Pakistan’s cash-strapped government has suffered a blow after New York moved to scrap a $220mn contract with a hotel it owns that became a focus of criticism from supporters of US President Donald Trump.
State-owned Pakistan International Airlines acquired the century-old Roosevelt Hotel in Manhattan more than two decades ago. Since 2023 the hotel has been used to host or process more than 100,000 immigrants bussed in from across the US.
But this week New York mayor Eric Adams said the city would close the shelter, saying the number of immigrants entering New York had dropped to 350 per week from 4,000 per week two years ago.
Adams said more than 232,000 migrants had come to New York in the last three years. “The Roosevelt Hotel was where we processed 75% of those who came into our care, and it was critical to our effective operations,” he posted on X.
The early end of the three-year contract is a setback for Pakistan as it tries to privatise its flag carrier, which has been a major drag on state finances. A first round of bidding for the airline fizzled out last year over investor worries about issues including taxes on new aircraft and staff retention.
“We were cognisant of the risk with this new government [the Trump administration] settling in,” said one senior government official in Pakistan. The contract could be cancelled after May, the official said.
A city spokesperson said the centre would close in the “coming months”, saving taxpayers “millions of dollars”.
Adams’ decision to close the shelter came two weeks after the US Department of Justice dropped corruption charges against him, a move critics say was part of a quid pro quo with the Trump administration to intensify a crackdown against illegal immigrants. Adams has denied the claims.
The once-luxurious Roosevelt, which has more than 1,000 rooms and was a storied New York venue for decades, was leased to PIA in 1979. The airline later bought it outright, making it a favoured haunt of wealthy Pakistanis who used the airline’s now-defunct service from Karachi to make shopping trips.
But the hotel gradually fell out of favour and pandemic-related losses finally forced its closure in 2020.
The proceeds from the migrant shelter agreement were helping to pay down the more than Rs600bn ($2.14bn) in debt taken on by PIA’s holding company when it was created last year, a move aimed at smoothing the privatisation of assets that include the core airline and a Paris hotel.
An intense backlash over New York’s use of the Roosevelt had grown among Trump administration officials and supporters.
Vivek Ramaswamy, who formerly headed the cost-cutting so-called Department of Government Efficiency alongside Elon Musk, said on social media site X in December that it was “nuts” that “NYC taxpayers are effectively paying a foreign government to house illegals in our own country”.
Trump himself complained in February about the city using large sums on a hotel he said was “not luxury”.
In a post on X, his homeland security secretary Kristi Noem justified a decision to freeze $80mn in migration-related funds for New York by saying the hotel was the “base of operations” for a Venezuelan gang. Noem offered no evidence for the claim.
The early end of the contract might force Islamabad to speed up efforts to sell the property or to knock it down and build a mixed-use skyscraper with a development partner, officials and analysts in Pakistan said.
At the hotel, near Grand Central station in midtown Manhattan, residents filter in and out of the building, exchanging greetings and fist bumps with security personnel behind metal barriers.
Children living in the hotel play on the pavement outside, steps away from upmarket eateries and clothing stores.
Inside, the hotel’s lobby still has its ornate chandeliers and a portrait of Guy Lombardo, renowned leader of the Roosevelt’s house band in the 1930s.
The planned closure of the hotel-turned-shelter has sparked concerns among some of its more than 2,800 residents.
“The truth is they haven’t told us anything,” said Hecdimar Rivas, a 26-year old mother of three who arrived from Venezuela earlier this year. “We found out from the press.”