Trip.com Group Limited (TCOM) 2021 Q2 法說會逐字稿

Thank you for standing by, and welcome to the Trip.com Group 2021 Q2 Earnings Conference Call. All participants are in a listen-only mode. There'll be a presentation followed by a question-and-answer session. (Operator Instructions)

感謝各位耐心等候，歡迎參加 Trip.com Group 2021 年第二季（Q2）財報電話會議。所有與會者目前皆為僅收聽模式。會議將先進行簡報，隨後進入問答環節。（接線員指示）

I would now like to hand the conference over to Michelle Qi, Head of Investor Relations. Please go ahead.

現在我想將會議交給投資人關係主管 Michelle Qi。請開始。

Thank you. Thank you all. Good morning, and welcome to Trip.com Group's 2021 Q2 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.

謝謝。謝謝各位。各位早安，歡迎參加 Trip.com Group 2021 年第二季（Q2）財報電話會議。今天與我一同出席的有董事會執行主席 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營運表現，其中包含依據 1995 年《美國私人證券訴訟改革法案》安全港條款所作之前瞻性陳述。前瞻性陳述涉及固有風險與不確定性。因此，我們的實際結果可能與今日所表達之觀點存在重大差異。多項潛在風險與不確定性已載於 Trip.com Group 向美國證券交易委員會提交的公開文件中。除非適用法律另有規定，Trip.com Group 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 second quarter of 2021, as well as some outlook color for the third 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 年第二季的財務表現，並就 2021 年第三季提供部分展望說明。在預先準備的發言結束後，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. Overall speaking, the Chinese domestic travel market was encouraging this quarter. We have witnessed a strong recovery momentum, with pent-up demand unleashed, following the relaxation of travel restrictions. Despite the regional and the temporary impact of COVID resurgence, overall travel activities in the country continued along the growth trajectory. The vaccination rate in China is still ramping up, more than 1 billion Chinese citizens are now fully vaccinated. With a larger vaccinated population, we are confident to anticipate a more stable momentum in travel demand. During the past quarter, we continued to dive deep into the Chinese domestic market, to meet the evolving needs and demands of domestic travelers. We continue to make good progress in major focus areas, such as content, product, service, technology and supply chain. Jane will share more details on this in her section.

謝謝你，Michelle。謝謝各位今天參加本次電話會議。整體而言，本季中國國內旅遊市場表現令人鼓舞。隨著旅遊限制放寬，我們見證了強勁的復甦動能，先前累積的需求得以釋放。儘管 COVID 再度反彈帶來區域性與短期影響，全國整體旅遊活動仍延續成長軌跡。中國的疫苗接種率仍在提升，目前已有超過 10 億名中國公民完成全程接種。隨著接種人口擴大，我們有信心預期旅遊需求將呈現更穩定的動能。在過去一季，我們持續深耕中國國內市場，以滿足國內旅客不斷演變的需求。我們在多個重點領域持續取得良好進展，例如內容、產品、服務、技術與供應鏈。Jane 將在她的部分分享更多細節。

We are delighted to embrace the recent regulatory changes in our domestic markets, as we believe they will favor fair competition and promote innovation in the industry. This could help foster a sustainable and healthy market (inaudible). Trip.com Group has long benefited from an organized and regulated environment, to cultivate our growth in an efficient manner over the past 22 years. We proactively communicate with the authorities and abide by the rules. We believe the new regulations will benefit all players in the industry.

我們很高興迎接國內市場近期的監管變化，因為我們相信這將有利於公平競爭並促進產業創新。這有助於培育一個可持續且健康的市場（聽不清）。過去 22 年來，Trip.com Group 長期受益於有序且受監管的環境，使我們得以更有效率地培育成長。我們主動與主管機關溝通並遵守規範。我們相信新規定將使產業內所有參與者受益。

Trip.com Group also pledged to give back more to the society, to heed the government's call for common prosperity. Over the past quarter, we launched a five year rural revitalization initiative to boost the local tourism and support low-income communities. The initiative aims at building 10 country retreats of Five Star hotel quality, empowering 100 rural villages, and creating 10,000 rural tourism talents for the industry. We believe rural tourism is a golden key to open the door to rural revitalization. Trip.com Group country retreats will serve as an example and benchmark for future development of rural tourism, as well as attracting younger generations to return and to create social values in their hometown.

Trip.com Group 也承諾回饋社會更多，以響應政府對共同富裕的號召。在過去一季，我們啟動了一項為期五年的鄉村振興計畫，以帶動在地旅遊並支持低收入社群。該計畫旨在打造 10 間具五星級飯店品質的鄉村度假村，賦能 100 個鄉村，並為產業培育 10,000 名鄉村旅遊人才。我們相信鄉村旅遊是打開鄉村振興之門的一把金鑰。Trip.com Group 的鄉村度假村將成為未來鄉村旅遊發展的示範與標竿，同時吸引年輕世代返鄉，在家鄉創造社會價值。

On the international front, many countries also embarked on the transition towards normalcy. As we see rising vaccination rates and more favorable policy in place to facilitate travel, as (inaudible) travel and tourism is getting back on track. We have established a leading position in the Asia Pacific market, with strong China outbound travel in the past years. Following our "Local Focus, Global Vision" strategy, we have continued to strengthen our product competitors in Europe over the past two years, on top of strong synergy between Skyscanner and Trip.com in Asia markets.

