Trip.com’s overseas journey cruises ahead, as profit wobbles

China’s leading online travel agent, formerly known as Ctrip, wants to be a global player, but spending on such efforts could erode its profits

Key Takeaways:

• Trip.com’s revenue rose 16% to 13.8 billion yuan in the first quarter, as its net profit declined by a slight 0.8% to 4.28 billion yuan
• Bookings for the online travel agent’s international platform rose 60% during the quarter from a year earlier

By Lee Shih Ta

More than two years after the pandemic’s end, global tourism recovered to more than 95% of pre-Covid levels this year, with Asia and the Middle East leading the way as some of the fastest-recovering regions, according to a recent report from the UN World Tourism Organization. The post-pandemic reopening in China, a popular destination for international tourists, has helped to fuel that recovery, both within and outside the region.

Against that backdrop, leading Chinese online travel agent Trip.com Group Ltd. (9961.HK; TCOM.US) delivered a glowing report card for the first quarter of the year.

The company brought in 13.8 billion yuan ($1.9 billion) in revenue during the quarter, up 16% year-on-year and 9% quarter-on-quarter, mostly thanks to seasonal drivers. Its profit dipped by a slight 0.8% year-on-year to 4.28 billion yuan, though its non-GAAP profit moved in the other direction, up by a similarly small 2.4% year-on-year to 4.2 billion yuan. The company is also quite cash-rich, sitting on around 92.9 billion yuan in cash at the end of March.

Trip.com is China’s biggest online travel agent, and derives most of its money from its accommodation reservation and transportation ticketing services. Its accommodation booking unit was its fastest-growing business segment in the first quarter, logging 5.5 billion yuan in revenue, up 23% year-on-year. Its transportation ticketing grew by a slower 8% to 5.4 billion yuan. Its smaller travel and package tour quarterly revenue rose 7% to 947 million yuan, while its corporate travel segment rose 12% to 573 million yuan.

In China and many other parts of Asia, companies tend to log fewer working days or cut back on operational activities during the Chinese New Year period in the first quarter, leading to delays in business plans as well as lower levels of meetings and travel. This explains the significant reduction in demand for business travel in the first two months of the year, which led to a sharp quarter-on-quarter decline in Trip.com’s overall corporate travel revenue. But that was offset by stronger demand for tourism travel during the holiday period.

Overseas growth

While growth prospects at home are limited due to its dominant position and economic uncertainty in China, Trip.com’s overseas expansion was one of its biggest bright spots in the first quarter. The company said reservations for its international platform rose over 60% year-on-year during the quarter. Outbound hotel and air ticket bookings were at more than 120% of pre-pandemic levels from 2019, while inbound travel bookings more than doubled from a year earlier.

The impressive inbound growth was catalyzed by China’s liberalizing policies that allow travelers from a large number countries to visit visa-free. Despite releasing selective data on its overseas and international travel business, the company did not specify the exact revenue contribution from its overseas business, suggesting the amount is still limited.

Trip.com was formerly known as Ctrip, but changed its name in 2019 as it aimed to boost its global profile and cultivate customers outside China. As part of the global expansion, the company also acquired international travel sites Skyscanner and MakeMyTrip, seeking to leverage its own network with names more familiar to foreign travelers.

Since its global journey began, the company has established significant footprints in countries and regions including Southeast Asia, Europe, South Korea and Japan. At the end of last month, it signed a three-year memorandum of understanding with the Ministry of Heritage and Tourism of the Middle Eastern nation of Oman. In addition to boosting travel to Oman, the deal is aimed at further accelerating Trip.com’s expansion abroad, particularly in the Middle East region that is becoming an increasingly important destination on the business and travel roadmaps for many Chinese.

But the overseas expansion isn’t coming without a cost, leading to steady rises in sales and R&D spending that could pressure the company’s profits. In the first quarter of 2025, Trip.com’s sales and marketing expenses jumped 30% year-on-year to 3 billion yuan, equal to 22% of its revenue. Meanwhile, product R&D expenses grew 13% year-on-year to 3.5 billion yuan, equal to 25% of revenue. Such increases could squeeze the company over the mid- to longer-term, pressuring its profits. Similarly, a lack of guidance from the company for its full-year revenue outlook could also turn off investors.

That may explain why investors didn’t seem too impressed by the company’s latest financial report. On the day of the release, Trip.com’s Hong Kong shares fell 2.22% to HK$505.50. The stock is now down around 6.5% this year, following a 15.8% rise in 2024.

The company’s stock currently trades at a price-to-earnings (P/E) ratio of around 18.8 times, slightly behind the 19.5 times for global rival Expedia (EXPE.US) and well behind the 33.4 for Booking.com (BKNG.US). That shows the stock is a slight laggard, but is still relatively attractive to global investors. But those investors don’t seem to give the company much credit for its future potential, especially considering its relatively solid first-quarter growth and rapidly expanding international business.

Trip.com is probably a decent bet for investors looking to gain exposure to the tourism recovery theme and who prefer names with steady growth and plenty of cash. But the company may need to stop cherry picking numbers from its international business and show the world how it’s really faring in its global journey, including the competition it’s facing and how much it is spending. More color in that regard, especially if it’s positive, could go a long way to luring more investors to its story.

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