Bar owners, performers, event promoters and late-night hospitality workers may face losing hundreds of thousands of dollars under Premier Barry O'Farrell's proposed 1.30am lockout and 3am drinks cut-off in the city precinct.

Young Sydneysiders whose livelihoods depend on the night-time economy say their income will be slashed if the city shuts down at 3am. Bar owners said it would make no sense for them to stay open after 3am last drinks.

''Keeping 15 to 20 staff on for four hours at double time-and-a-half on a Sunday morning becomes unaffordable when you can't sell a drink,'' said Tony Niutta, owner of the Burdekin Hotel on Oxford Street, which closes at about 6am.