TRIP.COM(TCOM)2024-04-29 20:03Business Operations - As of December 31, 2023, over 90% of total transaction orders were executed through mobile channels, with products and services available in 24 languages and 35 local currencies [277]. - The company has over 1.7 million global accommodation listings and offers flights from over 600 airlines, with a network of over 90,000 ecosystem partners as of December 31, 2023 [282]. - The transportation ticketing network covers over 220 countries and regions, with air ticket offerings from over 600 global airlines, covering over 3,400 airports [290][291]. - The company streamlined and optimized its offline stores, maintaining approximately 5,700 stores across about 300 cities in China as of December 31, 2023 [279]. - The company operates a one-stop travel platform integrating a comprehensive suite of travel products and services, enhancing user experience through AI capabilities and travel insights accumulated over 23 years [273][274]. - The company has established an open platform business model, allowing ecosystem partners to post their own offerings, thereby expanding business opportunities [281]. - The company provides 24/7 user support throughout the travel journey, ensuring a personalized and enjoyable experience for users [280]. - The company has been increasing its influence in target markets globally, focusing on personalized travel experiences for users [276]. - The company serves approximately 960,000 small and medium-sized enterprises and over 15,000 large enterprises, including over 300 Fortune 500 companies [298]. - The company operates four leading travel brands: Ctrip, Qunar, Trip.com, and Skyscanner, enhancing brand recognition in the travel sector [319]. - The company utilizes AI technologies for applications such as traffic forecasting and flight delay prediction, enhancing customer service and operational efficiency [311]. - The proprietary search and transaction engines can support hundreds of millions of queries per day, improving user experience on the platform [315]. - The rewards program allows users to accumulate membership points based on services purchased, promoting user loyalty [323]. - The company has established a travel safety center and a global travel SOS service, providing 24/7 emergency support for travelers [307][308]. - The company has a broad customer base, including ecosystem partners such as airlines, hotels, and various travel service providers [335]. Financial Performance - In 2023, the company generated approximately 39% of total revenues from accommodation reservations, 41% from transportation ticketing, 7% from packaged tours, 5% from corporate travel, and 8% from other products and services [424]. - The company's net revenues increased by 122% year-over-year in 2023, with net income rising by 632% compared to the previous year [437]. - The core online travel agency business achieved a record high in 2023, with a year-over-year increase in GMV of nearly 130% and a growth of about 30% compared to 2019 [437]. - Accommodation reservation revenue for 2023 was RMB17.3 billion (US2.6 billion), also representing 41% of total revenues [444]. - Packaged tour revenue for 2023 was RMB3.1 billion (US317 million) in 2023, representing a growth of 109% [445]. - Revenue from other businesses rose from RMB2.5 billion in 2022 to RMB3.5 billion (US258 million) in 2023, up from RMB1.2 billion in 2022 [448]. - Product development expenses as a percentage of net revenues decreased from 45% in 2021 to 27% in 2023 [448]. - Sales and marketing expenses remained stable at 21% of net revenues in both 2022 and 2023, down from 25% in 2021 [449]. - General and administrative expenses as a percentage of net revenues decreased from 15% in 2021 to 8% in 2023 [449]. - The effective income tax rate improved from -57% in 2021 to 16% in 2023 [450]. - Corporate travel services are recognized on a net basis after services are rendered, reflecting a shift in revenue recognition practices [445]. - The company anticipates continued growth in corporate travel and other business segments, driven by increased demand and market expansion strategies [445][446]. Regulatory Environment - The travel agency regulations in China require agencies to obtain licenses for outbound and domestic travel businesses from relevant authorities [355]. - Foreign investors can establish travel agencies in China, but are restricted from engaging in outbound tourism for mainland residents unless specified by the State Council [356]. - The Ministry of Culture and Tourism introduced measures to standardize online travel operations, mandating accurate service information and personal data protection [357]. - The air-ticketing business is regulated by the China Air Transport Association, which sets standards for sales agencies, including proper licensing and employee training [359]. - Online air-ticketing platforms are prohibited from bundling sales with other services by default and must display ancillary services explicitly [360]. - The PRC E-commerce Law imposes requirements on e-commerce operators to protect consumer rights and ensure fair trading practices [362]. - The PRC Consumer Protection Law mandates that business operators guarantee the quality and validity of goods and services sold [364]. - The PRC Data Security Law, effective September 2021, establishes a tiered system for data protection based on the importance of the data [372]. - Internet service providers face criminal penalties for failing to comply with information security obligations, including severe consequences from user information leakage [373]. - Recent regulations require data processing entities to apply for cybersecurity reviews if their operations could influence national security, with unclear parameters for implementation [374]. - The PRC Personal Information Protection Law, effective from November 2021, mandates compliance for processing personal information within China and for services provided to individuals in China [375]. - The Cybersecurity Review Measures, effective from February 2022, require cybersecurity reviews for internet platform operators with over one million users intending to pursue foreign listings [376]. - Security assessments for outbound data transfers are required if the data involves over 100,000 individuals' personal information or 10,000 individuals' sensitive personal information since January 1 of the previous year [377]. - The PRC Cybersecurity Law amendments proposed in September 2022 aim to enhance legal liability mechanisms for network operation security and personal information protection [378]. - The Administrative Measures on Data Security in Industry and Information Technology require data processors to regularly identify and file important data catalogs with local authorities [378]. - The PRC Anti-Monopoly Law amendment in June 2022 introduced a "safe harbor" for operators with market shares below a specific threshold, increasing penalties for violations [394]. - The Provisions on the Review of Concentrations of Undertakings issued in March 2023 clarify factors for determining control over other undertakings [394]. Sustainability Initiatives - Approximately 2,000 hotels have been selected as fulfilling the criteria for low-carbon hotel standards under the company's sustainability initiatives [338]. - The company is committed to promoting sustainable tourism and has launched initiatives like "Green Hotels" to encourage environmentally friendly practices among hotel partners [338]. - The company has established 28 country retreats across China as part of its rural tourism initiative, contributing to local income and talent development [340]. Market Competition - The company faces increasing competition in China's travel industry from both domestic and international players, necessitating a focus on brand recognition and user satisfaction [334]. - The company has a history of significant acquisitions, including Qunar in December 2015 and Skyscanner in December 2016, enhancing its market position [265]. - The company has not made any material acquisitions since 2020, focusing instead on evaluating strategic investments and acquisitions [337]. Intellectual Property - As of December 31, 2023, the company had over 1,550 patents registered in China, including over 600 invention patents and over 950 pending patent applications [330]. - The company owned over 1,700 registered trademarks and approximately 150 pending trademark applications in China, along with over 180 registered trademarks in various jurisdictions outside of China [330]. - The company has over 300 registered domain names in China and approximately 30 registered domain names outside China, ensuring full legal rights over these domains [332].