The Tourism and Sports Ministry has investigated illegal tour companies offering extremely cheap packages, forcing 10 of them to close.
Tour agencies said these grey market companies already account for 50% of Chinese tour groups in Thailand.
Tourism and Sports Minister Sermsak Pongpanit said the ministry told the Tourism Department, which has direct authority to regulate tour companies in Thailand, to immediately use stringent measures against these irregular business activities, particularly companies that slash prices and damage the country's reputation.
The minister's directive is in response to a call from the Association of Thai Travel Agents, which recently raised concerns about the return of ultra-cheap inbound packages. These packages promise very low fares to buyers, then once in Thailand they coerce tourists into shopping and spending at inflated prices.
To tackle this issue, Jaturon Phakdeewanit, director-general of the department, said six governmental agencies set up a joint operational centre to crack down on tour businesses using nominees and offering lower-than-cost packages over the past six months.
Those agencies comprise: the Tourism Department, the office of the tourism permanent secretary, the Business Development Department, the Department of Special Investigation, the Tourist Police Bureau and the Immigration Bureau.
After investigating 30 tour companies, the Tourism Department revoked the licences of 10 companies, forcing them to close.
Thai nationals determined to be nominees are banned from operating a tour business for five years and are subject to punishment listed in the Foreign Business Act, which includes prison sentences for both Thais and foreigners.
The centre expanded its probe and prosecuted 10 foreigners for illegally working as tour guides with these 10 companies, as this occupation is reserved for Thais.
Mr Jaturon said the Tourism Department has more than 10 other suspicious companies to investigate.
Tourists and business operators are encouraged to report suspicious cases to the agency using these phone numbers: 02-141-3264 or 02-141-3119.
Surawat Akaraworamat, vice-president of the Tourism Council of Thailand, said tour operators have used price dumping strategies since last year, but have not been getting much attention from the government.
He said licensed tour companies attract few leisure group customers, so they have pivoted to corporate travel instead.
The 10 companies charged by the Tourism Department are not believed to be the architects of these distorted business practices, said Mr Surawat.
If the Thai government wants to crack down on the large players, who are the same firms and individuals that conducted zero-dollar tours a decade ago, it might have to seek cooperation with Beijing, he said.
