St. Andrews businesses are feeling the loss of the historic Algonquin hotel. (CBC)

Businesses in the town of St. Andrews are feeling the gap in tourism left behind by the Algonquin. The resort began renovations two months ago, cutting back staff and leaving only 51 of its rooms open.

Now that the summer season is picking up, many restaurants and bars in the seaside town have taken a hit.

"It's a combination of the lack of tourists and of course the lack of the employees," said Dan Burley, co-owner of the Lobster Bay Eatery in St. Andrews. He said that without the Algonquin guests and staff, restaurants and bars are hurting this summer.

"It's approximately 400 to 500 hotel guests that are not here each day, and then of course there are about 150 staff members that aren't here this summer, which also spend money in the community."

Tim Henderson, St. Andrews’ chief administrative officer, acknowledged that the hotel's absence has hurt local businesses.

"The Algonquin being closed for the summer has had a big impact. It's not just the people staying in the hotel; it's the staff of the hotel. The staff spend their money in St. Andrews, go to the restaurants go to the bars in the evening."

Emma Farlow is a waitress and bar tender at the Red Herring Pub. She said that the Algonquin staff have always been regulars.

"The staff become in the summer, some of our most regular customers for food but mainly for the bar part of things. We've taken a very serious hit. Saturday night used to be my best night to work and now I'm getting surpassed, my Sunday days are better than my Saturday nights, which is something that I've never had before."

But Henderson added that even without the hotel, numbers are up at the visitor information centre and he is optimistic about the rest of the season.

"I know there's businesses that have felt an impact, and we are going to do our best to work with them," he said. "But our biggest marketing tool in St. Andrews is the weather so as long as we can keep getting the sunshine we'll see visitors."

Henderson also said that he hopes the numbers will continue to climb with cruise ship visits and War of 1812 commemorations this summer.

In March the New Brunswick government sold the hotel to New Castle Hotels and Resorts and Southwest Properties and provided a $21-million repayable loan to the companies.

As part of the deal, New Castle Hotels and Resorts and Southwest Properties are to ante up $4 million in contributions and incentives. New Castle Hotels and Resorts is responsible for six hotel properties in Atlantic Canada.

The Tudor-style Algonquin hotel was built in 1889 by the St. Andrews Land Co. The hotel was once owned by the Canadian Pacific Railway Co.

The provincial government began searching for a new owner for the hotel when its contract with Fairmont Hotels and Resorts expired last year. The province leased the Algonquin in 1973 and bought it in 1984.

During pre-budget talks two years ago, the government suggested that selling the resort and hotel could be a way to help tackle the deficit.

The hotel needed up to $20 million in upgrades and together with the Algonquin golf course lost almost $2 million in 2009. It also employed 250 people in peak season and generated up to $6 million a year for the local economy.

The Algonquin is set to reopen as a Marriott's Autograph Collection, a brand of luxury hotels, in the summer of 2013.