A new company set up to run three hotels in Bermuda is looking to expand and buy two more properties on the Island in the next year, The Royal Gazette has learned.

Naval Mehra, who owns the Harmony Club, Surf Side, and the under-construction Wharf executive hotel, has set up Bermuda Resort Hotels to jointly run the three properties.

Mr. Mehra, the company president and chief executive officer, said yesterday he wants to take advantage of the current slump in the tourist market to pick up two more small hotels for a good price.

Mr. Mehra believes it will take another two years for the tourist industry in Bermuda to bounce back, but he thinks now is the time to buy hotels at reasonable prices.

"We are negotiating with other properties. A couple of hotel owners want to get out of the business and we want to get into the business," he told The Royal Gazette.

"We definitely want to have similar properties and maybe have another two hotels next year to give us that comfort and break-even level.

"There are opportunities coming up now in Bermuda because some of these hotels will be trying to get out because it is going to be tough for some of the smaller hotels to work."

The company is looking at buying hotels, managing them, or co-investing in the properties, he said.

Mr. Mehra refused to name the hotels he is looking at, but said they were not White Sands or the Lantana, the Somerset cottage colony which has been closed for several years.

Bermuda Resort Hotels will now organise reservations, marketing, accounts and negotiations with wholesale tour operators centrally for the three hotels from next year.

He hopes this will give the company added muscle to secure discounts from the wholesale tour operators who sell packages to Bermuda.

The new company will be looking for more managers and staff on-Island, which should be good news for hospitality workers who are facing layoffs.

Mr. Mehra, who said he is a second generation hotelier based in Washington D.C., said he currently had an interest in one hotel and three restaurants in the United States but had been divesting his investments there to concentrate on Bermuda.

He is spending more than $15 million in renovating his three hotels and he remains confident about Bermuda's long-term prospects as a tourist island.

"The next two to three years are going to be very difficult, but our strategy is not for the short term. It's like the stock market; you buy when the market is low," he said.

"It is a good time for acquisitions because the hospitality industry is valued down world-wide. We definitely have a lot of faith in Bermuda. It is well positioned for the tourism rebound around the world.

"2002 should see the start because I think we have had the worst year in Bermuda and we've hit rock bottom now. We are trying to upgrade to give good value for 2002 and 2003.

"It is going to be at least two years before we get back to the levels we want to see. World wide, the economy is still going to go down and everyone will have to tighten their belts in the next 12 to 18 months, but it is a good opportunity now rather than in the middle of a construction boom to renovate our properties at a reasonable price.

"We've shown good faith in Bermuda by investing millions in renovations and acquisitions. We are not just talking, we are doing things before we talk."

Mr. Mehra said he is also in consultation with an airline to get a charter plane from Canada to Bermuda.

He said Canadians in particular were looking for good value in Bermuda and were interested in the Harmony Club, the Island's only all-inclusive resort.

When asked if his group would be looking at providing another all-inclusive resort, he said: "It depends on the property, but you find all-inclusive is a good deal for the budget traveller."