Trip.com Group reported strong Q2 2024 results, with net revenue growing 14% year-over-year to RMB12.8 billion, driven by robust recovery in the travel market and significant outbound travel growth.
Summary
Trip.com Group demonstrated resilient performance in Q2 2024, with outbound travel leading the growth. CEO Jane Sun highlighted the strength of the travel market:
“We are pleased to see that travel consumption in China remains resilient and the travel market continues to show robust growth following a strong start in 2024.”
Main Themes
- Guidance: Expecting normal seasonal patterns in H2 2024, with more favorable year-over-year comparisons after the National Day holiday
- Competition: Increased competition in Asian markets, but ample growth opportunities for all players
- Economy: Travel demand remains strong despite recent deceleration in China’s consumption growth
- AI Initiatives: Introduction of AI-powered tools like Trip.Best, TripTrends, and Trip.Genie to enhance user experience
- Market Opportunity: Significant growth in inbound travel to China, with bookings surging nearly 200% in H1 2024
Insights
- Outbound hotel and air ticket bookings recovered to 100% of 2019 levels, outpacing the industry average by 20-30%
- International flight capacity restored to about 75% of pre-pandemic levels
- Inbound travel now accounts for over 25% of Trip.com’s revenue, up from teens level pre-COVID
- Mobile transactions account for 65% of Trip.com’s global platform, rising to 75% in Asia
Market Opportunity
Trip.com Group is capitalizing on the growing inbound travel market to China, valued at RMB1 trillion. The company is well-positioned to capture this opportunity through its comprehensive travel information and competitive products offered via a convenient mobile app. Inbound hotel and air reservations on Trip.com grew by approximately 200% year-over-year.
Market Commentary
The travel market in China and globally shows strong recovery and growth potential. Outbound travel from China is driving market growth, with international flight capacity reaching 75% of pre-pandemic levels. APAC destinations remain popular, while long-haul travel to Europe is gaining traction, fueled by events like the Euro Cup and Olympics.
Customer Behaviors
Travel preferences are evolving, particularly among different age groups:
- The silver generation (50+) is shifting from group tours to customized experiences, seeking higher quality and unique offerings
- Younger travelers show increasing interest in entertainment-plus-travel products, with GMV for these products growing over 70% year-over-year
- Travelers are exploring lesser-known Tier 2 and 3 cities in China, with some destinations seeing 2-3x growth in visitor numbers
Economy Insights
Despite concerns about China’s consumption growth, Trip.com Group reports consistent travel spending. Jane Sun noted:
“What we have seen is that, the GMV per traveler on our platform remain quite consistent from last year. So the buying power still hold quite consistent with last year.”
Industry Insights
The travel industry is experiencing a rapid shift from offline to online bookings, particularly in the APAC region. This trend benefits online travel platforms like Trip.com Group. The company’s focus on mobile-first strategy and one-stop travel services positions it well to capitalize on this shift.
Key Metrics
Financial Metrics:
- Net revenue: RMB12.8 billion (+14% YoY, +7% QoQ)
- Adjusted EBITDA: RMB4.4 billion (35% margin)
- Non-GAAP diluted earnings per ADS: $1
KPIs:
- Outbound hotel and air ticket bookings: 100% recovery to 2019 levels
- International OTA platform revenue growth: ~70% YoY
- APAC region revenue growth: 76% YoY
- Mobile contribution to orders: 65-70% globally, over 75% in APAC
Competitive Differentiators
- Comprehensive one-stop travel services through mobile app
- Strong position in the growing APAC market
- AI-powered tools for personalized recommendations and trip planning
- Robust inbound travel growth to China
- Diversified product offerings catering to different age groups and preferences
Key Risks
- Potential economic slowdown affecting travel demand
- Increased competition in Asian markets
- Pressure on domestic hotel ADR and average airfares
- Dependence on recovery of international travel capacity
- Regulatory changes affecting visa policies and travel restrictions
Analyst Q&A Focus Areas
- Impact of China’s consumption deceleration on travel spending
- Summer travel booking trends and outlook for H2 2024
- Domestic ADR trends and factors contributing to softness
- Outbound travel recovery pace and pricing trends
- Competitive landscape in Asian markets
- Inbound travel opportunities and contribution to revenue
- AI initiatives and their impact on user experience and business performance
Trip.com Group Summary:
Trip.com Group demonstrates strong growth potential in both domestic and international markets, driven by robust travel demand and strategic initiatives. The company’s focus on AI innovation, mobile-first strategy, and diversified product offerings positions it well for future growth. Key areas to watch include the recovery of international travel capacity, competitive dynamics in Asian markets, and the continued evolution of customer preferences in the post-pandemic era.
