Premier Gladys Berejiklian issued the localised stay-at-home orders on Friday morning after the state recorded another 22 new local cases of COVID-19.

The seven-day lockdown, which will come into force from midnight, applies to people who live or work in the Woollahra, Waverley, Randwick and City of Sydney council areas.

National Retail Association chief executive Dominique Lamb said that retailers accept the need for a lockdown but it will be "carnage" for them.

It is the city's first lockdown without the JobKeeper program in place, and comes in the final week of end-of-financial-year sales.

"Rather than seeing consumers stampede into town to cash in on bargain sales, Sydney CBD shopping precincts will resemble a ghost town," she said.

"Retailers understand that this is a last resort option, but it's certainly going to come at a cost."

That cost could be as high as $750 million in lost retail sales, she says.

Ms Lamb said there are also concerns the lockdown will set business in the CBD - which is yet to rebound from the pandemic - back even further.

"Even if this lockdown is short and successful, it's likely to further dent the number of consumers visiting the Sydney CBD once restrictions are lifted," she said.

The impact of the lockdown will also be felt by the tourism industry right across the country, Accommodation Association chief executive Dean Long told AAP.

"The lockdown is absolutely devastating not only for NSW, but for the Queensland, Victorian and Tasmanian visitor economies," he said.

It is the second holiday period marred by a NSW outbreak this year.

Occupancy rates are already down 70 per cent northern Queensland, 50 per cent in Victoria and 40 per cent in Tasmania, Mr Long said.

"On average for every seven days this continues, just in room revenue, it's going to be a $6.5 million hit just to the Sydney CBD alone."

Recovery from the lockdown can be just as damaging too, he said.

"After the last lockdown in Sydney's Northern Beaches, it took about 83 days for Sydney to recover back to where it was, occupancy and rate-wise, before that lockdown occurred."

"There is a very long tail to these measures being brought in."

Ms Lamb said the state and federal governments must urgently consider introducing financial support for businesses impacted by the lockdown.

Mr Long agrees.

"This outbreak is having a greater impact than any other time before, because there's no assistance measures in place for businesses ... so what it means is businesses that have already burned through significant cash reserves will be under even greater strain."

Deputy chief executive of the Committee for Sydney, Ehssan Veiszadeh, said the federal government needed to stump up cash to keep businesses afloat.

"This is happening because the federal government was slow to purchase vaccines," he said.

"Given Australia is going to repeatedly experience lockdowns until everyone is vaccinated, the federal government needs to have a program in place to support businesses and individuals."

Business NSW spokesman Damian Kelly said the organisation had approached the state government about the need for financial support.

"We have begun discussions with government about how that might be able to be rolled out," he said.

"They're certainly very open to hearing about the plight of business owners."

Australian Associated Press