Trip.com Group Limited (TCOM) 16 Dec 212021 Q3 Earnings call transcript

Thank you for standing by and welcome to the Trip.com 2021 Q3 Earnings Conference Call. All participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. [Operator Instructions] I would now like to hand the conference over to Michelle Qi, Trip.com IR Director. Please go ahead.

Darcy. you, Thank all. Thank you, and good morning evening. Good Welcome Trip.com's XXXX QX call. conference earnings to

Executive Cindy me are Board; of Chief call on Ms. and James Sun, Joining the Chairman Mr. today Officer. Chief Wang, Financial Liang, Executive Jane Officer; Ms. the

will the During under Reform outlook and statements Harbor Act Securities Litigation provisions of of our performance, this discuss future are which call, forward-looking Private XXXX. we Safe made the U.S.

risks inherent uncertainties. and Forward-looking statements involve

A strategy XXXX. number updates, financial business remarks, As public the will except today. the obligation Jane, such, statements, and James. and the as as forward-looking our views operating quarter are Group XXXX uncertainties call any materially our may filings Trip.com update James, not of Cindy over does for James, Securities to we performance Group's have that, potential from different outlook Q&A of as share required outlined quarter After results turn and be the an fourth of session. will Exchange Trip.com under and well third please. Commission. With any law. the to a undertake I risks expressed in prepared will the highlights, for and with applicable

easing the have their vaccinated initial to The recovery towards Thank transition call and normalcy. have shape you, us that markets progressive seen Thanks to facilitate travel fully glad are able thank the take States third people travelers. of within Chinese for in quarter continent. were curbs, to reopened comfortable to on and with everyone domestic Europe to today. vaccine joining Michelle and you packages the we and the the are do world travel to and rollouts travel These In helped see destinations. continues traveling more more rapid [indiscernible] borders the and have United

an momentum China, vacation the to the July policies for beginning variant, travel spread best In at happy of challenges. rise travel concern the to high the was rate the suppressed of that global The The pandemic investors countries issue will the Omicron of a national country population restrictions. build next next have end the may started early are to vaccination alike year. many rollout year. hold some change international again season once rates hence and the with have is vaccinated We impacts. summer of to and over booster the and see out us to [indiscernible] the face recent continues ongoing Pandemic raise for smoothen has be of Chinese resilience consumers discovery continues fully key shots tourism. round Delta variant given also to new XX% vaccination in will travel also The many expectation of help winter. pandemic in It adopted concern believed travel disrupted of on that and in be the and in to

these will to offerings Chinese enrich leveraging attracting [indiscernible] travel new new The [indiscernible] cover counter more China domestic to generations. opportunities younger our focus focused and markets domestic continue adopt qualifying circulation to user changed to changing the supply chains strategy In global the strategies has and on We cases product conditions. markets. [indiscernible] on market a remain both, our

content of developed than business also XXX only users visitors unique is showcase used channel high a the groups channel, of year, not app million users. more have quality capital. can of with dotcom Our their products for our it's browsing an content. partners Remarkably inspiration XX% of our and This where the content business travelers, habit interact have platform but

them to conversion one stop travel monthly rates Business conversion cooperation. XX% partners our rate conduction to is As also reinforce can higher. encouraging enjoy platform, the leading content up our to

On the brand focus. awareness in such Trip.com will usage. Asia increasing been markets, and APAC global app Pacific as South brand markets Korea be gaining key international has Europe continue to Japan, In front, our share Hong our and with Singapore, and Kong,

pandemic, in leverage In will global focused will local focus, the Trip.com product strong and competitiveness local on its and be long strong adopted it to market years. Trip.com run, in throughout swiftly our by offering In and giving core meet to our Skyscanner's quarters, the to different vision continue all have brands. Trip.com's the been continue hotel brands During previous demands presence enhance to strengthening the Europe. strengthening closely metrics Europe, collaborating strategy of boost Staycation product a coming in region. Such

call on remain three operational global inputs our highlights. for over boom. and be will such the tourism competitiveness, travel see We in revival focused to start We base the next to the and fruit to to Jane bear turn of hope to will the the business prepare and that, years. to reflected will I performance With over strengthening embrace five

strategic James. multiple you, of of like natural in year-over-year updates everyone. Good and third in morning, infections, and by due decreased brief revenue overview China. start would on quarter-over-quarter, with the performance In our stable disasters which and remained quarter, mainly Thank quarter X% focuses. our the new net to a to rounds provinces affect our past the I total

