The Taoiseach has urged businesses in the tourist industry to increase competitiveness and keep prices as attractive as possible to help overcome difficulties facing the sector.

Mr Ahern told a forum in Dublin yesterday that after nine years of uninterrupted growth, the industry had built up a strong product base which made the State an attractive destination.

Businesses in the sector have responded to the difficult climate by adjusting marketing and pricing strategies to secure extra business.

The Taoiseach said the Government was determined to help the sector respond to the short-term challenge of the recent downturn, while also ensuring the correct structures and strategies needed to realise the long-term potential contribution of tourism to the Irish economy. The forum was organised by Cert, the national co-ordinating body for education, recruitment and training for tourism.

Before his address, Mr Ahern said the foot-and-mouth crisis early this year followed by the technology slowdown and the September 11th attacks in the US had caused difficulty for the sector.

Ireland still has "huge potential in Europe, in the UK, to make up the capacity that we lose in the American market and I think that is well within the bounds of our possibilities", he said.

Mr Frank O'Donoghue, who has co-authored a new Cert tourism report, said the factors which developed the tourism industry over the last decade were unlikely to be sufficient to sustain competitive advantage.

The co-author of Cert's People in Tourism report, Mr Paul Tansey, stressed the need for businesses to improve competitiveness. "Productivity gains are essential in this context and these are best achieved through developing the capability of the industry," he said.

Dr Dan McLaughlin, the Bank of Ireland's chief economist, said the economy and the tourism sector would begin to recover in spring. There were signs of a significant and rapid recovery in the US economy, which would return to positive growth in the first quarter of next year, he said.