By ZHENG Cuiying

Trip.com is now listed in Hong Kong and on the NASDAQ. Both listings occurred in the shadow of virus outbreaks but had completely different receptions.

Ctrip, the company’s predecessor, registered in the Cayman Islands, was listed on the NASDAQ in 2003 and raised US$75 million – around 9 million yuan at that time. On the first trading day, the stock price rose from $18 to close at $33.94. By contrast this year on April 19, the new stock opened at HK$281 (US$36, 235.14 yuan) and immediately fell, eventually closing slightly down at HK$280.2.

Domestic tourism has gradually returned to pre-pandemic levels and in 2020, Trip.com's performance turned from loss to profit in the third and fourth quarters. The lack of interest in the new issue is likely related to China's current anti-monopolies policy combined with pandemic gloom.

Going nowhere fast

In 2020, Trip.com's GMV was no lower than other OTAs but its market value is relatively low, despite rather wordy assertions by CEO Jane Sun on Monday that Trip.com is "the only one-stop travel company that provides all products.”

Also, at Monday’s lackluster press conference, founder James Liang came up with the gratifying notion that Trip controlled 2 percent of the world tourism industry, claiming that there was still “space for development."

Outbound tourism, however, has not returned to anything like normal levels, and perhaps never will. Haize Capital's LUO Haizi believes that the value of Booking and Expedia – both at record highs – reflects two things.

First, thanks to the coronavirus, direct sales by hotels are very weak so the task of selling rooms has been dumped back on OTAs. Second, by the third quarter of this year, vaccination will be in full swing and recovery well underway. Luo thinks that as soon as people are vaccinated, they will be just as eager as ever to board planes and head off on vacation. It’s a very pleasant degree of optimism in the pandemic era, one held by many in the industry and perhaps even shared by a few with no irons in the fire.

Driven by China's 120 million outbound tourists, Trip.com was doing very well in the US before the pandemic. All that has changed, and there is scant justification for the belief that it will change back with any degree of rapidity. International business travel has shown no signs of recovery at all.

In order to survive the pandemic, Trip.com has focused on the domestic market and jumped on the live-streaming bandwagon that dominates all kinds of retail marketing in China today. Nevertheless, the unproven content-driven capability is not equal to outstanding performance in the capital market.

Meituan Dianping, listed in Hong Kong in 2018, also sells hotel rooms and travel. Its value has hit HK$1.7 trillion. The labor cost of Trip.com's travel business is higher than Meituan’s, but the commission model is not yet outdated. International travel companies have not come up with any other models. The key issue remains web-traffic cost.

Where to go next?

The Meituan app is a cavernous emporium that sells more or less anything: food deliveries, hotels, entertainment, groceries, travel… you name it. In general, however, Meituan generates its own traffic and does not wholly rely on the munificence of Baidu, Google, Yandex, et al.

Every OTA is in the same boat, desperately seeking traffic and control over traffic. Airbnb’s strategy is to build a brand; Expedia mainly works in B2B outside the United States, bypassing Google’s constraints; Trip.com’s stated goal has always been to provide good services, and its current solution focuses on content.

There are four main directions Trip can go in – improve content and services; follow the herd into live-streaming; create a tourism marketing hub; squeeze the domestic market. Trip has always paid lip service to the notion that content is king and so, at least outwardly, this looks like remaining the main strategy.

Unfortunately, Trip.com has proved moderately to highly inept in its many attempts to improve content. There doesn’t seem to be much basis for the strategy beyond the enthusiasm of Liang himself, and the marketplace has moved a long way since 2003. Trip.com has to face up to competitors ’ already experts in live-streaming, including Douyin, Little Red Book, JD.com, and its biggest competitor Meituan.

When quizzed about the precise advantages of Trip.com, Sun came up with the knotty notion that the company was a travel “content and trading” platform, with a “pretty high” conversion rate from content to transactions. In 2020, average daily visitors to Trip.com content channels increased by more than 80 percent and more than 40 percent of Trip.com users made at least two transactions through the live-streaming platform.

Stay home, stay alive

OTAs are a new concept and one which may have burned as fleeting as it did brightly. Perhaps now past its sell-by date, the model looks ever more dated and doomed.

Founded in 1999, Trip.com has survived SARS, transformed from PC to mobile, acquired its biggest competitor, and may well survive COVID-19. But that’s going to take some big ideas, not just from Trip, but from all OTAs.

It seems that for China’s OTAs, it’s the domestic market or bust. At the same time as content channels like Douyin are competing intensely for traffic, airlines and hotels have learned to market themselves and no longer need parasitic OTAs on their backs.