Trip.com prepares for difficulties albeit profit growth last year

Trip.com, formerly known as Ctrip, posted an 18 percent growth in net profit for 2019, thanks to booming transactions and overseas expansion, China's biggest online tourism agency said on Thursday.

Nasdaq-listed Trip.com expects revenue to drop in the first quarter because of the COVID-19 outbreak. But it said it has prepared for the challenges with salary cuts for top executives and capital flow reserves of up to 60 billion yuan (US$8.6 billion).

Last year, its net profit hit 6.5 billion yuan compared with 5.5 billion yuan the year before. Revenue reached 35.7 billion yuan, a 15 percent growth year-on-year.

GMV, or gross merchandise volume, reached 865 billion yuan, a 19 percent growth. This topped the online tourism industry globally, higher than Booking’s 4 percent and Expedia’s 11 percent.

But revenue is expected to decrease by 45 to 50 percent in the first quarter of 2020, mainly due to the pandemic.

“Tourism demand will be delayed but it won’t disappear,” said Jane Sun, the company’s CEO.

Trip.com is gradually resuming pre-order domestic hotel and trip deals and said there had been a warm market response.

Due to the coronavirus outbreak, people were forced to cancel flights and trips in China and around the world.

Trip.com has returned 100 percent of money to users with most cancelled deals valued at 31 billion yuan. Trip.com and its suppliers and partners share the fiscal loss.

Trip.com said it has sufficient capital flow as it had capital or short-term investment assets valued at 59.9 billion yuan by the end of 2019.

It has announced plans to cut high-level executive salaries by at least half. CEO Sun and James Liang, executive chairman of Trip.com, got zero salary since March. 

“Despite a challenging beginning of 2020, we are confident of the underlying fundamentals of the Chinese economy, and continue to feel excited about the opportunities globally as well,” Liang said.