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While consumption growth in China has decelerated in recent months, this trend has not stood in Trip.com Group's (TCOM +8%) way, which continues to deliver robust quarterly numbers, including another top- and bottom-line beat in Q2. TCOM, like its US-based counterpart Expedia (EXPE), manages multiple travel platforms such as Ctrip and Skyscanner, catering to both domestic and international users.

The economic situation in China has been gloomy for some time. However, TCOM has capitalized on a decent tailwind over the past several months. Late last year, the Chinese government announced a trial program for six countries -- now expanded to over a dozen -- to visit China without a visa and without needing to have a booking in an outside country. Previously, China would allow leisure stays within its borders if the traveler was passing through (this is still the case for many countries outside the current trial program, including the United States). Now, with its one-year trial for visa-free travel, which the government extended to December 31, 2025, numerous countries, from France to Australia, can stay in China for up to 15 days.

• The Chinese government's action has steadily lifted TCOM's quarterly numbers, with Q2 being no exception. The company delivered 13.5% yr/yr revenue growth in the quarter, supported by growth across all segments. However, transactions on the company's international platform exhibited outsized strength, boasting around 70% revenue growth. Management mentioned that bookings from countries with visa-free entry to China grew at the fastest rate.
• Meanwhile, cross-border travel exhibited notable strength, as international events, including the Euro Cup and the Olympics, attracted many to Europe. Outbound travel remained a meaningful growth driver, with international flight capacity restored to around 75% of pre-pandemic levels. At the same time, outbound hotel and air ticket bookings recovered to 100% of 2019 levels.
• Individuals in China are also booking stays across the region, with consumption holding onto its robust growth following an energetic start to 2024. During Q2, hotel reservations by Chinese travelers spiked by around 20% yr/yr.
• Looking ahead, TCOM did not provide formal guidance but commented on what it has seen so far through Q3. The company's China business has maintained robust momentum as outbound travel sustains its growth, with air and hotel reservations reaching up to 120% of 2019 levels. For the rest of FY24, TCOM noted it has limited visibility due to short booking windows in China. However, it expects travel activities to follow normal seasonal patterns, translating to further growth throughout the remainder of the year.

With sustained travel demand across China combined with the tailwinds from the Chinese government's initiatives to boost tourism into the country, TCOM has been able to maintain solid quarterly numbers. While economic uncertainties linger, explaining TCOM's roughly 25% correction from May highs leading into its Q2 results, consumer preferences shifting toward experiences in light of sticky inflation and other macroeconomic headwinds puts TCOM in an attractive position to potentially mount a broader rally.