We were beaten by the better team - Donnelly
Jerson Dos Santos was at the double, while Sid Sollis also struck to seal a 3-0 Bostik League South win for Hythe at Middle Road.
The visitors moved in to the play-off places following their triumph but Mussels remain rooted to the bottom of the table.
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Hide AdCurrently a point and place adrift of Ashford United and safety, Shoreham boss Donnelly knows his team must start picking up points soon.
He said: “We knew how tough of a test Hythe were going to be and they proved just that.
“I couldn’t fault the effort of my players but this league is relentless and the tough matches just keep coming.
“Hythe are a well established side at this level, which they showed in the match. We’ve got a run of games coming up against teams around us, so we need to put this loss behind us.”