Trip.com Sees Value-Added Service Business Curtailed, but Still Positioned for Margin Expansion

Narrow-moat Trip.com competes in China’s crowded online travel agent industry by leveraging the largest selection of both domestic and international hotels in China on its platform and relying on user stickiness as a one-stop shop for travel ticketing, accommodations, and packaged tours. The platform is now also generating revenue from advertising, in which it hopes to take 3%-5% of the ad market, but nearly all its revenue streams are travel-related, and coronavirus lockdowns in China have cratered demand due to the inability to travel or unwillingness to quarantine.