Phuket was the most visited destination in the country last year after Bangkok and a good gauge of the state of its crucial travel industry, the agency noted.
Tourism accounts for 18% of Thailand’s gross domestic product and Chinese holidaymakers make up more than a quarter of total arrivals.
But while 2.2 million people from the country visited in 2018, according to official figures, numbers for January-September were down almost a fifth on-year.
Claude de Crissey, Honorary Consul of France in Phuket and owner of about 40 rooms in the popular Patong Beach area, said Chinese tourists are usually present even during the current low season.
“That was not the case this year,” he said, adding he had to lower his prices by as much as 50%.
The problem is not just in Phuket, with hotels also struggling to fill rooms in the seaside resort of Pattaya on the mainland and Koh Samui island.
Trade tensions with the US have already made some Chinese reluctant to take holidays owing to uncertainty back home, while the Thai baht has risen around 10% against the yuan this year.
The Phoenix tour boat disaster off Phuket last year that killed 47 Chinese holidaymakers has also scared some off.
“We are worried,” an industry insider told AFP, declining to be named due to the sensitivity of the topic in a country where tourism provides tens of thousands of jobs.
Adding to the headache is the fact that more than 3,000 new hotel rooms are being constructed on the island, raising the question of who will fill them.
“In terms of business, it’s not good,” said Kongsak Khoopongsakorn, vice president of the association of hotels in Thailand and director of Vijitt Resort.
“Because… we have more hotels, more rooms to sell, we have more restaurants, more coffee shops.”
Still, Tourism Authority of Thailand (TAT) Governor Yuthasak Supasorn told AFP he remained “optimistic”, adding: “We should reach our goal of 39.8 million foreign visitors” this year.
However, that is only up from 38.2mn in 2018, much less than the jump seen from the previous year's total of 35.6mn.
Counting on India
Now hoteliers and tour package operators are targeting visitors from elsewhere, particularly India, which experts see as a huge untapped market.
“We are counting on the Indians to revive the sector,” Mr Kongsak said.
A rapid expansion of the middle class in India, increased direct flights and visa-free travel have prompted Thailand to revise forecasts upwards.
It now expects two million Indian tourists this year, after an increase of nearly 25% on-year in the first seven months.
But for now, the lower arrivals is evident on the streets of Phuket.
“I’ve never seen anything as bad as what it is at the moment,” said Paul Scott from Australia, who said he has been coming to Thailand for 15 years.
He mainly blamed the stronger baht for the drop-off but also the fact that Thailand wasn’t the untouched vacation paradise it once was. “Now it’s not so new… and it’s not cheap," he said.