China's Travel Giant Is Still Experiencing Turbulence -- Heard on the Street
29 May 2020 - 7:08PM
Dow Jones News
By Jacky Wong
China's economy is climbing out of a deep hole. For some sectors
the climb will be longer and steeper.
China's online travel giant Trip.com reported a steep drop in
first-quarter earnings Thursday night. Revenue was down 42% year
over year. And that isn't even the bad news: The Nasdaq-listed
company, formerly known as Ctrip.com, expects its second-quarter
revenue to drop 67% to 77%.
Its first-quarter results were helped somewhat by a robust
January: Hotel bookings in the first 20 days that month grew at
double-digit rates. Revenue from international travel also grew in
the first half of the quarter before the pandemic basically shut
down cross-border travel. Shares of Trip.com fell 4.3% in
after-hours trading Thursday.
While China's domestic travel has started to bounce back as the
new coronavirus comes under control in the country, Trip.com's
international business is still in limbo. International travel
accounted for 35% to 40% of total revenue in the second quarter
last year. The company has been trying to expand abroad in recent
years, having acquired British travel website Skyscanner in
2016.
Cindy Xiaofan Wang, Trip.com's chief financial officer, said in
the company's earnings call that second-quarter new international
travel reservations would likely be close to zero because of strict
travel restrictions.
While the economy is gradually reopening in the U.S. and Europe,
border restrictions for many countries will likely be in place for
much longer. That is especially true for travel between countries
that have apparently controlled the disease and those that
haven't.
Even in China, tourism still hasn't fully recovered. New
bookings for domestic hotels have reached over 70% of last year's
level, the company said--but that is with heavy discounts.
The journey to recovery will be long and arduous.
(END) Dow Jones Newswires
May 29, 2020 04:53 ET (08:53 GMT)
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