The deadly coronavirus outbreak has come at the worst possible time for tourism operators in the middle of summer and the Chinese New Year, Queenstown's mayor says.
Chinese tourists accounted for more than $220 million of spending in the Queenstown Lakes District in the year to October.
Tourism operators are already reporting cancellations as China suspends overseas and domestic group tours as the outbreak worsens.
The death toll from the outbreak has risen to 56, while 1400 people worldwide have been infected, and Chinese President Xi Jinping said the country was facing a "grave situation".
Lakes Mayor Jim Boult said it was too early to know what effect the outbreak would have on tourism in the area but it would be significant.
"The timing couldn't be worse because this is probably the biggest week of the industry with Chinese New Year. I guess it's not a complete disaster because a number of them are already here but the issue will have a significant effect on the tourism industry," he said.
New Zealand Chinese Travel and Tourism Association chair Simon Cheung said he woke this morning to find tours from China had already been cancelled and other operators would be in the same boat.
"We've seen cancellations already. I've had three cancellations this morning from China, so anything beyond today I think there will be more cancellations because they probably can't get out of the country. They will stop the flights," Cheung said.
He had told his guides to go straight to hospital if they had any concerns about anyone's health while on a tour in New Zealand.
Tour guides and drivers had been given masks to wear if they felt it was necessary, but there was little else they could do at the moment, Cheung said.
Boult said whatever effect it had on the country's tourism industry, it would cope.
"I've been involved in the tourism industry for close to 40 years," Boult said.
"The industry is a very resilient one, it's been through all sorts of issues in the past - Asian bird flu, SARS, currency issues, the financial crisis of the latter part of the last decade, and it'll bounce back from this again. But look it certainly will have an effect."