Trip.com Group Limited (TCOM) 2021 Q3 法說會逐字稿

Thank you for standing by, and welcome to the Trip.com 2021 Q3 Earnings Conference Call. (Operator Instructions) I would now like to hand the conference over to Michelle Qi, Trip.com IR Director. Please go ahead.

感謝各位耐心等候，歡迎參加 Trip.com 2021 年第三季（Q3）財報電話會議。（接線員指示）現在我想把會議交給 Trip.com 投資人關係總監 Michelle Qi。請開始。

Thank you, Darcy. Thank you all.

謝謝你，Darcy。也謝謝大家。

Good morning, and good evening. Welcome to Trip.com Group's 2021 Q3 Earnings Conference Call. Joining me today on the call are Mr. James Liang, Executive Chairman of the Board; Ms. Jane Sun, Chief Executive Officer; and Ms. Cindy Wang, Chief Financial Officer.

各位早安、各位晚安。歡迎參加 Trip.com 集團 2021 年第三季（Q3）財報電話會議。今天與我一同出席的有董事會執行董事長 James Liang 先生、執行長 Jane Sun 女士，以及財務長 Cindy Wang 女士。

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. 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. Trip.com Group does not undertake any obligation to update any forward-looking statements, except as required under applicable law.

在本次電話會議中，我們將討論未來展望與經營表現，其中包含依據 1995 年《美國私人證券訴訟改革法》安全港條款所作之前瞻性陳述。前瞻性陳述具有內在風險與不確定性，因此我們的實際結果可能與今日所表達的觀點存在重大差異。Trip.com 集團向美國證券交易委員會提交的公開文件中列示了若干潛在風險與不確定性。除非適用法律另有要求，Trip.com 集團不承擔更新任何前瞻性陳述之義務。

James, Jane and Cindy will share our strategy and business updates, operating highlights and financial performance for the third quarter of 2021, as well as the outlook for the fourth quarter of 2021. After the prepared remarks, we will have a Q&A session.

James、Jane 與 Cindy 將分享我們的策略與業務最新進展、營運重點與 2021 年第三季的財務表現，以及 2021 年第四季的展望。管理層發言結束後，我們將進行問答環節。

With that, I will turn the call over to James. James, please?

接下來，我把電話交給 James。James，請。

Thank you, Michelle. Thank you, everyone, for joining us on the call today. In the third quarter, we are glad to see the world with a continued transition towards normalcy. Thanks to rapid vaccine rollouts and the easing of travel restrictions, people are more comfortable with traveling and are able to do more in destinations. The transatlantic travel market has seen recovery take shape, as Europe and the United States reopened their borders to fully-vaccinated travelers. The EU Digital COVID certificate has helped to facilitate free movement and travel within the continent. We're also happy to see that many countries have adopted travel friendly policies to smooth the path for international travel and tourism.

謝謝你，Michelle。也謝謝各位今天參加電話會議。第三季我們很高興看到全球持續朝正常化轉變。受惠於疫苗快速接種以及旅遊限制放寬，人們對旅行更有信心，也能在目的地進行更多活動。隨著歐洲與美國對完成疫苗接種的旅客重新開放邊境，跨大西洋旅遊市場已開始呈現復甦。歐盟數位 COVID 證明也有助於促進歐洲大陸內的自由流動與旅行。我們也很高興看到許多國家採取更友善的旅遊政策，為國際旅行與觀光鋪平道路。

In China, the spread of delta variant beginning at the end of July disrupted the summer vacation season and hence suppressed the travel momentum in winter. The vaccination rate in the country continues to rise with an expectation that over 85% of the China's population will be fully vaccinated early next year. A high vaccines rate and national rollout of booster shots will help us build resilience to pandemic challenges.

在中國，自 7 月底開始的 Delta 變異株擴散擾亂了暑期旺季，進而抑制了冬季的旅遊動能。全國疫苗接種率持續上升，預期明年初中國將有超過 85% 的人口完成全程接種。較高的疫苗接種率以及加強針的全國推進，將有助於我們建立面對疫情挑戰的韌性。

The recent discovery of Omicron variant may have started new round of a global concern and once again given rise to all sorts of travel restrictions. Pandemic uncertainties may continue to be an ongoing issue for consumers and the business alike in the next year. Yet we believe that the remaining agile in face of change is a key to hold off pandemic impacts.

近期發現的 Omicron 變異株可能引發新一輪全球擔憂，並再次帶來各式各樣的旅行限制。疫情的不確定性在明年可能仍將持續影響消費者與企業。然而，我們相信在變化面前保持敏捷，是降低疫情衝擊的關鍵。

We continue to adopt the dual circulation strategy to focus on both the China domestic and global travel market and continue to seize any opportunity amidst fast changing market conditions. In the China domestic market, we remain focused on fortifying supply chains to enrich our product offerings to cover more use cases scenarios and leveraging our content strategies to attract the younger generations.

我們持續採取「雙循環」策略，同時聚焦中國國內與全球旅遊市場，並在快速變化的市場環境中把握任何機會。在中國國內市場，我們仍專注於強化供應鏈、豐富產品供給以覆蓋更多使用情境，並運用內容策略吸引年輕族群。

Our content channel is not only an inspiration hub for travelers, but it's also a platform where business partners can showcase their products and interact with Trip.com Group's high-quality users. This year, more than [220 million] (corrected by the company after the call) users have viewed our content. Around 30% to 35% of the unique app visitors have developed habit of browsing our content channel. As a leading one-stop travel platform, our content to transaction conversion rate is also higher. Business partners can enjoy a monthly conversion rate up to 30%, encouraging them to reinforce our cooperation.

