The Plaza Is for Sale, but a Part-Owner Has Other Ideas
“We are not selling our stake and are comfortable with our rights relating to any sale by others,” said Sarmad Zok, chief executive of the prince’s company, Kingdom Hotel Investments. “We are proud to have partnered with Ashkenazy to reinstate the glory of this unique asset.”
The partners have a plan for an extensive modernization program to better compete with other five-star hotels in Manhattan and to reopen areas of the hotel that have been bogged down in renovations. The Plaza’s famous Oak Room and the wood-paneled Oak Room Bar have been closed for the past six years.
Whether Mr. Roy and Sahara truly intend to sell or are merely trying to bolster the price, they appear to be pressing forward.
“We’ll solicit bids,” said Jeffrey Davis, an international director of JLL, who is overseeing the bidding for Sahara. “It’s the most iconic real estate asset in the world. It’ll garner international attention.”
Mr. Davis declined to comment on whether Kingdom Hotel Investments has a right to match the highest bid for the property under the partnership agreement.
The Plaza is not the only old-line luxury hotel in a state of flux. In 2015, China’s Anbang Insurance Group bought the Waldorf Astoria hotel on Park Avenue for $1.95 billion. The hotel has since closed for renovations, which may take as long as three years. The chairman of Anbang, Wu Xiaohui, was detained in June by authorities in China.
But the 110-year old Plaza has a sterling pedigree and an honored place in American culture. The hotel, with its Beaux-Arts décor, 24-karat gold-plated fixtures and genteel tearoom, has always seemed to define hotel luxury. Room rates start at more than $600 a night.
F. Scott and Zelda Fitzgerald lived there and the Beatles stayed there on their first trip to America. Josephine Baker, Lena Horne and Andy Williams sang there. Miles Davis recorded a live album in the hotel’s Persian Room and Truman Capote held his famous Black and White Ball in the ballroom.
The Plaza is a setting for Kay Thompson’s “Eloise” books and Meg Cabot’s “The Princess Diaries.” It figures in more than 30 movies, including “Barefoot in the Park,” “Plaza Suite” and “American Hustle.”
Even today, more than a century after it opened, the Plaza remains in the rarefied company of a handful of ultraluxury hotels in New York, including the Four Seasons, the Mandarin Oriental, the Pierre, the St. Regis, and the Carlyle. But with new rivals like Baccarat and Park Hyatt, real estate analysts say, the Plaza has to step up.
“That property is very beautiful and gets a great room rate,” said Thomas P. McConnell, who heads the global hotel practice at Cushman & Wakefield, a real estate company, “but it needs to be brought up to a modern luxury standard. The Oak Room and the Edwardian Room are sitting fallow.”
But any buyer of “the Plaza hotel” is not getting the entire 19-story French Chateau-style building, which has been carved into pieces in recent years.
It is a tangled history.
Westin Hotels sold the Plaza in 1988 to Donald J. Trump, who described the hotel as a work of art, for $390 million. Teetering at the edge of bankruptcy, Mr. Trump was forced by his lenders to sell to a group led by Prince al-Waleed in 1995 for $325 million. The prince installed Fairmont Hotels as manager of the property.
The prince in turn sold the 805-room hotel for $675 million to an Israeli company, the Elad Group. Elad burnished the public spaces and turned half the building into condominiums, selling 181 apartments for a combined $1.4 billion.
The “hotel” became more of a boutique operation, with 131 rooms. There are an additional 150 condominium-hotel units that are privately owned but often available for overnight guests.
Elad sold a 50 percent interest in the hotel and a 25 percent interest in the condominium-hotel units to Prince Al-Waleed, while retaining the retail spaces at the Plaza.
Mr. Roy, chairman of Sahara Group, came on the scene in 2012 when he paid Elad $570 million for the other half of the hotel, the retail spaces and 100 of the hotel-condominium units. Ultimately, Mr. Roy expanded his stake to 75 percent of the hotel, while Prince Al-Waleed retained 25 percent overall.
Mr. Roy then brought in Sant Singh Chatwal, an Indian-American hotelier, to operate the retail spaces, including the Oak Room and the Palm Court, and gave him 5 percent of the hotel.
But in 2014, Mr. Roy ran afoul of the courts in India, where Sahara is accused of failing to repay small investors and lenders as much as $4 billion. The courts are now forcing Mr. Roy to sell assets.
His friend, Mr. Chatwal, had his own legal problems in the United States, where he pleaded guilty in 2014 to funneling illegal campaign contributions to three candidates, including Hillary Clinton.
The possible sale of the Plaza has attracted wide-ranging interest over the past three years, including, according to news reports, from Pras Michel, a founding member of the hip-hop group the Fugees, a Chinese company and a Qatari sovereign-wealth fund. There were once rumors that Sultan Hassanal Bolkiah of Brunei had put down $2 billion for the Plaza, although he categorically denied it.
Mr. Roy and Sahara are hoping that a buyer will emerge with a stratospheric offer for the right to own a trophy hotel in New York. But the prince’s ownership rights may give potential buyers pause. At the same time, the New York hotel market has slowed over the past year as revenues has flatlined and expenses have risen.
“I can’t imagine anybody coming along and giving them $500 million,” said Sumner A. Baye, a 40-year veteran of the hotel industry.
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