Customs and land tax duty relief will be granted to the Hamilton Princess for the conversion of an office block into staff accommodation — despite opposition from the Progressive Labour Party.

During the House of Assembly debate on the Hotels Concession (Hamilton Princess & Beach Club) Order 2016, PLP backbenchers Diallo Rabain and Wayne Furbert raised concerns that rental units around the island would lose out on business.

However, One Bermuda Alliance MPs stressed that most of those who would occupy the old HSBC Bermuda branch — that straddles Par-la-Ville Road and Bermudiana Road — are living at the Fairmont Southampton.

According to Mr Rabain, the planning application indicated that “the hotel currently houses approximately 100 staff in various rented properties throughout the island”.

“That’s the rationale the hotel has given for doing this,” he said. “They’re taking 100 people at least from rented properties throughout the island and putting them in a dormitory.

“We’re taking that funding out of the private sector and causing hardship for the people whose apartments they’re not going to be renting any more.” Mr Rabain also said the “dorms that are being created don’t have kitchens”, which he believes will lead to grocery stores losing out, too.

“I’m not against hotels building accommodation, I’m against the Government paying them to do it at the expense of Bermudians,” he said.

Economic development minister Grant Gibbons countered that the “Government isn’t paying out any money, it is simply not collecting money, which it wouldn’t have got if the project didn’t go ahead anyway”. He added: “This way at least Government gets some money out of this.

“We also get construction, we get a building which has been reconditioned and strengthens the overall hotel property.”

Dr Gibbons said “the lion’s share of these individuals” have been living at the Fairmont Southampton, adding: “It is a shift of rooms that are not in the community per se, into these new accommodations and probably has a net positive benefit because we may have more capacity at the Southampton Princess.”

According to junior tourism minister Kenneth Bascome, the building’s top four floors will accommodate 139 staff in 55 rooms and the ground floor will be general office space, with the basement used for storage.

With the proposed investment totalling $20 million — $5 million for the property and $15 million for the refurbishment — Mr Bascome said the order provided a “capped amount of relief for land tax of no more than $200,000 per year” for a five-year period, while also providing full customs relief until the first anniversary of the opening date.

The Hotel Concessions Amendment Act 2016 was passed on Friday, changing the definition of “hotel” in the Bermuda Concession Act 2000 to include “staff accommodations, administrative offices and storage facilities that may be external to the hotel property” and making way for the order to be approved.