我們的內容頻道不僅是旅客的靈感中心，也是業務夥伴展示產品並與 Trip.com 集團高品質用戶互動的平台。今年已有超過 [2.2 億]（公司於會後更正）用戶瀏覽過我們的內容。約 30% 至 35% 的 App 獨立訪客已養成瀏覽內容頻道的習慣。作為領先的一站式旅遊平台，我們的內容到交易轉化率也更高。業務夥伴每月最高可享有達 30% 的轉化率，促使其進一步強化與我們的合作。

On the international front, Asia Pacific and Europe will continue to be our key focuses. In APAC market, our global brand Trip.com has been gaining share in markets such as Hong Kong, Singapore, Japan and South Korea, with increasing brand awareness and app usage. During the pandemic, Trip.com swiftly adapted to meet different demands and focused on staycation by strengthening local hotel brands. In Europe, all of our brands have been closely collaborating throughout the previous quarters, giving a strong boost to Trip.com's product competitiveness in the region. In the long run, Trip.com will continue to enhance its product offerings and leverage Skyscanner's strong traffic to strengthen its market presence in Europe.

在國際市場方面，亞太與歐洲將持續是我們的重點。在亞太市場，我們的全球品牌 Trip.com 在香港、新加坡、日本與南韓等市場的市占率持續提升，品牌知名度與 App 使用量也不斷增加。疫情期間，Trip.com 迅速調整以滿足不同需求，透過強化在地飯店品牌來聚焦「宅度假」（staycation）。在歐洲，我們旗下各品牌在過去幾個季度緊密協作，強力提升 Trip.com 在當地的產品競爭力。長期而言，Trip.com 將持續強化產品供給，並運用 Skyscanner 強大的流量以鞏固在歐洲的市場能見度。

In short, "local focus, global vision" will continue to be our core strategy in coming years. We will remain focused on strengthening the group's competitiveness and are well prepared to embrace the global travel revival and tourism boom. We hope to see such inputs start to bear fruit and to be reflected in the performance of our business over the next 3 to 5 years.

總而言之，「立足本地，放眼全球」將在未來幾年持續作為我們的核心策略。我們將持續專注於提升集團競爭力，並已做好準備迎接全球旅遊復甦與觀光熱潮。我們希望這些投入能在未來 3 到 5 年開始開花結果，並反映在我們的業務表現上。

With that, I will turn the call over to Jane for operational highlights.

接下來，我把電話交給 Jane，請她分享營運重點。

Thank you, James. Good morning, everyone. I would like to start with a brief overview of our performance in the past quarter and updates on our strategic focuses. In the third quarter, our total net revenue remained stable year-over-year and decreased by 9% quarter-over-quarter, mainly due to natural disasters and new rounds of infections, which affected multiple provinces in China. We are glad to see the world moving ahead in normalizing international tourism. Yet the road to global recovery is not without ups and downs. The performance of travel market in major economies has been diverted.

謝謝你，James。各位早安。我想先簡要回顧上一季度的表現，並更新我們的策略重點。第三季，我們的總淨營收年比維持穩定、季比下降 9%，主要是因自然災害與新一輪疫情影響了中國多個省份。我們很高興看到全球正持續推進國際旅遊正常化。然而，全球復甦之路並非一帆風順，主要經濟體的旅遊市場表現出現分化。

The China travel market has been frequently interrupted by the resurgences of COVID cases. It has witnessed a strong recovery in July until natural disasters and the Delta variant emerged to slow it down.

中國旅遊市場因 COVID 病例反覆回升而頻繁受到干擾。7 月曾出現強勁復甦，但隨後自然災害與 Delta 變異株的出現使復甦放緩。

Industry-wise, the hotel occupancy rate and air ticket bookings in Q3 were down by around 30% when compared to the pre-COVID 2019 level for market performances. Nevertheless, our domestic hotel business was able to outpace the market performance by 20% to 25%. And our domestic air ticket booking recovery was much higher than the market levels as well.

從行業角度來看，第三季（Q3）的飯店入住率與機票預訂量相較於疫情前 2019 年水準約下降 30%。儘管如此，我們的國內飯店業務仍能較市場表現高出 20% 至 25%。同時，我們的國內機票預訂復甦程度也明顯高於市場水準。

The global market, on the other hand, has been making great progress in returning to normalcy, especially in Europe and United States. Air ticket bookings in these markets made some major strides towards pre-pandemic levels in the past months. While the global flight volume was still below 2019 level, Trip.com's overall international air ticket bookings have increased by around 40% quarter-over-quarter, with air ticket bookings in Europe growing by 170%. Skyscanner also saw air ticket bookings increased by approximately 100% year-over-year and around 35% quarter-over-quarter.

