Plans to waive cabin taxes for cruise ships in the ports of Hamilton and St. George's for the next three years by Government have been welcomed by Bermuda's business community.

Chamber of Commerce president Phil Barnett said that shopkeepers, restaurant owners and managers and water sports operators were just happy to get any help they could in the current economic crisis.

But Mr. Barnett said the Ministry of Tourism and Transport's consultation of a proposal to allow cruise ships staying one or more nights to provide full entertainment, open bars and signature shops while in port and to open casinos after 10 p.m., needed to be done fairly, with the same chances afforded to Island businesses.

"I think retailers, restaurateurs and water sports operators are truthfully just happy to get what they can get with the difficulties everybody is having with the global economy getting worse and worse every day," he said.

"The future of Bermuda, however, is not going to be attracting more and more cruise ship passengers - the future is especially visitors who come down on air arrivals, spending their dollars in hotels and restaurants and using the facilities and perhaps doing some shopping.

"But we are certainly in for a tough time considering that our hotel room inventory has dropped to one of the lowest points since the start of tourism in Bermuda.

"Bermuda is going to have to continue to look at what we are going to have to do in the future in order to rethink and reposition our products."

Mr. Barnett said Bermuda needed to promote itself as a luxury destination to the right kind of tourist in the high-end niche market.

"In terms of relaxing cabin tax, in the short-term, if anyone is going to complain, in answer to that - it is going to encourage smaller niche ships to St. George's and Hamilton," he said.

"It will help them, because the cruising price is a lot higher for all of these ships than the gigantic 4,000-person ships coming into Dockyard."

The Ministry of Tourism and Transport announced yesterday that it would be surveying private sector stakeholders on a policy proposal to make the Island more attractive to potential cruise ship partners.

This follows a review of the cruise industry trends, including discussions with cruise lines, which concluded that Bermuda was losing its competitive edge in bringing cruise ships to the Island, particularly the smaller, premium ships which can dock in Hamilton and St. George's.

The review noted that it was a challenge to attract smaller ships to Bermuda because the industry's smaller ships that once docked in St. George's and Hamilton have been retired or sold to developing markets in Asia and South America.

As a result, and recognising the Island's need to change its business model in order to remain competitive, Government said it would introduce legislation in the upcoming term that will waive cabin taxes for three years, for the St. George's and Hamilton ports only, starting in 2009 in an effort to attract the shrinking availability of smaller cruise ships.

Although this concession was designed to keep Bermuda competitive, the Ministry of Tourism and Transport said it would explore additional concessions through consultation with the Corporation of Hamilton, the Corporation of St. George's and the Chamber of Commerce, asking them to assess the merits of allowing cruise ships staying one or more nights to provide full entertainment, open bars and signature shops while in port, and open casinos after 10 p.m.

In return for allowing such controlled on-board business, the major cruise lines providing overnight ships on the Island would be expected to agree to take part in a number of activities and events that benefit all visitors and residents, said Government.

The review also revealed many competing destinations such as Aruba, US Virgin Islands and the Bahamas, already allow cruise ships to open retail shops, entertainment and casinos while in port.

Mr. Barnett admitted it was very difficult for Bermuda's businesses to compete with the billion-dollar cruise ship industry in terms of offering entertainment, on a level playing field.

He pointed out that they had dramatically different and higher overheads and had to stick to much tougher and stringent rules compared to their competitors, who could offer bargain $399 and $499 deals, including transport, accommodation and food.

"How can you compete on entertainment like that?" he said. "You cannot.

"So, Bermudian business owners need to have an absolutely equal opportunity to do exactly what the cruise ships are allowed to do."

A spokesperson from the Ministry of Tourism and Transport said: "The cruise industry is an important component of the Bermuda Tourism product specifically and the Bermuda economy generally. To remain competitive in the future, we must modify our product offering today."