The Journal. - The Waldorf Renovation: Over Budget, Past Deadlines, a Man Imprisoned

Episode Date: November 3, 2025

The historic Waldorf Astoria Hotel has reopened after an eight year saga that went $1 billion over budget. WSJ’s Craig Karmin takes us inside the deal to buy the hotel, the arrest of its new owner and the Chinese government’s takeover. Ryan Knutson hosts. Further Listening:- Six Days of Chaos at MGM’s Casinos- The Missing Minister Sign up for WSJ’s free What’s News newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices

The Waldorf Astoria Hotel in New York City is one of the most iconic hotels in the world. And it was once the crown jewel of New York glitz and glam. I spoke to my colleague Craig Carman about it. It's one of the most famous hotels in America. It opened in 1931, and at the time it was probably the most luxurious hotel, probably in the world. It was also the most modern.

Imagine it's the 1950s. You're headed out for a night on the town, so you put on your finest clothes and head to the Waldorf. So you would probably walk in from Park Avenue. The hotel took up a full block on Park Avenue. You'd walk up the marble stairs. And once inside, you would probably be surrounded by wealthy business people, tourists, perhaps the occasional celebrity or sports figure.

there was a part of the hotel lobby known as Peacock Alley. It was a place where people went to strut their stuff. The hotel drew celebrities like Marilyn Monroe and Frank Sinatra, and even presidents have stayed there. But by the 2010s, the hotel was losing its shine. It badly needed renovations.

The plumbing was old. Elevators needed to be repaired. In 2014, a Chinese billionaire bought it, looking to restore it to its former glory. But it was a tall task. They would go a billion dollars over budget, take nearly a decade to finish. And before it would be done,

its new owner would end up in jail. Welcome to The Journal, our show about money, business, and power. I'm Ryan Knutzen. It's Monday, November 3rd. Coming up on the show, the Waldorf has story is Nightmare Renovation.

Working. And the naked gun. That was awesome. Now that's a mountain of entertainment. Paramount Wolf. The Waldorf Astoria Hotel opened in 1931. Since the 70s, it's been owned by the Hilton Hotel Corporation. Conrad Hilton, the company's founder, once scribbled on a picture of the building that the Waldorf was the greatest of

them all. But in 2014, Hilton was thinking about selling it. What was the state of the Waldorf has story when it went up for sale? So by that point, it was approaching a century old. It had become a bit antiquated. You could see it on the walls. You could see it on the floor. It was a natural outcome from people having walked through it and rubbed up against the walls for decades. The investment company Blackstone, one of Hilton's largest shareholders, was told by its advisors that the Waldorf would likely be worth around a billion dollars. And there was someone who was interested. A Chinese businessman named Wu Xiaohui.

They didn't know who this guy was. They didn't know where his funding was coming from. But they thought it couldn't hurt to ask for a price. So they called up the CEO of Hilton, and they decided, well, why don't we ask for the moon? Let's ask for $2 billion and see what Chairman Wu says. So they went back to the Peninsula Hotel where they're having breakfast and they told him, well, you could have it for $2 billion. He thought for a little bit, and he said, well, how about $1.9 billion?

The Blackstone guys were floored. They couldn't believe that his counter was almost as high as their outrageous initial salvo. So they kept talking, and within a short period of time, that same day, they had reached a deal at $1.95 billion for the hotel. $1.95, it's almost $950 million more than they thought that their own hotel was worth. Roughly speaking, yes. Hundreds of millions dollars more. than they had been given guidance on it.

It was also the most anyone has ever paid for a standalone hotel. But to Wu, it still seemed like a reasonable price. He later said at an event that the hotel was cheaper on a square meter basis than certain properties in Beijing. Wu had a long career in the insurance industry, and he was married to a granddaughter of Den Xiaoping, the former leader of the People's Republic of China. So he was always sort of a mysterious figure in the U.S.

