Geographic diversification is paying off for China's Trip.com Group. Europe and the U.S. is still a fraction of its overall business, but they are now significant contributors.
As China’s pandemic resurgence and the government’s zero-Covid policies adversely impacted the domestic travel market in the second quarter, Shanghai-based Trip.com Group benefitted from the performance of its Skyscanner and Trip.com international brands in Europe and the U.S.
Chief financial officer Xiaofan Wang told analysts during the company’s earnings discussion earlier this week that revenue from Trip.com Group’s “key international brands” rose more than 200 percent in the second quarter, compared with the same period a year earlier, and “contributed 20 percent to 30 percent” of the Group’s total revenue.
That would mean Skyscanner, a comparison shopping engine for flights and hotels, and online travel agency brand Trip.com, which Trip.com Group acquired in 2016 and 2017, respectively, generated $115 million to $172 million in revenue in the quarter that ended June 30.
“We are also glad to see the adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of some international brands has turned positive supported by our fast business recovery and improved operational efficiency,” Wang said.
She didn’t specify which of the parent company’s international brands were profitable, although a year earlier Wang said Skyscanner had been losing money. Wang added this week that the company’s international brands were becoming “one of the key contributibutors” to bottom line profits.
During the second quarter, Trip.com Group notched $6 million in net income compared with a $95 million net loss a year earlier.
“While sporadic resurgence of Covid continues to disrupt the recovery of domestic travel in China, the effect on travelers’ sentiment has been fading and the market has shown its resilience,” said co-founder and Executive Chairman Jianzhang Liang. “Following the easing of the restrictions, we have seen overall, on domestic channel, hotel booking on our platform quickly rebounded and surpassed the 2019 level at the end of June.”
Trip.com Group, formerly known as Ctrip, which continues to be the name of its China domestic brand, spent just around 21 percent of total revenue, or $123 million, on sales and marketing in the second quarter. That compares with 51.3 percent of revenue allocated for sales and marketing at Booking Holdings, which generated $857 million in profits during the June quarter.
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Photo credit: Paris Duty Free in the past partnered with Talents Travel to create a WeChat Mini Program to target Chinese shoppers.