Tenterfield business owners say tourism will be a critical part of the town's recovery following a spate of severe bushfires and the ongoing drought.

Tim Dillion is the licensee of the Commercial Boutique Hotel in the town's CBD and he said the accommodation side of his business has had a number of cancellations recently.

"People have concerns about coming to the region, fears for their safety, about bushfires," he said.

"That fear is also coupled with concern for water shortages, and whether they should actually be coming to town and consuming that water."

The Commercial Boutique Hotel's Tim Dillon says his business, like many others in Tenterfield, relies on tourists. ( ABC North Coast: Kim Honan )

Mr Dillon said many in the business community were worried about what will happen to the town's economy when firefighters leave.

"The local economy really relies on visitation and if there isn't that visitation then all these small country towns are going to struggle even more than they already are," he said.

Tenterfield farmer and business owner Matt Richardson with Rural Fire Service volunteers. ( ABC North Coast: Kim Honan )

Tenterfield farmer and business owner Matt Richardson said retail sales from his nursery had dropped 80 per cent from last year.

"We've definitely had to look at our staffing numbers over the past four weeks," he said.

"The question is when is this going to end and how is this going to end?"

Both business owners are calling on travellers to consider Tenterfield for their next trip to help boost spending in town.

"As many fires as we have had, we're all still here, we're all still open for business and business owners are friendly, accommodating and would really, really love a morale boost at this time," Mr Richardson said.

Maree Parker and Sheree Thrift from Sherelle Fashions in Tenterfield have noticed a definite drop-off in business. ( ABC North Coast: Kim Honan )

Sheree Thrift knows all too well the flow-on effect the drought can have in town. She's been running Sherelle Fashions with her mother for 34 years this year.

"We've seen a couple of droughts before … but nothing, nothing like what we're seeing now," she said.

"My mum turned 90 about four weeks ago, and in her lifetime she's never seen a drought like this either."

Ms Thrift said she had felt the flow-on effects the drought is having on local retail spending over the past two months.

"We are desperate for tourists, we really are. It's what we're relying on at the moment," she said.

One of those tourists is Sue from Victoria Point in Brisbane, who says she visits the rural town every year during the school holidays to rest and relax, but admitted to some reservations about her stay this year.

"We were a bit worried about coming up this time because we didn't know if the fires would still be burning, but we've decided to come for a few days," she said.

"We just find it very relaxing. The people here are so friendly, the people are so helpful, the people are so kind."

The Mount McKenzie Road fire on the southern outskirts of Tenterfield on September 7. ( Supplied: RFS Glen Innes )

Last month an emergency-level fire tore through more than 3,500 hectares destroying one home and threatening dozens of others.

A volunteer firefighter was critically injured battling the blaze.

The Mount MacKenzie Road bushfire broke out on the edge of the town on the eve of the Peter Allen festival, which was expected to bring an extra 1,500 people to Tenterfield.

A fast-moving grass fire at Tenterfield on September 29. ( Supplied: NSW Rural Fire Service )

On Sunday fire crews again flocked to the town as another emergency-level blaze threatened homes and livestock, just north of town.

Police said the Sunnyside Road blaze was likely the result of children, aged nine and 10, playing with matches.

The Rural Fire Service said the damage to buildings and property was still being assessed, but it looked like a number of structures had been lost.

"Some structures have been lost but we'll work just to see if they were homes or actual sheds," RFS spokesperson Ben Shepherd said.

"That will take some time given the fireground is some 280 hectares in size."

Tenterfield Dam is at 30 per cent capacity, so locals have had to severely cut back on their water use. ( ABC News: Mark Leonardi )

On top of that, the Tenterfield Shire Council was reviewing its water restrictions after the town's dam supply dropped below 30 per cent.

Chief executive Terry Dodds says it is unclear how much of the water will be useable when the dam level drops below 20 per cent.

"How the reverse osmosis plant and how the filters work when it gets down to 19 or 20 per cent is anyone's guess," he said.

The town and surrounding area has not received decent rainfall in more than two years.