Irish hotels are carrying a total debt of €6.7 billion, according to a new report.
As much as €2.5 billion of that needs to be restructured to lower that debt burden to levels that will be sustainable in the long term.
The report for the Irish Hotels Federation was complied by economist Alan Ahearne.
One of the obstacles to resolving the debt problem, the report said, is that it is difficult to attract investment particularly from abroad for smaller hotels outside the main urban areas.
Among the solutions Alan Ahearne proposed is the use of qualifying investor funds which would select a group of hotels to invest in and allow investors from here and abroad to pool money for that object.
He also suggested that tax relief is subject to tightly defined caps and strictly defined types of investment would provide an incentive for such a scheme.
The onset of the economic crisis saw a dramatic deterioration in profitability within the hotel sector, with revenue per room falling 30% since 2007 and profit per room slumping 44%. Average room rates fell from €97 in 2007 to €72 in 2011.
Despite the cheaper accommodation prices, occupancy rates fell from close to 70% in 2007 to 61.4% in 2011.
The IHF points out that the sector has a critical role to play in contributing to recovery in the country's tourism sector and the wider economy. Tourism provides about 196,000 in the economy, which represents about 11% of total employment. More than 50,000 are directly employed by hotels and guesthouses.
''Now is the time for the Government to take decisive action to help improve access to equity finance and restore financial stability to the sector,'' commented Tim Fenn, chief executive of the Irish Hotels Federation.
''This issue cannot be allowed to fester and jeopardise future growth and job creation in the wider tourism industry. If we don’t act now, we’ll be picking up the pieces of a failed tourism industry in five years time," the IHF chief cautioned.
