Dublin's popularity with overseas visitors is masking an overall decline in tourism in the State as a whole, research by a leading industry body has found.

The newly elected chairwoman of the Irish Tourist Industry Confederation (ITIC), Catherine Reilly, warned at the group's annual general meeting yesterday that the industry would have to find a solution to the decline in visitors to the regions.

Research carried out by the ITIC found that the number of nights that tourists spent outside the capital in 2003 was 2.7 million fewer than in 1999. This means that accommodation providers faced a 14 per cent drop in demand.

At the same time, demand for bed nights in Dublin increased by two million over the same period, implying there was a decline in demand in the State as a whole.

"Despite the increasing popularity of Dublin over the period, attracting almost two million more bed nights, the overall result was a decline in bed nights," Ms Reilly said. "There is a real problem here, which we must face up to and deal with at industry level and at Government level."

ITIC will publish the results of the research next month. It is also planning to work with State body Fáilte Ireland on a review of the industry's product development needs, quality and markets.

She welcomed the news that the Minister for Finance Brian Cowen has rejected an EU proposal for a voluntary levy on airline tickets. The proposal is aimed at raising cash to fulfil the EU's commitments on development aid.

"As one of only three island nations in Europe, such a tax would cause serious economic damage to the country and to the regions that are highly dependent on tourism," she said.

Ms Reilly said the ITIC would broadly welcome the new national consumer agency that the Government plans to announce today. But she argued that all the factors that influence consumer prices have to be examined, and pointed out that State agencies were responsible for part of the problem.

"While inflation has been declining again, charges for a range of overheads, utilities and local authority services continue to rise at multiples of the inflation rate," she said. "So those price elements that lie within the control of the public sector need to be tackled also if real progress is to be made."

She also called for an e-marketing strategy. "Ireland should be a world leader in using the web as an effective selling tool. "That would give us a competitive advantage. Unfortunately, that is not the case so far."