Trip.com returns to normal, with growth and challenges coexisting

Author | Liu Baodan

Editor | Huang Yu

As the global tourism industry seeks new coordinates amid a strong recovery, Trip.com has drawn an upward curve with tangible actions.

On February 25, Trip.com announced its unaudited financial results for the fourth quarter and the full year of 2024. In the fourth quarter of last year, Trip.com achieved revenue of 12.7 billion yuan, with full-year revenue of 53.3 billion yuan, both growing by over 20%. Although this represents a significant decline compared to the doubling growth seen post-pandemic, it also indicates that the company's operations are beginning to return to normal.

In the fourth quarter of last year, Trip.com achieved a net profit of 2.2 billion yuan, a year-on-year increase of 69%. The net profit for the entire year reached 17.2 billion yuan, up 72% year-on-year, marking a new high in recent years; the Non-GAAP net profit for the fourth quarter was 3 billion yuan, an 11% year-on-year increase, while the full-year figure was 18 billion yuan, up 38% year-on-year.

Citigroup published a research report indicating that Trip.com's fourth-quarter revenue exceeded expectations, and profit performance was generally in line with expectations. Citigroup set a target price of $78 for Trip.com's U.S. stock, rating it as a buy.

Behind the robust performance, Trip.com achieved growth in accommodation bookings, transportation ticketing, travel vacation, and business travel management, with the high-margin accommodation booking business contributing 40% of revenue.

Specifically, in the fourth quarter, Trip.com's accommodation booking revenue was 5.2 billion yuan, a year-on-year increase of 33%; transportation ticketing revenue was 4.8 billion yuan, up 16% year-on-year; travel vacation revenue was 870 million yuan, a 24% year-on-year increase; and business travel management revenue was 702 million yuan, up 11% year-on-year.

Trip.com's business growth primarily comes from both domestic and international markets. In the deeply cultivated domestic market, Trip.com focuses on the "silver-haired generation" and young people, further exploring niche areas; in the international market, Trip.com is currently in the expansion phase.

At the beginning of 2024, Trip.com launched the "Old Friends Club" program to meet the needs of travelers aged 50 and above. Currently, the program offers over 50 popular destinations and more than 7,000 travel products. According to sources from Wall Street, this segment of the silver-haired population accounts for 10% of Trip.com's user base, with purchasing power 30% higher than the average.

Trip.com management expects that in the coming years, there will be over 100 million active and healthy elderly people in the country, presenting an exciting market opportunity for the tourism market, with the elderly travel market value expected to exceed 1 trillion yuan.

The demand among young people for experiences such as live concerts, music festivals, exhibitions, and sports events is continuously growing. To meet this demand, Trip.com has launched "Entertainment + Travel" products to cater to young travelers.

Compared to the domestic market, the international market is a goldmine waiting to be tapped. For Trip.com, internationalization has become the engine for the company's performance growth.

The expansion of the visa-free "circle of friends," combined with the newly implemented "240-hour" transit visa exemption policy, has led to a significant surge in the number of international tourists. Data from the National Immigration Administration shows that in 2024, the number of foreign visitors entering the country visa-free reached 20.115 million, a year-on-year increase of 112.3%.

Benefiting from this, in the fourth quarter of last year, Trip.com's inbound tourism bookings grew by over 100% year-on-year. According to Trip.com management, during the Spring Festival holiday, inbound tourism maintained triple-digit growth At the same time, in the fourth quarter of last year, Trip.com’s outbound hotel and flight bookings fully exceeded 120% of the level during the same period in 2019 before the pandemic, with the company’s international OTA platform hotel and flight bookings growing by over 70% year-on-year.

Trip.com Group co-founder and chairman Liang Jianzhang revealed during a conference call that the company’s international business continues to grow strongly, accounting for 14% of the group’s revenue in the fourth quarter, and is expected to account for 10% for the entire year of 2024.

In addition, Trip.com has been continuously increasing its investment in AI in recent years, deploying AI in business operations and using a series of artificial intelligence tools to make travel planning more portable and personalized, thereby improving user experience, enhancing operational efficiency, and alleviating cost pressures.

Looking ahead, Trip.com’s focus remains on vigorously expanding international growth and enhancing services for the "silver-haired generation."

During the conference call, Trip.com Group CEO Sun Jie stated that in 2025, Trip.com will focus on investing in inbound tourism digital infrastructure and upgrading services for the elderly, with plans to add 200 international self-service ticketing points.

Trip.com management indicated that in the next three to five years, the company will invest heavily to further provide quality services and comprehensive products for global customers. "The Asian market is about 150% the size of the Chinese market, with enormous potential."

Of course, the challenges faced by Trip.com should not be underestimated.

Tourism is a heavily service-oriented industry, and expanding international business involves not only the products themselves but also soft services. Outbound tourism may also face unexpected events such as weather and safety issues, which place high demands on the platform's service details and response speed, with high localization operating costs.

The tourism market is also highly competitive. Domestically, Trip.com’s most profitable accommodation business faces direct sales pressure, with Meituan, Fliggy, and ByteDance all vying for market share. In the international market, Trip.com also faces competitive pressure from international rivals such as Booking, Airbnb, and Expedia.

Currently, Trip.com’s international focus is on Southeast Asia, a market that is in a rapid growth phase. Founder Securities analyst Li Zhenni expects Trip.com to achieve breakeven in the next 3-5 years. The agency warns that there is direct competition between overseas OTA giants and local brands, and if business expansion or profitability falls short of expectations, it could negatively impact the company’s overall profits.

On the day of the earnings report, Trip.com’s Hong Kong stock fell by 11.92%, and its U.S. stock dropped by 11.38%. Nomura released a research report stating that Trip.com’s stock price was under pressure after the earnings announcement, with management providing performance guidance for this year that was below expectations, with a non-GAAP operating gross margin guidance of about 28%, lower than the market's general expectation of 28.5%.

As early as 2019, Liang Jianzhang proposed the G2 strategy, aiming to become the world's largest international tourism company within five years. Now, with the pandemic completely over, Trip.com is also accelerating its globalization strategy. This time, can Liang Jianzhang lead Trip.com to win this globalization battle? A new campaign has begun