The Southern District Health Board is set to discuss the viability of Queenstown as a isolation town during a meeting this morning.
Last week the government announced it was looking at the resort town and Dunedin as potential destinations for managed isolation facilities.
There are facilities in Auckland, Hamilton, Rotorua, Wellington and Christchurch.
In a report to the board, DHB chief executive Chris Fleming said a number of Queenstown hotels would be suitable and could welcome an injection of income.
"However, unlike the other isolation sites who all have either secondary or tertiary hospital facilities near by, Queenstown does not," Fleming said.
That would present a challenge if any cases needed hospital level care, he said.
"While Lakes District Hospital managed very admirably during the first wave of Covid-19, there is a difference between responding to your population and flying plane loads of people in for isolation purposes.
"Given the importance on containment and management of the virus, Public Health South has developed plans for in the event that we are asked to support isolation facilities in Queenstown."