Hello and thank you for standing by. Welcome to the Trip.com Group 2022 Second Quarter Earnings Conference Call. [Operator Instructions] It is now pleasure to introduce Senior Director of Investor Relations, Michelle Qi. You may proceed.

Thank you. Good morning and good evening. Welcome to Trip.com Group’s second quarter of 2022 earnings conference call. Joining me today on the call are Mr. James Liang, Executive Chairman of the Board; Ms. Jane Sun, Chief Executive Officer; and Ms. Cindy Wang, Chief Financial Officer. During this call, we will discuss our future outlook and performance, which are forward-looking statements made under Safe Harbor provision of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, our results may be materially different from the views expressed today. A number of potential risks and uncertainties are outlined in Trip.com Group’s public filings with the Securities and Exchange Commission. Trip.com Group does not undertake any obligation to update any forward-looking statements except as required under applicable law. James, Jane and Cindy will share our strategy and business updates, operating highlights and financial performance for the second quarter of 2022 as well as the outlook for the third quarter of 2022. After our prepared remarks, we will have a Q&A session. With that, I will turn the call over to James. James, please.

Thank you, Michelle. Thank you everyone for joining us our call today. In the second quarter of 2022 despite the challenging market environments in April and May, due to the outreach of Omicron and stricter pandemic control measures we are encouraged to see the strong release of pent-up demand in the back half of this quarter. While sporadic resurgence of COVID continues to disrupt the recovery of domestic travel in China. The effect of travelers’ sentiment has been fading, and the market has shown its resilience. Following the easing of the restrictions, we're seeing overall domestic channel book hotel booking, platform quickly rebounded and surpassed 2019 level at the end of June. Such trajectory continued as we entered the July with authorities adopt milder and more precise control measures. On the international front, the global travel industry continued to its progress towards full recovery to 2000 pre-pandemic level, demand is staying strong despite the challenges facing the industry. In Q2, our revenues in Europe and US markets have already surpassed of 2019 level and that in our Asia Pacific markets are also rapidly growing, while pace of growth in the European market has moderated due to headwinds such as airline capacity shortage and labor strikes, our air reservations in Europe has been approaching the 2019 level and our hotel reservation in the same region increased by about 400% year-over-year. Travel activity to Asia- Pacific also rebounded with border reopening and further lifting of travel curbs and have started to recover faster than ever since the outbreak of COVID. Together with product innovation, service enhancement and the holiday demand, we expect this new recovery in APAC continue to accelerate in Q3. While in the short term, the world may still face challenges such as regional instability and inflation. The fact that travelers have not been deterred by these challenges point two industries’ are resilience and a strong recovery. With the governments continue to open up and COVID can becoming hopefully more manageable, traveler confidence grow together with a proven safety perception, which leads us to believe the market outlook only continue to improve. With our strengthened product capability, optimize the operating efficiency and enhance the value proposition, we are as confident as ever with our capabilities as a competitive position in the market, and then navigate through any uncertainties and challenges. We do not necessarily need a crystal ball if you're able to offer whatever exists in the market and match customers’ aspirations, and we will remain competence and positive in attractive long-term growth profile of the travel industry. With that, I'll turn the call over to Jane Sun for operating highlights.

Thank you, James. Good morning, everyone. I would like to start with a quick overview of our performance in the second quarter and updates our operational highlights. In the second quarter of 2022, China domestic travel industry was largely impacted by the resurgence of pandemic in multiple regions in China. Despite all the challenges, we are delighted to see that the fundamental demand for travel remained solid. Travel activities in the region that are less affected by COVID have recovered much faster. Hotel bookings in the Southern China and the western part of the country has surpassed 2019 level since mid-May. Our total domestic hotel bookings have fully recovered to and surpass to 2019 level in late June. Same city staycation hotel reservation in this quarter grew more than 30% versus 2019. Our business continued to recover in July, and it's also already adopted more precise pandemic control measures. On the other hand, the global market continues to show steady improvement as more and more countries choose to leave COVID behind and move forward with minimal restrictions. Our global business continued to ride on a growth trajectory. First, our international flights, overall air ticket booking on our global platform has increased over 100% year-over-year in which our global brand Trip.com has managed to increase approximately 608% year-over-year. The growth in Trip.com was mainly driven by strong recovery of international flights. And we're glad to see such momentum continued in Q3. In July, total air tickets bookings on Trip.com was heading towards 90% recovery of 2019 level. Second, international hotel. Overall hotel bookings on global platforms have increased by more than 50% above the 2019 level in the second quarter with domestic hotel bookings in non-China market, Trip.com increased by 300% versus 2019. We have outperformed the industry across all key…

