The re-development of Ariel Sands is in limbo after a second group of investors fell by the wayside.

The collapse of talks with the 'Eyde' group follows the withdrawal of the Hilton Group in 2007, and leaves owners of the Devonshire hotel forced to look for a new partner in an uncertain economic climate.

Chairman of Ariel Sands' board of directors, Nicholas Dill, said: "We had a group who were involved, a family group 'The Eyde', but that fell apart and so now we are regrouping."

But he admitted trying to find new investors in the current global downturn was "not easy at all".

Ariel Sands Ltd. is currently drawing up a new presentation with which to market the property to potential developers.

And Mr. Dill said as plans have now changed, the resort could end up with less fractional units.

"We were originally talking in terms of having fractional units but I'm not so sure the fractional investment market is the way to go now," he said.

"We are fairly well saturated in Bermuda at the moment.

"A lot is going to depend on which hotel group we approach and what they feel is the best market to go for, so it could end up being fractional units or another type of development, I don't know at the moment."

Mr. Dill said Ariel Sands is looking to five-star brands but also at other options. "We will try the market and see," he said.

Mr. Dill remains "optimistic" despite forecasts of a gloomy tourism outlook for the Island.

"I think a lot of Americans will have their holidays at home and not travel abroad so much, but if you have a good product and good marketing, you've got a good possibility of getting ahead," he said.

"We hope within the next year to have the finances and staff in place and then go from there."

Ariel Sands has been owned and operated by the Dill family, whose members include Oscar-winning actor Michael Douglas, for more than 50 years.

Up to 75 percent of shares in the property were recently sold to a group of US shareholders, who include Florida-based developer Bruce Sonneborn and Samuel Eyde, a property developer from Michigan.

A breakdown in negotiations between Mr. Sonneborn and the Hilton Group was reportedly behind the brand pulling out of the new five-star resort in late 2007.

Plans for the Hilton Grand Vacation Club were first announced in spring 2006, with Hollywood star Mr. Douglas said to have played a role in securing the partnership with the global hotel chain.

The exclusive cottage colony was to be turned into luxury fractional villas, a spa, restaurant and conference centre plus a ten-room hotel. Planning permission for the $170 million development was approved in March 2007.