Waldorf buyer offers $135 million severance deal

China’s Anbang Insurance Group, which recently bought the Waldorf Astoria (above), has announced plans to convert as much as three-quarters of the hotel rooms into apartments. When the New York landmark reopens in two years, it will have about 500
China’s Anbang Insurance Group, which recently bought the Waldorf Astoria (above), has announced plans to convert as much as three-quarters of the hotel rooms into apartments. When the New York landmark reopens in two years, it will have about 500 rooms upgraded to luxury standards.PHOTO: AGENCE FRANCE-PRESSE

NEW YORK • The Chinese acquirer of Waldorf Astoria has offered a generous severance package worth US$100 million (S$135 million) or more to employees, as the new owner plans to convert most of the landmark hotel into residential units for sale.

Anbang Insurance Group's restoration plan calls for closing down the 1,413-room property within months, removing as many as 1,100 hotel rooms and eliminating hundreds of hotel jobs, the Wall Street Journal (WSJ) reported on Monday.

When the Waldorf reopens two years later, the hotel will feature between 300 and 500 guest rooms upgraded to luxury standards, sources told WSJ.

The remaining units will be sold as condominiums.

The plan will lead to a reduction of many of its 1,500 employees, including staff attached to room service and housekeeping.

WSJ said that Anbang and previous owner Hilton Worldwide Holdings, which will continue to manage the property when it reopens, have reached agreements with hundreds of staff at a cost of US$100 million or more. "We continue to explore all options," an Anbang spokesman said. "We have no definitive plans at this time."

Beijing-based Anbang, an insurance company that manages about 700 billion yuan (S$142 billion) worth of assets, acquired Waldorf for about US$1.95 billion from Hilton.

The redevelopment costs are expected to run to more than US$1 billion, sources told WSJ.

A condo conversion could help raise up to US$4 billion in sales, hotel industry analysts have estimated.

The changes will radically transform an 85-year-old institution that stands on Park Avenue in New York.

It gained worldwide attention for its luxury suites, lavish parties and famous guests.

Big names, including American leaders since president Herbert Hoover, celebrities like singer Frank Sinatra and international guests like the Duke of Windsor after he abdicated his throne to marry American socialite Wallis Simpson, have stayed at the property where a standard room costs US$389 a night and the presidential suite, more than US$10,000.

But the hotel in recent times has been described as a typical, old-fashioned New York landmark.

"It's expensive and outdated," Canadian tourist Lisa told The Independent newspaper while on her way out after a five-night stay. She did not give her last name.

Various other major hotels in New York City have also recently undergone makeovers or been closed down.

The famous Plaza hotel was closed between 2005 and 2008 while it underwent a US$400 million renovation, turning several floors into 181 condominiums.

A version of this article appeared in the print edition of The Straits Times on June 30, 2016, with the headline 'Waldorf buyer offers $135 million severance deal'. Print Edition | Subscribe