New economic trends in America could put further pressure on Bermuda's struggling tourism sector, an industry analyst warned yesterday.

Marketing expert Peter Yesawich told the Society of American Travel Writers conference that Americans, who make up 80 percent of Bermuda's tourists, were demanding cheaper holidays as the US economy softened.

Last month Tourism Department figures showed that visitor numbers for the year to June were down 15 percent on 2000 - leaving hoteliers fearing they would suffer the worst year on record.

A survey of Americans showed more were demanding all-inclusive packages offering cheaper vacations and destinations which could put a further squeeze on pricey Bermuda.

Mr. Yesawich predicted the Internet would put further pressures on the travel industry to cut prices as people hunted for deals.

However Tourism Minister David Allen said he was cheered by news that US holidaymakers wanted to stay closer to home and he said Bermuda could cash in on a desire for short breaks.

He said this summer's Elegant Escapes joint initiative between the hotels and Government to offer credits worth $200 had encouraged an extra 1,000 visitors to visit Bermuda.

He said he wished airlines would lower prices.

But he said full planes meant there was little incentive for the airlines to slash their prices and he said it was up to the hotels to decide what prices to charge.

"You can't discount to the point where hotels have no profit. On an island there are certain built-in costs."

He said Bermuda had to concentrate on giving quality. "It's value added - we have to give incredible value. There's nothing much we can do about prices."

Mr. Allen explained that $30-a-month labour rates in Mexico meant Bermuda would never be as cheap as some rival destinations.

He said an increase in demand for spa breaks could reap benefits for Bermuda with the Southampton Princess spending $185 million on a new spa and the Elbow Beach Hotel and Tucker's Point Club also set to install similar facilities.

Speaking to The Royal Gazette after his keynote speech at yesterday's conference at the Southampton Princess, Mr. Yesawich, who is president of Yesawich, Pepperdine and Brown marketing agency said Bermuda needed to concentrate more on bulk sales of business conferences to combat the price squeeze.

He said: "One of the biggest challenges we face is among affluent travellers. There is going to be some downward pressure on pricing.

"It maybe that greater emphasis should be placed, in the shorter term, on cultivating group demand, where you are booking 50 or a 100 rooms."

He said Bermuda had to redouble its marketing efforts to snare the luxury market.

"A lot of people who meet the target market for this destination don't realise that it's less than and hour and 35 minutes from New York.

"The affluent market hasn't dried up - it's just that those people have become more aggressive shoppers."

His firm's survey also came up with other worrying trends.

Bermuda should take note that Americans increasingly wanted a casual rather than formal environment.