The Minister for Tourism has predicted that the long-term outlook for tourism is good, with a major pick-up in foreign tourists set for the autumn.
Mr O'Donoghue said he expected to reach his target of increasing foreign visitors by 5 per cent this year with marketing campaigns in Germany, France, Italy and Spain.
His note of optimism comes as tourism operators in Killarney and south Kerry are reporting their worst season in recent times, with smaller establishments warning against below-cost selling of beds as competition to get in the numbers intensifies even before high season.
Mr O'Donoghue conceded that the industry was going through a bad patch due to global events such as SARS, the Iraq war and the downturn in the economy.
However, he said that while the short-term outlook was not good, the longer term was. "I still remain hopeful we will attract a substantial number of foreign tourists in the autumn," he said.
Asked about proposals to return the pub closing hour on Thursday nights to 11.30 p.m., he said he had no difficulty with it.
The Minister was speaking at the official opening of the Kerry Diocesan Youth Centre in Killarney at the weekend.
Meanwhile, smaller tourism operators such as B&Bs and guesthouses fear the deals being offered by some hotels in Killarney will wipe them out this summer.
They predict that the bigger hotels, banking on sales of food and drink, will fill rooms below cost, Ms Kathleen O'Reagan-Sheppard, director of Cork Kerry Tourism, said.
Rooms in three-star hotels were being offered for as little as €50 a night, and columns in newspapers were lined with terrific offers by the bigger hotels at or below cost, she said.
She called for tax concessions for the smaller operators.
Meanwhile, hotels and guesthouses around the country are being forced to the wall because of the soaring cost of insurance cover.
The president of the Irish Hotels Federation, Mr Jim Murphy, said operators who could not afford to pay the premiums, which have increased by over 350 per cent in the past three years, are being forced to close.
"The situation is absolutely alarming. Day in, day out, we hear people in all sectors of the economy, including customers, complaining about insurance costs and calling for something to be done to rectify the situation," he said.