HOTEL operators are divided over the prospects for hotel development in Ma On Shan. The planning department has identified a site there for a 500-room hotel. It proposes to offer the site for sale at a land auction in the coming financial year. Sino Hotels (Holdings), an arm of property developer Sino Group, said the company was interested in the hotel site. Sino Group general manager for hotels Charles Lee said: 'I believe the company is interested in looking at this new site coming from the Planning Department. That area is right for hotel development.' Earlier the hotel operator said it would reverse plans to build a 250-room hotel on its own hotel/residential site in Ma On Shan. Mr Lee said: 'We changed the hotel plan to residential development, because the return yield from a housing project was relatively higher than a hotel investment.' The group still expected to see positive potential for hotel investment in the area. He suggested that a resort hotel at Ma On Shan would attract customers. But some hotel operators are cautious about prospects for a hotel in the area, because a lot of external facilities would need to be built to create a leisure environment. According to the government, a package of proposals is being planned aimed at turning Ma On Shan into a resort area.