Trump Purchases the Plaza Hotel

The Crown Jewel

On March 27, 1988, Donald Trump agreed to purchase the Plaza Hotel, the storied 805-room landmark at the corner of Fifth Avenue and Central Park South in Manhattan. The purchase price was $407.5 million, a sum that Trump financed almost entirely with borrowed money. He declared the Plaza the greatest hotel in the world and compared it to owning the Mona Lisa. He installed his wife, Ivana Trump, as the hotel’s president and tasked her with a lavish renovation program.

The Plaza had been a cultural icon since its opening in 1907. It had hosted generations of socialites, presidents, and celebrities. Its Oak Room bar, its Palm Court, and its literary association with F. Scott Fitzgerald and Kay Thompson’s “Eloise” books gave it a mystique unmatched by any other American hotel. For Trump, owning it was as much about status as it was about business.

A Debt-Fueled Purchase

The acquisition reflected the reckless leverage that characterized Trump’s business dealings during the late 1980s. Trump borrowed heavily to finance the purchase, taking on debt that required the hotel to generate enormous revenue just to service the interest payments. Industry analysts immediately questioned whether the Plaza could generate enough income to justify the price, particularly given the aging infrastructure that needed costly upgrades.

Ivana Trump threw herself into the renovation, spending lavishly on restoring the hotel’s grand interiors. But the combination of the purchase price, the renovation costs, and the debt load created a financial burden that proved unsustainable. The hotel reportedly lost $74 million in its first 19 months of Trump ownership.

Financial Collapse

By 1990, as the broader real estate market softened and Trump’s entire empire came under severe financial strain, the Plaza became a symbol of his overextension. Unable to cover the debt payments, Trump ceded a 49 percent stake in the hotel to Citibank and other lenders in 1992 as part of a restructuring. He was eventually removed from day-to-day control of the property. The hotel was sold to a partnership between Prince Alwaleed bin Talal of Saudi Arabia and Singapore’s CDL Hotels International in 1995 for $325 million, roughly $80 million less than Trump had paid seven years earlier.

The Plaza Hotel purchase epitomized both the soaring ambition and the reckless financial practices that defined Trump’s business career in the late 1980s. It was a trophy acquisition, driven by ego as much as business logic, and it unraveled when the debt-fueled boom that supported it collapsed.