A Schrager-Less Gramercy Park Hotel? We Shudder at The Thought

July 12, 2010 at 9:31 AM | by juliana | Comments (3)

New hotels are opening left and right in New York but in looking at some of the former darlings of the hotel world, things aren't as happy. Like The Gramercy Park Hotel.

The hotel's owner Ian Schrager and its commercial landlords Aby Rosen and Michael Fuchs, have reportedly defaulted on a $140 million loan, according to Crains New York. This is certainly alarming for such a well-respected hotel like GPH but despite cutting room rates down from the initial $550 to about $425, the hotel is apparently still not generating enough money cover its debt. Yet GPH is not alone.

Crain's reports that "last year about half the city's hotels didn't generate enough cash to pay their debt-service obligations." Indeed, several big name hotels in NYC may get sold in the near future.

Yet the tricky part with GPH is that if someone else assumes the loan, there may be no guarantee that Schrager would stay involved with the hotel.

One investor who was offered the loan on the Gramercy Park Hotel said on the promise of anonymity that he wasn't interested because he feared the establishment would lose its panache if the investor couldn't reach a deal for Mr. Schrager to stay after foreclosure. �I'm afraid he would take all the pretty girls at the bar with him,� the investor said.

Could another boutique operator come in and run GPH better than Schrager? Well, we certainly don't want to see that day happen. Meanwhile, if you feel like patronizing GPH this week, rates start at $425 a night. But if you book two weeks in advance, you can save 20 percent. Do it! The future of GPH is at stake!

Comments (3)

Return to » A Schrager-Less Gramercy Park Hotel? We Shudder at The Thought

So many 'smart people' really think he (Ian) makes a difference towards the day-to-day. Anywhere else, it would simply be the owner/operator's responsibility to build a property to become self sufficient and/or change the manager (Schrager). I will never get the mystique this industry gets from those outside of it. Without Mr. Schrager, one might look today at Morgans, Royalton, Mondrian, et al, to see that they do succeed and perhaps better - certainly financially, without him.

By what standard are you judging them as a success? The Mondrian in NYC can't sell it's condos, so no matter what the hotel does the project is a financial failure, I would guess of roughly the same size, if not more then, GPH. Ian had no problem with his condo's at GPH or 40 Bond, so at least something was salvaged. Yes, it was a different market, but that is as much part of the game as Morgan's not understanding that East Canal St is not the place for luxury apts. The Paramount, Morgans (the hotel) etc are shadows of what they where. Morgan's stock price is a fraction of what it was, and the Hudson is basically the only thing in their portfolio making money. I would say that Ian faired better than Morgan's in that break-up. (how much did he cash out for again?)

Selling condos is not the first concern of a hotelier, which Ian really is - Aby is all about the condos and has the infrastructure and sell group to do so. The Paramount is a Highgate hotel, not Morgans - sold years ago. The Mondrian mentioned is the original in LA. Ian was never on an exchange and so its apples to oranges. No one noted here is going broke and all are without doubt successes; however, when it comes to operating an entity for its max return, allowing for debt service, let's be fair - this is not Ian's first bankruptcy filing.

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