The Elbow Beach Hotel looks set to appeal a decision to reject a multi-million dollar improvement project.

Officials at the South Shore resort were examining their options after planners refused proposals to build a six storey extension and sewage plant.

Hotel spokesman Kendaree Burgess-Fairn said: "We are disappointed, we intend to work within the law, we will probably seek planning advice on how best to proceed.'' The plan was thrown out following objections that the building would encroach upon Woodland Reserve that was not designated for tourism development.

However, the Government Conservation Officer was in favour of the scheme, citing the poor quality of the trees already in the area.

An objection was also raised by the Stonington Beach Hotel over the sewage plant, which was to be sited 150 feet from some of its guest rooms.

The rejection will be a major blow for Elbow's continual rejuvenation of the Paget resort. The latest enhancement was to add a new spa, ballroom, access road and guest accommodation to the facility.

They also wanted to begin work as soon as possible on the sewage plant, to minimise disruption in the tourism high season.

In addition, the sewage plant was to replace an existing system, that according to planning records, discharges untreated effluent into the sea via an outfall pipe.

The planning record said: "Currently Elbow Beach collects sewage from the main hotel in a settling tank and discharges untreated effluent through an outfall pipe directly into the ocean.

"The outfall pipe is vulnerable to storm surges..this would eliminate this risk.'' Although the hotel planned extensive planting and landscaping in and around the resort, it was the zoning that caused the problem. The Development Application Board minutes stated that the proposal failed to satisfy the Bermuda Plan in that it would encroach onto Woodland Reserve that was only designated for a detached house development.

The Bermuda National Trust objected to the plans because it feared endemic woodland would be lost.

The trust stated that they "believe that allowing such development sets a dangerous precedent. As more and more land gives way to development, it becomes increasingly imperative to make sure that our diminishing Woodland Reserve is preserved''.

But the Government Conservation Officer supported the plan. He said: "The area of encroachment is of poor quality and the proposed native and endemic trees in the landscaping would constitute a vast improvement. The high quality Woodland Reserve would not be affected by the extension.'' The improvements were the latest in a series of enhancements at Elbow Beach.

Over the years the resort has spent more than $100 million on revamping the site. It is now one of the top hotels on the Island, with extensive beachfront facilities, pools, renowned dining and sports facilities.