The warning came yesterday from Sean Lally, president of Limerick Chamber of Commerce, who also runs the city’s Clarion Hotel.
A huge market downturn in the past 12 months, he said, has been exacerbated by over-development of hotel rooms.
His comments came after it emerged that a city centre hotel had been taken over by the Department of Justice’s reception and integration agency to house asylum seekers.
The Sarsfield Bridge, which was closed for renovations, will take in 125 asylum seekers. It has been leased for two years.
Many asylum seekers housed in outlying areas have sought to get city accommodation as they find themselves isolated.
Mr Lally said: “Unfortunately times have really changed over the last 12 months. The number of hotels has literally doubled and the market isn’t there to support these hotels. People were just building hotels at the drop of a hat due to capital allowances.”
He estimates that Limerick has three hotels more than the market needs.
“There is a bit of pain to come in the hotel industry and it wouldn’t surprise me in the slightest if other hotels are to close,” he said.
He said people were planning hotels without finding out from those already in the industry as to the present situation.
He said: “The market would need to bounce back dramatically if more hotels are to open.”