Saudi Arabia, in October and November 2024, but no progress was made despite meetings with Saudi officials.
In August of last year, the Privatisation Commission board had suggested considering the privatization of the hotel through a government-to-government arrangement, while keeping all three potential transaction options—outright sale, joint venture, or 99-year lease—on the table for discussion.
Jones Lang LaSalle Americas was hired as the financial advisor for the Roosevelt Hotel’s privatization, costing Rs2.1 billion, which includes milestone-based payments and a success fee of 0.95% of the sale proceeds.
In June last year, the advisor proposed three options: a full sale of the hotel land, a joint venture for future development, or a 99-year lease. However, the Privatisation Commission board rejected the joint venture option in favor of other alternatives.
The Ali Committee did not finalize the privatization method, leaving that decision to the Privatisation Commission, which has full access to the advisor’s report.
Concerns about governance and potential litigation in joint venture projects were raised by the Privatisation Commission board. The committee also evaluated commercial risks, but stated that there were no immediate threats to the hotel, despite past concerns over it being classified as a heritage site, which would have limited its development. This issue was resolved with lobbying efforts from the Foreign Office and the outgoing US Ambassador Donald Blome.
The committee was also warned about risks related to the incoming Donald Trump administration’s policies, particularly concerning migrants. The Roosevelt Hotel is currently leased to house illegal immigrants, but this arrangement may not continue under the new administration. Additionally, there is a possibility that the hotel could be designated a heritage site again if the current lease ends.
