Q3 2025 Trip.com Group Ltd Earnings Call

Speaker #1: After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press *1 and 1 on your telephone.

Speaker #1: You will then hear an automated message advising your hand is raised. To withdraw your question, please press *11 again. Please be advised that today's conference is being recorded.

Speaker #1: And I'd like to hand the conference over to your first speaker today, Michelle Qi, Senior IR Director. Please, go ahead.

Speaker #1: ahead. Thank

Speaker #2: Thank you all. Good morning and welcome to Trip.com Group's third quarter 2025 earnings conference call. Joining me today on the call are Mr. Jianzhang Liang, Executive Chairman of the Board; Ms. Jie Sun, Chief Executive Officer; and Michelle Wang, Chief Financial Officer.

Speaker #2: During this call, we will discuss our future outlook and performance, which are forward-looking statements made under the Safe Harbor Provisions of the U.S. Private Securities Litigation Reform Act of 1995.

Speaker #2: Forward-looking statements involve inherent risks and uncertainties. As such, our results may be materially different from the views expressed today. A number of potential risks and uncertainties are outlined in Trip.com Group's public filings with the Securities and Exchange Commission.

Speaker #2: Trip.com Group does not undertake any obligation to update any forward-looking statements except as required under applicable law. Jian and Cindy will share in our strategy and business updates, operating highlights, and financial performance for the third quarter of 2025, as well as the outlook for the rest of the year.

Speaker #2: After the prepared remarks, we will have a Q&A session. With that, I will turn the call over to Jians. Jians,

Speaker #2: please.

Speaker #3: Thank you, Michelle, and thanks

Speaker #3: Thank you, everyone, for joining us on this call today. Travel is thriving, and the travel spirit shows no signs of slowing down. In the third quarter, travel demand surged across markets, led by vibrant domestic travel in China and a steady rise in outbound journeys.

Speaker #3: Travelers are exploring with confidence, seeking authentic experiences and new horizons—reflecting their enduring passion for discovery. This growing enthusiasm is mirrored in the performance of our AI-powered tools, such as Trip Planner, whose recent upgrade has fueled a 180% year-over-year surge in unique visits.

Speaker #3: Inbound travel continues to play a vital role in fostering international exchange, trade, and innovation, generating meaningful economic and cultural benefits. Expanded visa-free entry policies and broader coverage of the 240-hour transit visa exemption have made it easier than ever to visit.

Speaker #3: Bringing the goal of raising inbound travel revenue to 1% to 2% of GDP increasingly within reach. As part of our inbound initiative, Trip.com Group launched "Taste of China," an immersive dining experience that allows international visitors to explore Chinese culture through its rich culinary traditions.

Speaker #3: We remain optimistic about the future of travel by leveraging AI innovation and delivering world-class service. We continue to make travel easier, more personalized, and more enjoyable for every traveler.

Speaker #3: With that, I will turn the call over to Jane for operational highlights.

Speaker #2: Thank you, Jane. Good morning, everyone. As a quick overview, our net revenue in Q3 increased by 16% year-over-year, reflecting strong demand across segments during the peak travel season.

Speaker #2: Travel consumption remained robust throughout the summer and the National Day holiday, with both domestic and international travel markets showing healthy momentum. This performance underscores travelers' growing desire for diverse, immersive, and high-quality experiences.

Speaker #2: Outbound travel continued to post solid growth in Q3, with our outbound hotel and air bookings growing by close to 20% from last year and reaching about 140% of 2019 volumes.

Speaker #2: Japan, South Korea, and Southeast Asian destinations remained the most popular choices, supported by their proximity and visa convenience. At the same time, travelers' radius of exploration continued to expand, as more people sought new adventures and richer cultural experiences.

Speaker #2: This trend was particularly evident during the Golden Week, which was one day longer than last year and sparked stronger demand for long-haul trips. During the holiday, outbound hotel and air bookings surged by around 30% year-over-year, reflecting sustained travel enthusiasm.

Speaker #2: Europe stood out as a key growth region, driven by increased flight capacity and travelers' appetite for in-depth experiences. Bookings to Iceland and Norway more than doubled year over year.

