Southland District Mayor Gary Tong says the area — which before Covid had a population of less than 3000 — is in "dire straits".
While support from domestic tourists had, to date, been amazing, it was too late for many who had been made redundant and, with no other employment options, forced to leave the town.
Deputy mayor Ebel Kramer said restaurants, hotels, motels, camping grounds and cafes had all been forced to reduce staffing numbers last year and, if borders remained closed, there would be more redundancies.
Mr Kramer said the town had been busy during school holidays and over the peak summer period and many people had visited for the first time.
"But we have to be real — they’re not going to come back in two weeks’ time and do the same thing again."
Mr Tong said he had spoken to Queenstown Lakes Mayor Jim Boult and said he was keen to work with him on solutions to better the communities at large.
"We can’t work in silos.
"You’ve got people in the tourism business who are cutting their cloth to suit, and they’re still going to fall through the cracks."
Southern Lakes Helicopters office manager Erin Robertson said the town was "noticeably quiet" for this time of year.
"It is quite concerning.
"I drove up the main street just before lunch today and there were a lot of empty parks — this time last year it would have been full, people unable to get parks.
"We’ve been as optimistic as we can, but with the scares we’ve just had and the potential for even that Australian bubble not to be happening till the end of this year ... that hope’s kind of gone as well now."
Southern Lakes Helicopters was not solely reliant on tourism and subsequently was "doing OK", but the same could not be said for other businesses in the town, she said.
However, she did not believe another wage subsidy, targeting the tourism industry, was a viable option.
"I don’t think the country can afford [that].
"It’s a hard thing to say, but we have to pay all this debt back and I don’t think the country can afford that.
"[There’s] the risk of spending that money and we go into lockdown [again] and all businesses have no opportunity to trade.
"Sadly, I don’t want [struggling businesses to close], but I think some of them will.
"They just can’t carry on. They’ve probably spent a lot of the cash reserves that they’ve had and hoping that transtasman bubble would happen in March, which we kind of expected.
"I think that’s really been dashed now, so there will be some very concerned people out there."
