By Jacky Wong 

China's economy is climbing out of a deep hole. For some sectors the climb will be longer and steeper.

China's online travel giant reported a steep drop in first-quarter earnings Thursday night. Revenue was down 42% year over year. And that isn't even the bad news: The Nasdaq-listed company, formerly known as, expects its second-quarter revenue to drop 67% to 77%.

Its first-quarter results were helped somewhat by a robust January: Hotel bookings in the first 20 days that month grew at double-digit rates. Revenue from international travel also grew in the first half of the quarter before the pandemic basically shut down cross-border travel. Shares of fell 4.3% in after-hours trading Thursday.

While China's domestic travel has started to bounce back as the new coronavirus comes under control in the country,'s international business is still in limbo. International travel accounted for 35% to 40% of total revenue in the second quarter last year. The company has been trying to expand abroad in recent years, having acquired British travel website Skyscanner in 2016.

Cindy Xiaofan Wang,'s chief financial officer, said in the company's earnings call that second-quarter new international travel reservations would likely be close to zero because of strict travel restrictions.

While the economy is gradually reopening in the U.S. and Europe, border restrictions for many countries will likely be in place for much longer. That is especially true for travel between countries that have apparently controlled the disease and those that haven't.

Even in China, tourism still hasn't fully recovered. New bookings for domestic hotels have reached over 70% of last year's level, the company said--but that is with heavy discounts.

The journey to recovery will be long and arduous.


(END) Dow Jones Newswires

May 29, 2020 04:53 ET (08:53 GMT)

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