Hi Jazzy. It's most likely slugs. They come out at night and snack and leave holes just like that. They also hide under mulch. You might try laying a board, say a 1 x 12, out on top of the mulch for a day or so. Then pick it up and check to see if there are slugs under it. They are ugly... look like snails without shells. There's a product called Sluggo that you can use. I wouldn't bother this late in the season though. Just think about it for next year.

I agree on the Sluggo. I have been using that and I've also used another iron phosphate product. I think it's called Garden Safe Slug and Snail Bait, I'm to lazy to run out to the garage and check right now. I've had pretty good results with it. In my most heavily infested areas I've still had some damage, but not as bad as other years. However I would still use it this fall as every slug you kill now is one less to lay eggs for next summer. Another method that many people swear by, is to mix 1 part household ammonia with 10 parts water and spray the crown of the hosta and saturate the soil around the hosta. I haven't used this myself.

I had problems with slugs this year too. I first put down a beer bait to confirm and found 30 slugs in one can the first night! After that I used a slug bait product from the store. The beer bait is just a tuna can (or similar size) pushed down so the top is ground level and fill it with beer. The slugs like their beer!