A summer boom in Island hotel occupancies has brought some long-awaited cheer to the tourism industry.

An increase in occupancies this summer of around three percent has given a boost to the hospitality trade -- putting a gloss on the falling air arrival numbers.

The news has provided a filip to hoteliers after years of decline but could be tempered by a possible downturn during September and October.

Bermuda Hotel Association president Billy Griffith said this summer was already better than last year.

"The early summer has been solid in business, between May and August, but bookings for September and projections for October have not been as high as they should have been,'' he said.

With falls in bednights across the entire industry and a continuing four-year decline in air visitor arrivals, the overall picture is still gloomy.

Whilst the increase in occupancies has been good news for existing hotels, it is likely the rise is due to the loss of 400 rooms at the closed Marriott Castle Harbour Hotel.

However, Mr. Griffith said that closure, last November, had translated into a decrease in the bed base of roughly ten percent, whilst the overall occupancies were up three percent -- leaving a net gain of approximately seven percent.

While the short-term picture is bright, overall numbers of air visitors and their spending fell.

The first half of this year saw a total of 162,049 people fly in, down 10,458 on last year, dropping 12,241 on 1998 and falling 16,622 on 1997.

The picture so far, with air arrivals falling continually from February to June, would suggest that Tourism Minister David Allen's prediction of a 2.5 percent increase -- or 8,800 people -- in air arrivals seems unlikely.

Last night Tourism Minister David Allen said: "Based on Bermuda visitor arrivals to date, it is unlikely that the goal of 2.5 percent additional air visitors this year will be achieved.

"Bermuda has nearly 1,000 less hotel beds than last year with the closure of the Marriott Castle Harbour, Palmetto Bay etc and it is not possible to fill hotel beds that do not exist.

"Existing hotels have had their best year in a decade when the more significant measurement of hotel occupancy is addressed.

"For the first time in ten years Bermuda's hotels have consistently surpassed the 80 percent occupancy level in all four peak season months which is making for a more viable, although down-sized hotel industry.'' Those people that did come, also spent less during their stay.

Overall expenditure during the first half of this year was $194.2 million, down $9.3 million on 1999, but only slightly down on 1998 when air visitors forked out $196.2 million on accommodation, food and other services.

In contrast more cruise vacationers boosted Island spending during the months of January to June. A total of 77,898, up from 76,048, spent $16.9m, up $800,000 on the same period last year.

The upcoming jazz festival, the possible sale of the Sonesta hotel and renovations of the Hamilton and Southampton Princess' hotels are also affecting reservations.

"Visitors for the jazz festival are up by 25 percent over last year, supporting the decision to move it from October to a date where it could boost the traditional post Labour Day slump,'' he said.

"Princess hotels are embarking on their extensive construction programme.

Unfortunately, some dislocations and potentially some impact on business cannot be avoided when upgrading physical plant, but in the longer term, Bermuda will have a higher quality, stronger hotel and tourism industry as a result.

"There cannot be gain without some pain.'' Meanwhile the Minister said discussions are ongoing with Delta Airlines over the renewal of their second Atlanta flight next season.

He said, so far this year, the afternoon service had added 5,000 extra passengers.

Its timing was designed to enable travellers to fly in from other parts of the world to connect, and the Minister said business from California has increased between seven and 12 percent, in all but one month, as a result of the better access.