He had started his own insurance company, Anbang Insurance Group, in 2004, started off as a regional car insurance company in China, and he grew it rather rapidly into a full-service insurance company and asset management company. And the growth of Anbang coincided with this relaxation in China of investment rules in terms of Chinese investors and companies being able to buy real estate overseas. By 2014, the Chinese government made it easier for its citizens to buy property overseas, and Chinese businessmen saw it as an opportunity to buy prestigious property that would go up in value. Wu was at the forefront of this movement and bought a lot of real estate in places like Chicago,

L.A. and New York. But according to Craig's reporting, the Waldorf was his prized purchase. It was prestigious to own a trophy building in the U.S. I think Wu took a lot of pride in being able to show people the Waldorf and said, this is my property, I own it, I have great plans for it. And while he paid a lot for it, I think he also felt that this was a one-of-a-kind asset, and over a period of time, it would appreciate. And should he ever want to sell it, he would be able to sell it far above what he paid for it, even at $1.95 billion. And what did who's that who you want to do with the Waldorf story, once he acquired it? He really wanted to make it almost a centerpiece for Manhattan's social life.

And he had a lot of various ideas, many that he would think up and dismiss rather quickly afterwards. But at one point, he talked with other people working on the conversion project about creating a members-only club there that would invite only the city's billionaires. Another time, he talked about creating a stay-of-the-art gym that would turn to a nightclub at night and only resident. of the Waldorf would be allowed to attend. A gym to a nightclub? You're like running on the treadmills or dancing on the treadmill? And then someone would pull it away and it would bring out the disco ball, something like that. Perhaps his most ambitious plan for the hotel, another one that never really came to fruition.

He sketched out plans for what would be a magnificent grand reopening party for the Waldorf. When the conversion was done, the hotel was complete, the residences were all ready to be sold. And he wanted to show it back to the New York Society and to the public. And his plan called for combining his Chinese heritage and the history of the Waldorf. And he was going to rely on holograms. And his grand opening party would start with Chinese warriors riding horseback through the lobby, holograms of Chinese warriors entering the Waldorf Astoria, followed by Marilyn Monroe and Frank Sinatra, former residents of the Waldorf,

exiting a black limousine to enter the Waldorf. And then the grand opening party would hit its peak when Celine Dion, the singer in real life, not a hologram, would perform for the audience. Sounds like a cool party. It would have been a great party. And on top of these new additions at the hotel, don't forget, there were parts of it that also needed repairs.

And Wu wanted both of these things, renovations and repairs, to be completed on a quick timeline. How big or expensive, how would you characterize how ambitious his plans were? It was incredibly ambitious. He then hoped to convert the hotel to a modern hotel and residences in one year. How did he choose one year? He read that the Empire State Building had been built in one year. And he felt if you could build the tallest building in the world in a little over one year,

it took about 13 months. You ought to be able to convert the Waldorf. his development team in the U.S. told him that was not even remotely possible that construction laws and safety requirements were very different back then. Labor was far cheaper and more abundant, and there was no way they could turn around the Waldorf at such a tight schedule. You know, I was just at the Empire State Building recently, and I was walking through where they're like showing the videos of it being built.

And there are a lot of people balancing on steel beams in the sky without any fall protection back in the 1930s. something you'd get away with in the 2000s. So after they convinced him that, he grudgingly decided that he would do a three-year construction schedule. But before he could get that work done, Wu Xia Hui got arrested. That's next. That's annoying.

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Bel Air Direct, insurance, simplified. Conditions apply. In 2017, three years after he bought the Waldorf Hotel, Wu Xiaoui was arrested in China. Chinese officials had been cracking down on some types of international investments, like real estate, in part to help stabilize its currency. Wu was arrested on charges of fraudulent fundraising and abusing his power. Some people I talk to think that he had just become too much a face of this flamboyant, free-spending Chinese entrepreneur overseas that the Chinese government was no longer comfortable with. But in fact, by the time that he was arrested, the Chinese had started to rein back in those rules that allowed people like Wu to spend so freely on real estate in the U.S. Wu was believed to be serving an 18-year prison sentence.

