The plans to house 207 asylum seekers in four-star Stradey Park Hotel in Llanelli - which costs up to £240 a night has triggered outrage.
The Sunday Express understands that under the proposals, due to begin on July 3, the hotel - a popular wedding destination will be closed to paying guests and all events cancelled.
The plans were revealed only a week ago when Carmarthenshire County Council released a statement confirming that "following repeated requests for information" it had "received written confirmation from the Home Office".
There are now fears that jobs are at risk and that tourism ambitions for the area will be derailed if the plush hotel closes its doors to paying guests.
The cost of an overnight stay at the hotel, which is based around an elegant Edwardian manor house, ranges from £191 for a double room to £226 for a family room. The plush spa area offers a "hot tub room" treatment and relaxation rooms and unique "Copper tub bathing rituals".
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