Summary of the Conference Call on the China OTA Industry Industry Overview - **Industry**: China Online Travel Agency (OTA) Sector - **Key Focus**: Competitive dynamics and strategic updates within the OTA industry in China Core Insights 1. **High Entry Barriers**: The complexity of building OTA supply chains and service infrastructure creates significant entry barriers, which may take 3-5 years for new entrants to overcome. Established players have clear scale advantages [2][3] 2. **Transportation Supply Chain**: The transportation supply chain is simpler with around 100 airline carriers in China, but the ROI and margins are low due to limited direct monetization through commissions. Revenue opportunities lie in cross-selling value-added services [2] 3. **Hotel Supply Chain Challenges**: Establishing a hotel supply chain is more complex due to nearly 1 million suppliers, including alternative accommodations. Many small and independent hotels require extensive business development efforts [2] 4. **Customer Service Advantages**: Leading OTAs like Trip.com have developed large in-house customer service teams, providing superior service quality through a one-stop shop platform that can address cross-business issues [2] Competitive Landscape 1. **Stable Competition**: Despite new platforms showing interest in the OTA space, the competitive landscape remains stable. New entrants face constraints in supply capabilities, customer service, and user mindshare [3] 2. **Fliggy's Position**: Fliggy has gained traffic support post-Alibaba's restructuring but still lags in hotel inventory depth and price competitiveness compared to market leaders [3] 3. **Douyin's Strategy**: Douyin has shifted from a full OTA model back to a "content + voucher" approach due to slow hotel coverage and customer profile mismatches [3] 4. **JD.com's Early Stage**: JD.com is in the early stages of developing its hotel supply chain, focusing on service provider coordination and system integration [3] AI Disruption Concerns 1. **Limited Immediate Impact**: Concerns regarding AI disruption in the OTA sector are considered overblown at this stage. Current AI platforms are likely to serve as price comparators but face limitations in real-time price retrieval due to OTAs' defensive measures [4] 2. **Long-Term AI Integration**: For AI platforms to facilitate closed-loop bookings, they must improve their supply chains and services, necessitating ongoing monitoring [4] Stock Implications 1. **Earnings Visibility**: The stable competition in the OTA sector supports the earnings visibility of leading companies. The report is optimistic about the OTA sector's prospects in 2026, citing reasonable valuations [5] 2. **Valuation Metrics**: TCOM/Tongcheng is trading at 16x/11x 2026E PE, compared to 14x for the broader Chinese internet sector [5] Risks to Consider 1. **Evolving Competition**: The competitive landscape is subject to change, which could intensify competition [7] 2. **Technological Trends**: Rapid changes in technology and user preferences pose risks [7] 3. **Monetization Uncertainty**: Uncertain monetization strategies could impact profitability [7] 4. **Traffic Acquisition Costs**: Rising costs associated with traffic acquisition and brand promotions are a concern [7] 5. **Regulatory Changes**: Potential regulatory changes could affect the industry landscape [7] Additional Notes - The report emphasizes the importance of monitoring ongoing developments in the OTA sector and the potential for new entrants to disrupt the market in the future [4][5]

Core OTA business delivered healthy growth. In 3Q25, TC's core OTAbusiness revenue reached RMB4.6bn (83.7% of total revenue), up 14.9%YoY (2Q25: 13.7% YoY), and was 0.4% ahead of consensus driven bybetter- than-expected revenue growth in accommodation reservationservices and others. In 3Q25, transportation ticketing services/accommodation reservation services/other revenue achieved YoY growthof 9.0%/14.7%/34.9% (2Q25: 7.9%/15.2%/27.5%). The 12-monthaccumulated number of travellers served reached 2.0bn by en ...