The president of the Bermuda Hotel Association said the indefinite closure of Elbow Beach's main hotel should not scare off potential investors.

JP Martens, general manager of Grotto Bay Beach Resort, said the news was a blow for the tourism industry as it reduced the number of beds available to tourists.

But he added that he did not think it would sway any investors considering financing a new hotel on the Island resorts have been touted at several locations across the Island for the last several years though ground has not broken on any of the proposed sites.

"The reason for this particular closure is to do some redevelopment," he said. "I don't think it will scare off any hotel financiers, obviously it doesn't help, but I do not think it is going to make a whole lot of difference."

He added that groups looking at building hotels on the Island will most likely have done their homework and known that the closure was a possibility, particularly as it had been rumoured for three years.

Elbow Beach general manager Frank Stocek announced on Wednesday that the hotel would close its main building for a $10 million refurbishment before opening parts of the ground floor. For the next few years, the 101-year-old property will focus on the luxury cottage market, keeping 60 percent of its hotel rooms in the main building closed as it rides out the economic downturn.

Mr. Martens said that while bookings had been low at Elbow and across the Island he hoped things would get better.

"Obviously 2009 has been a challenging year in Bermuda, and worldwide, for the hotel industry," he said. "We are hoping that we have seen the bottom of this and from here on things will gradually increase."

Next summer is expected to be slow as well, Mr. Martens said. But he added that many hotels were already seeing larger groups book in for the summer of 2011.

Jon Crellin, of the Fairmont Hamilton Princess, has previously said his hotel has also noticed 2011 bookings for large groups and conventions were higher than 2010 bookings.

The Reefs general manager David Dodwell said he was saddened to hear the iconic Elbow Beach would be boarding up most of its rooms for the near future.

"It is terrible news for most of the staff, but at least they are keeping part of the hotel open. It is better than a full closure, for Bermuda.

"In the short term they are looking to operate in the luxury cottage niche, which has been successful in the past.

"I think it is an indication of the difficulties of making a [large] development work in today's climate.

"They are choosing to wait and see what happens in the hotel development market around the world before making any decisions."

However, the international website HotelChatter — named as one of the best travel website by Forbes Magazine — had this to say about the partial closure: "This hotel half-closure is akin to moving a TV show to Friday nights. You know it's on its way out but the powers that be will make it suffer through another season. We wouldn't be surprised if Elbow Beach closed up this time next year."