Chinese tourists are canceling hotel reservations following Beijing's decision to ban sales of tour packages in retaliation for South Korea's deployment of an advanced US missile defense system on its soil, industry sources said Thursday.

Ibis Budget Ambassador, located in a busy shopping district of Dongdaemun in Seoul, said all of its group bookings from China have been canceled at the request of the guests.

"We've also had two or three individual bookings canceled a day on average," an official at the Ibis hotel said. Chinese tourists account for about half of its guests.

Worries about losing deep-pocketed Chinese customers are becoming a reality for the local hotel sector after Beijing ordered its travel agencies to stop selling tours early this month.

China attacks have intensified after Seoul made plain that it will not call off the deployment of the Terminal High Altitude Area Defense aimed at better defending the country against evolving nuclear and missile threats from North Korea.

Lotte City Hotels in Myeongdong, another popular destination for tourists, has seen up to 30 percent of the bookings called off since Feb. 28, the hotel said. On that day, its parent firm Lotte Group signed a land swap with the military for one of its golf courses to be used to station the THAAD battery.

Shilla Stay, a budget accommodation run by Hotel Shilla Co., said the bookings from Chinese guests have dropped about 25 percent since early this month.

"That's about a 5 percent decline of the reservations overall. We're working to reverse the fall by bringing in more guests from Southeast Asia," a Shilla Stay official said.

Beijing's hostile policy toward South Korea is expected to deal a blow to local hotel chains, as they have been in a race to expand the number of rooms in key locations to meet robust tourist demand.

Since last year, six more hotels have opened in Myeongdong alone. In 2016, Chinese visitors accounted for more than half of all foreign visitors in South Korea. (Yonhap)