McSam changes course with development plans.

The McSam Hotel Group, one of the most active hotel developers in Manhattan and the boroughs, plans to shift its focus to developing projects in China.

In a conversation with Real Estate Weekly last week, McSam's chief operating officer, Gary Wisinski, said that the company would continue with its large pipeline of projects in the city, but that it won't expand that slate of developments. While the change in strategy highlights the attention developers are giving to the roaring Chinese economy, it also comes as a stark break with McSam's seemingly insatiable appetite for development projects in the city in recent years. During that time, the company built numerous hotels and, according to Wisinski, made plans for more on the way. The company has about 30 sites that it can develop, some of which are already under construction and others that right now are just parcels on which it can build in the future.

Among its current projects, the company is constructing a Wyndham Hotel at 20 Maiden Lane, a Holiday Inn at 99 Washington Street and unnamed projects at 8 Stone Street and 33 Beekman Street. The company's founder, Sam Chang, who was born in Taiwan, has said in published reports that it is his goal to build 50 hotels in the city. It isn't clear if the company's planned pullback will pare that number.

McSam has been at the forefront of a wave of hotel development in the city that was touched off by voracious demand for an increase in hotel rooms. But some, say that the firm might have become too ambitious, securing development sites that now may be financially burdensome.

Hotel experts say the company is among the most heavily land-banked, meaning that it has acquired parcels on which to build well ahead of when it may actually be ready to begin construction. But the current problems in the debt market have made it harder and more expensive to secure capital for development, complicating many developers' plans to turn money-losing development sites into profitable projects. In the meantime, some developers have to swallow the carrying cost of land until they can secure financing or the tumult in the debt market settles.

A hotel expert speculated that McSam may be going through this and that the distaste created by the situation may be a part of its decision to develop in China.

Wisinski said that the company does in fact assume a carrying cost for its development sites but that it is moderate and that the company's plans to concentrate of building in China predated the recent pullback in debt.

"Most of the parcels have buildings on them or parking lots that produce income," Wisinski said. "There is a cost to holding the land, but it is relatively small. It wasn't part of our decision making, we just see opportunities right now in China that we want to pursue."

According to Wisinski, hotel development continues to remain compelling because occupancy and room rates remain strong. He said that the recent spate of hotel development will add only about 10% to the city's supply of rooms, an increase that won't negatively impact fundamentals because it is outweighed by demand.