A sign at the Trip.com Group Ltd. headquarters building in Shanghai, China, Monday, August 28, 2023.
Bloomberg | Bloomberg | Getty Images
Shares in Chinese online travel service provider Trip.com plunged 19.23% in Hong Kong on Thursday, making it the worst-performing company on the Hang Seng Index, after the Chinese government launched an antitrust investigation into the company.
The decline also marked the worst day for Hong Kong stocks since they went public in April 2021. Shares closed 17% lower in New York on Wednesday.
China’s State Administration for Market Regulation announced late Wednesday that it was investigating Trip.com for “alleged abuse of dominant market position and monopolistic practices,” according to CNBC’s Mandarin translation.
Trip.com is Asia’s largest online travel provider by market capitalization and one of the largest in the world. The company has stakes in British airline aggregator Skyscanner, Indian travel company MakeMyTrip and several Chinese travel companies.
Trip.com said in a statement that it is “actively cooperating” with the investigation, adding that business operations are functioning as usual.
The lawsuit could have a long-term impact on the company, said Kai Wang, senior equity analyst at Morningstar.
“Several local tourism associations have complained that Trip.com is committing similar violations as the other two platforms, forcing local sellers to enter into exclusive contracts with the platform,” Wang said. After these agreements are executed, Trip.com will increase the commission from the seller.
Wang said Trip.com could face “heavy fines,” citing past high-profile antitrust cases involving Alibaba and Meituan and past government warnings.
SAMR investigated Chinese tech giant Alibaba in 2021 and imposed a record 18.2 billion yuan ($2.8 billion) fine on the company after it was found guilty of monopolistic conduct.
“This is not the first time Trip.com has come into conflict with the government over consumer violations, as the company was fined in 2017 for forced bundling of value-added services. Also, given its status as a repeat offender, this could further infuriate the government,” he added.
The Trip.com survey comes as Chinese tourist arrivals are expected to surge this year, with travel marketing and technology firm China Trading Desk predicting that about 165 million to 175 million mainland Chinese travelers will cross the border in 2026, up from an estimated 155 million last year.
The Lunar New Year holiday, during which hundreds of millions of people travel to their hometowns, will run from February 15th to February 23rd.
Travel consulting firm Dragon Trail International announced that 501 million Chinese people will travel domestically during the Lunar New Year holiday in 2025, an increase of 5.9% from the previous year. Tourism expenditure during the same period reached 6.77 billion yuan, an increase of 7%.
