The third in a multipart series on sustainable development in Bermuda.

The only thing more frightening than rapid change is a stagnant status quo.

And the reality is by the early 1980s Bermuda was confronting stagnation. Our routine way of doing things was demonstrably no longer viable let alone profitable. The tourism economy was in the doldrums.

Bermuda’s traditional tourism market was literally dying off and no new one had been identified and groomed.

A steep decline in air arrivals was masked by the tens of thousands of visitors who were disgorged onto the streets of Hamilton every week from cruise ships. But they were a different breed from an earlier generation of vacationers who had arrived here aboard the luxury liners which once plied the Bermuda route. These tourists were not interested in the fine china or crystal on offer on Front Street, a luxury goods precinct which had become internationally renowned as “The Shop Window of the Commonwealth”. Instead, they might take home with them a couple of cheap souvenirs and a T-shirt.

Given their shopping, dining and entertainment needs were all met aboard their floating hotels, cruise visitors’ direct contributions to the Bermuda economy were minimal. That continues to be the case, with the bulk of the revenues generated by cruise ships making Bermuda port calls taking the form of the passenger head tax and wharfage fees they pay.

The 1980s would have been the ideal time to review the long-term sustainability of the Bermuda economy and recalibrate accordingly. As a resort destination Bermuda was becoming overpriced, outdated and, frankly, unappealing to a younger generation of well-heeled North American vacationer.

The possible benefits of casino tourism to the Bermuda economy should have been investigated and pursued at that time; after all, the Bahamas had legalised casino gambling in 1969 and rejuvenated its tourism product.

The addition of stylish new casinos to the island nation’s traditional lures of sun and surf had proved hugely popular at a time when legalised gambling in the US was still restricted to Nevada — then a byword for sleaze. The success of the Bahamian foray into upscale gaming had led to massive infrastructure investment in that country, with new hotels, retail operations and entertainment venues opening up to cater to this wealthy new market. Bermuda’s ongoing debate on the subject of gambling is a textbook exercise in futility — in the second decade of the 21st century, when most of our potential visitors now have casinos within driving distance of their homes, whether or not the Island enters what has become an entirely oversaturated market will have little discernible impact on our bottom line.

But there was to be no comprehensive, long-range planning. Bermuda was overtaken by events in the form of its burgeoning new re/insurance industry and its associated businesses. The spectacular growth in the international sector of the economy in the wake of the 1986 US-Bermuda Tax Treaty fell on the Island like the force of destiny. However, its success was anything but preordained.

The development of a Bermuda market to address the US liability insurance crisis amounted to a multibillion dollar gamble on the part of its backers, one even the most optimistic among them had no idea would pay off so richly. And Bermuda was not entirely prepared to deal with all of the consequences of what amounted to a boomtown growth spurt. So hurried improvisation, by necessity, came to eclipse all other considerations.

But while the international sector of our economy was doing a roaring business, the insidious deterioration of the tourism infrastructure only accelerated.

Political and business leaders continued to employ high-minded generalities when they spoke about the ongoing importance of tourism to Bermuda’s economic and social well-being. But these were no substitutes for specific plans of action. With Bermuda’s antiquated tax system still yoked to import duties — which makes the price of everything from labour to electricity so disproportionately expensive in Bermuda — even the most casual cost/benefit analyses determined there was no money to be made investing in new hotels or tourism-related amenities.

What is now the Fairmont Southampton, opened in 1972, remains the last large-scale resort built in Bermuda. When a Hotels Concession Act, exempting developers from certain taxes was belatedly adopted in 2000, it proved to be too little, far too late. It did lead to the construction of what amounted to a second Tucker’s Town within the boundaries of Tucker’s Town, a gilt-edged residential development on land originally earmarked for hospitality projects. But precious few new hotel rooms came on line.

In fact quite the opposite held true. Literally dozens of hotels and guest houses were shuttered during the early years of breakneck growth in the offshore sector.

Gargantuan new office blocks were constructed on some sites to meet the demand from re/insurers and their satellite industries for commercial space. Other properties were turned into housing for the influx of foreign employees required to staff the re/insurance companies or service their ever-increasing corporate needs at the banks and legal and accountancy firms. Those young Bermudians with the brains, interest, work ethic, determination and will power were increasingly drawn towards the thriving new economic environment, further diminishing the available talent pool which might have reinvented tourism even while it languished in the shadow of the offshore sector’s success.

Crippled by rising costs and a chronically diminished spirit, by the early 1990s Bermuda had effectively exited the resort tourism industry it helped to pioneer in the 1920s and 1930s. Nevertheless, the tax burden on this steadily dwinderling source of revenue continued to grow, a situation carrying within it the seeds of future destabilisation and dislocation.