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International hotel developer hit by severe downturn in occupancy rates

Sol Kerzner, the flamboyant head of Kerzner International, confirmed that cutbacks at his flagship Bahamas resort are just the start of a much larger retrenchment for the privately held company.

New projects have been put on hold, he said, and costs are being scaled back throughout the company as cash-strapped tourists rethink their holiday plans. The cutbacks in the Bahamas include the loss of 800 jobs.

'Some countries and some regions are affected more so than others, but there's no question that everyone's feeling it to a greater or lesser extent. And we're not immune from that,' Kerzner said.

But the gloomy news didn't stop the party and Hollywood celebrities and other VIPs were present at the gala grand opening of the second Atlantis resort in his stable which is a partnership with Dubai-based developer Nakheel, the state-owned creator of the palm-shaped island atop which the hotel sits.

But disgruntled staff employed by the company are wondering how it can spend millions on an opening party on one hand and lay off people on the other. It is estimated that the Atlantis Dubai party cost $20 million. It included a private concert by superstar Kylie Minogue and guests included actors Robert de Niro and singer Janet Jackson.

'We all value our jobs and we think that in current conditions they should be given priority,' said one member of staff in Dubai. 'We have only just opened but already there is talk of jobs being lost because there are poor advance bookings for many resorts in Dubai,' he added.

Kerzner said the party, which he described as a high-profile attention-getter designed to generate buzz about the resort, was planned and budgeted for long before the global downturn.

He said it would have been a huge mistake not to launch it as planned. 'If I had it all over again and I understood that the timing was what it was, one might modify a couple of the things but not significantly,' Kerzner added.

It is a difficult time for developments that are dependent on tourism. Occupancy figures from Smith Travel Research show hotel demand fell sharply around the world in September, the most recent month for which data is available.

Middle East and Africa demand was down 5.3%, a bit more than Europe but less the Americas. In Asia, occupancy rates plunged 12.4%. Analysts say October numbers could be even worse.

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