Acquisitions can have unintended consequences. Trip.com Group likely didn't view the acquisitions of Skyscanner and Gogobot as hedges against the collapse of China travel.
Trip.com Group’s 2016 acquisition of Skyscanner and purchase of Trip.com, formerly called Gogobot, the following year appear to be paying off abroad because Covid hit China hard, particularly in big cities, in March, April and May.
In releasing its first quarter results Monday, Shanghai-based Trip.com Group showed how its global platforms outside China, namely Scotland-based Skyscanner and Trip.com, were bright spot given that China domestic travel still facing challenges.
Trip.com Group’s main domestic brand is Ctrip, and it uses its Trip.com brand, inherited with the 2017 acquisition of Trip.com/Gogobot, internationally.
Both hotel and flight bookings on Trip.com Group’s outside-of-China platforms exceeded pre-pandemic levels in the first quarter, which ended March 31, the company said.
The company’s revenue from transportation ticketing, primarily boosted by flight bookings in Europe and Asia-Pacific, where Covid restrictions have eased, grew 10 percent year-over-year to $262 million in the first quarter, the company said.
“We have been strengthening trends of business performance across our global platforms, with air bookings achieving triple-digit year-over-year growth and hotel bookings significantly improved, especially the trans-Atlantic and Asia markets,” Jianzhang Liang, co-founder and executive chairman of Trip.com Group, told financial analysts.
While touting a “brighter outlook for the long term,” Liang acknowledged that short-term scenarios don’t appear to be optimistic.
With the Chinese government imposing a bevy of travel restrictions in pursuit of its zero-Covid policy, a staycation trend took hold during the first quarter within China.
“Staycation travel continued to serve as a major contributor to the recovery of the Chinese domestic market, with local hotel bookings increased by over 20 percent year-over-year,” Trip.com Group stated in its earnings announcement.
There were conflicting signals during the analyst call about Trip.com Group’s stance about the government’s Covid policies.
While Liang referenced “sound Covid risk reduction measures” within China, CEO Jane Jie Sun cited the “authority making efforts to reduce the potential disruption from Omicron cases such as relaxing unnecessary quarantine and lockdown measures.”
Chief Financial Officer Xiaofan Wang also spoke about “unnecessary” government actions.
“We have recently seen the authority making efforts to reduce the potential disruption from Omicron cases such as relaxing unnecessary quarantine and lockdown measures and increasing the granularity of the scope of cross-province travel ban from province level to the country level,” she said.
The government banned Liang from social media for a period because he spoke out on social platforms against the official zero-Covid approach, where China has lockdown whole cities because of a handful of Covid cases.
Trip.com Group notched a net loss of $155 million in the first quarter compared with a profit of roughly $270 million a year earlier.
First quarter revenue of $649 million was roughly equal to the year-earlier period, and it was a 12 percent drop compared with the fourth quarter of 2021, the company said.
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Photo credit: China Covid-testing in Beijing April 24, 2022. Wikimedia Commons / Wikimedia Commons