Vornado might never reopen century-old Hotel Pennsylvania, CEO says

Pandemic seen as chance to pursue long-sought development

TRD New York /
May.May 06, 2020 09:00 AM
Steven Roth (Credit: Bruce Glikas/Getty Images, Vornado)

Steven Roth and the Hotel Pennsylvania (Credit: Bruce Glikas/Getty Images, Vornado)

For more than 20 years Steven Roth has wanted to close the Hotel Pennsylvania, demolish it, and build a tower in its place.

Now that the coronavirus pandemic has forced the Vornado Realty Trust CEO to take that first step, he is thinking anew about the other two.

As tourism dried up, Vornado closed the not-quite-prestigious hotel at 401 Seventh Avenue on April 1 and furloughed 414 of its employees. Then, on an earnings call Tuesday, Roth called the hotel “a parking lot for a development site” and revealed, “We have thought internally about using this and just never reopening it.”

By “this,” Roth apparently meant the opportunity of the closure to get started again on a project Vornado has wanted to do for a long time.

Roth quickly said it is likely that the hotel will reopen. It’s worth noting that the 414 employees were furloughed, not laid off, meaning they are still likely receiving benefits and are expected to be brought back.

But since Vornado bought what was once the world’s largest hotel in 1997, it has repeatedly tried to replace it, only to see plans fall through for one reason or another. It originally intended to rebrand the hotel along with acquisition partner Ong Beng Seng, a Singapore-based hotel developer, but that effort ended within two years. A 2007 plan to erect a 68-story tower anchored by Merrill Lynch died when the financial crisis hit a year later.

The City Council in 2010 approved zoning for a tower. But a year later, office rents in the area were still too low for Vornado to justify building its proposed 15 Penn Plaza, so it pivoted to a $300 million renovation of the hotel. In 2016, facing competition from office towers at the World Trade Center site and Hudson Yards, Vornado considered a condominium and retail project. Renderings for a 2.8 million-square-foot tower were leaked in 2018, but nothing came of that.

Yet more renderings for a tower were released last year, but Facebook declined to commit to space and Vornado appears unwilling to build without an anchor tenant in hand.

Before Vornado, the Hotel Pennsylvania — named for the famous railroad company that built it in 1919 — had been associated with many of the biggest names in hospitality or real estate: Ellsworth Statler, its first operator, whose namesake firm rebranded it the Hotel Statler in 1949; Conrad Hilton, who bought all 17 Statler hotels in 1954; William Zeckendorf Jr., who acquired it in 1979 for $24 million; and Elie Hirschfeld, his father Abraham Hirschfeld and Arthur Cohen, who together with the Penta Hotels chain paid $46 million for the hotel in 1983, overhauled it and renamed it the New York Penta.

The chain’s partners bought it out in 1991 and restored the original name.

Still somewhat unglamorous — it was denied landmark status by the city in 2010 and its 1,700 rooms last year were priced in the $175 to $200 range — the Hotel Pennsylvania celebrated its 100th birthday last year by undertaking a “multi-phase room modernization.”

Its general manager told hotelbusiness.com in June that “more people have stayed here than any other hotel in the world.” But its Twitter account has been silent since October, and now Vornado is thinking again about making the historic hotel, well, history.


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