There have been further calls on the Government to review the policy of using tourist accommodation to house people seeking asylum here.
Kinvara Community Council in Co Galway said the town is being placed at a social and economic disadvantage due to the effective loss of its main hospitality provider.
The Merriman Hotel has been used to accommodate Ukrainian refugees since 2022.
Local elected representatives were told this week that a two-year contract had been agreed with the hotel owners for the premises to operate as an International Protection centre.
But the Kinvara Community Council says the deal contradicts Government commitments to ensure a town's sole hotel would not be used for such purposes.
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It is calling for the IPAS contract to be cancelled, claiming the loss of the premises is having a major impact on tourism and associated economic activities in the region.
The council has carried out an assessment which maintains that there has been a €1.9 million reduction in visitor spending annually since the hotel closed.
It puts the total estimated economic loss per annum at €2.4 million.
The organisation is seeking Government assurances that the contract will be rescinded and that there will be better consultation with local communities before any future agreements are put in place.
In a statement this evening, the Department of Integration said it has not been possible "to apply many specific policies in relation to distribution of accommodation centres" due to an acute shortage of accommodation.
A spokesperson said the agreement not to accept offers from a town's only operating hotel was agreed by Government, in order to ensure there was adequate provision for events, socialising and other hospitality purposes, in different areas.
But the department said that as the Merriman Hotel has not been in public use since before the Covid-19 pandemic, it was not considered necessary to reject the owners' offer to accommodate asylum seekers.
The statement added that it will take time to develop State-owned centres for those seeking international protection.
As a result, the department said, it is envisaged that "the commissioning of emergency commercial accommodation will continue to be a feature in the short to medium term".
Minister of State for Migration Colm Brophy said the "vast majority" of those who come to Ireland provide "incredible services".
Speaking to RTÉ's Saturday with Colm Ó Mongáin, he said migration to Ireland is a "major asset to our country in so many ways".
The minister said the Government "want to move from a system that is different to where we're at at the moment in relation to the IPAS centres and how we're opening them".
He said this would "include a much fairer, faster and firmer system, which will be to the benefit of those who are applying to go through it and also to the benefit of communities who are experiencing it".
