industry into turmoil, The Royal Gazette has learned.

But their decision hinges on the outcome of the Prof. Ronald Haughton ruling on the marathon contract wrangle.

It is understood some hoteliers would not tolerate an award of over three percent for 1993 and 1994.

They could follow the recent lead of Grotto Bay and Pink Beach in splitting from the Bermuda Industrial Union.

The Haughton report is expected within the next 10 days.

It should be released before the crucial February 10 meeting between Government, the BIU and hoteliers, which may be used to head off a crisis.

News of a bitter battle looming has been revealed to The Royal Gazette by sources within the industry.

It comes amid fears of another year of strife on the labour front.

Contract talks involving blue collar Government workers and the hospitals are still being hammered out.

There are also a string of unresolved disputes -- including last summer's docks turmoil, and the BIU breakaways by Pink Beach, Grotto Bay, Palm Reef, and Mermaid Beach Club.

The Bermuda Forwarders dispute has also to be settled.

Yesterday BIU president Mr. Ottiwell Simmons MP described the labour scene as "worse than ever''.

And he warned his organisation would be defending its interests to the hilt.

Mr. Simmons urged employers to be bound by the boards of inquiry set up by Government.

On the hotel front, Mr. Simmons has refused to speculate on the Haughton report or its repercussions.

Members of the Hotel Employers of Bermuda also had no comment.

HEB president Mr. Dennis Tucker said he expected the report shortly.

Prof. Haughton and his Essential Industries Disputes Settlement Board have been studying more than 4,000 pages of evidence taking during 35 days of bitter argument.

Management want a wages and benefits freeze for 1992, and three percent rises for the following years.

It has considered the issue of 1991 wages closed after imposing a pay increase for the year.

The BIU wants increases of seven, six, and seven percent for 1991, 1992, and 1993.

Inside hotel sources, however, have told The Royal Gazette tensions within the industry would rush to the surface if Prof. Haughton breached a three percent ceiling wanted by management.

One source claimed: "There is the potential for a considerable problem. Some hotels could cut their own deal with the BIU if they can, others could walk away from the union.

"Employees and employers have a good understanding that the business is in tough financial straits.

"Many employees are willing to accept wages freezes as opposed to not working at all.

"It is the union executive which keeps stirring the pot. They keep saying hotels are not losing money, and that the figures are all lies.'' The source said Prof. Haughton had a reputation for trying to appear fair to all sides.

"But if one side is asking for nothing and the other 50 percent, it would be disastrous to go for 25.

"In the late 80's Prof. Haughton gave the hotel industry basically what it wanted in terms of wages, but he increased pensions. The costs in terms of pensions was crippling to some hotels.'' Another source said: "From what I've heard hotels, particularly the smaller ones, could pull away from the BIU if the award is excessive.

"There is, however, sometimes a big difference between what people say and what they do.''