Speaker #2: Spain, Italy, and Germany also grew by approximately 70%. These trends show that travelers are increasingly willing to invest in high-quality travel experiences, highlighting strong consumption power and continued confidence in outbound travel.

Speaker #2: Domestic travel also remained vibrant, fueled by travelers' passion for new and immersive experiences. From cultural discovery to outdoor exploration, the growing diversity of travel demand continues to drive solid market growth.

Speaker #2: Major cities such as Beijing, Shanghai, Chengdu, and Xi'an remained the top choices for their accessibility and offerings. Remote regions including Urumqi, Polhat, and Lhasa also grew by nearly 30%, as more travelers ventured west to discover unspoiled landscapes and rich heritage.

Speaker #2: At the same time, smaller cities are emerging as new favorites for urban residents seeking peace and renewal. Their local charm and slower pace offer a refreshing escape from everyday life.

Speaker #2: Inbound travel continues to connect the world, bringing travelers from across the globe to experience Oriental culture, spark innovation, and drive trade. The Asia-Pacific region remains the largest source of inbound travelers, with Europe and the US also seeing strong growth.

Speaker #2: In Q3, inbound travel bookings on our platform grew by over 100%, reflecting robust international demand. Building on the success of relay-over tours in Beijing and Shanghai, we recently launched a relay-over experience for travelers at Hong Kong International Airport.

Speaker #2: Transit travelers with seven hours or more can book in advance on the Trip.com app or website, or on-site at the airport, to explore Hong Kong's highlights.

Speaker #2: For those seeking a deeper adventure, premium tours provide access to landmarks such as Lantau Island and Victoria Peak, making it easier than ever for international visitors to plan, book, and enjoy these experiences.

Speaker #2: Aiming to become the go-to platform and trusted hub for travelers from around the world, Trip.com Group continues to deliver strong performance on the international front.

Speaker #2: International bookings on our platform grew by around 60% year over year. The Asia-Pacific region remains the largest contributor, rising over 50% in Q3. Across all regions, mobile continues to be a key growth driver, now accounting for over 70% of total bookings.

Speaker #2: Travelers increasingly rely on our app for a one-stop, on-the-go experience, managing hotels and tours seamlessly. Combined with the high service standards and hassle-free bookings, we offer users great convenience and excellent value, fueling continued growth across markets.

Speaker #2: As travel demand expands across borders, it is also diversifying across generations, with spending power three times that of younger travelers. Affluent and active seniors are eager to explore and spend on quality travel, reshaping the market from price competition toward true value creation.

Speaker #2: In Q3, the number of Old Friends Club members and their total GMV rose over 70%. Trip.com Group is tailoring more products and services for this growing segment.

Speaker #2: We launched our first Old Friends Club flagship store in Shanghai to connect with senior travelers face-to-face and introduce themed trips designed around their interests.

Speaker #2: We also formed a dedicated service team of Chief Mom and Dad Officers, friendly travel buddies who travel alongside the seniors, offering support and thoughtful care for their needs.

Speaker #2: Younger travelers are also shaping new trends in travel. Seeking experiences that go beyond the ordinary, in Q3, revenue from this segment grew by triple digits, propelled by the rising craze for concert and live experiences.

Speaker #2: To meet the growing demand, Trip.com Group announced multi-year strategic partnerships with the world's leading live entertainment companies. The collaboration allows fans to plan entertainment trips seamlessly, combining exclusive pre-sale access to shows with flights, hotels, and curated local experiences through our platform.

Speaker #2: As entertainment becomes an increasingly powerful driver of travel, these partnerships help fans follow the artists they love while supporting regional tourism and enhancing destination appeal across Asia.

Speaker #2: We are also strengthening event booking capabilities through our partnership with CityLine Group. Covering Hong Kong and Macau, users can now effortlessly collect tickets via CityLine's extensive self-service kiosk network.

Speaker #2: By connecting online booking with offline ticketing, the partnership delivers a smooth, hassle-free experience for travelers enjoying large-scale events. Trip.com Group remains deeply committed to nurturing the broader travel ecosystem and supporting local economic development.

