The Government has had to pay a hotel operator almost $400,000 after dropping plans for the Bermudiana Beach Resort, MPs were told today.

Earlier this month, Lieutenant-Colonel David Burch, the Minister of Public Works, said the Government had pulled out of a deal for the boutique hotel on the South Shore in Warwick to be run by the Hilton group.

At the time, the minister declined to say how much had been paid to Hilton, but updating the House of Assembly, he said: “This decision results in a separation from the Hilton agreement at a cost of $399,600.”

Colonel Burch told the House that the Ministry of Public Works had retained an expert who flagged up an inherent failure in the Bermudiana business model.

As a result, the Government engaged international accounting firm Ernst & Young to assess whether the Bermudiana Beach Resort project remained viable.

EY’s four recommendations included completing construction and converting the units into residential rental apartments, which the Government accepted.

The minister said that, overall, “$100 million-plus will have been spent on this property over 12 years — an incredible sum that reflected the change in direction with each pivot of the project to respond to the prevailing circumstances”.

He added: “Everyone has an opinion on this decision and they are entitled to that opinion.

“We were faced with a very difficult decision and chose the option that will secure some return on our investment and meet the payback of outstanding loans while also relieving some of the pressure on the rental market.”

The minister said there would be further announcements on the project over the coming weeks.

• To read the minister’s statement, see Related Media

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