Legislation allowing exempt companies to purchase hospitality units on hotel properties was tabled in the House of Assembly last week.

Many in the tourism industry have said such legislation would prove beneficial to proposed hotel developments on the Island.

Under new House rules the legislation could be debated today, although it is not expected that it will be.

The legislation states: "It is expedient to promote the development of the tourism industry in Bermuda by enabling Bermuda companies to acquire leasehold interest in residential units forming part of a hotel development, by creating a new class of hotel accommodation that may be occupied or rented by individuals or companies on a long-term basis, but allowing the Minister to issue licences for the immediate disposition of hotel residential units."

The units must be on the grounds of a hotel development which provides services such as housekeeping and a restaurant.

The proposed law stated only exempt companies with a physical presence in Bermuda will be able to purchase hotel units.

The companies must first obtain permission from the Minister of Immigration before acquiring a lease.

Fractionals are timeshare arrangements where people pay to have use of a unit for several weeks a year.

Leaseback units refer to those owned wholly by an individual, or company, who lease them back to the hotel to be rented for several weeks.

The hotel industry has been struggling recently. Last year occupancy fell to 51 percent, down eight percentage points compared to 2008.

And hotels that have already built fractional units such as Tucker's Point and Newstead Belmont Hills have yet to sell all of their units. Both opened shortly before the economic recession set in.

When the proposal was first announced at the Throne Speech the Chamber of Commerce welcomed the news.

Hoteliers such as John Jefferis, who plans to build 66 leaseback units at Coco Reef Resort, welcomed the news.

As did Ed Trippe of Tucker's Point and Kevin Petty of Newstead. Mr. Petty recently unveiled plans for the former Lantana property in Sandys, it will contain 28 fractional units.