China’s hotels allege predatory pricing, forced exclusivity in Trip.com antitrust probe

[BEIJING] China’s hotels are welcoming record numbers of travellers, yet room rates are sinking – a paradox many operators blame on Trip.com Group.

For Gary Huang, running a five-room homestay in the scenic Huzhou hills near Shanghai was supposed to secure his family’s financial future. Instead, he and other hoteliers in China’s southeastern Zhejiang province say nightly rates have fallen to levels last seen more than a decade ago, as Trip.com’s frequent discount campaigns force them to cut prices simply to remain visible on China’s dominant booking platform.

“The promotion campaigns now are almost a daily routine,” said Huang, who asked to use his self-given English name out of concern of speaking out against Trip.com. “We have to constantly cut prices at least 15 per cent to attract travellers. We have no choice but to go along with the price cuts.”

Trip.com has been central to China’s post-pandemic travel rebound, connecting millions of travellers with small operators like Huang. But for many hotels, visibility – and sometimes survival – comes at the expense of profits.

That dynamic is now at the heart of Beijing’s antitrust probe. Regulators allege Trip.com is abusing its market position, with analysts citing deflation across the sector as the government’s main concern. Interviews with lodging operators, industry groups and travel consultants describe a system where constant price-cutting and opaque policies are eroding profitability, even as demand rebounds.

Trip.com has said it is cooperating with the government’s investigation. The company’s stock dove more 16 per cent since the probe was announced a week ago.

Revenue per room – a key hotel metric – was flat across China in 2025, even as other Asian markets saw gains, according to Bloomberg Intelligence. Marriott International Inc.’s revenue per room in China fell 1 per cent most of last year, while Hilton’s China room revenue trailed its regional peers.

The company controls about 56 per cent of China’s online travel market, according to China Trading Desk, and has grown into the world’s largest booking site. Its dominance has helped fuel domestic tourism’s recovery – nearly five billion trips were logged in the first three quarters of 2025 – but operators say the benefits are being offset by falling room yields.

“The market has developed unevenly and innovation is lacking due to monopolistic practices,” said He Shuangquan, head of the Yunnan Provincial Tourism Homestay Industry Association that represents some 7,000 operators. “The entire online travel agency sector is stagnating in a pool of dead water.”

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‘Pick-one-of-two’

The broader challenge is oversupply and cautious consumer spending. In regions like Yunnan, hotel capacity has tripled since the pandemic, just as travellers tightened budgets. Consultants note that while people are travelling more, they’re spending less – leaving hotels slashing rates to fill empty beds and posting billions in losses.

For operators like Huang, the paradox is stark: the platform that delivers customers is also accelerating the race to the bottom. The complaints centre around Trip.com’s “er xuan yi,” Mandarin for pick-one-of-two exclusivity arrangements – a practice that Chinese regulators have repeatedly vowed to stamp out.

Trip.com categorises merchants into tiers with “Special Merchants” enjoying the most visibility and traffic, Yunnan Provincial Tourism’s He said. However, these top-tier merchants are typically prohibited from listing on rival platforms like Alibaba’s Fliggy, ByteDance’s Douyin or Meituan. Merchants who are not bound by these exclusive arrangements report being effectively compelled to offer the lowest prices on Trip.com’s online booking platform Ctrip, or risk facing a raft of measures like lowered search rankings.

Analysts and industry watchers suggest the government’s probe is driven by its desire to fix structural imbalances in an economy contending with deflation and reeling from the fallout of a property implosion. In recent years, the market watchdog has pursued antitrust probes in the technology and e-commerce space. It fined Alibaba and Meituan for monopolistic practices that included compelling exclusivity, discriminatory fee rates and punitive algorithms.

One homestay operator who recently hosted a live-stream sales on rival platform Douyin was contacted by a Ctrip business manager, asking them to remove their listing from the competing platform, according to Yunnan homestay association’s He.

Ctrip rarely puts such demands in writing and offers little transparency around its enforcement measures, He said. But the consequences can be immediate. Operators says penalties include lowered search rankings, removal of preferred-merchant badges and throttled traffic that makes it harder for hotels to attract customers, according to He and other operators. Lodging service providers may see bookings suddenly drop with no clear explanation – and are effectively barred from marketing on other platforms to offset the losses.

Depriving Oxygen

“From the merchant’s perspective, that can be indistinguishable from coercion because traffic is oxygen,” said Subramania Bhatt, chief executive officer of marketing and travel consultancy China Trading Desk.

Such practices are common across the industry globally, but Trip.com’s sheer size in China amplifies the pressure, leaving merchants with little control over pricing decisions.

Wang Lin, who rents out 10 rooms at a single-property homestay in Shantou, in the southern Guangdong province, said Ctrip unilaterally lowered his room prices multiple times last year without notifying him. He learnt of the reductions only from customers.

One cut slashed room prices by 66 per cent to 100 yuan (S$18.44). What infuriated Wang further: Ctrip continued to charge commission based on his original room prices. Complaints to Ctrip failed to halt the cuts or recover lost revenue.

“These are the practices of a bully,” said Wang.

Trip.com declined a request for comment on merchants’ complaints, citing the ongoing investigation.

Founded in 1999, Trip.com offers flights, hotels, car rentals and excursions through its brands such as Qunar, Trip.com and Skyscanner, besides Ctrip. It has few peers at similar scale, competing mainly with Alibaba, Meituan and ByteDance units.

The probe should be cautionary for other market leaders, said Tat Koon Koh, as associate dean of the Hong Kong University of Science and Technology School of Business and Management, who studies the digital economy.

Platforms like Trip.com naturally drift towards monopoly because of the “network effect” – more users attract more hotels, which in turn attract more users, said Koh. But once they achieve dominance, they need to be extra mindful of unfair practices or risk government intervention.

“It’s a reminder for all these platform operators: once you become so big, all the more, you may want to exercise your responsibility to the different stakeholders in the ecosystem,” Koh said. “And just because I’m so big and dominant, I shouldn’t try to squeeze them.” BLOOMBERG