Speaker #2: By promoting travel products around concerts, festivals, and major sports events, we inspire more travelers to explore these destinations, driving overnight stays and spending, and turning seasonal excitement into lasting economic impact for local communities.

Speaker #2: At the same time, we continue to tailor products and services to meet diverse traveler needs. For example, we are offering Muslim-friendly options highlighting smart toilets for Japanese users and providing foreign currency exchange for inbound visitors.

Speaker #2: To further empower partners and elevate service standards across the industry, Trip.com Group is harnessing technology and AI to help the entire travel ecosystem move forward.

Speaker #2: Hotels can now overcome language barriers with our AI communication tools that respond to guest inquiries in real time. Our AI content generator and training tools also empower hoteliers to produce engaging content and sharpen their digital skills.

Speaker #2: Helping them connect with international guests and with our updated hotel scoring and page ranking algorithms, we encourage hotels to focus on what truly matters: genuine service and lasting guest satisfaction.

Speaker #2: Instead of chasing ratings or rankings, together these efforts help partners stay competitive in a fast-changing landscape and create richer, smoother, and more seamless travel experiences for travelers around the world.

Speaker #2: Travel is a fundamental part of the human experience, and we remain confident in the industry's long-term growth. We will continue to enhance our services and empower the broader ecosystem, driving sustainable growth across the travel industry and the wider economy.

Speaker #2: With that, I will now turn the call over to Cindy. Thanks, Jane. Good morning, everyone. For the third quarter of 2025, Trip.com Group reported a net revenue of RMB 18.3 billion, representing a 16% increase from the same period last year.

Speaker #2: And a 24% increase from the previous quarter, reflecting robust travel demand throughout the summer and the Golden Week holiday. Accommodation reservation revenue for the third quarter was RMB 8.0 billion, representing an 18% increase year over year and a 29% increase quarter over quarter.

Speaker #2: This was mainly driven by strong momentum in outbound and international hotel bookings, along with sustained strength in domestic demand. Transportation ticketing revenue for the third quarter was RMB 6.3 billion, representing a 12% increase year over year and a 17% increase quarter over quarter.

Speaker #2: International air bookings showed robust growth, with outbound air bookings continuing to outpace the market. Packaged tour revenue for the third quarter was RMB 1.6 billion, representing a 3% increase year over year and a 49% increase quarter over quarter, primarily driven by the expansion of our international offerings.

Speaker #2: Our destination services delivered strong growth, with international markets continuing to drive overall expansion. Corporate travel revenue for the third quarter was RMB 756 million, representing a 15% increase year over year and a 9% increase quarter over quarter.

Speaker #2: This was driven by more companies adopting our managed corporate travel services. Excluding share-based compensation charges, adjusted product development expenses for the third quarter increased by 12% year-over-year.

Speaker #2: Adjusted G&A expenses for the third quarter increased by 6% year over year. These were mainly due to an increase in personnel-related expenses. Adjusted sales and marketing expenses for the third quarter increased by 26% from the previous quarter and increased by 23% from the same period last year.

Speaker #2: The sequential increase was primarily driven by broader marketing investments, with incremental spend allocated to our international expansion. Adjusted EBITDA was RMB 6.3 billion for the third quarter, compared with RMB 5.7 billion in the same period last year and RMB 4.9 billion in the previous quarter.

Speaker #2: Diluted earnings per ordinary share and per ADS were RMB 28.61, or USD 4.02, for the third quarter of 2025. Excluding share-based compensation charges and fair value changes of equity securities investments and exchangeable senior notes, non-GAAP diluted earnings per ordinary share and per ADS were RMB 27.56, or USD 3.87, for the third quarter.

Speaker #2: Diluted earnings per ordinary share and per ADS for the quarter were elevated primarily due to a one-time gain from the divestment of one of our overseas investments.

Speaker #2: As of September 30, 2025, the balance of cash and cash equivalents, restricted cash, short-term investments, held-to-maturity time deposits, and financial products was RMB 107.7 billion, or $15.1 billion.

