Obama snubs Waldorf-Astoria hotel amid Chinese espionage fears

For the first time since the 1930s, the Waldorf-Astoria's swank Presidential Suite is missing something major during the annual UN General Assembly: A U.S. president.

In a break with tradition, Barack Obama is not staying in his usual $10,000-a-night digs at the historic Manhattan building, amid high tensions over cyber-espionage. And a glance at the hotel's west-facing facade might reveal why.

There, above the Art Deco building's famous marquee, flutters the Five-Star Red Flag of the People's Republic of China.

• U.S. has security concerns about sale of Waldorf Astoria to Chinese

Long considered a home-away-from-home for American commanders-in-chief going back to Herbert Hoover eight decades ago, the Waldorf-Astoria sold last fall for $1.95 billion US to Angbang Insurance Group, a Beijing firm with deep pockets and reported links to the Communist Party.

The new owner's call for upgrades to the 47-storey tower included ordering "a major renovation," an announcement that alarmed White House security staff apparently skittish about eavesdropping.

Since then, U.S. delegates attending the UN General Assembly have been instructed to avoid the Waldorf, which is still operated by the Hilton Corporation.

As Beijing TV news crews this week filmed the hotel's exterior, and men wearing dark suits and earpieces whispered into their sleeves inside the Waldorf's stately Peacock Alley, U.S. delegates were a block away at the South Korean-owned Lotte New York Palace.

Hilton issued a statement upon losing the high-profile clients: "It is always a privilege to host representatives of the U.S. Department of State and we hope to have the occasion to welcome them back to the Waldorf Astoria New York when the opportunity presents itself."

Mutual distrust

Adam Segal, an expert on China and cybersecurity with the Council on Foreign Relations, was hardly surprised by the U.S. precautions.

"Countries have been known to exploit their connections," he said. "People build embassies and it's happened before that other countries have found bugs hidden in the walls."

In the case of the hotel diplomacy playing out now, the distrust appears to be mutual, Segal says.

He pointed out that Chinese President Xi Jinping and his staffers took a pass on sleeping at the Sunnylands retreat in California during a 2013 summit with Obama.

"They opted instead to stay at a local hotel," Segal said.

The Chinese diplomats' reported fearfulness about spying may not have been entirely unfounded. In 2002, the U.S. delivered a Boeing 767 jet to China for then-president Jiang Zemin to use as his personal aircraft.

"It was meant to serve as their version of Air Force One," Segal said. "But when they dismantled it, they found all sorts of bugs planted in it."

The Chinese government claimed to have discovered 27 surveillance devices in the plane and purported that the Central Intelligence Agency put them there. The CIA and the White House declined to comment on the allegations.

Faiza Patel, a national security analyst with the Brennan Center for Justice at New York University, says any potential tit-for-tat Chinese espionage "is basically the same type of stuff that the NSA is doing to foreign governments," pointing to documents leaked by Edward Snowden.

"Security concerns about the Waldorf could cover a host of issues, not just concerns about rooms being bugged," Patel said. "Of course, we know that the NSA itself has frequently spied on the conversations of foreign leaders and high-level UN officials, so it may be that they are simply expecting that the same tactics will be used against the U.S. president."

It's also no secret that cyber issues will be high on the agenda for Xi's first state visit to the States, she added.

Fitting intrigue

In a way, the tensions and intrigue befit the Waldorf-Astoria's reputation as a hotel whose original Fifth Avenue location grew out of a feud. William Waldorf Astor and his cousin John Jacob Astor IV built rival adjacent hotels in the 1890s, eventually connecting them via a long corridor.

Aside from being an icon of luxury for VIPs of the past, such as Frank Sinatra and Elizabeth Taylor, the current building on Park Avenue played a key role in world politics during the Cold War, hosting what the CIA called "one of the strangest gatherings in American history" when the hotel convened the controversial Communist-sponsored World Peace Conference in March 1949. Slammed by protesters as a front for selling Stalinism to Western culture, the conference was one of the first great propaganda battles of the era.

The ambassador's official residence has traditionally been a luxurious apartment in the Waldorf Towers.

"The key to American irritation over the Chinese ownership would be reflected in how soon Samantha Power leaves the Waldorf-Astoria," Meisler said. "If the Obama administration was really upset, it would pull her out immediately."

A spokesperson with Hilton Worldwide reiterated that the company retains a 100-year management contract for the Waldorf-Astoria, as per its agreement with Anbang Insurance Group. "The property will also undergo a major renovation so its elegance and grandeur can be enjoyed by many generations to come, and this construction will of course be fully compliant with U.S. law," the hotel operator said in a statement.

The Hilton spokesperson declined to comment on the UN ambassador's housing plans, or Obama's withdrawal from the hotel.

So far no official U.S. government decision has been made about whether Power will vacate her home, though her lease expires this year.

In the meantime, other heads of state have had no qualms about checking in to the Waldorf-Astoria, the hotel that originated the concept of room service.

Chinese leader Xi is reportedly staying there, as is fellow guest Russian President Vladimir Putin.