Under new immigration changes, migrants will now need to earn at least $49,000 to be eligible for a skilled worker visa.
The average annual wage of those working in hospitality is $39,624 and $43,284 for those working in retail, according to data from Statistics New Zealand.
First Retail Group managing director Chris Wilkinson said the Government's "blanket approach" to vet the quality of people coming to New Zealand was "inappropriate" and would have a significant impact on the industry.
"The blanket approach the Government has taken is inappropriate given the regional issues that we have going on, particularly in pressure point places like Queenstown," Wilkinson said.
"Clearly they have had to take a blanket approach, otherwise it's very hard to enforce, however, there doesn't seem to have been the consultation with stakeholders that's necessary given just how impactful this will be."
He said there weren't enough local workers in all regions to sustain such changes.
"Migrant workers are absolutely vital to much of our resort areas such as Queenstown, etc, so the businesses there for instance have huge staff turnover based on the fact that they are hiring lots of migrant workers," Wilkinson said.
"There aren't the numbers of local workers in places like Queenstown to be able to sustain the demand for both shop staff, hospitality staff and also in terms of adventure tourism as well."
Migrant workers bring a breadth of benefits to the retail space, Wilkinson said.
"We actually need the fresh talent amongst our wider regions and talent pool for retail because we do need this international experience which becomes a fresh experience. It's just part of a good economy.
"We need to make sure that we continue to be a cosmopolitan environment."
Advocacy and policy manager for Hospitality New Zealand, Dylan Firth, said the hospitality industry would feel the strain, particularly front of house staff.
"In the first instance we'll probably see a lot of bar managers and front line staff affected by it, however, those higher skilled jobs not too much. The entry-level chefs and the mid-level ones, which are actually in higher demand, are probably cut off by that $48,800 cap," Firth said.
"That will probably have a long-term effect down the road, especially with the three-year visas.
The entry-level chefs and the mid-level ones, which are actually in higher demand, are probably cut off by that $48,800 cap.
"What we'll see is that there will still be people getting visas, it's just that they will be restricted to three years and even if they are under that dollar threshold, people will still be able to if they can't fill the position with anyone else."
Those on a one-year working visa would not be affected by the cap, Firth said.
"For that long-term migrant looking to get a pathway to residency through the hospitality sector, it will be difficult."
Firth said it was not unknown that changes to immigration were on the cards.
"At dollar value it's based on medium income nationwide is fairly arbitrary because, unfortunately, in our industry you get fluctuation per region quite a lot. It's not like other industries where it is a standing dollar value nationwide."
Firth said he thought if the changes were tested on medium regional income then the cap could have been more useful.
"In that middle management and upper management hospitality sector, it takes quite a lot of years of experience, and unfortunately those people will be below that threshold, too," he said.
"It's disappointing to see the dollar value being put on it."
Anyone earning less than $49,000 will no longer be classified as highly-skilled, and permanent residence applications will no longer be able to claim points for jobs that are paid below the median national income.
The other change in threshold will be set at 1.5 times the New Zealand median income of $73,299 a year for jobs which are not considered skilled but are well paid.
