At 7.20am on a cold but clear Tuesday morning we find ourselves belting along the motorway out of Dublin towards Belfast in a green bus containing several nationalities while the driver and senior guide Charlie O'Connell aka 'the High King', sings 'Black Is The Colour (Of My True Love's Hair)' over the vehicle's sound system.

Welcome to the Paddy Wagon experience – early starts, an eclectic group, endless storytelling. And singing. Lots of singing. Just before the singing starts, there is a lengthy story about leprechauns, including the rather dubious claim that the Kennedy family's misfortunes are down to them bulldozing a fairy fort while building a house in Wexford.

Charlie comes back on the mic to teach the group a bit of Irish before descending into a rendition of Richie Kavanagh's 'Aon Focal Eile'. The rest of the Irish lesson involves a couple of key phrases ("a pint of Guinness please" and "I love you") followed by the national anthem.

The group is a large mix of nationalities. Some Australian couples, a couple from China, a Canadian family, German backpackers, a group of French girls, an Italian horse breeder and his family (the revelation that one of the group breeds horses is followed by a brief horse-racing quiz from Charlie – asking which two Irish horses won the Melbourne Cup – which inexplicably ends in him singing 'It's A Long Way To Tipperary'.)

We stop in Belfast, at one of the six 'Paddy's Palace' hostels. The tour started at the Dublin branch on Gardiner Street in the north inner city. After picking up some more tourists, we're off to the Carrick-a-Rede rope bridge on the Antrim coastline. In the car park there, we meet Steve McPhilemy, the company's "part-time marketing chieftain" and senior guide.

"I've got a bus full of 21-year-old backpackers and a Filipino family," Steve says, clutching a takeaway coffee and being whipped by the sea breeze. "A couple of years ago, that Filipino family might have gone with CIE or a big coach company," he adds. Instead, Paddy Wagon is sweeping up customers from higher-end operators which have priced themselves out of the market. "For a lot of people, places like Ashford Castle are now out of the question," he says bluntly.

Over 12 years, the company has expanded rapidly. It now has 30 buses transporting tourists around the country every day. Its six hostels around the country accommodate many of those tourists. On an average year, 90,000 people will avail of the Paddy Wagon experience. The company has a policy of never cancelling, even if just a few people have booked a tour. It funds and travels to its own trade shows abroad, and its interaction with Fáilte Ireland is minimal. "They see us as the young kids on the block," McPhilemy says. "We're at the Ryanair end of things."

While high-end coach tours in Ireland struggle, Paddy Wagon is excelling. It is regularly voted one of the most enjoyable tours worldwide on hostel and backpacker sites – in 2004 it won an 'outstanding contribution to Irish tourism award', and last year it reached the final of the Entrepreneur of the Year Awards.

Back on the bus, the group is heading for the Giant's Causeway. Jade and Hugh from Canberra and Albury in Australia have been in Ireland for two days and took a Paddy Wagon tour because friends recommended it after another tour fell through. "It's really good," Jade says, "the singing, and the stories, I really like it."

In Derry, three tourists are waiting for the bus as the rest of the group finishes a walking tour of the Bogside and beyond.

Breanne Shemko, her mother Lisa and her grandmother Sylvia Ewanik have come here from Alberta, Canada, via Scotland. "It's entertaining, the songs and everything," Lisa says. Her mother agrees. "The driver is very knowledgeable about history and the culture." The key for them is value for money.

Then it's back to Belfast, and on to Dublin. Meanwhile, in Derry, the sheebeen is kicking and a barbecue blazing, as dozens of other buses criss-cross the country. The Paddy Wagons roll on.