At least one hotel and restaurant owner in Churchill, Man., says her business is feeling the pinch now that passenger and freight rail service to the northern town has ground to a halt.

Some tourists have cancelled their travel reservations in Churchill in light of the rail disruption, while others are paying thousands of dollars more to fly there in time for their planned tours, says Tundra Inn co-owner Brenda Fitzpatrick.

"We're just starting to have cancellations right now," said Fitzpatrick, whose business includes a hotel, a hostel and a restaurant.

"We have been able to contact most of our hotel guests and give them a head's up, and they have opted to maybe book flights in advance or have enough time to sort of make alternative arrangements."

Town officials said Omnitrax Canada told them on Friday that rail service between Gillam and Churchill has been suspended until further notice, blaming unsafe track conditions on problems caused by severe permafrost.

It comes on the heels of a freight train derailment near the community on June 2. The derailment forced Via Rail to halt its passenger rail service between Winnipeg and Churchill.

Passenger trains have not serviced Churchill since May 30, and the freight rail interruption means businesses like the Tundra Inn are not getting their supplies.

"We have a restaurant open right now and that is very affected because we can't get the freight up here, either, so we actually have to delay our opening by a week," Fitzpatrick said Monday.

"We've got enough food to keep us going for another week, but we're not quite sure what we're going to do after that.

Fitzpatrick added that many tourists her staff have contacted were not aware of the rail disruption.

Rugged terrain poses problems

The rugged sub-arctic terrain has long been a problem for the rail line. In 2007, Prime Minister Stephen Harper travelled to Churchill to announce $60 million for repairs and another $8 million for the Port of Churchill.

The rail line is expected to see increased traffic of grain shipments and other goods due to growth at the port and a longer ice-free season.

Omnitrax also wants to conduct test runs of crude oil shipments along the line, although the plan has met with strong opposition from environmental groups, the Manitoba government and others who fear a spill would be disastrous for the environment.

Figures from the Transportation Safety Board of Canada show there were 63 accidents on the rail line between 2003 and 2012. All but 10 were derailments.

On the weekend, Omnitrax said several days of repairs would be required before freight service could resume.

With files from The Canadian Press