Photos later posted online showed a Western-looking foreigner watching one of the men in a cloud of smoke as others extinguished the flames. The latest foreigner ban started days later.
Such bans are usually delivered orally to tourism industry leaders, apparently to avoid issuing documents that could embarrass officials eager to project a sense of calm and control.
Foreign tourists trying to book Tibet trips over the border from Nepal have been denied permits since May 28, according to travel agent Pradip Pandit in the Nepalese capital, Katmandu.
The Chinese government sees tourism as a key way of bringing money into the chronically poor region. A signature project inaugurated in 2006 — a $4.2 billion high-speed rail project that zips over mountain passes — can whisk travelers from Beijing or Shanghai to Lhasa in about two days.
But after violent riots in 2008 in which Tibetans attacked Chinese migrants and shops, torching parts of Lhasa's commercial district, the government sealed off the region. Overall tourism that year fell by nearly half, while the number of foreign tourists fell by 80 percent. To try to draw the crowds back, authorities halved prices for tours, hotel rooms and entry tickets for the Potala.
Last year, the number of Chinese tourists jumped 27 percent to 8.4 million while that of foreign tourists grew 19 percent to 270,800, raking in 9.7 billion yuan ($1.5 billion) in tourism revenues, official statistics show.
The foreigner ban is hurting Tibet's handful of luxury hotels, including Lhasa's Jardin Secret Hotel where rooms go for up to $335 a night. "Our occupancy rate is relatively low at the moment because we don't have many domestic guests," said a staffer who gave only his surname, Xu.
But many establishments are thriving. All but a fifth of the 80 rooms at the three-star Tibet Mansion in Lhasa are occupied, said an employee surnamed Liu. The hotel's guests are mostly domestic travelers.
Associated Press writer Binaj Gurubacharya in Katmandu contributed to the report.