Senators have approved legislation to grant Grotto Bay a tax concession on a $7 million modernisation and renovation programme.

The Hotel Concessions (Grotto Bay Beach Resort) Order 2010 will give the 200-room Hamilton Parish property a rebate of $509,855. It is the 14th order giving tax breaks to a hotel since the Hotel Concessions Act was passed a decade ago.

Shadow Tourism Minister Michael Dunkley said in the Senate on Wednesday that the Opposition supported the legislation as such concessions were of "real benefit to the industry".

But he questioned whether the orders were the most efficient method of offering a rebate. "Does this vehicle work effectively or could we make it less cumbersome and more efficient?" he asked.

Junior Tourism Minister Marc Bean replied: "The legislation is currently under review. Up until this point it appears that it has been pretty effective."

Sen. Bean said Grotto Bay, which employs 100 Bermudians, was planning to improve guest rooms, exterior facilities and its energy management system. He said that while the economic downturn had affected tourism on the Island, some areas were "starting to see a rebound".

Premier and Tourism Minister Ewart Brown has previously said the Island's overall tourism product benefits from encouraging hoteliers to reinvest in their property through development.

Grotto Bay general manager JP Martens could not be reached for comment.