Thanks Jane. Good morning, everyone. For the second quarter of 2022 Trip.com Group reported net revenue of RMB 4 billion, representing a 32% decrease from the same period last year, and a 2% decrease quarter-over-quarter, primarily due to continued disruption from pandemics resurgences to the China's domestic travel industry. Our overseas markets, on the other hand, are becoming significant contributors to our top line and bottom line performance. Accommodation reservation revenue for the second quarter of 2022 was RMB 1.4 billion, representing a 45% decrease year-over-year and a 6% decrease quarter-over-quarter recovering to 40% of the 2019 level. This is mainly due to the severe impact from the Omicron outbreak in China and the following strict lockdown in several first tier cities. While offsetting by solid, local and shortfall demands. Transportation ticketing revenue for the second quarter of 2022 was RMB 1.8 billion, representing a 15% decrease year-over-year and a 6% increase quarter-over-quarter recovering to 52% of the 2019 level. The impact of travel restrictions in the first two months of this quarter was largely offset by the strong air reservation on our international platform, among which China domestic recovery momentum was largely disrupted by a resurgence of COVID while air reservations on our international platforms saw a significant increase. Packaged tour revenue for the second quarter of 2022 was RMB 122 million, representing a 67% decrease year-over-year and a 2% decrease quarter-over-quarter recovering to 12% of the 2019 levels. This is mainly due to pandemic related travel restrictions in domestic China market and largely muted outbound tourism. Corporate travel revenue for the second quarter of 2022 was RMB 210 million, representing a 46% decrease year-over-year and a 5% decrease quarter-over-quarter recovering to 68% of the 2019 level, primarily due to the impact of pandemic related drastic management in April…

[Operator Instructions] And our first question comes from the line of Thomas Chong with Jefferies.

Hi, good morning. Thanks management for taking my questions. My questions about our meaningful cost savings in Q2 especially in the product and development segment. Given our solid cost control measures, how should we think about the further cost savings and margin trends in the next coming quarters? Thank you.

Thank you, Thomas. In Q2, our total adjusted operating expenses decreased by 27% year-over-year and the 9% quarter-over-quarter. It was a saving of 44% compared to the same period in 2019 back to our largely flexible cost structure and effective cost control. Firstly, following a strict our driven investment protocol, our sales and marketing expenses were largely considered discretionary. And in the second quarter, we also swiftly reduced the marketing investment in the China domestic market, which was partially offset by the increase of marketing activities for the international brand. Decrease of personnel related expenses were mainly related to the flexible part of our performance based bonus. During the past two years, we have a streamlined our operations across the business line in addition to certain adjustments related to COVID. And we are also able to run a very lean and stay productive in our domestic operations with the current team structure and will continue to improve our operating efficiency. In addition, our improvement of the content as well as the cross-selling and technology have further lifted our marketing efficiencies. So we are very confident that we are going to deliver a very healthy operating margin once the market can go back to the normal. Thank you.

And our next question comes from the line of Simon Chou with Goldman Sachs.

Hi, can you hear me?

Yes, we can.

Oh, sorry, hi. Thanks James, Jane and Cindy for the thorough presentation. So I just have one or two quick questions, in relation to what you mentioned about the guidance on the third quarter that you're expecting a healthy growth year-on-year on the top line. So just wanted to do a bit more, would you be able to share with us how you're thinking about the hotel versus the transportation division respectively? How are you seeing the trends in the third quarter, if you can provide us with some guidance that will be great? And then secondly, I think Jane earlier mentioned that the take rate particularly on the hotel segment, actually trying to be better in the second quarter, as well as maybe in the third quarter as well, because of some scale downloads of the rebates, wondering, are you seeing the same trends and now that the travel starting to recover? Would you see the necessity to basically increase the rebate again? Thank you.

