St.

George's, Town Mayor the Wor. Henry Hayward said yesterday.

"There are negotiations going on with some potential buyers,'' Mr. Hayward said. "However, if they fall through, I think opening the hotel on a limited basis would do several things.'' It would make the hotel easier to sell, create jobs in St. George's, and make available Club Med's many facilities, like a beach, restaurants, and tennis courts, he said.

Club Med closed in 1988.

The Royal Gazette reported on Monday that Club Med has asked for Government approval to reopen 100 rooms in the 300-plus room hotel. Instead of the Club Med format, more than $1 million would be spent to reopen it as "a more traditional, Bermuda-style hotel, in the spring of 1996.'' But Government did not jump at the offer. Works and Engineering Minister the Hon. Leonard Gibbons noted that litigation had begun and an August 23 court date was set.

Government is going to Supreme Court to reclaim the land on which the hotel stands, saying Club Med is in violation of its lease.

Mr. Joseph Townsend, secretary and treasurer of Club Med in New York, said the asking price for the hotel had been slashed several times and now stood at $13.5 million.

Mr. Hayward said the dispute between Government and Club Med should be left as "a separate issue.'' "At the same time, there's no reason why opening the hotel with 100 rooms would jeopardise anything that's going on.

"Ultimately, the objective should be that the hotel is sold to good buyers and that it's opened.'' Mr. Gibbons said the Tourism Minister would make a recommendation to Cabinet.

Mr. Townsend said Club Med needed an answer by September, when its fall brochure goes to print.