在國際方面，許多國家也開始邁向常態化的轉型。隨著疫苗接種率上升，以及更有利於促進旅行的政策到位，（聽不清）旅遊與觀光正逐步回到正軌。憑藉過去多年強勁的中國出境旅遊，我們已在亞太市場建立領先地位。依循我們「立足本地、放眼全球」的策略，過去兩年我們持續強化在歐洲的產品競爭力，同時也在亞洲市場上，進一步發揮 Skyscanner 與 Trip.com 之間的強大協同效應。

The size of air ticket booking market in Europe is close to that in the Asia Pacific. Together, they account for about 60% of world's total air travel. With our strategic layout in both Asia Pacific and Europe, we see a lot of potential in the global air ticket booking market. By balancing emphasis on both globalization and domestic development, such dual circulation strategy will help fortify Trip.com Group's resilience in the face of pandemic challenges.

歐洲機票預訂市場的規模接近亞太市場。兩者合計約占全球航空旅行總量的 60%。憑藉我們在亞太與歐洲的策略布局，我們看見全球機票預訂市場蘊含巨大潛力。透過在全球化與國內發展之間取得平衡，這樣的雙循環策略將有助於在疫情挑戰下強化 Trip.com Group 的韌性。

Going forward, we'll continue to be adaptive and responsive to the changing market conditions and evolving demand for post pandemic travelers. As we have mentioned in the previous quarters, we will continue to leverage our content to inspire travelers and to leverage our supply chain to provide users with the most appealing product choices. All these offerings are backed by our ever-improving product capabilities and service quality. It is our mission to bring forward the most enjoyable booking experience. We can see the value, as we exceed the needs and demands of our customers.

展望未來，我們將持續因應不斷變化的市場環境，以及後疫情時代旅客需求的演進，保持彈性並快速回應。如同我們在前幾季所提到的，我們將持續運用內容來啟發旅客，並運用供應鏈為用戶提供最具吸引力的產品選擇。所有這些供給都由我們持續提升的產品能力與服務品質所支撐。我們的使命是帶來最愉悅的預訂體驗。當我們超越客戶的需求與期待時，我們能看見其中的價值。

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

接下來，我把電話交給 Jane，請她分享營運重點。

Thanks James. Good morning, everyone. I would like to start with a brief overview of our performance in the past quarter, and update on our strategic focuses.

謝謝 James。各位早安。我想先簡要回顧我們上一季的表現，並更新我們的策略重點。

First, overall performance overview; in the second quarter, our total net revenue increased by 86% year-over-year and 43% quarter-over-quarter, driven by strong recovery momentum of China domestic market. Despite a regional resurgence of COVID cases in Guangdong, our domestic revenue increased by 80% year-over-year, and has surpassed the pre-COVID 2019 level. Both our domestic hotel and air ticket GMV increased by about 150% year-over-year, and their bookings increased by double digits, when we compared with the same period pre-COVID in 2019.

首先，整體表現概覽：第二季在中國國內市場強勁復甦動能帶動下，我們的淨營收總額年增 86%，季增 43%。儘管廣東地區 COVID 病例出現區域性反彈，我們的國內營收仍年增 80%，並已超越 COVID 之前 2019 年的水準。我們的國內飯店與機票 GMV 均年增約 150%，且與 2019 年 COVID 前同期間相比，其預訂量皆呈現雙位數成長。

Notwithstanding the effect of Guangdong cases in June, the rest of the country was largely unaffected, and has demonstrated a strong growth momentum. Domestic hotel and air ticket bookings in non-Guangdong areas were up for approximately 30% compared to the same period in pre-COVID 2019. Our corporate travel management business and other revenues also continue to ride on the growth trajectory and grew by double digits compared to the same period pre-COVID in 2019.

儘管6月廣東疫情個案帶來影響，全國其他地區大致未受波及，並展現強勁的成長動能。非廣東地區的國內飯店與機票預訂量，較疫情前2019年同期約成長30%。我們的企業差旅管理業務及其他收入亦持續沿著成長軌道前進，較疫情前2019年同期實現雙位數成長。

As we further penetrated the second tier cities, we are glad to see total hotel bookings on our feature platform increase significantly, growing by more than 50% in Q2 when we compared to the same period in 2019. Staycation travel continues to serve as a major driver for domestic recovery, with local hotel booking growing nearly 80% versus pre-COVID in 2019, and the cross-selling ratio from transportation to hotel also improved by more than 20% versus pre-COVID 2019.

隨著我們進一步滲透二線城市，我們很高興看到特色平台上的飯店總預訂量顯著提升，與2019年同期相比，第二季成長超過50%。宅度假（Staycation）旅遊仍是帶動國內復甦的主要驅動力，本地飯店預訂量較疫情前2019年成長近80%，由交通到飯店的交叉銷售比率亦較疫情前2019年提升超過20%。

Second, our major focus on domestic market. Throughout the second quarter, we continued to stick with our focus on domestic market, in terms of supply chain, content capabilities, service quality and technology advancement, in order to lay out a solid foundation for new growth drivers beyond the pandemic.

