Trip.com Group’s financial results for the first quarter of this year are a clear indication Chinese consumers are eager to travel again, said a report in PhocusWire.
The Chinese government lifted some virus testing requirements on domestic travel in December and reopened its borders in early January, allowing Chinese residents to go overseas.
In Q1, Trip.com Group said domestic hotel bookings grew by more than 100% year over year and air-ticket bookings on the company’s global online travel agency platform grew by more than 200% year over year and doubled the bookings of the same period in 2019.
But while outbound demand has been strong, limited capacity for international flights from China continues to be an impediment.
“Outbound is a very robust business. We have already seen the demand side have far exceeded the 2019 level. However, the supply side, particularly for the air capacity, is still on the way to recover,” said Jane Sun, Trip.com Group CEO and group director, in a call with analysts to discuss the results.
“In Q1, the recovery for the industry is about 15 per cent. And in Q2, we have seen it raised to about 40 per cent. However, Trip.com is able to outpace the market by a great margin.”
Driven by growth in both domestic and overseas travel, Trip.com Group reports revenue for Q1 of this year was up 124 per cent compared with Q1 2022 to $1.3 billion. That’s also higher than the company’s Q1 revenue in 2019, which was $1.2 billion.
Accommodation reservation revenue for the first quarter of 2023 was $507 million, up 140 per cent year over year, and transportation ticketing revenue was $605 million, up 150 per cent. Corporate travel revenue is also double the same period of 2022 to $65 million.
Adjusted EBITDA for the first quarter was $410 million compared with $16 million for Q1 2022 and adjusted EBITDA margin was 31 per cent compared with 2 per cent in 2022, which the company said was its highest in the past decade.
In the first quarter, Trip.com Group’s sales and marketing expenses came in at $256 million, 19 per cent of net revenue.
Earlier this year, Trip.com became the first major online travel agency to integrate OpenAI’s chatbot technology into its mobile app. Known as TripGen, the AI assistant helps users find and book travel using natural language. In May, Trip.com added a plugin for ChatGPT, and Sun said the company is continuing to explore ways to use generative AI to both help customers and improve internal operations.
“We believe with proper guardrails in place, AI is not only able to unlock the business potential, but also speed up, scale and boost up our existing user cases. By augmenting our service capacities, such technology will bring transformation to the travel industry at large and can empower us to deliver faster and better services and more personalized user experience,” she said.
