First time! A fine of 5.1 billion! How did intermediaries become monopoly agents?

On July 25, the State Administration of Market Supervision and Administration officially announced a major administrative penalty decision: Ctrip Group (TCOM.US,09961) was fined a total of 5.179 billion yuan for abusing its dominant position in the online hotel reservation market to carry out monopoly acts. Among them, 1,658 billion yuan of illegal proceeds were confiscated, and 3,521 billion yuan was fined 7.5% of domestic sales in 2025. At the same time, orders were made to fully refund 122 million yuan of order reserves collected from hotels in violation of regulations, and enterprises were required to comprehensively rectify, disclose the rectification plan, and continue to be supervised by the whole society.

This is the first major anti-monopoly penalty case in the history of the domestic online travel (OTA) industry, and it is also a landmark event in the normalization of anti-monopoly supervision of the platform economy. A sky-high price ticket has torn apart the unspoken rules of the online hotel industry that have continued for many years: relying on traffic hegemony, algorithm tools, and platform rules to lock in high-quality listings, deprive hotels of their pricing autonomy, and squeeze upstream and downstream profits. This heavy regulatory crackdown is not only a punishment for an enterprise; it also means that the platform hegemonic model that relies on “choosing one of two” and enforcing the lowest price has come to an end, and the trillion-dollar cultural tourism online market is about to usher in a new round of order restructuring. The full text is about 3,300 words.

1. Establishing a monopoly: Two major illegal methods to secure tens of millions of hotel merchants

According to regulatory investigations, since 2020, Ctrip has had a dominant position in the online hotel reservation service market in China. For a long time, Ctrip has used the right to distribute traffic as a core bargaining chip, superimposing platform rules and automated technical tools to systematically implement two types of typical monopoly practices.

The first type of act is to implement a disguised “choose one of two” through a “specialty hotel” mechanism, which is a limited transaction prohibited by the Anti-Monopoly Law. Ctrip divides hotels into special brand, gold, and ordinary unlicensed tiers. For top quality hotels, if they want to get exposure on the homepage, favorable search traffic, and priority participation in platform activities, they must sign an exclusive “special brand” cooperation agreement, promising not to sell guest rooms on competitive platforms such as Meituan, Flying Pig, and Tongcheng. The platform establishes an all-weather monitoring system. Once it is discovered that merchants operate across platforms, punitive measures such as downsizing, delisting, and traffic reduction are immediately implemented. Many hoteliers confess that once Ctrip traffic is lost, there may be a cliff-style decline in room orders. Small and medium-sized hotels are simply unable to bear the consequences and are forced to accept exclusive bindings. High-quality housing continues to be locked into a single platform, making it difficult for competitors to obtain core supply, and market competition channels are artificially fragmented.

The second type of act requires hotels operating across platforms to implement the “lowest price on the entire network”, which is an additional unreasonable transaction condition. For gold medal and ordinary hotels that have not signed an exclusive agreement, Ctrip stipulates that the price displayed by the merchant on Ctrip must be lower than on all competitive platforms. The platform launched the “Price Adjustment Assistant” and “Listing Pass” algorithm programs to compare prices throughout the network without interruption throughout the day. Once the system recognizes that the hotel is selling at a lower price on other platforms without confirmation from the hotel, the algorithm can directly lower the Ctrip page price; merchants that refuse to cooperate with the price adjustment will be subject to deduction of reserves and restricted traffic exposure. According to feedback from many homestay operators, the platform algorithm automatically adjusts prices dozens of times within a day, the hotel completely loses its right to independent pricing, and the pace of operation is firmly controlled by the platform algorithm.

The two methods cooperate to form a closed-loop control system: high-end hotels that can compete for customer sources are exclusively locked down; small and medium-sized hotels that are unable to sign exclusive agreements are denied freedom of pricing. Long-term continuous illegal operation directly harms the interests of the three parties. The bargaining power of hotel merchants continues to weaken, and profits are constantly being squeezed by commissions and marketing fees; the market competition mechanism is disrupted, making it difficult for other platforms to compete fairly for housing supply; in the long run, the cost pressure on the industry is eventually transmitted upward, and consumers' choice space is compressed, making it difficult to enjoy the diversified benefits brought about by full competition.

For a long time, a large number of hoteliers were angry and afraid to speak up. For the vast majority of individual hotels and small and medium-sized homestays, online channels account for more than half of the customer sources. Ctrip has huge traffic entrances, and merchants rely heavily on platforms to acquire customers, so they are naturally in a weak position. The imbalance between supply and demand has allowed the platform's unreasonable rules to continue to operate for many years. Previously, market supervisory authorities in many places had interviewed Ctrip several times and pointed out related irregularities, but the rectification was superficial, and there was no fundamental change in the core mechanism, which ultimately pushed the supervisory authorities to launch a formal investigation.

