Simon Cheung

Simon Cheung of Goldman Sachs requested guidance on the future growth trajectory for inbound tourism to China for 2026 and beyond, given its designation as a core pillar of Trip.com Group's future growth.

Answer

CEO Jane Sun expressed strong optimism for inbound travel, noting its current low GDP contribution compared to other countries and projecting 5x-10x growth potential. She detailed Trip.com's strategy, including promoting 'super destinations,' empowering local partners for global readiness, and enhancing traveler experience, citing 20 million inbound travelers served in 2025 and a goal to double the number of cities with high inbound travel contribution in 2026.

Simon Cheung asked for guidance on the future growth trajectory for inbound tourism to China into 2026 and beyond, given its designation as a core pillar for Trip.com Group.

Answer

CEO Jane Sun expressed belief in a significant and sustainable growth cycle for inbound travel, noting its current low GDP contribution compared to other countries and seeing potential for 5-10 times growth. She detailed Trip.com Group's unique position through local expertise and global reach, and outlined efforts in promoting destinations, empowering local partners, and enhancing traveler experience. In 2025, the company served over 20 million inbound travelers, achieving nearly 100% year-over-year growth, and aims to double the number of cities with high inbound travel contribution in 2026.

Simon Cheung of Goldman Sachs requested more details on the operational and financial performance of the Trip.com international platform ('foreign-to-foreign') and its expected long-term contribution to the group.

Answer

CEO Jane Sun reported that bookings on the Trip.com platform grew over 60% year-over-year in Q2, with the APAC region as the primary contributor. She noted strong synergies with inbound China travel and encouraging momentum in newer markets like the Middle East. The Trip.com rewards program was also credited with strengthening user retention and creating a customer loyalty flywheel.

Simon Cheung of Goldman Sachs inquired about outbound travel trends, the company's performance versus the industry, the full-year outlook, and the potential impact of tariffs and forex volatility.

Answer

CFO Xiaofan Wang stated that cross-border flights recovered to 83-84% of 2019 levels in Q1, with a forecast to exceed 90% by year-end. She noted Trip.com's outbound bookings consistently outperform the market, especially for long-haul destinations. Wang also explained that the company's combined inbound and outbound operations create a natural hedge against foreign exchange fluctuations.

Simon Cheung of Goldman Sachs asked about the 2025 growth outlook for the Trip.com platform, planned initiatives, and whether the company has seen a response from local or global competitors.

Answer

CEO Jane Sun attributed the platform's rapid growth to its one-stop-shop model, excellent user experience, superior customer service, and heavy investment in AI. Regarding competition, she noted that the industry has always been competitive, and Trip.com's focus remains on building internal strengths rather than reacting to specific competitors.

Simon Cheung of Goldman Sachs noted the strong margin performance and the decline in product development expenses, asking for quantification of future AI investments and the margin outlook for the second half.

Answer

CFO Xiaofan Wang projected that margins would follow typical seasonality, with Q3 being the strongest. While marketing expenses may rise slightly, they will remain efficient. Long-term, she expects the China business margin to benefit from scale while overseas operations remain in an investment cycle, with no structural barriers to achieving margins comparable to international peers.

Simon Cheung from Goldman Sachs inquired about the differing margin profiles and take rates for Trip.com's domestic, outbound, and global platform businesses, and asked for color on the trend of declining operating expenses as a percentage of revenue.

Answer

CEO Jane Sun explained that the domestic business has a healthy margin due to scale, while the outbound business has a slightly higher margin due to higher average selling prices. The global Trip.com platform, though in an investment phase, has reached breakeven on a contribution margin basis. She stated that future margin expansion will be driven by operational scalability and improved marketing efficiency, which may be partially offset by expenses for international expansion.

Simon Cheung of Goldman Sachs asked about the new upscale Sahe brand, including targets for hotel count and regions, and requested feedback on the performance and reception of the Atour Light 3.3 version.

Answer

Management reported that the first Sahe hotel in Shenzhen achieved a RevPAR exceeding RMB 800 in its first full month. The expansion strategy for Sahe is 'quality first,' focusing on key cities without a fixed numerical target. For Atour Light, the 3.0 version's RevPAR recovery outperformed the group average, and the new 3.3 version has strong franchisee interest and signing momentum. The long-term goal is to reach 1,000 Atour Light hotels.

