30 percent airfare reductions -- and other hoteliers are hopeful of a similar upsurge.

Sonesta Beach has even cut room rates to bring down the cost of a Bermuda holiday yet further.

Yesterday's wave of optimism came as tourism chiefs announced an $80,000 overseas advertising blitz on the slashed United States-Bermuda fares.

Large ads appeared yesterday in The New York Times and The Boston Globe , and more will follow.

With the slogan "Pinch me, I must be dreaming,'' they urge readers to capitalise on the lowest fares in years.

Last week American Airlines reduced the Bermuda-New York round trip high season fare to $193, weekdays.

The weekday low season fare for the same route dropped to $165. Tickets have to be bought before the end of the month.

A chain reaction followed with the other airlines offering similar discounts for American visitors.

Yesterday the Pink Beach Cottage Colony revealed it was already reaping benefits from the airline war.

Said a delighted general manager Mr. W. A. (Toppy) Cowen: "We've been inundated with calls, and have also made some firm bookings.

"Our representative in the States said all lines have been continually flashing.

"There has been a real transformation with the low airfares. It has done nothing but good.'' Mr. Cowen said 30 bookings were made on Tuesday as visitors capitalised on the cut-price fares.

"We made $50,000 worth of bookings on one day alone,'' he added.

Mr. Cowen said he planned to "pull out all the stops'' to boost occupancy levels through advertising.

Other hotels have also experienced an August bookings surge, although managers were uncertain whether to link it with the cutprice fares.

The Palm Reef Hotel has been virtually booked out for the month -- a marked improvement on July.

General manager Mrs. Bridget Marshall said reduced fares would enable Bermuda to compete with the United States domestic market.

Travel within the US had shot up following cheap air fares.

"We just could not compete, but now we should be able to do so,'' said Mrs.

Marshall.

Mr. David Boyd, president and managing director at Sonesta Beach, said: "It's difficult to gauge the effect of the airfare reductions yet.

"We are sure, however, it will have an effect on bookings.'' Mr. Boyd said the hotel had put together a special package to tie in with the reductions.

This involved cutting the normal room rates -- although he declined to say by how much.

"We want to offer an overall package to visitors which will be very attractive,'' Mr. Boyd added.

Mr. George Robinson, general manager at Grotto Bay, described the lower airfares as "marvellous''.

"It's absolutely fabulous news, and we anticipate a big rise in bookings.'' He said New Jersey-based Global Tours, which does a lot of business with the hotel, was also thrilled.

"We continue to experience a late bookings trend. The question is how much thrust will the new fares give the trend. Only time will tell.'' Mr. Peter Smith, the Department of Tourism's assistant director for marketing, said he was confident of a bookings upsurge through the US advertising campaign.

He said the department had acted quickly to alert overseas travel agencies of the new fares.