Almost three-quarters of tourism businesses claim they need a wage subsidy extension to stay afloat.
A new Tourism Industry Aotearoa survey found a third will have to let more staff go if there's no further support.
Chief executive Chris Roberts says businesses favour a wage subsidy extension over cash injections.
"There is a real challenge for tourism businesses to earn enough money to pay their staff. They want to hold onto their staff, but they need some Government help."
Thirteen percent of businesses are exploring non-tourism opportunities according to the survey of 408 tourism operators, conducted between July 6 and 13 after Prime Minister Jacinda Ardern announced that the current wage subsidy would not be extended.
Ninety-six percent of tourism businesses accessed the wage subsidy, and three-quarters of them also took the extension, with international tourism halted for the foreseeable future thanks to COVID-19. Seventy-two percent they'll need another extension.
"Through no fault of their own they're desperately struggling to hold onto their staff," said Roberts. "Some further assistance beyond the wage subsidy is going to be needed."
Almost half of tourism businesses are downsizing and 10 percent are planning a lengthy hibernation.
Roberts says relying on New Zealanders alone is tough, because of the "lumpy nature of domestic demand".
"New Zealanders of course tend to take a holiday at the weekend or the school holidays, and that leaves the weekdays very quiet - that's hard if you're trying to operate a seven-day-a-week business."
The last two weeks have been great for some local tourism businesses however, with schools out.
Hanmer Springs Thermal Pools has been relishing visitors from all over the country. General manager Graeme Abbott says business is up 9 percent on the same time last year, but he does not expect it to last.
He says they are rethinking their marketing campaign for the rest of the year, trying to get more people from the North Island to head south.
"We will start targeting the North Island markets - Auckland and Wellington - as we head in towards that pre-Christmas time. We're pretty sure there will be the great New Zealand and great South Island road trips."
But locals are also expected to be a source of revenue.
"After the 2011 earthquakes we had a really strong season because people wanted to get out of Christchurch, they wanted to go somewhere safe and somewhere secure, and they came here. I think there's a very strong parallel between that and what's happened post-COVID lockdown."
The industry's action plan for the incoming Government will be released next week.
"With well-targeted Government support, our industry will survive this crisis and emerge revitalised," Roberts said.
The survey's full results can be read on the Tourism Industry Aotearoa website.