The world’s tallest Holiday Inn has won a judge’s approval to become an migrant lodging facility in downtown Manhattan — paving the way for a deal with the city that will pay the hotel 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 being hit by the pandemic — signed an agreement with New York City Health and Hospitals, which is tasked with housing the Big Apple Agency skyrocketing migrant population, according to court filings.
The nightly room rate the city pays — which amounts to a daily bill of $93,500 and a monthly bill of $2.8 million when the hotel is at full capacity — is at the high end of a range of $115 to $190 -dollars the city has earmarked a hotel accommodation program for migrants, which hotel consultant Geoffrey Mills reportedly now includes dozens of hotels across the city.
It’s also well above the average daily room rate of $102 the hotel earned at 60% occupancy in January, according to court filings. On Tuesday, the hotel’s website advertised rooms for $145 to $149 a night.
The Holiday Inn Manhattan Financial District has just been approved as an asylum seeker for the next 15 months. William Farington
A federal bankruptcy judge in Manhattan on Monday approved the plan put forward by the hotel’s owner, Chinese developer Jubao Xie. The hotel estimates it would make $10.5 million by the end of the contract on May 1, 2024, which would help pay off its debt, including $11 million in interest on its loans.
Under the agreement, the city will provide 24-hour security and be responsible for removing “guests who are unruly or otherwise pose a danger or nuisance to other guests, employees and contractors,” according to court filings. The hotel offers a cleaning service at least three times a week.
The files give a rare glimpse into the partnerships the city is forging with about 70 local hotels, including The Row, The Watson, The Stewart, The Paramount and Night Hotels, which have agreed to temporarily accommodate migrants.
More than 40,000 migrants have arrived in NYC since last year.Gregory P. Mango
Asylum seekers staying at The Row Hotel used hotplates to cook in their rooms, The Post exclusively reported. GN Miller/NY Post
“It pulls back the curtain on these agreements that are otherwise not public,” said distressed debt expert Adam Stein-Sapir.
Under the agreement, the hotel’s franchisor, IHG Hotels and Resorts, requires that it not be advertised as a Holiday Inn during the term of the contract and that “external branding signs be covered and otherwise made clear to the public that the hotel is not available for public use,” states it in court records.
If migrants stayed at the hotel after the contract expired, the city would be required to pay the hotel $750 per room per day as an incentive to evict the hotel, the filings say.
The Stewart Hotel is among about 70 properties that have contracts with NYC to accommodate migrants.J. Messerschmidt/NY Post
Mayor Eric Adams said this month that the cost of housing and caring for asylum seekers crossing the Mexican border, mostly from Central America, has already exceeded the city’s estimates, at $2 billion, or double the city’s projections. Around 40,000 migrants have come here since last year, the city said this month.
Under the agreement, microwaves will be removed from rooms and some moved to common areas to avoid safety risks posed by migrants using hotplates in their rooms — an issue that has emerged at Times Square’s Row NYC Hotel, exclusively from The Post reported. The city will also provide all groceries, but could use the hotel’s restaurants and staff to prepare meals, the filing said.
A dispute between the Holiday Inn and its lender, the Wilmington Trust National Association, came to a head last week when the bank asked the judge to block the plan, including objecting to the terms of the agreement that allow the city to do so , to decide whether to repair “excessive wear and tear” to the hotel.
“Operating the hotel as asylum seeker accommodation is not consistent with the hotel’s branding, how it is being marketed, or how it could be adversely affected by marketing after the proposed contract expires,” the lender said in a Jan. 24 filing.
The property’s owners countered in a filing filed Jan. 17 that the bank’s claims were “outrageous” and claimed that the lender’s “ultimate goal is to… [hotel’s] cheap loan.”
The Holiday Inn’s lender is opposed to the hotel being used to house migrants, the bank said in court filings. Kristy Leibowitz
The hotel, which opened in 2014, defaulted on its $137 million mortgage in 2020 with the outbreak of the pandemic. The hotel’s lending rate is 5.25%, which equates to approximately $612,000 in monthly interest payments.
“The hotel has to do pretty well to keep its existing loan,” Stein-Sapir said. The irony is that “if the hotel is performing well, it’s not good for the lender who doesn’t want to be stuck with a low market loan on their books,” Stein-Sapir added.
A lawyer for Wilmington Trust did not respond to requests for comment.