Shambolic staff behaviour, guests treated with disrespect, and chefs attempting indoor barbecues - this was the image of the four-star, 402-bed Liverpool hotel, the Adelphi, that was broadcast across the nation in 1997. To say that it gave Liverpudlian hotels a bad image in both the public's and the industry's eyes would be an understatement.

What was portrayed in ITV's fly-on-the-wall documentary programme, Hotel, left the company which owned the Adelphi, Britannia (left), cringing. The impression given was possibly unfair to the Adelphi but, overall, Liverpool's hotel scene acquired a less-than-favourable image, with businessmen preferring to stay outside the city because they claimed the quality wasn't there.

The negative images showed by Hotel were not the expected death knell, however. Within a year of the broadcast, the city's hotels underwent something of a metamorphosis thanks to two big brand names. In 1998, the 159-bedroom Crowne Plaza and the 146-bedroom Marriott (formerly Swallow) opened, both with the help of Objective One European funding - about £400m is allocated to help regenerate the city. Fears among existing hoteliers that the brand names would dilute the market faded as the new hotels became an instant hit and enhanced the market rather than killing it.

Since opening, the Plaza, named last month by Mersey Tourism as the city's hotel of the year, has been running on an average occupancy of 80%. It already has plans to invest £1m to expand its lounge and leisure club.

Last year, the Marriott finished with an average occupancy of 79% on a room-only rate of £105. Throughout the city, four-star occupancy is roughly 80% per year, while the average room rate has increased from a mid-1990s level of £35 to £45 and is predicted to pass £50 this year.

The achievement of the Crowne Plaza and the Marriott opened the floodgates for other hotels to come to Liverpool. Since 1998, the number of hotel beds in the city has increased by 680, bringing the total to 2,255 across 21 hotels. Other additions have included two Holiday Inns, an Ibis, with a Howard Johnson and Travelodge opening this year.

And there is another Marriott (right), a 164-bedroom, £13.5m development at the site of the old Liverpool airport at Speke, which is a mile from the new one and is a direct result of the achievement of its city-centre sister. "The success of the city-centre Marriott has given us the confidence to open here," says Peter Rigby, general manager of the new hotel. It will open later this month with an average room-only rack rate of £79, which will rise to £95 from August. It will have 140 staff.

Cashing in on Liverpool's musical heritage, a 128-bedroom Beatles-themed hotel called Hard Day's Night is being planned next to the famous Cavern Club. It has received one-third of its £10m cost from European funding.

European grants originally enticed companies in, but the city is keen that new buildings be self-funded. "The market can now stand on its own feet, as the opening of the Holiday Inn in the city centre, which did not receive any grants, showed," says Chris Brown, director of tourism operations for the Mersey Partnership, which is supported by the European Regional Development Fund under the Objective One programme for Merseyside. "The difference between now and five years ago is that we get the big names, such as Radisson, looking at opening in the city. Before, we weren't even a consideration."

Tourists make up a significant proportion of the visitors to Liverpool (40%), with business people making up the other 60%. The Mersey Partnership forecasts that visitor spend will have increased from £500m in 1999 to £1b by 2005. Events such as this month's Grand National horse-racing meeting at Aintree are crucial to the city's tourist industry. The importance of marketing to potential tourists is obvious - for 1997/98, Mersey Partnership's budget was £175,000; last year, that had gone up to almost £500,000.

The positive feeling has spread to Liverpool's residents. The number living in the city centre has risen from 3,000 in 1991 to 10,000 in 2000, and Brown says that this will climb to 30,000 by 2007. It is also responsible for the transformation in Liverpool's fortunes. "Gone are the days of militant city councillors, and the image that Liverpool is an industrial city," says Mike Storey, leader of Liverpool City Council. Councillors and business people have also woken up to the fact that Liverpool has to catch up with the regeneration that was happening in Manchester 10 years ago and Cardiff five years ago.

Liverpool's hoteliers, both old and new, know that enticing the lucrative conference business is key to sustaining this growth. But the city is sorely lacking in large facilities. The biggest arena near Liverpool is the 1,600-seat Floral Hall in Southport. "We are desperate for a new centre because we are losing business to outside regions such as Manchester," says Lisa Chevalier, conference manager for Mersey Partnership. There are 74 members of the association, ranging from hotels to football grounds, which offer day-rate facilities ranging from £22 per delegate up to £44 for four-star accommodation.

