CHARLOTTE AMALIE, St. Thomas -- The shutdown of the 290-room Grand Beach Palace resort on Aug. 22 will be permanent, and not a temporary closure as had been previously announced, according to Luis Entrala Fabregas, general manager.

After less than a year of operation by Mexico-based Palace Resorts, which purchased the 26-acre beachfront resort last November from CTF St. Thomas Corp. for $9.75 million, the property will cease operations nearly a week earlier than was announced in July.

Last month officials announced that the hotel would close temporarily on Aug. 28 for $12 million worth of renovations, and that the owners would ask the Virgin Islands Economic Development Commission to exempt the resort from property and gross-receipts taxes for 10 years, an exemption that more than 15 U.S.V.I. hotels already have. The owners have now cancelled plans to apply for the benefits and are closing permanently instead.

The closing will put almost 300 employees out of work, some of whom had worked for the resort since it opened in 1984 as the Wyndham Virgin Grand Beach Resort, which changed in 1993 to Stouffers. The fate of the employees and their severance compensation has become a center of political controversy, according to lawyers representing the employees who had tried to gather enough signatures to force a vote on unionizing before the hotel closes.

Palace Resorts owns 10 all-inclusive hotels in Mexico and plans to open a resort next year in the Dominican Republic.

To contact reporter Gay Nagle Myers, send e-mail to [email protected].

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