The news has rubbed salt into the wounds of a hospitality industry still reeling from multiple hotel closures and loss of revenue inflicted by Hurricane Fabian three weeks ago.

Carnival cited scheduling constraints at Dockyard's King's Wharf as the reason for the decision. The ships will instead call into the Bahamas as well as Port Canaveral and Orlando in Florida.

The loss would be widely felt, said Henry Hayward, president of the ship's agent, Meyer Agencies Ltd.

"It is going to be a considerable loss going into the millions," he said. "These passengers, we estimate, spend $100,000 a day in related services, tours and transportation, so it's a considerable loss not only to the West End, but to Bermuda."

An industry insider said it was Government inefficiency that saw the contract fall apart.

"Government failed to meet the deadline for the response back to Carnival and Carnival could not wait and had to choose the available route to the Bahamas," he said.

Tourism Minister Ren?e Webb denied the charge, saying that Government was simply unable to accommodate all of Carnival's requests.

"There was no gap in communication, we take an holistic approach to tourism and how it affects other cruise vessels," she explained. "The Ministry was not able to accommodate the request they made due to the berthing facilities we have.

"We weren't able to give them the amount of calls they wanted to Bermuda and so they cancelled. This year, basically, was a test for us with 'mega-ships'.

"The retailers, of course, were pleased, the infrastructure worked, the cruise ship passengers were generally pleased - although they wanted more entertainment and beaches - but we couldn't give (Carnival) the full schedule they wanted for 2004.

"We think Carnival worked. The only complaints we had were from hoteliers complaining because there were no taxis for their guests because of the mega-ships."

Tourism was now in discussion with other cruise liners which she hoped would fill the gap left by Carnival, Ms Webb said.

"It's unfortunate that the contract was not signed off. But the main reason it didn't take place in July - when it was initially supposed to - was because of the election. It wasn't until Thursday of last week that Carnival called and told me what they were considering.

"But we couldn't accommodate them. It doesn't mean they won't make occasional calls. Hopefully, we will find a replacement but there's nothing we can do now, but be proactive."

Dockyard business people, on hearing the news yesterday, described the loss of the ships as a "disaster".

Two of the mega-ships - the 2,500-capacity and the - have made regular trips to the island throughout the past season. And plans to add a third, even larger ship to the Dockyard schedule have also been axed. The , which hoped to pay 12 visits to Bermuda, has a capacity of 2,900.

"For the 2004 cruise season, due to scheduling constraints at King's Wharf, and the resulting itinirary we would have been required to operate, we determined we could generate a higher cruise yield with the itinerary we are now proceeding with," Jennifer de la Cruz, company spokesperson for Carnival Cruises, explained.

When asked if difficulties had arisen in negotiations with Government, Ms de la Cruz said: "I can't really expand beyond that but I would emphasise that we are strictly doing this for the 2004 season. We have not solidified any plans beyond that, and we are in productive discussions with Bermuda Tourism officials for 2005 and beyond."

On being told the news of the loss of the Carnival ships, Dockyard business people said the impact would be great.

"That's a disaster," said a shocked Eugene Minors, who opened the Pier-Vu store in Dockyard just five months ago to add to his store of the same name in St. George's.

"Those ships are very, very important to businesses in Dockyard. They are the difference between day and night for us.

"They bring a lot of people, and they are different kind of clientele. It's a real shame if they don't come back."

Jon Faulkner, owner of Bermuda Clayworks, a business based in Dockyard for six years, said: "That's a shame because those ships were important to us.

"They gave us a big boost, obviously because they brought in 2,000 people. We definitely benefited from that."

Carnival's and paid occasional visits to the island last year. It was during the 2002 season, that company president Bob Dickinson expressed keen interest in getting a full season at Dockyard.

Despite good intentions, Government and Carnival have allegedly had a stormy relationship. A report on the Bermuda.com web site last year stated that Mr. Dickinson stormed out of a meeting with former Tourism Minister, the late David Allen, after he asked for a $200,000 marketing fee for each of the five extra voyages Carnival requested for the 2002 season.

According to a story in , the incident was said to be inaccurate.

The ships had paid seven visits from New York to the island between July and August - arriving at King's Wharf on Friday and staying through Monday afternoon. Two voyages had been made - one from Baltimore and the other from Philadelphia - in April and were scheduled to be repeated this October.

As well, there is one seven-day cruise out of New York, scheduled for April 2004.