第二，我們的重點聚焦於國內市場。整個第二季，我們持續堅持以國內市場為重點，從供應鏈、內容能力、服務品質與技術進步等方面著手，為疫情後的新成長動能奠定堅實基礎。

First, on supply chain, we scaled up our support for our suppliers by providing technology support in the training to hoteliers, to support enhancing their revenue management, market effectiveness and many other aspects. We also consistently invest in developing new products and services to empower suppliers to better capture evolving customer needs. For example, our dual membership program with airlines, create value for both sites by rewarding customers for their loyalty and expanding the airlines customer base. We also cooperated with domestic Chinese airports, to improve the efficiency of connecting flights. Many of them have seen significant year-over-year growth in passenger traffic.

第一，在供應鏈方面，我們透過為飯店業者提供培訓中的技術支援，擴大對供應商的支持，以協助其提升收益管理、市場效能及其他多個面向。我們亦持續投入開發新產品與服務，賦能供應商更好地掌握不斷演變的客戶需求。例如，我們與航空公司推出的雙重會員計畫，透過獎勵客戶忠誠度並擴大航空公司的客戶基礎，為雙方創造價值。我們也與中國國內機場合作，以提升中轉航班的銜接效率。其中許多機場的旅客吞吐量已出現顯著的年增長。

Second, in terms of the content, we are making good progress and our content strategy has begun to bear fruit. In Q2, the quantity of the content published on our platform, nearly doubled and the number of the influencers on our platform increased by approximately 50%, when compared to Q1. User engagement also improved this quarter, with more than 35% of our unique app visitors accessing the content platform and spending more time on our multimedia offerings. New users have shown a high level of engagement with our content platform.

第二，在內容方面，我們進展良好，內容策略已開始開花結果。第二季，我們平台發布的內容數量較第一季幾乎翻倍，平台上的內容創作者（influencers）數量亦較第一季增加約50%。本季用戶互動也有所提升，超過35%的App獨立訪客會進入內容平台，並在我們的多媒體內容上停留更長時間。新用戶亦展現出對內容平台的高度參與度。

Our content to transaction conversion rate was also on the rise this quarter. We continue to reinforce our infrastructure and output of our first-class live streaming and promotion capabilities for travel industry. We are glad to have -- to see the top players on our Star Hub benefits from the rewarding conversion rates. We also continue to expand the Star Hub partner base, to empower more market players.

本季我們的「內容到交易」轉化率亦持續上升。我們持續強化基礎設施，並輸出一流的旅遊產業直播與促銷能力。我們很高興看到星球號（Star Hub）上的頭部玩家受益於可觀的轉化率。我們也持續擴大星球號合作夥伴基礎，賦能更多市場參與者。

We continue to invest in the service quality and technology. We enhanced our service reliability and price transparency. We also have consistently invested in our R& D capabilities, and continue to improve operating efficiency. We can now handle booking changes and cancellation enquiries much more efficiently, amid the resurgence of the domestic COVID cases in August. Millions of reservation were canceled on Trip.com Group platforms. Close to our 2020 level, during the first wave of the outbreak. Yet, the amount of the phone calls handled by real person operatives has decreased by 50%. The number of the customers waiting in the line for call pickup also shrank by90%, which are empowered by our investment in technology.

我們持續投入服務品質與技術。我們提升了服務可靠性與價格透明度。我們也持續投資研發能力，並不斷提升營運效率。在8月國內疫情個案再度反彈期間，我們如今能更高效率地處理改期與取消諮詢。Trip.com Group平台上有數百萬筆訂單被取消。接近2020年疫情首波爆發時的水準。然而，由真人客服處理的電話量下降了50%。等待接聽的客戶排隊人數也縮減了90%，這得益於我們在技術上的投入。

On the international front, our global brands have enhanced our collaboration in terms of the supply chains and technology capabilities to generate strong synergy in order to better capture the recovery trends in the global markets. We are glad to see, that our brands in Europe showed a strong and continuing sequential improvement in air ticket booking over the past few months, with several countries such as Germany, France and Italy already surpassing the comparative 2019 level.

在國際市場方面，我們的全球品牌在供應鏈與技術能力上加強協作，產生強勁協同效應，以更好把握全球市場的復甦趨勢。我們很高興看到，過去數月我們在歐洲的品牌機票預訂量呈現強勁且持續的環比改善，包括德國、法國與義大利等多個國家已超越2019年同期水準。

Trip.com became the first OTA to offer Eurail and Interrail train passes, which are very popular among millennials and generation Z travelers in Europe. It is a great opportunity to tap into these markets, as we further our contribution to the global travel recovery.

Trip.com成為首家提供Eurail與Interrail鐵路通票的OTA，這些通票在歐洲的千禧世代與Z世代旅客中非常受歡迎。隨著我們進一步為全球旅遊復甦作出貢獻，這是切入上述市場的絕佳機會。

Regarding the recent regulatory changes, we fully support and abide by new policies and guidelines, as they aim at fostering a sustainable digital economy in the long run. Over the past two decades, we have grown in a healthy and organized market environment. As the digitalization continues to drive industry evolution, today, we are all digitally connected, and the boundaries between online and offline engagement are becoming blurred. The whole travel industry has witnessed, with a rising wave of online and offline integration. Such digital transformation is further accelerated by pandemic. In 2019, Trip.com Group only accounted for nearly 13.7% of market share of China domestic travel market, and still has ample room to grow, as Chinese economy grows. We anticipate to see all players to thrive in the market, with fair and transparent guidelines of the new regulation.