另一方面，全球市場在回歸常態方面取得顯著進展，尤其是在歐洲與美國。過去幾個月，這些市場的機票預訂量在朝向疫情前水準方面取得重大進展。儘管全球航班量仍低於 2019 年水準，Trip.com 的整體國際機票預訂量季比增加約 40%，其中歐洲機票預訂量成長 170%。Skyscanner 的機票預訂量亦年比增加約 100%，季比增加約 35%。

While COVID-19 pandemic has negatively affected the travel industry, there is no doubt the industry will emerge out from the trenches and come back stronger. We hope to see the travel industry take off in mid-2022 as vaccination level rise in the key markets and travelers become used to some level of travel restrictions and feel more comfortable booking trips again. Looking beyond 2021, our long-term mission is to pursue the perfect trip for a better world, and it has never changed. As James just mentioned, we will continue to stick to our strategy of "local focus, global vision" and focus on the following areas.

儘管 COVID-19 疫情對旅遊產業造成負面影響，但毫無疑問，產業終將走出低谷並以更強韌的姿態回歸。我們希望隨著主要市場的疫苗接種率提升、旅客逐漸適應一定程度的旅行限制並再次更安心地預訂行程，旅遊產業能在 2022 年年中起飛。展望 2021 年之後，我們的長期使命是「追求完美旅程，讓世界更美好」，這一點從未改變。正如 James 剛才提到的，我們將持續堅持「立足本地，放眼全球」的策略，並聚焦於以下領域。

First, building strong user cases and make traveling part of our daily lives. As the pandemic and the resulting health and travel measures make people shy away from long-distance trips, weekend, regional and vacation travel have become more popular and frequent.

首先，打造強而有力的使用者情境，讓旅行成為我們日常生活的一部分。由於疫情以及隨之而來的健康與出行措施使人們對長途旅行卻步，週末、區域性與度假型旅行變得更受歡迎且更為頻繁。

In Q3, we were glad to see our intra-province hotel bookings grew by approximately 35%. And our local hotel bookings grew by more than 60% compared to the same period pre-COVID in 2019. In order to build strong user cases to attract and motivate users, we collaborated with more than 6,000 high-star hotels to provide value-added hotel packages, which included catering and many other in-hotel services. Such packages contributed around 30% to our sales of these partner hotels.

在第三季，我們很高興看到省內飯店預訂量約成長35%。與2019年（疫情前）同期相比，我們的本地飯店預訂量成長超過60%。為了打造強而有力的使用者情境以吸引並激勵使用者，我們與超過6,000家高星級飯店合作，提供包含餐飲及多項飯店內服務在內的加值飯店套裝方案。此類套裝方案約貢獻了我們這些合作飯店銷售額的30%。

We strive to seize this opportunity to attract young generations and to help users embrace travel as part of their daily lives. In response to addressing the need for inspiration for short-haul and the local trips, we continue to make solid progress in our content strategy. The total amount of content published on our platform increased by 100% year-over-year. Compared to Q2, our number of KOLs have sequentially increased by 35%. The amount of users who interacted with our content increased by 20%, and the monthly content-to-transaction conversion rate reached 30% in July.

我們致力把握這個機會吸引年輕世代，並協助使用者將旅行融入日常生活。為回應短途與本地旅行對靈感的需求，我們持續在內容策略上取得扎實進展。我們平台上發布的內容總量年增100%。相較第二季，我們的KOL數量環比增加35%。與我們內容互動的使用者數量增加20%，且7月的月度「內容到交易」轉換率達到30%。

Second, tightening our relationship with business partners by empowering them to optimize customer structure and improve efficiency. Not only as an inspiration hub for users, our content channels also serve as the go-to platform where suppliers are empowered to improve [marketing] (corrected by the company after the call) efficiencies and gain traction with Trip.com Group's high-quality users. As an important part of our content strategy, Star Hub aims to help improve suppliers' conversion rate and info feed to increase their exposure. We have seen the number of the professionally generated content, content exposure and content GMV increase by a monthly average of 50% for past consecutive 7 months.

第二，透過賦能商業夥伴，協助其優化客群結構並提升效率，以此加深我們與合作夥伴的關係。我們的內容渠道不僅是使用者的靈感樞紐，也作為供應商的首選平台，讓其得以提升[行銷]（公司於電話會議後更正）效率，並在Trip.com Group的高品質使用者中獲得成長動能。作為內容策略的重要一環，Star Hub旨在協助提升供應商的轉換率，並透過資訊流提高其曝光。我們看到，過去連續7個月，專業生成內容數量、內容曝光以及內容GMV的月均增幅達到50%。

In order to help expand our partners' customer base, we are also able to -- are pushing forward with [mutual co-branded] (corrected by the company after the call) membership programs where users are entitled to benefit from both parties. There are now more than 30 million co-branded members between Trip.com Group and our hotel partners. And this number has grown by about 6 times since 2019.

為了協助擴大合作夥伴的客戶基礎，我們也正在推進[雙方聯名]（公司於電話會議後更正）的會員計畫，讓使用者可同時享有雙方的權益。目前Trip.com Group與飯店合作夥伴之間的聯名會員已超過3,000萬名，且自2019年以來約成長了6倍。

We also strengthened our partnership with airlines to help them with operating efficiencies and enhance our growth in the first and business class bookings.

