Core Points - Zhengzhou Market Supervision Administration conducted an administrative interview with Ctrip Travel Network, requiring comprehensive rectification and standardized operations to maintain fair competition and protect the legitimate rights of platform operators [1][5] - The platform was found to have violated the Electronic Commerce Law and the Interim Provisions on the Prohibition of Unfair Competition by using service agreements, transaction rules, and technical means to impose unreasonable restrictions on transactions and pricing of platform operators [1][5] - A corrective notice was issued on September 4, 2025, mandating Ctrip to complete contract revisions and pricing tool optimizations within a specified timeframe [1][5] Regulatory Emphasis - Fair competition is emphasized as the core of the market economy, with internet platform companies urged to enhance legal awareness and actively cooperate with regulatory authorities [2] - Companies are required to establish a regular legal education mechanism to improve compliance capabilities among management and operational staff [2] - The importance of respecting merchants' autonomy and correcting unreasonable restrictions, such as forced service activation and inability to exit, is highlighted [2] Follow-up Actions - Zhengzhou Market Supervision Administration will continue to monitor Ctrip's rectification progress and conduct inspections to ensure compliance with responsibilities [2]

Core Viewpoint - Ctrip (9961.HK) is facing regulatory scrutiny from the Zhengzhou Market Supervision Administration due to allegations of unreasonable price manipulation through its "Price Adjustment Assistant" tool, which has been reported to force hotels to comply with price changes without consent [1][2][3] Regulatory Actions - The Zhengzhou Market Supervision Administration conducted an administrative interview with Ctrip on September 17, following a report from multiple hotels regarding forced price adjustments [1] - Ctrip has been ordered to respect merchants' autonomy and rectify issues related to forced activation of the "Price Adjustment Assistant" tool, which modifies hotel prices without consent [1][3] Business Operations - The "Price Adjustment Assistant" is an automated pricing tool that lowers hotel prices on Ctrip if they are higher than competitors, which has raised concerns about its unilateral nature [2][3] - Ctrip's response to the allegations has been to claim that the tool is intended to help hotels adapt to local market prices and enhance competitiveness [3] Financial Performance - Ctrip has shown strong financial performance, with projected revenues of 445 billion yuan and 533 billion yuan for 2023 and 2024, respectively, and net profits of 99 billion yuan and 172 billion yuan [4] - In Q2 2025, Ctrip's revenue reached 148.43 billion yuan, a year-on-year increase of 16%, with net profit rising by 26% to 48.46 billion yuan [4] Market Position - Ctrip holds a dominant position in the domestic OTA market, with a GMV market share of 56% in 2024, providing significant exposure and traffic for hotels [6] - The company has been criticized for squeezing hotel profit margins while maintaining a low-price image to attract users [3][6] Industry Dynamics - The hotel industry is experiencing challenges, with a 11.8% year-on-year increase in total hotel supply, while demand is undergoing structural adjustments, leading to intensified competition [7] - Major hotel chains like Jinjiang Hotels and others have reported declines in revenue and net profit, indicating a tough operating environment [7][8] Competitive Landscape - Competitors like JD.com are seizing the opportunity to expand their presence in the hotel industry by offering lower commission rates and alternative supply chain services [9] - Ctrip has initiated changes in response to industry backlash, including a "de-involution" campaign aimed at restructuring its review system and optimizing recommendation logic [10]

Core Viewpoint - The company has exceeded revenue expectations in Q2 2025, benefiting from a favorable competitive landscape and optimized marketing efficiency, leading to a continuous increase in profit margins [1][2]. Financial Performance - In Q2 2025, the company achieved revenue of 14.864 billion RMB, representing a 16.23% year-on-year increase, and a net profit attributable to shareholders of 4.864 billion RMB, up 26.4% [1]. - Adjusted net profit (excluding non-recurring items) was 5.011 billion RMB, reflecting a slight increase of 0.5% [1]. - Adjusted EBITDA reached 4.880 billion RMB, marking a 10% increase, while adjusted operating profit was 4.668 billion RMB, up 10.4% [1]. Revenue Breakdown - Revenue from accommodation bookings grew by 21.2%, while transportation ticketing increased by 10.8%, group tours by 5.3%, business travel by 9.3%, and other revenues surged by 31% [2]. - Domestic hotel performance outpaced transportation, with low double-digit growth, while outbound business remained stable, indicating an increase in market share [2]. Profitability and Market Position - The company's profitability is steadily improving, primarily driven by sales expenses management, with a stable sales expense ratio of 22.4% compared to 22.2% in the previous year [2]. - The overseas business continues to show strong growth, with revenue growth exceeding 50%, and the company's share in regions like Hong Kong and Singapore is increasing [2]. - The company has maintained a consistent increase in profit margins over several quarters, reflecting a stable competitive landscape and high certainty in profitability [2].

