Beijing ends Trip.com's hotel exclusivity as international revenue grows more than 50%

China's largest online travel company put a RMB5.2 billion antitrust bill through its second-quarter income statement on Tuesday, converting what would have been another profitable quarter into a RMB2.4 billion net loss, while the one book of business Beijing did not fine, the international platform, grew revenue more than 50%.

The unaudited results, released at 6 p.m. Eastern time after the U.S. close, book the State Administration for Market Regulation's July 25 decision into the quarter that ended June 30. Net revenue was RMB15.7 billion (US$2.3 billion), up 6% from a year earlier and down 3% from the first quarter, inside the roughly 3% to 8% range the company set in June. Strip out the penalty, and Trip.com said it would have earned RMB2.7 billion. Nasdaq-listed TCOM closed at $39.25 before the print, up 0.44%.

The stock is down 45% year to date through Tuesday's close; from the July 24 close, the session before SAMR's decision, through Tuesday it is down 10%.

After-hours, as of 8 p.m. Eastern, it was quoted about 0.8% above the regular close. That is a first print, not a session. Management's call was set for 8 p.m. Eastern Tuesday, 8 a.m. Hong Kong Wednesday, the first cash market that can price the accounts. The written release did not include a third-quarter revenue range.

SAMR is now a contra-revenue item inside the accommodation line, not only a fine in general and administrative expense. Hotel growth decelerated, and exclusive cooperation agreements and "lowest price across the internet" rules are prohibited going forward. The only book still compounding at more than 50% is the international platform, which the company still will not break out by customer.

The July SAMR case is now an earnings line

On July 25, SAMR found that Trip.com had abused a dominant position in China's online hotel-booking market. The regulator said the company used its traffic-allocation mechanism, platform rules and technical tools to require certain hotels to enter exclusive cooperation agreements and to offer the "lowest price across the internet," limiting hotels' ability to operate on multiple platforms and set their own prices. SAMR's English-language account called it China's first antitrust case in online travel.

The decision ordered Trip.com to forfeit RMB1.658 billion in illegal gains and pay a RMB3.521 billion fine, equal to 7.5% of 2025 sales from its China operations, for a combined RMB5.179 billion. SAMR also ordered a RMB122 million refund of hotel-order security deposits that it said had been forcibly deducted from hotel operators, plus comprehensive rectification and public disclosure of corrective actions. Trip.com's July 27 Form 6-K said the company "sincerely accepts" the decision. Neither that filing nor Tuesday's release stated that the cash had been paid or that an appeal had been filed.

The charge is now in general and administrative expense, which the company said jumped 477% to RMB6.3 billion, or 40% of net revenue. Without the penalty, it said G&A would have increased 5% from a year earlier to RMB1.2 billion, and would have been 7% of revenue. The same RMB5.2 billion (US$763 million) is added back in adjusted EBITDA, which was RMB4.6 billion, a 29% margin, against RMB4.9 billion and 33% a year earlier. Non-GAAP diluted earnings per ADS were RMB7.27, versus RMB7.20 in the year-earlier quarter. GAAP diluted loss per ADS was RMB3.89.

Reported earnings absorbed a regulatory bill equal to about a third of quarterly revenue. On the company's own adjusted measure, the travel franchise still produced earnings close to last year's.

China hotels slowed before the ban; the international platform did not

Accommodation reservation revenue, the line SAMR targeted, was RMB6.6 billion, up 6% year over year and 1% from the first quarter. Trip.com said more hotel bookings drove the increase and that it was "partially offset by a contra-revenue imposed by" SAMR, so the case clipped the hotel line itself, not only G&A.

That hotel line had grown 17% in the first quarter. Two quarters, 17% then 6%: that deceleration is the operating fact underneath the fine.

The clip does not explain it. In July the company said it would book the RMB122 million deposit refund as contra-revenue in the second quarter; Tuesday's release confirmed a SAMR-imposed contra-revenue inside accommodation but did not restate the figure. RMB122 million is about 2% of the RMB6.6 billion hotel line. The second quarter also ended June 30, more than three weeks before the July 25 decision, so the slowdown is not the exclusivity ban showing up in bookings. The ban's operating effect, if it arrives, starts in the third quarter.

On the July 27 call after the ruling, chief executive Jane Sun said the company would end distribution arrangements that had given it greater sway over hotel pricing and inventory, and warned the transition could bring some fluctuations in financial performance. Morgan Stanley's Yang Liu said the outcome largely matched expectations. Goldman Sachs analysts including Simon Cheung noted that the 7.5% fine on 2025 China sales exceeded the 4% and 3% levied on Alibaba and Meituan in 2021.

Transportation ticketing revenue, the domestic air-and-train engine, was RMB5.4 billion, down 1% year over year and 12% from the first quarter. Packaged-tour revenue rose 8% to RMB1.2 billion. Corporate travel rose 11% to RMB771 million.

Revenue on the international platform increased by more than 50% year over year. Inbound travel revenue, the company said, increased at a high double-digit rate. In the first quarter it had reported inbound bookings up approximately 90%. This quarter it switched the metric from bookings to revenue and dropped the number. It still did not say how much of the 50% platform growth came from Chinese travelers going abroad versus users outside China.

For the first six months, net income attributable to shareholders was RMB41 million, down from RMB9.1 billion a year earlier. As of June 30, cash, cash equivalents, restricted cash, short-term investments and held-to-maturity products totaled RMB100.5 billion.

The China internet funds hold the size

The concentrated China-internet funds, not the broad country trackers, are where a Trip.com print shows up in dollars. KraneShares' CSI China Internet ETF CKWEB, graded C by etf.net against other China-country funds, holds the Hong Kong line as a top-ten position. iShares' China large-cap fund BFXI, a B in that group, and its broader MSCI China fund AMCHI, an A, hold it at much smaller weights. Davis's active worldwide fund BDWLD, a B among global active value funds, is the high-conviction exception among U.S. listed products: Trip.com is its second-largest holding.

A holder of CKWEB has a single-name China travel line more than three times the weight of the broad MSCI China tracker. Wednesday's Hong Kong session is the first cash market to price that concentration against a hotel franchise that can no longer require exclusivity.