A developer has won his two-year battle to get planning permission to build a block of luxury tourist apartments in Southampton.

But Christian Bay Beach Club president Conrad Engelhardt now wants to rent the properties out to residents rather than visitors "because of the disastrous state of tourism''.

The plan to build the luxury block on South Road, Southampton, was first submitted in the summer of 1996 but, after getting initial approval, an appeal against the project was successfully launched. That appeal has now been overturned by Environment Minister Irving Pearman.

Mr. Engelhardt blamed the slump in the tourism industry on the decline in air arrivals.

Last night he told The Royal Gazette : "Our company has applied to the Department of Tourism for a change in use from tourism to residential because of the disastrous state of tourism resulting from the decline of air arrivals from 500,000 in 1980 to the present 360,000. The hotels have accumulated more than $45 million in losses. Very recently the owner of Longtail Cliffs has been given approval for a change of use because of three years of losses.

"Similarly the attractive Pretty Penny guest house has also been given approval for residential use.'' Mr. Engelhardt gave examples of other hotels that had been forced to close because of a lack of business.

And he said that work on the new development would not start until a decision on the change of use had been made. "Nobody wants to invest in building hotels anymore and I'm not prepared to invest my own money,'' he said.

Last night Tourism Director Gary Phillips urged Mr. Engelhardt to give his business a chance to succeed and said Government was doing all it could to "look to the future to regain our status as a premier location experience''.

And he denied that air fares alone were the major reason for the decline in visitor numbers in the past decade.

"In the case of someone who has permission to build a tourism accommodation, if they haven't given it a try it's very difficult for them to argue that it's not going to work,'' he said.

"It's no secret that tourism is in transition and the first pages of the 2005 Plan speak of a decline. But that does not only relate to air fares but also competition, consumer perceptions about value, level of service, the lack of visible product improvements -- for example we haven't had a new hotel since 1972 -- and, perhaps most importantly of all, the market task force has identified a lack of focus and commitment to tourism. But we are not looking back and there are a number of new initiatives in the 2005 Plan, for example the Government has introduced zero duty on goods for the refurbishment of hotels.

"On the airline front there's a perception that we can do a lot more to impact on air fares. We have worked diligently to encourage competition between the main carriers but you have to understand that the airlines are in an extremely powerful position at the moment.'' TOURISM TOU HOUSING HSG