我們也強化了與航空公司的合作，協助其提升營運效率，並推動我們在頭等艙與商務艙預訂方面的成長。

Third, strengthening the synergy among all brands of our group -- of Trip.com Group to increase our market response to global spaces. The strengthening of the synergy among our group companies globally has continuously on the go for the past quarters. Leveraging the stronger combined brand awareness and a global presence, we're able to establish closer relationships with local suppliers and to fuel the Skyscanner and Trip.com, with improved competitiveness, enhanced product offerings and service reliability. Grasping the opportunity presented by the pandemic, we launched a series of value-added services to address our global clientele's [need] (added by the company after the call) for user friendliness and flexibility. We believe these will enable us to better respond to the post-pandemic travelers' evolving demand and further gain market share. A strong local supply chain and bolstered product capabilities will enable Trip.com to better utilize Skyscanner's strong traffic in Europe.

第三，強化我們集團——Trip.com Group——旗下各品牌之間的協同效應，以提升我們對全球市場的反應能力。過去幾個季度以來，我們在全球範圍內強化集團公司之間協同效應的工作持續推進。憑藉更強的整體品牌知名度與全球佈局，我們得以與本地供應商建立更緊密的關係，並為Skyscanner與Trip.com注入動能，提升競爭力、強化產品供給與服務可靠性。把握疫情帶來的機會，我們推出一系列加值服務，以滿足全球客戶對易用性與彈性的[需求]（公司於電話會議後補充）。我們相信，這將使我們能更好回應後疫情時代旅客不斷演變的需求，並進一步提升市佔率。強健的本地供應鏈與強化的產品能力，將使Trip.com能更好利用Skyscanner在歐洲的強大流量。

Fourth, corporate responsibility. Following up on our rural revitalization initiatives, on top of the [three] (added by the company after the call) Trip.com Group Country Retreats that were already opened in business in Q2, 2 more were opened this quarter. Our facility in Anhui Province has now grown into a foundation of our Rural Revitalization Academy, co-created with the local government. Through online and off-line channels, we provide local talents with professional training and develop skills and contribute to improved [the local] (corrected by the company after the call) service quality. On top of the developing rural tourism, the country retreats also help facilitate the sales of local products beyond vicinity as a means to improve local economy and livelihoods.

第四，企業責任。延續我們的鄉村振興倡議，在第二季已開業的[三]（公司於電話會議後補充）家Trip.com Group鄉村度假村基礎上，本季又新增開業2家。我們在安徽省的設施如今已發展為我們與地方政府共同打造的鄉村振興學院之基礎。透過線上與線下渠道，我們為當地人才提供專業培訓、培養技能，並促進[當地]（公司於電話會議後更正）服務品質的提升。除發展鄉村旅遊外，鄉村度假村也有助於促進當地產品銷售至周邊以外地區，作為改善地方經濟與民生的一種方式。

With a strong, diverse workforce, Trip.com Group also strives to create an inclusive and friendly working environment. We adopt a clear code of conduct to support working mothers and care for pregnant employees. In October, we were happy to receive the Women's Empowerment Principles Award by UN Women China as a recognition of our efforts in promoting gender equality and female empowerment.

憑藉強大且多元的員工隊伍，Trip.com Group也致力於打造包容且友善的工作環境。我們採用明確的行為準則以支持職場母親並關懷懷孕員工。10月，我們很高興獲得聯合國婦女署中國頒發的「女性賦權原則獎」，以表彰我們在推動性別平等與女性賦權方面的努力。

The travel industry has proven its resilience over the time, from 9/11 to SARS. And we'll definitely weather the storm of COVID-19 as well. With crisis comes opportunity. Remaining agile in the face of the challenge will help us to seize opportunities and come back stronger and reestablish confidence in travelers, and to pursue the perfect trip for a better word as our mission stated.

旅遊業長期以來已證明其韌性，從9/11到SARS皆是如此。我們也一定能挺過COVID-19的風暴。危機之中亦蘊含機會。在挑戰面前保持敏捷，將幫助我們把握機會、以更強姿態回歸，重建旅客信心，並如我們使命所述，追求更美好的世界中的完美旅程。

With that, I will now turn the call over to Cindy.

接下來，我把電話會議交給Cindy。

Thanks, Jane. Good morning, everyone. For the third quarter of 2021, Trip.com Group reported net revenue of RMB 5.3 billion, representing a 2% decrease year-over-year and 9% decrease quarter-over-quarter, primarily due to the influence of natural disasters and new rounds of pandemic outbreak in multiple regions of China.

謝謝你，Jane。各位早安。2021年第三季，Trip.com Group淨營收為人民幣53億元，年減2%、季減9%，主要由於自然災害以及中國多地新一輪疫情爆發的影響。

Accommodation reservation revenue for the third quarter of 2021 was RMB 2.2 billion, representing an 11% decrease year-over-year and an 11% decrease quarter-over-quarter, recovering to 53% of the 2019 level. This is a net result of a steady growth in July offset by the disruption of natural disasters and resurgence of COVID cases spreading over multiple provinces beginning at the end of July.

2021年第三季住宿預訂營收為人民幣22億元，年減11%、季減11%，恢復至2019年水準的53%。這是7月穩健成長與7月底開始多省自然災害及COVID病例再度擴散所造成的干擾相互抵銷後的淨結果。

Our China's domestic hotel bookings have been -- have seen high single-digit growth year-over-year, while ADR and blended take rate are both affected by the depressed demand.

我們在中國的國內飯店預訂量年增達高個位數成長，而ADR與綜合抽佣率（blended take rate）均受到需求低迷的影響。

Transportation ticketing revenue for the third quarter of 2021 was RMB 1.8 billion, representing a 5% decrease year-over-year and a 12% decrease quarter-over-quarter, recovering to 49% of the 2019 level. Among which domestic transportations recovery momentum was disrupted by natural disasters and to resurgence of COVID cases in summer, while international air ticket bookings increased by approximately 40% when compared to the previous quarter, mainly contributed by the recovery in Europe.