Speaker #2: Looking ahead, we are confident in the continued strength of our business and future opportunities. Our disciplined approach to investment and execution will remain central as we focus on sustainable growth and long-term value creation.

Speaker #2: With that, operator, please open the line for questions.

Speaker #1: Thank you. If you would like to ask a question, please press *11 on your telephone and wait for your name to be announced. To withdraw your question, please press *11 again.

Speaker #1: A moment, please, for our first question. Our first question comes from the line of Joyce Qi from Bank of America. Please ask your question.

Speaker #1: Morning, James, Jane, Cindy, and...

Speaker #3: Michelle, congratulations on another strong quarter, and thanks for taking my questions. AI is clearly top of mind for the market and a key pillar of Trip.com Group's strategy.

Speaker #3: Could management please elaborate on where you see AI heading on your platforms? Specifically, how do you view the trajectory for AI agents? Do you see them going mainstream?

Speaker #3: Thank you very

Speaker #3: Thank you very much. Thank you for the

Speaker #4: AI is a central pillar of Trip.com's strategy, and we are committed to unlocking its full potential for the travel industry. We believe we are at the forefront of this transformation.

Speaker #4: On the user side, we are shifting more touchpoints to AI-driven tools, continuously iterating our AI plus content ecosystem. Our AI agent, Trip Genie, is now used in over 200 countries and regions.

Speaker #4: With users growing over 200% year over year in the first half of 2025, we are also refining the balance between advanced AI search and conventional search to better serve user intent.

Speaker #4: For hotels, search results now evolve from standardized information to real-time recommendations tailored to individual preferences. On the operational side, AI helps detect issues and provide intelligent solutions for complex cases.

Speaker #4: This enhances employee productivity, improves satisfaction and conversion rates, and can help reduce cancellations through smarter, more responsive customer service. Looking ahead, we see AI as a tremendous opportunity to make travel more accessible, reliable, and enjoyable.

Speaker #4: Trip.com is committed to investing in AI to enhance every step of the traveler's journey. By combining cutting-edge technology with 26 years of travel expertise, we ensure seamless experiences that go beyond AI alone.

Speaker #4: We will continue to explore how AI can make every step of the traveler's journey better and enrich the travel experience. Ultimately, travel is about exploration and experience, and we are focused on delivering the best for our customers today and in the future.

Speaker #3: Thanks. future.

Speaker #1: Thank

Speaker #1: You. We will now take our next question from Alex Yao from JP Morgan. Please ask your question.

Speaker #1: Alex. Thank you, management, for

Speaker #5: Taking my question. I would like to ask about some of the near-term consumer behavior and travel trends during the national holiday, as well as during the Mid-Autumn Festival.

Speaker #5: In addition, I think given the current geopolitical tension between Japan and China, can you talk about Japan's revenue contribution to our company and also the financial impact you could expect over the next couple of quarters?

Speaker #5: quarters? Sure.

Speaker #6: I'd be happy to take this question. Alex, first of all, for the national holiday combined with the midterm holiday, we have seen a very strong trend.

Speaker #6: The trend we call is the three Ls: long stay, long distance, and long tail. Because it's a longer holiday, most people go long haul, which is the strength for Trip.com.

Speaker #6: And also, because people are going so far away, we are able to promote many long-tail travel destinations for sophisticated travelers. And the stay is longer.

Speaker #6: So, if you look at the industry, the domestic market posted a very healthy single-digit growth. Cross-border, it was even stronger. The international capacity recovered even further compared to the previous quarter.

Speaker #6: At around 88% of pre-COVID levels, look at our platform. Our long-haul and long-stay segments drive strong growth both domestically and internationally. For our hotel and air bookings, it jumped to more than 30% year-over-year growth.

Speaker #6: And also, for inbound travel, we surged by more than 100% year-over-year for Golden Week holidays. So we are very positive for these holiday seasons.

Speaker #6: Regarding Japan, I think as long as consumers have the buying power, they will travel to different destinations. What we have seen are a couple of factors impacting travelers' behavior.

