Operating profits at Gresham Hotel Group fell by €1.9 million to €4.1 million for the six months to July 26th, 2001, compared with the same period last year, despite a 4 per cent rise in turnover to €27.5 million (£21.6 million).

The group blamed the 31.7 per cent fall in profits on travel restrictions that were put in place following the outbreak of foot-and-mouth disease in the UK and Ireland in the first half of the year. Group occupancy rates fell from 81 per cent to 75 per cent in the period.

"The effects of the travel restrictions were felt acutely in our west coast division but the impact on our centre-city locations, in terms of diminished corporate travel and the cancellation of numerous business and sporting events, were also significant," chairman Mr Sean Henneberry said in a statement.

The company also said its future results could not be insulated from the effects the terrorist attacks in the United States would have on the travel and tourism sector worldwide.

"I think it would be folly to say you're not going to be affected by it," said Mr Patrick Coyle, chief executive of Gresham. About 15 per cent of Gresham's business is derived from the American market. "We are seeing a sluggish booking pattern compared to what we would have expected for this time of year," said Mr Coyle.

The cash profit of €14 million realised from the sale of the Royal Marine Hotel in D·n Laoghaire left the group in a satisfactory cash position to cope with a likely change in market conditions, he said. The sale of other land banks was also under review, he added.

Mr Coyle also called on the Government to set up a tourism task force with a designated marketing fund of £20 million to encourage additional tourist volume from the UK and continental Europe.