The historic Audley Boatshed will be revamped, with part of the building to become an undercover space for picnics and a new open pavilion to be built at the rear for "small pop-up catering" for functions.
Boat hire was suspended on Friday and is not due to resume for about nine months. The building was constructed 82 years ago, replacing a boatshed dating back to the late 1800s.
The closure comes at a time of very high demand for boat hire.
"It has been crazy since we reopened after Covid," said Geoff Hughes, whose family has operated the hire business for 35 years.
"The October long weekend was by far the busiest we have had."
Mr Hughes said his lease had been on hold for about 10 years. He is unsure whether he will compete for a new lease when expressions of interest are called following the upgrade.
"My dad started here in 1985 and I worked part time with him and took over in 1995," he said.
"It's a great place to work - I have enjoyed every minute.
"I never get sick of going up the river on busy days to tell people to come back in."
Heathcote MP Lee Evans said National Parks and Wildlife Service (NPWS) would "restore the building, providing access to part of the boatshed for undercover space for picnics and constructing a new open pavilion behind the boatshed for small pop-up catering".
"The 77-metre long concrete and timber building will get a makeover inside and out, as well as new roof sheeting so it can continue to provide boat, kayak and board hire," he said.
"The works will also include new decks in front of the boatshed to allow people to take in the scenic river views and gather in the new covered space."
NPWS said works are due to be completed by June 30, 2021 - with a reopening likely shortly thereafter.
The timeframe is dependent on the proponent / operator once works are completed.
Mr Evans said the state government would spend $2 million on the boatshed and other improvements in the visitor precincts at Audley and Wattamolla.
"Landscape improvements at the popular Ironbark Flat picnic area opposite the boatshed are currently underway, with upgrade of amenities at Allambie Flat to follow, making these spaces more comfortable for visitors to relax and enjoy the park," Mr Evans said.
"Wattamolla, another popular visitor precinct in the park that receives up to 3500 visitors a day in summer, is also continuing with its makeover.
"The new amenities building, along with the recently upgraded sewage treatment system, will help to accommodate more visitors to this spectacular community asset.
"This work is part of a package of improvements that include better picnic areas, access improvements and a new walking track to Wattamolla Beach that are still to come."
"There will be some restrictions on access in and around the Audley and Wattamolla precincts during renovations.
"The Audley Visitor Centre and Cafe will remain open, as will access to Wattamolla Beach and the Royal Coast Track."
We depend on subscription revenue to support our journalism. If you are able, please subscribe here. If you are already a subscriber, thank you for your support.