Elbow Beach Hotel is to close its main building making 160 people redundant approximately 50 percent of its workforce at the end of next month.

Just over a century after ground was broken on the Paget site, the hotel will close 60 percent of its 235 rooms on November 30.

Also under the axe are the South Shore resort's main lobby and two popular eateries, The Seahorse Grill and the Veranda Rum Bar.

The hotel was named one of the world's top 500 properties this year by Travel + Leisure Magazine. However, the accolades were not enough to save it in the current climate.

General manager Frank Stocek said the state of the economy factored in owner Prince Khaled bin Sultan bin Abdulaziz Al Saud's decision to hold off on a major renovation of the 101-year-old resort and focus on a smaller upgrade.

"We are proud of the legacy of excellence at Elbow Beach, Bermuda as we begin this new chapter in the history of this legendary resort," said Prince Khaled. "With our renovation plans, we look forward to contributing to Bermuda's bright future as a unique tourist destination, by creating a luxurious resort that is in keeping with its heritage as the first luxury hotel to have opened on the Island's South Shore over a century ago."

Part of the ground floor of the property will reopen in March after a $10 million refurbishment, however hotel rooms in the main building will remain closed for three to four years.

Butterfield Bank and Prince Khaled agreed on the terms of financing for the redevelopment on Tuesday. Planned are upgrades to the first floor of the main hotel, cottages and transportation system.

The property's 98 cottages will remain open throughout the refurbishment as the hotel looks to reposition itself as a luxury cottage resort for the time being. The smaller resort will include a refurbished lobby, a new recreation room and a luxurious meeting and banqueting area for small groups, weddings and social functions.

News of the hotel's closure came after years of speculation over what Prince Khaled, a prominent member of the Saudi Arabian Royal family, would do with the property.

Yesterday, Mr. Stocek said half of the 160 jobs to be lost are held by Bermudians and spouses of Bermudians. He added that the company was saddened by the loss of jobs and was in the process of offering retirement packages and redundancy packages which he described as "three levels above what is required by law".

The repositioning of the hotel will result in the entire food and beverage sector closing. The MEF Group which runs three restaurants on the property — Lido, Sea Breeze and Mickey's — will continue its operations. Upgrades to the Deep nightclub will also be undertaken.

Said Mr. Stocek: "After 101 years of grand hospitality, Elbow Beach is poised to offer guests the next level of luxury accommodation in Bermuda. Our recently renovated garden cottages and suites have been extremely well received by our guests, and they will be further enhanced while the renovation plans for our legendary main building are being developed."

Mr. Stocek noted that the main building was old and in need of upgrading as it was unable to meet the needs of modern travellers. He added that now was deemed a good time to close the building for the upgrade due to poor bookings.

This year's air arrivals have been particularly gloomy with the first quarter reporting a 22 percent drop. The second quarter saw a 14 percent decline with 74,979 tourists flying to the Island the worst recorded air arrivals for the second quarter since a modern recording system was implemented in 1980.

"It is easier to close a building when there are less bookings than to close it when occupancy levels are at 80 percent," Mr. Stocek said.

He added that they have been able to accommodate everyone who had booked to stay at the hotel after November 30 in their cottages.

Staff shocked by hotel closure

By Elizabeth Roberts

Staff at Elbow Beach spoke of their shock and upset over yesterday's news that the main hotel will close amid massive job losses.

Some of the staff told The Royal Gazette they were unhappy that, after months of rumours, they only learned of the November 30 closure yesterday.

It's anticipated that around half of the 300-plus workers at the resort will be out of a job. Around 35 percent of those redundancies will affect Bermudians, with 15 percent affecting spouses of Bermudians or those with permanent residency status.

One Bermudian kitchen worker said yesterday: "The way I see it, they waited until the last minute to tell us that they're closing the next month, and this has been happening since last year.

"They kept telling us not to listen to the rumours. They kept putting notices up saying the hotel is operating as normal. Then yesterday they told us they're having a meeting today, telling us that next month it's closing. The local staff and the foreign staff are very upset that they didn't give us proper notice. People have families and bills to pay and the feeling is it's not right."

The woman, aged 48, declined to give her name as she does not know for sure whether her own job is safe or not. She explained that she's worked at the venue for three years and knew things were looking bad when her hours were cut from 40 per week to 35 in July.

"We're not going to get new jobs. The foreign workers may get work but Bermudians will have a hard time getting work," she said.

Another Bermudian worker, a 20-year-old man who works in the Recreation Department, said his section is closing in just ten days. "I don't know if my job is safe yet. I don't feel good. We just found out today and we're closing in ten days. It's been poor. We should have known probably a month ago and given some notice, at least we could have started looking for a new job," he said.

However, the man, who has been employed at the resort for two years, said the news was taken quite well when it was broken to staff yesterday.

"I thought it would be an uproar but it really wasn't," he explained.

One of his co-workers, a 27-year-old Bermudian woman, said of the news: "It's disappointing. It was a big shock. I heard last year when I first started working here [that it might close] but they said it was just rumours. I just hope I can find another job."

