Dubbo Regional Council is fielding "messages and inquiries" about the water crisis from potential visitors who may not necessarily be staying away.
Accommodation venues are "almost sold out" for the October long weekend.
On Tuesday, NSW Opposition leader Jodi McKay advised the community that people had been avoiding the city.
"We know that visitors are not coming to Dubbo because they believe there is no water here," she said.
The Daily Liberal asked the council to respond to the claim with its economic development and marketing manager Josie Howard acknowledging receipt of "messages and inquiries, where visitors have expressed concerns about visiting the city".
"But it's important to note that the Dubbo region is still open for business," she said.
"It's concerning that some people have contacted us about the current water situation.
"However, we advise that Dubbo is prepared for visitors.
"In fact we need tourism dollars to help keep the local economy turning during this difficult time."
Ms Howard also offered up encouraging news and data.
"At the moment, accommodation is looking almost sold out for the upcoming October long weekend, she said.
"School holidays are also looking good but there are still plenty of vacancies across the region.
"October is typically a good holiday season, and this year has thankfully been no exception."
..accommodation is looking almost sold out for the upcoming October long weekend.Dubbo Regional Council's Josie Howard
The manager told of accommodation occupancy increasing annually and visits to the Wellington and Dubbo information centres remaining steady.
"In August, accommodation occupancy for the Dubbo region was at 61 per cent, slightly up from the same time last year," she said.
Events such as the recent A-league match in Dubbo "were well attended", the manager said.
"Meanwhile, growing ticket sales at the Wellington Caves is also extremely valued and appreciated during the drought," Ms Howard said.
The council reports in the year ending March 2019 there were 754,000 domestic overnight trips in the Dubbo region, a 30.3 per cent increase across five years.
Ms Howard noted initiatives to attract visitors.
"With the recent release of the new Dubbo Region Visitor Guide, in partnership with councils in the Great Western Plains, Dubbo is doing what it can to appeal to a large market," she said.
"The Great Big Adventure Pass also went on sale earlier this week, and has already been incredibly popular."