關於近期監管變化，我們完全支持並遵守新的政策與指引，因其旨在長期促進可持續的數位經濟。過去二十年，我們在健康且有序的市場環境中成長。隨著數位化持續推動產業演進，如今我們皆已數位互聯，線上與線下互動的界線日益模糊。整個旅遊產業已見證線上線下融合浪潮的興起。疫情進一步加速了此一數位轉型。2019年，Trip.com Group在中國國內旅遊市場的市占率僅約13.7%，隨著中國經濟成長，仍有充足的成長空間。我們預期在新監管公平且透明的指引下，所有市場參與者都能在市場中蓬勃發展。

In terms of our rural revitalization initiatives, our first three Trip.com Group country retreats in Anhui Province, Henan Province and Hunan Province are already open for business. Large majority of the employees of these retreats come from the local areas, and are receiving professional trainings, and enjoy a higher-than-average salary from a local standard. By honing the local people skills and improving their livelihood, we hope to narrow the gap between the poor and rich. We look forward to leading by example, and encouraging more industry players to enjoy the development of rural tourism and leverage rural revitalization.

在鄉村振興倡議方面，我們在安徽省、河南省與湖南省的前三家Trip.com Group鄉村度假村已正式開業。這些度假村的員工絕大多數來自當地，正在接受專業培訓，並享有高於當地平均水準的薪資。透過精進當地居民技能並改善其生計，我們希望縮小貧富差距。我們期待以身作則，並鼓勵更多產業參與者共享鄉村旅遊發展成果，並借力鄉村振興。

Amidst the height of pandemic, Trip.com Group made significant efforts to support the supply chain and bolster the recovery of our travel industry. We facilitate the guaranteed cancellations and cover losses for our customers, in order to protect the best interests and offer financial assistance, to support our business partners during a very challenging period.

在疫情最嚴峻之際，Trip.com Group付出重大努力以支持供應鏈並推動旅遊產業復甦。我們協助提供有保障的取消服務並承擔客戶損失，以保障客戶最佳利益並提供財務協助，在極具挑戰的時期支持我們的業務合作夥伴。

As of August 2021, Trip.com Group has also donated 3 million medical masks and hundreds of oxygen concentrators to more than 25 countries and regions around the world, battling COVID. We hope to inspire more companies to contribute to the common prosperity of the society.

截至2021年8月，Trip.com集團亦已向全球超過25個國家及地區捐贈300萬個醫療口罩及數百台製氧機，共同抗擊新冠疫情。我們希望能夠激勵更多企業為社會共同富裕作出貢獻。

As an industry leader, we will take on more responsibility to take care of our customers, our partners and our employees. There have been and will continue to be challenges along the way, but we will always endeavor to maximize our social impact, while increasing our company's value. We will keep on improving, as we strive towards our ideals.

作為行業領導者，我們將承擔更多責任，照顧我們的客戶、合作夥伴以及員工。一路走來曾有且仍將持續面臨挑戰，但我們將始終致力於在提升公司價值的同時，最大化我們的社會影響力。在追求理想的道路上，我們將不斷精進。

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 second quarter of 2021, Trip.com Group reported net revenue of RMB 5.9 billion, representing an 86% increase year-over-year and 43% increase quarter-over-quarter, primarily due to a strong recovery momentum of the China domestic market, despite regional and temporary impact of the pandemic, and travel restrictions in the Guangdong province.

謝謝Jane。各位早安。2021年第二季度，Trip.com集團實現淨營收人民幣59億元，同比增長86%，環比增長43%，主要得益於中國國內市場強勁的復甦動能，儘管疫情帶來區域性及短期影響，以及廣東省的出行限制。

Accommodation reservation revenue for the second quarter of 2021 was RMB 2.5 billion, representing a 96% increase year-over-year and a 55% increase quarter-over-quarter, recovering to 72% of the 2019 level. This was primarily due to the strong release of Chinese domestic travel demand following the lifting of restrictions. Despite regional COVID outbreaks, hotel booking in the domestic China also saw double-digit growth, when compared with the same period in 2019.

2021年第二季度住宿預訂收入為人民幣25億元，同比增長96%，環比增長55%，恢復至2019年水平的72%。這主要由於限制解除後，中國國內旅遊需求強勁釋放。儘管出現區域性新冠疫情爆發，中國國內酒店預訂相較2019年同期仍實現兩位數增長。

Transportation ticketing revenue for the second quarter of 2021 was RMB 2.1 billion, representing an 80% increase year-over-year and 37% increase quarter-over-quarter. Recovery to 61% of the 2019 level, among which domestic air ticket booking revenue doubled year-over-year, and increased by double digits, when compared to the same period in 2019.

2021年第二季度交通票務收入為人民幣21億元，同比增長80%，環比增長37%。恢復至2019年水平的61%，其中國內機票預訂收入同比翻倍，且相較2019年同期亦實現兩位數增長。

Package tour revenue for the second quarter of 2021 was RMB 367 million, representing a 182% increase year-over-year and 117% increase quarter-over-quarter, recovering to 35% of the 2019 level. This was contributed by a modest recovery of the domestic China market. Domestic attraction ticketing booking tripled year-over-year, and nearly doubled when compared to the same period in 2019.

