Trip.com is Finally Ready for Takeoff -- Heard on the Street

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 [e-mail]

(END) Dow Jones Newswires

December 02, 2020 01:12 ET (06:12 GMT)

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