Any future deal for the former Club Med hotel may have to include some homes to make the project viable.

With a new investment company interested in the St. George's property, there is a likelihood that any development there will have a residential factor.

Income from selling condos, villas or townhouses is increasingly seen as vital to the profitability of new tourism schemes -- which on their own are not attractive investments.

Overseas backers are much more keen to bring their millions to the Island if there is the possibility of selling ten $1 million properties to give the deal a kickstart.

The new Belmont plan is due to include villas, as is the Castle Harbour hotel and Palmetto projects, and industry executives believe any movement at Club Med will almost certainly require a similar makeup.

The new consortium interested in Club Med are the fourth to come along since November 1998.

They have met with Tourism and union officials and surveyed the property, indicating a strong attraction to the place.

But any potential deal would have to include a substantial tourism element -- hotel or other accommodations.

Tourism Minister David Allen said: "It is very early stages but we have been talking for several months now.

"We are committed to ensuring there is a large tourism component.'' In addition, there is the option to lease back properties to visitors, giving upscale accommodation other than the standard hotel room.

Meanwhile, the Minister said there were encouraging signs that a new city centre hotel could soon be all systems go.

Still possible: Artist's rendition of the proposed city hotel at Par-La-Ville parking lot in Hamilton. Tourism Minister David Allen says the hotel development could still go ahead.