NEWSTEAD businesses are confident the town will survive the closure of Welshmans Reef Caravan Park.
Goulburn-Murray Water (GMW) announced on Tuesday it would close the 64-site park in November, putting the area's most popular tourist destination out of business.
Mount Alexander Shire Council mayor Michael Redden said while he was disappointed GMW had not completed required wastewater and bushfire mitigation works, the town would not be impacted.
"We gave them a series of requirements to fix up fire protection and wastewater management three years ago which they agreed to do, but they have done nothing," he said.
"They then asked for a six-month extension on that contract.
"I can't see any hope that we can keep the park open."
Mr Redden said even though the park was not at a high risk of bushfires, it still needed "proper fire protection".
"We don't just invent these standards," he said.
Mount Alexander Shire Council transferred management of the park to GMW in the mid-2000s and chose not to renew the contract beyond December this year.
Newstead IGA store manager Darren Gervasoni said the closure would "definitely have an impact on business".
"We get an influx at Christmas, Easter and on long weekends - the park is pretty much full during those times and we get a lot of business," he said.
"People come from everywhere to stay at the park, from the outskirts of Melbourne to people from Bendigo and Castlemaine.
"They always come back to the supermarket for supplies or go to the butcher for meat for their barbecues."
Crown Hotel Newstead owner John McCarthy said while the town would notice a downturn in business in summer, it "wouldn't affect business too much".
Siteholder Norma Ewing said siteholders would organise a public meeting for next month.