China’s Trip.com CEO says primary challenge is to ensure cash flows this year

Even as the global tourism sector is staring at big losses due to the outbreak of the novel COVID-19, China’s largest online travel agency Trip.com Group CEO Jane Jie Sun is rather optimistic about the future of the industry.

According to estimates available with the World Tourism Organization (UNWTO), there will be as many as 1.8 billion tourists globally a year by 2030.

“Undoubtedly, the global tourism industry has suffered because of the coronavirus. However, the industry does have a future…. there is still room for growth for our group and all players,” said Sun in an interview with DealStreetAsia.

Going forward, the company (earlier known as Ctrip) will continue to work with international groups to extend business developments through novel products and services. “We have remained optimistic about the industry in China and internationally since we are sure that demands are still there,” said Sun.

Established in 1999, the Nasdaq-listed Trip.com has adopted the inorganic route in the past to expand its operations. It acquired the UK travel search site Skyscanner for $1.7 billion in 2016, and the US travel discovery app Trip.com in 2017 for an undisclosed amount. In India, it increased its stake to 49 per cent in MakeMyTrip, paving the exit for early investor South Africa-based global internet group Naspers Limited.

More recently, Trip.com made headlines for forging a joint venture with global travel platform TripAdvisor. Back home, it announced a tie-up with rival Qunar Cayman Islands Ltd in 2015 to tap the rising number of Chinese travelers heading overseas.

The primary challenge for the company at the moment is to ensure cash flows this year. “It was challenging when the pandemic hit the country at the beginning of 2020. Tens of millions of orders have been cancelled,” said Sun. However, she added that the industry in China has begun to show signs of a pickup. “A good sign is that the bookings are soaring among domestic trips. The next stage is to work with travel bureaus to discover more destinations in China and foreign countries where COVID-19 is controlled.”

Edited excerpts:- 

How has the COVID-19 pandemic impacted business operations?

It was challenging when the pandemic hit the country at the beginning of 2020. Tens of millions of orders have been cancelled with GMV totaling over 31 billion yuan ($4 billion), while the customer-protected call flows have increased 20-fold.

A good sign is that the bookings are soaring among domestic trips. The next stage is to work with travel bureaus to discover more destinations in China and foreign countries where COVID-19 is under control.

Have you found solutions to ensure cash flows for this year?

We realized (the) business would fall dramatically as we were hit by the novel coronavirus. To ensure our financial terms remaining strong and having enough cash flows, I along with our chairman James Liang agreed to take zero salaries aligned with a volunteered pay cut to 50 per cent in leadership teams.

Our Tourism Recovery V plan, with V standing for victory, is ongoing. We have great prepaid deals from travel suppliers. As for business investments, we will always stick to the three principles which are tourism-oriented, market leaders and reasonable prices.

What opportunities and challenges are you seeing during the pandemic?

In terms of opportunities, for our group, we aim to maintain and continue to invest in the fields including manpower, customer service, and new technology. Meanwhile, we target to innovate our products and services. Currently, we are looking at trip-prepaid bookings, which we need to find a way to boost customers’ confidence – keeping the situation in control while allowing people to feel safe on travel.

The primary challenge for us comes from customer supports such as booking cancellations and refunds at the start of the outbreak dealing with millions of bookings and a huge quantity of calls. For the tourism industry, we think that challenges and setbacks will linger, or will have limited advancements, thus the result might depend on whether we can find solidarity. We are in this together as one world – one team, so we cannot and must not isolate anyone. This is the case for all countries and certainly, all are involved in the tourism ecosystem.

Have you noticed any shift in China’s tourism industry over the past few years? What are the trends? 

The concept of travel was nascent in China, and its citizens had a great desire to travel with rising disposable earnings and decreasing passport limitations. As a result, it has facilitated the industry to offer online travel services. It also witnessed that personalized tours or theme tours have been on the rise. Although travelers from first-tier cities have a significant contribution to the customer base, new top-tier cities [current at third or second-tier cities] are showing huge potential from different demographics such as middle-aged and senior travelers.

Could you take us through Trip’s global business strategies? 

We will continue to work with international partners and groups to extend business developments through novel products and services. We have remained optimistic about the industry in China and internationally since we are sure that demand is still there and will have a climax.

The tourism market in the world is already crowded. Is there enough room for more players? 

Every single industry has competition and dynamics, so I do believe that there is room for development in the travel industry. If you look at China, traveling domestically has been blooming and they will persist in traveling overseas as passport freedom is going up. Likely, the Chinese government is making efforts to attract foreign travelers as The Winter Olympic Games 2022 is coming up in Beijing.

Undoubtedly, the global tourism industry has suffered because of the coronavirus. However, the industry does have a future. As predicted by the World Tourism Organization (UNWTO), there will be 1.8 billion tourists globally a year by 2030. Therefore, there is still room for growth for our group and all the players.

How do Trip’s business strategies differ from other players in the China market?

We are a one-stop travel solutions provider offering desired products and services to cater to corporates, business travelers, family tours, individual travelers, among others. Besides, we also provide a wide range of services to suit demands covering travel insurance and visa. Overall, we dedicate to creating a greater range of travel solutions.

What’s your outlook for Chinese tourism development in the coming 15 months? 

I keep a positive perspective for the future. Recovery needs time, so it will take steps. The thing in common is that the industry has to elevate confidence in the domestic market and then shift to overseas.

Do you think the Chinese government will support to recover the industry?

As China reopens, more than 20 local authorities handed out tourism consumption coupons to its citizens in a bid to fuel the economy. In order to promise safe tourism, the Chinese government has regulated the policy of tourist attraction appointment across the nation with maximum visit capacity less than 30 per cent of its own, and it has also called for smart tourism.

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Following vacancies can be applied for (only in Singapore).   

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.