Hotel developer Gencom is holding the island “over a barrel” in its demands for the Fairmont Southampton development, it has been claimed.

Charles Jeffers II, the former chief executive of the Bermuda Tourism Authority, added that the Government had “zero leverage” in any negotiations.

Mr Jeffers spoke out after resort investors threatened to pull the plug on the project if a special development order was not granted.

At a public meeting on Tuesday night, Chris Maybury, of the investment group, said: “We have shown a certain amount of commitment. We can’t and won’t keep doing that. We can’t. The world has changed. We either have to get this done or the world is begging for our investment.”

In addition to renovating the hotel, Gencom wants to build 147 residential units, some in blocks six storeys high, but needs special authorisation from the Government before construction can begin.

The proposals, unveiled this month in a special development order application, sparked outrage among environmental groups.

Commenting on social media after Tuesday’s meeting, Mr Jeffers said: “With the hotel having already been closed for three years, Bermuda is over a proverbial barrel and has zero leverage.

“The threat of the developers/financiers walking away is real, as there is nothing that prevents them from just letting the hotel continue to sit empty while we suffer.”

Karen Border, the executive director for the Bermuda National Trust, said foreign investors had the most to gain out of the residential portion of the development.

She said: “It is clear that the majority of those in favour of the development support it for one reason — not because they love Westend’s vision for the resort, but because they are worried about Bermuda’s economic situation and are afraid for the future.

“The developer is playing on this fear and pushing the line that Bermudians MUST accept everything in the SDO or they will walk away, the hotel will be left derelict and Bermuda will lose.

“We should not be fooled and we should not be intimidated into giving away our island for real-estate development that will primarily benefit foreign investors.

“The economic benefit to Bermudians of the residential portion of the project is wholly unproven. What we will lose from this overdevelopment far outweighs what might be gained.

“Gencom/Westend are playing chicken with Bermuda. It is extremely unlikely that they will walk away from their investment at this stage.

“If they really want to be ‘good neighbours’ and good corporate citizens, as Mr Maybury claims, and if they want to move forward with the development quickly so that they can begin to make money on the project, they should scale back their ambitions now to a level of development that is more acceptable to the many thousands of Bermudians who find the current proposal offensive.”

Last night a spokeswoman for the Bermuda Audubon Society, one of several groups campaigning against the plans, said that they were pleased with the turnout at Tuesday’s meeting, which was attended by about 200 people.

But the spokeswoman also expressed concern at Mr Maybury’s remarks.

She said: “He certainly expressed a take-it-or-leave-it attitude.

“He said that the golf course would close and ‘we would have another derelict hotel in the landscape’. There was no room for negotiation. The clock is ticking.”

Asked if the society felt that Gencom was holding the Government to ransom, she said: “The question should be, do the people of Bermuda feel like they are being held to ransom?

“We cannot say if this is a done deal. Government’s support for this project has been made clear by the $75 million loan guarantee and the tax and duty concessions that may be valued at over $100 million.

“We have not heard anything about scaling back of the plans. Mr Maybury sounded adamant that they would only accept the level of development as proposed. We would be very happy to see a reduction in the number of units and size and scale of the condominium buildings.

“Everyone needs to submit their objections. If there is considerable opposition to the proposal, perhaps changes can be made to minimise the negative impacts of the proposal.“

A petition against the development has collected almost 4,000 signatures and will be presented to the Cabinet Office at 10.30am tomorrow.

The Audubon Society spokeswoman said: “We hope to have a good turnout at the protest. Schools are closed for the Ag Show and we encourage families to come out to Cabinet for 10.30am and be counted.

“This is our future and the future of our children that we are fighting for.”