The Irish Hotels Federation (IHF) is calling upon government intervention to support the hospitality industry during the current financial crisis.

Chief executive John Power said: “Banks are looking at the risks in the hotels. They see it as a bigger risk now than it was two years ago.

“So we believe that as has happened in other countries, some form of government guarantee of the provision of working capital is put in place to ensure that banks are more comfortable in lending to the sector.”

According to Power, tax breaks until 2007 encouraged the expansion of hotel beds in Ireland from 40,000 in 2002 to an unsustainable 61,000 at present.

“Hotels that were built on the basis of tax breaks now feel that they are just being supported by investors to stay in existence.”

Compounding this over capacity in the sector are high levels of debt, declining tourist numbers and lower expenditure with increasingly competitive room prices. Massive energy bills are also making leisure centres a liability.

Powers added: “They can be expensive to run. Energy is a large cost and at the moment when the revenues are suffering, all the cost items come into focus.”

The group is holding an emergency meeting with its 1,000 members today (Wednesday 12 August) to discuss the troubled sector.