2021年第二季度度假產品收入為人民幣3.67億元，同比增長182%，環比增長117%，恢復至2019年水平的35%。這主要得益於中國國內市場的溫和復甦。國內景點門票預訂同比增長三倍，且相較2019年同期接近翻倍。

Corporate travel revenue for the second quarter of 2021 was RMB 390 million, representing a 141% increase year-over-year and 55% increase quarter-over-quarter. This segment continues to gain momentum, with revenue growing by 26%, when compared to the same period in 2019, mainly driven by strong growth of accommodation bookings.

2021年第二季度商旅收入為人民幣3.90億元，同比增長141%，環比增長55%。該業務板塊持續增長動能，收入相較2019年同期增長26%，主要由住宿預訂的強勁增長所帶動。

Revenues from other business for the second quarter of 2021 was RMB 614 million, representing a 33% increase year-over-year and 2% increase Q-on-Q, showing an increase of 17% when compared to the same period in 2019. This is mainly contributed by rapid growth in our travel financing services and domestic advertising business.

2021年第二季度其他業務收入為人民幣6.14億元，同比增長33%，環比增長2%，相較2019年同期增長17%。這主要由我們旅遊金融服務及國內廣告業務的快速增長所貢獻。

Gross margin was 79% for the second quarter of 2021, increasing from 75% in the previous quarter, mainly driven by strong top line recovery and improved operating efficiency.

2021年第二季度毛利率為79%，較上一季度的75%有所提升，主要受益於營收端強勁復甦及營運效率提升。

Excluding share-based compensation charges, our adjusted operating expenses decreased by 23% compared to the same period in 2019.

剔除股份支付費用後，我們的經調整營運費用較2019年同期下降23%。

Adjusted product development expenses for the second quarter stayed approximately the same in the previous quarter, and achieved a savings of 16%, when compared to the same period in 2019, as we continue to run lean and maintain a stable headcount of product development personnel.

第二季度經調整產品研發費用與上一季度大致持平；由於我們持續精益運營並保持產品研發人員編制穩定，較2019年同期節省16%。

Adjusted sales and marketing expenses for the second quarter increased by 47% from the previous quarter, primarily due to the increase in expenses related to sales and marketing promotion activity, in response to increased travel demand in this quarter. This reflects a saving of 34% when compared to the same period in 2019, as we follow more prudent spending protocols.

第二季度經調整銷售及市場推廣費用較上一季度增加47%，主要由於為應對本季度旅遊需求上升而增加了與銷售及市場推廣活動相關的支出。在我們採取更審慎的支出規範下，較2019年同期節省34%。

Adjusted G& A expenses for the second quarter stayed approximately the same, as in the previous quarter, and increased by 77% year-over-year, primarily due to a reversal of bad debt provisions in the second quarter of 2020 for the company's travel suppliers. Tallying in a saving of 16% when compared to the same period in 2019.

第二季度經調整一般及行政費用與上一季度大致持平，同比增長77%，主要由於2020年第二季度就公司旅遊供應商計提的壞賬準備出現轉回。相較2019年同期節省16%。

Adjusted EBITDA for the second quarter was RMB 916 million compared to negative RMB 216 million in the previous quarter. Adjusted EBITDA margin was 16% for the second quarter compared to negative 5% in the previous quarter.

第二季度經調整EBITDA為人民幣9.16億元，而上一季度為負人民幣2.16億元。第二季度經調整EBITDA利潤率為16%，而上一季度為負5%。

Diluted loss per ordinary share and per ADS were RMB 1.02 or $0.16 for the second quarter. Excluding share-based compensation charges and fair value changes of equity security investment and exchangeable senior notes, non-GAAP diluted earnings per ordinary share and per ADS was RMB 1.13 or $0.18 for the second quarter.

第二季度每股普通股及每股ADS攤薄虧損為人民幣1.02元或0.16美元。剔除股份支付費用以及權益證券投資公允價值變動和可交換優先票據的公允價值變動後，第二季度非GAAP每股普通股及每股ADS攤薄收益為人民幣1.13元或0.18美元。

As of June 30, 2021, the balance of cash and cash equivalents, restricted cash, short-term investments, held-to-maturity time deposits and financial products was RMB 75 billion or $12 billion.

截至2021年6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合計為人民幣750億元或120億美元。

Turning to the third quarter of 2021, we would like to share some recent colors of our businesses.

展望2021年第三季度，我們想分享一些近期業務動態。

The growth momentum of the China domestic market continues to carry over to July, especially for regional and local travel. Our domestic hotel bookings have grown by more than 20%, and domestic air revenue has grown by double digits, when compared to 2019.

中國國內市場的增長動能延續至7月，尤其是在區域及本地旅遊方面。與2019年相比，我們的國內酒店預訂增長超過20%，國內機票收入亦實現兩位數增長。

As cross-province travel was disrupted in August, domestic China hotel occupancy rate and air ticket bookings decreased by more than 50%, compared to the same period in 2019. Local staycation travel was less affected, and our local hotel reservations maintained about 30% growth compared with 2019.

