Trip.com Group Limited American Depositary Shares 2026 Q2 Earnings Call

Good morning and good evening. Welcome to Trip.com Group's second quarter of 2026 earnings conference call. Joining me today on the call are Mr. James Liang, Executive Chairman of the Board, Ms. Jane Sun, Chief Executive Officer, and Ms. Cindy Wang, Chief Financial Officer. During this call, we will discuss our future outlook and performance, which are forward-looking statements made under the safe harbor provision of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, our results may be materially different from the views expressed today. A number of potential risks and uncertainties are outlined in Trip.com Group's public filings with the Securities and Exchange Commission. Trip.com Group does not undertake any obligation to update any forward-looking statement except as required under applicable law.

James, Jane, and Cindy will share our strategy and business updates, operating highlights, and financial performance for the second quarter of 2026, as well as some outlook for the third quarter of 2026. After the prepared remarks, we will have the Q&A session. With that, I will turn the call over to James.

James, please. Thank you, Michelle, and thanks everyone for joining us today.

The global travel industry faced a more challenging operating environment this quarter. Macroeconomic and geopolitical uncertainties continued to create volatility across markets. Elevated fuel prices and airfares increased the cost of travel and weighed more heavily on longer-haul demand. Despite these pressures, travelers' appetite for exploration remained resilient, with demand shifting towards shorter-haul destinations. We believe these near-term dynamics do not change the long-term trajectory of global travel. Travel remains a fundamental consumer need, and global connectivity continues to expand as travelers seek higher quality, more personalized experiences. Against this backdrop, our strategic priorities remain clear. Globalization and great quality continue to anchor our long-term growth. Globalization represents a significant structural opportunity. We are particularly bullish on the long-term potential of inbound travel. China offers an unparalleled breadth of destinations, culture, and experiences.

We believe inbound travel remains well below its full potential and is entering an important phase of structural growth. To capture this opportunity, we have committed to accelerating the development of inbound travel. We will invest to build a stronger inbound travel ecosystem, empower local partners, and make the country more accessible to travelers around the world. Capturing this opportunity requires more than expanding our global reach. It also requires us to compete on the quality of the products and experiences we deliver. This is the second pillar of our G2 strategy: great quality. We believe travel growth will increasingly be defined by differentiated products, superior service, and compelling value for travelers and partners. These are capabilities we have built over many years, and they will become increasingly important as consumer expectations continue to evolve.

We believe the industry is moving in the same direction, with competition increasingly centered on quality, value, and experience. This evolution is closely aligned with the direction of our G2 strategy. Technology is also reshaping the travel experience, with AI rapidly transforming how consumers discover, plan, and experience travel. We are advancing our proprietary AI capabilities across the travel journey, making travel more personalized, seamless, and valuable. We are seeing growing evidence that AI is becoming an integral part of the travel journey. AI-assisted orders through TripGenie on Trip.com increased by approximately 400% year-over-year, and nearly 60% of TripGenie interactions are now booking related, spanning hotels, flights, and attractions. These trends demonstrate that travelers are increasingly relying on AI not only for inspiration, but also to make and fulfill travel decisions. Importantly, we believe AI will make the underlying infrastructure of travel even more valuable.

AI may transform how travel is discovered, but it does not eliminate the complexity of delivering travel. Every trip still depends on high-quality supply, trusted information, real-time availability and pricing, transaction infrastructure, fulfillment, and reliable service. These capabilities are built on deep industry relationships, technology, and operational expertise, and are difficult to replicate. Our longstanding investments in these capabilities position us well for this next phase. We will continue to combine the power of AI with our global travel infrastructure, making travel easier and better for consumers and creating greater value for our partners. Looking ahead, our confidence in the long-term opportunity has never been stronger. We are excited about this next chapter and remain firmly focused on building a stronger, more innovative, and more valuable global travel platform for travelers and partners around the world. With that, I will turn the call over to Jane for operational highlights.

