Regulations requiring hotels to provide breakfast, lunch and dinner should be dropped to help the industry become more competitive, according to a study published yesterday.

The report, commissioned by the Irish Hotels' Federation (IHF), says market forces should be allowed to drive the industry and some regulations restricting hotel and guest-house business ought to be removed.

A consultant involved in its preparation, Dr Peter Bacon, said the requirement on hotels to provide food and beverage amounted to a room tax and was anachronistic.

The study says the sector is entering a new phase of development following a period of dramatic growth in which rising costs, intense competition, skills shortages and projected slowdown in tourism growth will all have a significant impact.

So many alternative dining outlets are now available that the need for hotels to have a full food service no longer exists, it argues. Dr Bacon said yesterday it was widely accepted that food and beverages were "marginal or loss-making", and cross-subsidisation was required to sustain them.

The report, which takes into account trends in other EU states, recommends that hotels and guest-houses be re-categorised under four headings: full service hotels, town and country house hotels, budget hotels and "aparthotels".

Since 1995, the industry has increased capacity by 50 per cent, with 850 hotels and 490 guest-houses providing more than 45,000 rooms. Its revenue turnover stands at £1.3 billion and it provides 61,000 jobs, according to the federation.

The IHF annual conference in Kilkenny also heard a call yesterday from its Ms Mary Fitzgerald, for a relaxation of the regulations governing work permits. She said seven-week delays in having permits processed were "unacceptable".