An 18-week upgrade means the pools will be shut for most of the Rugby World Cup and the opening weeks of the cruise ship season.
Shopkeeper Rupal Mehta, of the Hot Spot Superette across the street from the pools, said nearby businesses were already "really struggling".
"It's really bad. Lots of tourists didn't know the hot pools were going to be closed."
Mrs Mehta said one group of visitors had travelled from as far away as Auckland to discover the pools were shut. "All the tourists are now asking us, where is another place nearby, like Whakatane or Rotorua, that we can go?"
Vanessa Gillard of Oceanside Resort and Twin Towers, also opposite the facility, said the pools were a major drawcard and "iconic part of the Mount".
"The tourists come here for a walk around the Mount, a soak in the pools, then have coffee and cake at the local cafes, so it will definitely have an impact on our area here."
Tauranga Mayor Stuart Crosby agreed the closure of the pools was a cruel blow to Mt Maunganui, but said the council was not prepared to undertake a "cheap patch job".
"With the economy as flat as it is at the moment, the last thing you need is these types of issues happening. What we offered with Mauao was a commitment to deal with it as soon as possible, and we've also made that same commitment with the hot pools."
Tourism Bay of Plenty general manager Glenn Ormsby said both Mauao and the hot pools rated highly on visitors' lists of things to do.
"We are very keen for them both to open as soon as possible, but certainly we understand that if something's broken, it has to be fixed."