The Irish Hotels Federation has called for a reduction in local rates saying the high cost of business is the single most pressing issue facing the industry.

The IHF holds its annual conference today at which it reported a 1% increase in room occupancy rates in 2013.

The increase was driven by an upsurge in overseas visitors here last year but it points out that growth potential was held back by subdued consumer demand from the home market.

The IHF said the hotels sector is still a number of years away from achieving profitability due to excessive levels of overhanging debt. Debt in the sector was estimated to stand at €6.7 billion at the end of 2012.  

However, today's conference also heard that Irish hoteliers are more optimistic about the outlook for the tourism industry. 

An industry survey shows that overall confidence levels are up on last year, with four out of five (83%) of respondents indicating a positive outlook for trading conditions for their business over the next twelve months - compared to just 51% having a positive outlook this time last year. 

As a result, two out of every three hotels (68%) plan to take on additional staff over the next 12 months.   

75% of hoteliers are also seeing an increase in business levels compared to this time last year and advance bookings are performing strongly with 65% seeing an increase on 2013.

The IHF said that early indications for 2014 show that city destinations such as Dublin, Cork and Galway are benefiting from event and business-related tourism while traditional tourism hotspots, such as Killarney are doing well. 

Growth is also evident in the East, South East and parts of the West coast. However, business levels are continuing to lag in the Midlands, Shannon region and North West. 

"The Government's decision to retain the 9% VAT rate continues to help the industry when marketing Ireland abroad as a tourism destination. Combined with increased air access and a continued upturn in the global economy, this is enabling us to attract a greater share of overseas visitors," commented the IHF's chief executive Tim Fenn. 

"This is directly feeding into increased confidence on the ground with over 65% of hoteliers planning to increase their investment in marketing next year and 77% planning to increase investment in refurbishment and product development," he added.