Speaker #6: First of all, the travel destination needs to be safe and welcoming. Secondly, the visa application needs to be easy. Thirdly, the direct flight is also a very important consideration for travelers.

Speaker #6: So, over the years, we have seen that if a certain destination is impacted, travelers, as long as they have time and money, can choose different travel destinations to go to.

Speaker #6: So overall, on our platform, we haven't seen major impacts so far yet. Thank you.

Speaker #6: you. Thank

Speaker #1: You. We will now take our next question from Thomas Chong from Jefferies. Please go ahead.

Speaker #1: Thomas. Hi, good morning.

Speaker #7: Thank you, management, for taking my question, and congratulations on a strong set of results. My question is about the recent trends in hotel and air ticket prices.

Speaker #7: And what's the outlook for next year? Thank you.

Speaker #6: In Q3, the year-on-year decline in hotel and air ticket prices narrowed to the low single digits. During the Golden Week, both domestic hotel and airfares trended higher, reflecting strong travel demand before easing sequentially after the holiday.

Speaker #6: On the supply side, domestic hotel capacity continues to expand at a mid- to high-single-digit pace year over year, which is likely to keep some pressure on room prices going forward.

Speaker #6: Internationally, flight capacity has now recovered to about 88% of 2019 levels. As a result, cross-border air ticket prices have softened compared with last year, but remain above pre-pandemic levels, while hotel prices have stayed largely stable.

Speaker #1: Thank you. We will now take our next question from Yang Liu from Morgan Stanley. Please go ahead.

Speaker #5: Thanks for the opportunity, and congratulations on a solid result, first. I have one question that, yeah, could you please hear?

Speaker #5: Thanks for the opportunity, and congratulations on a solid result first. I have one question: could you please hear me? Yes.

Speaker #6: We can. Thank you.

Speaker #5: Hey, thank you. My question is: Could management share some insights on the recent consumer sentiment and, more importantly, your early thoughts for the coming year?

Speaker #5: Thank you.

Speaker #6: So we have seen the travel industry remain very strong. People's desire to explore the world continues to grow. Across cultures, this reflects travelers' desire for good products. In terms of leisure travel, it has stayed robust, supported by extra holidays this year.

Speaker #6: Our platform, Long Haul Trips, shows strong momentum. Our hotel and flight bookings rose over 30%, with Europe emerging as a key driving force. Domestically, travelers are also seeking deeper and more immersive experiences.

Speaker #6: And explore less-known destinations. Year-to-date, per capita spending on our platform remains in line with last year. For business travelers, it has remained stable.

Speaker #6: We continue to attract new corporate clients, with average business travel spending on our platform increasing year over year. This growth is supported by Chinese companies expanding their global footprint.

Speaker #6: Looking forward to 2026, at Trip.com Group, we will challenge opportunities to strengthen our foundation. Our focus remains on enhancing our product and service to better meet the evolving needs of our global travelers.

Speaker #6: For international business, our strategy at Trip.com has proven to be very effective in driving rapid market share gain outside of the domestic market in the recent quarter.

Speaker #6: We will also continue to invest globally, particularly across Asia Pacific, to accelerate our growth and expand our presence. Domestically, we're focusing on capturing more demand and providing excellent services to our customers.

Speaker #6: In particular, we tap into the great opportunity for inbound travel and the silver generation and young travelers. We aim to deepen the collaboration with our partners.

Speaker #6: When we bring inbound customers to the domestic market, it drives huge job opportunities and also creates significant incremental opportunities for our hotel partners, flight partners, destination partners, rental cars, etc.

Speaker #6: So we are very positive about the growth in 2026. Thank you.

Speaker #6: you. Thank

Speaker #5: you. Thank

Speaker #1: You. Our next question comes from John Choi from Daiwa. Please go ahead.

Speaker #1: You. Our next question comes from John Choi from Daiwa. Please go ahead, John. Good morning, and thanks for taking my question.

Speaker #5: Question and congratulations on another great quarter. Just quickly, with new strategies from your industry peers in the China market, what kind of impact could this have on your business going forward?

