Home Trump Organization weighs sale of Washington hotel
October 26, 2019
Three years after opening its doors in Washington, the Trump International Hotel is up for sale. Donald Trump’s children attributed their decision to consider offers to their wariness of mounting claims that the property has improperly benefited from their father’s presidency.
“People are objecting to us making so much money on the hotel and therefore we may be willing to sell,” Eric Trump, executive vice-president of the Trump Organization, said in a statement on Friday.
The Trump Organization has retained Jones Lange LaSalle, a property brokerage, to market the rights to the 263-room hotel, which occupies the renovated quarters of the Old Post Office building on Pennsylvania Avenue just a few blocks from the White House.
They are seeking about $520m, according to people familiar with the discussions, based on a valuation of $2m per room. That would shatter the previous high in the Washington market of $1.3m per room, prompting one hotel executive to quip that the family was “seeking New York prices in DC”.
A key question, according to property executives, is whether the family will seek to sell the property with or without the Trump name attached. Several agreed that it would fetch a higher price “unencumbered” — that is, without the family name or the Trump Organization serving as its operator.
“It is a special hotel if it’s offered unencumbered,” one said.
The building’s owner, the government’s General Services Administration, sought bids for a long-term lease and the right to develop the historic property in 2011. The Trumps were selected the following year, when Mr Trump was still a reality television star, with a $200m plan to turn it into a luxury hotel. Several major hotel companies, including Marriott, had expressed interest.
Under a 60-year lease, the Trump Organization pays the GSA a monthly rent of $267,653.
At a ribbon-cutting ceremony in October 2016, then-candidate Trump praised the hotel as “the most coveted” location in Washington, apart from the White House.
Unlike every other hotel company, while our father is president of the United States, we have imposed voluntary restrictions and have chosen not to market, nor solicit, foreign government business during his time in office
The Trumps’ opulent renovation has won plaudits. Yet the hotel has become a magnet for controversy since Mr Trump took office. Critics have alleged that spending lavishly in the five-star hotel has become a back door for lobbyists and foreign governments to curry favour with the Trump administration.
In one case, a lobbying firm working for the Saudi government booked hundreds of rooms at the hotel shortly after the 2016 election, according to The Washington Post.
Earlier this month, an appeals court said it would reconsider a complaint filed by two Democratic attorneys-general that Mr Trump’s ownership of the hotel amounted to a violation of the US constitution’s emoluments clauses, which restrict the president from accepting gifts from foreign governments. Mr Trump prevailed in an earlier ruling.
The president earned $40.4m from the hotel in 2017, according to his financial disclosure forms. Mr Trump transferred his interest in his family business to a trust upon taking office but still benefits as its owner.
The family has repeatedly denied allegations of impropriety.
“Unlike every other hotel company, while our father is president of the United States, we have imposed voluntary restrictions and have chosen not to market, nor solicit, foreign government business during his time in office,” Eric Trump said on Friday.
Far from resolving ethical questions, selling the hotel could create a host of new ones, according to Public Citizen, a watchdog group.
“If the Trump Organization puts out a for sale sign on the Trump International Hotel and seeks and takes bids, it will create massive conflicts of interests with the deep-pocketed individuals, foreign governments, investment funds or corporations that could afford to make such a purchase,” the group said in a statement.
Even if the Trumps were to sell the property lease they could still retain naming rights and an operating role, meaning they would still see regular income flowing from the hotel.
Assuming the family presses ahead with a sale, then they will be forced to disclose closely-held financial information — something they have been loath to do.
Apart from the clues in Mr Trump’s annual financial disclosure, the Trump International’s financial performance is a subject of some debate in the industry.
While the Trump name repels many, it has undoubtedly attracted business from the president’s admirers, some of whom can be seen in its lobby clad in red Trump gear.
“It’s clearly at its peak value,” one property executive said. “The minute he’s not president, it’s worth less.”