Beijing market regulator investigates Fliggy, Tongcheng, Tujia, Meituan over hotel booking algorithms and marketing
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On September 19, the Beijing Municipal Market Regulation Bureau launched investigations into Fliggy, Tongcheng, Tujia, and Meituan for alleged anti-competitive practices in hotel booking. The probe, which began in April, focuses on algorithm-driven marketing, including bidding for traffic rankings, requiring merchants to offer the lowest prices across platforms, and restricting pricing autonomy. The investigation follows a prior antitrust case against Ctrip and Qunar. Industry insiders note that all major online travel agencies (OTAs) use tiered ranking systems that favor exclusive partners, with commissions reaching about 20% of room rates. Liu Xu, a researcher at Tsinghua University, said the action signals regulators are targeting firms of all sizes, not just dominant players. The four companies stated they are cooperating fully. Liu added that the travel industry should shift toward service quality and differentiation to avoid price wars and stimulate broader economic benefits.
Source report
Beijing, September 19 — The Beijing Municipal Market Regulation Bureau has initiated investigations into four major online travel companies for alleged violations of relevant laws and regulations. The companies under investigation are:
- Hangzhou Taomei Aviation Service Co., Ltd. (operating as Fliggy)
- Tongcheng Network Technology Co., Ltd. (operating as Tongcheng)
- Tujia Online Information Technology (Tianjin) Co., Ltd. (operating as Tujia)
- Beijing SanKuai Information Technology Co., Ltd. (operating as Meituan)
According to exclusive information obtained by Economic Observer News, the Beijing Municipal Market Regulation Bureau dispatched teams to these four companies in April this year. The investigation covered multiple business lines, including algorithms, marketing, and legal affairs. The companies were required to submit relevant data, which they did in accordance with regulatory requirements.
Focus of the Investigation
The investigation centers on alleged illegal practices in the hotel accommodation sector, including:
- Paid ranking for traffic display
- Requiring merchants to offer the lowest prices across all platforms
- Depriving merchants of pricing autonomy
Notably, Ctrip and Qunar were not included in this round of investigations, as Ctrip had already been investigated and penalized in a previous antitrust case.
Industry Practices Under Scrutiny
Multiple hotel and homestay operators told reporters that tiered ranking systems are common across online travel agencies (OTAs), not just Ctrip. Key details include:
- Ctrip operates a well-known "Special Card, Gold Card, No Card" system. "Special Card" hotels receive the most traffic but must enter exclusive partnerships with Ctrip, preventing them from listing rooms on competing platforms such as Meituan or Fliggy.
- Meituan uses a merchant comprehensive operational capability evaluation system that directly affects the types and quantities of benefits merchants receive.
- Tongcheng conducts monthly performance ratings for accommodation suppliers.
- Fliggy uses a "diamond level" rating system.
- Tujia has introduced a pyramid classification system for homestays: "Preferred, Selected, Premium." Premium homestays account for only 1% of the platform's listings but achieve occupancy rates 22% higher than ordinary homestays.
Operator Feedback
A homestay owner with properties in Guangxi and Fujian provinces noted that OTA platforms operate similarly: different tiers correspond to different commission benefits, with top-tier resources reserved for exclusive partners. Display rankings are determined by bidding, with higher bidders receiving more prominent placement on consumer-facing pages. After a transaction, commissions are deducted, bringing total costs to approximately 20% of room rates.
While many operators acknowledged that OTAs are more effective at customer acquisition than individual businesses, they also noted the high cost of orders. The hotel accommodation sector has seen intense price competition this year.
Expert Commentary
Liu Xu, a special researcher at the National Strategy Research Institute of Tsinghua University, commented that following the Ctrip case, this investigation signals the State Administration for Market Regulation's commitment to:
- Protecting the competitive environment in the tourism industry
- Safeguarding consumer rights
- Treating operators of all sizes equally, rather than focusing only on larger players
Company Responses
Fliggy, Tongcheng, Tujia, and Meituan all responded to Economic Observer News, stating that they are actively cooperating with the regulatory investigation and will fully implement regulatory requirements to promote high-quality development in the industry.
Outlook
Liu Xu suggested that the tourism industry should shift its focus toward service quality and differentiated competition, rather than continuing to rely on price wars that sacrifice service standards. Such a shift could help boost tourism consumption and drive related investments in areas such as building renovation, home appliance procurement, and cultural creativity, thereby stimulating broader economic growth.
Source
经济观察报Eastern
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Beijing Regulators Probe Fliggy, Tongcheng, Tujia, Meituan Over Unfair Hotel Booking Practices