Elbow Beach Hotel will lay off about 160 employees by the end of November as it shutters 131 rooms and outsources food and beverage services, Mandarin Oriental Hotel Group spokeswoman Danielle DeVoe said.

"It's fair to say that current business levels are challenging globally," she said.

The hotel's 1908 pastel-yellow building will remain closed for several years. Hotel officials hope to renovate it during that time, although no details have been specified, DeVoe said.

Premier Ewart Brown said he hopes the projected renovation will enable Elbow Beach to compete with other high-end brands.

"The closure of any hotel property is difficult at any time," he said. "We never want to see Bermudians losing their jobs."

Elbow Beach will still operate 98 luxury suites and cottages, said Frank Stocek, the hotel's general manager.

The resort made its debut on Travel + Leisure magazine's list of the world's top 500 hotels this year. Mandarin Oriental has managed it since 2000.

Rates range from US$300 to more than US$800 a night.

Bermuda, a British territory several hundred miles northeast of Florida, has seen a nearly 20 per cent drop in tourists through June, compared to the same period last year, according to the Caribbean Tourism Organization.

Earlier this year, the Four Seasons Resort Great Exuma in the Bahamas and the Nikki Beach Resort & Spa in the Turks and Caicos Islands both closed down.

- AP