The report, which covers April to June 2004, shows a third of tourism companies are showing a "decrease in levels of activity" in this quarter.

But 39% of those polled said that turnover was up compared to 2003.

Just over 60% of business leaders are complaining that increased costs are becoming a problem.

'Tough year'

The South West Tourism survey acknowledges that 2003 was an "exceptional" year and that comparisons with 2004 make this year look "average".

Robin Barker, deputy chief executive, said: "The report shows that 2004 has been a tough year in some parts of the region.

"It's been a generally good start across the whole South West but has been a poor spring and early summer in parts of Devon and Cornwall."