Hotel closures at the height of the covid pandemic were not unusual in New York. Travel restrictions and lockdowns brought the city’s hospitality sector to a standstill. However, as the US and much of the world has reopened for travel, some of the city’s shuttered hotels are poised for a comeback.
One example is a hotel that sits in the heart of Times Square, the Hilton on 234 West 42nd Street. Its recent purchase by Apollo Global Management and hospitality investor Newbound Holdings shows signs that there is renewed investor confidence in hospitality, despite the property having been bought for a fraction of its previous value.
The Hilton Times Square was a high-profile casualty of the pandemic in New York City. The hotel, known for its city views and high-floor rooms, once drew in guests from far and wide before the pandemic altered the landscape. Now, the 478 rooms are eerily quiet. The hotel closed in April 2020 and announced its permanent closure in September that year.
The hotel’s owner at the time, Irvine, California-based real estate investment trust Sunstone Hotel Investors, defaulted on a loan for the hotel and handed over the keys to the lender, Torchlight Investors, in late 2020. The prior owner had not been paying its mortgage since a month after lockdown began. Since then, the property has remained closed to visitors, vacant in the middle of what traditionally has been one of the busiest and most vibrant streets in the world.
The sale of the hotel for $85 million is a 65 percent drop in value from its $242.5 million sale price in 2006, according to a report by The Wall Street Journal. The pricing partly reflected the pandemic’s impact on tourism and hotel demand in New York’s entertainment district.
The hotel opened in 2000 and was managed by Hilton Hotels until 2006, when Sunstone Hotel Investors took over management following their purchase of the property that year. According to reports at the time of the 2006 transaction, Sunstone executed its option and made an additional $15 million payment to convert the property into a franchise, and it remained under Sunstone’s ownership until the financial impact of the pandemic took hold.
Back to life
As life begins to return to Times Square, the hotel is likewise headed for recovery. After the Hilton Times Square deal closes at the end of summer, there are plans to reopen in the fall, according to the WSJ. Both Apollo and Newbound plan to invest in improvements to the rooms and the hotel’s 15th floor lobby.
If the walls could talk at the Hilton Times Square, there would be less of a conversation and more a sigh of relief. After two years laying vacant with its future unclear, it can finally look toward once again becoming an oasis for travelers amid the hustle and bustle of Times Square.
The Hilton Times Square opens
The hotel is bought by California-based REIT Sunstone Hotel Investors for $242.5 million
The hotel closes after financial losses exacerbated by the pandemic
Sunstone Hotel Investors hands the property over to the lender, Torchlight Investors
Apollo Global Management and Newbound Holdings buy the Hilton Times Square for approximately $85 million
The Hilton Times Square is set to reopen