Trip.com Group saw its net revenue plummet 42% in the first quarter
of 2020 to $669 million compared to a profit of more than $1.1 billion in 2019.
In a statement to share the first quarter financial results,
Trip.com Group says it is anticipating an even sharper drop in revenue in the
second quarter, ending June 30. The company says it expects net revenue to decrease
by approximately 67 to 77% in the current quarter year-over-year.
In the first quarter of this year, Trip.com Group recorded a
net loss of $754 million, after reporting net income of $643 million in the
same period of 2019.
In a call to discuss the result with analysts, Trip.com
Group executive chairman James Liang says he is encouraged by “continued
recovery of domestic travel in the past few months” and the company will focus
on that domestic business in the near term.
“We believe the disruption caused by the pandemic will
eventually disappear, and travel will come back stronger after the pandemic,”
Liang says.
In the first quarter, Liang says direct expenses related to
traveler refunds were $168 million, but these refunds and other efforts will
develop long-term customer loyalty and “increasing lifetime value.”
“Between January and April the company extended coverage and
the scope of our cancellation provisions multiple times in response to the global
development of coronavirus, to the greatest extent possible securing refunds
for our travelers,” he says.
“In addition, Trip.com launched a COVID-19 International Travelers
Guide to help customers navigate the travel restrictions and access the latest
refund and cancellation policies. As a result of all our efforts our NPS [net promoter
score] reached a new high in Q1, demonstrating customer satisfaction and confident
in our service quality.”
To date, the company reports new reservations for domestic
hotels have reached 70% of their volume last year at this time, although room
rates are still heavily discounted. For the first quarter, accommodation
reservation revenue showed the most decline year-over-year, down 62% to $163
million.
Transportation ticketing revenue was down 29% to $338
million, packaged tour was down 50% to $74 million and corporate travel revenue
was down 47% to $18 million.
In its statement, Trip.com Group says, “Based on our review
of liquidity and financial positions, we believe our cash reserve, the
aggregated cash flow from operations and financing sources will be sufficient
to meet our anticipated cash needs, including working capital requirements,
capital expenditures and our other payment obligations for the foreseeable
future.”
In April the company entered into a facility agreement with
certain financial institutions in connection with an up to $1
billion transferable term and revolving loan facility with an incremental
facility of up to $500 million. The company successfully made a $1
billion draw down earlier this month.
"The company took immediate actions to ensure that we
are protecting customer interest and making appropriate adjustments in response
to the pandemic. With a strong cash reserve, we are prepared and are in prime
position to take advantage of an industry recovery. We are confident
that Trip.com Group will emerge an even stronger company after the
COVID-19 pandemic,” says Jane Sun, Trip.com Group CEO.