A crackdown on tour operators was conducted recently due to the numerous bogus travel packages sold to Thailand.
Chinese tourists have tripled to nearly a third of all Thailand's tourists by numbers and revenue but have recently slackened due to the "zero dollar" scheme.
The scheme involved selling very cheap packages to Thailand but once the tourist arrives, they are charged huge amounts for food, hotel, and transportation.
The Thai government spearheaded a crackdown on these operators and is expected to affect a number of travelers ahead of the Spring Festival holiday season, Jan 27 to Feb 2.
Ruengdet Amorndetphakdee, the owner of D Land Holiday Co, said that they only sold 300 packages for the holiday compared with 800 last year.
"It's the crackdown," he said.
Central Plaza Hotel PCL also said that Chinese bookings had fallen. Tristar Floating Restaurant Co used to operate six cruise ships for Chinese visitors alone but is operating only one this year.
This Chinese New Year, the Thai tourism authority expects a 7.7 percent drop in Chinese tourists. However, the Thai government said that the drop will be offset by a 3.9 percent rise in tourists from other countries.
The crackdown also commenced during last year's Golden week when the police had shut three companies operating "zero dollar" tours and had seized 2,155 tour buses.
Amorndetphakdee said that the crackdown had made Thailand tour packages more expensive for Chinese visitors.
"Chinese travel agents are not recommending Thailand because it suddenly became more expensive. It is easier for them to sell cheap package tours to South Korea or Vietnam," he said.
Chinese travel agents said that the peak travel season would have been more profitable if the "zero dollar" scam did not pursue.