{"text":[[{"start":7.25,"text":"This article only represents the author's own views."}],[{"start":11.25,"text":"China’s market regulator has told the country’s leading online travel platform to pay heavy fines and clean up its act. But executives and investors were still able to breathe a sigh of relief that the antitrust penalty was not even worse."}],[{"start":26,"text":"Trip.com Group Ltd. (TCOM.US; 9961.HK) must stump up about 5.3 billion yuan ($783 million) in fines and refunds, while undertaking steps to “rectify” its business. But the company was spared the structural measures most feared by the market, including a breakup of its business or divestment from industry peers. With the worst-case scenario off the table, Trip.com’s Hong Kong-listed shares leapt 7.7% after the outcome of the six-month probe was announced, before closing the session 3.79% higher at HK$355.60. However, the ruling could have a long-lasting impact on Trip.com’s hotel-related income, flowing through into earnings."}],[{"start":70.95,"text":"Regulators found that Trip.com had abused its dominant position in China’s market for online hotel bookings since 2020. Through platform rules, traffic allocation and technical tools, the company pushed some hotels into exclusive terms and imposed price limits on those operating on multiple platforms, restricting their scope to freely set rates and choose sales channels."}],[{"start":95.1,"text":"The regulator imposed a fine of 3.52 billion yuan, equivalent to 7.5% of Trip.com’s China revenue in 2025, and confiscated nearly 1.66 billion yuan in gains from the irregular practices, bringing the penalties to just under 5.18 billion yuan. The company must also refund 122 million yuan in security deposits taken from hotel operators, putting its total liability at about 5.3 billion yuan."}],[{"start":127.35,"text":"In a statement on July 27, Trip.com said it accepted the decision by the State Administration for Market Regulation, vowing to comply with all the requirements and strengthen its governance mechanisms."}],[{"start":140.04999999999998,"text":"The 7.5% fine was higher than the 4% imposed on Alibaba Group (BABA.US; 9988.HK) and the 3% levied on Meituan (3690.HK) in their 2021 antitrust cases. Still, Trip.com has plentiful resources to settle its bill, sitting on 104 billion yuan in cash, deposits and financial investments at the end of March."}],[{"start":167.2,"text":"The one-off financial hit is less significant than the repercussions for Trip.com’s business model. The company will stop requiring exclusivity deals with hotels, remove its lowest-price-across-all-platforms requirements, discontinue certain pricing tools and refrain from changing room rates without hotel consent. Its existing mechanisms for traffic allocation, fees and commissions will also need to be redesigned."}],[{"start":191.35,"text":"Together, those tools formed the moat around Trip.com’s hotel business, limiting its accommodation partners’ room for maneuver and curbing the competitive power of rival platforms."}],[{"start":202.04999999999998,"text":"Following the changes, hotels will have greater freedom to allocate rooms and set prices across travel sites and lifestyle apps such as Meituan, Fliggy and Tongcheng Travel (0780.HK). Trip.com is unlikely to lose its market-leading status any time soon, but its competitive edge will increasingly depend on member loyalty, technological prowess, customer support and the ability to convert interest into bookings, rather than price and traffic controls."}],[{"start":230.6,"text":"Trip.com CEO Jane Sun said automated pricing tools were already switched off in March, with an impact on the company’s second-quarter outlook. She also acknowledged that the firm’s financial performance could fluctuate during the transition to the new partnership model."}],[{"start":246.75,"text":"Empire left intact"}],[{"start":248.95,"text":"Accommodation reservations rank as Trip.com’s biggest source of revenue, totaling 26.1 billion yuan in 2025, or about 42% of total turnover. The booking income rose another 17% to 6.5 billion yuan in the first quarter from the same period a year earlier. If the new model cuts commission rates or forces greater spending on hotel subsidies and marketing, margins in the accommodation business could be squeezed even if volumes keep growing. Analyst estimates compiled by Visible Alpha show Trip.com’s adjusted net profit could fall 15% to 13.5 billion yuan in 2026."}],[{"start":290.9,"text":"The anti-monopoly probe, which began in January, sparked concerns that Trip.com might be forced to sell off stakes in other travel businesses, diluting the power it has built up through M&A and investments in the industry. But the regulatory ruling focused only on hotel partnerships, pricing and online traffic. Trip.com was not required to sell its interest in Tongcheng Travel, a digital platform. Nor was it ordered to spin off the travel site Qunar, accommodation reservations or transportation ticketing. Regulators appear to have focused on correcting business practices rather than restructuring the company."}],[{"start":327.54999999999995,"text":"Trip.com still owns about 24% of Tongcheng Travel, which could expand its business network with the removal of restrictions on hotel partnerships. A more immediate challenge will come from Meituan and Fliggy. Trip.com still controls about 56% of mainland China’s online travel market, but once hotels are free to offer the same rooms and prices across platforms, rivals can leverage their vast user traffic and extensive local-services ecosystems, chipping away at Trip.com’s dominance."}],[{"start":359.15,"text":"Trip.com currently trades at about 14 times forward earnings, above Tongcheng Travel’s 7.7 times and slightly higher than the roughly 13 times for Expedia (EXPE.US), indicating that investors are still willing to pay a premium for its industry position, membership base and international business. That could continue if growth in booking volumes and profits is sustained during the rectification period. But the upside for the stock will be limited if falling commission rates, fiercer competition and rising costs weigh on earnings. Trip.com has preserved its corporate structure, but whether it can hold into its valuation will depend on its results in the quarters ahead."}],[{"start":406.7,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1785500134_3166.mp3"}