Bermuda could reap the benefits of a record strong euro and British pound which have effectively slashed the cost of a holiday on the Island this year, business and tourism leaders said yesterday.

Chamber of Commerce president Charles Gosling said the weakness of the US-pegged Bermuda dollar to the two currencies has cut the cost of a vacation to Bermuda for Europeans by around 25 percent.

Fear of terrorism in the United States and the resulting high cost to Americans of a European vacation, could all work in Bermuda?s favour, said Mr. Gosling and acting Bermuda Hotel Association president Michael Winfield.

The euro is now standing at 1.27 against the dollar ? up from 1.04 last January ? while the pound, which was at 1.55 last April, is now trading at 1.83.

Mr. Gosling told yesterday: ?Thanks to the strength of the euro and the pound, this has effectively discounted the Bermuda market by as much as 25 percent.

?This is a great opportunity for not only the Department of Tourism, but also (for) the hoteliers to emphasise the Bermuda market, particularly when the European visitor stays longer and has deeper pockets than his North American cousin.

?Terrorism is always an unknown, and I feel whatever colour the warning flag in the US is will affect visitors from Europe and the US coming here.

?But I feel the Bermuda product is getting better every day. With the Fairmont Southampton re-opening in April we will have one of our flagship hotels in better shape than it has ever been in.

?So if everyone plays their cards right and listens to what was said in last month?s tourism forum and gets off their rear ends and commits themselves to action to do what we know has to be done, this could has the possibility not just of a good year, but a good decade.?

Mr. Winfield, the president of Cambridge Beaches, said the exchange rates ?make Bermuda significantly more attractive for the UK and European markets?.

?This works very well because Bermuda tourism has recently launched the largest advertising in the UK in recent history, and hopefully that will show some results.

?Without question, the American travelling public is still reticent about flying. There is terrorism, and inconvenience is also a factor, however the basic economic indicators ? the Dow Jones, employment rate, confidence rates ? are all significantly healthier than a quarter or a half a year ago, and all this suggests that 2004 should be a good year.

?But in today?s tourism market instant events can have long-term effects, so a major terrorism incident or even the US raising the security level all impact. We just don?t know how significant the impact.

?But everything is just so mercurial that it is difficult for anyone to be definitive. Ten years ago in these circumstances, I would say we would have a good year. Today, I can?t say that.

?Ten years ago, I could tell you our occupancy levels for the year, but there have been dramatic changes in the way people book.

?Whereas people would book 60 and 90 days out, now it is 30 days or less, so it is very difficult to sit and project with total confidence.

?At Cambridge Beaches, bookings are up, but not dramatically, and I would suspect there are similar levels of activity in other hotels, but it is too early to say.

?Major booking activity for Bermuda takes place at the end of the first quarter for the second quarter.

?The amount of investment in Bermuda hotels in the last three or four years, the change in focus of Bermuda ? a marketing campaign into the gateways and a very focused message about what Bermuda is ? has been good and there is more air lift, and I am led to believe that there is more to come.

?All of these are pretty good indicators. We should continue to work hard, but with some confidence that at last our work may be paying off and Bermuda is well positioned to reap the benefits of all that hard work.?

Acting Tourism Minister Neletha Butterfield said: ?We have followed with great interest, the performance of the dollar against the euro and the pound, as well as the security challenges the US is facing as the year begins.

?Travellers from the US will be weighing their travel plans cautiously. With its proximity to the US East Coast and its position (to) the US dollar, Bermuda is in a good position to take advantage of any move by Americans to stay close to home and to rationalise their vacation spending.

?On top of this, it being an election year in the US may also help in added vacation traffic to Bermuda for those looking to stay close to home.

?The Bermuda Department of Tourism and our travel partners will be doing everything possible to grow our business this year.?