Fáilte Ireland's latest Tourism Barometer shows that more than half, 51%, of the sector is reporting a rise in their business.
However, the survey of more than 500 tourism businesses around the country also found that a third say business from Northern Ireland and the UK is down and also showed that industry sentiment is down slightly on recent years.
The falling perceptions of growth in the sector come despite high visitor numbers and strong performance which two thirds, 64%, say has been helped by tourism agency supports.
This drop in sentiment shows there is an unease over the impact Brexit will have on business.
While northern counties have seen growth overall, they have felt a larger decline in business from Britain than other locations and, as a result, have a less positive outlook going forward with just 11% expecting business to be up.
The barometer also found that 62% of hotels say the US market is up on 2017, while the German market is also performing well, with 45% of hotels saying it is up on last year.
However, B&Bs are experiencing a more challenging year with 23% having had more visitors to date this year, but 34% recording a decrease. The sector is reporting declines in the British and Northern Irish markets, and the impact of low-priced competition.
Fáilte Ireland's Chief Executive, Paul Kelly, said: “By and large, the picture so far this year being reported by businesses reflects the buoyant visitor numbers that we have seen in the CSO’s data, and what has been a record year for tourism.
That said, if we take a closer look at how businesses are performing, it’s clear there are concerns brewing around the drop in business from Britain and Northern Ireland as well as the potential impact Brexit may have.
While hotels are thriving, B&Bs are experiencing a more challenging year as they deal with a decline in visitors from the UK.
"Similarly, Northern counties have been much more significantly impacted by the decline in the Northern Irish visitor market, and are certainly more exposed to any future challenges created by Brexit.
“At Fáilte Ireland, we have a range of measures in place to help the industry adequately prepare for Brexit through programmes including 'Get Brexit Ready', as well as those focused on diversifying into other markets such as China and the Middle East, which are showing great growth potential in the coming years.
"We are also working closely with Government to roll out a further programme of supports to help the industry be on the front foot in dealing with the implications of losing visitors from our nearest overseas market.”