Thank you, James. Good morning, everyone. For the second quarter of 2026, our group net revenue totaled RMB 15.7 billion. Despite a more complex operating environment, Trip.com Group continued to demonstrate resilience in the second quarter. Our international businesses continue to grow strongly with inbound and world-to-world travel increasingly contributing to our overall momentum. Inbound travel continued to be one of our fastest-growing businesses in the second quarter, with revenue increasing high double digits year over year. APAC remains our core source market, supported by frequent travelers from markets such as Korea and Southeast Asia. Travel behavior is also evolving. They are venturing beyond traditional eastern coastal destinations and increasingly exploring central and western parts of the country.

They are also shifting from traditional sightseeing and landmark visits toward more immersive cultural experiences centered around local cuisine, traditional culture, and intangible cultural heritage. We are also seeing growing demand for family travel from key source markets, particularly during holidays and school breaks. At the same time, international events are creating additional opportunities to drive inbound travel. Events such as the Canton Fair in Guangzhou and our Envision Global Partner Conference provide natural opportunities for international visitors to extend business trips into leisure travel. To capture these opportunities, we are working closely with local partners and destinations to improve international visibility, strengthen multilingual services, and better serve overseas travelers. We are committed to supporting the development of inbound travel with an ambition to serve 200 million inbound travelers over the next five years.

Our goal is to bring more destinations, experiences, and local businesses into the global tourism ecosystem and capture the next phase of inbound travel growth. On the international front, global travel is increasingly becoming a structural growth engine for our platform, powered by expanding international supply and growing demand from travelers around the world. During the quarter, revenue on our international OTA platform increased over 50% year-over-year, supported by higher transaction value and a favorable mix despite elevated fuel prices and airfares weighing on travel demand. Importantly, this growth is increasingly driven by higher quality and more personalized travel demand. In the first half of 2026, first- and business-class flight bookings on Trip.com increased more than 70% year-over-year. Customized tour bookings, where travelers can work directly with a travel expert to design a trip around their specific needs, increased 600%.

These trends point to growing demand for premium travel options, greater personalization, and unique experiences. We are continuing to strengthen our presence across key international markets and expanding our supply, localized products, and service capabilities globally. More importantly, the composition of this growth reflects the increasing diversity of our platform. We are increasingly enabling travelers from around the world to discover destinations globally. This creates a significantly larger addressable market and provides a strong foundation for the next phase of our global growth. Turning to outbound travel, demand remained resilient in the second quarter, although travelers continued to be selective amid a more complex macro environment. Travel intent remained healthy, with holidays and major events, including sporting events and entertainment, continuing to drive meaningful travel demand. At the same time, higher fuel prices and airfares weighed on overall outbound growth.

We are seeing travelers adjust their destination preferences in response to higher travel costs, with short-haul and visa-free destinations capturing a larger portion of outbound demand. Travelers have also been responsive to changes in airfare, adjusting their destination and travel plans as prices fluctuate. We view these dynamics as primarily cyclical rather than structural. As these temporary cost pressures ease, we believe outbound demand has the potential to return toward its underlying growth trajectory. Turning to domestic travel, demand remained robust in the second quarter, supported by a series of holidays and the continued rollout of spring break programs.

The Qingming, May Day, and Dragon Boat Festival holidays each generated strong travel demand, and spring break is creating additional travel occasions for families. In the spring break pilot cities, family travel bookings and spending both increasing more than 300% year-over-year, approximately five times the growth rate of non-family travelers. Overall, bookings in these cities increased nearly 150%, with spending up nearly 200%. We are also seeing a shift in where and how people travel. Less traditional, lower density destinations are growing faster than major tourist attractions. Short-haul trips, city breaks, rural leisure, and educational experiences are becoming increasingly popular. Travelers are also moving beyond single attraction sightseeing toward more immersive experiences that combine tourism with dining, accommodation, transportation, culture, and other local offerings.