There were 3,300 approved B&Bs in the Republic in 2004, compared to 4,200 in 1999.

B&Bs are facing increasing pressure from three-star hotels, and demographics are also playing a part as many operators have retired or are facing retirement. Those leaving the industry are not being replaced fast enough.

Failte Ireland is keen to protect the industry as, although its importance is diminishing, the B&B sector remains crucial for overseas visitors to Ireland.

The tourism agency reckons that B&Bs have to sell more than simply bed and breakfast, and should promote themselves as a unique family home experience.

Failte Ireland also believes some form of grading could benefit the sector. There can be price differences between B&Bs that charge the same, and classifying properties would let people know in advance what they are paying for. Failte Ireland believes the system should be voluntary and could be packaged with supports such as e-marketing to encourage operators to join the system.

There are mixed views in the industry itself, but grading would be in the interests of the sector as a whole as it would help the better operators and close any gaps between consumers' expectations and reality.