Trip.com Group sees outbound travel demand surge

Trip.com Group says outbound travel demand has been strong since China’s border reopened in December, and the company expects demand to continue to accelerate in the coming months.

“Right now, the bottleneck lies in outbound flight capacity, which is currently only at 15% to 20% of pre-COVID level and is largely limiting the overall recovery pace of China’s outbound travel,” says Jane Sun, CEO of Trip.com Group in a call with analysts to discuss the company’s fourth quarter and full year 2022 financial results.

“We anticipate that the aviation industry will set in motion plans to restore flight capacity and that outbound travel will pick up the pace in the coming quarters.”

In Q4 2022, outbound air ticket bookings on Trip.com Group platforms increased by more than 200% and outbound hotel bookings increased by 140% compared with the same quarter of 2021.

And Sun says demand for outbound travel has “continued to surge” in the first two months of this year, with bookings up more than 300% compared with the same period last year.

“We are confident that we can work hard to capitalize the opportunity in 2023,” she says. 

In Q4, Trip.com Group had net revenue of $729 million, a 7% increase year over year. For the full year 2022, net revenue was $2.9 billion, flat compared with 2021.

Adjusted EBITDA was $41 million in the fourth quarter and $314 million for the full year 2022.

Trip.com Group’s sales and marketing expenses came in at $166 million in Q4, down from $204 million in the same period a year earlier. For the full year, sales and marketing expenses were $616 million, down from $772 million in 2021.

As a percentage of revenue, sales and marketing expenses were 23% of net revenue in Q4 and 21% of net revenue for the full year. 

Accommodation reservation revenue was $245 million in Q4 and $1.1 billion for the full year, while transportation ticketing revenue was $320 million in Q4 and $1.2 billion for the full year. 

Sun shared updates regarding the company’s efforts on sustainability, corporate responsibility and its content platform.

“We are seeing customers coming to our platform not only to book air tickets or hotel rooms but also to get inspired for their next trip. In the fourth quarter, our content generation pipeline and the users’ engagement capabilities continued to improve,” she says.

“In 2022, user generated content also increased by 33% compared to the previous year. Average number of the content viewed per user also continued to increase.”

Sun highlighted the new TripGen artificial intelligence chatbot on the Trip.com platform as an example of the company’s commitment to innovation.

And in response to a question from analysts about the potential for AI and the chatbot, executive chairman James Liang says, “First of all, it enables our customers to find more relevant information faster and more efficient. Secondly, we are able to link their search results to our existing products more efficiently. And certainly it will also enable our service team to provide better services. We are working very hard to try to improve our efficiency by utilizing the new technology as always, but it’s still at early stage.”