BANGKOK, April 14, 2009 (AFP) - Thailand's battered tourism sector could shed up to 200,000 jobs this year, industry experts warned as violent street battles in Bangkok triggered mass cancellations.

Anti-government demonstrators who forced the cancellation of a major Asian summit on the weekend shifted their campaign to the capital, clashing with security forces Monday in defiance of a state of emergency.

Apichart Sankary, president of the Association of Thai Travel Agents, said that television images beamed around the world of troops firing volleys of gunfire to disperse protesters had alarmed potential visitors.

"Layoffs are inevitable. We may lose up to 200,000 people this year if the situation is not resolved," he said, appealing to the government to resolve the turmoil as soon as possible.

Bewildered tourists in Bangkok said they feared for their safety, while others were irritated that major shopping centres were shuttered as protesters loyal to ex-premier Thaksin Shinawatra rampaged through the capital.

It was not exactly the "Land of Smiles" many visitors had expected.

Thailand's tourism industry accounts for five percent of gross domestic product and employs two million people, or up to seven percent of the country's total workforce.

The industry has already been worn down by the SARS epidemic in 2003, the 2004 Asian tsunami, a 2006 coup and last year's devastating closure of Bangkok's two airports by a separate protest movement.

Continued instability will wreak more havoc on the tourism sector, which is already bruised from the impact of the global economic crisis.

"The question is how far and how long this situation will go on," said Robert McIntosh, a specialist in the hotel sector with property consultancy CB Richard Ellis.

"The declaration of the state of emergency and the issuance of travel advisories by other countries can be very detrimental to international travel," the Singapore-based McIntosh told AFP.

"People will redirect their holidays to places like Bali and Vietnam."

Australia, China, Russia and Hong Kong have joined governments around the world in urging their citizens to avoid or reconsider travelling to Thailand as the protests raged.

Apichart said that 1,000 people booked to travel on a cruise ship from Singapore to Thailand had opted to stay in the city-state, and that passengers who decided to come to Bangkok would be asked to stay in their hotels.

"Our overseas partners know that Thailand is split... They are scared of what's happening," he told AFP.

McIntosh said that Thailand's tourism sector had shown it was "resilient", but John Koldowski of the Pacific Asia Travel Association said the damage could be long-lasting.

"The longer this uncertainty continues, the more businesses will close and more people will be laid off not just in the travel and tourism industry but across the board," Koldowski told AFP.

The challenge is "how to restore Thailand's image internationally," he said. "It has been battered on many fronts and the impact has been cumulative. That could take some time."

Koldowski said even if the situation settles down, "there will always be the fear that things could boil over again very quickly and people will avoid Thailand because of that."

In its latest report released this month, the World Bank said Thailand's economy is expected to contract 2..7 percent this year from a growth of 2.6 per cent in 2008.

But it said "significant downside risks remain," including the threat of political instability.