Irish hoteliers were advised to cut staff costs to maintain profits in a report published today.
Consultants warn the industry that it must come together to combat the rising costs of employing workers which is eating into profits.
Horwath Bastow Charleton (HBC) produce the annual Ireland and Northern Ireland Hotel Industry Survey which is well regarded by the hospitality trade.
"Hoteliers will need to address the issue of trimming payroll costs in the wider context of National Pay Agreements, in order for the industry to continue to develop," Aiden Murphy of HBC said.
This year's report found that hotels in Dublin are thriving with occupancy rates of 76 per cent. Some 43 per cent of all hotel guests in the capital are visiting on business.
In the west of Ireland, however, the picture is different with the industry losing out to Dublin's greater access and transport options. On average, hotels in the capital are making twice the profit of their counterparts along the Atlantic coast.
"Hotels in the Western Seaboard are suffering due to access problems, and the lack of investment in regional airports," said Mr Murphy.
"It is vital that this imbalance be addressed in order for this market to thrive. The combined factors of Dublin airport being the major gateway for visitors and shorter average length of stays by overseas visitors, leaves the Western Seaboard at a marked disadvantage in terms of capturing their fair share of overseas tourists."
The consultants forecast around 6,500 new hotel rooms being built throughout the state by 2008, some 3,700 of these in Dublin. But it also predicts a number of hotels leaving the industry entirely and selling off their properties for redevelopment purposes.
"We have seen this trend emerge, most notably in the Dublin market, against the backdrop of the property scene — with hotel properties being sold for prices far in excess of their stated book value," said Mr Murphy.