Tourism body Fáilte Ireland said revenue from tourism last year fell to €5.2 billion - a drop of almost 17% from 2008 and the lowest level since 2004.
In its review of last year and outlook for next year, the body blamed the fall in revenue on difficult conditions in the important UK and US markets, as well as intense competition which drove accommodation prices down.
But a Fáilte Ireland survey of tourism businesses found that they were slightly more optimistic about 2010, with almost two-thirds expecting business to be similar to or better than 2009. This was up from 20% in a similar survey last year.
The organisation's chairman, Redmond O'Donoghue, said the downturn in international tourism made 2009 an 'ugly year' for many businesses. He said Fáilte Ireland was focusing on supporting tourism businesses and jobs through the next 12 months to be ready for a recovery which could being in the second half of the coming tourist season.
Fáilte Ireland's figures show that the number of people visiting Ireland fell by 12% last year, while the number of home holiday trips taken fell by 5% to 7.9 million - the first such decline in the past decade.
Numbers from Britain dropped 16%, and their spending slumped by 24%, hit by the weakness in sterling. North American visitors were down 8%, with spending down 7%. Arrivals from the rest of Europe were also down 8%, but the more traditional markets in western Europe showed much smaller falls, with Italy showing a 19% increase. Revenue from European tourists dropped by 21%, however, due to shorter stays and more cautious spending.
Fáilte Ireland registered 16 new hotels last year, but when closures were taken into account, the number of hotel beds in the country fell by 410.