Trip.com (TCOM) Report Interpretation

Overview

This report reviews Trip.com’s 2Q26 results and outlook. Nomura sees a split business profile: China travel is weakening amid hotel-policy reform, softer travel demand and lower airline commissions, while the international business is expanding rapidly. The institution maintains Neutral and lowers its target price to USD44.

Core views

Trip.com reported 2Q26 revenue of CNY15.663bn, up 6% year-on-year and broadly in line with forecasts. Non-GAAP operating profit fell 6% year-on-year to CNY4.365bn, broadly matching Nomura’s estimate but 8% above Bloomberg consensus. Nomura’s central conclusion is that the much larger and highly cash-generative China business is weakening faster than international growth can offset in the near term. It forecasts China-business revenue, including domestic and outbound travel, to fall 6% year-on-year in 3Q26F and 9% in 4Q26F, after a 3% decline in 2Q26 and 10% growth in 1Q26. The domestic hotel business is a major source of pressure. In response to antitrust regulation, Trip.com overhauled hotel-merchant policies in September, removing exclusivity requirements and lowest-price obligations for certain higher-tier hotels. Hotels can now select commission rates within a 10–15% range, while traffic allocation is based on information completeness, price competitiveness, service quality, room-supply reliability and commission rate rather than predominantly on commission. Nomura expects popular hotels initially to choose lower commissions while assessing how to retain volume and profitability, weighing on domestic hotel revenue. The firm does not expect Trip.com to maximize hotel revenue in the near term because regulators are likely to remain focused on commercial practices. The removal of exclusivity may also allow competitors such as Meituan and Douyin to narrow the hotel-supply gap. Nomura estimates China domestic hotel revenue will decline 6% year-on-year in 3Q26F and 12% in 4Q26F; the business represented an estimated 64% of hotel-segment revenue and 27% of consolidated revenue in 2Q26. Nomura also attributes the broader China slowdown to a weaker macro environment and higher aviation fuel surcharges. During the July–August peak travel season, China air-travel passenger volumes grew 3% year-on-year and rail passenger volumes rose 1.2%, the slowest growth rates since 2023. The surcharge for flights longer than 800km increased to CNY70 per ticket from CNY20 at the beginning of the year. Airline partners also cut commissions again from July, leaving online travel agencies with limited revenue beyond cross-selling value-added products such as lounge passes. Nomura forecasts China domestic air-ticketing revenue to decline by an average 32% year-on-year in 2H26F and to account for 5.6% of consolidated revenue by 4Q26F. International operations provide the principal offset. The flagship Trip.com brand delivered revenue growth of more than 50% year-on-year in 2Q26, while its operating-loss margin narrowed to about 10% from 16% a year earlier. Inbound travel contributed 15% of Trip.com-brand revenue and grew more than 70% year-on-year in 2Q26. Nomura expects the international brand to grow revenue by more than 50% again in 3Q26F and account for 19% of consolidated revenue. It believes this business can become a meaningful growth and earnings driver over time, but it remains too small at present to counter the China slowdown. Reflecting these conditions, Nomura lowered FY26F revenue to CNY66.460bn from CNY67.751bn and FY27F revenue to CNY71.075bn from CNY75.078bn, a 5% FY27F reduction. Its FY27F non-GAAP operating-profit estimate was reduced 2% to CNY18.479bn. The institution projects FY27F revenue growth of 7% and operating-profit growth of 3%. It maintains its Neutral rating and lowers the target price to USD44 from USD51, applying 11x FY27F P/E rather than the prior 12x. The stock traded at about 10x FY27F P/E, according to the report.

Analysis framework

Nomura combines a 2Q26 earnings review with segment-level demand and revenue analysis. It assesses regulatory changes in hotel merchant terms, travel-volume and fuel-surcharge trends, airline commission changes, and the scale and profitability trajectory of the international business, then revises revenue and profit forecasts and applies a FY27F P/E multiple to derive the target price.