2021年第三季交通票務營收為人民幣18億元，年減5%、季減12%，恢復至2019年水準的49%。其中，國內交通的復甦動能在夏季受到自然災害及COVID病例再度升溫的干擾；而國際機票預訂量較上一季增加約40%，主要由歐洲復甦所帶動。

Packaged-tour revenue for the third quarter of 2021 was RMB 392 million, representing a 20% increase year-over-year and a 7% increase quarter-over-quarter, recovering to 24% of the 2019 level. This was contributed by an increase of leisure travel demand in July before the new round of pandemic outbreak.

2021年第三季度假套裝旅遊營收為人民幣3.92億元，年增20%、季增7%，恢復至2019年水準的24%。這主要受益於新一輪疫情爆發前7月休閒旅遊需求的增加。

Corporate travel revenue for the third quarter of 2021 was RMB 338 million, representing a 20% increase year-over-year and 13% decrease quarter-over-quarter, slightly higher than 2019 level. This segment continues to gain momentum as a result of the expanding user base and improving cross-selling from transportation to accommodation.

2021年第三季企業差旅營收為人民幣3.38億元，年增20%、季減13%，略高於2019年水準。由於使用者基礎擴大，以及從交通到住宿的交叉銷售改善，該業務板塊持續累積動能。

Gross margin was 77% for the third quarter of 2021, decreasing from 79% in the previous quarter, mainly due to reduced topline recovery interrupted by a new wave of infections.

2021 年第三季毛利率為 77%，較上一季的 79% 下滑，主要由於營收復甦動能減弱，且受到新一波感染潮干擾。

Excluding share-based compensation charges, our adjusted operating expenses decreased by 32% compared to the same period in 2019.

剔除股份基礎給付費用後，我們的經調整營運費用較 2019 年同期下降 32%。

Adjusted product development expenses for the third quarter increased by 20% from the same period in 2020 and increased by 2% from the previous quarter, mainly reflecting the general increase in salary of product development personnel. We continued to run lean and maintain a stable headcount in the team. It is a saving of 19% when compared to the same period in 2019.

第三季經調整產品研發費用較 2020 年同期增加 20%，較上一季增加 2%，主要反映產品研發人員薪資普遍上調。我們持續精實營運並維持團隊人力規模穩定。與 2019 年同期相比，節省 19%。

Adjusted sales and marketing expenses for the third quarter decreased by 10% from the previous quarter as we swiftly adapt to the changing market conditions and followed a more prudent spending protocol in response to the uncertainty brought about by the pandemic. This reflects a saving of 49% when compared to the same period in 2019.

第三季經調整銷售與行銷費用較上一季下降 10%，因我們迅速因應市場環境變化，並在疫情帶來的不確定性下採取更審慎的支出規範。與 2019 年同期相比，節省 49%。

Adjusted G&A expenses for the third quarter decreased by 5% from the previous quarter. It also increased by 83% year-over-year primarily due to a reversal of bad debt provision in the third quarter of 2020 for the company's travel suppliers, and it is a saving of 20% when compared to the same period in 2019.

第三季經調整一般及行政（G&A）費用較上一季下降 5%。同時，年增 83%，主要因 2020 年第三季針對公司旅遊供應商的呆帳準備回轉所致；與 2019 年同期相比，節省 20%。

Adjusted EBITDA for the third quarter was RMB 537 million compared to RMB 916 million in previous quarter. Adjusted EBITDA margin was 10% for the third quarter compared to 16% in the previous quarter. Diluted loss per ordinary share and per ADS were RMB 1.32 or USD 0.20 for the third quarter. 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 0.81 or USD 0.13 for the third quarter.

第三季經調整 EBITDA 為人民幣 5.37 億元，上一季為人民幣 9.16 億元。第三季經調整 EBITDA 利潤率為 10%，上一季為 16%。第三季每股普通股及每股 ADS 稀釋後虧損為人民幣 1.32 元或美元 0.20 元。剔除股份基礎給付費用、權益證券投資公允價值變動及可交換高級票據的公允價值變動後，第三季非 GAAP 每股普通股及每股 ADS 稀釋後盈餘為人民幣 0.81 元或美元 0.13 元。

As of September 30, 2021, the balance of cash and cash equivalents restricted cash, short-term investment, held-to-maturity time deposits and financial products was RMB 67.6 billion, or USD 10.5 billion. We redeemed early USD 500 million of the 2025 booking and Hillhouse Notes in the quarter and another USD 500 million of the same convertible notes in December, reducing a potential dilution of 14.6 million ordinary shares.

截至 2021 年 9 月 30 日，現金及現金等價物、受限制現金、短期投資、持有至到期定期存款及理財產品餘額為人民幣 676 億元（約美元 105 億元）。本季我們提前贖回 2025 年到期的 Booking 與 Hillhouse 票據中美元 5 億元，並於 12 月再贖回同一批可轉換票據的美元 5 億元，降低潛在稀釋 1,460 萬股普通股。

Turning to the fourth quarter of 2021. We would like to share some color of our business.

