Resorts now competing on price should compete on service instead, the President of the Thai Hotels Association (Southern Division), Suchart Hirankanokkul, told a meeting.
Speaking at a tourism and technology forum in Patong organised by True Vision, Khun Suchart warned that Australian visitors were down by five percent in the second quarter.
Chinese tourists were coming in large numbers, with passengers to Phuket constantly increasing. But he said selling cheap accommodation was a mistake.
''If we sell cheap, what do we get?'' he said. ''Nothing. All we get is tourists in large numbers. Quality is what's important.''
Resorts also needed to develop an appreciation of the natural environment and work to preserve it, he said.
High-end European visitors were already abandoning Patong for Khao Lak: ''Unless we turn things around on Phuket, more will leave.''
On a recent road show trip to London, he said the message was plain from agents. One of them told him: ''Don't try to sell anything about Phuket to me.''
Several times, Khun Suchart noted, the Chinese Ambassador to Thailand had suggested that officials on Phuket should put up signage in the Chinese language - including warnings about the dangers in the water.
There was no sign yet of replacement signage, he said. ''If you let the problems continue, tourism on Phuket will. start to decline,'' he said.
The gathering at Phuket Graceland Resort and Spa noted that conventional marketing of destinations had speedily been replaced by social networks and smart telephone technology.
On a positive note, Khun Suchart said that the coming of the Asean Economic Community in 2015-16 represented a good chance for Phuket to evolve ''if we are strong enough.''
He said it was vital for Phuket resorts to stop the competition to drive prices lower, to exploit new technology effectively, and to target high-end tourists.
Khun Suchart owns the Graceland Resort and has recently constructed a second resort near Khao Lak, north of Phuket.