The world’s tallest Holiday Inn has won a judge’s approval to become a shelter for migrants in downtown Manhattan — clearing the way for a deal with the city that will pay the hotel’s owner $190 a room per night.
Earlier this month, the 50-story, 492-room Holiday Inn Manhattan Financial District – which filed for bankruptcy in November after getting slammed by the pandemic — inked an agreement with New York City Health and Hospitals, the agency charged with housing the Big Apple’s ballooning migrant population, according to court documents.
The nightly room rate the city will pay — which, with the hotel at full capacity, amounts to a daily tab of $93,500 and a monthly tab of $2.8 million — is at the high end of a range between $115 and $190 the city has allotted for a migrant hotel housing program that now reportedly spans dozens of hotels citywide, according to hotel consultant Geoffrey Mills.
It’s also well above an average daily room rate of $102 the hotel was getting in January with an occupancy rate of 60%, according to court filings. On Tuesday, the hotel’s website was advertising rooms at $145 to $149 per night.
A federal bankruptcy judge in Manhattan approved the plan on Monday submitted by the hotel’s owner, Chinese developer Jubao Xie. The hotel estimates that it would earn $10.5 million through the end of the contract on May 1, 2024, which would help pay down its debts, which include $11 million in interest on its loans.
Under the agreement, the city will provide 24-hour security and be responsible for removing “guests that may be unruly or otherwise pose a danger or nuisance to the other guests, the employees and contractors,” according to court papers. The hotel will provide housekeeping services at least three times a week.
The filings provide a rare glimpse into the partnerships the city is forging with some 70 local hotels, including The Row, The Watson, The Stewart, The Paramount and Night Hotels that have agreed to temporarily house migrants.
“It pulls back the curtain on these agreements, which are otherwise not public,” said distressed-debt expert Adam Stein-Sapir.
Under the agreement, the hotel’s franchisor IHG Hotels and Resorts is requiring that it not be advertised as a Holiday Inn during the contract period and that “exterior branded signage be covered and it otherwise be made clear to the public that the Hotel is not available for public use,” according to court documents.
If any migrants stayed in the hotel past the contract, the city would be obligated to pay the hotel $750 per room per day as incentive to clear the hotel out, according to the filings.
Mayor Eric Adams said this month that the cost to house and care for asylum seekers coming across the Mexican border, mainly from Central America, has already exceeded the city’s estimates and is approaching $2 billion or double what the city had forecasted. Some 40,000 migrants have come here since last year, the city said this month.
According to the agreement, microwaves will be removed from the rooms, with a few moved to common areas to prevent safety hazards that have stemmed from migrants using hot plates in their rooms — an issue that arose at the Row NYC hotel in Times Square, as exclusively reported by The Post. The city will also provide all food but might use the hotel’s restaurants and employees to prepare meals, according to the filing.
A conflict between the Holiday Inn and its lender, Wilmington Trust National Association, came to a head last week when the bank asked the judge to block the plan, objecting to among other things the terms of the agreement that allow the city to determine whether to repair “excess wear and tear” to the hotel.
“Operating the hotel as an asylum seekers’ residence is not consistent with the Hotel’s brand, how it is marketed or how it may be impaired from being marketed after the proposed contract ends,” the lender said in a Jan. 24 filing.
The property’s owners countered in a Jan. 17 filing that the bank’s claims were “outrageous,” alleging that the lender’s “ultimate goal is getting rid of the [hotel’s] favorable loan.”
The hotel, which first opened in 2014, defaulted on its $137 million mortgage in 2020 with the onset of the pandemic. The hotel’s loan rate is 5.25%, which equals about $612,000 in monthly interest payments.
“The hotel has to be performing pretty well for it to keep its existing loan in place,” Stein-Sapir said. The irony is that “if the hotel is performing well, it’s not great for the lender, which doesn’t want to get stuck with a low market loan on its books,” Stein-Sapir added.
An attorney for Wilmington Trust didn’t respond to requests for comment.
[Written in collaboration with other media outlets with information from the following sources]
