The Fairmont Southampton last night announced 35 job losses, in the first signs of recession hitting the Island's tourism product.

An announcement by managing director Norm Mastalir appeared to confirm fears that the global economic downturn will cause hardships in the second pillar of the economy.

Not only are 35 staff positions to be axed but the four-star hotel is to close half of its guest rooms until April. In addition, restaurants will be shut on a rotating basis based on hotel-occupancy rates, until the summer season.

The Bermuda Industrial Union is understood to be planning a meeting with staff on Monday.

Mr. Mastalir said last night: "The financial crisis that has gripped the United States, Canada, Europe and indeed the world, is having a dramatic effect on our business levels and our customers' spending."

And he painted a gloomy outlook for the near future.

"Business, as we have known it for the last few years, will not be the same any time in the foreseeable future," said Mr. Mastalir.

In a statement he said: "The Fairmont Southampton today announces cost-cutting measures designed to preserve the operation of 593-room resort for the balance of the year."

The measures announced "in light of the current economic reality" include: 50 percent of guest rooms to close until April 1, plus "all unused public areas"; extension of the closure of Fairmont Gold until April; restaurants to be closed on a rotating basis for the next three months; and no more complimentary ferries to Hamilton until April although "lower-cost ground transportation" will be available.

In addition, the 'full-service' business centre will be replaced by an 'automated' centre for the rest of the year; staff cafeteria hours will be reduced; and third-party contracts for services will be reduced by 20 percent.

"The most regrettable change of all, however, will be the elimination of 35 positions in the hotel effective today," said Mr. Mastalir.

Eighteen of these posts are already vacant but will not be filled in 2009, as will three positions occupied by retiring members of staff. Another 15 employees however, will be made redundant.

Mr. Mastalir said: "We understand the hardship that these decisions will bring. The economic realities faced by the hotel are unprecedented, making these steps unavoidable.

"I would like to take this opportunity to sincerely thank all of those who will be leaving our family today, for their years of hard work and dedication. Our thoughts and prayers are with them on this difficult day. There is no way to express the regret that goes with having to make these difficult decisions."

John Harvey, CEO of the Bermuda Hotel Association, said last night: "We are all disappointed by the announcement but it's a global challenge which Bermuda is part of.

"We are all very concerned but have to address it as things develop. It is very unfortunate."

An announcement on the job losses and cost-cutting measures at the hotel is expected from the Ministry of Tourism on Monday.