been Industry ups been travel slow of road world Yet, rates occupancy down QX emerged to the strong has has it the interrupted Delta are ticket has COVID were international recovery market not the much XX% compared recovery the returning higher market past a down. market frequently major moving domestic economies to when cases. by in pre-pandemic in witnessed performances. XX% markets air performance in air XXXX bookings disasters progresses The for hotel been market domestic The in hand, business natural and glad ticket in making in levels normalcy, downs. Nevertheless, the well. Europe recovery was see great resurgences booking month. these outpace levels towards and around diverted, by markets especially to July bookings ahead ticket without able Air than but United China's the the is XX% as the until strides in major variant our travel States. It the wise, global by hotel market, performance tourism. and level to We other to global was pre-COVID normalizing the and made has to to and on in our of some

increased quarter-over-quarter. around still growing bookings approximately XXX% with air level, While increased global in XX% flight air ticket by overall volume also quarter-over-quarter, Trip.com's XXXX the has air around saw booking ticket was Europe by ticket bookings Skyscanner international by XXX%. XX% year-over-year, and below

negatively industry some industry, and is travelers from of become vaccination there the come travel as doubt travel off used industry mid XXXX pandemic to level comfortable restrictions more XX and in We and key will feel emerge has affected stronger. no see booking COVID levels trips out rise in travel take back the hope to markets, the While the trenches the again.

better is perfect never beyond for to it our a the pursue and world XXXX, changed. has Looking mission trip long-term

focus, mentioned, our on continue areas. just following James As vision local we to the will global to strategy focus and stick of

cases of First, and strong our lives. user part daily traveling make building

and shy grew glad in-hotel by QX, to to local to results, the our more of and than we continue We cases hotel our value resulting become measures popular amount have by to have in strive frequent. away services. monthly to our catering seize to hotels. for our attract XX% other XX%. to added same and booking as regional, number provide and addressing more hotel travel young XXXX daily Such the health trips, in the year-over-year. their with than user strategy. to users, XX% see progress of intra-province amount vacation for people the hotels reached increased content many response grew and sequentially of were weekend, as our XX% published increased with transaction content compared users The In order by pre-COVID contributed rate approximately KOLs XXXX. XX% attract to As the sales users XXX% and the from five-star of make build period more of motivate increased travel make to In and travel packages by interacted packages, we solid strong In trips, this included around content And long collaborated in July. lives. The distance platform these total hotel to Compared need which bookings to pandemic XX%. conversion part we and short QX, our haul our on opportunity inspiration by help embrace who and local generations to content and partner

the go and hub empowered Second, users. customer serve only structure platform tightening business our suppliers as gain where content optimized as traction also making Group's empowering by them with with efficiencies relationship improved to not efficiency, quality and high channels Trip.com improve inspiration partners for users, our an are to to

our of Hub part rate, Star important an conversion content improve help feed exposure. increase and to As their info suppliers aims strategy, to

about multiple since between to and the than more of to past users million hotel also number are customer order of partners increases partners' benefit average months. by help are and both XX where our parties. corporate grown entitled XX% this to members programs, have with for now There seven Group able membership content are pushing monthly We our by times or forward number and Trip.com co-branded content from professionally XXXX. has six generated the seen content, exposure base, In GMV consecutive expand we

our business We the also first efficiencies, partnership help enhanced in them to strengthened with our class bookings. operating and growth with airlines and

synergy utilize combined local to Trip.com with and the synergies past travelers supply Europe. capabilities series added and the spaces competitiveness, strong our goal to product on companies Fourth, and friendliness able service the in relationships corporate us the globally. Skyscanner response global the a among and to our Grasping these offerings strengthening and clientele enable to quarters. services has improved group to We among the value companies presented bolster of enhanced chain and suppliers traffic our globally strengthening user global our strong to for among we global responsibility. and Trip.com establish all awareness for gain better by of evolving closer respond continuously a of strengthening pandemic group market pandemic, with address believe The of will flexibility. the group Leveraging further strong increase we're presence to to product the launched Skyscanner's local post brand the enable feel demands will our better Trip.com synergy share, reliability. Third, market brands Group the the and opportunity

our countries that rural quarter. initiatives, were a in Trip.com retreats already top opened on were QX, two of revitalization opened business this up more in Group these Following

