profitability.

The warning is sounded in the report on Premier the Hon. Sir John Swan's Task Force On Employment.

It states available hotel beds plummeted by 11 percent between 1986 and 1991.

And at the same time the industry shed 487 jobs, 188 of them in the "service sector''.

Hotels are the largest employers of unskilled workers, many of whom are middle-aged or older.

Unless things pick up, these workers could be hit hard.

The report points out the tourism slump and increased operating costs saw the large hotels suffer $41.6 million losses over the five years to mid-September 1992.

"Several of the Island's other hotels have experienced similar deterioration in their financial position.

"These losses are not sustainable in the medium term and if the Island is not to be faced with the loss of further hotel capacity, as was experienced in 1988 with the loss of the Bermudiana and Club Med properties, their financial position needs to be improved.'' The higher number of tourists arriving in Bermuda should help.

But this has been achieved through "substantial discounting and intensified marketing programmes''.

"In addition, the average length of stay has continued to slip, in keeping with the change in tourism trends.

"Global over-capacity in the industry, together with the growth in alternative tourist destinations, prevents the hotels from raising prices.

"The only alternative facing the industry is to contain costs, but the industry has limited scope to reduce non-personal costs without seriously impairing the quality of the product.'' The report says other parts of the economy are also likely to continue facing hard times, including shops.

Since 1990, the end of the credit boom, the recession, and shoppers' changing buying habits have led to a slump in spending.

The number of retail outlets fell back to 362 in 1991, the report says.

"The improvement in tourism in 1993, which hopefully can be sustained through the remainder of the decade, should provide some relief to the retail sector.

"However, there are few signs at present per capita visitor expenditure is increasing in real terms and the industry continues to face changes in purchasing habits.'' The report says 611 jobs would have to be cut if retailers were to return to the $67,250 sales per employee of 1982.

"While cutbacks of this magnitude are unlikely to occur, significant reductions could be achieved through the implementation of modern technology and sales techniques.'' Construction, too, will go on facing hard times -- although more huge job losses were unlikely.

"It should be noted, however, that as the stock of office buildings in Hamilton ages there will be a growing demand for large scale modernisation and renovation over the next decade.'' Some parts of the economy are likely to expand, the report adds.

These include restaurants, cafes, and bars -- which saw employment jump by 52.5 percent from 1982 to 1991, and ten percent in 1992.

"The sector will continue to expand during the 1990s but at a far slower pace than hitherto, reflecting a more modest increase in disposable incomes.

"However, increased competition, specialisation and ongoing changes in consumer taste will require greater flexibility and responsiveness.'' Social and community services will also probably expand, the report states.

And international business will continue to flourish.

"The establishment of excess and financial reinsurance companies has given the industry a new lease of life and that, together with the growing attraction of Bermuda as an alternative insurance centre following the problems at Lloyds of London, may see further gains in the number of such companies located in Bermuda.'' Mr. David Lines.