The area, widely known as Bai Chay old town, had been a popular stop for both domestic and foreign tourists.
It offered dining, shopping and nightlife, with eateries serving local specialities and street food alongside cafes and bars.
Workers have begun fencing off the site with metal sheets in preparation for demolition.
Several businesses, including a yoghurt shop and a photo-printing service, have already been cleared from the area.
Decorative lanterns and tiled roofs that once gave the complex a traditional appearance remain in place in parts of the site.
Local residents said the demolition is intended to free up land for a commercial project expected to reshape Bai Chay’s tourism landscape.
The site is located near vacant plots that have been subdivided, next to a beach popular during the summer season and close to a large public square used for major provincial events.