and professionally with our the any and skills rural of talent facility the help tourism offline inclusive and working strong On the to of Revitalization economy clear livelihood. means a to Academy, Group facilitate services training developing of Through to Our With care working the affinity we that With and develop government. for top global an young foundation Rural co-created workforce, Trip.com and products, the a online grown improve inclusion, also the in contribute retreats into as with conduct provide and sales country local provinces create quality. channels has and now X/XX over mothers local COVID-XX in strives With a improve the local us to of that also code the local the female friendly of back environment. definitely resilience diverse in support Award of by stronger come perfect our Woman employees, empowerment. of opportunities as face Women's comes world as to the stated. that, SARS With trip to Principles seize a confidence pursuit of the industry now storm happy and time, help travelers will receive and to turn to October, call pregnant The better recognition Cindy. promoting over equality agile the reestablish gender China in I travel and weathered will Empowerment in we opportunity. proven from and the were crisis we efforts well. the as mission Remaining for challenge has its to our UN

everyone. Good Jane. morning Thanks

the primarily year-over-year, and of multiple quarter This third RMBX.X of representing revenue beginning decrease and RMBX.X third a decrease of XXXX provinces the net quarter-over-quarter, quarter disasters growth decrease regions X% XXXX, July, for outbreak natural due of in representing XX% new reported of spreading X% disasters Trip.com result level. billion, resurgence of at over to disruption steady COVID net XX% was by the XXXX decrease a of billion, reservation Accommodation it the influence the XX% China. the offset and Group to recovering pandemic For of of of cases quarter-over-quarter natural and July. end is year-over-year round of multiple revenue in

new continues China of year-over-year the of leisure both and previous transportations momentum from for recovery ADR recovery compared recovering round international the gain demand. segment of than for million, take top XX% the for XXXX quarter Europe. representing Packaged of This the third bookings increase decreasing to pandemic the while quarter-over-quarter, the a the and quarter, was XXXX wave a quarter, XXXX demand XX% -- mainly level, increase as by in natural while expanding the domestic XX% the year-over-year increase recovering momentum single This to to interrupted RMBXXX was approximately slightly which third XX% resurgence XXXX for digit was outbreak. Transportation ticketing higher decrease representing revenue of to X% cross previous an user decrease selling in XX% July quarter travel bad transportation margin was of mainly and bookings was quarter XXXX due third from increased RMBXXX tour X% XX% summer, Corporate base COVID representing XX% disasters Our to of quarter domestic hotel Gross by the XX% have disrupted by in by when affected and in seen the are accommodation. blended revenue contributed the air improving XX% revenue depressed XXXX growth infections. high result cases billion, of was of quarter-over-quarter, year-over-year year-over-year, new before level. travel rates by contributed a to RMBX.X decrease the level. recovery line increase million, of third among quarter-over-quarter, reduce XXXX and of and a by ticket

same the the previous quarter, charges, in compensation XXXX. XX% XX% product based in share for Adjusted in operating increased of salary by by from third the development adjusted expenses XXXX, expenses mainly development increase product same quarter Excluding reflecting by and period the our compared X% period the decreased increased personnel. to from general

XX% in Adjusted RMBX.XX We the the a teams. the and U.S. third to the the the previous saving in compared and third or previous a marketing maintain quarter. the million X% period in same continued for to for margin saving decreased in run to XX% period sales lean the in quarter. quarter, expenses XX% headcount suppliers were the and in when the increased XX% RMBXXX is a compared compared to stable primarily as of quarter by Diluted from the third It for XXXX. quarter by to Adjusted compared of EBITDA XX% is to by adapt to G&A the million for swiftly in and travel more This uncertainty period ADS brought Adjusted company's the It the a followed market from RMBXXX pandemic. the same we also was ordinary decreased in it changing protocol debt the conditions expenses reflects XX% compared previous response to quarter. XX% the year-over-year a prudent XXXX. was provision third for for when of of bad to saving by third about spending Adjusted in when XXXX. XXXX and reversal share per EBITDA the a in per previous of quarter due loss third same the quarter. quarter $X.XX quarter

exchangeable and diluted where senior the per ADS for fair charges U.S. investments share or Excluding earnings and per ordinary third notes, share-based changes securities equity quarter. and value $X.XX of compensation non-GAAP RMBX.XX,

