Summary of Key Points
On July 25, 2026, the State Administration for Market Regulation issued the first anti-monopoly penalty in the OTA (Online Travel Agency) industry against Ctrip. Ctrip was found to have abused its market dominance by implementing hidden "forced choices" and requiring merchants to offer the "lowest price across all platforms." As a result, Ctrip was ordered to cease these practices, return a reserve fund of 122 million yuan to merchants, pay a fine of 1.658 billion yuan for illegal gains, and an additional fine equal to 7.5% of its domestic sales in 2025 (3.521 billion yuan), totaling 51.79 billion yuan in penalties. This penalty rate of 7.5% sets a new record for anti-monopoly cases in the platform economy, exceeding the 4% imposed on Alibaba and 3% on Meituan. Ctrip chose not to appeal or defend itself, stating that it "sincerely accepts the rectifications."
The penalty revealed Ctrip's "control system" centered around traffic from 2020 to 2025: by using tiered classifications to lock in exclusivity and algorithms to dictate pricing, Ctrip trapped merchants in a dilemma where they could not attract customers without using Ctrip but also lost profits if they did.
Detailed Analysis
How Severe is the Penalty?
The two "firsts" and one "highest" aspect of this penalty are particularly significant:
- First OTA industry case: Previous anti-monopoly actions targeting Alibaba and Meituan focused on e-commerce and local services; this time, the regulation targeted online hotel bookings, indicating that it covers more niche areas of platforms.
- First confiscation of illegal gains: While previous penalties mainly involved fines, this case directly confiscated Ctrip's illegal profits in the amount of 1.658 billion yuan, targeting the financial benefits of its monopolistic practices.
- Highest penalty rate: The 7.5% fine rate far exceeds the 4% for Alibaba and 3% for Meituan, sending a strong message that more concealed forms of monopoly will result in stricter penalties. Ctrip was penalized for using algorithms and unwritten rules to establish an implicit monopoly.
In short, the regulatory authority is not just interested in imposing financial sanctions; it aims to dismantle the foundation of platforms' profit-making through monopolies.
The Hidden "Forced Choice"
Ctrip's approach to enforcing exclusivity did not involve directly forcing merchants to sign exclusive contracts. Instead, it used a "traffic tiering" system as a lure and threat:
- Traffic tied to tiers: Hotels were categorized into special, gold, and non-gold levels, with the special level offering more search visibility and coupon benefits in exchange for exclusivity on Ctrip.
- Evasion of written agreements: The contracts omitted the clause stating "all rooms are exclusive," but merchants were required not to list their properties on Meituan or Fliggy. This was communicated verbally by business managers, with the threat of losing their status if they did so.
- Strict punishment: Ctrip used technology to monitor merchants' compliance. Non-compliant hotels received warnings, followed by reduced traffic and loss of their exclusive status, which could lead to a significant drop in sales.
Why did merchants tolerate this? Online traffic is crucial for many hotels (over 80% of their business), making it practically impossible for them to operate without Ctrip and forcing them to accept exclusivity.
The "Lowest Price Across All Platforms"
For non-exclusive gold and non-gold level hotels, Ctrip used tools like the "Price Adjustment Assistant" to enforce the "lowest price across all platforms":
- Formal requirement: The agreement stated that prices should not be higher than those of competitors, but in practice, Ctrip required prices to be 20% or more lower.
- Automated price adjustments: Once merchants authorized the tool, it automatically adjusted prices based on competitors' rates. Some hotels had their prices changed seven or eight times a day, and manual adjustments were ineffective.
- Forced adoption: Many merchants were unaware that the tool was being used on their properties and could not opt out, even if they tried to.
Ctrip claimed this was for the benefit of consumers, but regulators disagreed. Low prices may not always be beneficial; in the long run, they can lead to lower-quality services due to insufficient profits for merchants, ultimately harming consumers.
How Much Did Ctrip Take from Merchants?
Ctrip's profits came from both explicit commissions and additional fees:
- High costs: Special level commissions were 15%, and gold level commissions were 12%. To gain more traffic, merchants had to purchase additional promotional tools like "Pyramid" (paid for clicks) and "Ladder" (5-10% commission on transactions), increasing overall costs to nearly 40%.
- squeezed profits: The net profit margin for mid-to-high-end hotels was only 10-15%, with most of the profits going to Ctrip. A homestay owner noted that while commissions were 12% six years ago, the combined costs have now reached nearly 40%, leaving them with little profit.
- Ctrip's success: In 2025, Ctrip's net profit was 33.2 billion yuan, with a profit margin of over 50%, twice the industry average—merchants' hard-earned money became Ctrip's profit.
Can Rectifications Solve the Problem?
Ctrip has announced 19 measures to rectify its practices, focusing on dismantling its control system:
- Removing the special and gold level exclusivity models.
- Disabling price adjustment tools like the "Price Adjustment Assistant."
- Revising platform pricing policies and returning the 122 million yuan reserve fund.
However, the effectiveness of these reforms depends on how they are implemented. For example, it remains to be seen whether Ctrip will find new ways to maintain an implicit monopoly. Will merchants truly have the freedom to list their properties on multiple platforms? This penalty marks a starting point for re-negotiating the terms of the industry, as merchants seek not only the return of their money but also control over pricing and operational rights, as well as the freedom from relying on Ctrip's whims.
In summary, this penalty is not just a case against Ctrip; it serves as a warning to all platforms that monopolistic practices will eventually be addressed by regulators. For consumers and merchants, this is good news as it may lead to more stable hotel prices and greater market competition. Whether the reforms are truly implemented depends on future regulatory actions and Ctrip's commitment to change its business model.
(End of analysis)