I thought it was written by Cole Porter, and the story goes that he was at some sort of gathering where he made a bet that he could write a song based on the first thing said by the next person to enter the room.
It was indeed written by Cole Porter and dates back to the 1930s. Kirsty MacColl got together again with The Pogues (three years after Fairytale of New York) to record it for the Red Hot And Blue album - an album of Cole Porter songs reworked by contemporary artists to raise money for AIDS charities - in 1990.
Further to Big Gill's answer � Cole Porter was in a restaurant, and the ma�tre d' entered the room and announced: "Miss Otis regrets she's unable to lunch today."