Bay Venues runs the council's aquatic and sports facilities, community centres and halls and the Trustpower Arena and Stadium.
Total visits to the venues and facilities were also down by 34 per cent from July to December 2021 when compared to the same time period in 2020.
Hooker said the biggest impact to the bottom line was the inability to have events that are a "significant part" of the organisation's income.
"It's been challenging six months.
"We generate revenue not just from the venue hire around events, it's the revenue from catering and audiovisual services that we provide for those [as well].
"That's hit us pretty hard and will continue to do so while we're still at the red alert level setting."
Bay Venues had a $1.26m decline across the events, catering and audiovisual sectors of the business from July to December 2021.
Under the Covid-19 protection framework, events and gatherings had attendance limits imposed causing cancellations and postponements. There was also a lockdown and restrictions under the previous alert levels.
More than 50 events were cancelled, at a proposed revenue loss of $600,000, and cancellations continue, with no significant bookings for before June 2022, according to the half yearly report.
Impacted events for Bay Venues included the cancellation of the music festival Bay Dreams, postponement of the annual Women's Lifestyle Expo and the National Mustang Car convention – that was six years in the making.
The recent removal of restrictions on outdoor gatherings are of little benefit to the organisation.
"While we can hold outdoor events, that doesn't help us heading into winter unfortunately," Hooker said.
The requirement of vaccination passes for public facilities in Tauranga also caused a slight drop in visitor numbers for some facilities and 5 per cent staff turnover, the report states.
"We've spent a lot of time working with the government regulations," Hooker said.
"We had Covid vaccine passes introduced at quite short notice, and we had to respond to that very quickly, which the team did very successfully.
"Equally as quickly, we've been able to now take them away.
"We're starting to see things coming back in the right direction, which is good, but we still have some challenges there."
Hooker said looking at the budget for next financial year they are seeing an improvement because of the expected move to the orange setting soon.
He said there would still be a "hangover" from the red setting around the logistics of getting events back up and running and when that would occur.
"We're working hard to manage costs and look at all options to try and minimise the impact, but it's just the world we're in at the moment."
- Public Interest Journalism funded through NZ On Air.