接著談 2021 年第四季。我們想分享一些關於業務的最新情況。

In China, during the National Day Holiday, our domestic hotel reservations reached a double-digit growth during the beginning of the holiday, while transportation reservations close to the pre-COVID level.

在中國，國慶假期期間，我們的國內飯店預訂在假期初期達到雙位數成長，而交通運輸預訂接近疫情前水準。

Multiple rounds of COVID cases that began in mid-October and spread to more than 20 provinces largely impact the entire China domestic travel industry. In November, the industry level hotel occupancy rate was down by 30% to 40%, and air ticket passengers down 50% to 60%, both compared with the same period in 2019. Trip.com Group was also affected, but we continue to lead market performance by at least 10% to 20%.

自 10 月中旬開始並擴散至 20 多個省份的多輪 COVID 疫情，對中國國內旅遊產業整體造成重大影響。11 月，行業層面的飯店入住率較 2019 年同期下降 30% 至 40%，機票旅客量下降 50% 至 60%。Trip.com 集團亦受到影響，但我們仍持續領先市場表現至少 10% 至 20%。

Outbound travel remains rather muted in current conditions, while outside of China, the recovery momentum in Europe and the U.S. continues to carry over to October with increased flight segment, benefiting from the relaxation of travel restrictions and vaccine rollouts.

在目前情況下，出境旅遊仍相當低迷；而在中國以外，歐洲與美國的復甦動能延續至 10 月，航段量增加，受惠於旅遊限制放寬與疫苗接種推進。

The path to global recovery is set, but not without ups and downs. We will continue to be adaptive and responsive to changing market conditions and be flexible and agile to seize opportunities to create value for our users and partners.

全球復甦的路徑已確立，但仍難免起伏。我們將持續因應並快速回應市場環境變化，保持彈性與敏捷，把握機會，為用戶與合作夥伴創造價值。

With that, operator, please open the line for questions.

接下來，請接線員開放提問。

(Operator Instructions) Your first question comes from the line of Thomas Chong from Jefferies.

（接線員指示）第一個問題來自 Jefferies 的 Thomas Chong。

James, Jane and Cindy, can you share some color about the company's plan for the international business? How do you think about the pace of recovery in outbound travel as the restrictions are lifted?

James、Jane 和 Cindy，能否分享一下公司對國際業務的規劃？隨著限制逐步解除，你們如何看待出境旅遊的復甦速度？

In recent months, many countries have adopted border reopening plans to relax travel restrictions. More and more people are back on the road and travel further. Though some countries have tightened restrictions recently due to the omicron variant, the temporary turbulence will not change the ultimate trend of travel recovery. Under normal conditions, we may see China gradually relax inbound and outbound travel policies in the second half of 2022.

近幾個月來，許多國家採取重啟邊境計畫以放寬旅遊限制。越來越多人重新上路，且旅行距離更遠。儘管部分國家近期因 Omicron 變異株而收緊限制，這種短期波動不會改變旅遊復甦的最終趨勢。在正常情況下，我們可能會看到中國在 2022 年下半年逐步放寬入境與出境旅遊政策。

The process of reopening is expected to begin with Mainland China with connecting Hong Kong and then international openings with other international markets, the pace and rate largely depending on vaccine rate and the pandemic control capability in related markets. We'll continue to enhance our product and service competitiveness in the domestic market and fully prepared for the recovery of international markets. In the past 2 years, Trip.com Group has demonstrated its resilience by leading the industry recovery despite COVID headwinds, making us a stronger company. We believe that our local focus, global vision strategy will drive sustainable growth in the long run.

重啟進程預期將先從中國大陸與香港的連通開始，之後再與其他海外市場逐步開放；其節奏與速度在很大程度上取決於相關市場的疫苗接種率與疫情管控能力。我們將持續提升國內市場的產品與服務競爭力，並為國際市場復甦做好充分準備。過去兩年，Trip.com 集團在 COVID 逆風下仍引領產業復甦，展現韌性，使我們成為更強的公司。我們相信「立足本地、放眼全球」的策略將在長期推動可持續成長。

Your next question comes from James Lee from Mizuho.

下一個問題來自 Mizuho 的 James Lee。

Great. Two quick ones here. Jane, how should we think about maybe the travel activity heading into Chinese New Year, that being first? And second, for, I think, outbound travel to Hong Kong. Any early read that you're seeing on consumer demand and behavior there?

很好。我有兩個簡短問題。第一，Jane，我們應如何看待臨近農曆新年的旅遊活動？第二，關於赴港出境旅遊，你們是否已看到消費者需求與行為的任何早期跡象？

Sure. Thanks, James. The opening up of Macau really provides a very good leading indicator for the consideration of Hong Kong. So we were just in Macau, holding our global partnership meeting. And the control of the virus over there is being conducted very well. So that provides everyone in the travel industry, some experience as to what will happen if Hong Kong opens up. So we are very much looking forward to a very good control of the virus in Hong Kong continuously. And with that condition, there might be a good consideration for opening up of Hong Kong.

好的，謝謝你，James。澳門的開放確實為評估香港提供了很好的領先指標。我們剛在澳門舉辦全球合作夥伴會議，那邊的病毒管控做得非常好。這也讓旅遊業的各方對於香港若開放可能會發生什麼，有一些經驗可供參考。因此，我們非常期待香港能持續維持良好的病毒管控；在此條件下，香港開放就可能會被更積極地納入考量。

And that also connects to our plan for the Chinese New Year. Historically, these -- Hong Kong is very popular travel destination for Chinese New Year as people try to go visit different cities and doing some shopping in Hong Kong. So hopefully, there will be enough supporting evidence as to the well-controlled environment both in Mainland China and in Hong Kong, which give us the support to further consideration of opening up Hong Kong in addition to Macau.

