The arrangement means the Ministry itself has earned commission on each booking and also that potential visitors trying to book a hotel through the site have a choice only of hotels that have signed up with Expedia's Private Label service.

Not only has this limited the number of hotels linked to the reservations system, it is also an expensive option for any hotel looking to be included.

For each booking through this service, Expedia charges hotels a commission equivalent to the value of at least 20 per cent of their lowest advertised room rate.

It is understood the Ministry will receive a percentage of the revenue. One source said this rate was four per cent.

The Department of Tourism (DOT) struck the deal with Expedia without consultation with the Bermuda Hotel Association (BHA).

Expedia is used by hundreds of thousands of tourists world-wide to book flights and hotels and to hire cars.

Hoteliers believe the BHA's own booking engine, in association with Synix, which is linked to the properties of all BHA members, would be a better option for the Tourism web site.

This engine is accesible through a secondary page of the Tourism web site and also operates on the BHA's own web site, experiencebermuda.com. Synix charges a small, fixed rate fee as its commission for each booking.

Some in the industry are concerned that the deal with Synix could be jeopardised by the Expedia arrangement. The unfavourable reaction of hoteliers, on finding out that the Expedia contract had been signed behind their backs several weeks ago, has sparked talks between the Ministry and the BHA to resolve the problem.

Transport and Tourism Minister Ewart Brown yesterday did not answer questions about whether the Department received a cut from the scheme, why the BHA's system was not the principal booking engine on the web site and why hoteliers were not informed about the deal.

"This matter is currently being discussed with the appropriate parties and there will be no further comment to the media at this time," Dr. Brown said yesterday.

John Harvey, the BHA's chief executive officer, said: "We have a challenge in terms of these web sites. I have shared this with the Ministry of Tourism and we are now working towards a resolution."

The BHA booking engine was created thanks chiefly to the efforts of Royal Palms co-owner Nicholas Weare, in conjunction with the Synix company.

It is linked to all BHA member hotels and millions of dollars' worth of bookings have been made through the engine over the last three years.

Mr. Weare's efforts earned him the BHA's Hotelier of the Year award for 2005, presented last May. Mr. Weare was off the island yesterday and unavailable for comment.

Michael Winfield, owner of the Cambridge Beaches hotel and president of the BHA, said yesterday that his members just wanted value for money.

"We are in discussions with the Department of Tourism trying to resolve this issue," Mr. Winfield said.

"The Department elected to use the Private Label Expedia booking service for the booking of some hotels in Bermuda.

"The BHA was not aware in advance of that arrangement being made. We believe there are better options available to the DOT."

He explained that Expedia would approach hotels and offer to link them to its web site booking engine if a commission structure could be agreed. Each hotel negotiates a deal, but Mr. Winfield said Expedia's commission would certainly be no less than 20 per cent of the lowest advertised room rate.

"Many hotels have agreed to this but have not given permission to third-site bookings (for example, the DOT site)," Mr. Winfield said. "There is no arrangement between the DOT and the BHA permitting any sort of commission.

"The hotels of Bermuda are concerned about costs in every aspect of the operation. Rising costs, by definition, drive the price of a room higher.

"So every effort is being made to maintain value while reducing costs, and we hope that all concerned will be working towards that objective."

He confirmed that hoteliers wanted to see the BHA/Synix booking engine as the principal mechanism for making a reservation through the Bermuda Tourism web site, as it was less expensive and open to all hoteliers. The pursued the story after hearing from a frustrated hotel industry source.

"Why is Tourism using taxpayers' money to fund a web site that only represents a minority of Bermuda's hotels?" the source said.

"In doing so, this either adds cost to the consumer or puts hotels out of business. If hotels had 20 per cent of their margin to throw away, they wouldn't be closing at the rate they have been."

The story follows hard on the heels of our revelation last week that the DOT had made a deal with TNT Vacations that made possible a $49 return airfare from Boston and New York.

Part of the arrangement was that hoteliers would contribute $165 per booking, something that the BHA was informed of only after the deal had already been advertised at a Boston travel fair.