A local developer who started doing the groundwork for Bermuda?s first five-star hotel two years ago, is crying foul after the piece of land in Warwick earmarked for the development was sold to another party.

?Rammy? Smith was issued a Special Development Order last year to develop his five-star hotel, ?The Cliffs?, along Bermuda?s South Shore.

The Cliffs was to be a full service hotel with some residential development, but Mr. Smith and fellow investors ran into problems when the land earmarked for the hotel was sold to another party.

A frustrated Mr. Smith said he found it strange that someone would buy a piece of property without knowing whether or not they will receive approvals.

He is afraid the new developer will piggy-back on his Special Development Order as he had seen plans for a proposed development ? not a five-star hotel, but tourism units and residential, or fractional properties.

Mr. Smith said he had invested over $2 million and spent several years putting together a development on this land and felt it would be unfair to allow someone to step in and take the effort and use it to their own gain.

Mr. Smith said what bothers him the most is that this was possibly the only chance in Bermuda in over 30 years to develop a five-star hotel.

In a letter to Tourism and Transport Minister Dr. Ewart Brown late last year, Mr. Smith queried whether or not the zoning of the land would be changed to allow the development of residential units without a full service hotel.

If this was the case, he said, then he wanted the opportunity to pursue the purchase of this land under those circumstances.

Mr. Smith said he never heard from Dr. Brown on this issue and was then told the land was sold to another developer.

understands that the property, was owned by WB (Bill) Johnson through a holding company, Bermudatel Ltd., but has been sold to Atlantic Development Ltd. Neither party could be reached for comment, however.

?I wish the new owners every success, only if they are going to develop the site, I hope they abide by the same rules and restrictions governing what can and cannot be built on that site,? Mr. Smith said.

He added that he does not wish to speak of Government or the Ministry of Tourism, all he wants is to ensure that a hotel will be built on the site. ?Because God knows we need it,? he said.

The Special Development Order, which was signed by the Minister of the Environment, Neletha Butterfield, on April 16, 2004, requires a 50/50 relationship of hotel bedrooms to residential bedrooms, with the hotel bedrooms being available for use as part of the tourism product a minimum of six months of the year.

A fractional unit will be sold typically in increments of five weeks and will not be available for rental as hotel rooms during the tourist season as the owners of the fraction will be staying there.

The Permanent Secretary of Tourism, Marc Telemaque, said no other party has submitted any plans to the Department of Planning for this land. He aslo said Tourism has not been asked to approve any new plans for the site.

He added that as part of the Special Development Order process, which was some time ago and predated him, the Ministry of Tourism as it was then, would have played a role in expressing its support for the concept of Mr. Smith?s proposed development of the site.

?However, it is important to note that no development can take place until some party has an interest in the land,? he said. ?Certainly nothing of this sort has been received.?

Mr. Smith?s dream of a five-star hotel for Bermuda was backed by investor Horst Shulze, the former vice president of the Ritz-Carlton. Mr. Schulze told that while Bermuda is selling itself as the ?Rolls Royce? of destinations, it is in fact only delivering a ?Volkswagen Beetle?.

Mr. Schulze, who was responsible for Ritz-Carlton operations world-wide, said five-star properties will be of great service for the Bermuda tourism industry as true five-star hotels not only support the positive image that Bermuda enjoys, but would also bring the five-star (and above) market segment to the Island.

Mr. Shulze said it is clear from market studies that Bermuda needs a high-end, first class property which would not only be successful as a hotel operation, but also as a business.

He added that consequently the tourism business would stimulate the lower market segments, as every market study shows that secondary markets follow the primary market. But, he was quick to add that free-standing timeshares will only accomplish the opposite.

?The timeshare business has been proven successful on the two and three-star levels, when the development is standing on its own and on a higher level ? the five-star or above ? it has only been successful if connected and served by a hotel that is serving that same market,? he said.