Developers of the luxury Tucker's Point Club resort are hopeful that a planned hotel on the site will open in 2007.

"Our position is that the hotel absolutely will be built - we want it as much as Government wants it," company president Ed Trippe said.

And he announced that ground has been broken on the first stage of the project's hospitality offerings - the Residence Club.

Some politicians are sceptical that projects like Tucker's Point have any intention of starting, let alone completing, their hotels, while benefiting from tax incentives granted to them by the Hotel Concessions Act.

But Mr. Trippe explained yesterday that the $350 million project was complicated and depended on creative financing but there was every intention of going ahead with the hotel.

And he said some $10 million had already been spent specifically on the hotel. Investors and lenders do not expect to be repaid from the hotel business, he said, because of the sorry state of the traditional hospitality industry - a global phenomenon especially since the September 11 attacks on the United States.

"We cannot build the hotel until we build the condos because that's how the lenders are going to expect to be repaid," Mr. Trippe said.

"At Tucker's Point, because investors and lenders have been unwilling to look to the uncertain profits from a hotel as the source of repayment, we have had to demonstrate that the revenues from real estate sales and the club membership programme are sufficient to repay them. To date our investors have foregone any return on their investment as all proceeds have been reinvested in the resort."

But he said the Bank of Bermuda, one of the project's key lenders was confident that a $20 million loan will be repaid and will likely be providing financing for the hotel. The Bank of Butterfield and Argus Insurance company are also on board.

He stressed that Government's continued support was essential for the project to be successful.

"One fundamental factor all around the world is you cannot build a hotel without the tremendous support from the host country," Mr. Trippe said. "It's critical. You must have it and this Government has been very supportive of our plans."

Mr. Trippe is somewhat concerned about Government's continued support for the project.

"It's a new Government. They are still PLP but there are new members in Cabinet who were not involved (at the start) so they don't know the history as well as we do," Mr. Trippe said.

"David Allen is gone, and Eugene Cox is gone and those two individuals were actively involved in the creation of this venture."

But he said that while there was a learning curve to be surmounted, he found that the Government was accessible and communication was good. The five-year-old Hotel Concessions Act, which provides tax incentives for new development, came under renewed scrutiny by the Opposition party recently.

As legislators debated granting tax concessions to the Lantana resort development, concerns were raised that developers might be using the scheme to build condos and did not intend to erect the hotels.

More than half a dozen developments have benefited from the Concessions Act, but the expected additional hotel rooms have not yet materialised, the Opposition pointed out.

But Tourism Minister Renee Webb said that the problem had been noted and that the Lantana project would be done in phases with the resort section coming first.

She said she was not happy that neither the Palmetto Bay or the Tucker's Point developments had completed the hotel part of their plans. "We cannot have condo developers cavorting as hotel developers," she said. "In no way will we allow you to develop condos on the pretext that you are building a hotel."

And the Minister has promised amendments to the Concessions Act to tighten up implementation.

Tucker's Point is planned as a mixed use community - with luxury townhouses and estate homes, a golf, beach and tennis club, a 90 room hotel to replace the former Marriott's Castle Harbour and a Residence Club.

Seventy-five percent of the 31 estate and town homes at Ship's Hill, ranging in price from $1.8 to $3.4 million, have been sold.

And just five of the 11 more expensive (starting price $3.5 million) Shell Point homes have found buyers.

He pointed out that the company had just closed a development deal with the Bank of Butterfield and ground had been broken on the Residence Club - a complex of 20 luxury villas scheduled to open next year and available to 200 fractional owners at prices starting at $280,000. Mr. Trippe said the Residence Club concept was the first stage of Tucker's Point hospitality product and it was expected that it would appeal to wealthy repeat visitors who want the convenience of a luxury vacation home here.

"The investment to date has been in the critical infrastructure of the resort, including the rebuilding of the golf course, the beach club, the golf club house and the extensive utilities and services required to support a resort of this size. A significant part of this investment has been generated by the sale of the resort's real estate.

"We've spent $10 million on the hotel, so our commitment is there. In that sense we've started. We still need to complete the architectural designs - the details," he said.

"My hope is we are going to start the design work in a couple of months, construction in 2005 and open in 2007."

That is, barring any major terrorist attacks, he was quick to add. "We've had timelines that we missed - there's no question. 9/11 set us back tremendously."