Tourist numbers have fallen by 7 per cent this year in the first downturn in the industry for over a decade, according to Bord Fβilte estimates.
Revenue from tourism suffered only a 1 per cent drop, however, as visitors spent more per head than in previous years.
In money terms, the drop in business represents about €270 million in lost revenue while the number of visitors lost was almost half a million.
The performance is a major disappointment after a year which began with a prediction by Bord Fβilte of 5 per cent growth.
It is not so severe as the slump of up to 10 per cent expected when the situation was reviewed last month, however, and the Minister for Tourism, Sport and Recreation, Dr McDaid, was upbeat when he released the figures yesterday.
"Any fall in visitor numbers is disappointing but minimising the drop to 7 per cent represents a substantial achievement given the difficulties posed by foot-and-mouth disease, the slowdown of world economic growth, and the attacks on New York and Washington on September 11th," he said.
The sector worst affected by the combination of crises was operators serving the north American market which had already produced 11 per cent fewer visitors prior to September 11th. In revenue terms, however, the decline was only one per cent as US visitors spent on average 15 per cent more during their stay.
Visitor numbers from Britain dropped dramatically during the foot-and-mouth outbreak, falling 13 per cent from March to May.
But the reduction stabilised at 2 per cent during the peak summer months so that total expenditure over the year is expected to be just 2 per cent down on last year.
Revenue from the mainland Europe market rose by 1 per cent due to a 9 per cent increase in spending by visitors despite a 7 per cent drop in visitor numbers.
Long-haul markets, including Asia, Australia and New Zealand, showed a 3 per cent reduction in visitor numbers but again, due to increased expenditure, the overall drop in revenue was kept to one per cent.
Dr McDaid said an increased tourism budget of €110 million for 2002 and the resilience of the tourist industry meant the country was "well placed to cope with the downturn".
He predicted that increased numbers holidaying at home in Ireland and the potential for improvement in British and European markets suggested tourism in 2002 would not be as badly affected as initially feared.
Dr McDaid also pointed out that next year's performance would be boosted by a number of high-profile sports events, including the Seve Ballesteros Golf Trophy and the AMEX World Golf Championship.
The Minister warned that rebuilding the American market would depend on retaining the routes established by Aer Lingus. He said this would have to be a priority in the troubled airline's survival plan.
"We must ensure that we are well placed to take advantage of the inevitable upturn when it comes," he said.
The Irish Tourist Industry Confederation (ITIC) has said the downturn has already cost 10,000 jobs and warned a further 10,000 would be lost next year.
The chief executive of the ITIC, Mr Brendan Leahy, said yesterday he was preparing a recovery programme with a strong emphasis on marketing and promotion.
He said proposals would be presented to the Minister at the end of January.