One of the resort's many foreign staff, a 31-year-old man from Sri Lanka who works as a cleaner, said: "It's bad. I've been two years here. Sometimes it's been good and sometimes not good. This week it's been no busy, no hours. I'm worried."

Asked about complaints over the short notice of the closure, the hotel's communication manager Zeudi Hinds, said: "We have no control over the rumours. We can't inform people of what's not confirmed. As soon as it was confirmed we let our colleagues know."

She added: "We value our colleagues highly and are committed to help them find alternative employment with quality employers in Bermuda or overseas after the conversion. All staff made redundant will receive [a] full and fair severance payment in accordance with Bermuda law. We will retain as many of our valued staff as we can. We will also offer early retirement to as many eligible colleagues as possible. Following that, we anticipate that unfortunately we will need to make approximately 160 colleagues redundant."

She declined to give a figure for exactly how many staff are currently employed at the hotel. However, she added: "Even though the property will only have 98 guest rooms following the closure of the main building, we will still require over 160 colleagues to provide the high level of service expected by our guests.

"The hotel aims to advise all colleagues of the status of their positions within one week of the announcement."

She said efforts are being made to find new jobs for those affected, explaining: "Efforts will include opportunities at sister Mandarin Oriental hotels, other quality hotels on the Island and business partners of Elbow Beach. The hotel will hold job fairs, provide information on continuing education, prepare employment confirmation letters and provide professional assistance throughout the transition."

Premier and politicians react to resort news

By Ruth O'Kelly-Lynch

Premier and Tourism Minister Ewart Brown yesterday said he was saddened by news that 80 Bermudians would lose their jobs with the closure of Elbow Beach.

After years of rumours that the South Shore property would undergo a major redevelopment, hotel bosses announced its main building would close at the end of next month.

The Paget resort is to reopen in March, when it will focus on the luxury cottage market as it awaits the end of the economic downturn.

General manager Frank Stocek said 160 people would lose their jobs, half of whom are Bermudians or spouses of Bermudians.

Yesterday, Dr. Brown said: "The closure of any hotel property is difficult at any time, but this is no typical closure. The owners of Elbow Beach have made it clear that they are committed to Bermuda and that this closure is an opportunity to better enhance their product.

"We never want to see Bermudians losing their jobs but I know that the management and the Bermuda Industrial Union are working on an equitable package for the dedicated staff affected by this transition.

"My hope is that where possible members of the Elbow Beach team will remain in the hospitality sector where their talents and unique service are still in demand."

A press statement indicated that the Premier believed the hotel was in "dire need of upgrading" and added that he was "expressing optimism on the future".

"The rooms that will replace the old-style accommodations in the old building will make a welcome addition to the improved product that will come when other hotels are developed," he said. "Elbow Beach will then be able to compete with brands like Park Hyatt, Four Seasons and St. Regis."

Ground at the three properties Dr. Brown mentioned has yet to be broken.

The press statement added that Elbow Beach will neighbour the proposed Four Seasons to be developed at the site of Coral Beach/Horizons.

News of the hotel's closure came only hours after the Progressive Labour Party's website proclaimed: "The Platinum Period revitalisation of our tourism product is continuing to pay dividends."

The site was referring to Bermuda being named the number one island in the Caribbean and Atlantic in the 2009 Condé Nast Traveler Readers' Choice Awards.

Government's first concern on hearing news of the hotel's closure was the future of those made redundant said Acting Labour Minister Walter Roban.

"I have asked the team at the Department of Labour and Training to devote any and all available resources to assisting where they can," he said. "I want to remind them that there's a full gamut of services available such as job placement and career guidance. And the department stands ready to assist."

Bermuda and the world faced tough economic times ahead, Mr. Roban added.

"And without question, we anticipate that we will continue to face workforce challenges due to the current economic climate."

Shadow Tourism Minister Michael Dunkley said yesterday marked a sad day for Bermuda tourism.

"The indefinite closure of this long-standing jewel of Bermuda tourism is a major blow to Bermudian prestige and pride and a measure of just how seriously endangered the industry has become."

Mr. Dunkley said he believed that the worldwide recession played a factor in the decision but added he believed the Ministry of Tourism's marketing has been mismanaged for several years. He called again for an independent tourism authority to be established and called on Government to help retrain those made redundant.

"Finally, the closure of this great hotel on Dr. Brown's watch — the man who continues to promise numerous new hotel openings — says to us that we are falling backwards, not moving forwards," he said.

"In that regard, we would urge him to get real: stop the spin, stop misleading people about the prospects for new hotels with timelines that have yet to be delivered. It does no one any good.

"People need to be given good information to make the best decisions. The Premier clearly would have known about Elbow's closure last week, but that did not stop him from telling Bermudians that we are 'holding our own' in tourism.

"Really? Is that what this is?"

In tomorrow's newspaper general managers from hotels across the Island weigh in on the impact Elbow Beach's partial closure will have on Bermuda's brand and the hospitality industry.

In today's business section, heads of the international business community speak of the impact Elbow Beach Hotel's indefinite closure will have on their industry.