Trip.com Group saw its net revenue plummet 42% in the first quarter of 2020 to $669 million compared to a profit of more than $1.1 billion in 2019.
In a statement to share the first quarter financial results, Trip.com Group says it is anticipating an even sharper drop in revenue in the second quarter, ending June 30. The company says it expects net revenue to decrease by approximately 67 to 77% in the current quarter year-over-year.
In the first quarter of this year, Trip.com Group recorded a net loss of $754 million, after reporting net income of $643 million in the same period of 2019.
In a call to discuss the result with analysts, Trip.com Group executive chairman James Liang says he is encouraged by "continued recovery of domestic travel in the past few months" and the company will focus on that domestic business in the near term.
"We believe the disruption caused by the pandemic will eventually disappear, and travel will come back stronger after the pandemic," Liang says.
In the first quarter, Liang says direct expenses related to traveler refunds were $168 million, but these refunds and other efforts will develop long-term customer loyalty and "increasing lifetime value."
"Between January and April the company extended coverage and the scope of our cancellation provisions multiple times in response to the global development of coronavirus, to the greatest extent possible securing refunds for our travelers," he says.
"In addition, Trip.com launched a Covid-19 International Travelers Guide to help customers navigate the travel restrictions and access the latest refund and cancellation policies. As a result of all our efforts our NPS [net promoter score] reached a new high in Q1, demonstrating customer satisfaction and confident in our service quality."
To date, the company reports new reservations for domestic hotels have reached 70% of their volume last year at this time, although room rates are still heavily discounted. For the first quarter, accommodation reservation revenue showed the most decline year-over-year, down 62% to $163 million.
Transportation ticketing revenue was down 29% to $338 million, packaged tour was down 50% to $74 million and corporate travel revenue was down 47% to $18 million.
In its statement, Trip.com Group says, "Based on our review of liquidity and financial positions, we believe our cash reserve, the aggregated cash flow from operations and financing sources will be sufficient to meet our anticipated cash needs, including working capital requirements, capital expenditures and our other payment obligations for the foreseeable future."
In April the company entered into a facility agreement with certain financial institutions in connection with an up to $1 billion transferable term and revolving loan facility with an incremental facility of up to $500 million. The company successfully made a $1 billion draw down earlier this month.
"The company took immediate actions to ensure that we are protecting customer interest and making appropriate adjustments in response to the pandemic. With a strong cash reserve, we are prepared and are in prime position to take advantage of an industry recovery. We are confident that Trip.com Group will emerge an even stronger company after the Covid-19 pandemic," says Jane Sun, Trip.com Group CEO.