Latest figures from the Central Statistics Office have shown a decline in tourism numbers for the past two months.
Figures for July of this year showed 1,155,100 people visited Ireland- down 0.5% from 1,160,500 from the same period last year.
On the other hand, the number of Irish residents making overseas trips increased in July by 7%.
CEO of the Irish Tourism Industry Confederation (ITIC) warned that trading conditions for tourism and hospitality businesses were more challenging this year.
CEO of ITIC Eoghan O'Mara Walsh said the figures highlighted the impact of increased costs and Brexit uncertainty on Irish tourism businesses.
Tourism is the largest indigenous industry and biggest regional employer, providing 270,000 jobs around the country.
ITIC estimates that the VAT increase in the last budget to be an additional €466 million in tax for the industry, making Ireland's tourism VAT higher than 27 other EU countries.
Mr O'Mara Walsh said: "In the year that Brexit comes to pass, which Fáilte Ireland estimate could cost Irish tourism €390 million, the timing of the Vat hike is disastrous. Coupled with a hard Brexit, this could mean nearly a €1 billion hit to the sector”.
