Why Chinese online travel site Trip.com’s $18 billion rally may have more room to grow

Although the economic slowdown has reduced domestic consumer spending, China’s travel boom is not thanks to adventure-seeking millennials, says Jane Sun, 56, CEO of online travel booking site Trip.com. “If you ask young people in China today what their first priority is, travel is number one,” he says in an interview on the sidelines of the recent Forbes Global CEO Conference in Bangkok. “Covid has changed the mindset of people.”

According to the World Travel and Tourism Council, Chinese travelers are forecast to spend 1.8 trillion yuan ($250 billion) on international travel this year, up 42% from the previous year and surpassing the pre-pandemic 1.7 trillion yuan in 2019. After experiencing lockdowns during the Covid-19 pandemic, travel demand in the world’s second-largest economy has rebounded due to a fundamental shift in the spending habits of young Chinese, added Sun. Forbes AsiaA list of rising businesswomen in 2018.

Rising demand for airline tickets and hotel bookings has boosted Trip.com’s bottom line, with the company’s net profit rising nearly 50% year-on-year to 6.8 billion yuan in the third quarter through September, with revenue up 16% to 15.9 billion yuan.

Looking ahead to 2025, Sun says he has reason to be optimistic, noting that Chinese tourists are showing interest in some long-haul destinations, including Australia and South Africa, in addition to their favorite tourist hot spots such as Japan, Singapore and Thailand. . And people are willing to explore remote and lesser-known inland places, he adds. For example, Jibo, a previously unknown industrial city in Shandong province, saw a sudden influx of tourists last year.

Trip.com’s strong revenue growth pushed its stock to an all-time high in October; Shares are up 80% so far this year, boosting the company’s market value by $18 billion to $41 billion, making it one of the best performers on the Nasdaq Golden Dragon China Index.

A fierce price war with local service giant Meituan offered coupons and subsidies against hotel bookings made on its sites. Qi adds that Trip.com’s share price is likely to rise further as it currently trades on the Nasdaq at a price-to-earnings ratio of 22.6 times, which lags behind US rival Booking Holdings’ PE ratio of 34.5 times.

Kai Wang, a Hong Kong-based analyst at Morningstar, thinks Trip.com is overvalued at current levels, saying earnings growth in 2025 and beyond will justify further upside in the stock. He adds that travel is one of his preferred sectors because it will not be directly affected by the escalating China-US trade war with President-elect Donald Trump’s threat of higher tariffs.

Sun says he has other ideas to attract customers. Founded 25 years ago, the company plans to add event-related products such as concerts. He cited Taylor Swift’s sold-out Eras tour, which included Australia, Japan and Singapore.

“We will continue to innovate,” Sun says. “As long as customers need products, we add products.”