The Queenstown Lakes District Council announced on Monday it would not stage its traditional lakefront event on January 31.
There are concerns it could have burdened the town’s hospitality businesses already grappling with the Covid-19 traffic light system.
Queenstown Lakes deputy Mayor Calum MacLeod said "hope springs eternal" for Wanaka celebrations to go without a hitch but there was the looming spectre of Covid-19 and all its variants combined with how the traffic light system worked.
"It’s [the system is] such a moving feast, it’s hard to pin it down ... it’s a space we’ve never been in before."
Rhythm & Alps going ahead meant the over 18s had something to go to, he said.
That left the under-agers who have caused problems in the resort town at New Year and large congregations at areas such as the Wanaka skatepark.
Mr MacLeod said whether that would happen again this year was hard to predict.
Last New Year’s Eve police said underage drinking in the town was "prolific" and the alcohol appeared to have been supplied by parents.
Police warned parents and caregivers they could face fines of up to $2000 if they supplied alcohol to underage teenagers
Wanaka Community Board chairman Barry Bruce said the hospitality sector would do its best to work within the guidelines and said he had a lot of faith in the various agencies that worked with police to ensure celebrations went smoothly.
Councillor Naimh Shaw and the councillor assigned to the Wanaka Alcohol Group said the council would continue to provide full support to the police with roaming security personnel, St Johns and Red Frogs.
"The police and Red Frogs have indicated that live music and other events, in addition to providing entertainment, are useful distractions for people congregating in large crowds and where alcohol or drug use may be prevalent — in other words, events help with crowd control."
"Council has taken on more and more responsibility around the Christmas and New Year events, and I think this is a good opportunity to consider our input and role in this space."
Red Frogs Otago co-ordinator Ray Thomson said the volunteer organisation’s response was tweaked in the wake of the news.
"We are currently working with QLDC, police and St John as to how we best support patrons during the new year’s period, but one thing does not change — Red Frogs’ commitment to keeping young people safe while they are out celebrating."
Volunteers would be out in force in Wanaka and return to Queenstown after a break due to Covid-19 last year, he said.