這也與我們對農曆新年的規劃相連。歷來香港是農曆新年期間非常受歡迎的旅遊目的地，因為大家會去不同城市走走，並在香港購物。因此，希望能有足夠的佐證顯示中國大陸與香港的環境都受到良好控制，從而支持我們在澳門之外，進一步考慮開放香港。

Your next question comes from Brian Gong from Citi.

下一個問題來自花旗的 Brian Gong。

So my question is about domestic travel expectation. So how does management see the travel performance outlook in first quarter '21 and next year? For first quarter next year with some local government right now encouraging people not to travel across regions and Winter Olympics held in March, should we still expect domestic performance to be dragged by travel restriction? And also with a low base in the second half of this year, should we see a more normalized year-on-year growth in the second half next year for domestic market?

我的問題是關於國內旅遊的預期。管理層如何看待 2021 年第一季以及明年的旅遊表現展望？對於明年第一季，考量目前一些地方政府鼓勵民眾不要跨區旅行，以及 3 月舉辦冬奧，我們是否仍應預期國內表現會受到旅遊限制拖累？另外，由於今年下半年基期較低，明年下半年國內市場是否會出現較為正常化的年增成長？

Yes. So what we have seen for the domestic travel is 4S. By saying 4S, we have seen people are paying more attention to safety. So we encourage our suppliers to make sure they have very good safety measures such as providing hand sanitizers, masks to our travelers. The second S is people prefer to travel with much smaller groups rather than big groups. So normally, our customized tour is selling very well. Our customers prefer to hire car and to avoid with family then to take their family along. The third S is with much short booking window. Because of the virus control, a lot of time, we will get notifications from different destinations.

是的。所以我們在國內旅遊方面看到的是「4S」。所謂 4S，我們看到人們更加重視安全。因此我們鼓勵供應商確保具備非常完善的安全措施，例如為旅客提供乾洗手、口罩。第二個 S 是人們更偏好以更小的團體出遊，而不是大團。因此通常我們的客製化行程賣得很好。我們的客戶更傾向於包車，並與家人同行以避免與他人混行。第三個 S 是預訂窗口更短。由於病毒防控，我們很多時候會收到來自不同目的地的通知。

So the booking window we have seen is much shorter. And the last 4-- 1 of the 4S is short distance. So what we have seen is people prefer to travel nearby their hometown anywhere within the 300-kilo becomes radius people feel more comfortable to travel to. And also, we have seen young generation prefer to travel much more. So we have seen young spenders who were born in 90s and generation Z travel quite a lot. So these are the trends we have seen so far. Again, I think a lot of it will be depending on how well the virus is being controlled during the first quarter and the second quarter. However, these demands are not disappearing. From our data of the search, customers' pent-up demand is accumulating and very strong. Just as what we saw in May holiday this year, the surge of the demand is very strong. So we are very hopeful that the vaccination rate will be continuously increasing. The measures of the virus control will prove to be effective and then gradually, the market will increase. So your assessment, the second half of 2022 will be stronger than the first half, we very much hope so. Thank you.

因此我們看到的預訂窗口明顯縮短。最後一個——4S 之一——是短距離。我們看到人們更偏好在家鄉附近出遊，通常在 300 公里半徑內會讓人覺得更安心出行。另外，我們也看到年輕一代更偏好旅行。我們看到 90 後與 Z 世代的年輕消費者出遊相當頻繁。以上就是我們目前看到的趨勢。再次強調，我認為很大一部分仍取決於第一季與第二季病毒控制得如何。不過，這些需求並不會消失。從我們的搜尋數據來看，客戶被壓抑的需求正在累積且非常強勁。就像我們今年五一假期所看到的，需求的爆發非常強。因此我們非常希望疫苗接種率能持續提升，病毒防控措施能證明有效，然後市場逐步回升。至於您的判斷——2022 年下半年會比上半年更強——我們也非常希望如此。謝謝。

Your next question comes from Ronald Keung from Goldman Sachs.

下一個問題來自高盛的 Ronald Keung。

My question is more on if the recent travel patterns that we saw in recent months last for longer and with Omicron and government's dynamic 0 COVID strategies, then how does management see the trajectory for domestic and international travel in 2022 if the recent trends last longer? And how will we plan our costs accordingly and implications to either cash flows or margins in the next 1 to 2 years?

我的問題主要是：如果我們在最近幾個月看到的旅遊模式持續更久，再加上 Omicron 以及政府的動態清零策略，那麼若近期趨勢延續更長時間，管理層如何看待 2022 年國內與國際旅遊的走勢？以及我們將如何相應規劃成本，並對未來 1 到 2 年的現金流或利潤率有何影響？

Thank you, Ron. Our margin is actually decided by both the top line as well as our cost control. On the top line, on the revenue side, of course, we are in the travel industry, so our performance will be pretty much decided by the industry growth. However, as always, we will do our best to continuously outpace the industry growth. For example, in the third quarter this year, we outpaced the 10% to 20%, at least for different segments compared with the industry growth in the travel industry.

