Geographic diversification is paying off for China’s Trip.com Group. Europe and the US are still part of their overall business, but are now significant contributors.
As China’s pandemic resurgence and the government’s zero-Covid policies weighed on the domestic travel market in the second quarter, Shanghai-based Trip.com Group benefited from the performance of international brands Skyscanner and Trip.com in Europe and the USA
Chief Financial Officer Xiaofan Wang told analysts during the company’s earnings call earlier this week that revenue from Trip.com Group’s “core international brands” grew more than 200 percent in the second quarter, compared with the same period last year, and “contributed 20 percent to 30 percent” of the Group’s total revenue.
That means Skyscanner, a comparison shopping engine for flights and hotels, and online travel agency brand Trip.com, which Trip.com Group acquired in 2016 and 2017, respectively, generated between $115 million and $172 million in revenue a year. quarter ended June. 30.
“We are pleased to see adjusted EBITDA (earnings before taxes, interest and depreciation) of some international brands has become positive underpinning our rapid business recovery and improved operational efficiency,” Wang said.
He did not specify which of the parent company’s international brands were profitable, although a year earlier Wang said Skyscanner had lost money. Wang added this week that the company’s international brands are becoming “one of the key contributors” to bottom line profits.
During the second quarter, Trip.com Group posted net income of $6 million compared to a net loss of $95 million a year earlier.
“While the sporadic resurgence of Covid continues to disrupt China’s domestic travel recovery, the impact on traveler sentiment has faded and the market has shown its resilience,” said co-founder and executive chairman Jianzhang Liang. “Following the easing of restrictions, we saw overall, across domestic channels, hotel bookings on our platform rebound quickly and surpassed the 2019 level at the end of June.”
Trip.com Group, formerly known as Ctrip, which continues to be its domestic brand name in China, spent just 21% of total revenue, or $123 million, on sales and marketing in the second quarter. That compares with 51.3% of revenue going to sales and marketing at Booking Holdings, which posted a profit of $857 million in the June quarter.