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Since Husayni was an avid supporter of Hitler and was complicit in the Holocaust, Avigdor Lieberman wants Israel to distribute photos of Husayni with Hitler to blunt criticism of Israel's allowing the hotel to be turned into apartments where Jews could live.
It is unclear if the Mufti ever lived at the site, but it is indeed ironic that a building once owned by someone who wanted to make Jerusalem and all of Palestine Judenrein is the one that the State Department wants so badly to be - Judenrein.
And don't forget how much Hitler liked the Mufti, especially when he saw his Aryan features:
Notice the last line.
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