Executive Summary / Key Takeaways

• Trip.com Group (TRPCF) is strategically transforming into a global travel ecosystem leader, leveraging its dominant position in China and aggressive expansion into international markets, particularly Asia-Pacific, with a strong focus on inbound China travel.
• Artificial Intelligence (AI) is a core differentiator, enhancing user experience through personalized planning tools like Trip.Planner and TripGenie, improving operational efficiency, and empowering hotel partners with solutions like Intelli-Trip.
• The company delivered robust financial performance in Q2 2025, with net revenue up 16% year-over-year and adjusted EBITDA increasing 10%, driven by strong demand across all segments, especially triple-digit growth in inbound bookings.
• Significant growth opportunities lie in the underdeveloped China inbound travel market, the rapidly expanding "silver generation" segment (forecasted to exceed $1 trillion in 3-5 years), and the burgeoning "travel plus entertainment" offerings.
• A newly approved $5 billion multi-year share repurchase program underscores management's confidence in long-term value and commitment to shareholder returns, complementing its strong liquidity position.

A Global Journey: Trip.com Group's Strategic Ascent

Trip.com Group Limited, originally founded in 1999 as Ctrip.com, has evolved into a formidable global travel service provider. The company's strategic rebranding in October 2019 to Trip.com Group Limited signaled its broader international ambitions, moving beyond its foundational strength in the Chinese market. This transformation is underpinned by a clear overarching strategy: globalization, the delivery of excellent services, continuous innovation, and a commitment to sustainable growth.

The global travel industry is experiencing a robust resurgence, with consumers increasingly prioritizing experiences over material goods. This trend, coupled with the recovery of cross-border flight capacity—forecasted by the CAAC to exceed 90% of pre-pandemic levels by the end of 2025—provides a fertile ground for growth. Trip.com Group's foundational strengths, including its deep inventory, strong local partnerships, mobile-first approach, and 24/7 multilingual customer support via its Global SOS service, position it favorably within this dynamic landscape. The Global SOS service, launched in 2017, has successfully resolved over 22,400 cases with a 98% success rate, demonstrating a deep commitment to customer safety and support during crises.

The AI Imperative: Powering the Future of Travel

At the heart of Trip.com Group's strategic differentiation is its profound commitment to Artificial Intelligence. The company views AI not merely as a tool but as a cornerstone for revolutionizing the travel industry, enhancing user experience, and streamlining the entire booking process. This AI-driven approach spans the entire customer journey, from initial inspiration and planning to post-sales support.

Trip.com Group's core AI technology leverages advanced language models and proprietary data to deliver highly personalized and efficient travel services. The recently upgraded Trip.Planner exemplifies this, generating customized itineraries based on user preferences for destination, duration, and travel style. It seamlessly integrates real-time transportation, accommodation, dining, and attraction options, complete with pricing and availability. This is powered by millions of data points from Trip.Best, Trip.Pulse, and Trip.Events, ensuring practical and locally relevant suggestions. Users also have the unique option to collaborate directly with real travel consultants to fine-tune their AI-generated plans.

The impact of AI is quantifiable across the platform. TripGenie, the company's AI agent, saw its average user session duration increase by approximately 50% in the first quarter of 2025. In 2024, TripGenie's traffic surged by 200%, browsing time increased by nearly 100%, and the total number of conversations rose by 200%. Furthermore, AI chatbots and self-service tools efficiently handle over 80% of customer inquiries, offering 24/7 support. Internally, AI aids engineers in cutting coding time by 15% to 30%, demonstrating significant operational efficiency gains.

Beyond direct consumer applications, Trip.com Group extends its AI capabilities to empower its partners. The "[Intelli-Trip]" initiative provides hotels with a suite of AI-powered tools to capture inbound demand and improve efficiency. This includes a multilingual AI system offering translation and customer service in 26 languages, tools like the "Hi China tag" to attract inbound travelers, an AI business adviser for real-time operational insights, and an AI content generator for cost-effective video creation. The company aims to partner with 200,000 hotels over the next three years, targeting a 100% growth in inbound bookings, new users, and efficiency. These technological advancements collectively form a robust competitive moat, driving higher customer satisfaction, improved conversion rates, reduced operational costs, and enhanced cross-selling opportunities, all contributing to a stronger market position and long-term growth.

Financial Strength and Operational Momentum

Trip.com Group's strategic investments and operational focus are translating into compelling financial results. For the second quarter of 2025, the company reported net revenue of RMB 14.8 billion, marking a 16% increase year-over-year. Adjusted EBITDA grew by 10% year-over-year to RMB 4.9 billion, reflecting healthy top-line expansion and continued operational efficiency. Diluted earnings per ordinary share and per ADS stood at RMB 6.97 (USD 0.97), with non-GAAP diluted earnings per ordinary share and per ADS at RMB 7.20 (USD 1.01).

Segment-wise, Accommodation Reservation revenue reached RMB 6.2 billion, up 21% year-over-year, driven by robust outbound and international hotel bookings. Transportation Ticketing revenue increased 11% year-over-year to RMB 5.4 billion, with outbound air bookings consistently outpacing market growth. Packaged Tour revenue rose 5% year-over-year to RMB 1.1 billion, primarily due to the expansion of international tour offerings. Corporate Travel revenue saw a 9% increase year-over-year to RMB 692 million, supported by a growing adoption of managed travel solutions.

For the full year 2024, Trip.com Group reported net revenue of RMB 53.3 billion, a 20% increase year-over-year, and adjusted EBITDA of RMB 17.1 billion, up 22% year-over-year. The company's profitability metrics are strong, with a trailing twelve-month (TTM) gross profit margin of 80.86%, an operating profit margin of 26.13%, a net profit margin of 31.50%, and an EBITDA margin of 34.03%. These figures underscore the scalability and efficiency of its business model.

