Last year was an extraordinarily good one for the travel industry in Ireland. But the effects of the economic downturn in US business, compounded by the foot-and-mouth crisis and followed by the events of September 11th in the US, are beginning to show.

Earlier this year, corporations began to reduce spending on travel and "people were beginning to travel further down the plane" said Mr Don Cullinane of West Cork Travel. Since September 11th, all major companies have reviewed their budgets and most travel is happening on a "mission-critical basis" only.

A major telecommunications corporation, that would normally spend £500,000 (€634,869) per month on airfares, is now spending in the region of £150,000. A well-known engineering firm, with a substantial spend on travel, says it is very cost conscious now.

The car rental industry is also seeing evidence of a business travel down turn. Mr Dermot Carberry, of Avis, said: "We are seeing a corporate freeze on travel being translated into less car rental at home and abroad. The biggest worry, however, is the cut back in capacity by the scheduled air carriers. After a very good start to the year, we have been affected by the events in the United States and are banking on Europe to pull us through."

Europe is the banker for many in the travel industry, with travel agents seeing a definite shift in business to Europe. Mr Brendan Moran, of the Irish Travel Agents Association said: "There is a move towards western Europe. Spain, Portugal, Italy and the Canaries will all benefit from recent events."

Irish Ferries introduced its summer 2002 holidays this week and "advance bookings to France are much higher than last year," said Mr Declan Mescall, passenger sales manager. Stena, too, is seeing an improvement in business after being 35 per cent down earlier this year. Last week saw a 10 per cent increase in year-on-year business.

Mr Stan Ryan of CI╔ Tours predicts a good 2002 to and from Europe. This year CI╔ brought in 25,000 visitors from the United States but bookings for next year have dried up.

Cancellations were a feature of the first two weeks after September 11th and business in most travel agents centred around advising people on their position. The situation has since improved with many agents busy selling "bargain basement special offers".