The Government has committed to a $10 million guarantee to support further development of the Bermudiana Beach Resort in Warwick.

In his Budget speech, Curtis Dickinson, the Minister of Finance, said the redevelopment of the property – originally erected for affordable housing – was an example of “target stimulus” to bolster the economy.

Mr Dickinson said: “This economic activity will put Bermudians to work in construction and spark the hiring of Bermudians to run the hotel.

“Having satisfied myself of the tourism need as well as the proposed plans for the remainder of the development, I am pleased to advise this Honourable House that I have executed a $10 million guarantee to support funding necessary for the completion of the next phase of works.

“The scope of work has been the subject of an open tender, and pending the award of a contract, work will start early in March with a view to completion in late summer.”

The development was built as part of the Grand Atlantic affordable housing scheme, but Government decided to adapt the property for tourism after only two of the 78 constructed apartments were sold.

Work started to transform the site into a mid-market boutique hotel in 2019.

Guarantees for hotel projects have been the subject of heated debate in the wake of the collapse of the Caroline Bay project, which was backed by a $165 million Government guarantee.

Mr Dickinson said in the Budget Statement said the effect of the failed hotel project has been “severe”.

He said: “Close to $200 million of public funds has been unnecessarily tied up and at risk.

“Not only is there an ongoing interest cost, but this has also significantly reduced the Government’s capacity to fund productive investments that could be critical to Bermuda’s economic recovery.

“However, the Government met its commitment under the guarantees as it must, and we are equally committed to using all means necessary to return as much value as we can to the people of Bermuda.”

Mr Dickinson noted the economic damage caused to the tourism industry by the Covid-19 pandemic, with “historic” drops in visitor arrivals and spending.

He said: “Tourism will need every ounce of good fortune and skill to carve out its share of the inevitable pent-up demand that will be released when we finally get to the new normal.

“Leisure travel will return, and conferences will again be in person.

“I have every confidence that Bermuda will build on its reputation as a safe place to stay, and our visitors will again enjoy all that we have to offer.

“This is a tall order, but with the welcome news of the opening of the St Regis on 22 May and the commitment to redevelop the Fairmont Southampton – incorporating expanded event capabilities to minimise seasonality – tourism renewal can be accomplished.”