Holidaymakers in the Republic of Ireland are saving money by stocking up on food and drink in supermarkets instead of eating out in their hotels.

Consumers are cutting back on what they spend on domestic travel and the result will be a 15pc drop in spending this year to €1.3bn, with worse to come in 2010, a new report from the Irish Tourist Industry Confederation has warned.

Although the number of domestic holidays taken this year will fall by a more modest 10pc, ancillary spend in hotels "is noticeably down with reports of guests shopping in local supermarkets for food and beverages", the report finds.

Many hotels reported that as well as paying less for rooms, guests were cutting back on restaurant and other expenditure, and generally spending less on site, said Eamonn McKeown, ITIC Chief Executive .

People are also taking much shorter breaks than they used to, and the number of nights spent on domestic holidays nationwide fell from a peak of 16.4m in 2007, to 15.6m last year, and is expected to be down by another 10pc this year. However domestic holidays are still crucially important to the tourism industry, and two out of every three hotel guests here last year were Irish.

And though it has been a difficult year, domestic tourism is not as badly hit as holiday trips abroad, which have plunged by 19pc in 2009, the report said.

However, the National Assets Management Agency (NAMA) will have a negative impact on the hotel sector by putting older hotels at a competitive disadvantage to new ones which are being kept afloat by banks because their developer-owners owe huge sums, hoteliers said.

The Irish Hotel Federation (IHF) called for a "set-aside scheme" under NAMA for surplus hotels similar to that used to pay farmers to keep farmland out of production. This could be applied to whole hotels or large chunks of them.

IHF Chief Executive John Power suggested that barely functioning hotels under NAMA's remit could be transformed into nursing homes or hospital step-down facilities, as there was a massive over-supply of rooms.

Source Irish Independent