II. How traffic hegemony is formed: The evolution of the OTA industry's decades-long pattern

Ctrip was able to establish a dominant position in the market, stemming from the integration and expansion of the industry over 20 years. Ctrip was founded in 1999 and pioneered the establishment of an online hotel and air ticket reservation model to seize the early dividends of the Internet. Subsequent, a series of capital mergers and acquisitions reshaped the industry landscape: Mergers and acquisitions went to Qunar.com, deeply integrating upstream and downstream resources; strategically investing in platforms such as Tongcheng, Elong, and Tujia, and laying out a wide range of hotel group shares. After many rounds of integration, Ctrip has developed an unshakable advantage in the domestic online high-star hotel circuit. The online hotel reservation market share has been stable for a long time, and its advantages are particularly prominent in high-end hotels, business travel, and cross-border travel tracks.

Online travel platforms have typical bilateral market characteristics: one side of the platform gathers a large number of consumers, and the other side attracts hotel and homestay suppliers. The more users, the more attractive it is to the hotel; the richer the number of registered hotels, the more it can attract consumers and form a positive network effect. The network effect continues to amplify the advantage of the head, and the strong are always stronger. When the market share of the platform breaks through the critical value, merchants become path dependent on the platform, and a dominant position in the market is formed.

As Meituan, Flying Pig, and Tongcheng continue to enter the market, the OTA market has formed a “one super many strengths” pattern. Meituan relies on the advantages of local life to deeply cultivate budget hotels and short-distance lodging; Tongcheng relies on WeChat traffic to seize the sinking market; and Flying Pig relies on Ali ecology to boost cultural tourism and long-term tourism. However, in the field of high-star hotels and high-end lodging chains, Ctrip still has firm barriers. The online operation and business cooperation systems of a large number of high-end hotels are deeply tied to Ctrip for a long time, making it difficult to completely transfer them in the short term.

When the leading platform holds absolute traffic chips, the profit logic quietly shifts. The platform no longer only relies on matching transactions to earn reasonable commissions; instead, it is trying to use its dominant position in the market to establish unilateral rules.” “Special brands and gold” ratings, differentiated distribution of traffic, and mandatory minimum price clauses are essentially all tools to transform dominant market positions into excessive profits. The platform continues to squeeze profits from upstream hotels, continues to raise marketing and investment costs for merchants, and intensifies within the industry. Ultimately, it forms an unbalanced ecosystem of “the platform earns a lot of money and the hotel operates at a small profit”.

Many people are puzzled. The platform provides online channels, and it is reasonable to receive commissions. There is a clear boundary between legal intermediary services and monopoly practices. In a normal market environment, merchants have the right to freely choose platforms and independently set room sales prices. However, “choosing one of two” and imposing the lowest price on the entire network restricts the operating autonomy of merchants through a punitive mechanism, artificially eliminating cross-platform competition, crossing the bottom line of fair competition, and touching the red line of anti-monopoly laws. The platform can set rules for cooperation, but the rules must not aim to exclude or limit competition.

3. Sky-high fines have three profound effects: merchants, industries, and consumers have ushered in changes

The total amount of fines forfeited this time was 5.179 billion yuan. The penalty ratio reached 7.5% of the previous year's sales, which is at a high level within the penalty range stipulated in the Anti-Monopoly Law. High penalties are not just a one-time financial shock; more importantly, they force a deep transformation of the business model, and the rules of the game in the entire OTA industry have been reshaped.

First change: The bargaining power of hotel merchants has increased significantly. The penalty decision clearly requires Ctrip to immediately stop the two types of offenses: exclusive cooperation and imposing the lowest price. In the future, hoteliers can freely choose to list listings on multiple platforms simultaneously, and will no longer be forced to “choose one of two”; platforms will not have the right to force the lowest price on the entire network, and hotels will take back their pricing autonomy. Hotel chains and regional homestays can independently set prices based on off-peak seasons and operating costs, and there is no need to passively accept algorithmic price adjustments. Upstream suppliers, which have been suppressed for a long time, have more room for negotiation, and are expected to usher in rational adjustments in commission ratios and marketing expenses. High-quality listings are no longer locked into a single platform. Competitors such as Meituan, Tongcheng, and Flying Pig can compete fairly for resources, and the market competition is more adequate.

