Trip.com Group expects net revenue to decrease by 45% to 50% year-over-year in the first quarter of 2020 due to the outbreak of the COVID-19 coronavirus.
The Shanghai, China-based online travel agency disclosed its low expectations for the start of 2020 during its earnings call recapping its full-year 2019 results.
“The beginning of 2020 has been challenging with the outbreak of the Coronavirus,” says CEO Jane Sun in the call to discuss earnings.
Sun adds that its strong operations “have prepared us well for times like this.”
Tens of millions of travel orders were cancelled during Chinese New Year and Trip.com Group’s call center was flooded with peak call volume over 10 times its regular capacity.
“I'd like to thank all of our team for their top-quality services and efforts in the joint fight against the impact of coronavirus,” says chairman James Liang.
“We also continue to appreciate the support from our valued partners and have announced a set of measures to help them manage through this difficult period.”
Liang adds that the company “expects a very quick and strong recovery of domestic travel.”
The travel industry in China is attempting to rebound after the COVID-19 outbreak peaked in January and February.
On Thursday, China reported zero new local infections.
“As we have started to see early signs of recovery in China, the virus continues to spread with a subsequent decline in travel activity in the overseas market,” says Sun.
As Trip.com Group prepares for a domestic industry rebound, Sun says the company is also “getting ready for a prolonged battle against weak international demands.”
“We will not only overcome this challenge but also lead the recovery of the travel industry starting in China,” Sun says.
2019 earnings
Trip.com ended 2019 on a high note, with income reaching $84 million in the fourth quarter.
Operating margin increased from 8% in 2018 to 14% in 2019.
Net revenue grew by 10% year-over-year in the fourth quarter to $1.2 billion and by 15% for the full-year 2019 to $5.1 billion.
Each segment reported growth in revenue, with the largest increase in corporate travel.
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Revenue for corporate travel soared by 33% year-over-year in the fourth quarter to $54 million and by 28% for the full-year to $180 million.
Accommodation revenue increased by 12% in the quarter to $426 million and by 17% for the full year to $1.9 billion.
Packaged tours revenue experienced an 11% year-over-year increase in the quarter to $115 million and a 20% increase for the full year to $651 million.
Transportation ticketing expanded by 2% in the quarter to $498 million and by 8% for the full year to $2 billion.
“We achieved strong results in the fourth quarter, despite facing macro challenges in certain regions,” says Sun.
“Our business fundamentals have never been healthier than today, with both international expansion and lower-tier city penetration becoming increasingly important drivers in our future growth roadmap.”