由於8月跨省出行受到干擾，中國國內酒店入住率及機票預訂量較2019年同期下降超過50%。本地「宅度假」旅行受影響較小，我們的本地酒店預訂相較2019年仍保持約30%的增長。

During September, the COVID situation was generally under control in most parts of China, and the domestic situation is gradually recovering. In the past Mid-Autumn Festival, our domestic hotel reservations reached double-digit growth compared to the same period in 2019, and domestic air ticket business was on track to full recovery. Due to uncertainties over changing COVID related travel restrictions, travel booking window has shrunk, and travel radius has shortened significantly. We expect to see more travel booking for national holiday in the following weeks.

9月期間，中國大部分地區的 COVID 情況整體上已受到控制，國內形勢正逐步復甦。在剛過去的中秋節，我們的國內酒店預訂量較2019年同期實現兩位數增長，國內機票業務也正朝著全面復甦的軌道前進。由於與 COVID 相關的旅行限制變動仍存在不確定性，旅遊預訂窗口期縮短，出行半徑也明顯縮小。我們預計在接下來幾週，國慶假期的旅遊預訂將會增加。

On the other hand, while outbound travel is still muted, Europe and the U.S. markets have seen a significant improvement and our global brands start to recover sequentially. During challenging times, we'll be adaptive and responsive to the changing market conditions and strive to grow our market share, while continuing to maintain a lean operation.

另一方面，儘管出境旅遊仍然低迷，歐洲與美國市場已出現顯著改善，我們的全球品牌也開始按季逐步復甦。在充滿挑戰的時期，我們將因應並快速回應不斷變化的市場環境，努力提升市佔率，同時持續維持精實營運。

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

接下來，請接線員開放提問。

Thank you. (Operator Instructions) Your first question comes from Ronald Keung of Goldman Sachs. Please go ahead.

謝謝。(接線員指示) 第一個問題來自高盛的 Ronald Keung。請開始提問。

Thank you. Thank you, James, Jane, Cindy and Michelle. My question is more on the international recovery. Just want to hear what is our strategy for international, particularly how we see the recovery trajectory. Firstly, for Pure International that you've shared some encouraging signs for Skyscanner, and I believe Trip.com and then how we think about the outbound, which at this point has been slower than the pure international? Just want to hear our strategy there. Thank you.

謝謝。謝謝 James、Jane、Cindy 和 Michelle。我的問題主要關於國際業務的復甦。想請教我們的國際策略，特別是我們如何看待復甦軌跡。首先，關於純國際業務，您分享了 Skyscanner 的一些令人鼓舞的跡象，我也相信 Trip.com 亦然；以及我們如何看待出境業務——目前出境復甦速度仍慢於純國際業務？想聽聽我們在這方面的策略。謝謝。

We are still pushing ahead with our local focus, global vision strategy. China domestic travel market is generally riding our growth trajectory, despite short-term COVID interruptions. We believe the continuing growth in domestic markets will gradually make up for the muted outbound travel. At the same time, thanks to the rising vaccination rates and the relaxed travel restrictions, overseas markets have seen promising recovery. Our overseas brands such as Skyscanner and Trip.com showed quick sequential improvements in recent weeks. Europe and APAC together account for about 60% of world's total air traffic. We therefore have a huge growth potential in these overseas markets.

我們仍將持續推進「本地聚焦、全球視野」的策略。儘管短期內受到 COVID 擾動，中國國內旅遊市場整體仍沿著我們的成長軌跡前進。我們相信國內市場的持續成長將逐步彌補出境旅遊的低迷。同時，受惠於疫苗接種率提升與旅行限制放寬，海外市場呈現可喜的復甦。我們的海外品牌，如 Skyscanner 與 Trip.com，近幾週按季表現快速改善。歐洲與亞太合計約占全球航空總流量的60%。因此，我們在這些海外市場擁有巨大的成長潛力。

Currently, we have already exhibited strong competitiveness in domestic China and Asian air markets. Meanwhile, our overseas brands will continue to upgrade products and services offering, to strengthen our competitors in our European markets. Our focused efforts will enable us to gain additional market share, and a solid foundation for sustainable growth beyond COVID in the long run.

目前，我們已在中國國內及亞洲航空市場展現出強勁競爭力。同時，我們的海外品牌將持續升級產品與服務供給，以強化我們在歐洲市場的競爭力。我們的聚焦投入將使我們能取得更多市佔率，並為疫情後長期可持續成長奠定堅實基礎。

With the vaccination rate continuing to rise globally, we have full confidence in the resumption of international travel. In the meantime, our team continues to enhance the fundamentals in terms of price, product, service and app user experience for overseas users. With that, we will be best positioned to capture the pent-up travel demand when international travel reopens.

隨著全球疫苗接種率持續上升，我們對國際旅行的恢復充滿信心。同時，我們的團隊持續在價格、產品、服務以及海外用戶的 App 使用體驗等方面強化基本功。如此一來，當國際旅行重新開放時，我們將處於最佳位置以承接被壓抑的旅遊需求。

Thank you, James.

謝謝你，James。

Thank you.

謝謝。

Thank you. Your next question comes from Alex Yao of J.P. Morgan. Please go ahead.

謝謝。下一個問題來自摩根大通的 Alex Yao。請開始提問。

Thank you, management. I have a couple of questions on the content operation. How do you guys incubate the content supply ecosystems? And then what's the progress on advertising monetization on content operation? Thank you.