Thank you, Simon. We, yes, as we said before, we are glad to see the domestic travel market, at least show some resilience, especially starting from this summer. Overall, our domestic China hotel reservations on our platform quickly rebounded and surpassed the pre-COVID level from late June, such trajectory continued with the authorities adopted by wider and more precise control measures, and the total domestic hotel bookings was around 20% higher than 2019 level in July. And we continued to grow over the 2019 level in August and achieve the higher growth versus 2021. And with the recent outbreak of COVID cases spreading to more than 20 provinces and locked down becoming more frequent, since late part of -- since late August. The long haul travels was significantly impacted and number of total domestic air passengers was down by 70% to 80% versus the 2019 level in the recent weeks, and hotel business was relatively less affected with the support of staycation demand. And this is basically the outlook for the Q3. And in terms of the long-term outlook, we are still very confident that as long as we can provide competitive product as well as a variety of product offerings, we are going to continuously to gaining market share both domestically, as well as in for the international market. As for the margins, or take rate of our hotel business, we are closely monitors the marketing. But as we always did, we will have different, slightly different strategy for both the mid to high end, as well as the lower end comparatively lower end of the market. For the lower end of the market, especially local demand for staycation, we will continuously to have competitive pricing, this always is the first priority for us. And for the mid to high end market. We will closely monitor and but overall we expected to have a very healthy margin for the quarters to come. Thank you.

And our next question comes from the line of Alex Yao with JPMorgan.

Sorry, I was on mute. Good morning, management. Thank you for taking my question. I'd like to get an update on your international part of the business. Can you share with us the growth momentum and revenue contribution from Skyscanner and the Trip.com in second quarter, and also how do you expect these two operation units to perform in the second half this year? Thank you.

Thank you, Alex. Was the easy and dropping off the travel restrictions in more and more countries outside of China, the global travel market quickly went back to recovery? And as we shared in the prepared remarks, the overall air ticketing bookings of global platforms have increased over 100% year-over-year in which our global brand Trip.com has managed to increase by approximately 680% year-over-year. The growth in Trip.com was mainly driven by the strong recovery of international flights. And we are happy to see such momentum to be continued in Q3. In July, our total air ticketing bookings on Trip.com was heading toward 90% recovery of the 2019 level. Overall, hotel bookings on our global platform also have increased by more than 40% above the 2019 level. In the second quarter, domestic hotel bookings in non- China markets on Trip.com increased by 300% versus the 2019 level. In terms of the financial contribution, driven by the growth of -- growing travel demand following relaxing travel restrictions and improving hotel ADR and air ticketing prices, revenues generated from our key international brands grew more than 200% year-over-year, and contributed 20% to 30% of our total revenue in Q2. Revenues generated by our Europe and American markets already surpassed the 2019 level. While revenues from the Asia Pacific excluding China markets also on a faster recovery track. We are also glad to see adjusted EBITDA of some international brands has turned positive, supported by our fast business recovery and improved operational efficiency. Thank you. Oh, sorry, in terms of the outlook for our international market. While in the short term, there are still some uncertainties and challenges from the macro environment. We have but still -- we still have a very strong confidence in the consumers’ strong desire to travel across the world. With governments continued to open up and COVID becoming hopefully more manageable, travelers confidence grow together with improved the city perceptions, which lead us to believe the market outlook will further improve. And we will continuously to strengthen our one stop service capability, improve supply chain and technology and strengthen our cooperation among the different brands within the group. Thank you.

Next question comes from the line of James Lee with Mizuho.

Great, thanks for taking my questions. My questions relating to outbound travel, I wondered can you guys talk about the pace of recovery in recent months as we’ve seen the length of quarantine has been reduced pretty meaningfully. And secondly, maybe any update on the reopening policy, I assume maybe give a sense once the border starts to reopen how fast you think the outbound travel demand will return. Thanks.

Thanks you, James. Yes, Oh, Jane Sun, go ahead.

Okay. Yes, sure. I think the trend is quite positive as everyone observed we started with 21 days quarantine and then was reduced to 14 days and now it’s seven days. And in Hong Kong, it is further reduced to four plus three. So as more measures is being put in control and more people are getting vaccines, we are confident eventually the quarantine period will be shortened and therefore the release of the travel will be able to achieve. And when we look at the pent-up demand from our consumers, I think the pent-up demand is very strong. So once we're in a good stage to open the travel borders, we are confident with our coverage for comprehensive products we'll be able to capitalize on these opportunities. Thank you.

