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Oak Room to Close After Landlord Dispute With Hotel in New York City

The Plaza Hotel’s Oak Room Restaurant in Manhattan is closing after squabbles with hotel management, The New York Times reports.

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According to The Times, lease negotiations broke down with the hotel in March after tensions between the parties soared because hotel owners pushed the Oak Room owner to cancel events or pay double rent. The Plaza’s owners have sued the Oak Room’s owners for more than $33 million, claiming “numerous violations of the lease, unacceptable activities and significant financial arrears.”
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The dispute between the parties started with the restaurant’s “Day and Night” Saturday afternoon parties, which invited hundreds of young partiers and made the restaurant as much as $180,000 in the afternoon, much of it from top-shelf alcohol sales. But the parties disrupted hotel residents and guests.

The Plaza Hotel has been in the news as recently as October, when actor Charlie Sheen, naked and apparently intoxicated, ransacked one of the Plaza’s rooms and was later hospitalized. The hotel was hit hard by the recession, as by January 2010, nearly a dozen condo owners had to sell their units at a loss, the Times reported.

Plaza owners claim in court filings that Oak Room owners violated the terms of their lease and obstructed the landlord’s “costly efforts to restore the landmark Plaza Hotel to its former glory, in a city where the amenities and manners of cosmopolitan society have increasingly given way to the rude and the ordinary.”

The Oak Room opened in fall 2008 after delays from $8.5 million in renovations. The restaurant started with poor reviews from its first chef and once the recession hit, the owners were unable to pay the $125,000 per month in rent, so the Plaza agreed to a reduced rent of $50,000 plus 8 percent of sales, making the parties necessary to keep business flourishing.