The Fairmont Southampton Princess opened a new lounge yesterday as part of a $37 million upgrade with a declaration of confidence from management in the future of the Island's tourism industry.

Premier Jennifer Smith and Tourism Minister David Allen formally opened the 148-seat Jasmine lounge by hanging a painting, Quarry Walk, Devonshire Bay, by Sheilagh Head.

The hotel will eventually spend a total of almost $80 million on refurbishments, which includes six new meeting rooms, a business centre, a new retail space, an entree gold concierge level, penthouse suites, an upgraded ballroom, and a new spa, which will open in part in December.

Hotel general manager Norman Mastalir said at the opening yesterday: "There is a vision for the revitalisation of tourism in Bermuda. Fairmont hotels are proud to take a leading role in implementing the first step in a national plan.''

He said there was a realisation that the physical infrastructure and service standards had to be improved, and he thanked the current Government for introducing the Hotel Concessions Act, which offer tax breaks for hotels upgrading their properties.

He said the Act was vital in spearheading many of the improvement of hotels essential for reviving tourism in Bermuda.

"This investment will pay great dividends for Bermuda in the future. We are excited about the future and pleased to be part of the new spirit of Bermuda.''

The lounge was opened on the day 450 influential journalists from the Society of American Travel Writers began arriving at the hotel for their four day annual conference, which officially opens today.

Mr. Mastalir said the first phase of the 28,000 square foot spa is on course to open by Christmas, the second phase should be on-stream in January, and the third phase at some time after that.

Mr. Allen said of the $500 million of hotel construction currently underway, around $300 million was spurred on by the Hotel Concessions Act.

"With the public/private sector strategy (Bermuda Alliance for Tourism), I know we are going to have a great tourism destination when all of this construction is completed over the next two to three years,'' said Mr. Allen.

"Fairmont will put us in the pinnacle of world island tourism. I am confident the Fairmont Southampton Princess will be exceeding expectations.''