Trip.com Cautious of Travel Rebound Even After China Loosens Covid Rules

Even though China’s recent relaxation of Covid measures is widely seen as a step forward for travel, Trip.com is still cautious in the very near term as winter is usually a slack season for both business and leisure travel.

“It also might take some time for people to get through the first wave of infections before travel demand could fully release and rebound,” said Xiaofan  Wang, chief financial officer and executive vice president of the Chinese online travel giant while anticipating a nice rebound in growth in the domestic travel segment next year.

Following the change in travel policies announced by China in November, the search volume for inbound and outbound travel at Trip.com did however skyrocket in the subsequent days.

“As soon as the government announces some relaxation of policy, our site witnesses a surge in search for both domestic travel as well as international travel,” said Jane Sun, CEO and director of Trip.com on an earnings call this week.

The announcement also led to cross-border air ticket reservations in Mainland China reaching the highest level since 2020 with inbound and outbound flight reservations recovering to about 20 percent of the pre-Covid level, Sun said.

At a time when layoffs in technology companies have been making headlines, Sun said that they didn’t expect to lower the head count at Trip.com at any point in time.

“Going forward, we expect our total staff strength to remain generally stable, especially for the China domestic business, while the cost per head count may change according to the performance of the company.”

Primarily due to the strong recovery of China’s domestic market, the company delivered strong results in the third quarter with a total net revenue of $969 million representing an increase of 29 percent year-over-year with the quarter-over-quarter increase being 72 percent.

The adjusted earnings before interest, taxes and depreciation for the third quarter was $198 million, representing a 164 percent increase from the same period in 2021 and a 300 percent increase from the previous quarter.

In terms of operating margins, Sun said they have a very good business model and when the business returns to normalcy, Trip.com expects reasonable and healthy operating margins.

“We achieved strong results in the third quarter despite market volatility in the back half of this quarter. Our domestic hotel bookings showed positive growth over the last year and almost recovered fully to pre-pandemic levels,” said Sun.

Trip.com also noted that despite some headwinds in the macro environment the company hadn’t noticed much impact on its overseas platform, both in the Europe, Middle East and Africa as well as the U.S.

Sun said this could probably be because the company is still in the very early stage of its development in the overseas market, and the comparable base is very small.

With the Asia Pacific region having just started to reopen, Sun said they have a very good opportunity to catch the pent-up demand recovery in this region.

Trip.com Group’s Chief Operating Officer Schubert Lou was a guest speaker at the Skift Global Forum East in Dubai that concluded on Thursday.