Alternatives to using hotels for refugee accommodation need to be found as soon as possible to allow for tourism towns to recover.
Fáilte Ireland CEO Paul Kelly said 12% of all registered tourism accommodation is being used to house refugees and asylum seekers.
That figure can rise as high as 30% in some counties.
Research shows 44% of tourism businesses are expecting more visitors in 2024, but rising operational costs and accommodation constraints continue to be a concern.
About three-in-five businesses had more visitors in 2023 compared to 2022, the tourism body said.
The top three concerns for this year are 'rising costs besides energy or payroll' (58%), 'rising energy costs' (55%) and 'rising payroll costs' (51%).
The food and drink sector has been particularly impacted, with 80% citing rising payroll costs as a concern.
Fáilte Ireland CEO Paul Kelly told The Pat Kenny Show that if tourism leaves an area it may not come back.
"Nationally about 12% of registered tourism accommodation is out of tourism use for humanitarian reasons," he said.
"When we look at different counties that goes up to 20% to 30% in some counties, so it is a very different picture in different parts of the country.
"For every euro that's spent by a visitor in accommodation, they spend €2.50 in other areas such as visitor attractions, activities, food and drink, retail etc".
'The town has to recover'
Mr Kelly said there are 'real concerns' that repeat visitors could be put off when hotels do return to the tourism market.
"That is one of our real concerns and why, like everyone in the tourism industry, we're asking that alternatives can be found as soon as possible," he said.
"We know that's incredibly difficult and we know people are working on it.
"We want to see those alternatives found as soon as possible because it's not just individual business [affected] - it's towns.
"There's tourism towns around the country that are without the visitors, and without the visitor economy, they begin to go into decay.
"When those accommodation come back on-stream, the town has to recover as well.
"We've spend a lot of time, a lot of money - a lot of taxpayers money - investing [in] and developing those towns over the last 10 years or so.
"We do ideally want to see those back into tourism as soon as possible so they can be healthy, vibrant tourism destinations."
'The bottom line'
Mr Kelly said cost is still a big problem across the board.
"The cost pressures that are in the industry are really, really high," he said.
"Obviously the industry is still grappling with the return from 9% to the 13.5% VAT rate.
"We have significant increases in labour costs with the rapidly increasing rate of minimum wage and the knock-on impact that has on the next levels up in business where everyone's wages goes up.
"Continually rising insurance costs, energy costs still very high - the cost pressure in businesses are really significant.
"So, turning the revenue into bottom line operating profit is really difficult," he added.
Some 50% of pubs and bars were up on customers in 2023 - this compares to 31% reporting to be down.
Profitability in 2023 was the other way round, however, with 37% reporting it to be up but 46% say it was down.
North America continues to carry the main hopes for the overseas market.
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