China’s travellers coming back is good news for Trip.com


Travellers at the Futian Border Control Point in Shenzhen. — Bloomberg

Beijing: Chinese travel stocks have rallied as more tourists hit the road, and may get a further boost after bookings giant Trip.com Group Ltd reports earnings today.

Trip.com shares hit a record in Hong Kong last Friday, rising for a fifth day, and are up 58% this year.

The company is uniquely positioned as both an “enabler and beneficiary” of inbound travel, according to Morgan Stanley analyst Alex Poon. Travel agent Tongcheng Travel Holdings Ltd reached a new high a week ago.

“People’s overall spending has been relatively cautious because of the property sector, job losses and wage cuts,” said James Kenney, senior investment manager at Pictet Asset Management based in Hong Kong. Moving forward, “we’ll see a two-pronged improvement – numbers in terms of the volume will increase, but also people will spend more as they travel”.

Even as the country struggled and retail spending remained sluggish, travel picked up and is one of the stronger consumption categories, according to Morgan Stanley.

Travellers made 28.2% more trips during the Labour Day holiday versus the pre-pandemic level in 2019, according to Bloomberg calculations from Culture and Tourism Ministry data.

The trend looks set to continue. Stronger outbound and inbound international travel is expected after Beijing in January said it has eased visa requirements for 11 countries since July 2023, and as foreign tourists once again warm up to the idea of China as a destination.

“As people want to go back to China again, we think that will be a driver for travel,” Pictet’s Kenney said. Obvious beneficiaries are players like Trip.com’s Ctrip, “but it should help the hotel industry, restaurants and the services”.

The profitability of bookings overseas is about double domestic ones. Outbound travel numbers are back to 80% of the 2019 level during the Labour Day holiday and continuing to improve, said Kenney.

Trip.com itself is expected to report a 26% increase in revenue for the first quarter, according to data compiled by Bloomberg.

Citigroup Inc analyst Brian Gong expects the company to potentially beat market consensus as investors might have underestimated “decent outbound and international as well as margin improvement”.

Hotel groups including H World Group Ltd. will continue to rally too, said May Zhao, Hong Kong-based managing director at Zhongtai International Securities Ltd’s research department.

Some categories still appear to be in trouble. Air carriers may struggle as the travel pickup is “partially being driven by declines in pricing as airlines add back capacity on major routes,” said Eric Zhu, Bloomberg Intelligence’s aviation analyst.

Air China Ltd and China Eastern Airlines Corp in Hong Kong have both underperformed their benchmark year-to-date. — Bloomberg

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