Phuket Tourist Association (PTA) President Somboon Jirayus said current average occupancy rates are about 30-40 per cent in most parts of the island, down about 30 per cent year-on-year, on average.
Revenue is down even further because of all the discounts and promotions hotels are putting on to attract tourists, he said.
The main reason for the drop in tourist arrivals figures is not the swine flu pandemic, but the global economic downturn and Thailand's internal political situation, he said.
Patong is outperforming the rest of the island in terms of occupancy, he said.
The PTA hopes and expects the tourism picture to improve following the successful hosting of the Asean-led meetings at Laguna Phuket that ended on Thursday.
Thai tourism in general and Phuket in particular should benefit as a result, he said.
An improvement in the domestic political situation and an expected increase in the number of charter flights expected in October should help boost occupancy rates to around 60 per cent going into the high season, he said.
Nampetch "Nikki" Tipaxsorn, Marketing Communications Manager at the Hilton Phuket Arcadia Resort & Spa, said occupancy rates and revenue were down to only about 30 per cent of what they would be 'under optimal circumstances'.
She likewise blamed the bleak economic picture and internal politics for the occupancy drop-off at the island's largest resort.
This low season is worse than last year's, although the situation has improved in the last two months, she said.
Methee Tanmanatragul, President of Thai Hotels Association Southern Chapter, estimated that occupancy in the region is down about 20 per cent year-on-year.
Rooms going at 1,000 baht per night last year are now typically being offered at 800 baht, while promotional offers have increased costs, he said.
Patong was faring better than the rest of the island, with occupancy rates about 10-15 per cent higher than the rest of the island, he said.
As for the prospects for next year, the internal political situation would be the most critical factor, he said.
"If Thai people stop fighting, everything will surely improve, but if we can't find harmony we will remain stuck in this rut," he said.
Promchote Traivate, director of Phuket Tourism and Sports Office, noted that European tourists are far less likely to cancel trips to Thailand due to the swine flu outbreak.
Asian tourists are far more sensitive to health and security issues when it comes to holiday planning, he said.
Figures released by Thai Immigration support this. June arrivals from some important source countries in East Asia are down about 40 per cent compared to around 10 per cent from Europe.