The End of the “Lowest Price” Era for Hotel Bookings? Industry Changes Behind the Interviews with Six Major Players
Hello everyone, I’m your financial journalist. Today, we’re talking about a matter that affects everyone’s travel: the myth of finding the “lowest price” for hotels on mobile apps may be coming to an end.
On September 15th, the State Administration for Market Regulation and the Ministry of Culture and Tourism gathered the heads of six major domestic online travel (OTA) companies—Meituan, Douyin, JD.com, Ctrip, Tongcheng, and Fliggy—for a meeting. This wasn’t about imposing fines; it was more about “administrative guidance,” in other words, “a warning in advance to set some rules.”
Why such a big deal all of a sudden? Just less than two months ago, industry leader Ctrip was fined 5.179 billion yuan for alleged monopolistic practices. By bringing these six companies together, they’re essentially taking a “make-up exam.” The question is simple: “Stop using the ‘lowest price’ as a tool to exploit both businesses and consumers.”
Let me break down the logic, the issues involved, and the future trends for you in five key points.
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1. What exactly was Ctrip fined for?
Many people might think, “5.179 billion yuan? That’s a lot!” But this fine wasn’t just a punishment; it was a “license to operate legally.”
How did Ctrip make its money before? It used a clever “three-tier rocket” strategy to tightly control hotel providers:
1. Traffic coercion (special/gold card system): Ctrip categorized hotels as “special,” “gold,” and “non-special.” If you wanted to be more visible on the platform or rank higher, you had to offer exclusivity or a price advantage. Otherwise, your traffic would plummet. For hotels, traffic is lifeblood, so most high-star hotels had to comply.
2. Price locking (price adjustment tool): Ctrip had a system that monitored prices on other platforms like Meituan and Fliggy. If a hotel sold for less elsewhere, Ctrip would automatically lower its price or force the hotel to reduce its own price. Other platforms had similar systems, leading to a vicious cycle of competitive pricing that left hotels with barely enough profit to cover expenses.
3. Economic penalties (order reserve fees): If a hotel didn’t meet Ctrip’s price or sales targets, it had to pay a fee. This effectively gave Ctrip control over the hotels’ finances.
In summary, Ctrip’s fines were for using its market dominance to force unfair trading conditions. Although Ctrip’s revenue continued to grow in the second quarter, the 5.179 billion yuan fine turned it from a profitable company into one in the red.
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2. “Lowest price” is a myth; who’s really paying the price?
We often hear platforms claim, “We offer the lowest price on Ctrip!” But the truth is that the prices shown on OTAs are not the “lowest available anywhere.”
Hotel prices are structured like a pyramid:
- Top: Private events and negotiated prices (very low, out of reach for most people).
- Middle: Business and conference prices.
- Bottom: The prices we see on apps.
- Bottommost: Direct hotel desk prices, which can sometimes be cheaper or include additional services.
So, when platforms say they offer the “lowest price,” they mean it’s just the lowest within their own network, not the absolute lowest.
Why the price war?
When OTAs control 70% of hotel traffic and sales, hotels are forced to compromise. With profits squeezed, they cut costs, often by reducing services:
- Reduced cleaning: Less staff, less thorough cleaning, unchanged bed sheets, dirty toilets.
- Aging facilities: Poor maintenance, broken air conditioning, inconsistent hot water.
- Employee turnover: Low salaries, lack of training, poor service.
As a result, consumers save a few yuan, but end up with dirty rooms and poor service; hotel owners lose profits, and platforms earn commissions but see overall quality decline. This is a typical example of “involutionary competition” where no one really benefits, except for consumers’ experiences.
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3. Changing regulatory approach: from post-fine to pre-warning
This meeting sends a strong signal that regulation is shifting from punishing problems after they occur to setting rules in advance.
- Chronological events: The Central Economic Work Conferences in 2024 and 2025 called for addressing involutionary competition.
- 2026 January: Government began investigating competition among food delivery platforms.
- 2026 June: Third-party ticket platforms were questioned.
- 2026 July: Ctrip was fined 5.179 billion yuan.
- 2026 September: The six OTAs received administrative guidance.
What does this mean?
- Multi-departmental collaboration: Previously, the State Administration for Market Regulation might have acted alone; now, it’s working with the Ministry of Culture and Tourism, with greater impact and broader coverage.
- Learning from cases: Ctrip’s penalty serves as a warning to the other companies.
- Global trend: This isn’t unique to China. Foreign platforms like Booking and Expedia have also faced antitrust investigations for similar practices.
The new rule is simple: “Compliance is key.” OTAs can no longer rely on market dominance to exploit businesses; they must compete fairly.
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4. If prices can’t be competed on, what will the six giants focus on next?
Since the “lowest price” strategy no longer works, these companies will need to differentiate themselves:
- Ctrip: Leveraging its deep supply chain, focusing on air tickets, tickets, mid-to-high-end hotels, and business services, with a focus on professional services and exclusivity.
- Meituan: Building on its local lifestyle ecosystem, offering integrated services like dining and entertainment.
- Douyin: Using content to attract and convert traffic, showcasing hotel features through videos and live broadcasts.
- JD.com: Combining its supply chain with its Plus membership, targeting high-value users who value quality over price.
- Tongcheng: Expanding into lower-tier cities and leveraging WeChat’s user base for convenience and affordability.
- Fliggy: Relying on Alibaba’s ecosystem, especially for overseas travel.
In summary: The era of traffic-based subsidies and price wars is over. The future competition will depend on providing more efficient tools for businesses and unique experiences for consumers. It’s no longer about who offers the lowest price, but who understands their needs best.
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5. The test: Mid-Autumn and National Day holidays
The real test will come during the Mid-Autumn and National Day holidays. We’ll watch for three key indicators:
1. Stable prices: If platforms raise prices significantly during peak seasons, consumers will be unhappy, and regulation will be ineffective. Stable prices indicate a genuine shift in the industry.
2. Improved services: Will hotels pass on cost savings to consumers (cleaner rooms, better breakfast, more flexible cancellation policies)? If prices remain unchanged and services worsen, the reform is a failure.
3. Elimination of intermediaries: Will regulation prevent intermediaries from profiting from price differences between platforms?
**In conclusion, Ctrip’s fine is just the beginning of new rules. In the past decade, OTAs thrived by controlling resources and prices. Now, the winner will be those who create value for businesses and provide good experiences for consumers within legal frameworks.”
Every time we book a hotel through an app, we’re evaluating these companies. Let’s hope this “make-up exam” leads to better experiences for both us and hotel owners. After all, only when businesses thrive can we have a better time staying somewhere.