Could the Manhattan hotel boom be headed for a bust?

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A Four Seasons coming in Lower Manhattan. Boutique hotels rising in Chelsea. Several big names making their debut in Midtown.

It isn't hard to find examples of New York City's hotel-construction boom--antidotes to travelers' seemingly insatiable thirst for additional rooms in recent years--but could a sagging economy soon burst this real estate bubble?

Some signs for concern could be here. Developer Sam Chang, who heads up McSam Hotel Group, has reportedly been heading overseas for new projects as lenders yank in the reins here at home.

"The tightening credit market is slowing me down," Chang told Crains earlier this month.

Architect Gene Kaufman, currently juggling about three-dozen hotel projects in Manhattan, said hospitality construction is strong, though there are some areas of unease.

"One of the issues has been financing," he said last week. "The amount of equity has changed. It has implications for what is being considered today. But when you look at the numbers of cost ... versus return, projects still look good."

Indeed they have been yielding great results. According to PKF Consulting, Manhattan hotels had an occupancy rate of 86.5% in 2007.

"That's the third year of mid-to upper-level 80s," said John A. Fox, senior vice president in PKF's New York office. "That's unheard of in major metropolitan markets."

For comparison, Fox said, the national average for occupancy percentage is in the 60s. In 2007, hotels in New York City were sold out between 225 to 250 nights while room rates were up an average 12.6 % over 2006, Fox said. This year's numbers look healthy so far, as well.

Fox said some 18,000 hotel rooms are scheduled to come online in New York City over the next three years, though that figure is hard to actually nail down.

"When a project is initially (pitched), you heard about it," he said. "But when it gets abandoned, you don't."

Still, Fox said the market is growing at a strong rate: He said there are very few years over the past two decades where New York City added more than 1,000 rooms in a 12-month period.

"The developers have seen this big run-up in occupancy increases and room-rate increases, so they think they can develop," he said. "Indeed, we can."

With additional hotel rooms on the horizon, Fox estimates that room rates will not drop, but the rate of increase will slow.

Fox doubts a sagging economy will hurt the hotel boom because the slow down isn't expected to be long-lasting. Additionally, the weakening dollar can only help: While extra foreigners take up more rooms, so do traveling Americans who may opt to vacation within the country in an effort to save money themselves.

Kaufman said he sees the construction boom as addressing a "past shortfall." Although there are worries, he said a comparison may be made to the Starbucks expansion: People asked how New York City could sustain so many shops opening so close together.

"Turns out it was more than anyone ever thought," Kaufman said.

Financing for hotel projects has become tighter, Kaufman said, but demand for the necessary architectural services has been steady.

"The question with (developers) looking for the first time ... is whether they can bring the resources to do the project," he said. "That being said, we've signed contracts for new projects several times already."

Ultimately, of course, only time will tell if that begins to change.