Trip.com Expected to Benefit from Chinese Travel Recovery

Investing.com– Trip.com is expected to benefit from an ongoing recovery in Chinese travel, according to Bernstein analysts. Data since the Golden Week holiday indicates stability in the sector.

Bernstein has rated Trip.com Group (NASDAQ:TCOM) (HK:9961) as Outperform with a target price of $85, offering an upside of just over 27% from Wednesday’s close.

They noted that average daily rates—a key gauge of hotel profitability—have remained steady in October and November, declining at a slower pace after the Golden Week holiday compared to previous holidays this year.

The brokerage mentioned anecdotal evidence indicating that travel trends in major Chinese tourist attractions had softened slightly; however, travel to scenic spots showed growth, likely due to a warmer October and November.

Moreover, outbound flights from China rose by 16% year-on-year in November, while domestic flights grew 10%. Estimated seat capacity for the first quarter of 2025 also showed increased supply towards Canada and America, alongside strong demand for short-haul Asian flights, particularly to Thailand, Japan, and South Korea.

In the near term, the booking data for December and January appears encouraging, as Bernstein stated that it suggests strong travel demand trends remained intact in November. This indicates that Trip.com is still benefitting from “momentum from demand growth and outbound recovery,” which is positive for its fourth-quarter guidance and 2025 outlook.

Trip.com is the largest online travel agency in China and one of the biggest globally. Although the company faced sluggish demand in its primary market for nearly three years, this trend has reversed recently, particularly following Beijing's introduction of several stimulus measures aimed at boosting local growth.

Markets are also closely monitoring for any additional targeted measures from Beijing to support private spending, which is expected to bode well for Trip.com, as it is significantly affected by consumer demand.