Chinese Travel Rebound Pushes Trip.com Group’s Revenue to Exceed 2019 Levels

22-11-23

Chinese consumers have exhibited a growing inclination towards prioritizing travel spending over other discretionary expenditures.

Trip.com has reported a solid third quarter and sees no signs of a slowdown any time soon. But not keen to put all its eggs in one basket (China), the online travel company has also sets its sights on global expansion.

In a significant rebound fueled by heightened summer travel demand, China’s Trip.com Group posted a net revenue of RMB 13.7 billion ($1.9 billion) in the third quarter, marking a 99% increase over 2022 and 31% increase from 2019 levels.

During an earnings call on Tuesday, CEO and Director of Trip.com Group, Jane Sun, revealed that while the overall Chinese outbound market only recovered to about 50% of pre-pandemic levels in the third quarter, the group’s outbound hotel and air ticket reservations have already surged to 80% of 2019 levels.

Hotel bookings experienced a 97% year-over-year increase, while air bookings saw a 70% uptick, according to Sun. Domestic hotel reservations showed robust growth, surpassing 90% year-over-year and 70% compared to 2019.

Accommodation reservation revenue for the third quarter was RMB 5.6 billion ($780 million), representing a 92% increase year-over-year, 36% higher than the 2019 level.

Chinese Prioritize Travel Spending

Over the past three quarters, Chinese consumers have exhibited a growing inclination towards prioritizing travel spending over other discretionary expenditures, with a steady rise in the propensity to travel abroad, Sun noted.

Emphasizing the role of tailored services offered by hotels in popular destinations, including Dubai, Paris, and Kuala Lumpur, such as Chinese language support and payment options, Sun said these contribute to enhanced consumer confidence.

Top outbound destinations for Chinese travelers continue to be in the Asia Pacific region, including Hong Kong, Macau, Thailand, Singapore, Korea, and Japan, due to higher flight capacity recovery and streamlined visa application processes. Notably, long-haul destinations like Europe have witnessed the fastest growth rate compared to the previous quarter.

Potential for Global Expansion

Trip.com highlighted the significant growth of its global online travel platforms, representing nearly half of its total overseas business. Sun stated that the group sees substantial potential for further global expansion, with 60% of global bookings coming directly through its global mobile app.

In the Asia Pacific region, 70% of orders are booked through the mobile app, surpassing the global booking rate, Sun added. The company aims to strengthen its brand awareness in the Asia Pacific region, which it considers a “key market and powerhouse of growth.”

Highlighting a substantial surge in air ticket bookings on the global platform, Sun said this has nearly doubled year-over-year, surpassing 80% above 2019 levels.

Highlighting the company’s impressive market share growth in key regions such as Hong Kong, Korea, and Southeast Asia, Sun said, “We are applying the same strategic approach to expand to the rest of the world by leveraging our product and service capability.”

No Slowdown in Spending

Despite uncertainties in the global economy, Trip.com remains optimistic about China’s travel demand.

“So far, we see no signs of consumption slowdown. And the average travel spending on our platform continues to exceed 2019 levels both for new and existing users,” said Xiaofan  Wang, chief financial offer and executive vice president.

Corporate travelers have also exhibited increased spending compared to 2019, Wang noted. The company sees significant opportunities in the business travel segment as more businesses adopt managed corporate travel services to optimize budgets.

“If there is one country in the world that has not taken revenge travel outbound, it is mainland China,” Boon Sian Chai, managing director and vice president of international markets at Trip.com Group had said earlier to Skift.

Looking ahead, Trip.com remains confident in China’s travel demand, citing ongoing expansions in air, rail, and highway networks and investments in travel infrastructure as strong foundations. The company anticipates a shift in leisure travel spending from cyclical to more secular, driven by rising disposable income and a consumption shift towards services and experiences. Increased online penetration further positions Trip.com for continued success in the evolving travel landscape.

Trip.com Group reported a net income of RMB 4.6 billion ($640 million) in the third quarter, compared to RMB 245 million for the same period in 2022. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) for the third quarter was RMB 4.6 billion ($640 million), compared to RMB 1.4 billion for the same period in 2022.

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