Trip.com fine in China antitrust case unlikely to materially change hotel pricing dynamics: analysts

CHINA’S months-long antitrust probe into Trip.com Group ended with a multi-billion-yuan penalty on the nation’s largest online travel agency, but the action does little to ease the fierce price wars gripping the domestic hotel sector.

Regulators imposed a 5.18 billion yuan ($765 million) penalty after the State Administration for Market Regulation found Trip.com abused its dominant position in hotel bookings by restricting hotels’ ability to work with rival platforms and infringing on their right to set prices.

The ruling lands in the midst of Beijing’s ongoing scrutiny of major internet platforms and its push to rein in price wars across consumer industries.

Still, analysts say the Trip.com fine is unlikely to materially change pricing dynamics for hotel operators, who remain reliant on promotions amid soft consumer spending.

“The timing fits China’s broader effort to reduce destructive ‘involution’ and encourage competition based on service, quality and innovation,” said Subramania Bhatt, chief executive officer of China Trading Desk, a travel analytics firm.

But he added that most hotels operate in highly competitive markets and have limited room to raise rates without hurting occupancy.

China’s domestic trips increased 6 per cent while total travel expenditure increased 2.9 per cent, Bhatt said, underscoring continued price sensitivity.

The size of the Trip.com penalty exceeded past cases involving other platforms, Goldman Sachs analysts including Simon Cheung wrote in a note. 

Trip.com said the 5.18 billion yuan penalty comprises a 3.52 billion yuan fine – equal to 7.5 per cent of its 2025 China revenue – along with confiscation of 1.66 billion yuan in gains and a refund of 122 million yuan in hotel deposits.

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The fine portion alone is higher than the 4 per cent and 3 per cent imposed on Alibaba Group and Meituan, respectively, in similar cases in 2021, according to Goldman Sachs.

The People’s Daily, the Communist Party’s official mouthpiece, described the Trip.com case as a milestone in efforts to curb platform price wars, adding that dominant platforms are a key driver of the destructive “involution-style” competition in some sectors.

While the regulatory action may not significantly alter competition in China’s hotel market, it removes a key uncertainty for Trip.com.

The company’s shares jumped as much as 7.7 per cent in Hong Kong, the most in nearly a year, as analysts such as Morgan Stanley’s Yang Liu said the outcome largely matched expectations.

Trip.com shares have fallen about 40 per cent since the investigation began in January, compared with a roughly 7 per cent drop in the Hang Seng Index, making it one of the benchmark’s worst-performers over that period.

Trip.com said it accepts the decision and will implement rectification measures, strengthen compliance systems and fully cooperate with regulators. BLOOMBERG