謝謝，管理層。我有幾個關於內容營運的問題。你們如何孵化內容供給生態？另外，內容營運的廣告變現進展如何？謝謝。

Thank you, Alex. We have been making quite good progress on our content ecosystem development, by following on our three-step strategy. First, we have further enriched the content offerings on our platform. Our total content booking in second quarter nearly doubled compared with the previous quarter. And the number of sites, KOLs, also increased nearly 50% sequentially in the second quarter. And second, we are encouraged to see better user engagement, through content platform. For example, in the second quarter, we are glad to see an average of 35% of our app unique visitors, viewed content-related channels, with the key value reached over 40% during the holiday. Meanwhile, our diverse content format are gaining increasing traction from new users. And the third, our content to transaction conversion was underlined, as we continue to improve infrastructure development. We are happy to see that over 180 leading travel business have signed up Star Hub channel, which is our new travel marketing hub launched in April. Top Star Hub players have seen their conversion rates improving.

謝謝你，Alex。我們依循三步策略推進內容生態建設，已取得相當不錯的進展。第一，我們進一步豐富了平台上的內容供給。第二季的內容帶動預訂總量較上一季幾乎翻倍。第二季站點與 KOL 的數量也按季增加近50%。第二，我們很高興看到透過內容平台帶來更好的用戶互動。例如在第二季，我們很高興看到 App 的獨立訪客中，平均有35%瀏覽了內容相關頻道，假日期間該關鍵指標超過40%。同時，我們多元的內容形式正獲得新用戶越來越多的青睞。第三，隨著我們持續完善基礎設施建設，內容到交易的轉化得到強化。我們很高興看到已有超過180家領先的旅遊商家入駐 Star Hub 頻道，這是我們於4月推出的全新旅遊行銷中樞。Star Hub 的頭部玩家已看到其轉化率提升。

As we are the leading travel transaction platform in China, and many of our users have already got strong travel desire and [spend] when they come to our platform. Our strong product development capabilities make content to transaction conversion more easier and frictionless. We have built a technology and product team for our content strategy, which will mainly leverage our existing infrastructure and we will carefully evaluate the future investment for this long-term opportunity. Thank you.

作為中國領先的旅遊交易平台，我們的許多用戶在來到平台時已具備強烈的旅遊意願與[消費]需求。我們強大的產品開發能力，使內容到交易的轉化更容易且更順暢、摩擦更小。我們已為內容策略建立技術與產品團隊，將主要利用既有基礎設施，並會審慎評估未來在這一長期機會上的投資。謝謝。

Your next question comes from Alex Poon of Morgan Stanley. Please go ahead

下一個問題來自摩根士丹利的 Alex Poon。請開始提問

Thank you management for taking my question. My question is regarding our margins. Can management break down the non-GAAP operating margin of 11.7% in second quarter into China business, Skyscanner and Trip.com, separately? And assuming our China business revenue stays around the same level, can our China margin continue to improve on the same revenue level? And for Skyscanner, at what level of revenue of 2019 level, Skyscanner margin can go back to 20% margin level in 2019? Thank you.

謝謝管理層回答我的問題。我的問題關於我們的利潤率。管理層能否將第二季非 GAAP 營業利潤率11.7%分拆為中國業務、Skyscanner 與 Trip.com 各自的情況？並且假設中國業務收入維持在大致相同水準，我們的中國業務利潤率能否在同等收入水準下繼續改善？另外，對於 Skyscanner，當其收入恢復到2019年水準的多少比例時，Skyscanner 的利潤率可以回到2019年的20%利潤率水準？謝謝。

Thank you, Alex. With regard to the margin, we think we are still targeting a very healthy 20% to 30% normalized margin level. But at the second quarter for the domestic travel business, since it's almost fully recovered, so we have already maintained a very healthy margin for the domestic business. While for the international part, for example, Skyscanner, as -- they are still suffering some losses, but as we already see some pent-up demand and normalized travel demand, especially starting from Europe and U.S. market, we already see very healthy sequential increase for our pure international business. I think as long as the travel demand will recover or gradually recover, our international business, including Skyscanner will -- going back to a normalized margin level. Thank you.

謝謝你，Alex。關於利潤率，我們認為我們仍以非常健康的20%到30%的常態化利潤率水準為目標。但在第二季，就國內旅遊業務而言，由於幾乎已全面復甦，我們已為國內業務維持了非常健康的利潤率。至於國際部分，例如 Skyscanner——目前仍有一些虧損，但由於我們已看到部分被壓抑需求與常態化旅遊需求的回升，尤其從歐洲與美國市場開始，我們已看到純國際業務按季出現非常健康的增長。我認為只要旅遊需求恢復或逐步恢復，我們的國際業務（包括 Skyscanner）將會回到常態化的利潤率水準。謝謝。

Thank you. Your next question comes from Thomas Chong of Jefferies. Please go ahead.

謝謝。下一個問題來自 Jefferies 的 Thomas Chong。請開始。

Hi, good morning. Thanks management for taking my questions. I have a question regarding the hotel business. Can management comment about the competitive landscape in the lower-tier cities, and how we should think about the overseas accommodation as well in the second half? Any qualitative color would be great. Thank you.

