Little Devil Donuts owner Ann Lifshen said she was not surprised Festivale had been cancelled but losing the business from the event would definitely have an impact.

"Festivale is one of about half a dozen big festivals that my company has been doing for the last three years," she said.

"It's like losing one of the biggest events for turnover and income."

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Visit Northern Tasmania CEO Chris Griffin said there would be a major impact on the tourism industry not having the normal Festivale event during the summer.

Mr Griffin said, however, it would be good to look at more experimentation as to how public health concerns could be mitigated while still holding an event.

Related Story: Festivale cancelled, but organisers hopeful for smaller event

He said one of the ideas under exploration is to hold a larger event but break it down into smaller groups, capping at 500 people each, where the public would not be allowed to move between sectioned areas.

"I think we have to be appreciative that the restrictions are there for a public health and safety concern which collectively the industry respects," he said.

City of Launceston mayor Albert van Zetten said the council was excited by the committee's vision for a reimagined event on the same weekend in 2021.

"Council is supporting the Festivale committee to ensure viability with consideration to COVID-19 Worksafe requirements, which is a much better outcome for everyone involved - for those visitors coming to Launceston, for the stallholders and for the hotels and other businesses across the city, who will also benefit from such an event, albeit on a smaller scale," he said.

The event will no longer be held in City Park. More information on the new location and format to follow.

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