Trip.com Group Limited

to enhance our services by making travel planning more personalized and efficient. We believe AI agents will not replace OTAs. Instead, they will complement us. They are likely to replace traditional search engines as primary entry points for traffic, opening new customer acquisition channels for OTAs. Trip.com provides value that AI alone cannot replicate, particularly in two areas. Firstly, our extensive real-time proprietary travel insights are key to delivering accurate and personalized travel recommendations. Secondly, our end-to-end service model and open platform approach enable us to offer competitive service standards and pricing tailored to diverse customer preferences. We recognize the vast potential of generative AI in the travel industry and are committed to furthering our investment in this field. We are eager to introduce more user-friendly and valuable features in the future.

Thank you. And one moment as we move on to our next question. And our next question comes from the line of Alex Yeo with JP Morgan. Your line is open. Please go ahead.

Thank you, management, for taking my question, and congrats on good quarter. So my question is, how do you view the current leisure and business travel demand? How do you view the growth trajectory for 2025? And lastly, what are the primary drivers that's going to support the revenue growth? Thank you.

Thank you, Alex. We have seen travel industry is very resilient, particularly after COVID is over. The surge of the travel demand is really strong. In particular, there are a couple of segments we're targeting in. The first one is domestic travel market. We have seen young people have shown great enthusiasm, travel around the world to visit different sites. And event plus travel is really a trend for young people. The second traveling force is for the early retired generation. This is the generation which has money, is energetic, and is very curious to explore the world. So we have a special package for silver generation. The third driving force is the further opening up of the borders. We have seen many countries offer relaxed visa restrictions to Chinese travelers. So that gives another engine for us to bring people around the world. And we also see the recovery of direct flights. based on the official data, by the end of this year, direct flight will recover to approximately 90% to 95% of pre-COVID level. So all these factors give us a very strong engine for the travel industry's growth. And going forward, for the next three to five years, we'll make strong investment to further improve provide excellent services and comprehensive products for our customers around the world. If you look at the Asian market, it's about 150% compared to the China market. So it's huge potential. And our results have shown that we grow in the Asian market outside of China at a rate of more than 80% year-over-year. So we'll keep up with this strong investment to make sure we offer services for the global customers. Thank you.

Thank you. One moment as we move on to our next question. Our next question comes from the line of Yang Lu with Morgan Stanley. Your line is open. Please go ahead.

Thanks for the opportunity and congrats on the solid results. My question is that your operating margin reached the record high in 2024 over the past decades. How do you expect the margin to trend in 2025 and beyond? Thank you.

Yeah, we actually never set a specific margin target. Instead, we consider margin as a natural outcome of a dynamic business mix and continuous improvement in our operational efficiency across each business unit. In the near term, we will continue to prioritize our overseas business extension, which are strategic and essential for unlocking significant long-term growth opportunities as well as Additionally, we are also very excited about the transformative potential of AI-driven solutions, which will play a key role in enhancing our operational efficiency, streamlining our operations, and mitigating cost pressures over time. In the longer-term period, we see no structural limitations to our profit margins. it could be comparable to those of our international peers supported by our innovative strategy, global expansion, as well as forward-looking investment. Thank you. Thank you.

Thank you. One moment as we move on to our next question. Our next question comes from the line of Joyce Chu with Bank of America. Your line is open. Please go ahead.

Good morning, James, Jane, Cindy, and Michelle. Congrats for the strong results, and thanks for taking my question. My question is recent business trend related. Could management share updates of your performance during the Chinese New Year and post-holiday trend with us? How did hotel price such as ADR or take rate change recently? What is the outlook for 2025? Appreciate any comments.

Thank you. During the Chinese New Year, we observed several encouraging trends. Firstly, the overall travel demand remained very healthy. Many travelers choose to leave earlier or return late to avoid peak traffic, resulting in a more even distribution of demand during and around official public holidays. Travelers expanded their travel radius to more distant destinations, partly thanks to the longer period of the public holiday period, with cross-border trips being particularly popular despite headwinds in certain areas. And outbound travel booking increased by over 20% year over year, while inbound travel maintained triple-digit growth, during the Chinese New Year holidays. After the holiday, what we observed is the travel activities maintain a healthy momentum. Thank you. Sorry, for the hotel prices and outlook for the 2025, the industry data shows that hotel prices are still below last year's level. but they're gradually approaching them. The hotel supply increased to a high single-digit percentage year over year, reflecting continued market confidence in the travel industry. And we believe the ongoing improvement in the travel infrastructure will further benefit the industry in the longer-term period. And looking ahead to the year 2025, We anticipate that the growing travel demand and normalizing supplier growth will stabilize the hotel price. Thank you. Thank you. Cool. Thank you.

Thank you. One moment as we move on to our next question. And our next question comes from the line of Wei Xiong with UBS. Your line is open. Please go ahead.

Good morning, management. Thank you for taking my question. and congrats on the very good growth this quarter. My question is about the outbound travel. So could you please update on the outlook for outbound flight capacity improvement this year? Have we seen any impact on outbound travel demand from the recent incident in Thailand? Also the higher prices due to FX changes. Also for our group, our outbound travel growth have consistently been outperforming the industry. How do we keep this outperformance going forward? Thank you.