Speaker #5: Thanks.

Speaker #6: Sure. First of

Speaker #6: All, I think the travel market brings joy and happiness to people. Secondly, we invest heavily in our technology and AI, trying to improve the efficiency for the whole industry.

Speaker #6: That will benefit all the players in the market. And thirdly, as you can see, we have a couple of offerings, which are very much liked by the consumers.

Speaker #6: First of all, we provide a one-stop total solution. So when you make a reservation for a flight, customers automatically book a nice hotel with us, and we offer airport transfer.

Speaker #6: We also have trusted lists for destinations and attractions. When you are traveling, if you run into any issues, for example, if certain areas have a tsunami or experience earthquakes, or if a war occurs during your trip, our team will reach out to customers in the destination within two minutes. We will make sure they move to a safe area the very next day if our customers choose to fly back to their home countries.

Speaker #6: We will make prioritized arrangements for our customers so that our capacity and ability to help them in their destination—pre-trip and post-trip—gives our consumers the confidence that when they travel with Trip.com, they have peace of mind.

Speaker #6: We continuously improve our customer service level to ensure we offer the best product, best technology, and best service to our customers. We will continuously do that.

Speaker #6: I think as long as we make the right investment in these areas, our customers will trust our team for our service and product. We will continue to.

Speaker #6: grow. Thank

Speaker #1: You. Our next question comes from Wei Xiong from UBS. Please ask your question, Wei.

Speaker #7: Sure. Good morning, management. Congrats on a solid quarter, and thanks for taking my question. On the international side, it is encouraging to see Trip.com continue to maintain strong growth in the third quarter.

Speaker #7: So, could management maybe share more on our international performance and any regional operational highlights? Thank you.

Speaker #6: Sure. Thank you. In Q3, booking on trip the booking on trip.com increased by around 60% year over year, with APAC growing more than 50%.

Speaker #6: Demonstrating robust growth despite macroeconomic uncertainties. In particular, Asia Pacific remains our operational focus and the largest contributor to our international business growth. Through localizing our products and tailoring our marketing strategy, our brand recognition and market presence continue to strengthen across key markets.

Speaker #6: Trip.com was named the best online travel agency in Asia at the 2025 Travel Weekly Asia Readers' Choice Award. We are now a leading OTA in several key markets, reflecting our growing and solid footprint.

Speaker #6: For the new markets, emerging markets such as the Middle East and Europe also show encouraging momentum, signaling expanding global opportunities. For inbound booking, we surged more than 100% year over year in Q3 by continuously innovating our offerings, such as half-day tours at the Bund or at the Great Wall, and Taste of China immersive dining experiences. We reinforce our position as the pioneer in the inbound travel market.

Speaker #6: So, our international business will continue to grow, and we will make strong investments in this field. Thank you.

Speaker #1: Thank you. We will now take the next question from Brian Gong from City. Please go ahead, Brian.

Speaker #8: Good morning. James James, Indiana, Michelle. Congratulations on a solid quarter. My question is regarding the inbound travel you just mentioned, which is the hottest growing segment for Trip.com.

Speaker #8: Could you provide updates on your inbound business and the key catalysts for the growth ahead? Thank you.

Speaker #6: Sure. When we surveyed the inbound customers, we received very positive feedback. People told us the country is very safe, particularly for women travelers. They can run and jog in the middle of the night, where they cannot even do so in some major cities in their home countries.

Speaker #6: People are very friendly, very hospitable. The food is delicious. The history is very rich, and the infrastructure is very new and effective. On top of it, they find affordable luxury in inbound travel by paying $100 USD or $200 USD; they can stay in a very nice five-star hotel with excellent services.

Speaker #6: So that gives a very good foundation for us to build upon these preconditions. Also, the free visa provides more than 60 countries with the convenience for these people to come for inbound travel.

Speaker #6: And also the extension for in-transit travel from three days to ten days makes it easier for business travelers to come. So we see a great opportunity to capitalize on these opportunities.

Speaker #6: And from our end, because our inventory in China is the most comprehensive one, our service is also very good, and we offer multilingual services. When a customer comes in, we provide 24-hour service.