Group 1 - The Zhengzhou Market Supervision Administration conducted an administrative interview with Ctrip Travel Network on September 17, 2023, due to violations of the E-commerce Law and regulations against unfair competition [1] - Ctrip was found to impose unreasonable restrictions on transaction and pricing of platform operators through service agreements, trading rules, and technical means [1] - A corrective notice was issued to Ctrip on September 4, 2025, requiring the company to complete necessary adjustments and establish a long-term compliance mechanism [1] Group 2 - The meeting emphasized that fair competition is the core of a market economy, urging internet platform companies to enhance legal awareness and actively cooperate with regulatory authorities [2] - Companies are required to correct unreasonable restrictions, respect merchants' autonomy, and address issues such as "forced activation" and inability to exit [2] - The need to protect the legitimate rights of platform operators and prohibit the use of technical means to manipulate prices or restrict transactions was highlighted [2]

Core Viewpoint - Ctrip has been summoned for an administrative interview by the Zhengzhou Market Supervision Administration due to complaints from multiple hotels regarding the platform's interference in hotel pricing through a tool called "Price Adjustment Assistant" [1][3] Group 1: Issues Raised - Multiple hotels reported that Ctrip unilaterally modified their room prices on the platform without consent, using the "Price Adjustment Assistant" tool [2] - Hotel managers indicated that Ctrip monitors pricing on other platforms and automatically lowers prices on Ctrip if discrepancies are found, often without notifying the hotels [2] - Instances were reported where Ctrip's adjustments led to significant price reductions, affecting hotel revenues, especially during peak periods [2] Group 2: Regulatory Actions - Ctrip's actions were found to violate the Electronic Commerce Law of the People's Republic of China and related regulations, prompting the Zhengzhou Market Supervision Administration to issue a correction notice [3] - The administrative interview emphasized the need for Ctrip to revise contract terms, optimize pricing tools, and establish a long-term compliance mechanism to prevent similar issues in the future [3] - Regulatory authorities outlined three key requirements for Ctrip: enhancing legal awareness, correcting unreasonable restrictions, and ensuring the protection of merchants' pricing autonomy [3]

Summary of Conference Call Notes Industry Overview - The conference call primarily discusses the **tourism industry** in China, focusing on domestic and outbound travel trends during the National Day holiday period [1][3][4]. Key Points and Arguments 1. **Optimistic Market Performance**: The tourism market during the National Day holiday is expected to perform well, continuing the positive trend from the summer, with capacity recovery reaching **94%** [1][3]. 2. **User Behavior Changes**: There is a significant shift in user behavior, with **65%** of travelers opting for deep travel and long-distance trips, indicating a diversification in travel methods [1][5]. 3. **Stable Pricing**: Domestic flight and hotel prices remained relatively stable during the holiday, with a slight year-on-year decline. Hotel supply increased by **15%** compared to previous quarters [1][6]. 4. **Peak Travel Trends**: The holiday's extension led to a more dispersed travel peak, with **30% to 35%** of users choosing to travel during off-peak times, extending the travel period from **September 29 to October 12** [4]. 5. **Increased Depth of Travel**: Outbound travel trends show a preference for deep exploration and self-driving tours, reflecting evolving user demands and preferences [1][7]. 6. **Hotel Market Growth**: The domestic hotel market is projected to grow by approximately **15%**, with varying performance across different destinations, particularly in regions known for autumn scenery [12]. 7. **Outbound Travel Popularity**: Popular outbound travel destinations include Japan, South Korea, Thailand, and Malaysia, with a notable increase in family and group travel [13][14]. 8. **Rising Customer Spending**: The average spending per outbound tourist is on the rise, driven by longer stays and increased group travel, with family trips accounting for about **50%** of the total [15]. 9. **OTA Market Competition**: The OTA market is experiencing competitive pressures from both established players and new entrants, with companies like JD.com and Meituan actively entering the travel sector [16][20]. 10. **Marketing Strategies**: The OTA industry plans to increase marketing budgets in Q4 to address competitive pressures and seasonal demand fluctuations, particularly in overseas markets [21]. Additional Important Insights - **Temporary Travel Plans**: An estimated **25% to 30%** of travelers are expected to make last-minute travel plans during the holiday, indicating a growing demand for flexible travel arrangements [10]. - **Hotel Pricing Trends**: The average daily room rate (ADR) has seen a narrowing decline, reflecting improved market confidence, with a current drop of about **3%** compared to earlier in the year [9]. - **Challenges for New Entrants**: JD.com faces challenges in the food delivery and hotel markets, struggling to achieve significant results despite initial efforts [17][19]. - **Marketing Adjustments**: The OTA industry is adjusting its marketing strategies to enhance competitiveness, particularly in response to aggressive moves by rivals like Fliggy [20][21].

