Members of Parliament early this morning passed a bill to give substantial concessions to developers to build new hotels in a bold move to try to revitalise the Island's ailing tourism industry.

Tourism Minister David Allen described the Hotels Concession Act 2000 as "the most significant legislation affecting the hotel industry that's ever come before this House of Assembly''.

Government will be able to offer a range of concessions, including land tax, occupancy tax, payroll tax and duty free alcohol, tailored to individual developments.

Developers will be able to build villas on the property which Bermudians can buy, but which must be leased back to the hotels as tourist accommodation for six months of the year.

Hotel groups will need to give assurances on training of Bermudians to qualify for the concessions and Government claimed there will be increased opportunities for Bermudians to invest in the developments.

Government also dropped a planned 40-bed threshold to allow smaller hotels to take advantage of the concessions.

Shadow Tourism Minister David Dodwell said the bill was a continuation rather than a start and claimed the Progressive Labour Party had still not revealed its master plan for tourism.

United Bermuda Party backbencher Trevor Moniz said the bill "stank'' because of its emphasis on cutting deals and predicted the taxpayer would be heavily hit.

Mr. Allen told the House of Assembly: "It creates at one stroke an entire new climate for hotel investment. At one stroke it energises an industry that has been moribund and declining for at least 20 years because there has not been a new hotel or resort built in 20 years.'' Mr. Allen said it would be hard to find a jurisdiction anywhere on the planet -- not merely tourist destinations -- that had not seen a major new resort built in that time.

Hotel breaks will revive tourism: Allen This stagnation had propelled the PLP into Government in 1998, he said.

He said Premier Jennifer Smith had set up a Cabinet committee 15 months ago to look at hotel development in recognition that "Bermuda has not been an investor-friendly jurisdiction. Today that begins to change.'' Previously, investors would have to trawl round several different ministries, but Government had now established one committee that would pull together concession packages of mutual benefit to developers and Bermuda.

The Island had lost 1,000 beds in the past year, the bulk caused by the closure of the 800-room Marriott Castle Harbour Resort at Tucker's Town.

Mr. Allen said hotel rooms had declined from their peak of 9,298 in 1980 to 6,586 now.

Most hotels were full on weekends in June or July and more people could be accommodated if there were more beds.

The closure of the Marriott meant the Island also lost out on the leisure group's marketing, frequent flier and convention business.

Concession agreements would be approved by himself then ratified by Cabinet and the House.

The first concession package, to Texas-based Rosewood Hotels which indicated they would manage the Castle Harbour site, would be completed in two weeks time and will "blast out of the gates''.

The concession packages were flexible and could include exemption or deferrals on taxes or both. Other perks would be exemption from alcohol duty if the savings were used to substantially increase Bermudian entertainment.

Mr. Allen said: "We can nip and tuck according to each project. There is a basket of taxes and it doesn't mean every resort can get all concessions or any at all'.

He announced Government was scrapping the proposed threshold of a minimum of 40 bedrooms to qualify for the perks, paving the way for Bermudians with smaller properties to qualify.

He stressed that any additional residential units built as part of a hotel development would have to be leased back to the hotel for a minimum of six months each year. These units would always form a lesser component of the overall development "We are going to make hotel investment viable again in Bermuda. That's the pattern in Hawaii, Mexico, the Cayman Islands, and the Seychelles and Bermuda has to be part of that if it wants tourism to survive. We have to think anew to catch up with the rest of the world.'' He said this would not mean "big mega-resorts''. the emphasis would be on developing dormant hotel sites rather than eating into open space.

The payroll concessions would be tied into developers ensuring there were training and career opportunities for Bermudians.

Describing the duty free alcohol concessions which allowed the cruise ships and the airport to provide more Bermudian entertainment as starters, the new initiative would provide the main course.

The concessions could be worth $300-400,000 a year to big hotels to spend on Bermudian entertainers. The Bill was designed to "widen the basket'' to allow more Bermudians the opportunity to take part in hotel investment.

Shadow Legislative Affairs Minister John Barritt warned against the development spoiling the thing tourists came for.

He said he thought the villas or townhouses which would be available to buy on a leaseback basis would be too expensive for most Bermudians.

He said he understood one of the concessions referred to in the new act in terms of building was already on the stature book but had expired on June 30.

He asked whether the package could be applied retroactively to people who had invested to upgrade hotel and tourist accommodation in the past.