Speaker #6: If you call our call center within 30 seconds, a live person will answer the call to help you solve the issues on the ground.

Speaker #6: And we remain very alert when they enter the country. So all that combined together enables us to drive the volume for inbound travel very strongly.

Speaker #6: And we will continuously do so. By bringing these inbound customers into the country, we also offer very good job opportunities for young people. We also bring new revenue opportunities for our hotel partners, for our airline partners, for the local tour operators, for major travel destination partners, and also for famous landmark attractions.

Speaker #6: So overall, I think we bring happiness to the consumers who are traveling inbound. We also bring great job opportunities for young people, as well as great opportunities for our partners in inbound travel.

Speaker #6: So, very positive move in this field. Thank you.

Speaker #6: you. Thank

Speaker #1: Thank you. As a reminder, before we take our next question, if you would like to ask a question now, please press star 11 on your telephone.

Speaker #1: Our next question comes from Wei Fang from Mizuho. Please go ahead.

Speaker #1: ahead. Oh, thank you.

Speaker #9: Good morning, James, James, India, Michelle. Congrats on the good numbers. I think I heard there were additional marketing spend allocated to the international business, right, in the quarter?

Speaker #9: I was wondering, can management give us some more updates on your Trip.com marketing progress in the quarter? And what's your plan for next quarter and beyond, like 2026?

Speaker #9: Thank you.

Speaker #6: Sure. Sure. Our marketing strategy on Trip.com delivered solid results in Q3. The scalable nature of our business is now directly improving marketing efficiency in our key targeted markets.

Speaker #6: In Q3, our mega sale in major markets such as Korea, Thailand, and Malaysia reached historical heights. For the quarter, internally, we also empowered our execution team to set our targets.

Speaker #6: Aligned with long-term growth objectives, this approach drives motivation and ensures disciplined control over the key levers of marketing efficiency. Looking ahead, upcoming global holidays will continue to execute our signature campaigns using a proven playbook.

Speaker #6: While staying agile to capitalize on emerging market trends, by combining these opportunities with our long-term strategy, we aim to accelerate revenue growth and strengthen our market position, including expanding our organic mobile user base.

Speaker #6: Thank

Speaker #6: you. Thank

Speaker #1: You. Our next question comes from Parrish Chen from HSBC. Please go ahead.

Speaker #1: ahead. Hi.

Speaker #9: Thank you for taking my question. And hello, team. I have a question more on the recent dynamics in the global market and how they will impact your business.

Speaker #9: And the dynamics on two fronts. Firstly, with your deeper penetration in the region, as you rightly mentioned, are you seeing intensifying competition with the global OTAs like Agoda?

Speaker #9: And my second question is: another trend we have noticed is where Google is pushing paid search instead of SEOs. Does it impact your meta search platform?

Speaker #9: Thank

Speaker #9: you. Sure.

Speaker #6: Thanks for your question. The Asia Pacific market offers huge potential, representing around 60% of the world's total population. Additionally, it is benefiting from a strong economic growth rate, with the middle-income population rising very fast.

Speaker #6: And the GDP growth in this region is the fastest compared to the rest of the world. The region combined has very rich travel resources, from majestic nature to vibrant cities, with a fragmented market.

Speaker #6: And relatively low online penetration, highlighting opportunities for consolidation and digital expansion. So we invest heavily to expand into this market. These market dynamics create a very favorable environment for online travel companies.

Speaker #6: We focus on delivering a one-stop total solution for our customers, with localized products and exceptional customer service for APAC travelers worldwide. Our globalization strategy evolves the insights from each market, driving significant growth in our presence.

Speaker #6: By taking the dynamic and market-specific approach, we are confident in our continuous growth trajectory. Thank you.

Speaker #9: Thank

Speaker #9: you. Thank

Speaker #1: You. Our next question comes from Simon Chung from Goldman Sachs. Please go ahead, Simon.

Speaker #8: Hi, James. James, India, and Michelle, thanks for the presentation. I just have one quick question. So, I think you touched on, when you discussed your package tour business, one of the segments that I'm interested in is your destination service business.

