The total number of overseas visits to Ireland in 2010 was down by 16% on the previous year, according to a new report.
The Irish Tourist Industry Confederation says it is hopeful that visitor numbers will increase in the coming year.
The end of year review from the ITIC estimates that 5.5 million people travelled to Ireland in the last twelve months, down one million on the 2009 total.
In the last three years, annual revenue from overseas visitors has declined by €1.7 billion. Tourist numbers from Britain have fallen sharply in the same period.
The Confederation, which represents a range of organisations with interests in the tourism sector, says it is confident that there will be a reversal of recent trends in the coming year.
It highlights a €7 reduction in the airport departure tax as one encouragement and says a weaker euro will help attract visitors from the key UK and US markets.
The report says a recovery in the numbers visiting from abroad is crucial to the tourism sector, as domestic demand is not likely to recover significantly over the next few years.