Thank you. Our overall flight capacity reached over 80% of 2019's level in the fourth quarter and increased further during the Chinese New Year holiday. And according to the CAAC, total international flight capacity could recover to more than 90% by 2025, indicating a double-digit year-over-year growth. Despite tapwings in certain major destinations, Our total album booking grew by 20% to 30% during the Chinese New Year holiday. We believe that some travelers just simply switched their destinations. And with regard to the impact from foreign exchanges, as far as today, we see no significant correlations between the forest rates and the international air price so far. For the continuous outperformed industry growth, what we focus is just by continuously enhancing our product offering as well as the service quality. And with the continuous investment in the trip.com business, we are able to further enhancing our international product offerings. To some extent, it will also benefit and fuel our growth for the outbound business travel. Thank you.

Thank you. Thank you. And one moment as we move on to our next question. Our next question is going to come from the line of Simon Chung with Goldman Sachs. Your line is open. Please go ahead.

Hi, thanks for taking my question and also the presentations. Just one quick question on follow-up on the trip.com platform. You have accelerated growth over 70% in the fourth quarter. Wondering what is the outlook for 2025 and what are some of the initiatives that you are planning to do? I remember that you did mention now you have coverage of over, I think, 30 countries globally, for example. And then secondly, I think whether you are starting to see some response from some of your local competitors or even some of the global competitors, like, you know, a golden booking. Thanks for that. Thank you.

Yeah. So for the Trip.com business, it's growing very rapidly. I think we focus on our internal strength. which includes providing one-stop shopping platform, which makes travel very convenient for our travelers. Secondly, the user's experience is excellent. And thirdly, we also focus on providing excellent customer service to the global customers. And lastly, we also invest heavily in AI. So with all these concerted efforts, we have seen very promising growth going forward. We'll keep up with our efforts. Travel is a very robust industry. So ever since Trip.com was established, we have seen competition from different players. But our focus has always been to use our internal strengths to provide the best service and best product for our customers. and naturally our footprint will grow. Thank you.

Thank you. Thank you. And one moment as we move on to our next question. Our next question is going to come from the line of Jack Yuan with Mizuho Securities. Your line is open. Please go ahead.

Great. This is James Lee at Mizuho. A quick question on inbound travel in general. It sounds like you guys are off to a great start. Just curious what the current contribution of inbound travel to your business and what is sort of expected growth rate going forward? And maybe, you know, a big picture question over a longer term, several years from now, how should we think about the level of contribution for inbound travel? Thank you so much.

Yeah, inbound travel has great potential. Globally, if you look at the countries, which attracts lots of inbound customers, inbound travel can contribute anywhere between 2% to even 10% of their GDP, depending on different countries. For China, we just started the inbound travel. We have given more than 40 countries free visa. We also extended in-transit visa from three days to 10 days. So that makes the Inland Travel very convenient. Last year, we invited more than 2,000 global partners to Shanghai for a summit. And after that, we chartered four planes to take them from Shanghai to Zhangjiajie, where the movie Avatar was filmed. And the feedback we got was very positive. All the people told us that they were very pleasantly surprised by what they have seen. It's very clean, very safe. People are very friendly. The history is very rich, and the infrastructure is excellent. So we can see as long as we put concerted efforts to promote inbound travel, it can become trillion-dollar contribution for this industry. And CryptoCon is very well positioned. because our inventory is the most comprehensive. Service is outstanding. So we would like to welcome more friends from all over the world to come and visit us. So this is a very promising field for us to make our investment going forward in the next five to ten years.

Great. Thank you so much.

Thank you. Thank you. And one moment for our next question. Our next question is going to come from the line of Jian Xiao with Barclays. Your line is open. Please go ahead.

Thank you very much for taking my question. I'm glad you talked about the enhanced capital return program for 25 earlier. I was just wondering, could you firstly remind us when is the dividend payout date for that $200 million and for your $400 million buyback this year? Any updates so far? Have you brought any shares back? Could you also remind us sort of what's beyond this year if you have announced any other program beyond 2025? Thank you so much.

The dividend registration date for the Hong Kong shareholder is on the March 21st, 27th, sorry. And the U.S. shareholders, the registration date is on the April 1st. And in the year 2024, we fully executed the U.S. dollar 300 million share repurchase plan which reduced approximately 1% of our outstanding shares. And for the year 2025, the Board of Directors authorized a new capital return program, and this includes a share repurchase program of up to US$400 million and a cash dividend totally approximately US$200 million, effectively doubling the size of our 2024 capital return program. And looking ahead, we will remain committed to increase our shareholder returns through sustainable business growth while also actively seeking opportunities to further enhance the values through our capital return program. Thank you.

Thank you very much.

Thank you. And I would like to hand the conference back over to Michelle Chi for closing remarks.

Thank you. Thank you, everyone, for joining us today. You can find the transcript and a webcast of today's call on InvestorsTrip.com. We look forward to speaking with you on our first quarter 2025 earnings call. Thank you, and have a good day. Thank you. Thank you.

This concludes today's conference call. Thank you for participating, and you may now disconnect.