Trip.com CEO sees tailwinds for China tourism

Mint

6 hours ago

China's plan to boost services demand bodes well for Trip.com Group, its chief executive said, betting that travel revenue will get a lift despite continued consumer wariness.
Chinese officials have over the past year been relaxing visa rules for foreign visitors and introducing subsidies for consumers, searching for new drivers of economic growth.
That is welcome news for Trip.com. The online travel giant expects to capitalize on the resulting travel upswing, CEO Jane Sun said.
'We are very supportive of these initiatives," Sun, who has led the company since 2016, told The Wall Street Journal.
China's biggest online travel agency by traffic volume enjoyed a windfall during the travel boom that followed the nation's lifting of strict pandemic restrictions. Last year, its net profit surged 73%, sending Hong Kong-listed shares up about 95%.
As revenue growth normalizes, the company plans to drive growth from both domestic and international markets.
It sees a significant tailwind in Beijing's efforts to boost consumption. The push, which initially focused on goods, has expanded to target services, including tourism.
Recent data suggest the efforts are paying off. During China's Labor Day holiday in May, domestic tourism spending rose 8% from a year earlier.
Inbound tourism also holds 'great potential," Sun said, aided by easing visa requirements and a new tax-refund program for visitors.
Tourist arrivals contribute far less to China's economy than in other major countries, statistics show.
Revenue from foreign travel makes up 2% to 3% of the annual gross domestic product of the U.S., the world's largest economy, Sun said.
'If we can at least reach where the U.S. is, that's a trillion-dollar industry," she said.
According to Chinese Vice Commerce Minister Sheng Qiuping, inbound tourism accounted for about 0.5% of China's GDP in 2024.
Chinese policymakers have been seeking a larger share of international travel traffic for years. That has led to more open borders, with tourists from more than 50 countries now able to enter without a visa.
In 2024, 64.9 million foreigners visited China, with 20 million of them entering visa-free, according to data from the National Immigration Administration. Still, the number has yet to return to prepandemic levels.
Sun expects Trip.com's inbound travel revenue to more than double this year.
International business was a highlight for Trip.com in the first quarter, with bookings up 60%, buoying overall revenue. Higher costs for branding and user acquisition weighed on margins, but that is 'part of the process," Sun said. It takes 18 to 36 months to develop a new market, she said.
Trip.com faces challenges at home as well.
Even with government incentives to spur service consumption—including $500 million for tourism and other services in Shanghai alone—economic woes have kept Chinese households wary about spending. Doubts persist about the sustainability of the subsidy-driven boost.
In the first quarter, China's daily hotel prices declined from the previous year as more lower-tier hotels entered the market, underscoring the trend of downtrading, in which consumers switch to cheaper services from pricier ones.
And despite robust overall spending during the Labor Day holiday, domestic spending on a per-person trip basis was still down about 10% from 2019 levels.
However, Sun believes that if China's GDP can continue to grow at 4% to 5%, tourism revenue can outpace that by a couple of percentage points.
Stiffer competition in the Chinese market also doesn't faze her.
Trip.com competes with the likes of Alibaba-backed Fliggy, Tongcheng and Meituan for China's tourism dollars. The industry's brightening outlook has attracted new rivals too, such as Douyin, TikTok's sister app in China, and e-commerce giant JD.com.
Sun expects Trip.com to maintain its leading market share in China, projecting that its domestic business growth will outperform the industry average.
Newcomers might be able to bring customers to their platforms, but they still need a developed booking mechanism and travel support system, the CEO said.
'That's very hard to do," said Sun.
Write to Sherry Qin at [e-mail]