Wests Entertainment Group announced on Tuesday the two Tamworth venues - Wests Leagues Club and Diggers - would cancel their schedule of live music shows in January amid health concerns.

The venues had entertainment booked to mark what would have been the Tamworth Country Music Festival 2021.

The Leader understands the Longyard Hotel has also informed artists the show will not go on during the unofficial music festival, but other Pub Group locations will have pumping stages.

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Wests CEO Rod Laing said while the decision would cause a "big loss" of income for the business, it was especially devastating to break the news to seasonal staff and booked performers.

"The cancellation of the festival has already had its impact ... so to compromise and revamp an unofficial festival was really a light at the end of the tunnel, and this takes that light out unfortunately," he told the Leader.

"The effect on staff, entertainers and fans will no doubt be devastating, but we're all in this together and it's a pandemic."

Mr Laing said officials had been "procrastinating" making the call to cancel, but the the difficulty of complying with strict health orders - like no singing and dancing - and the added health risk of attracting outside tourists forced their hands.

"Locally, there seems to be no issue with COVID, but we can't take the risks with visitors that might come from greater Sydney or greater Brisbane or other hotspots," he said.

"We were closed down at the end of March and April, May last year and I don't want to see us shut down again, that's the main driver."

Mr Laing said he had to consider SafeWork NSW, Liquor and Gaming NSW and licensing police would be patrolling during what would have been the 2021 version of the Tamworth Country Music Festival.

The venues had multiple shows booked across the two-week period, and usually have extra staff on deck during what's one of their busiest times.

"We have seasonal casuals that come back each year for the festival and this decision does affect them, it excludes them from picking up extra hours," Mr Laing said.

"It's devastating for the entertainers, their livelihood is based on entertainment and we really feel for them."

Mr Laing said there's still a buoyant feel at Wests, despite the blow.

"We have the Warriors with their summer camp here so effectively there is 100 per cent booking into the hotel, which has saved us for the January period," he said.

"And we'll rely and survive on the support of our local members."

Tamworth mayor Col Murray said "layers of uncertainty" during COVID-19 has continued to wreak havoc on local businesses, but he's proud of how they have faced challenges and make tough decisions.

"I think it's a very mature way to approach business, nobody wants to see an outbreak of COVID come to town and nobody wants to be in a position where they are potentially subjected to a significant fine," he said.

"This is just another reality in the COVID world."