TOKYO -- China's Trip.com Group said on Wednesday it had made a quarterly profit for the first time since the coronavirus outbreak, underlining how the travel market is bouncing back in Asia's largest economy.
But in contrast to China and other parts of the region, the online travel company said its international business -- which accounted for nearly 50% of revenue before the pandemic -- will take more than a year to recover. It warned investors of the continued uncertainty from cross-border travel restrictions.
Trip.com posted a net income of 1.6 billion yuan ($234 million) for the third quarter through September.
"The company remained lean on operations while starting to invest in resources to capture market rebound," said CEO Jane Sun of the U.S.-listed group during an earnings teleconference on Wednesday. "Domestic air and hotel bookings both turned positive starting in August."
Its air ticketing business grew year on year while domestic hotel bookings increased nearly 20%.
"Strong recovery momentum extended into the fourth quarter," Sun said, adding that the company's domestic hotel transaction volume reached "double-digit growth year on year" during the eight-day October Golden Week holiday from Oct. 1, when over 600 million people traveled within the country.
The robust figures suggest how far Chinese domestic demand is likely to influence wider regional economic activity amid recovery from the pandemic. The Organization for Economic Co-operation and Development said this week that China's economy was forecast to grow 10% from the end of last year to the end of 2021 -- far more than other large economies.
The owner of China's popular Ctrip brand, which recorded net revenue of 5.5 billion yuan for the third quarter -- a 48% decrease from the same period last year -- faced an unprecedented challenge in January and February. Most travel was shut down in China to contain the virus, pushing the company to a net loss of 5.4 billion yuan for the quarter through March.
But a gradual recovery in domestic travel demand has helped Trip.com return to profitability and generate positive cash flow.
Trip.com's livestream platform, which sells package tours to destinations presented during online events, has attracted users eager to travel and contributed to "positive user engagement," said Sun. The way in which the platform displays information has helped partner hotels improve their conversion rate to 5%, she added.
While Ctrip serves midrange to highend customers, the company's other brand Qunar focuses on budget products. Some 40% of Qunar users are under the age of 25 and close to half are from third-tier cities, Sun explained. "Millions of users booked their first flight through Qunar this year, reaching a five-year high," she said.
Ctrip remained cautious on the outlook of its international business, combining overseas Chinese tourists with business travel under Trip.com and other brands in foreign markets.
"In the long run, global markets still present significant opportunities for growth. The pandemic has not changed that," said James Liang, co-founder and executive chairman of Trip.com. "However, in the near term, we have to lean on the domestic market for recovery and ensure our product lineup is perfected to capture such opportunities."
Traffic to the Trip.com site recovered to nearly 70% of pre-COVID levels in the third quarter.
Asked about the prospect for international recovery, Liang said cross-border travel, especially outbound business from China, "will remain low in the next few months."
Despite recent breakthroughs, "it will take time for vaccines to reach the general population ... Full recovery of international travel probably will take at least a year or even longer," Liang said, because of the need for political and international arrangements between governments.