Trip.com is Finally Ready for Takeoff -- Heard on the Street
December 02 2020 - 1:27AM
Dow Jones News
By Jacky Wong
Getting the pandemic under control in China has helped the
country's online travel giant Trip.com ride out a turbulent year.
But a smooth ride in 2021 depends on a strong rebound in
international travel.
The company's revenue for the quarter ending in September was
down 48% from a year earlier, the company reported Tuesday after
the market closed, but that was a marked improvement from the 64%
decline in the previous quarter. While Trip.com's international
business is still in limbo, its domestic business has rebounded
strongly as people in China start to travel again. During the
eight-day Golden Week holiday in October, 637 million people
traveled inside the country, according to official figures.
Domestic air tickets and hotel bookings have turned positive
year over year since August, the company said. Short-haul trips and
high-end hotel bookings grew even faster. Trip.com also managed to
keep costs down: Sales and marketing expenses for the third quarter
dropped 54% from a year earlier.
The company is confident the recovery will continue into this
quarter. It expects revenue to be down 37% to 42% from a year
earlier, largely stemming from weakness in the international
business. International business accounted for 40% to 50% of
Trip.com's revenue in transportation tickets and packaged tours in
the fourth quarter of last year.
There is a silver lining from the pandemic, as many users have
turned to online bookings in the age of social distancing. Around
40% of this year's new users are under 25 and nearly half are from
smaller cities.
Understandably, Trip.com's shares have underperformed many of
its peers. Its Nasdaq-listed shares are up 2.6% this year while
MSCI China has gained 24%. Hopes for the return of international
travel have helped its shares lately: Trip.com's stocks surged 17%
in November after positive vaccine news from Pfizer, BioNTech and
Moderna.
After a year of dark clouds and waiting on the tarmac, Trip.com
could be setting off for greener pastures soon.
Write to Jacky Wong at JACKY.WONG@wsj.com
(END) Dow Jones Newswires
December 02, 2020 01:12 ET (06:12 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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