Trip.com Group Ltd. Q3 FY2024 earnings call

Key Points

• China Travel Market: Demonstrated resilience with strong domestic and cross-border travel. National Day holiday saw passenger trips and bookings surpass pre-pandemic levels. Young people prioritized travel, driving demand for concerts, festivals, etc.
• Outbound Travel: Strong growth with Japan as top destination, APAC regions leading, long-haul destinations gaining interest. Tier 4/5 city bookings surged during National Day.
• Domestic Travel: Robust demand with even distribution across the country, inland and lesser-known destinations emerging.
• International Business: Global OTAs saw over 60% year-over-year growth in air ticket and hotel bookings, APAC region up over 70%. Trip.com app most downloaded in many APAC markets. Inbound hotel bookings up ~100% year-over-year.
• Senior Travel: Travel bookings from users aged 50+ up 26% year-over-year, 61-65 age group up 58%. Over 70% of transactions by senior users via Old Friends Club, 20% by family members.
• AI and ESG: Integrated AI to enhance travel experience, streamline planning, personalized solutions. Embed ESG principles, received Forbes China award.

In the third quarter of 2024, Trip.com Group's net revenue was RMB15.9 billion, up 16% year-over-year and 24% quarter-over-quarter. Accommodation reservation revenue was RMB6.8 billion, up 22% year-over-year and 32% quarter-over-quarter, with outbound hotel bookings exceeding 2019 levels. Transportation ticketing revenue was RMB5.7 billion, up 5% year-over-year and 16% quarter-over-quarter, with outbound air ticket bookings surpassing 2019 levels. Packaged tour revenue was RMB1.6 billion, up 17% year-over-year and 52% quarter-over-quarter, driven by triple-digit growth in outbound packaged tours. Corporate travel revenue was RMB656 million, up 11% year-over-year and 4% quarter-over-quarter, driven by more companies adopting managed corporate travel services. Accommodation reservation contributed approximately 42.77% to total revenue, transportation ticketing about 35.85%, packaged tour around 10.06%, and corporate travel roughly 4.12%.

Post-National Day

• China travel market shows normal seasonality but momentum strengthened. Outbound flight and hotel bookings maintain strong year-over-year growth, exceeding 120% of 2019 levels.

2025 Outlook

• Anticipate normalized growth for China-related business, emphasis on inbound and outbound cross-border travel. Trip.com brand to maintain growth and expand in Asia and global markets.

• Market Uncertainties: Challenges in accurately predicting future performance, especially for 2025. Competition from international peers could impact market share.
• Economic and Regulatory: Economic fluctuations and regulatory changes in travel markets could affect business growth.

Q: Insight into recent performance post-National Day and 2025 outlook A: China travel market has normal seasonality but momentum strengthened. Outbound flight and hotel bookings exceed 120% of 2019 levels. 2025 outlook: normalized growth for China-related business, focus on inbound/outbound cross-border travel, Trip.com brand to expand in Asia/global markets.

Q: Hotel prices, inventory growth, 2025 outlook A: Hotel prices below last year but gap narrowed. Hotel inventory on platform continues to grow but at normalized rate. 2025: expansion/diversification of travel suppliers to contribute to industry growth.

Q: Outbound flight capacity changes, recovery timeline A: Outbound flight capacity reached ~80% of 2019 level in Q3, exceeded 80% in Q4. Some airlines reduce flights in off-peak, but capacity expected to improve.

Q: Travelers' overspending, stimulus impact A: Users' average spending consistent with last year, ~20% higher than 2019. Impact of recent stimulus measures too early to determine, but healthy economy benefits travel.

Q: Operational/financial performance, domestic hotels, international business A: Trip.com air/hotel reservations up 60%-70% year-over-year, APAC region over 70% of bookings. Hotel-related revenue >40% of total revenue. Mobile app contributes 65%-70% of global orders. Trip.com brand revenue up to 9% of group total.

Q: Asia strategy, market share gain A: Asia is important market. Focus on one-stop platform, excellent customer service, app experience, and volume-driven good products.

Q: AI initiative, financial impact A: AI used to improve user experience, cut coding time, enhance customer service, generate content. Financial impact hard to quantify now, but improves user engagement, conversion rates, operational efficiency.

Q: Capital use, GMV operating lever A: Focus on maximizing synergies among international brands. Year-to-date repurchased ~6 million shares. Marketing expenses ratio may increase in Q4 due to seasonality. Long-term aim to enhance marketing efficiencies via AI and cross-selling.