Trip.com Group CEO Downplays Market Share Against China Antitrust Backdrop

Online Travel This Week

Given China’s crackdown on internet platforms in February, Trip.com Group officials did something they rarely do — trot out specific market share numbers in a recent earnings call.

After one analyst asked Trip.com CEO Jie Sun last week whether China’s largest travel seller would be able to avoid penalties for price discrimination or monopoly power, Sun said Trip.com supports the government’s efforts to create a “healthy” market environment.

“Our market share is quite small still,” Sun said, adding that the company’s domestic market share in 2019 was 13 percent. She was referring to the company’s market share of the total Chinese travel market, including offline tour operators, hotels and airlines.

Co-founder and Executive Chairman Jianzhang Liang said Trip.com’s domestic market share is “mid-teens,” and that globally it “is still in the low single digits.”

Both officials emphasized Trip.com Group has plenty of room to grow, and didn’t mention the company’s dominance of China’s online travel market. Barron’s estimated it is around 60 percent. Trip.com, it should be noted, is very much of a hybrid business with a chunk of its sales still taking place offline.

Trip.com Group officials’ emphasis of how small their overall market share in China might be has rough parallels to Booking Holdings’ CEO Glenn Fogel pointing out to European regulators in March that Booking.com commanded merely 13 percent of European hotel revenue in 2019 when considering the total online and offline market. That percentage would be much higher, of course, when focusing on the online travel market in Europe instead.

The Chinese government issued its antimonopoly guidelines February 7 — and Trip.com Group was among a slew of internet platforms to pledge to “not abuse market dominance” and “not implement unfair price behaviour,” according to Yahoo News.

But in the English-language press, at least, officials haven’t shown any candor in addressing how the crackdown might impact the Trip.com business. Of course, there are severe limits to what they can say about Chinese government policy.

Still, during a Reuters interview May 12, Sun totally avoided a question about whether Trip.com forces hotel partners into exclusive deals, a charge that’s commonly heard, and one that might have drawn the attention of Chinese competition authorities.

Trip.com was more forthcoming, however, about the platform crackdown in its annual report to the U.S. Securities and Exchange Commission, which was issued March 15.

Although the company views this scenario as unlikely, Trip.com Group stated that if the government decides the company violated antimonopoly laws for failing to file a notice of concentration and a request to review its 2015 acquisition of then-rival Qunar, then Trip.com could be forced to unwind the deal and would be subject to stiff fines.

See, it’s not just in the United States as it relates to Google, Facebook and Amazon where there is talk about breaking up Big Tech.

The issue with Qunar arises because of the deal’s variable interest entity structure, where one company controls another because of contractual relationships rather than outright voting control.

Regardless of whether a reversal of the Trip.com-Qunar tie-up would ever occur, it’s clear that Trip.com Group and other Chinese online platforms will face increased scrutiny from regulators in future partnerships, as well as mergers and acquisitions.

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