In some respects, travel companies are prisoners of their geographic strengths and weaknesses in the Covid-19 era. Operational considerations aside, it sure didn't hurt Trip.com Group to be based in China.
Because of China’s earlier-than-the-rest recovery and inroads in striking deals with high-end hotels, Trip.com Group notched a second quarter that was better in most respects than the performance of Booking Holdings and Expedia Group.
For example, Trip.com Group’s revenue fell “only” 64 percent year over year to $448 million, compared with plummets in the quarter of 82 percent and 84 percent at Expedia Group and Booking Holdings, respectively.
While Booking Holdings recorded a profit, namely net income of $122 million in the period, it was bolstered by a one-time gain in stock investments of $835 million, and otherwise would have been a loss. For its part, Trip.com Group recorded a net loss of $67 million in the quarter, while Expedia Group was in the red at $753 million.
Trip.com Group officials cited gains in the high-end hotel sector, with gains in brands turning to the hybrid online-offline Chinese travel agency as their preferred distributor and offering guaranteed room allotments as contributing to the overall performance upswing.
Trip.com’s accommodation revenue in the second quarter fell 63 percent year over year, but that was a 9 percent jump compared with the first quarter, and high-end hotels experienced double-digit growth year over year in the past few weeks, said Executive Chairman Jianzhang Liang.
Average daily rates were weak in the second quarter, but on the rise in recent weeks, Trip.com Chief Financial Officer Xiaofan Wang told analysts in a second quarter earnings call in Shanghai Thursday.
The recovery in China began with short-haul domestic travel early in the quarter, the company said, and broadened to cross-province long haul-travel later in the period. .Air-ticket volumes showed positive year-over year growth in August.
When it comes to marketing, Trip.com Group stated that opening physical stores in lower-tier cities proved beneficial.
In other news, regarding reports that the public company might see to go private, Wang said, “We noticed some recent market rumors about the potential privatization in the market, but the company does not have any plan for privatization at this moment. And as always, we are always open-minded to evaluate all the possibilities in the capital market in order to maximize the best interest of our company and shareholders.”
Looking to the third quarter, Trip.com Group forecasts revenue improvement in the form of a year over year decrease of 47-52 percent. That would be more than a 60 percent improvement when measured against second-quarter performance.
In the current pandemic era, travel companies welcome those sorts of small victories.
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Photo credit: The exterior of a Wangfujing Mandarin Oriental Hotel in Beijing. Trip.com Group said the high-end hotel sector is propelling its financial results. Mandarin Oriental