Expanding Asia-Pacific Market Will Drive International Tourism

Key Takeaways

• Rising travel demand in Asia-Pacific and rapid digital adoption are driving strong revenue growth, higher transaction volumes, and improved margins.
  
• Investments in AI and global expansion efforts are boosting user engagement, repeat bookings, and diversifying revenue streams for greater long-term profitability.
  
• Heightened competition, regulatory and geopolitical risks, pricing pressures, disintermediation threats, and sustainability concerns collectively challenge Trip.com Group's long-term growth and margin outlook.

Catalysts

Through its subsidiaries, operates as a travel service provider for accommodation reservation, transportation ticketing, packaged tours, in-destination, corporate travel management, and other travel-related services in China and internationally.

• The rapidly expanding middle class and rising disposable income across Asia-Pacific-which is fueling higher travel demand and international tourism-positions Trip.com Group to capture robust, long-term revenue growth across both inbound and outbound travel markets.
  
• Accelerating consumer adoption of digital channels and mobile-first travel planning, with app-originated bookings already comprising 70% of global orders, supports continued high-volume transaction growth and increasing operational efficiencies, likely benefiting both revenue and net margins.
  
• Significant upside in China's inbound travel market-currently under-penetrated but growing swiftly-combined with easing visa policies and China's inherent appeal, presents a structural opportunity for Trip.com Group to drive outsized revenue gains and incremental earnings over the next several years.
  
• Ongoing investment in proprietary artificial intelligence, personalized recommendation engines, and integrated "one-stop" trip planning tools (like Trip.Planner and Intelli-Trip) is driving higher user engagement, stronger repeat bookings, and better operating leverage, supporting margin expansion and increased customer lifetime value.
  
• The company's international expansion focus, especially in the fragmented, high-growth APAC region and emerging markets like the Middle East, is diversifying revenue streams and providing opportunities for higher-margin growth as Trip.com scales its global presence and brand recognition.

Trip.com Group Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Trip.com Group's revenue will grow by 13.3% annually over the next 3 years.
• Analysts assume that profit margins will shrink from 31.5% today to 27.8% in 3 years time.
• Analysts expect earnings to reach CN¥23.2 billion (and earnings per share of CN¥33.19) by about September 2028, up from CN¥18.0 billion today. However, there is some disagreement amongst the analysts with the more bearish ones expecting earnings as low as CN¥18.8 billion.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 21.8x on those 2028 earnings, up from 18.4x today. This future PE is lower than the current PE for the US Hospitality industry at 24.0x.
• Analysts expect the number of shares outstanding to grow by 1.1% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 8.23%, as per the Simply Wall St company report.

Trip.com Group Future Earnings Per Share Growth

Risks

• Intensifying competition from both local OTAs (such as JD, Umetrip, and others) and global players (especially in APAC and international markets) is leading to elevated marketing and promotional expenses, which can pressure net margins and reduce long-term earnings growth if market share gains are offset by higher costs.
  
• The reliance on outbound and inbound travel related to China exposes Trip.com Group to risks from geopolitical tensions, protectionism, potential regulatory shifts, or travel restrictions that could limit cross-border travel and directly impact revenue and earnings volatility.
  
• Softening Average Daily Rates (ADR) in key domestic and outbound hotel and air ticket segments, despite resilient volume growth, indicate potential structural pricing pressures that may slow top-line growth and compress profitability over time.
  
• Increased adoption of direct airline and hotel booking tools, as evidenced by new direct sales features from platforms like Umetrip, presents a long-term disintermediation risk, potentially eroding Trip.com Group's commission-based revenues and threatening sustainable net margin expansion.
  
• Growing focus on sustainability by consumers and governments, coupled with increasing regulation around climate change and carbon emissions in the travel sector, may dampen long-term demand for high-volume international travel and pose risks to future gross bookings and revenue growth.

Valuation

• The analysts have a consensus price target of $82.621 for Trip.com Group based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $97.26, and the most bearish reporting a price target of just $70.19.
  
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be CN¥83.3 billion, earnings will come to CN¥23.2 billion, and it would be trading on a PE ratio of 21.8x, assuming you use a discount rate of 8.2%.
  
• Given the current share price of $71.23, the analyst price target of $82.62 is 13.8% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.