companies to ease their "astronomical'' operating costs.

Government last week agreed to meet with hoteliers after Christmas on a range of items that could see them win duty relief in February's Budget.

And discussions have already been started with the Bermuda Electric Light Company and Watlington Water Works.

The meetings signal the first concrete effort to ease hotel operating costs which industry members consider to be among the highest in the world.

"They're astronomical compared to other destinations, particularly the United States,'' one leading hotelier said last night.

Those costs have been cited as a major factor in a shocking industry performance that has seen the Island's largest hotels lose $41.5 million in the past five years. In the fiscal year ending September 30 they lost a combined $12.5 million.

Premier the Hon. Sir John Swan last week indicated that Government was sympathetic to the hotels' plight.

He described the industry as being in a crisis. And he warned that continuation of the current situation could lead to the closure of one major hotel.

"The Bermuda hotel industry is in deep trouble,'' he said.

"The Government is anxious to help the hotels as much as we can. Their difficulties are Bermuda's difficulties ...'' The hotels are looking to gain relief on an array of duties that are part of their water and electricity charges.

It is believed talks with utilities will take place with Government officers because the only option for reductions is in duties already within their utility charges.

There are also strong indications that hotels will petition for renewal of an expired legislative plan that allowed them duty relief in 1991 and 1992 on capital items that helped them refurbish their properties.

Government agreed last week to talk with hotels further about possible help following a meeting between owners and top Government representatives.

One hotelier said he thought the meeting was the first time the "enormity of the hotels' problems was absorbed and understood.'' Last night, Finance Minister the Hon. David Saul said: "We have agreed to have the Finance Ministry sit down after Christmas for some serious discussions. We want to try and assist them, through incentives, anything.''