Trip.com: Bernstein optimistic on China travel recovery

Trip.com is expected to benefit from an ongoing recovery in Chinese travel, Bernstein analysts said, with data since the Golden Week holiday showing stability in the sector.

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

Bernstein said average daily rates- a key gauge of hotel profitability- had held steady in October and November, and had declined at a slower pace from the Golden Week holiday than seen in holidays earlier this year. 

The brokerage noted anecdotal evidence showed travel trends in key Chinese tourist attractions had softened slightly. But travel in scenic spots showed growth, likely reflecting a warmer October and November. 

Outbound flights from China rose 16% year-on-year in November, while domestic flights grew 10%. Seat capacity estimates for the first quarter of 2025 also showed increased supply towards Canada and America, while short-haul Asian flights were underpinned by trips to Thailand, Japan, and South Korea.  

In the near-term, booking data for December and January was encouraging, Bernstein said.

The brokerage said the data suggested that travel demand trends had remained strong in November, which indicated that Trip.com still had “momentum from demand growth and outbound recovery” to buoy its fourth-quarter guidance and 2025 outlook. 

Trip.com is the largest online travel agency in China, and is one of the biggest travel agencies in the world. 

While the company has been grappling with sluggish demand in its biggest market for nearly three years, this trend has reversed in recent months, especially as Beijing rolled out a slew of stimulus measures aimed at shoring up local growth.

Markets are also watching for any more targeted measures from Beijing to support private spending. Any such measures bode well for the firm, which is largely exposed to consumer demand. 

Source: Investing.com