THE hotel building boom looks set to continue with up to 90 hotels planned for the whole country, almost half of which are earmarked for Dublin over the next two years.

Opinion is divided on whether the boom could lead to an oversupply, particularly in Dublin. Some industry experts are warning that there is a danger of this happening, while others contend that the industry is merely catching up after a lengthy period when there were relatively few hotels built.

The rapid growth in tourism, particularly since the ceasefires in the North were first announced, and the higher room rates being charged by many hoteliers, has encouraged others to move into the business.

Apart from new developments, dozens of hotels are planning to increase their existing accommodation. For example, the Galway-based Flannery Group, which paid £2.2 million for the Ashling Hotel in Dublin's Parkgate Street, is to increase the number bedrooms from 56 to 150 and to develop a multi-storey car park to facilitate customers.

Confidence in the industry - from hoteliers and investors - has been boosted by the consistent growth in tourism figures over the past few years. Preliminary figures for 1995 show that overseas tourist visits to Ireland grew by 15 per cent last year - the fourth successive year of growth.

the number of hotels planned will represent an investment of at least £400 million, if they are all built, according to a report prepared by ICCBank last week. "The figure is a conservative estimate as hotel construction is very difficult to cost," says Donal Waldron, general manager of lending-hotels at ICCBank.

Mr Waldron, whose company claims to fund about 25 per cent of hotel developments in Ireland, said 703 hotels were registered with Bord Failte by the end of 1995. His company's report identified 717 hotels as of May this year.

ICCBank's research shows that by the end of next year, national capacity in hotels will grow considerable - up one-third by the end of 1997. In all, it says, some 9,000 additional hotel bedrooms are in planning or are currently under construction.

If the hotel developments all materialise, the sector will have grown by around 12.5 per cent by the end of 1997.

Mr Waldron attributes the expansion in the hotels sector to several factors, including low interest rates, the peace process, and general confidence in the economy.

Like others, he also believes that increased access to Ireland and the growth in short-break holidays is helping the industry. "The rate of growth has been far greater than people anticipated."

Tourism in Ireland is growing faster than in any other European country. Europe has seen growth of just 2 per cent, with a 9 per cent increase in tourist spending. It is estimated tourists now spend almost £1.3 billion a year in Ireland.

Hotel development has "just about kept pace" with demand, according to a Bord Failte spokesman, John Browne. "There are one or two pockets of the country where accommodation can be stressed at times. For example, there were problems in Galway, but several developments have come onstream."

In 1988, just £30 million was invested in the industry. Mr Browne recalls the then Bord Failte chairman, Martin Dully, saying the industry was jaded. Since 1988, around £1 billion has been invested in the industry - not just in hotels, but also in leisure facilities and other amenities.

Hotel development is not grant-aided as such, although developers can write off 100 per cent of the capital costs over seven years. The usual tax breaks apply to hotels which are located in tax designated areas.

However, the boom will not last forever, and some people are asking just how expansionary the sector is. Peter Malone, managing director of Jurys, believes "there is a lot of hype about the hotel market" but says not all the hotels planned will come onstream.

Jurys will be opening a 234-bedroom economy hotel at the IFSC in Dublin. This hotel, and its other highly successful budget hotel at Christ Church, will have added 500 rooms to the current supply. "Dublin was undersupplied by hotels, but it has probably hit its peak now," says Mr Malone.

He questions whether the lending institutions are watching who they are lending money to. "It takes time to make money. It is said you should build in a recession, not in the good times."

Mr Malone feels that a number of speculators are looking at hotel projects as a way of using land they have. However, he says, good hoteliers must be able to handle the difficult times - such as the Gulf war period and the last recession.

"The big problem for tourism in Ireland is still the seasonality factor," he says "Filling hotels from October to February can still be very difficult."

Donal Waldron says there is a danger of oversupply. "There is always a danger of oversupply when you have a growth cycle he says. "Only in hindsight you see the market has peaked".

John Browne believes the private sector is "pretty astute" regarding investment in the sector. He says a lot of the investment is expansion by existing hoteliers who already have good contacts and know the business. (This is important because it can take two to three years for a hotel to become established).

The Irish Hotels Federation chief executive, John Power, says his organisation "has no great concern" on whether the industry could end up oversupplied with hotels. "A lot of plans have been mentioned, but what comes out of the ground is another matter."

Although hotels have a major impact on their surroundings, Dublin Corporation declined to comment on the issue of whether there is a danger of oversupply. A spokeswoman said the authority felt it inappropriate to comment as there are around 20 planning applications for hotels before the corporation.

Industry analysts say there is no discernible pattern to what type of hotels are being built. "Dublin can accommodate all styles of hotels," says Ian Bowen, operations director of Tourism Quality Services, which registers and classifies hotels and guesthouses in Ireland. "The city caters for a very diverse market".

However, he says budget hotels are very popular. Donal Waldron has also noticed a shift towards the economy/budget-style hotels - hotels in the three-star bracket, without many frills.

In Dublin, he says, over 60 per cent of business for hotels comes from the commercial/business customer sector.

Hoteliers also say room prices in Dublin are beginning to harden because of demand. A rough rule-of-thumb is around £50 per night without breakfast for a room in a budget hotel and £80 per night for a room in a five-star hotel.

Rooms are the most profitable part of the hotel business, industry experts say, and hotels in Ireland have become more profitable over the past few years. However, sector analysts say a 75 per cent occupancy rate is needed to turn a profit. For example, if you own a 100-bedroom hotel, you must sell 27,000 bed-nights per annum to get a return on your investment. Good going by anybody's standards.