Optimism about the tourism season always seems to rise in the spring. All too often, by the time the high temperatures disappear in the autumn, the high hopes of spring have too.

Whether 2010 will be different remains to be seen. Arrivals in the first quarter of the year were down ten percent over the same period in 2009, which was dismal to begin with. An unusually high number of flight cancellations was partly to blame, but cannot have been the only factor.

Now many hoteliers say that projections for the summer months are running higher than they were a year ago, and some of the promotions Bermuda has launched this year also seem to be paying off. Improved projections are due at least in part to the improved economic climate in the US, where consumers at last seem to be opening their wallets. As a result, individual spending is said to have remained strong as well.

All of this needs to be viewed against the background that 2009 was a catastrophe for the Bermuda tourism industry, with hotels collectively losing something close to $30 million. So any improvements, while welcome, should not be seen as a triumph, but at best as the beginning of a slow recovery – the fabled slowdown to the slowdown simply is not enough.

Air arrivals also have to be seen in the context of an ever-shrinking hotel bed bank, which makes recovery even harder, particularly in the summer months. Since last year, Elbow Beach has closed its main building and there is word that Grape Bay and Horizons will be renting their rooms to nurses.

The truth is that Bermuda tourism will struggle as long as the cost of a Bermuda hotel room remains uncompetitive. For new properties, the problem is compounded by the high cost of construction, which makes debt service difficult, if not impossible. Many hotels were counting on the sales of fractional units, leaseback units and so on to offset the cost problems, but the collapse of that market at the end of 2008 means that that option is no longer available.

Until Bermuda is able to find ways to lower its basic costs, it will be difficult to compete. The recent extension of the payroll tax break will be welcomed by hotels, but it makes all the more obvious the wrongheadedness of the increase in the payroll tax in the February Budget. Having raised the overall tax, struggling industries like hotels must immediately be let off it. This creates a two-tier economy where failing industries get tax breaks and are effectively subsidised by those sectors of the economy that are successful, at least for now. But if costs cannot be brought under control generally, there will be no successful industries.

Similarly, promotions that are based on discounted rooms may put heads on beds and "create buzz", but in the long term, they will simply lead to more losses unless tourism's basic business model is put right. This is why gambling is so attractive to hoteliers; it promises, as Dr. Brown has said, a new revenue stream. but even gambling will not be enough until Bermuda makes the hard choices that cost cutting demands. But the likelihood is that without reducing costs, gambling will only be a stopgap. It might be part of the solution, but it's not the only solution.