Hotels in Kaohsiung, Taiwan's second-largest city, have received thousands of Chinese cancellations since early this month, the Taipei-based China Times reported.
This follows instructions from Chinese authorities to mainland tour groups to temporarily stay away from the city, according to the paper, which cited hotels in the area.
At least 200 reservations for October have also been called off, and booking is scarce for China's October 1 National Day holiday, it added.
The paper quoted unnamed tourism operators as saying the Dalai Lama's visit to Kaohsiung was the main reason for the cancellations, causing an estimated six million Taiwan dollars (185,000 US dollars) in lost revenue.
The city's hotel association, now focused on damage control, plans to ask the Kaohsiung city government to remove a film on Rebiya Kadeer, the exiled leader of China's Uighur minority, from an upcoming film festival, it said.
The Dalai Lama was invited by officials from the island's pro-independence opposition Democratic Progressive Party, including Kaohsiung's mayor, to comfort victims of Typhoon Morakot.
The Tibetan monk said repeatedly his visit was "non-political," but China, which regards Taiwan as part of its territory, voiced anger and cancelled several delegations to the island.
Beijing also voiced concerns over Kaohsiung film festival's plan to show "Ten Conditions of Love" on Kadeer, whom it blasts as a "criminal" inciting unrest in Xinjiang, a region in northwest China where most Uighurs live.
"We do not wish to see anything that disrupts the peaceful development in cross-strait ties happen again," Yang Yi, China's Taiwan Affairs Office, told a briefing.
Organisers have said they selected the film for "purely artistic" reasons and that they were not planning to invite Kadeer to Taiwan for the screening next month.
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