Performances at live music venue The Patch have been cancelled after a damaging disturbance complaint to the state's liquor regulator.
The Fairy Meadow venue has been the subject of regular noise complaints for about 18 months, even after operators spent $80,000 on soundproofing.
The Office of Liquor, Gaming and Racing is now poised to decide whether live music should be permanently restricted as a condition of the site's licence.
It has taken submissions from Wollongong City Council, residents and police, who recommend a ban on "amplified entertainment" at the venue, part of the Cabbage Tree Hotel.
Hotel owners the Young family - brothers Brad and Dean and their father Craig - plan to make the case for maintaining live performances in their own submission.
They took over the venue in 2008, setting out to fill the gap created by the closure of city centre live music hub, the Oxford Tavern, in 2010.
In the past two years, the venue has hosted acts including Cosmo Jarvis, TZU, British India, Children Collide, Ash Grunwald, Tumbleweed, Segression, Dead Letter Circus, Guttermouth, Oh Mercy, DZ Deathrays, Catherine Britt, Loon Lake, Stonefield and Deep Sea Arcade.
"We were actually congratulated by the police for going down this path and having a crack at live music," Brad Young said.
"We had some massive acts come through and were getting 400 to 500 people in. I will say for the most part the police have been as good as they could be ... it is frustrating that one residence in the whole of Fairy Meadow can have such an impact on our business."
Police have attended the venue more than 70 times in the past 12 to 18 months.
Mr Young believes most, if not all, complaints have originated from a manager at the Fairy Meadow Motel, located at the back of the hotel. It was not known if the manager was complaining personally or on behalf of guests and residents.
Motel management did not return the Mercury's calls yesterday.
Under Section 79 of the Liquor Act, it takes three residents from the neighbourhood to make a disturbance complaint.
Venue bookers have cancelled upcoming shows by artists including Deniz Tek, Sleep Parade, Dead In Second, The Arsonist, Bec Sandridge and Leadfinger.
Mr Young said the cancellations were not yet required by licensing authorities, but were necessary because of uncertainty surrounding the venue.
The Patch once hosted music five nights a week but had pared that back to one or two nights because of the complaints.
"All that hard work's come to a halt," Mr Young said.
"Less traffic means less revenue. It's such a shame."
Wollongong City Council conducted noise assessments at the site four times and recorded levels higher than are allowed, findings that will be considered by the Office of Liquor, Gaming and Racing.
Venue operators have until February 20 to respond to the complaint.