Chinese travel site charts course out of virus fog

March 20, 2020 By TheNewYorkNews

Chinese travel site charts course out of virus fog

Chinese travel site charts course out of virus fog

Visibility is improving for China’s Trip.com. As most of the world hunkers down in place, the $12 billion online booking site reckons it could be through the worst of the virus. First-quarter sales are expected to halve, but boss Jane Sun also sees a rebound coming at home, where the epidemic may be ebbing. It offers a glimmer of hope in a sea of economic gloom.

Travel has been one of the industries hit hardest by Covid-19. In China, the start of the outbreak coincided with the weeklong Lunar New Year festival, a peak time for taking trips. As a result of quarantines and contagion fears, some $4.4 billion of Trip orders were cancelled. Weak demand, along with the company’s generous refund policies, will hurt the bottom line. Its adjusted operating loss may be as much as about $260 million in the first quarter.

BREAKINGVIEWS-Chinese travel site charts course out of virus fog
Condor planes stranded on the ground during Coronavirus pandemic. Picture by Pixabay on Pexels.

Sun is starting to see light through the fog, though. Even as international flights are grounded and countries close their borders, the People’s Republic is gradually lifting curbs. Trip says hotels and airlines across the country are resuming business and it anticipates a quick recovery in domestic tourism. Likewise, smaller peer Tongcheng-Elong earlier this month reported a surge in hotel and flight reservations at the end of February; notably, airline ticket sales for June also have ticked up as travellers look ahead.

Despite the serious risk of a resurgence in cases in China, Trip’s clearer outlook is a far cry from peers such as Expedia and Booking. Both have recently withdrawn financial guidance, citing the pandemic. Moreover, Sun and other executives have gone out of their way to reassure investors and customers, including taking voluntary pay cuts of up to half their salaries and guaranteeing cancellations.

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Nasdaq-listed Trip shares were already faring slightly better for its sector before its latest outlook. After falling by more than a third since the start of the year, they are trading at some 17 times forward earnings, according to Refinitiv data, more than twice as high as Expedia’s valuation. That’s at least one small encouraging sign for those only starting their coronavirus journey.

Chinese travel site charts course out of virus fog
pic by Ketut Subiyanto – Pexels

Source: Reuters.com

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