Meituan, Fliggy, Tongcheng, Tujia Under Investigation by Beijing Market Regulator Over Hotel Algorithm Marketing

By Zheng Yuxin, Economic Observer reporter

On September 19, the Beijing Municipal Administration for Market Regulation launched investigations into suspected illegal activities by four major online travel and accommodation platforms:

• Beijing Sankuai Online Technology Co., Ltd. (Meituan)
• Hangzhou Taomei Aviation Service Co., Ltd. (Fliggy)
• Tongcheng Network Technology Co., Ltd. (Tongcheng)
• Tujia Online Information Technology (Tianjin) Co., Ltd. (Tujia)

Investigation Scope and Timeline

Economic Observer reporters have learned exclusively that the Beijing Municipal Administration for Market Regulation entered these four companies as early as April this year. The investigation covered business lines including:

• Algorithms
• Marketing
• Legal affairs

Detailed investigations were conducted, and all companies submitted relevant data as required.

Focus of the Investigation

The probe centered on alleged illegal practices related to hotel accommodations, including:

• Requiring traffic exposure through bidding rankings
• Mandating merchants to sell at the lowest prices across the entire internet
• Depriving merchants of their pricing autonomy

Ctrip and Qunar Not Included

According to reporters' understanding, Ctrip and Qunar.com were not among the companies investigated this time, as an antitrust investigation and penalty had already been carried out against Ctrip previously.

Industry Practices: Tiered Systems Across Platforms

Multiple hotel and homestay operators told reporters that tiered ranking systems are not unique to Ctrip. Other online travel agencies (OTAs) such as Meituan and Tongcheng also classify hotels and homestays, albeit using different terminology.

Key Platform Tiering Systems

• Ctrip: Uses a widely known "Special Gold, Gold, and No Badge" system. "Special Gold" hotels receive the greatest traffic support but must enter exclusive cooperation with Ctrip, meaning they cannot list rooms on competing platforms like Meituan or Fliggy.
• Meituan: Operates a comprehensive merchant operational capability assessment system that directly affects the types and quantities of benefits merchants receive.
• Tongcheng: Implements monthly performance ratings for its accommodation suppliers.
• Fliggy: Uses a "Diamond Level" rating system.
• Tujia: Has introduced a pyramid-tiered classification system for homestays labeled "Preferred," "Strictly Selected," and "Premium." Premium homestays account for only 1% of the platform's listings but have occupancy rates 22% higher than ordinary homestays.

Operator Perspectives on OTA Strategies

An owner of multiple homestays in regions such as Guangxi and Fujian told reporters that OTA strategies are broadly similar:

• Different tiers correspond to different commission benefits.
• Top-tier resources are allocated to merchants in exclusive partnerships.
• Exposure requires bidding, with higher bidders securing more prominent positions on consumer-facing display pages.
• After transactions, commissions are deducted, bringing total costs to approximately 20% of room fees.

Many operators stated that while their customer acquisition capabilities are inferior to those of OTAs, and OTAs can bring orders, the cost per order remains high. This year, the hotel and accommodation industry has faced intense competition driven by low prices.

Expert Commentary

Liu Xu, a special researcher at Tsinghua University's Institute for National Strategy, told reporters:

"Following the Ctrip case, this investigation demonstrates, on one hand, the State Administration for Market Regulation's emphasis on the competitive environment in the tourism industry and consumer rights protection. On the other hand, it shows that the administration will not 'catch big fish while letting small ones go,' but will instead 'strike both tigers and flies,' treating operators of different scales equally."

Company Responses

Meituan, Fliggy, Tongcheng, and Tujia all responded to Economic Observer reporters, stating that they are:

• Actively cooperating with regulatory investigations
• Fully implementing regulatory requirements
• Promoting high-quality development in the industry

Outlook

Liu Xu noted that the tourism industry should place greater emphasis on service quality and differentiated competition in the future, avoiding continued reliance on price wars achieved by sacrificing service quality. This approach would help:

• Promote tourism consumption
• Drive investment by related companies in areas such as architectural decoration, home appliance procurement, and cultural creativity
• Exert an economic stimulus effect