I am not surprised that they want to get rid of the balconies. I can recall two separate instances over the last 10 years where a guest has accidentally fallen to their death after horsing around on a balcony. In addition to accidental deaths I can recall two suicides by jumping from balconies at this hotel over the years (probably many more than two have happened).
About a month ago a young man died from a fall from a balcony after a party in a room with a balcony (probably horsing around) at the soon to be closed Sutton Place Hotel. This is a big downside of having balconies on Hotels although in resort locations they are a must.
The Delta Chelsea was originally designed as a rental apartment building. If it had been designed as a hotel from the beginning I doubt it would have balconies.