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Saturday, May 18, 2024

A brief history of the iconic Roosevelt Hotel

The Roosevelt Hotel is an icon of culture and history in New York City, but like many other enterprises is closing down due to the COVID-19 pandemic

For over 90 years, The Roosevelt Hotel has stood as an example of New York City pomp and prestige through its spectacular historic building in midtown Manhattan. Located at Madison Avenue and 45th Street in Midtown Manhattan, The Roosevelt is at the very heart of New York.

What the Roosevelt Hotel is famous for

The hotel has also been the backdrop in many blockbuster motion pictures, including The Boiler Room, Wall Street, Quiz Show, Presumed Innocent, Malcolm X, Monday Night Mayhem, The French Connection, Hanky Panky, most recently The Irishman on Netflix, and who can forget “Maid in Manhattan” starring Jennifer Lopez.

And the sad news is that the darling among hotels in New York is being closed. The Hotel’s demise is part of the ongoing trend in the pandemic-stricken hospitality industry in the USA.  Millions of Dollars in commercial mortgage-backed securities loans on hotels have gone unpaid. And occupancy rates in New York City remain lower than the national average. Most recently, the 478-room Times Square Hilton also announced its permanent closure and laid off 200 employees.

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As reportedly planned, converting a hotel into just a property business means losing the Brand value of Roosevelt and a hotel of class because companies’ market value is determined on the basis of its tangible assets plus its intangible brand worth and, more specifically, its future growth prospects.  Take ‘Apple’; for example, it has hit a $2tn market value just two years after it became the world’s first trillion-dollar company not only based on its assets but based on non-tangibles and future growth prospects. And this is what Roosevelt hotel has. It has the name and capacity to earn in the future once the Covid-19 subsides.

In case the plan goes as it is announced, the mere building may worth to be a couple of millions of US$. As per an assessment in the year 2015, at the average price, the Roosevelt, with its 1,015 rooms, would sell for $636 million. If it sells for the prices of hotels sold in Midtown Manhattan, which are its true comparable, it will sell for between $1 billion and $1.4 billion in enterprise value.

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It has been observed that whenever the CEO has a finance background, he tends to cut costs while a CEO with a  marketing background tends to increase revenue and it has also been observed that inefficient companies having CEOs with marketing backgrounds turn around frequently than ones with a finance background CEO. I assume the decision of closure of the Hotel has been taken by Cabinet ECC (Economic Coordination Committee) headed by Finance people.

Two result-oriented CEOs of Pakistani origin with Marketing backgrounds and well known among their respective circles for revenue earning are:

Representing the Western World

A Multan born and now 74 years New Yorker, Fareed Hassan, son of an ex-diplomat who remained mostly abroad and very little known in Pakistan while very well known in the western world. A Harvard graduate Fareed, is famous for turning around ailing companies and involved in mega-mergers of giant pharmaceuticals companies. He successfully turned around various companies, and his success was once described by The New York Times as the “Fred Factor” (They call him Fred). He was also interviewed by Harvard Business Review (a magazine by Harvard University) about his main attribute towards turning around a business concern. His answer was focusing on more revenue outlets than cost-cutting measures.

Fareed Hassan remained on the Board of CNN (Time Warner) from 2009 until its sale to AT&T in June 2018.  He took over the failing merger of Pharmacia & Upjohn (PNU) and converted it into a successful one. In the three years leading to Hassan’s next CEO assignment, PNU’s stock value had increased from $15 billion to $52 billion. The Wall Street Journal ran an article titled “Turnaround becomes a reality at Pharmacia and Upjohn”.  Shortly after the merger of PNU closed in April 2003, Hassan took over as chairman and CEO of Schering Plough (SGP), a struggling pharmaceutical company. As chairman and CEO of Schering Plough (SGP), Hassan oversaw the resolution of multiple legal, regulatory, research and development, and operational challenges. He was able to declare a company turnaround by 2005.

Representing Pakistani Hotel Industry

One most relevant example from the Pakistani five stars hotel market industry’s CEOs is Azeem Qureshi (In hotels, CEOs are called General Managers). He tripled the revenue of a 5-star hotel in a short span of time and then turned around a 3-star l deserted hotel into an activity bustling center and upgraded to 4 stars through his dynamic marketing strategies. He is currently the corporate commercial head of a 5-star hotel chain in Pakistan and Dubai.

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Since the Roosevelt Hotel has been run by a Management company lately, instead of a management company, why not an individual is hired to head the Hotel and understand their charismatic leadership. There must be many likes of Fareed Hassan and Azeem Qureshi in New York who need to be reached out to rescue the Grand Dame of New York as the upswing of the economy has already started all around.

A report also says that hotels are continuing their comeback, ever so slowly. The occupancy rate across the U.S. hit 48.9 percent for the week ending August 1.

Though a few hotels are leaving, many are not closing. So, the closure of a few is an opportunity for rest. So why not be among the rest that persists.

Mushtaq Jumma is an Ex-Airliner and Business Consultant