Hotel Chelsea Sold to Luxury Hotelier

By Mathew Katz on August 27, 2013 4:35pm | Updated on August 27, 2013 5:01pm

 The Hotel Chelsea has been the site of a controversial renovation for nearly two years.
The Hotel Chelsea has been the site of a controversial renovation for nearly two years.
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flickr/Robyn Lee

CHELSEA — Two years after longtime owner Stanley Bard sold the historic Hotel Chelsea to developer Joseph Chetrit, the hotel has been sold once more, DNAinfo New York has learned.

According to an Aug. 27 memo sent out to tenants at the hotel at 222 W. 23rd St., Chetrit, along with Clipper Equities, sold their interests to luxury hotel company King & Grove.

King & Grove, which owns boutique hotels in Midtown, Williamsburg and Montauk, previously owned a passive minority interest in the landmarked building. The details of the deal were not immediately available.

Chetrit bought to hotel for roughly $80 million in August 2011, closing it to guests for a renovation by architect Gene Kaufman, in the hopes of eventually turning it into a luxury hotspot.

But the billionaire developer, who also owns a large portion of the Willis Tower in Chicago, did not count on the roughly 100 tenants still living permanently at the iconic hotel.

During his two years in charge of the Chelsea, Chetrit frequently came under fire over an ongoing renovation that tenants claimed disrupted their lives, filling the building with dust, mold and toxic compounds, and even cutting off heat, hot water, and gas in the hotel for days in March.

In May 2012, a judge ordered Chetrit to clean up the renovation, though almost a year later, in April, the tenants filed a motion in housing court claiming that the "unlivable" conditions had not gone away.

In the memo, King & Grove CEO Ed Scheetz signaled that his company's ownership would mark the end of that disruptive era.

"We now own 100 percent of the hotel and we intend to make a number of significant enhancements to the way the property is managed and the manner in which the restoration is conducted," Scheetz wrote in the memo.

Scheetz promised that the lobby will be dedicated exclusively to tenants and that contractors would not be permitted to use it. 

The memo also promises enhanced security to identify workers entering the hotel, and Scheetz committed to improve the cleanliness of the entire building.

"This is just a beginning, but I hope it indicates to you that we are fully committed to minimizing the impact of the restoration to the extent possible," Scheetz wrote.

Zoe Pappas, who heads up the tenant's association at the hotel and helped organize tenants to take legal action against Chetrit, said she was looking forward to working with Scheetz.

"He would be extremely successful if he chooses to do the right thing," she said. "I'm very willing to work as long as there is respect and consideration."

The Chetrit Group did not immediately respond to a request for comment. A representative for King & Grove declined to comment on the deal.

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