Core Viewpoint - The Zhengzhou Market Supervision Administration has conducted an administrative interview with Ctrip Travel Network due to violations of e-commerce laws, specifically regarding unreasonable restrictions on platform operators' transactions and pricing [3][4]. Regulatory Actions - Ctrip was found to have violated Article 35 of the E-commerce Law of the People's Republic of China and Article 24 of the Interim Provisions on the Prohibition of Unfair Competition in the Network by using service agreements and technical means to impose unreasonable restrictions on transaction prices [3][4]. - The Zhengzhou Market Supervision Administration issued a "Notice of Correction" on September 4, 2025, requiring Ctrip to rectify its practices and ensure compliance with market regulations [3][4]. Compliance Requirements - Ctrip is required to revise contract terms and optimize pricing tools within a specified timeframe, establish a long-term compliance mechanism, and enhance internal supervision to prevent similar issues in the future [4]. - The administration emphasized the importance of fair competition and urged internet platform companies to strengthen their legal awareness and actively cooperate with regulatory authorities [4]. Complaints and Investigations - Multiple hotels have complained about Ctrip's "Price Adjustment Assistant" feature, which was allegedly activated without permission, automatically scanning competitor prices and forcing price reductions [5]. - The Zhengzhou Market Supervision Administration initiated an investigation into the "Price Adjustment Assistant" in July, following complaints from hotel operators regarding forced participation in discount activities [5]. Financial Performance - In Q2 2025, Ctrip reported revenue of 14.8 billion RMB, a year-on-year increase of 16%, and a net profit of 4.8 billion RMB, up 26% from the previous year [6]. - Ctrip's financial services, including consumer loans and supply chain finance, have shown significant growth, with Ctrip Small Loan's net profit increasing by 132.58% in the first half of 2025, reaching 4.429 million RMB [6].

Core Insights - The upcoming long holiday combining the Mid-Autumn Festival and National Day is expected to significantly boost the tourism market, with early travel planning encouraged by authorities [1][4]. Group 1: Travel Demand Trends - The "please take 3 days off for 12 days" strategy has created favorable conditions for long trips, leading to a diverse range of travel demands [2]. - Orders for inter-provincial border cities have surged, with a 58% year-on-year increase in bookings, particularly in cities like Zhaotong (95% increase) and Hezhou (88% increase) [2]. - Multi-destination travel products, such as long-distance tours and car rentals, have seen booking increases of 53% and 93% respectively [2]. Group 2: Emotional and Cultural Factors - Emotional value is becoming a key factor influencing travel decisions, with hotel searches in remote destinations like Xinjiang and Tibet rising by 60% [3]. - The desire for nature and relaxation is driving interest in scenic areas, with locations like Chongqing's Wushan gaining popularity for autumn foliage [3]. Group 3: International Travel Dynamics - The long holiday has led to a broadening of outbound travel, with bookings covering over 140 countries, and significant increases in interest for destinations like Australia and Russia [4]. - The introduction of visa-free policies, particularly for South Korea, has spurred a rise in flight searches, reshaping the outbound travel landscape [4]. Group 4: Local Tourism Growth - The long holiday also allows for deeper local cultural experiences, with events like the Shanghai Tourism Festival offering discounted tickets to various attractions [6]. - Family-oriented activities, including visits to theme parks and cultural sites, have seen ticket bookings increase by over 40% [6]. - The trend towards emotional and diverse travel experiences reflects a shift in consumer preferences, supported by policy changes and service innovations [6].