Liquidity remains robust, with cash and cash equivalents, restricted cash, short-term investments, held-to-maturity time deposits, and financial products totaling RMB 94.1 billion (USD 13.1 billion) as of June 30, 2025. This strong cash position provides ample flexibility for strategic investments and shareholder returns.

Strategic Growth Pillars and Outlook

Trip.com Group is actively cultivating several high-growth segments that are poised to drive future expansion.

Inbound Travel to China: This is highlighted as a key growth engine. Inbound travel bookings on the platform surged by over 100% year-over-year in Q2 2025, with national inbound arrivals growing 30% in the first half of 2025. This momentum is fueled by increasingly open visa policies, including visa-free arrangements for over 40 countries and extended 240-hour transit visas. China's inbound travel currently accounts for less than 0.5% of its GDP, significantly below the 1% to 5% seen in developed markets, indicating substantial room for growth. The company is well-positioned to capitalize on this, offering a seamless, one-stop travel experience, affordable luxury, and a rich cultural heritage. The launch of China's first inbound travel service center at Beijing Capital International Airport in August 2025 further solidifies this commitment.

Outbound Travel from China: This segment continues its strong recovery, with outbound hotel and air bookings surpassing 120% of 2019 volumes in Q2 2025, outpacing the broader market by 30 to 40 percentage points. Japan remains a top destination, with rising interest in long-haul Western markets.

The Silver Generation (Old Friends Club): This demographic, comprising travelers aged 50 and above, is a rapidly expanding and influential force. Both the number of Old Friends Club users and their total GMV grew by over 100% since year-end 2024. Management forecasts this market to grow into a $1 trillion-plus market in the next 3 to 5 years, offering significant potential due to their time flexibility and spending power.

Travel Plus Entertainment: This segment, catering to younger travelers seeking immersive experiences, saw revenue grow by over 100% year-over-year in Q2 2025, fueled by the rising popularity of concerts and live events.

Management remains highly optimistic about the long-term prospects of the travel industry, emphasizing continued investment in innovation and support for partners. The company's commitment to sustainability is also notable, with a USD 100 million Tourism Innovation Fund launched and efforts to promote eco-conscious travel options, including a doubling of participation in its low-carbon hotel standard initiative to 3,000 partners.

Competitive Landscape and Strategic Positioning

Trip.com Group operates in a highly competitive global online travel agency (OTA) market, contending with major players such as Expedia Group (EXPE) and Booking Holdings (BKNG), as well as niche providers like Airbnb (ABNB) and regional specialists like MakeMyTrip Limited (MMYT).

Trip.com Group's competitive advantage stems from its deep roots in the Chinese market, where it holds a dominant market share, and its comprehensive, integrated service offerings tailored for Asian travelers. While global rivals like Booking Holdings and Expedia Group excel in established Western markets and possess advanced technological capabilities, Trip.com Group differentiates itself through its one-stop shopping platform, extensive local partnerships, and superior customer service, including 24/7 multilingual support. The company's international OTAs have become the most downloaded OTA app in several APAC markets, including Hong Kong, Macau, Taiwan, South Korea, Singapore, Malaysia, and Thailand, highlighting its strong regional penetration and mobile-first strategy.

The company's AI strategy further sharpens its competitive edge. While general AI agents may replace traditional search engines as traffic entry points, Trip.com Group believes OTAs, with their proprietary user insights, real-time product feeds, and verified inventories, are uniquely positioned to deliver more accurate and trustworthy recommendations. This focus on vertical AI agents, combined with its end-to-end service model, allows Trip.com Group to offer competitive service standards and pricing that general AI alone cannot replicate. The APAC market, characterized by its fragmented resources and low online penetration, presents a vast opportunity that Trip.com Group is actively capturing through targeted and localized marketing investments.

Risks include macroeconomic uncertainties and short-term shifts in travel patterns. However, Trip.com Group's diversified inbound and outbound operations create a natural hedge against major forex changes. The company's strategy prioritizes excellent services and comprehensive product offerings over pure price competition, a philosophy that has served it well for over two decades.

Shareholder Returns and Capital Allocation

Trip.com Group demonstrates a strong commitment to enhancing shareholder returns. As of the Q2 2025 earnings announcement, the company had completed approximately USD 400 million in share repurchases, fully utilizing its authorized quota for the year. In August 2025, the Board approved a new, substantial share repurchase program, authorizing the company to repurchase up to an aggregate of USD 5 billion of its outstanding shares. This multi-year program aims to at least mitigate potential dilution from its ESOP program and potentially reduce the overall share count, reflecting strong confidence in the company's long-term value. For 2025, the company has also distributed USD 200 million in cash dividends to shareholders.

Conclusion

Trip.com Group is at a pivotal juncture, successfully transforming its business model to capitalize on the robust global travel recovery and evolving consumer preferences. Its strategic emphasis on AI innovation, particularly in personalized planning and operational efficiency, provides a significant competitive advantage in a dynamic industry. The company's aggressive expansion into high-growth segments such as inbound China travel, the silver generation, and travel-plus-entertainment, combined with its dominant position in Asia-Pacific, underpins a compelling growth narrative.

With strong financial performance, ample liquidity, and a clear commitment to shareholder returns through substantial buyback programs, Trip.com Group presents a robust investment case. While macroeconomic shifts and competitive pressures remain, the company's disciplined strategy, technological leadership, and diversified market approach position it for sustained growth and long-term value creation in the global travel ecosystem.