Bermuda's only all-inclusive resort is to undergo major renovations costing millions of dollars.

This winter the Harmony Club will begin a transformation of its rooms, public rooms and pool area.

The first part of the work will involve revamping 18 rooms at a cost of $750,000, and eventually creating a new tier of room category.

The programme, which will last 18 months, follows the announcement by the owners that their second Bermuda property, Surf Side Beach Club, will undergo a $5 million refurbishment.

Both Harmony Club and Surf Side are owned by a group of Washington D.C.

businessmen, headed by managing partner Neville Mehra.

Harmony Club president Billy Griffith said the scheme would be the first major work done in over 12 years -- and came as a result of a successful summer for the Paget resort.

"We have had a good season. It has been very, very encouraging,'' he said.

"We have got to reinvest. It goes with a commitment to improve the product.'' Work has begun already on some rooms, completely gutting them and transforming them. In addition, junior suites will be created as part of construction around the putting green.

Later, work will start on the lobby, restaurant and bar area.

In addition, there are plans to completely upgrade the pool area, possibly creating an enclosed spa and exercise room. A new pool will be created in place of a putting green.

The resort will be closed for a brief period during December but will remain open during the remaining work.

Most of the work will be completed during the off-seasons, eventually revamping all 68 rooms.

Mr. Griffith said an application for tax breaks under the new Hotels Concession Act will also be made, to ease the financial burden of the development.

The work at Surf Side will increase its room count from 37 to 46, giving a total of 92 beds.

Planning permission has already been granted but the owners are waiting for a successful concessions application before they can begin work.

The Hotels Concession Act gives breaks or deferments on taxes such as drinks duty, occupancy and payroll, some of which are linked to training or the provision of Bermudian entertainment.