union, but for now is continuing to recognise the Bermuda Industrial Union.

"We have concluded that it is no longer in the best interest of the Elbow Beach Hotel to remain a member of the HEB,'' managing director of the resort's development company Mr. John Jefferis said in a statement yesterday.

"Notice of our resignation was sent to the executive director of the HEB on (Wednesday) February 10.

"Our decision to resign should in no way be construed as a reflection of our opinion with regards to the effectiveness of the HEB.'' Mr. Jefferis had no comment when asked if the resignation meant the hotel was about to walk away from the BIU.

The BIU will hold a meeting of all its Elbow Beach members at union headquarters at 4 p.m. today. President Mr. Ottiwell Simmons said: "They must attend this urgent and important meeting.'' HEB executive director Mr. John Harvey said yesterday he regretted Elbow's decision but understood it given the current economic and industrial climate.

Hotelier and Bermuda Hotel Association president Mr. David Dodwell said Elbow's resignation was a sign that hotels were needing to make individual decisions.

"It's nothing to do with the effectiveness of the HEB,'' he said. "I think that in the current industrial climate there is a desire by hotels to paddle their own canoes.'' Grotto Bay Hotel, Pink Beach Club, Mermaid Beach Club and the Palm Reef Hotel all split with the BIU after resigning or being forced out of the HEB for non-compliance.

Mr. Dodwell said he had no fears of other members following suit and causing the HEB to fold.

But he did have fears that the community was not focussing on turning around the tourism industry: "I think there is a lack of recognition of the bigger problem.'' Mr. Jefferis further said yesterday that the hotel was still pondering the Haughton Award. Accountants are continuing to assess the costs, he said.

The hotel was the only HEB member not to have accepted the award, which offered a modest three percent wage hike in 1993.

Hotel industry sources have said Elbow would faces tens of thousands of dollars in labour payouts and accounting fees if it joined other HEB-member properties in accepting the Haughton award for a new hotel workers contract.

When the award was announced last month Mr. Jefferis labelled it "lunacy''.

An Elbow decision to go it alone for an independent contract would be considered a serious challenge to the BIU -- and to the HEB if the hotel had not chosen to resign.

BIU leader Mr. Ottiwell Simmons MP said yesterday he nor his staff had received word of Elbow's resignation.

But in any case, he said, he did not see how it could affect the BIU. The Haughton award, which was a product of the Essential Industries Disputes Settlement Board, had singled out Elbow as a renegade for its unilateral actions during the nearly two years it took to reach the settlement.

In a special five-page section in the report, American Professor Ronald Haughton ruled that "Elbow Beach must conform'' to the provisions of his deal.

Elbow's deal had sought to cover the five percent Hobgood increase through gratuities pay hikes.

It was a move Prof. Haughton deemed risky. He concluded that Elbow's arrangement did not cover standard compensations for such things as overtime, sick leave, vacations and public holidays.