lease of the east-end Castle Harbour Hotel and Resort, it emerged last night.

But officials stressed that there were no plans to close the hotel and hotel management firm Marriott International is expected to continue operating the facility.

Meanwhile, the hotel's ownership and operating responsibility reverts back to Bermuda Properties Limited (BPL) which owns 229 acres in Tucker's Town including the Castle Harbour property and golf course.

The joint announcement came from BPL president Edward Trippe, BPL general manager Peter Parker and hotel general manager Mark Conklin.

"To walk away from a $100 million investment is not an easy thing to do,'' said Mr. Parker.

"They (Host Marriott) recognised the hotel needs a lot of investment and they were not prepared to make that further investment.'' Mr. Conklin said the hotel's operating results had improved significantly in 1997 but that in order to remain competitive and profitable in the future, major capital investment was required.

Marriott leased the hotel in 1984 and invested about $60 million into renovating the property. Since the hotel opened in 1986 the company has accumulated operating losses of some $40 million.

Mr. Trippe pointed out that the continued operating losses plus requirements for new capital had become intolerable.

"This should send a wake up call to every single Bermudian that the tourism industry is in trouble,'' continued Mr. Parker.

However, he and Mr. Conklin added that there were no plans to close the hotel as a result of the lease termination.

"Everyone is working so that does not happen,'' stressed Mr. Parker.

He and Mr. Conklin pointed out that a new management arrangement between Marriott International and BPL was under negotiation.

But Mr. Trippe stressed that BPL was not prepared to incur the losses experienced by Host.

The only solution to financial viability was to upgrade and reposition the hotel and resort, he added.

Mr. Parker said BPL planned to turn the hotel around.

Host Marriott terminates lease "We are trying to find the right solution to have economic viability in the tourism industry.'' Mr. Parker said BPL "believes there is an awareness building in Bermuda about the problems in the tourism industry...but we have not been able to galvanise everyone together.'' In 1995 BPL initiated a plan to upgrade the facility including improvements to the golf course, creation of a golf centre including a practice range, creation of a spa and development of a residential resort community.

The proposed $65 million Ship's Hill development was opposed by environmental groups which claimed that it would damage a fragile underlying cave system despite an environmental assessment which gave the development an A-grade.

The two year delay in securing final approval of this plan and the subsequent delay in making the improvements to the resort is thought to have been a contributing factor in Host's decision to terminate the hotel lease.

Mr. Parker pointed out: "Any major resort today has a residential component.

What this does is become a ready source of financing and, equally importantly, it creates a sense of community. Nobody wants to go to an empty resort where they're bouncing off empty walls.''