Princely Plaza probs
Elegant inn’s sale tarred by complex ownership
I NTRIGUE runs high and low at the iconic Plaza Hotel, which India’s embattled Sahara Group appears on the verge of selling to a Qatari sovereign wealth fund for around $550 million.
But “appears” is key, because nothing about the Plaza is easy.
For starters: “Plaza Hotel” means only the portion of the landmarked building that serves as a 282-room hotel — compared with more than 800 rooms prior to conversion to mostly condo apartments by former owner Elad.
The iconic but shrunken inn is a tangle of overlapping and/or conflicting interests. They include principal owner Sahara Group; Saudi minority owner Prince Al-Waleed Bin
Talal; the Chatwal Family Trust, which holds a very small but undefined stake; hotel management company Fairmont; New Yorkbased Sant Chatwal’s Dream Hotel Management, which is separate from the trust and operates the Plaza’s restaurants and bars; and powerful union Unite Here, Local 6.
Indian courts are reviewing the prospective sale of the Plaza, the Dream Downtown and London’s Grosvenor House for a combined $1.55 billion. A sale would bail out Sahara founder Subrata Roy, who’s been jailed for two years in India for an alleged $4 billion real estate fraud.
Meanwhile, Manhattan restaurant circles are buzzing over the ouster by Sahara of Lambs Club chef
Geoffrey Zakarian from his role as culinary director. Although Zakarian was tapped for the job by Chatwal in 2013, the chef ’s contract was with Sahara, the Plaza’s spokesperson said.
Although seemingly a trifle compared with the sale drama, Zakarian’s unexpected departure typifies the murky backstage goings-on behind the landmarked facade.
New York sources confirmed that the presumptive buyers of Sahara’s 75 percent stake in the Plaza are the Qatari Investment Authority and Kingdom Holdings, the publicly traded company run by Alwaleed Bin Talal, which currently holds about 25 percent. A rep for Chatwal said it was “too early to comment” on whether the trust would retain its stake if the sale goes through.
Sahara bought its majority stake in the hotel from Elad for $575 million in 2012. Last year, Roy came under pressure to sell the three hotels by Indian courts and by mortgage holders who own $800 million in debt on them.
However, several reported deals fell through. Now, sources say QIA and Kingdom desperately want the Plaza in part to protect Fairmont’s management contract. (We warned you this was complicated.)
QIA, Kingdom and Ontario pension fund OMERS owned Fairmont parent FRHI (Fairmont Raffles Holdings International) until they sold it in a deal valued at $3.2 billion to France’s AccorHotels.
The sale closed last week. But it left QIA with a 10.4 percent stake in Accor and Kingdom with 5.8 percent, according to a statement by Kingdom.
Sources told us that Kingdom’s Plaza stake includes a major say in any refinancing. Thus, “Kingdom holds the keys to this deal,” one insider said.
A different source said that if a competing hotel company ever gained control of the Plaza, it would likely replace Fairmont with its own management.
“Fairmont would fight to the death to keep their name on the property,” said Lodging Advisors President Sean Hen
nessey, who was not one of our unnamed sources.
Hennessey said the “value of rights to manage a hotel like the Plaza is substantial,” involving millions of dollars a year.
But he said the prestige of running the Plaza is incalculable, because it makes it easier for Fairmont to sign up other hotels.
Fairmont won the Plaza management contract in 2007, when Elad reopened the hotel after a two-year restoration and condo conversion. Terms and the duration of the contract are not known. Fairmont did not respond to questions. Al-Waleed is moreover said to be fed up over Sahara’s failure to reopen the Oak Room and Oak Bar. They were thriving when he bought the Plaza from Donald Trump in 1995 and reopened for a time after the sale to Elad, but closed in 2011. Culinary director Zakarian successfully relaunched the moribund Palm Court, but he never got the chance to work his magic in the Oak rooms. When Sahara and Zakarian parted ways last month, Zakarian sued for $1.5 mil- lion over alleged failure to pay him a termination fee. He also said Sahara had started a “whispering campaign” against him.
Although the dispute appears to have been resolved amicably — Zakarian and Sahara later put out a joint statement praising each other — the suit cited Sahara’s “decision to abandon or at least shelve plans for the Oak Room.”
This week, a Plaza rep said plans for the room were still being discussed. Sources laid the delay on being unable to make a deal on work rules with the Local 6 union.
But soon it’ll be up to QIA — and the prince.