Group 1: Travel Demand and Trends - The upcoming National Day and Mid-Autumn Festival holiday has led to a surge in travel bookings, with outbound travel bookings increasing by over 30% year-on-year and inbound travel bookings doubling [1] - The unique holiday structure this year has stimulated diverse travel demands, with many consumers opting for "leave stacking" to extend their holidays [2][3] - Data shows that the order volume for interprovincial travel during the holiday has increased by 45% compared to last year, with significant interest in long-distance destinations like Xinjiang and Tibet [4] Group 2: Ticket Sales and Travel Patterns - Train tickets for popular routes sold out quickly upon release, indicating high demand for travel during the holiday period [2][3] - The peak travel period is expected to start on September 29, with October 1 anticipated as the highest traffic day before the holiday [3] - Over 30% of workers are choosing to travel during off-peak times, with significant savings on travel costs [5] Group 3: Emerging Travel Preferences - There is a noticeable shift from "check-in tourism" to "immersive vacations," with travelers seeking unique experiences that combine culture and relaxation [9] - Popular activities include cultural workshops and wellness retreats, reflecting a growing interest in meaningful travel experiences [9] - The demand for multi-destination travel is rising, with an increase in bookings for transportation services and long-distance travel packages [4] Group 4: International Travel Insights - Short-haul destinations like Hong Kong, Japan, and Southeast Asia remain popular, while countries along the Belt and Road Initiative are emerging as new hotspots for self-driving trips [5] - The rental car orders for these emerging destinations have seen significant growth, with Uzbekistan, Georgia, and Kazakhstan experiencing increases of 300%, 200%, and 1000% respectively [5][7] Group 5: Family and Child-Friendly Travel - Family-oriented hotels, particularly in South Korea, are gaining popularity, with certain hotels fully booked during the holiday period [7] - The trend of family travel is reflected in the increased search volume for family-friendly attractions and accommodations [6]

Core Viewpoint - The online travel industry is facing scrutiny as Ctrip, a major player, has been summoned for administrative talks by the Zhengzhou Market Supervision Administration due to allegations of unreasonable restrictions on pricing and transactions for platform operators [1][3][5]. Group 1: Regulatory Actions - The Zhengzhou Market Supervision Administration's announcement on September 17 highlights concerns over Ctrip's practices, including the use of a "price adjustment assistant" that allegedly forces hotels to comply with price changes without notification [3][4]. - This regulatory action follows a previous meeting in August where multiple travel platforms, including Ctrip, were warned about practices such as "forced choices" and price manipulation [3][4]. - Ctrip has been instructed to revise contracts and optimize tools to establish a long-term compliance mechanism [5]. Group 2: Ctrip's Business Performance - Ctrip has shown significant recovery from the pandemic, reporting revenues of 28.7 billion and a net profit of nearly 9.2 billion in the first half of 2025, translating to over 50 million in daily earnings [6][8]. - The company's revenue is primarily driven by accommodation bookings and transportation ticketing, which together account for over 70% of its total revenue [8][10]. - Despite Ctrip's financial success, many of its partners, including major airlines, are experiencing substantial losses, indicating a disparity in the industry's financial health [8][10]. Group 3: Industry Dynamics - The hotel industry is facing significant challenges, with approximately 30,000 hotels closing in the past two years, and average room prices declining by 6% year-on-year in 2024 [10]. - Ctrip's market share in the hotel and travel market is projected to reach 56% in 2024, benefiting from a high commission model that ranges from 10% to over 30% for some hotels [10]. - The ongoing regulatory scrutiny and the pushback from airlines suggest a growing tension between online travel agencies and traditional service providers, as airlines seek to reclaim pricing power and user data [11][13].