The first phase of the old Grand Atlantic’s transformation into a condominium hotel should be completed by the 2016 tourist season, according to developers.

Representatives of MacLellan & Associates were recently on the Island to provide Government with a memorandum of understanding presentation pack on how the Bermudiana Beach Resort project on Warwick’s South Shore will move forward.

Robert MacLellan, the chief executive officer, told The Royal Gazette that he hoped the development would prove that “other mid-market properties are viable as ongoing resort operations”.

“The Bermudiana business plan does not call for a ‘super luxury’ resort like the planned Ritz-Carlton and St Regis, where development costs will be very high,” he said.

“Instead, it is a much needed new mid-market boutique hotel product for Bermuda.

“This is made possible because the buildings exist and, while the resort conversion costs are substantial — including condo elevators, two pools, funicular elevator to the beach, bar, restaurant, spa and meeting room — it still allows the condos to be sold at very competitive whole ownership prices.”

Government is in the process of reviewing the MOU conditions before conversion works to build the new development begin.

The Bermudiana Beach Resort is believed to be the first example of residential property being converted to a resort in Bermuda.

Mr MacLellan added: “Resort development in all of the islands is only just starting to recover after the 2008 great recession and, while Bermuda has unique qualities, it also has higher development costs and operating costs than many other destinations.

“The vast majority of hotel developers prefer to own an urban business hotel rather than a resort on an island.

“The business hotel has a natural market, driven by commercial activity in its immediate vicinity, while the island resort has to drive business to come to it, in competition with thousands of other leisure tourism destinations around the world.

“The Bermudiana condo hotel project involves only the 78 condos currently built.

“In Bermuda, many resorts have been converted to residential use, partly explaining the huge loss of hotel inventory over the last decade.”

The Grand Atlantic redevelopment will be undertaken in a series of phases and is expected to net condo owners a “reasonable rental income” when they are not in residence.

Mr MacLellan said: “The resulting hotel accommodation can, therefore, be priced at rates similar to Coco Reef and Grotto Bay and still provide reasonable rental income for the condo owners when they are not in residence.

“Each Bermudiana condo owner will be restricted to 90 days’ maximum annual owner occupancy, but our consultancy’s experience from previous projects is that owners will occupy their condos for only about half that time and are keen to derive income from the condo’s use as hotel accommodation.

“After the conversion, eight condos become resort public areas and operations areas, and the 70 remaining condos provide 104 hotel suites and rooms.

“The conversion will be undertaken in phases.

“Phase one is planned to include all the resort facilities, with a minimum of 21 condos or 31 hotel suites and rooms, ready for the 2016 tourism season.”