The reopening of international borders amid widespread vaccinations gave a much-needed boost to the travel and hospitality industry. However, the resurgent virus in China weighed on the operating performance of the leading Chinese online travel platform, Trip.com (NASDAQ: TCOM).
During the Q1 conference call, TCOM’s management stated that after an encouraging start to this year, the spread of the Omicron variant of the coronavirus in multiple regions limited the performance of the travel industry.
However, as the outbreak is now under control, local travel and vacation demand could rise. TipRanks’ Website Traffic screener also points to a recovery in TCOM’s business.
Per the screener, the number of visits to trip.com and its other website (ctrip.com) was up 138.87% year-over-year in May 2022. Moreover, on a year-to-date basis, the website traffic has grown 95.63% compared to last year’s period.
Further, on a month-over-month basis, TCOM’s website traffic was 16.03% higher in May compared to April. Also, compared to Q1, website traffic is trending 38.07% higher in Q2 so far, which is encouraging.
Now What?
The spike in website traffic is an encouraging sign. Moreover, management hinted that demand continued to improve in June. Its CFO Xiaofan Wang stated, “In the past several weeks, our hotel reservations have surpassed the 2019 level, mainly contributed by local vacation demand, while long-haul travel is still under pressure.”
Wang added that outside of China, the recovery momentum remains robust.
Highlighting the recovery, Deutsche Bank analyst Leo Chiang stated that TCOM is well-positioned “to capture the reopening opportunities in both domestic and international travel.” Chiang is bullish about TCOM and expects it to benefit from the rebound in domestic demand and steady recovery in overseas businesses.
Bottom Line
The improvement in website traffic, easing COVID restrictions in China, and recovery in the international market bode well for growth. Furthermore, Wall Street is bullish on TCOM stock. It has received nine Buys and one Hold recommendation for a Strong Buy consensus rating. Additionally, the average Trip.com price target of $31.70 implies 14.07% upside potential.
While TCOM stock has multiple positives, the uncertain COVID situation and weakness in the global macro environment could play spoilsport.
