Taoiseach Leo Varadkar has told the Dáil that the Government is working towards the D Hotel in Drogheda having a dual use, with asylum seekers and tourists both using the facility.
He said the Minister for Integration Roderic O'Gorman is meeting the town's chamber of commerce today.
Up to 500 people are expected to be housed in the D Hotel from 5 March, in a two-year contract with the Department of Integration.
Labour TD Ged Nash said that "Drogheda will lose 56% of its tourism hotel beds in March" when the D Hotel starts to house migrants.
The "economic impact of this decision is very real", he said, will cost €5.4m locally and there "needs to be a mitigation package".
Mr Varadkar spoke highly of Drogheda noting that when his father first came to Ireland, he worked at Our Lady of Lourdes.
"I know it's a welcoming town to migrants," he said.
The Taoiseach said he was aware of the recent far right protest in Drogheda, and few people could be found locally to talk at it, "and I think that says a lot".
While the hotel operator has certain views and "there may be issues around child protection", dual use is the Government's preference "if at all possible", as has been done in other areas.
"We think that's the best solution," he said, and "I'm sure all those things can be sorted out".
Fergus O'Dowd, a local Fine Gael TD, said that people are angry at losing the only remaining functioning hotel, and criticised the policy as "wrong".
