Once home to Crocodile Dundee and Eloise, the Plaza is soon to be an apartment block

ITS ORNATE interiors have hosted scenes from Plaza Suite and Crocodile Dundee. Michael Douglas and Catherine Zeta-Jones got married there, as did Donald Trump and Marla Maples. Eloise, the mischievous star of Kay Thompson's children's books, has her home there. But after 98 years, one of New York's most loved landmarks is to be shut down and utterly transformed.

To ease the inevitable tantrum, it is worth reassuring Eloise and other fans of the Plaza that this will not be for ever. New owners of the hotel, who bought it only a few months ago, are pulling down the shutters only until the end of next year, when it will reopen in its new and thoroughly multi-purpose incarnation, with shops, restaurants, 200 luxury apartments and a much smaller selection of hotel rooms.

If you have never slept in any of its 805 rooms, nibbled tea-time sandwiches in its ornate Palm Court or sipped a Manhattan amid the virile wood panelling of the Oak Room Bar, you still feel like you know the place. There is illustrious history as a favourite of Hollywood directors. Other films with the Plaza as the backdrop have included North by Northwest, Funny Girl and The Great Gatsby. And its fame has been secured by many celebrity ghosts. F Scott Fitzgerald tippled there and Truman Capote held his 1966 Black and White Ball there.

You could no more retire the Plaza for good than you could the Savoy in London or the Ritz in Paris. It is more than just any old New York hotel. Its majestic wedding-cake edifice and high-ceiling interiors are part of the city's soul, and a touchstone, perhaps not always deservedly, of hotel pomp and grandeur.

You can, however, try to make it better, which is the goal of Miki Naftali, chief executive of the new owners of the 19-storey building, the Israel- based Elad Properties. And more profitable. (The hotel has been losing money for years now.) And so it is that the Plaza will lock down its revolving doors and send its greatcoated doormen home on the last day of April. And it will remain off-limits to all of us at least until the end of 2006.

What will happen in the interim is a remodelling of the Plaza that, fortunately, will pay plenty of heed to New York's enduring sense of nostalgia. The exterior, which echoes every day to the clip-clopping of horses and buggies in adjacent Central Park, will be left entirely unchanged. In truth, the new owners had no choice, since the edifice is a designated landmark. Also to remain intact, if a little spruced up, will be its most famous interior spaces, including the Oak Room and the Palm Court. But beyond that, the updated Plaza will be more or less unrecognisable.

Most of all, expect it to shrink. The 805 rooms available today to tourists, visitors and the occasional permanent resident (Eloise among them) will be shaved to only 150. Worse, none will have windows overlooking the Park or even Fifth Avenue, and will be squeezed into a few lower floors on the 58th Street side of the building. That is because the bulk of the building will be converted to high-priced condominium apartments.

That the Plaza should succumb to the pressure to turn itself partly into a luxury apartment building has surprised no one. Indeed, after Elad Properties snapped it up for $675m (pounds 360m) late last summer, rumours swirled that all of it would become luxury residences and its past as a hotel would be buried entirely. To the extent that some hotel space will be left behind has therefore been greeted by many in the city with grateful relief.

What many did not expect, however, was the second main element of Mr Naftali's plan - to install a five- or six-floor department store in its guts. It will be a big shop - about 150,000 square foot of it accessible via the doors that are the hotel's main entrance today - and an entirely posh one, too. It will, Mr Naftali reassures us, be "a very high-end retail operator, even more exclusive than Bergdorf Goodman, Saks Fifth Avenue or Harrods".

What Elad seems to have achieved already is getting its proposals on the table without causing instant uproar. As for Eloise, there is always the Waldorf a few blocks away, where surely she will enjoy high jinks aplenty.