The ferry service has been running since 1997. (CBC)

Hundreds of hotel and service jobs will disappear along with the loss of the Yarmouth ferry, local businesses and politicians warn.

The CAT high-speed ferry, which connects Nova Scotia and Maine, will not resume in the spring. Bay Ferries Ltd. said it decided to end the long-running service after the provincial government refused a recent funding request.

Bus tour companies are cancelling hotel bookings and hotel owners are preparing for layoffs, said Yarmouth town Coun. Ken Langille.

He said at least 320 people — including many older workers — will likely lose their jobs and many could end up needing social assistance.

"The people who are going to be laid off are going to be the low-end workers," he said. "They are your housekeepers, your maintenance people, cooks, dishwashers, groundskeepers, people involved with the service industry."

Brian Rodney, owner of the Best Western hotel, said the news about the ferry came as a complete shock.

"It's almost like having a death in the family. We were fully expecting to have the boat on for next year," said Rodney.

Langille said there is talk of a replacement ferry, but that may come too late.

"With the Cat going as suddenly as it is, there is tremendous fear here that the infrastructure will be gone and it will be just too late to replace the service," he said.

Yarmouth Mayor Phil Mooney is meeting with Premier Darrell Dexter on Wednesday. He hopes he can convince the government to subsidize the ferry for at least one more year.

"I believe once Darrell Dexter sees our numbers and the impact that we have on the economy of Nova Scotia, I believe he will do the right thing, and then we can discuss the other options later," said Mooney.

Those options include using a more traditional vessel to haul more freight, such as fish, lumber and trees, Mooney said.

'Not sustainable'

The Nova Scotia government has put $18.9 million into the ferry service since the fall of 2007. Bay Ferries was asking for another $6 million, sources told CBC News last week.

"Bay Ferries was the recipient last year of a $12-million subsidy," Dexter told reporters in Sydney. "This is something that's just not sustainable for a province that finds itself in a $560-million deficit."

Langille said he hopes to hear that the government has an economic development plan for the area.

"We have lost our air carrier. We do not have regular bus services. Our highway structure is not finished in Yarmouth. And now with the loss of the international ferry, there really isn't much left for this end of the province from a tourism point of view," he said.