The gamble is that domestic high-rollers will keep rolling in. If that doesn't pay off, failures will hit tax investors hard. Hotel fever is being driven by the capital allowance tax breaks that were extended yet again in finance minister Brian Cowen's 2005 budget.

Fifty-four new hotels that would qualify for accelerated capital allowances are in the planning process. In the past five years, Ireland's peak season room capacity grew from 38,000 to 49,000.

Of 5,000 hotel rooms expected to be added this year, most will be at the high end of the market, with many positioning themselves as luxury resort destinations.

Investments of 45m to 70m on a hotel and golf course are now relatively commonplace. The tendency to overspend is notorious:

think The Four Seasons in Dublin or Johnstown House in Enfield, Co Meath, now The Marriott. In many cases, the only way developers can expect to recoup their outlay is by building and flogging luxury housing with such developments.

Austin Hickey of BDO Simpson Xavier suggested that many new projects are "questionable" in terms of the investment required.

"Each hotel is positioning itself as having the biggest and best spa in Ireland, many are going for signature golf courses, " he said. "We would be slightly concerned about potential oversupply of these products."

The country's five-star market is heating up. Until the recent opening of The G hotel in Galway, Ireland had 20 listed five-star hotels, just two more than in 2000, but that select group is set to swell.

New multinational brands entering the arena include the Ritz Carlton, which will operate Treasury Holdings' hotel in Powerscourt, Co Wicklow. Starwood Hotels and Resorts, which operates Dublin's Westin, is bringing the Sheraton brand to Fleming Construction's resort at Fota Island in Cork.

Fleming Construction previously developed the Inchydoney Lodge & Spa, and the firm's Seamus O'Mahony is upbeat about Fota. The fact that a heli-pad is being provided indicates the type of clientele expected.

"A resort development in the southwest hasn't existed, " O'Mahony said. "We see there is a demand for that type of product."

Even so, O'Mahony said the figures wouldn't work without an element of high-price housing. Fota will represent a total investment of 150m to 200m. To recoup some of the outlay, Fleming will sell 280 five-star lodges, currently priced between 450,000 and 1m, and O'Mahony said sales should reap about 100m.

"You still end up with a longterm debt of 50m, which is sizeable, " he added.

The resort will run the gamut from golf course to golf academy to spa to marina, and O'Mahony said Irish custom will be key to its success.

"With the Starwood connection, if we could get 10% of the business from the American market, it would be the cream."

Irish luxury hotels are relying increasingly on Irish business. Malcolm Connolly, Failte Ireland's director of research and development, says the occupancy rate "litmus test" shows that demand is there.

"The proof of the pudding is that the four-star and fivestar hotels are being used, " he said, "and much of it seems to be driven by growth of activity within the Irish market."

Five-star occupancy rates were at 70% in the first 10 months of 2005, the highest since the 72% occupancy in the equivalent period in 2000.

Four-star occupancy rates from January to October 2005 were at 65%, compared with 74% in 2000. This beat the national average of 64% occupancy for the first 10 months last year, down four percentage points on 2000.

But this is not the full story.

Some hotels are cutting prices to attract Irish custom.

Industry sources say the performance of new hotels is not usually anywhere near the industry average, and can be as low as 30% in the first year for luxury hotels that try to maintain high rates. Many business plans will not have taken into account the growth in hotel room supply.

Kerry hotelier Xavier McAuliffe, who on Friday opened his 50m five-star Lyrath Estate Hotel outside Kilkenny, believes Ireland will soon see collapses. The demand is there for luxury, he argues, but the four-star sector is overstocked and the population isn't big enough to support all the new taxdriven hotels.

"Very few people can create a destination: you're either in a business area where you have lots of commercial business or you are in a destination area, " he said.

"I believe many will fail because they are in the wrong location. Sometimes they think they will survive because they have a golf course, but some are struggling."

McAuliffe expects a mix of commercial and leisure business at Lyrath. "We already have 80 weddings booked for 2006". To cover his bases, he has applied for planning permission for a budget hotel in Lyrath's 170-acre estate, and said he may develop housing.

Golf is a long-standing selling point for many Irish luxury hotels, but the new theme is 'wellness'.

McCabe Pharmacy Group founder Roy McCabe is developing a wellness resort at Farnham in Cavan. Hotelier Liam Griffin just opened the new Monart spa hotel in Enniscorthy, which boasts the country's biggest thermal spa.

"Everyone seems to be baking the same bread . . . offering golf, spa, wedding, births and deaths, " Griffin said.

"There is going to be an oversupply of that type of hotel in our view, so we went for a niche."

Griffin project-managed Monart himself to keep costs to 30m. He does not expect it to be a "quick kill", and does not believe Ireland can sustain all its hotels.

"Greater Birmingham has a bigger population, " he said, "and we'd be outplaying them 10 to one. It looks to me like we'll have to replace the Ryder Cup with a different Ryder Cup next year and something else the following year. You can't build a nation of tourism on one Ryder Cup."

Failte Ireland acknowledges the need to win "the right mix" of tourists. In recent years, the main growth in inbound tourism has been in people visiting friends and family . . .

not the ideal hotel market, says Connolly.

For Irish weekend trippers, there may be a bright side to the building splurge, Austin Hickey of BDO Simpson Xavier suggested. "I would expect there will be great value from a consumer point of view. It is the only way these hotels will be able to make it work."

In the longer term, though, Griffin suggests that fundamental questions should be asked. "You'll soon be able to golf from Rosslare to Rathlin Island without breaking a hole, and no-one has stood back and said, 'Do we want golf every inch of the way?'

"If we build a golf course, we have to build 500 houses around it. No-one is shouting stop. No-one is asking what we want to be when we grow up."