U.S. of held We early term short-term of dilution ordinary the RMBXX.X XXXX of the financial notes investments $XX.X in product in $XXX was Booking and Notes As U.S. of convertible to or restricted maturity XXXX, XX, deposits and cash million equivalents million quarter a another same XX.X redeemed cash September billion. $XXX balance U.S. billion and reducing December, million of the potential and Hillhouse the shares. cash,

benefiting fourth provinces reservation our the Turning more domestic and Day of rounds the to than was our down least spread domestic Outbound XX%. passengers XX% but occupancy reservations vaccine would XX% to rate of to impacted in holiday and mid pre-COVID down close In rather In and Group some hotel to muted China, COVID began to segment National the recovery while downs. with color relaxation hotel travel industry. and and same growth quarter XX%, recovery entire in industry to not the XXXX. October at the was over XXXX, remained to of but travel air tickets compared but to share the performance October, holiday, to by the China, with Europe during XX in of period global also Trip.com level. the outside like The carry affected, travel to freight in from double-digit XX% beginning U.S. level transportation XX% market largely without Multiple November, of continues path set, of continue momentum is increased during the that cases by the current business. rollout. lead conditions, while ups restrictions to China reached we we

continue adaptive for We agile market open flexible to opportunities create be to will operator, conditions line the and please seize responsive users With partners. that, and to and and be questions. value for to changing our

first comes from go Your Thank Thomas Please ahead. you. [Operator from Jefferies. Chong Instructions] question

morning. lift? recovery about the Jane, for for Thank share are you color Can the the How James, Cindy, taking as spend Thanks my you. about travel open you questions. some pace do Hi, international in the good business. of company's think restrictions

variant, travel adopted markets. China the of and have the the will in temporary countries second people broader outbound XXXX. change to China more restrictions further. some Mainland with travel on Though is then reopening we restrictions. In reconnecting relax international reopening enhance other a vision In recovery gradually expected the not prepared control conditions, Kong the The is us pandemic travel are long Under focus, Omicron The capability markets. the the making revive that relax inbound Group We'll our due trend has and many travel normal and We tightened countries road with have Trip.com the to will its the of to fully plans the our Hong by back global recent and past half months, industry resilience markets. competitiveness leading international continue two in recovery. despite international growth our the sustainable largely market run. the recovery recently headwinds, process for turbulence to and we're see COVID relaxation company. on of the with and may ultimate in demonstrated begin policies openings More pace domestic strategy stronger and service in local believe rates years depending related product

you. Thank

comes Mizuho. Please next from Your Lee James from ahead. question go

first, Great. Two and Hi, seeing second Chinese taking Thank any Kong, that early behavior Hong we that you. Year on and read should Thanks about my demand Jane. to I travel outbound activity consumer ones think there? quick travel questions. heading for, for being here. maybe think into How the you're New

James. Kong. The thanks, opening indicator provides Macau a for further really Hong very consideration leading of up Yes, good of

we of being just in conducted were Partnership is well. So control Macau, holding over and the there Global Committee virus the very our

travel will experience that opens industry everyone in Hong happen Kong provides to as up. So if what the some

shopping this as Year. to might a for visit Chinese and Hong Hong Kong. cities much be Kong New So there is And go in of up Hong Year condition, connects a And very the control good that Chinese opening doing Historically, the very New try to virus good in for consideration to travel different looking that with Hong our Kong. destination forward also of Kong some are people we popular continuously. very plan for

us both in be the environment, gives addition Mainland will support opening enough to Kong, evidence to as there in you. consideration China Kong in well and Hong Macau. controlled of hopefully, Hong supporting further the So to which up Thank

you. thank Great,

Thanks.

Thank you.

comes go question from Your from Citi. next Please ahead. Brian Gong

question. and James, Thanks taking Cindy for my Jane, Michelle

about question travel is my domestic expectation. So

to performance by quarter in travel across first now year people see travel regions management Winter some to year government March, with should growth normalized not second or in and a performance year the domestic XXXX encouraging local outlook does with be base year-on-year in half also we first and you. second expect the held how Thank still year and So Olympics half next quarter next we should right the for see next in dragged more domestic low of restriction, market? travel this

the Yes, we S, for four have travel by four paying seen to is so attention what people we more are S, saying have domestic seen safety.

