Release Date: August 27, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Trip.com Group Ltd (TCOM, Financial) reported a 14% increase in net revenue year-over-year, reaching RMB12.8 billion.
- Accommodation reservation revenue grew by 20% year-over-year, driven by strong outbound and domestic hotel bookings.
- The company saw a 42% increase in packaged tour revenue year-over-year, with outbound package tours showing significant growth.
- Inbound travel to China surged by 150% year-over-year, with visitors from visa-free countries increasing by 190%.
- Trip.com Group Ltd (TCOM) continues to leverage AI technology to enhance user experience and operational efficiency, including AI-powered travel assistance and personalized recommendations.
Negative Points
- Transportation ticketing revenue only saw a 1% increase year-over-year and a 3% decrease quarter-over-quarter.
- Domestic hotel ADR and average airfares decreased year-over-year, putting pressure on short-term prices.
- Adjusted general and administrative expenses increased by 6% year-over-year due to higher personnel-related costs.
- The company anticipates continued investment in overseas operations, which may impact overall group margins in the short term.
- Despite robust growth, the company faces increased competition in the Asia-Pacific market, which could affect future performance.
Q & A Highlights
Q: Could you explain why you chose to use digital human for this earnings call and provide more detail on Trip.com Group's adoption of AI technology?
A: We chose to use digital human for this earnings call to underscore our commitment to innovation and our dedication to leveraging transformative technology that has the potential to revolutionize the industry. By incorporating these virtual agents, we not only make our communication more engaging and captivating but also highlight our forward-thinking approach. This choice hints at exciting future applications such as in live streaming shows and other scenarios, demonstrating the versatility and transformative potential of digital human technology on our platforms. We have already employed virtual agents like virtual Jane to introduce popular destinations such as Shanghai and E. ON, in addition to the general use of generative AI in customer service, copilot in software engineering, and the virtual assistant. We have integrated several other AI-powered tools to enhance user experience on our mobile platform. These include trips offers tailored recommendations for top accommodations, dining options, and activities around the world, trend, which showcases trending events and provides inspiration for users, and 15, which helps travelers in planning their itinerary with real-time insights and personalized suggestions. Overall, the adoption of AI technology at Trip.com Group demonstrates our commitment to enhancing both operational efficiency and customer experience. By integrating AI across various touchpoints, we are able to provide more personalized, consistent, and scalable interactions, ultimately driving innovation and delivering greater value to our customers.
Q: My question is related to the travel demand. Recently, we have seen a clear deceleration trend in China's consumption growth. I'm just wondering if management has observed a similar trend in travel spending. Any colors on individual or business travel spending behaviors would be great. Have you seen any companies tighten their travel budgets, and how does this affect Trip.com's business?
A: Thanks, Joyce, for your question. What we have observed is that the GMV per traveler on our platform remains quite consistent from last year. So the buying power has stayed quite consistent with last year. Secondly, a lot of our customers are getting their regions to travel around the world. So part of the increase in high overseas offsets passion and ADR pressure. We have seen quite steady volume. We realize that customers' interest to explore domestically as well as internationally remains high. So we believe travel in the long term remains robust. The industry just needs to work very hard to provide the best products and services to our customers. Thank you.
Q: Could you provide more details about travel bookings in the summer and the outlook for the second half of the year?
A: Sure. With regard to the summer performance, our China business has maintained robust momentum with outbound travel driving the growth. Our air and hotel reservations have exceeded and reached 110% to 120% of the 2019 levels, consistently outperforming the market by 20% to 30%. Domestic hotel reservations have shown double-digit year-over-year growth despite a challenging comparison to the same period last year. With regard to the overseas platform, Trip.com has maintained robust growth in the mid to high-end double-digit percentage range. For the second half, despite having limited visibility due to short booking windows in China, we expect travel activities to generally follow normal seasonal patterns. Year-over-year comparison would be more favorable after the National Day holiday due to a relatively easier comp last year. In the global market, we anticipate Trip.com to continue its robust growth, with Skyscanner and other overseas brands also expected to maintain a healthy growth trajectory. Thank you.
Q: Could you provide more details about the domestic ADR trend during the summer? What factors contributed to the trends, and how do you expect prices to move in the future?
A: Thank you. Although our domestic hotel ADR and average airfares decreased on a year-over-year basis, sequentially, the summer prices have improved slightly as we entered the stronger selling season. The increase in hotel and air supply has put pressure on short-term prices, particularly when compared to the high benchmark set during last year's peak seasons. For instance, a number of listed hotel inventories are higher than a year ago. The increase in overall supply would benefit us, especially in the longer term. With regard to the outlook, we expect the ADR pressure to ease somewhat by the end of Q4 this year and to generally follow normal seasonality in the future. The expansion and diversification of travel suppliers will significantly contribute to the overall growth and stability of the travel business. Thank you.
Q: Could you provide more details about the recovery pace of outbound travel during the summer break and the outlook for the second half of the year? What are the latest price trends?
A: The total outbound flight capacity has recovered to nearly 80% of the 2019 levels during the summer, with Chinese airlines showing even higher recovery rates. We anticipate that the flight capacity will remain stable over the next couple of months. We also expect continuous improvement in international travel offerings in the coming years. During the summer, average outbound airfares were still 5% to 10% above pre-COVID levels, slightly increased quarter over quarter. Thank you.
Q: Could you provide more details on Trip.com's campaign performance in Q2, including a breakdown by major regions and platforms?
A: Trip.com achieved robust revenue growth of approximately 70% in the second quarter, contributing roughly about 10.5% to the group's total revenue. The A-Pac region accounted for over 70% of Trip.com's total revenue, showing the strongest growth among our regions, increasing by 76% year over year. Cross-selling from transportation to hotels continued to rise, with hotel-related revenue accounting for 35% to 40% of Trip.com's total revenue in the second quarter. Mobile contributed significantly, with 65% to 70% of orders placed through Trip.com's mobile apps globally, and in the A-Pac region, mobile contributed over 75%. With regard to the Trip.com brand margin, we will continue to prioritize growth while closely monitoring the ROI in each market. Given the ample growth opportunity in the international market, we will continuously invest in this brand. Thank you.
Q: Could management share if you have observed any increased competition in the Asian markets recently? How does that impact your business? What are Trip.com's key competitive advantages against local and global peers in overseas markets?
A: Given the ample growth opportunity, especially in the A-Pac market, and for all travel players, the A-Pac region is currently the fastest-growing region. The online penetration rate in this region is still relatively low, but there's a rapid shift from offline to online as well as mobile platforms, which benefits online players in this industry. Trip.com aims to provide one-stop travel services, including transportation, accommodations, activities, and more, primarily through our mobile apps. This approach offers travelers a unique and convenient experience, differentiating us from other players. We will continue to focus on product innovation
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
