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In an opinion piece published by the Communist Party-owned Global Times, Chinese OTAs—and Ctrip in particular—are blasted for their anti-consumer practices. In fact, the author goes as far as referring to some of Ctrip’s alleged practices as defrauding Chinese customers. The public denouncement of OTA practices in a state-owned publication follows the decision by the Civil Aviation Administration of China (CAAC) to force Ctrip to stop bundling services with flight tickets. The sudden change in stance on this particular issue could reduce Ctrip’s operating profits by as much as 16 percent. While CAAC’s decision forces Ctrip to change the way it sells flight tickets, it has little jurisdiction over other—perhaps similarly anti-consumer—business practices of Chinese OTAs. The Global Times piece argues that automatically added fees and “service packages” across all types of bookings should be next on the chopping block. Fees and additional services deemed misleading and confusing to avoid are, for example, transportation insurance, hotel vouchers, VIP lounge access, car rentals, and other items that automatically get added to customers’ bookings. While CAAC made the first move against the OTAs, the editorial calls for “holistic” action against such practices, with tourism authorities coming together and amending laws related to how OTAs conduct business. For Chinese OTAs, a crackdown on added services and fees could have devastating effects on profitability. Profit margins on these additional services are notoriously high, earning Ctrip approximately USD 1.5 billion per year according to the opinion piece author. Of course, it remains to be seen how much will come of the increasingly harsh rhetoric against China’s OTAs. Nevertheless, such rhetoric in the national press often tends to be a good indicator of things to come—and bears similarities to the sudden moves that authorities made against HNA Group, Dalian Wanda, and Anbang earlier this year. Read Original Article |
