Hoteliers are feeling the pinch of a drop in arrivals and it is predicted that the future will not bring much relief.

Hotel receipts fell 12 percent during the first quarter of 2008, a period when arrivals dropped 8.4 percent.

And second-quarter hotel bookings indicate there will be a drop in hotel receipts again.

Frank Stocek, chairman of the Bermuda Hotel Association and general manager of Elbow Beach, said the current economy coupled with the fact that it is a US election year has made group bookings for conventions and meetings in Bermuda less likely.

Government's quarterly bulletin indicated 2008 first-quarter hotel gross receipts fell to $37 million compared to $42 million in the same period last year.

And Mr. Stocek said hotel bookings continued the decline in April and May, when hotels were down 8,622 room nights compared to the same two months last year, which means it is likely hotel gross receipts will be down when the second quarter's results are released next week.

He said: "For the first half of 2008 we lost 11,464 room nights [in group business] compared to 2007. In transient and tour for the first half of 2008 we lost 12,615 room nights compared to 2007.

"Ninety-five percent of this loss was from the Fairmont Hotels. They represent such a large portion of the overall volume, their results have a great impact on the industry as a whole.

"In 2007 Fairmont Bermuda saw unprecedented growth in group business, it was truly an exceptional year. In 2008 this was not repeated for a few reasons. The US economy and election make it very difficult for meeting planners to justify having their meetings out of the country or state.

"Incentive business is also down for the summer for this same reason... corporations are cutting back."

Another reason was that Bermuda did not offer a Boston charter, which netted nearly 5,000 room nights in 2007, and reduced its companion air credit promotion by 30 percent in 2008. The programme offered a deduction in ticket price for participants bringing a companion.

And Mr. Stocek said projections for the rest of the year are not looking promising. In particular, room bookings in November and December are not as strong as hoteliers would like.

"With the election in November corporations are very hesitant to do anything," he said. "However we see some pick up next year January to March, but at the moment, not close to the numbers experienced in 2007."

The loss in September of American Airlines flight AA415, which holds about 200 passengers and departs seven days a week from New York to Bermuda, will hit hotels hard as well, particularly as it is on the only wide-body plane flying here out of the US.

He said "Large groups specifically request to have most of their staff on one flight. With this loss we will probably see more decline."

Another factor is the closure of three hotel properties, Ariel Sands, Horizons and Harmony Club, since 2007.