Methodology notes

• Industry AnalysisVolume-price decomposition

  Segment-level revenue analysis across hotel, air-ticketing, China travel and international operations

  The report links revenue outcomes to travel volumes, commission rates, fuel surcharges, hotel ranking rules and the respective sizes of domestic and international operations.

• Valuation methodsP/E and PEG Valuation

  FY27F price-to-earnings multiple valuation

  Nomura values Trip.com at USD44 using 11x FY27F P/E, reduced from the previous 12x multiple.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Trip.com (TCOM)

  Primary covered company; China hotel and air-ticketing pressure is partly offset by rapid international growth.

  Strengths

  Trip.com-brand revenue grew more than 50% year-on-year in 2Q26; inbound travel grew more than 70% year-on-year and the operating-loss margin narrowed to about 10%.

  Weaknesses

  The larger China business is expected to weaken further, with domestic hotel and air-ticketing revenue as key drags.

  Comparison

  The removal of hotel exclusivity could create room for Meituan and Douyin to narrow the hotel-supply gap.

  Risks

  Global economic downturns, natural or man-made disasters, and rising competition from emerging players could impede the target price.

• Meituan (3690 HK)

  Competitor that may benefit from Trip.com’s removal of hotel exclusivity requirements.

  Strengths

  May gain room to narrow the hotel-supply gap.

  Comparison

  Nomura identifies it as a potential beneficiary of the policy change relative to Trip.com.

• Douyin

  Competitor that may benefit from Trip.com’s removal of hotel exclusivity requirements.

  Strengths

  May gain room to narrow the hotel-supply gap.

  Comparison

  Nomura identifies it as a potential beneficiary of the policy change relative to Trip.com.

Key data

• 2Q26 net revenueCNY15.663bnUp 6% year-on-year and broadly in line with Nomura and consensus estimates.
• 2Q26 non-GAAP operating profitCNY4.365bnDown 6% year-on-year; broadly in line with Nomura and 8% above Bloomberg consensus.
• China-business revenue forecast-6% y-y in 3Q26F; -9% y-y in 4Q26FVersus -3% in 2Q26 and +10% in 1Q26.
• China domestic hotel revenue forecast-6% y-y in 3Q26F; -12% y-y in 4Q26FEstimated at 64% of hotel-segment revenue and 27% of consolidated revenue in 2Q26.
• China domestic air-ticketing revenue forecast-32% y-y on average in 2H26FExpected to represent 5.6% of consolidated revenue by 4Q26F.
• Trip.com international-brand revenue growthMore than 50% y-y in 2Q26Expected to remain above 50% year-on-year in 3Q26F; inbound travel was 15% of revenue and grew more than 70% year-on-year.
• FY27F revenue estimateCNY71.075bnReduced 5% from CNY75.078bn; implies 7% growth.
• FY27F non-GAAP operating-profit estimateCNY18.479bnReduced 2% from CNY18.920bn; implies 3% growth.

Impact & implications

Nomura believes regulatory reform and demand pressure could restrain Trip.com’s domestic hotel monetization and China travel revenue in the near term. International growth and narrowing losses improve the longer-term earnings outlook, but the business is not yet large enough to offset the China slowdown, supporting the maintained Neutral view and lower valuation multiple.

Risks

• Upside risks include stronger-than-expected average spending per traveller.
• Upside risks include a faster-than-expected resumption of outbound travel alongside increasing international flight capacity.
• Upside risks include sustained solid growth in China’s domestic travel market.
• Downside risks include a severe global economic downturn caused by natural or man-made disasters.
• Downside risks include intensifying competition from emerging players.

What to watch

• The pace of China domestic hotel revenue decline following the September merchant-policy overhaul.
• How hotel commission choices and the five-factor traffic-allocation system affect listing rankings and monetization.
• China air and rail passenger-volume trends and the level of aviation fuel surcharges.
• Further airline commission reductions and their effect on domestic air-ticketing revenue.
• International-brand revenue growth, inbound-travel demand and the pace of operating-loss-margin improvement.