As the history of an iconic New York City hotel shows, when it comes to business, factors such as politics, religion and culture are set aside to consummate a deal.
Every hotel has a history. Some of those histories are elegant (The Greenbrier in White Sulphur Springs, West Virginia). Some are photogenic (The Grand Hotel on Mackinac Island, Michigan). Some are infamous (The Stanley Hotel in Estes Park, Colorado). None are probably as interesting as the history of The Plaza Hotel in New York City.
They say politics and business make strange bedfellows, and nowhere is that more true than at The Plaza, one of the most iconic hotels in the world. Following the hotel’s long, strange trip shows that when it comes to dealmaking, politics, culture and even religion take a back seat to making a transaction happen.
The Plaza—and more to the point its current primary owner, Sahara India Pariwar—have been in the headlines in recent months. Starting in 2012, Sahara Chairman Subrata Roy bought a portion of the property and ended up with 75% ownership. Since then, however, Roy’s assets have been under attack by courts in his native India, which have accused Roy of fraud are compelling him to dispose of assets, including The Plaza.
In late August, Roy hired a broker to explore a sale of the property. That’s where the story gets interesting as it shows the unusual intersection of geopolitics in the hotel’s ownership structure as well as possible buyers.
According to news reports, a wide range of groups and individuals have expressed interest in buying the hotel, including the government of Qatar sovereign wealth fund; a Shanghai-based municipal fund; and Pras Michel, a founding member of the hip-hop group the Fugees.
The hotel’s legacy of ownership stretches back to its opening in 1907, and the list include a number of A-list hoteliers and celebrities.
The property was built for $12.5 million (about $311 million in today’s dollars.) In 1943, Hilton Hotels founder Conrad Hilton, in partnership with the Atlas Corporation, bought the hotel for $7.4 million. The group sold it for $6.2 million in 1955 to a restaurant company, which 20 years later sold it to Westin Hotels for $25 million.
In 1988, Donald Trump paid $390 million for the property. The Plaza’s Grand Ballroom was the site of Trump’s marriage to second wife Marla Maples in 1993.
From there, ownership of the hotel shifted to the Middle East. In 1995, CDL Hotels International and Saudi Arabian Prince Al-Waleed bin Talal’s Kingdom Holding Co. bought a controlling stake, which they sold nine years later to Israeli-owned Elad Properties, while retaining 25% ownership.
Elad closed the hotel in 2005 for a $450-million restoration and partial conversion to condominium units. The hotel reopened in 2008 under management of Fairmont Hotels & Resorts.
Four years later, Sahara purchased Elad’s stake in the property, and earlier this year Ashkenazy Acquisition Corporation bought a sliver of ownership from Kingdom Holding. Ashkenazy owner Ben Ashkenazy hopes to leverage that small stake into full ownership of the property.
As fascinating as the transactions are, what makes The Plaza a one-of-a-kind hotel in the world are the cultural touchstones associated with the property. The most famous fictional celebrity that’s part of the hotel’s lore is Eloise. The first in a series of children’s books was written in 1955 and followed the adventures of six-year-old Eloise who lived at the hotel.
Scenes from F. Scott Fitzgerald landmark novel “The Great Gatsby” took place in the hotel. In the 1960s, the hotel was the backdrop for the biggest musical phenomenon of the decade when The Beatles took up a six-day residence during the band’s first trip to the U.S. Another cultural heavyweight, architect Frank Lloyd Wright, lived at the hotel for six years during the 1950s. During the 1960s, author Truman Capote hosted his famous Black and White Balls at the hotel.
The Plaza has also been a frequent backdrop in popular movies, including “North by Northwest,” “The Way We Were,” “Home Alone 2,” “Sleepless in Seattle” and others.
The Plaza is that rare accommodations offering that is much more than a hotel. For New Yorkers especially, it represents the highest levels of romance, luxury and sophistication. For investors, ownership of The Plaza generates a corporate cachet that transcends profits and asset appreciation.
As the saying goes, they don’t make hotels like this anymore—and probably won’t anytime in the foreseeable future.
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