謝謝你，Ron。我們的利潤率其實同時取決於營收端（top line）以及成本控制。在營收端，當然我們身處旅遊產業，因此我們的表現很大程度上會由產業成長所決定。不過一如既往，我們會盡最大努力持續跑贏產業成長。舉例來說，在今年第三季，我們在不同細分領域相較於旅遊產業的成長，至少跑贏了 10% 到 20%。

On the cost side, we will continuously -- to weather the COVID, to weather the storm, we have to have a very disciplined cost policies, cost structures to weather the storm. Firstly, we have a very strong cash position. At the end of the Q3, we have about USD 10.5 billion in the cash balance, which probably is the best -- among one of the best in the travel industry. Then secondly, on the cost side, our total adjusted cost and operating expenses actually decreased by more than 35% in Q3 compared with before COVID level, thanks to our very largely flexible cost and expenses structure and as well as efficient operating management. During the past few quarters, we streamlined our operations across different business lines in addition to certain adjustments related to the COVID. And in addition, our improvement on the content cross-selling and technology have further lifted our marketing efficiencies.

在成本端，為了度過 COVID、度過風暴，我們必須有非常嚴謹的成本政策與成本結構來抵禦衝擊。第一，我們有非常強勁的現金部位。截至第三季末，我們的現金餘額約 105 億美元，這大概是旅遊產業中最好的之一。第二，在成本方面，我們第三季的總調整後成本與營運費用相較於 COVID 前水準實際下降超過 35%，這得益於我們高度彈性的成本與費用結構，以及高效率的營運管理。過去幾個季度，我們在不同業務線精簡了營運，並進行了與 COVID 相關的若干調整。此外，我們在內容交叉銷售與技術方面的提升，也進一步提高了行銷效率。

In terms of the cost trend going forward, we will expect a very modest increase in the personnel expenses only on our international markets. And for the domestic market, we expect our total headcount will be pretty much stable, especially for our core businesses, but we need to add some investment just to capture the pent-up demand that has already been seen in the international market, especially in the Europe market. On the sales and marketing expenses, we will continuously to adapt -- adopt an ROI-driven strategy, and we will have a very disciplined policies in terms of sales and marketing spendings both for the domestic China market as well as for the international market.

就未來的成本趨勢而言，我們預期人員費用只會在國際市場出現非常溫和的增加。至於國內市場，我們預期總人數將大致保持穩定，特別是在核心業務方面；但我們需要增加一些投入，以把握國際市場已經出現的被壓抑需求，尤其是歐洲市場。在銷售與行銷費用方面，我們將持續採用以 ROI 為導向的策略，並在中國國內市場以及國際市場的銷售與行銷支出上，維持非常嚴謹的政策。

(Operator Instructions) Your next question comes from Alex Yao from JPMorgan.

（接線員指示）下一個問題來自摩根大通的 Alex Yao。

Management, I have a question on the investment activities. So in light of the potential reopening in China and also more regions and the markets in the rest of the world, are you guys contemplating any additional and the new investment activity to capture those reopening opportunities?

管理層，我有一個關於投資活動的問題。鑑於中國可能重新開放，以及世界其他地區與市場的進一步開放，你們是否正在考慮任何額外或新的投資活動，以把握這些重啟帶來的機會？

Yes. So thanks, Alex. In terms of investment strategy, historically, we are very disciplined. There are 3 principles we adhere to. First of all, it needs to be very closely related to our core competence. And secondly, we need to really look for the companies that is #1 or #2 in their verticals. And thirdly, the valuation needs to be very reasonable. So historically, we are very, very selective and very careful in terms of our investment.

是的，謝謝你，Alex。就投資策略而言，從歷史上看，我們一直非常自律。我們遵循三項原則：第一，必須與我們的核心能力高度相關；第二，我們會尋找在其垂直領域排名第 1 或第 2 的公司；第三，估值必須非常合理。因此一直以來，我們在投資方面都非常、非常挑選且非常謹慎。

However, in terms of our organic investments in our core competence for the long-term investments, such as technology and services and products, we are taking advantage of this slow season to make sure we focus on the projects, which were strengthening our competitiveness in the long term. So with limited resources, we are also prioritizing our internal projects to make sure we give the priority for the projects, which will extend our competence in the long run.

不過，就我們在核心能力上的有機投入、著眼長期的投資而言，例如技術、服務與產品，我們正利用這個淡季，確保把重點放在能在長期強化我們競爭力的專案上。因此在資源有限的情況下，我們也在內部專案上做優先排序，確保優先投入那些能在長期延伸我們能力的專案。

Thank you. There are no further questions at this time. I'll now hand back for closing remarks.

謝謝。目前沒有其他問題了。我現在把時間交回去做結語。

Thank you. Thank you, everyone, for joining us today. You can find the transcript and webcast of today's call on investors.trip.com. We look forward to speaking with you on our fourth quarter 2021 earnings call. Thank you, and have a good day.

謝謝。謝謝各位今天參與。我們今天電話會議的逐字稿與網路直播可在 investors.trip.com 查閱。我們期待在 2021 年第四季財報電話會議上再與各位交流。謝謝，祝各位有美好的一天。

Thank you very much.

非常感謝。

Thank you.

謝謝。

Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.

謝謝。今天的會議到此結束。感謝各位參與。您現在可以斷線。