to measures suppliers good very to So they providing masks our as we such our sanitizers, travelers. make hand have encourage sure safety

groups S than to much big groups. is travel people prefer The with most rather smaller second

is So, normally very well. our selling customized tool

customers around. to ride Our prefer take hire van to to family car their family and with

get because third is much from we booking a The a virus destinations. short of S different results notifications with lot of control the will time

have the short is shorter. S So, one the booking And we the of last distance. window four is seen much

prefer prefer to what to have So seen much also we comfortable People we generation nearby their more. home travel radius. seen XXX kilo feel young people more is the within travel the travel becomes to. town, anywhere to have And

spenders So young XXs were travel a seen Z in the quite and born we lot. have Generation who

and these are the it the of I during the so quarter will well trends think So is a the on seen far. how depending second lot controlled have being quarter. first be virus Again, we

disappearing very just accumulating Customers what as up this pent demands our we in not and the search from demand are However, is May the these demand very data search. the saw strong. year, of holiday of strong is

vaccination and increasing, prove be will of to the will then rate control that will market hopeful very gradually the are we the measures So effective, the virus increase. continuously be

half of than be XXXX the first So much stronger hope your we the half will Thank assessment, very so. you. second

Thank you.

go Sachs. Goldman question next ahead. Ronald Please comes from from Your Keung

and in with last you. governments recent more zero saw you, Cindy that question and accordingly, recent My Thank how our the travel either flows margins costs longer how cash then on, international strategies, the you. and will COVID for the implications to is next or in if Omicron patterns James, trends last dynamics we months XXXX two years? management travel Jane, for see in one Michelle. and longer, and Thank the Thank we does and trajectory if to domestic plan recent

thank you. Ron. Thank Yes, you,

by decided as line side. control margin Our on control, cost our the well the the cost on top as both the actually to revenue line to top

travel growth. Of by the decided performance course, industry we industry be are in so the much will our pretty

always, continuously However, the the our in we for with do we industry best segments to industry the the outpace this for will travel as industry. to least XX% growth in example, growth XX% outpace quarter, the year, different compared third at

On the cost side, we will continuously a structures to weather have cost the storm. to COVID to weather to weather very the the storm, we have policies cost disciplined

management. cash Firstly, the the and the compared expenses with of and of very operating thanks as U.S. expenses by than to actually among we probably before which decreased our travel Then cost costs the strong cash the $XX.X total we in QX, billion have At more structure, position. efficient QX operating well adjusted largely the one on COVID side, level, as best best is flexible our end XX% secondly, very have cost industry. about in balance, in

During the COVID. past in lifted different our the few to technology content adjustments marketing in quarters, cross-selling addition the to we and our And addition, have streamlined further related efficiencies. operations certain lines, improvements across on business our

for international modest of has the in in been total cost forward to just trend, the especially personnel some in domestic expect our the capture markets, our in need add pretty be investment for that the we very market, we expect will international headcount increase businesses. terms only seen In markets. And Europe But to demand the the stable, a will much expenses market. especially already core we pent-up our going

driven of spending, will both well very On sales, marketing adopt the -- expenses, we and policies will ROI we in international and disciplined market. terms as the market for China the And to marketing have for our continuously strategy. domestic sales adapt as

you. Thank

JPMorgan. Instructions] next Alex question Thank Yao ahead. you. from comes from Please go [Operator Your

management. question morning my on good taking investment for have question. the Thank Hi, a you activities. I

world, rest So you opened the to guys in regions Thank in in you. any we the investments additional activity markets reopening of also new and those are the light capture contemplating of China, and the potential are more and opportunities?

Yes, so thanks, Alex.

investment terms historically disciplined. adhere of we three There principles In we're to. very strategy, are

core to in it all, And very of closely for secondly, really to the valuation look reasonable. related very one, verticals that is companies First our competence. or needs needs number and we certainly to be two the need their number to be

selective terms of historically, careful are very, So in our we very very investment. and

in However, technology, terms projects, our sure competence this in we of and for to our the long-term. we're as the the season long-term of such organic strengthening and on our in which core make investments services slow advantage were investment, focus competitiveness products, taking

to prioritizing we're you. limited the the also in resources, we our competence priority extend sure with the So projects will long Thank internal make our which give for projects run.

now Thank no back questions I'll at further you. remarks. time. for this There are hand closing

Thank you everyone for joining us today.

quarter you look day. You a with you speaking and can Thank calls. on and good find forward We fourth investors.trip.com. earnings on our XXXX the transcript webcast of today's to call have

very you Thank much.

you. Thank

for does Thank conclude Thank conference our participating. That for today. you. you

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