The economic hit plays into the Hong Kong government's strategy to resolve the crisis by having police step back from direct confrontations with the crowds and instead wait them out. Authorities expect the protesters will tire or lose support from the wider public as it suffers from the business slowdown.
The China National Tourism Administration issued a notice to travel agencies Monday evening advising them to stop organizing Hong Kong-bound tours until further notice, said Jenna Qian, a spokeswoman for the Beijing-based online travel platform Qunar Cayman Islands Ltd. The notice exempted already sold Hong Kong-bound tours, Ms. Qian said.
Tour operators said they believed the change in policy was a result of the Hong Kong protests. It was unclear whether individual travelers were affected.
"It will definitely have an impact on Hong Kong's tourism industry and we don't know how long the measure would last," said Joseph Tung Yao-Chung, executive director of the Hong Kong Travel Industry Council.
Beijing's decision comes after other countries including the U.S., the U.K., Canada, France, Italy, Germany and Australia issued travel warnings regarding Hong Kong, advising tourists to avoid public demonstrations and to follow media reports for updates.
The contribution of mainland Chinese visitors to Hong Kong's 296 billion Hong Kong dollar (US$38 billion) tourist industry is crucial. China accounts for two-thirds of all tourists in Hong Kong, up from half of all tourists a decade ago. The number of Chinese visitors rose to more than 40 million people last year from 8.5 million in 2003, the year Beijing eased curbs on mainland Chinese travel to Hong Kong.
Many of the Chinese visitors come to Hong Kong to spend, packing the city's luxury boutiques in search of high-end apparel and jewelry, especially during the National Day peak travel period, known as Golden Week, which ends Oct. 7.
Allan Zeman, the developer of Hong Kong night life district Lan Kwai Fong, said some retailers at areas near the protests—Central, Admiralty, Causeway Bay, Wan Chai and Mong Kok—have experienced declines in business from 20% to 70%.
"I was in Central yesterday and some of the shops haven't seen a customer all day," said Mr. Zeman, a Canadian who acquired Chinese citizenship several years ago.
Tourism directly contributed about 3.9% of Hong Kong's gross domestic product in 2012, the latest year for which government data are available.
Industry experts said the impact of Beijing's travel curb could be contained if the halt is temporary.
Mr. Tung of the Travel Industry Council said 10,000 mainland visitors arrive in such groups every day, accounting for roughly 10% of total Chinese tourists, with the rest being individual Chinese travelers who have multiple-entry or business-travel permits.
Mr. Tung said the international attention paid to the protests and concerns over safety as the standoff continued may have a chilling effect on would-be tourists. "The situation here is like the recent unrest in Thailand.
Many foreign travelers are avoiding traveling to Bangkok and that created a major impact on the tourism industry," he said.
Lam Siu Lun, chairman of the Hong Kong Travel Agent Owners Association, said demand for accommodation has dropped significantly. "This year we don't have to fight for hotel rooms," he said.
At Big Bus Co. (HK) Ltd., which runs bus tours around the city, the number of customers has declined sharply this week.
Normally its tours attract 600 or 700 passengers daily, but this week the number has dropped to 300 to 400 a day, said Roy Chan, a Big Bus manager. Sales are down 30% to 40% this week compared with normal weeks, he said.
Big Bus is now trying to attract more customers by offering a free night tour to people who book one-day or two-day tours.
The harm to business hasn't been felt by all. Major Japanese travel agencies H.I.S. Co. and JTB Corp. said the protests have had no effect on their package tours from Japan to Hong Kong.
Christine Foo, a Singaporean tourist in her 50s visiting Hong Kong for the city's watch and clock fair, said she wasn't concerned, despite Singapore's issuance of a travel warning for Hong Kong.
"We are not being disturbed at all," she said. "The protests in Hong Kong are peaceful, and sometimes we are just rubbernecking."
"It doesn't affect my plan to come and it's easy for me to shop as it's less crowded," said Magan Li, a Chinese tourist who visits Hong Kong frequently from Shekou in neighboring Shenzhen.
William Li, a 22-year-old visitor from Guangdong province, had just arrived Thursday for his three-day trip with an individual visit permit. He said the pro-democracy protests won't be affecting his travel plans. "They do their own protests, we do our own traveling," he said.
Source: Wall Street Journal by Joanne Chiu, Prudence Ho and Juro Osawa
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