The expansion of Dublin's hotel market is outstripping growth in tourist numbers, according to figures released yesterday.

The State's tourism agencies expect that the number of hotel rooms in the city will reach 16,000 by the end of the year, a 25 per cent increase on current levels.

At the same time, tourist bodies expect the number of overseas visitors to the country to grow by 5 per cent in this year. In 2004, 6.4 million holiday makers came here.

Dublin Tourism chief executive, Mr Frank Magee, said yesterday that the city's industry faced a number of challenges this year.

"Results for 2004 show that the number of visitors to Dublin increased by 6 per cent and the revenue earnings were up 8.85 per cent, giving a return to the Exchequer of €650 million," he said.

"However, Dublin must not rest on its successes and there are many challenges facing it, not least the huge investment in hotel development, which will result in a 25 per cent increase in the number of hotel rooms in the city by the end of this year, giving us a total of almost 16,000 hotel rooms.

"We are also faced with increased international competition, particularly from other European cities," Mr Magee added.

In 2004, the city had 20 per cent share of all overseas holiday visits. It also was also the destination of one-third of all tourists from Ireland's biggest tourism market, Britain.

Mr Magee was speaking at a presentation to the city's tourist industry bosses by Fáilte Ireland and Tourism Ireland of their plans for 2005 in Dublin yesterday.

Fáilte Ireland chief executive, Mr Shaun Quinn, said that the bodies would prioritise regional growth in 2005, but he argued that this would not mean taking visitors away from the capital, but getting an increased share for the country as a whole.

Tourism Ireland, responsible for marketing the island as a whole as a holiday destination, is to spend €200 million over the next three years in a bid to grow visitor numbers to nine million by 2008.

Its chief executive, Mr Paul O'Toole, said that this year, the body would match specific Irish destinations to markets in specific European regions.

"These matches will be rotated on a three-year cycle, but for 2005, Dublin will be matched with Sweden, Finland, Norway and Denmark," he said.

At the same time, Mr O'Toole said that €14 million would spent on a campaign in Britain this year, in a bid to reinvigorate that market.