Speaker #8: And the so-called experience markets. I'm wondering whether you can share some thoughts about your long-term positioning and the opportunity over there, especially given reportedly there's some IPO going on in that segment.

Speaker #8: Thank you.

Speaker #6: Sure. The destination service business is quite small compared to the overall pie. We expect our group to deliver around $5 billion in GMV for destination services, which represents only 2% to 3% of our total GMV.

Speaker #6: We drive our volume, and growth is more than 130% year-to-date for Trip.com. The rising demand from the APAC region is strong. We cover about 300,000 offerings worldwide, and we continuously add more products to our platform.

Speaker #6: For us, our strength is one-stop travel platform, covering activity, attraction, transportation, to better match users' demands and enhance overall travel experience. Leverage our large APAC user base, along with the loyalty program and AI tool, we're deepening engagement and driving repeated booking.

Speaker #6: Over the next three to five years, our focus is broadening product coverage and market share. For us, the traffic for destination services is free because our customers already make the air flights and hotel bookings.

Speaker #6: So we don't need to spend money to acquire these customers. The acquisition of these customers is free. On top of it, we don't intend to make any money from destination marketing because it's very small.

Speaker #6: It's mainly to enhance users' experience and make sure our customers love our product and love our platform. So we intend to expand aggressively in this field, aiming to increase loyalty and customer satisfaction to better serve our customers on the flight and on the hotel. This one-stop ecosystem gives us the advantage for traffic acquisition.

Speaker #6: Also take away the pressure for making profit for this very small segment. Thank you.

Speaker #9: Thank you.

Speaker #1: Thank you. And next question comes from Ellie Chung from Macquarie. Please go ahead, Ellie.

Speaker #10: Good morning. Thank you so much, management, for taking my questions, and congrats on the solid print. I have a question on the cost side.

Speaker #10: The operating expenditure came in at slightly lower end of expectations during the third quarter. How should we think about the outlook for the coming quarter and fourth quarter, as well as for 2026?

Speaker #10: Thank you very much.

Speaker #6: If we continue to manage our investments with discipline, on the sales and marketing side, we adjust spending based on each market's maturity and the characteristics of different channels.

Speaker #6: As a result, the overall expense mix may align with business priorities. On the personnel front, as more markets grow rapidly, we are expanding our global presence while maintaining high standards for new hires to ensure strong marginal cost efficiency.

Speaker #6: The quarter-over-quarter increase in operating expenses mainly reflected seasonal factors in China. With the global holiday season approaching, we plan to step up marketing investments as planned, while the marketing ratio may rise sequentially; it will vary year over year depending on regional and channel mix.

Speaker #6: Over the longer term, we remain focused on improving efficiency by growing direct mobile traffic, enhancing cross-selling, and strengthening customer loyalty.

Speaker #1: Thank you. We will now take our last question from the line of Qiu Ting Wang from CICC. Please go ahead, Qiu Ting.

Speaker #10: Good morning. Thanks, management, for taking my question. My question is about Trip.com's margin as our international business grows rapidly. How should we expand margin out of Trip.com next year and in the longer term?

Speaker #10: Thank

Speaker #10: you. It

Speaker #6: It is still too early to provide specific commentary on the margin outlook for 2026. In general, we view margin as a natural result of a dynamic business mix and ongoing improvements in operating efficiency across each business segment.

Speaker #6: In the long run, we do not see any structural limitations to our profit margins. Supported by our innovative strategies, global expansion, and forward-looking investments, our margins could be comparable to those of our international peers.

Speaker #1: Thank you. We have now come to the end of the question-and-answer session. Thank you all very much for your questions. I'll now turn the conference back to Michelle Qi for a closing comment.

Speaker #11: Thank you. Thank you, everyone, for joining us today. You can find the transcripts and webcasts of today's call on investors.trip.com. We look forward to speaking with you on our fourth quarter 2025 earnings call.

Speaker #11: Thank you, and have a good day.

Speaker #3: Thank you very much. See you next quarter.