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For Storied Plaza, The End of an Era

Hotel Closes for Conversion to Condos

By Michelle Garcia
Special to The Washington Post
Saturday, April 30, 2005; Page A03

NEW YORK -- Taxicabs and limousines glide into the circular drive where smartly dressed bellmen greet visitors with the phrase that makes just about anyone feel as though he has arrived: "Welcome to the Plaza."

Walking inside is stepping into history, a hotel made famous by presidents, in children's stories and on the silver screen. Deep, dark wood. The scent of lilies. Dazzling chandeliers.

Patrons sit beneath a mural in the Plaza Hotel's famous Oak Bar, which will be spared when the Manhattan landmark is largely converted into condominiums. (Kathy Willens -- AP)

On a recent day, a mother impressed the dignity of it all upon her whining young daughter. "You do not do that," scolded the woman in a powder pink suit. "Not at the Plaza." But grand hotels such as the 98-year-old Plaza are very much on the endangered list. One after the other, the hotels that once defined elegance and luxury on Central Park South and along Fifth and Sixth avenues, are disappearing. They have become the latest victims of a real estate bubble that tempts developers to turn the old beauties, albeit some bearing signs of aging, into condominiums.

The result means fewer hotel rooms in the nation's largest city, a loss to preservationists who value the hotels' history and to hundreds of unionized employees put out of work.

The 805-room Plaza is to close Saturday and will reopen with condominium units and many fewer hotel rooms. It is the best-known of a group that in the past two years has included the Stanhope, the Intercontinental Central Park South and Delmonico: hotels that have gone condo in a raging real estate market in which the average Manhattan apartment sells for $1 million. By the end of this year, the city will have lost about 3,000 rooms from the closings, according to an analysis by Pricewaterhouse Coopers, with most in historic, grand hotels.

New hotels in Manhattan typically have fewer rooms than their venerable forebears and the loss comes when average occupancy rates are high, about 85 percent. Hotels in the borough were sold out 150 days last year.

The decline has set off new worries for hotel workers.

"We can't allow the hotel industry to dismantle itself because of a blip on the real estate market," said Peter Ward, president of the Hotel and Motel Trades Council Local 6, which includes the Plaza's 900 employees.

But Elad Properties, the Plaza's new owner, said preserving the hotel was not financially feasible. It purchased the Plaza for $675 million and plans to spend $350 million more on renovations. One of New York's most famous hotels, it has played host to every president since Theodore Roosevelt, was featured in the Alfred Hitchcock movie classic "North by Northwest" and, of course, was known to countless younger readers as the place where Eloise lived.

"The market for condominiums at this particular location is more favorable [than] for hotel rooms," spokesman Lloyd Kaplan said. "For there to be a Plaza, you have to have a product that you can market."

Under pressure from city officials and preservationists, Elad decided two weeks ago to keep 350 hotel rooms when it reopens. Also remaining will be the stately Oak Bar and Grand Ballroom, where Truman Capote hosted the legendary Black and White ball. The agreement with the union came as the city council was considering a bill to limit the number of rooms that could be made into condos -- that legislation is on hold as Mayor Michael R. Bloomberg (R) plans meetings with other hotel owners to discuss condo conversions.

Even with the agreement between the owner and labor union, about 600 Plaza employees will lose their jobs. Hotel conversions citywide have claimed 1,000 union jobs in recent years, according to union officials. At the Plaza, annual salaries range from $35,000 for housekeepers to $35,000 to $100,000 for banquet waiters, wages that roughly match other unionized hotel jobs in the city.

Neyibe Handal, a Honduran-born chef who has worked at the Plaza for 23 years, has just bought a house. He now worries about paying for it and starting over again in a new job. "There's a lot of unemployment" in the city, he fretted.

Afaf, an Egyptian woman who declined to give her last name to protect her medical privacy, works as a housekeeper. She said she was worried about the layoffs and her chances of landing another union job.

"I need health insurance because I had big surgery," she said. "I had [a] big tumor."

The vestiges of tradition in what will remain of the Plaza stand in contrast to the city's new hotels. They are frequently the mid-priced sort often found along interstates and a few limited-service boutique hotels.

The newcomers are usually not in hot Midtown. A Marriott Courtyard will open in Harlem next year. A Hampton Inn is opening at the Southside Seaport.

Bjorn Hanson, a hospitality analyst for Pricewaterhouse Coopers, said the new hotels have fewer rooms and that employees describe them as "less high-end, less luxury."

"Only one is opening that will be like the Plaza," Hanson said. "And that's the Plaza."

© 2005 The Washington Post Company