Trip.com Group — Navigating Macro Headwinds with a Resilient Global Travel Franchise

Trip.com Group Limited is China's largest and the world's second-largest online travel agency by gross booking value. Headquartered in Shanghai, the company operates a portfolio of brands including Ctrip (domestic China), Trip.com (international), Skyscanner (flight metasearch), Qunar (domestic China discount travel), and Travix (Europe). Revenue is generated primarily through commissions on accommodation reservations, transportation ticketing (air, rail, bus), packaged tours, and corporate travel management services. Customers include leisure and business travelers across Greater China, Asia-Pacific, Europe, and the Americas, with a growing base of international users accessing services in 24 languages. The company employs approximately 50,000 staff globally and serves hundreds of millions of annual users, with gross bookings exceeding $100B pre-pandemic and recovering steadily since.

• Near-Term (2026-2027): Recovery of China outbound travel to pre-COVID levels remains the single largest driver — current outbound volumes are estimated at 70-80% of 2019 peaks. Expanded flight capacity, simplified visa regimes for Chinese citizens (e.g., Thailand, Malaysia, Singapore), and pent-up demand for long-haul destinations support double-digit outbound growth. Domestic China travel continues to grow mid-single-digit, driven by leisure resilience and business travel normalization.
• Medium-Term (2028-2030): International expansion beyond China — particularly intra-Asia travel and outbound from Southeast Asia, Japan, and Korea — provides a second engine. Skyscanner's global flight search footprint and Trip.com's localized apps in 39 countries position the company to capture cross-border flows. Corporate travel (Trip.Biz) is a high-margin, underpenetrated segment with significant runway as multinationals expand Asia-Pacific operations.
• Margin Trajectory: We model revenue growth of 12-15% in 2026 and 18-20% in 2027, with adjusted operating margins expanding from approximately 25% to 28-30% as international mix and operating leverage kick in.

Note: Historical figures based on reported results; estimates are analyst projections. Current trailing EPS of $6.38 reflects non-GAAP adjustments and one-time items; our normalized forward EPS estimates are shown above.

The primary driver of earnings growth is operating leverage: revenue growth of 12-18% translates to EPS growth of 20-26% as fixed technology and marketing costs are spread over a larger base. Margin expansion is supported by a mix shift toward higher-take-rate international products and disciplined sales & marketing spend as a percentage of revenue (declining from ~30% to ~26% over the forecast period). Free cash flow conversion remains strong at 85-90% of net income, underpinning balance sheet flexibility.

The global online travel market was valued at approximately $500B in 2025 and is projected to grow at a 9-11% CAGR through 2030, driven by rising disposable incomes in Asia, digital adoption, and the ongoing shift from offline to online booking. Asia-Pacific is the fastest-growing region, with China alone representing over $200B in online travel gross bookings.

Trip.com holds the #1 position in China with an estimated 50%+ share of the OTA market and ranks #2 globally by gross bookings. Key competitors include:

Trip.com's competitive moat derives from scale (largest inventory of Chinese hotels and flights), localized service (24/7 multilingual support), and proprietary technology (AI-driven dynamic packaging). The company's gross margins of ~82% are comparable to Booking's ~85%, reflecting the asset-light agency model. We view the competitive landscape as rational, with Trip.com best positioned to capture China outbound and intra-Asia growth.

DCF Analysis: We apply a 10-year discounted cash flow model with the following key assumptions: revenue CAGR of 12% (2026-2030) moderating to 6% terminal growth; operating margin expanding to 30% by 2028 and stabilizing; a 10% WACC (reflecting China regulatory risk premium and cyclicality); and a 3% terminal growth rate. This yields an intrinsic value of approximately $68 per share, implying 64% upside from the current price of $41.40.

Comparable Multiples:

Note: Trip.com multiples based on current price of $41.40 and our 2026E estimates; peers based on consensus estimates.

Trip.com trades at a meaningful discount to global peers on a P/E basis (11.3x vs. Booking's 18.5x) and a premium to Expedia on EV/Sales, reflecting higher margins and growth. We believe the discount is unwarranted given Trip.com's superior growth profile and balance sheet strength. Our 12-month price target of $60 is derived from a blended approach: 60% weight on DCF ($68) and 40% weight on a peer-relative P/E of 15x applied to 2026E EPS ($3.65), yielding $55 — blending to approximately $63, which we round conservatively to $60.

• China Macro & Regulatory Uncertainty: Slower-than-expected GDP growth, property market weakness, or new regulatory actions against platform companies could suppress domestic travel demand and compress valuation multiples. Government policy shifts on data security or cross-border data flows could disrupt international operations.
• Geopolitical Tensions: US-China trade and technology frictions, potential Taiwan-related escalation, or restrictions on Chinese outbound travel to certain destinations (e.g., visa bans, flight cancellations) could impair the core recovery narrative. The stock's near-zero beta does not shield it from idiosyncratic geopolitical shocks.
• Competitive Intensity: Domestic rivals (Fliggy, Meituan) and global players (Booking, Expedia) could engage in price wars or exclusive supplier agreements, pressuring take rates. Skyscanner's metasearch model faces margin pressure from Google's travel features and direct booking trends.
• Execution Risk in International Expansion: Scaling Trip.com's brand outside Asia requires significant marketing investment and localization; failure to achieve critical mass in new markets could delay margin expansion and dilute returns.
• FX and Interest Rate Sensitivity: With revenues in RMB and USD-denominated ADRs, currency fluctuations (RMB depreciation) can negatively impact reported USD results. Rising global interest rates increase the discount rate applied to long-duration growth assets, pressuring the multiple.