"This is a really significant issue for Canberra. The biggest issue is the publicity nationally and internationally," Canberra Region Tourism Leaders Forum chairman David Marshall said.

"People are definitely saying we're not going to visit if the air is worse than Beijing or New Dehli. People are saying I'm just not going to take my family to Canberra."

Australian Hotel Association manager Anthony Brierley said over the past week up to 15 per cent of forward bookings for January had been cancelled, with the cost approaching $1 million.

Mr Brierley was keen to emphasise the positive, saying while the industry understood people's concerns the headline smoke events were behind the city, which was safe to visit.

Canberra is set for a major international conference next week when 350 delegates arrive from 31 countries for the Asia Pacific Parliamentary Forum, which starts on Monday.

The forum has warned the delegates that weather this weekend is uncertain, and active fires are nearby. It has told them that smoke has had a serous effect on outdoor air quality, as well as an impact on flights and visibility, and "the strong smell of smoke" is present in cultural institutions and shops.

But organisers said no one had yet pulled out as a result of the smoke or fires.

Director of Happy People at the East Hotel Kylie Murdoch said cancellations had reached 15 per cent or a little higher, but people had rescheduled. Most were domestic travelers and for January.

"Hopefully in the next few weeks things will calm down and we won't see the level of cancellations that we have had in the coming weeks," she said.

Canberra was "ready and waiting" with a more positive outlook and milder weather forecast, she said.

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Mr Marshall said the lesson from disasters in Queensland and elsewhere was that as soon as the bushfire crisis was over, government should spend big on promotion, not only for Canberra but also for the Snowy Mountains, the South Coast and other impacted areas.

While Canberra had historically been quiet over Christmas, it now had the art blockbusters, the Summernats car festival, and the biggest share of people making visits to friends and family. Some Summernats visitors had been forced to cancel because of road closures and the gallery had been closed on days of bad smoke.

A 15 per cent fall in accommodation bookings was a substantial financial hit, especially at this time of year before Parliament returned, and had a ripple effect on restaurants and other businesses, he said.

Pegasus Economics director Stephen Bartos said the public service would "find work arounds" and continue largely unaffected, and some sectors - cinemas, airconditioning and air-purification retailers - would see more sales.

But overall, economic activity was down, with fewer people shopping and doing outdoor activities and tourists likely to be put off by stories of the terrible air quality.

That was likely to see a noticeable blip in Canberra's economy, but the impact would not be quantifiable until the data on spending, retail sales and tourism numbers was in for the first quarter of the year.

"The longer it lasts the more likely it will have a depressing effect on the economy," Mr Bartos said.

Nationally, the impact on the South Coast would flow through the entire economy and Mr Bartos joined other economists in predicting another 0.25 point interest rate cut when the Reserve Bank meets next on February 4 or at the beginning of March.

Professor of economics at Canberra University Phil Lewis said with Canberra "basically shutting down", the biggest impact would be on small business and tourism.

"It doesn't matter too much for the public sector, but if people decide not to go shopping or not to go to a cafe you can never make that up again. It's usually small business that cops the most in these sorts of things," he said.

Public service work could be reallocated and Canberra's economy was service-based so would not be hit by the loss of production, like the South Coast where the impact would be devastating. But there would be a definite short-run effect.

"Smoke is stopping people coming here, so there's less money for hotels retailers, restaurants and cafes," he said. "In the long run, the tourism experts say that essentially people have very short memories and they're likely to return to Canberra. At the moment it's bad because we're getting that international reputation as the most polluted capital in the world."

The long-term health impact also had an economic impact, and the lack of spending would hit consumer confidence, which was already poor.