Trip.com (9961 HK, HK$349.20, HK$227bn) A Manageable Penalty

On July 25, 2026, the State Administration for Market Regulation (SAMR) imposed an administrative penalty on Trip.com for abusing its dominant position, with total refunds, confiscation and fines amounting to roughly RMB5.2bn, comprising:

1). Refund of booking deposits of RMB122mn — The company is ordered to cease violating acts and fully refund deposits which were compulsorily deducted from hotel operators.  

2). Confiscate gains on violating acts amounted to RMB1.66bn — Profits derived from monopolistic conduct were confiscated and remitted to the state treasury. Notably, this marks the first instance of disgorgement in platform economy antitrust enforcement, as neither the previous cases on Alibaba nor Meituan have involved such a penalty.

3). Imposed a Fine of RMB3.5bn — Imposed under the Anti-Monopoly Law, calculated at 7.5% of Trip's 2025 China domestic revenue of RMB46.96bn. This ratio is the highest among platform economy antitrust penalties, exceeding Alibaba's 4% and Meituan's 3%, with the absolute amount ranking second in China's antitrust history.

Nature of the Violations: The SAMR investigation found that Trip.com held a dominant position in China's online hotel booking platform market since 2020. Its violations are centered on leveraging traffic allocation and forcing hotels into accepting exclusive cooperation and price controls.

Our View: We consider the resolution of this case through a monetary penalty rather than a direct commission cap as a favorable outcome for Trip.com.

Based on our estimates, assuming the commission rates for the Exclusive (previously 15%–20%) and Gold (previously 12%) tiers are uniformly reduced to 10%, and these tiers collectively account for approximately 30% of Trip.com’s total accommodation GMV, the direct impact on total revenue would be a decline of about 5%. However, Trip.com could partially offset this through alternative monetization channels, such as advertising auctions and subscription services, to minimize the net impact.

Nevertheless, Trip.com's competitive advantage remains intact. China's hotel industry is highly fragmented with chain ratio standing at only 34%. The company commands over 50% of the domestic online hotel booking market, supported by a solid group of high-value business travelers, 24/7 multilingual customer service, and a mature supply chain ecosystem—none of which can be readily replicated by competitors in the near term. Moreover, high-end hotels, keen to preserve their brand positioning, are inclined to avoid price wars, and the resilience of their partnerships with Trip.com is unlikely to weaken meaningfully given the platform’s dominance in the premium hotel segment.

Near-term margin pressure is expected from overseas expansion and commission rate reductions. Continued international expansion, particularly via Trip.com, will broaden its addressable market and support long-term earnings recovery. The counter is trading at 13x FY26E. (Research Department)