嗨，早安。感謝管理層回答我的問題。我有一個關於飯店業務的問題。管理層能否評論一下低線城市的競爭格局，以及我們在下半年應如何看待海外住宿業務？任何定性的補充說明都很有幫助。謝謝。

Yes. For the hotel platform, we further penetrate into the second tier and lower-tier cities. Many of the contributors work well together. Our transportation business also cross-sell into our lower tier cities very significantly. The cross-sell ratio during this year have increased, compared to pre-COVID level by 20%. We also have seen generation-Z have used our product significantly, coming from other cities around China. Into the overseas hotels, with the recovery in Europe and United States, we have seen the vaccination rate also increases. And recently, U.S. have announced open to many of the European countries. And with that, our air transportation business unit will further increase the volume, which will also help us to lift our sales for overall products. Our competitiveness in providing the comprehensive product offerings, as well as a high service level with app usage will enable us to gain market share in the growing market overseas. Thank you.

是的。就飯店平台而言，我們進一步滲透到二線及更低線城市。許多貢獻方之間的協同合作運作良好。我們的交通運輸業務也非常顯著地在低線城市進行交叉銷售。今年的交叉銷售比率較疫情前水準提高了 20%。我們也看到 Z 世代大量使用我們的產品，來自中國各地其他城市。在海外飯店方面，隨著歐洲與美國的復甦，我們也看到疫苗接種率提升。而近期美國也宣布對許多歐洲國家開放。在此背景下，我們的航空運輸事業部將進一步提升運量，這也將有助於帶動我們整體產品的銷售。我們在提供全面產品組合方面的競爭力，以及透過 App 使用所帶來的高服務水準，將使我們能在海外成長市場中取得市占率。謝謝。

Thank you. Your next question comes from Yulin Zhong of Haitong International. Please go ahead.

謝謝。下一個問題來自海通國際的 Yulin Zhong。請開始。

Thanks, James, Jane, Cindy and Michelle for taking my question. My question is regarding the regulation. Could you share with us any thoughts on the regulatory environment and any potential regulatory pressure to your sector or your company? For example, on your collaboration with hotels, your take rate and your cross sale rates, et cetera? Thank you.

謝謝 James、Jane、Cindy 和 Michelle 回答我的問題。我的問題是關於監管。能否分享你們對監管環境的看法，以及是否存在對你們所處行業或公司可能帶來的監管壓力？例如，你們與飯店的合作、抽成率（take rate）以及交叉銷售比率等？謝謝。

Thank you. We believe the tightened regulations will bring positive impact to the Internet industry, especially in the long run, in terms of forbidding malpractices, encouraging innovation and portray a sustainable and healthy environment. Trip.com Group has long benefited from an organized and regulated environment to cultivate our own growth in an efficient manner in the past 22 years. We strongly support the proposed regulations in the market, which we believe we will -- which will eventually create value to all the stakeholders. In terms of a different potential regulation risk, at this moment, we are not considered to have a significant impact to our existing business practices. And going forward, we will work continuously to follow all the rules and regulations in both domestic China as well as for the international market. Thank you.

謝謝。我們認為收緊監管將對網際網路產業帶來正面影響，尤其從長期來看，有助於禁止不當行為、鼓勵創新，並塑造可持續且健康的環境。Trip.com 集團在過去 22 年中，長期受益於有序且受監管的環境，使我們能以高效率方式培育自身成長。我們強烈支持市場上提出的相關監管措施，我們相信這些措施最終將為所有利害關係人創造價值。就不同的潛在監管風險而言，目前我們認為對我們既有的業務做法不會造成重大影響。未來我們也將持續遵循中國境內以及國際市場的所有規則與法規。謝謝。

Thank you. Your next question comes from Brian Gong of Citi.

謝謝。下一個問題來自花旗的 Brian Gong。

Yes. Thanks management for taking my question. So my question is about competitive landscape. With recent regulatory change and some regional resurgence of cases, do you see any material change on competitive landscape and any behavioral change for our key competitor. Thank you.

是的。感謝管理層回答我的問題。我的問題是關於競爭格局。在近期監管變化以及部分地區疫情再度反彈的情況下，你們是否看到競爭格局出現任何實質變化，以及主要競爭對手是否有任何行為上的改變？謝謝。

Yeah. I think we fully support the new rules and regulation. As Cindy said, our company has grown in the past two decades in a very healthy and regulated environment. And going forward, we believe the new policy and regulation will further foster a very healthy growth in the industry. So I think everyone is studying these rules and regulation very carefully. And we believe in the new environment that will enable everyone to operate in a very transparent and a fair environment, which we have confidence in. Thank you.

是的。我想我們完全支持新的規則與監管。正如 Cindy 所說，我們公司在過去二十年是在非常健康且受監管的環境中成長。展望未來，我們相信新的政策與監管將進一步促進產業的健康成長。因此我認為每個人都在非常仔細地研究這些規則與監管。我們相信在新的環境下，將使所有人都能在非常透明且公平的環境中營運，對此我們有信心。謝謝。

Thank you.

謝謝。

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

謝謝。目前沒有其他問題。我現在把時間交回給 Michelle Qi 作結語。

Thank you. Thanks 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 the third quarter 2021 earnings call. Thank you and have a good day.

謝謝。感謝各位今天參與。您可以在 investors.trip.com 上找到今天電話會議的逐字稿與網路直播回放。我們期待在 2021 年第三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.

謝謝。

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

今天的電話會議到此結束。感謝各位參與。您現在可以掛線。