Simon Cheung of Goldman Sachs asked for an update on two hotel brands: the newly launched upscale Sahe brand, inquiring about expansion targets and regions, and the Atour Light brand, seeking feedback on the new 3.3 version.

Answer

CEO Wang Haijun (via moderator) reported that the first Sahe hotel in Shenzhen achieved a RevPAR over RMB 800 in its first month. The brand will expand cautiously with a 'quality first' approach in key cities. For Atour Light, the 3.0 version's RevPAR recovery outperformed the group average, and the new 3.3 version has strong signing momentum. Atour Light remains a strategic priority with a long-term goal of 1,000 hotels.

Simon Cheung of Goldman Sachs asked for the company's 2025 guidance on new hotel openings and new signings, following the record-breaking performance in 2024.

Answer

CEO Haijun Wang stated that Atour targets opening 500 new hotels in 2025, maintaining a similar growth rate to steadily advance towards its goal of 2,000 premier hotels. He noted that franchisee demand remains active and expects new signings to remain strong, but emphasized that the company will maintain strict quality control for new projects, particularly for its Atour 4.0 and Atour Light 3.0 products, to protect long-term brand value.

Simon Cheung from Goldman Sachs asked about the timeline to resolve the underperformance of older HanTing brand hotels that are affecting same-store RevPAR. He also inquired about the long-term growth potential and market share expectations for the Crystal Orange and Intercity brands.

Answer

Jason Chen, Head of IR, translated the response, indicating it will likely take one to two years to resolve the issue with older HanTing hotels (versions 2.5 and below) through upgrades and substitutions with the new 4.0 version. For other brands, the company aims for Orange Hotel to become its second growth engine in the midscale segment. Intercity is positioned to become a leading upper-midscale brand within 3-5 years, capitalizing on high-quality properties becoming available due to weakness in the real estate market.

Simon Cheung of Goldman Sachs noted the rapid pace of hotel openings in Q1 and asked if this indicated an upside risk to the full-year guidance. He also inquired about the future growth strategy for the mid-upscale hotel segment, given its current focus on a limited number of cities.

Answer

CEO Hui Jin acknowledged the strong start to the year but stated the company is conservatively maintaining its full-year opening guidance, prioritizing 'high-quality scale growth.' Regarding the mid-upscale strategy, he explained the focus is on establishing strong brand presence in prime locations within Tier 1 and Tier 2 cities to 'reform' the segment, expressing confidence in long-term market leadership.

Simon Cheung of Goldman Sachs noted the rapid pace of hotel openings in Q1 and asked if this indicated an upside risk to the full-year guidance. He also inquired about the growth strategy for the mid-upscale hotel segment, given its concentrated presence in a limited number of cities.

Answer

CEO Jin Hui stated that despite strong Q1 openings, the company is maintaining its conservative full-year target to prioritize high-quality, profitable growth over pure scale. For the upper-midscale segment, he explained the strategy is to first establish a strong brand presence in prime locations within Tier 1 and Tier 2 cities before expanding further, expressing confidence in eventually surpassing competitors in the segment.

Simon Cheung of Goldman Sachs posed three questions regarding the medium-term hotel supply outlook in China and its impact on RevPAR, how softer RevPAR guidance would affect margins, and the long-term strategy for the Deutsche Hospitality (DH) business, particularly in Asia.

Answer

CEO Hui Jin and CFO Jun Zou provided answers. On supply, Mr. Jin stated that the market lacks high-quality supply, not overall supply, and H World's strategy is to provide superior products to gain a competitive edge. For the DH business, he outlined a three-part strategy: an asset-light transformation, continuous cost control, and leveraging the brand for expansion in the Middle East and Asia Pacific. CFO Jun Zou addressed margins, explaining that despite short-term RevPAR fluctuations, margins are expected to improve long-term due to the shift to an asset-light model, flexible budgeting, and disciplined ROI measurement on spending.

Simon Cheung requested more details on the revamped promotional program and asked for guidance on daily operating expenses, particularly with the relaunch of 'The House of Dancing Water'.

Answer

President Evan Winkler explained the new loyalty program focuses on guaranteed benefits for top players and targeted offers for new players to create an aspirational path. CFO Geoff Davis reiterated prior guidance, stating daily OpEx could reach $3.0 million by year-end and that the relaunch of 'The House of Dancing Water' in Q2 2025 is expected to add $0.1 million per day to OpEx.