The Government should spend an extra £25 million (€31.7 million) to promote tourism as part of a plan to offset a massive drop in demand from US visitors, the Irish Hotels Federation said yesterday.

Local authorities should also waive rates for hotels and guesthouses which experience a 15 per cent downturn in turnover over the next three months, the tourism body added.

Mr Jim Power, chief executive of the hotels federation, urged the Government to show the same leadership and support tourism - in the same way as it had for agriculture during the foot-and-mouth crisis. He said the downturn of US visitors to Ireland between now and the end of the year would be more than 200,000.

"This shortfall represents lost revenue in excess of £100 million and will have an enormous effect on the cashflow of hotels and guesthouses," he added.

Mr Power said every £1 million spent by tourists supported 51 jobs here, suggesting more than 5,000 people would lose their jobs. The drop in demand would also lead to an earlier closure of businesses in the winter, he added.

The federation called on the Government to develop a strategic plan for tourism. It should include:

Provision by Government of a special £5 million marketing fund dedicated to promoting Ireland until the end of the year, in the UK and continental Europe;

The waiving of local authority rates for the last three months of 2001 for hotels and guesthouses where turnover fell by 15 per cent on last year;

An extra £20 million allocated to augment marketing and promotional activities of Tourism Ireland which should be dedicated to rebuilding the US market, and

The reduction by Aer Rianta and port authorities of charges, to maintain and create an incentive for the increase of access routes and schedules.

This proposal was met in part yesterday, when Aer Rianta introduced a zero airport charge scheme for new routes to Dublin airport for the first three years.

Mr Power said care should be taken to ensure the continued promotion of Ireland in the US market, though any advertising would have to be done sensitively.

For the foreseeable future it seemed likely that there will be a greater dependence on Irish, British and European markets.

The Minister for Tourism, Sport and Recreation, Dr Jim McDaid, yesterday told the Dβil the terrorist attacks in the US would lead to the first annual decline in visitor numbers for a decade in the Republic.

Dr McDaid welcomed Aer Rianta's introduction of zero landing fees for new routes and described a discount fare of $198 (€216) offered by Aer Lingus for its services from New York and Boston to Ireland as "very attractive".

Dr McDaid said the chief executive of Tourism Ireland was already spearheading a review of marketing plans for 2002 with the intention of making a major announcement early next month.

An action group to prepare plans to counter the dramatic fall-off in tourist numbers in the Shannon region was set up in Limerick yesterday.

It was claimed - at a meeting of industry representatives - that there could be a loss of more than 700,000 passengers arriving at Shannon next year as a result of the terrorist attacks on the US.

Mr John King, Shannon Development Heritage and Tourism Director, who convened the meeting, said Shannon was at the very sharp end of the decision by airlines to cancel routes or reduce flight frequencies in response to the current difficulties.

"It is not a time to just wait and see," he said. "Everyone must work together to develop and deliver appropriate response strategies to win business."