Unsurprisingly, the pace of Ctrip’s recovery was disrupted by the sudden domestic epidemic. But the good news is that a strong recovery in foreign tourism has partially compensated for the loss of domestic business. In addition, the recent adjustment of the domestic travel restriction policy has brought the light of the “long drought” to Ctrip.
On June 28, Ctrip released its financial report for the first quarter of 2022. Net operating income was 4.11 billion yuan, basically flat year-on-year, down 12% from the previous quarter; the operating loss in the first quarter was 359 million yuan, the operating loss in the same period in 2021 was 787 million yuan, and the operating loss in the previous quarter was 740 million yuan. Total net loss was $989 million and Adjusted EBITDA was $91 million.
In Q1 2019 before the epidemic, Ctrip’s revenue was 8.164 billion yuan. Today, it is still in a state of “halving”, but it is already better than the revenue forecast given by analysts (3.85 billion yuan). After the financial report, Morgan Stanley released a research report, raising Ctrip’s full-year revenue forecast by 30%, and its non-GAAP net profit was also raised from a previous pre-loss of 1 billion yuan to a pre-profit of 800 million yuan, and the target price was raised from 30 US dollars to 35 million. Dollar.
Aside from the better-than-expected earnings report, the bigger good news for Ctrip is that domestic travel restrictions are beginning to show signs of easing.
On June 28, the Joint Prevention and Control Mechanism of the State Council released the ninth edition of the New Coronary Pneumonia Prevention and Control Plan, which further relaxed restrictions on the movement of people. The “downgrade” cycle in the region has been shortened significantly, which is good for the recovery of the tourism industry. Affected by this news, Ctrip’s Hong Kong stock price rose sharply in late trading, closing up 16.54% on the day.
01 The epidemic situation is repeated, and domestic business continues to be under pressure
Liang Jianzhang said, “The performance of the Chinese market in the first two months is encouraging. In January and February, our domestic hotel bookings outperformed the market, increasing by more than 20% year-on-year.”
However, similar to most domestic Internet platforms, affected by the outbreak of the domestic epidemic in March, Ctrip’s overall performance in the first quarter showed a trend of high and then low. Among the four main businesses, three of the four main businesses saw a year-on-year decline in revenue.
Specifically, transportation ticketing revenue increased by 10% year-on-year to 1.7 billion yuan, which was the only business with an increase in revenue; tourism and vacation business revenue was 124 million yuan, down 27% year-on-year; accommodation booking revenue was 1.5 billion yuan, down 8% year-on-year; business travel management Business income was 222 million yuan, down 12% year-on-year.
In April and May, Beijing, Shanghai and other cities broke out successively, and Ctrip’s business in the second quarter was also affected to a certain extent. However, recently, with the domestic epidemic under effective control and the National Health Commission reaffirming the “nine prohibitions” requirements for epidemic prevention and control, Ctrip’s various businesses have gradually recovered around the big curve of the tourism economy rebounding. According to the financial report, in late June, the overall domestic air ticket orders increased by more than 80% from the previous month. Local travel and inter-provincial travel also ushered in an accelerated recovery.
According to Sun Jie, CEO of Ctrip Group, hotel bookings in southern and western China have exceeded the level of the same period in 2019 in the last month. As the epidemic situation eased, Ctrip’s domestic hotel bookings also exceeded 2019 levels in the past two weeks.
The “2022 Summer Travel Consumption Forecast Report” recently released by Tongcheng Travel shows that with the gradual improvement of the epidemic prevention and control situation, domestic tourism demand is expected to be restored this summer.
In the two days after the release of the financial report, relevant departments successively introduced new policies, and domestic travel restrictions have shown a trend of further lifting.
At noon on June 28, the Joint Prevention and Control Mechanism of the State Council released the ninth edition of the New Coronary Pneumonia Prevention and Control Plan, further relaxing restrictions on the movement of people. “Monitoring” was adjusted to “7-day centralized isolation medical observation + 3-day home health monitoring”, and at the same time, the “de-escalation” cycle in risk areas was significantly shortened.
On the afternoon of June 29, according to the Ministry of Industry and Information Technology, in order to resolutely implement the general strategy of the Party Central Committee and the State Council on “foreign import, internal defense rebound” and the general policy of “dynamic clearing”, to support the efficient coordination of epidemic prevention and control and economic and social development, it is convenient to For the majority of users to travel, the “asterisk” mark of the communication itinerary card will be cancelled from now on.
During the conference call, Liang Jianzhang expressed his expectations for the domestic market: “Although the domestic market may be relatively weak in the second quarter due to the impact of the epidemic, and the tourism industry will still experience ups and downs in the short term, as the epidemic situation improves, user confidence and travel willingness will continue to increase. In the past few weeks, Ctrip’s domestic hotel bookings have exceeded the level of the same period in 2019. With the further lifting of travel restrictions, the Chinese market can be expected to recover, and the tourism industry still has a bright future. “
Despite the dawn, Ctrip’s main business in China is still facing huge uncertainty when the epidemic has not yet completely ended. With the lifting of travel restrictions in many countries and regions around the world, the rebound of business in the international market has made up for the loss of Ctrip’s domestic market to a certain extent.
02 The international market recovers, and hotel bookings exceed those before the epidemic
According to incomplete statistics, about 60 countries and regions around the world have lifted all entry restrictions related to the new crown epidemic. According to the World Tourism Barometer released by the United Nations World Tourism Organization, in the first quarter of 2022, the number of international arrivals to global tourist destinations will almost triple compared to the same period in 2021.
“In the international market, we are pleased to see strong travel demand in many countries, particularly Europe and Asia Pacific, as the global market recovers from the epidemic. After these countries decided to significantly lift travel restrictions, the business of our international platform Outstanding performance.” Liang Jianzhang said.
The financial report shows that the overall hotel bookings on the Ctrip International platform in the first quarter increased by about 25% compared with the same period in 2019. Local ticket bookings under the Trip.com brand in overseas markets increased by more than 200% compared to the same period in 2019. Among them, markets such as Hong Kong, South Korea, Singapore, Malaysia, the United States, the United Kingdom and the United Arab Emirates grew rapidly.
In terms of international air ticket business, the overall air ticket bookings on Ctrip’s international platform in the first quarter increased by over 270% year-on-year, of which the Trip.com brand achieved a year-on-year increase of about 400%. In overseas markets, local air ticket bookings under the Trip.com brand increased by more than 150% compared to the same period in 2019. In addition, the order volume of overseas destination play products also maintained a year-on-year growth of more than three digits in the first quarter.
Ctrip said in its earnings report that it has become an important partner for overseas destination governments seeking post-pandemic recovery. In the first half of 2022, Ctrip Group’s overseas destination marketing cooperation targets are located in East Asia, Southeast Asia, the Middle East, Europe, America and Oceania, and the scale of cooperation exceeds that in 2021.
Ctrip’s executive team released a more positive signal about the international business performance in the second quarter of this year, “The upward trend in the international market continued to strengthen in the second quarter.”
However, aviation data analyst Li Hanming pointed out that Ctrip Group’s overseas business expansion still faces certain difficulties, “Although the handling fee for international air tickets is relatively high, which is profitable, it is already a very competitive Red Sea market. The income of the international ticketing market may be far less than that of the domestic market; secondly, the international hotel business requires a large number of personnel to be stationed overseas, and the channel cost is relatively higher.”
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