The resurgence of the COVID-19 pandemic continued to
disrupt demand for travel in China early in the second quarter of this year.
Trip.com Group’s accommodation reservation
revenue fell 45% in Q2, to $203 million, compared to the same period in 2021.
Transportation ticketing revenue, primarily air, declined 15% year-over-year to
$263 million, and total revenue in the quarter came in at $598 million, down
32% from the same period in 2021 and down 2% compared to Q1 of this year.
But the company says there are signs of future
growth, especially in the latter half of the quarter, with air-ticket and hotel
bookings on its global platforms increasing more than 100% in Q2 compared to the
same period last year.
In a call with analysts to discuss the results, Trip.com
Group executive chairman James Liang says, “In the second quarter of 2022,
despite the challenging market environment in April and May due to the ongoing
nature of Omicron and the stricter pandemic control measures, we’re encouraged
to see the strong release of pent-up demand in the back half of this quarter.
While the sporadic resurgence of COVID continues to disrupt the recovery of
mass travel in China, the effect on traveler sentiment has been fading and the
market has shown its resilience.”
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As travel restrictions eased, domestic channel hotel bookings surpassed 2019
levels at the end of June. Trip.com Group says “staycation” travel is a primary
contributor, with same-city hotel reservations up more than 30% in the quarter
versus the same period in 2019.
And as restrictions have been lifted in most parts of the world, Trip.com Group
CEO Jane Sun tells analysts the company’s global business is showing continued
growth.
“First, on international flights. Overall air
ticket bookings on our global platform has increased over 100% year-over-year
and enriched our global brand, Trip.com. ... The growth in Trip.com was mainly
due to the strong recovery of international flights and we are glad to see such
momentum continued in Q3. In July, total air ticket bookings on Trip.com was
heading towards 90% recovery of 2019 level,” she says.
“Second, international hotel, overall hotel
bookings on global platforms has increased by more than 50% above the 2019
level in the second quarter.”
Packaged-tour revenue for the
second quarter was $18 million, down 67% year-over-year, and corporate travel
revenue was $31 million, down 46% compared to Q2 2021.
Gross profit for the quarter came in
at $452 million, a 35% drop, while adjusted EBITDA for the quarter nearly
tripled year-over-year to $53 million.
Trip.com Group’s sales
and marketing expenses decreased 41% year-over-year in Q2 to $123 million primarily
due to a decrease in expenses relating to sales and marketing promotion
activities. As a percentage of net revenue, sales and marketing expenses were 21%
for the second quarter of 2022.
“We
will continue to improve our operating efficiency and conduct prudent cost
control in the face of the changing environment. All these efforts will enable
us to remain flexible and pave the way for long-term growth,” Sun says.