Affected by COVID-19, the sharp decline in international tourism and massive cancellations of orders in the first quarter of 2020 caused a sharp downturn in Trip.com's financial performance.
►Trip.com recorded net losses of CNY 5.4 billion (around USD 754 million) in Q1 2020, with a significant deterioration compared to the net income of CNY 4.6 billion for the same period in 2019.
►Trip.com is expecting its revenue in Q2 to decrease year-over-year by a figure between 67% to 77%.
The pandemic caused a significant reduction in travel demand, which led to a sharp decline in Trip.com's (Nasdaq:TCOM) orders in the first quarter of 2020. Besides, the impairments and bad debt provision of long-term investments have increased.
On May 29, Trip.com released its financial results for the first quarter of 2020. The company recorded a revenue of CNY 4.7 billion (around USD 669 million) with a y-o-y drop of 42%. Net losses were CNY 5.4 billion (around USD 754million), with a significant deterioration compared to the net income of CNY 4.6 billion at the same period in 2019. The operation losses recorded CNY 1.5 billion (around USD 211 million) – mainly because of cancellations related to the COVID-19 that induced a large bad debt provision of CNY 1.2 billion.
As of May 31, Trip.com held cash and cash equivalents of CNY 68.2 billion (around USD 9.6 billion).
In responding to the pandemic-affected economy, Trip.com lowered its total costs and expenses by 14% in the first quarter, taking quick actions to limit its budget.
Management woes in the COVID era
The pandemic has presented challenges to the global tourism industry. Fortunately, the adverse effects are fading, with travel activities reaching a plateau in many places. The industry hit its low point in February and now is on the uptrend. During the pandemic, Trip.com took steps in the first place to protect consumer interests and ensure the capital reserves. The management team has confidence in building an even more robust company after the downturn, with the advantages held by the forces of industry recovery.
Performance outlook
Given the fact that the pandemic will continue to affect the tourism industry to some extent in the second quarter of 2020, Trip.com is expecting its revenue in Q2 to decrease y-o-y by 67% to 77%.