Storey has reassuring words - "it's on its way," he says. A £250m development has been earmarked for King's Dock next to the Albert Dock (left). Five developers have submitted plans, but the one hotly tipped to win is the bid by Everton Football Club, which will contribute just over £30m, with the remainder of the funding coming from European Objective One grants and other partnerships. The completed project will boast a multi-purpose 55,000-seat stadium with conference space, hotels and restaurants.

With this amount of growth, there is a danger that Liverpool could be a victim of its own success. "There is a worry that Liverpool could have an over-supply of hotels, because it's still an immature market," says Stephen Roberts, the Crowne Plaza's general manager.

Opinion is also split as to whether the city could sustain five-star premises. "I really don't think that a five-star hotel is needed," says Roberts. "At the moment, we struggle to pay four-star prices." But Storey disagrees: "As leader of the council, I think having a five-star premises, which would be decided after appropriate surveys are carried out, would be good for the image of the city."

Concern is also growing that, with the creation of so many new hospitality jobs, the city could face a staff shortage. Storey has a solution. He is making plans to set up an academy of excellence which would be connected with an existing college and would possibly hold day-long training courses, or three-week courses instructing hotel and restaurant staff on the importance of customer care.

Tackling the problem from another angle is Paul Mullins, tourism network business manager for the Mersey Partnership. He is already addressing the city's lack of chefs, and has established Liverpool's first chef conference, taking place on 23 April. "We are going for the tourism product, which is quality hotels," he says. "To get this, we need the right staff. The conference will look at the long-term strategy needed to sustain it."

Working at grassroots level, Mullins is also promoting a feel-good factor among the hospitality industry's core workers. Numerous awards have been set up to promote the 22,000 people already working in the industry and to help foster a positive image to encourage the estimated 8,000 extra needed by 2005.

In the past three years, Mullins has launched several initiatives such as upgrading the Mersey Tourism Awards, held last month, from an afternoon ceremony to "a glitzy black-tie event which will give it more credence". On a smaller scale, the Ambassador awards, set up last year in Southport, recognise the industry's unsung heroes with accolades such as "most welcoming receptionist" and "best bar person".

Mullins gives a simple explanation for his hard work. "In many ways," he says, "Liverpool is a hidden jewel. When people come here, they realise the reality is so very different from the perception. There is so much to this city."

Storey highlights the city's ambition. "Our goal is to be up there with the other major European cities," he says. And with Liverpool bidding to become the European Capital Culture for 2008, no doubt it will succeed.

http://www.liverpool.com

• Merseyside - which includes Liverpool, Sefton, Wirral, St Helens and Knowsley - attracts more than 19 million visitors a year, who spend £600m.
• The number of nights spent in hotels and guesthouses has increased by 45% since 1990, when it was 1.8 million. Last year, it stood at 2.6 million.
• Visitors who stay in hotels spend 4.5 times more than day visitors.
• Around 76% of visitors are from the UK, with 24% from overseas. Western Europeans and North Americans make up the biggest percentage.
• The five-year Tourism Strategy for Merseyside (2000), Vision 2005, is to double annual visitor spending to £1b, and to increase the number of people working in tourism in the region from its current 22,000 to 30,000.
• There are more museums, theatres and galleries in Liverpool than in any other city or region outside London. Brands include Liverpool Tate, Walker, Maritime and Empire.
• Liverpool Airport is Europe's fastest growing airport, and has links to Amsterdam, Barcelona, Belfast, Geneva, Madrid, Malaga and Nice.

The annual Aintree race meeting, being held from 6 to 8 April, was still on, despite fears that it could be cancelled because of the foot-and-mouth outbreak.

In financial terms, cancellation would cost the city and estimated £17.7m in lost revenue. For the Crown PLaza, which, like the city's other hotels, is 100% booked, suspending the event would mean the hotel losing £50,000.

Usually, more than 125,500 people flock to the city for this weekend of festivities. Chris Brown, director of tourism operations for the Mersey Partnership, puts it simply: "Aintree is hugely important to us."

He adds that, overall, tourism in the city has not had an easy time with the recent strength of the pound.

But so far the city has escaped the results of foot-and-mouth - a minor concession. "Funnily enough," says Brown, "we are picking up a lot of business because there are no cases in Liverpool at the moment."