Second change: The platform's competitive logic has been forced to transform. In the past, Ctrip relied on traffic barriers and exclusive agreements to seize supply; in the future, it cannot rely on administrative means to lock in merchants, and competition among platforms will shift from “controlling listings” to competing for service capabilities, technical tools, and traffic operation efficiency. If you want to attract hotels, you can only rely on lower comprehensive costs, better traffic management, and perfect merchant services, rather than punitive rules. All OTA platforms need to re-examine their own business models, abandon the idea of relying on monopolies to obtain profits, and shift to healthy sustainable development. The era of extensive expansion, which relied on unilateral rules to harvest upstream and downstream, has come to an end.

Third change: Long-term benefits for consumers. Only a fully competitive market can spawn more diverse products and reasonable prices. When hotels can operate freely across platforms, there will be healthy competition between different platforms, and various promotions and differentiated products will continue to emerge. At the same time, regulations continue to regulate platform chaos, and issues that have been criticized for a long time, such as bundled sales, unreasonable price increases, and the slaughter of big data, will also continue to be rectified under normalized supervision. Consumers have more channels for price comparison, information is more transparent, and the space for choice continues to expand.

Of course, industry transformation won't happen overnight. The long-standing inertia of cooperation is difficult to eliminate immediately. Although “choose one of two” is explicitly prohibited, the platform can still attract voluntary in-depth cooperation from merchants through traffic management, business cooperation, and marketing policies. The core boundary of regulatory concern is whether to use the dominant position in the market to force merchants to make exclusive choices through punitive measures. There is a clear legal distinction between voluntary commercial cooperation and compulsory monopoly practices. Subsequent supervisory authorities will also continue to follow up on the implementation of rectification and reform to prevent new problems such as disguised violations and hidden rules.

4. Normalization of platform antitrust: supervision is not suppression, but rather delineation of development boundaries

In recent years, anti-monopoly enforcement in the domestic platform economy has continued to advance, and Internet platforms such as Ali and Meituan have successively received major antitrust fines. The implementation of the Ctrip case means that the regulatory reach is further extended to online cultural tourism circuits, sending a clear signal: Internet platforms, regardless of the industry track or size, will seriously investigate and punish in accordance with the law if they abuse their dominant position in the market to disrupt fair competition. The goal of supervision has never been to curb platform development, but rather to correct market distortions caused by disorderly expansion, delineate clear boundaries of legal operation, and promote the standardization and sustainable development of the platform economy.

There is no doubt about the value of the platform economy for the development of the digital economy and the cultural tourism industry. Online reservation channels reduce hotel customer acquisition costs, break down geographical information barriers, drive the online transformation of the domestic tourism industry, and create a large number of jobs. However, once the platform grows, it is necessary to maintain the bottom line. The network effect brings market advantages, which does not mean that enterprises can freely set rules and squeeze upstream and downstream. The barriers to capital and flow construction cannot take precedence over fair competition and the legitimate rights and interests of operators.

For Ctrip itself, huge fines put short-term financial pressure, and the greater challenge lies in restructuring the business model. The company's official response stated that it will profoundly reflect and comprehensively reform to build a symbiotic and win-win cultural tourism ecosystem. How to balance platform revenue, hotel interests, and consumer rights, get rid of dependence on exclusivity rules, and explore healthy and sustainable profit paths will be a long-term issue at the management level.

At the macro level, tourism is a pillar industry that drives domestic demand and promotes consumption. The domestic cultural tourism market continued to recover in the post-pandemic era, and the hotel and bed and breakfast industry was already facing operating pressure. The platform and the hotel are supposed to be symbiotic partners, not opposing sides in a game of strength and weakness. A healthy industrial ecosystem should be a win-win situation for the platform, hotels, and consumers, rather than one party harvesting in one direction based on advantages.

epilogue

An anti-monopoly fine of 5.179 billion yuan drew a dividing line between decades of barbaric expansion in the OTA industry. The unspoken rules of the industry, which once relied on traffic hegemony, algorithm control, and unilateral rules, were declared invalid under the supervision of the rule of law. From enforcing “choose one of two” to the lowest price clause on the entire network, these merchants have endured unreasonable restrictions for many years and finally ushered in systematic correction. Hoteliers are expected to regain operational autonomy, industry competition will return to a fair track, and consumers will also benefit from fuller market competition.

The Ctrip monopoly case once again proved that any market player, no matter how large or how influential the industry is, must operate within a legal framework. Traffic and technology can create commercial advantages, but they cannot be a tool for monopoly profit. As normalized anti-monopoly continues to advance, we expect the online travel industry to completely bid farewell to “hegemonic thinking”, and that the platform and upstream and downstream will work together to build a healthy ecosystem, rely on service innovation to drive cultural tourism consumption, and truly achieve long-term, steady, and win-win high-quality development for all parties.

This article was transferred from “Qingbei Jiaotong Alumni Research”, Zhitong Finance Editor: Li Cheng