Tourism Minister David Allen said last night he was disappointed new figures showed the Island was heading for its worst season on record, but he remained confident Bermuda was on course for long-term recovery.

Figures for the first six months of the year show arrivals are down 15 percent on the same period last year at 207,673.

Mr. Allen said last night: "I am disappointed, but realistically, we know we are continuing to climb out of a twenty-odd year hole as a country, as an industry and as a ministry.

"At the same time, I have to say we are not alone in this. Cayman is down 18.6 percent, St. Lucia is down 34 percent and Barbados is down a little over eight percent.''

Mr. Allen said the numbers would not improve until more rooms become available with new properties coming online such as the planned new Belmont, Rosewood's luxury $250 million Tucker's Point Club, and the proposed city hotel in Hamilton.

Even with fewer rooms available, occupancy rates are down on last year, but Mr. Allen claimed this was because potential travellers could not get rooms over the weekend.

Most hotels were blocked solid with people on weekend breaks, but had empty rooms for the beginning of the week, he said. This meant people were not booking week-long breaks because they could not get rooms over the weekend.

Another problem was that the Island has lost big brand names such as Marriott, which have their own marketing and promotional drives for leisure and convention bookings.

He said the Island had to turn away a booking of 600 Italians in October because there was not enough availability at the three beachfront hotels they wanted.

"We'll never get back to the numbers of the 1980's. We want to increase the numbers, but we need a higher grade accommodation to increase the yield,'' he said.

"We need to give incredible service to increase the yield because we will never be able to compete in cost terms with the likes of Cancun and Nassau, which have much lower overheads.''

Mr. Allen said the Hotel Concessions Act, which gives tax breaks for new hotels or for existing properties which are carrying out major renovations, had spurred on $340 million of building.

And with further applications in the pipeline expected from Elbow Beach, the new Belmont and the new city of Hamilton hotel, he expected hotel construction to top $500 million. The only new hotel investment the United Bermuda Party attracted was the $32 million to build the Fairmont Southampton Princess in 1972, he said.

"You don't have the Saudi owners of Elbow Beach, Rosewood and the Fairmont group investing money if they don't have faith in the future of tourism in Bermuda,'' he added.

"That's a big investment, and they don't throw away money. All that investment is a huge encouragement, and our policies - the Hotel Concessions Act and the new Bermuda Alliance for Tourism - have broken a dam to have this money flowing into Bermuda.''

Mr. Allen said progress was being made on attracting an American Airlines flight from Florida to Bermuda, but the Island had been told by American that it has to make a strong case.

He said he was hopeful that Bermuda will be able to secure a flight out of Florida within the next two years.

American was subsidising the trip by Tourism and Island hoteliers to a trade fair in Buenos Aires, Argentina, in October because it wanted to generate business out of Latin America.

Bermuda is emphasising there is a demand for business flights to Florida to connect to the Caribbean. There was also tourist travel in both directions from Bermuda to Florida.

But Mr. Allen said extra business coming in from Latin America could help tip the equation to convince American that the route is viable.

"The last part of the puzzle is Latin America, and that should put us over the top. I've heard from American officials sooner and also later (for the flight). A lot depends on availability of aircraft.

"One official I spoke to recently said sooner. It is too early to specify a date, but I would hope something would happen within the next two years.''