So what happened to his project with the Waldorf Astoria after he was sentenced to prison? So Wu was really the driving force and the vision behind creating this magnificent hotel. And once he was gone, things got a lot more difficult to push ahead. After Wu was arrested, the Chinese government took over his company's assets, which included the Waldorf Hotel. But by then, the project was on pace.

to blow past its deadline. And its new owner kept setting new ones. It said that hotel will be done by 2020, then 2022, then 2024. When the Chinese government took over the project, why didn't they change the scope? I think at that point they were just following through on the initial vision. I think they felt like money was not an object for them. This is the Chinese government, after all. They didn't need a loan.

They have plenty of cash around. they wanted something that they could be proud of and maybe at one point that they would sell and I think they just figured the path of the least resistance was to continue and move on somewhat along the lines of what Wu had wanted although they would be tweaks along the way. Some of those tweaks included killing the hybrid gym nightclub idea.

Ultimately, the entire renovation process took eight years. Part of the reason it took so long because there was a lot of painstaking detail in the hotel. There's a floor mosaic that has 148,000 individually hand-cut marble pieces that make up this mosaic. So it was very labor and time-intensive. They brought in artisans from Europe. But a lot of the work was just the more mundane stuff, replacing the plumbing, replacing the electrical systems, replacing the stairs and the elevators, stuff that had been around for decades

that was beyond obsolete and that took much longer to replace than anyone anticipated at the time. Did the Chinese government, did they say anything about how they felt about the project? Did they consider selling it off? Or they just sort of thought, like, we'll just have this gem?

Yeah, people who working on the project said that they considered a few options. They considered bringing an American partner to take control of the project. But the American partners, who they considered all wanted equity, they weren't comfortable giving up the equity, so that never really went anywhere. They also floated the idea of selling it. I don't know how seriously. I think if someone was willing to give them a good price for it, they would have taken that in consideration. But in the end, it was, you know, a work in progress. It was going slower than expected, costing well over budget,

and they didn't find any offers for many outsiders that seemed compelling. 11 years after the sale, the Waldorf is now open again, and it's not just a hotel anymore. About half of the rooms are being sold as condos. One of those condos, a roughly 900-square-foot, one-bed, one bath, is listed for $3.2 million. And how much did they end up spending on this renovation? Well, the all-in costs, if you include the acquisition cost,

the construction costs, the fact that they kept paying property taxes and insurance premiums, even though it was closed, all in costs were around $6 billion. $6 billion. That seems like a lot of money for a hotel renovation. I think it's a lot of money by almost any standards. And I think there's a big question about whether they'll ever see any return on their dollars. If the condos sell at extraordinarily high prices, probably higher prices they're getting right now, It's possible.

And you've gone to see it. What is it like now? Yeah, I went with a colleague a few weeks ago on a Friday afternoon, and the lobby was a buzz with people who looked like a combination of people who had gotten off work and were still dressed in work attire, people who looked like tourist, the guy in the white suit and the white cowboy hat was probably a tourist. Most of the tables in the lounge were full, and I asked the bartender, is it always this crowded. And he said, actually, it's pretty light today. Usually the bar is standing room only.

Would there ever be a way to renovate the Waldorf Astoria and make money back? Well, that's a good question. I mean, I think there was probably ways it could have streamlined the process, but I think it was always, you know, given a building that was that big, I think in the end it was about 1.6 million square feet and trying to modernize. something that was nearly a hundred years old. It was always going to be a very costly endeavor. It was always going to be an expensive project. It was always going to have to be a passion project for someone

who was probably thinking more about the hotel's place in history than about the bottom line. Craig says that, like the hotel itself, what happened to the Waldorf is unique. There's only one Waldorf story in New York in the world, the original Waldorf Hotel. I think if there's a lesson, it's, that if you want something badly enough

and you want to make it as pretty and as historic and iconic as it can be, you have to open your checkbook and spend the money. That's all for today. Monday, November 3rd. The journal is a co-production of Spotify and the Wall Street Journal. Additional reporting in this episode of Allison Polly. Thanks for listening. See you tomorrow.