Paxton Hotel licensee Vic Simpson made the decision to stop accepting Sydney residents last Monday after health authorities announced several Hunter venues had been visited by positive cases from Sydney.

"I thought it was just common sense, keep the locals safe," he said.

Mr Simpson said the pub was regularly visited by Sydney folk on their way to the vineyards, and while the decision has affected his bottom line, he thought it was a necessary measure.

"I've got nothing against Sydney people," he said. "But with the outbreaks in Western Sydney, we've just got to be safe.

"Everyone's been pretty understanding, we've had no trouble so far.

"We're in an isolated area, we're just trying to keep the locals safe.

"Everyone's health is worth more than the holey dollar."

The Lemon Grove Hotel at Wallsend has taken matters a step further and is only accepting social club members and patrons within a five kilometre radius.

Hotel Jesmond also made the decision to refuse people from Sydney and Melbourne after a state capital resident visited the pub on July 29 and later tested positive for the virus.

Australian Hotels Association NSW liquor and policing director John Green said pubs were well within their rights to refuse entry to Sydney and Melbourne residents.

"Individual licensees have the right to decide who can and can't enter their venue - providing they aren't breaching anti-discrimination laws," Mr Green said.

"While case numbers in NSW remain low, we understand these measures are not designed to punish anyone but simply to keep local patrons safe.

"NSW hotels are operating under significant restrictions, and have been since March so with no cases in the vast majority of Sydney, refusing patrons needs to be a carefully considered position.

"The vast majority of hotels are going above and beyond what is required by NSW Health and are trying to rebuild after the statewide lockdown."