Our next question comes from the line of Elinor Leung with CLSA.

Hey. Thank you very much management taking my question. My first question is regarding the domestic competition. Can you comment on that under such difficult situations [Tech Difficulty] right now and the second question is follow up on the international business. How fast the Skyscanner is has been recovering so far. And you talked about a contribution international business for the top line and how much is it contributes to the bottom line for the second quarter, thank you very much.

Thank you, Elinor. In terms of the domestic competition, we believe the competitive environment in the domestic market is stable. Despite the up and downs in industry, we are happy to see that we are able to -- we were able to deliver very strong performance outpacing the market by 20% to 25% for the domestic hotel reservation. Firstly, over the past two years, we've built a very strong user cases for the short haul travel through multiple initiatives in product and marketing innovation. Now, short haul and local travel activities has become a key contributor to our domestic recovery, especially in Q2 despite the severe pandemic influence, especially on the long haul travel, our local hotel reservation increased -- our local hotel reservations still increased by more than 30% compared with the 2019 level, such growth momentum continued to gain steam and gained a lot of the local hotel reservations increased by more than 60% compared with the 2019 level in July and August, while the long haul travel also saw significant recovery during the same period. Yes. Secondly, on our cross-selling from the transportation to accommodation and other travel products has also achieved the significant improvements in the past two years. And so we are confident that once the pandemic is under effective control, or if there's any change of the pandemic control policies, we can enjoy a higher recovery potential in both our long haul and short haul travels. In terms of the contributions of our international brands, and as I explained earlier, they contribute about, the other international brands, they contribute about 20% to 30% on the top line. And we also see in terms of the adjusted EBITDA, almost all our major international brands, they have turned positive and becoming one of the key contributors of borderlines Thank you.

Next question comes from the line of Tian Hou of T.H. Capital.

Good morning, management. I have a question regarding your international business strategy. So as China took a different approach for COVID control, so I guess the international market can become a much more attractive to us. So international business, contributing higher portion of your top line and bottom line. So can you help us understand your global expansion strategy at this point? Thank you.

Thank you, Tian. So following our local focus global vision strategy, we will continue to integrate and upgrade the supply chain and technology of our international brands and further strengthen the reliability and efficiency of our customer services. So we actually provide very strong value not only to the Chinese users, but also to our travelers around the world. Firstly, on the one stop shopping platform Trip.com actually was one of the largest the global air ticketing platform, and our team will continue to add more product categories onto the platform and improves the cross selling from air to other products, such as accommodation as well as the activity. So in the Q2, our overall hotel reservation through our key international brands grew more than 40% compared with 2019 level, which are, which also more than doubled of our 2021 level, which was benefit from -- it was benefited from both the strong demand of the domestic travel as well as the cross-selling for our recovery international air reservation. Second, we are an app based platform, we usually see higher user engagement and user retention on mobile app. In the second quarter, Trip.com was named the top 10 most downloaded OTA apps in the first half of 2022 with Trip.com mobile app installations reached the record high, and the mobile app contributed more than half of Trip.com’s order and reached more than 70% in certain Asia Pacific markets. And certainly, we provide high quality services. We believe a high quality in-house customer service team will continue to be a driving force behind our business success. And we have an in-house customer service team and have established our global call center with multi language capabilities to ensure a swift, responsive, customers can connect with us a receive direct solution with a human touch 24x7 via phone calls, free in app internet call and in act online chats or emails. And also with the help of the AI Chatbot self-serving -- self service functions and automatic prioritization mechanism, we are able to improve the efficiency and have our team handle more than and more complicated and urgent situations. And the automation rates of our global call center have reached around 80%, which are on par with our domestic call center. Thank you.

The next question comes from the line of Wei Xiong with UBS.

Hi, good morning, Management. And thank you for taking my question. I want to understand more about your content strategy. So could management share more color on the update of your content strategy? And how's the progress they're helping with our user acquisition and user engagement as well as our competitiveness against some other short video platforms? And also, as we further invest in the content side, how should we think about the potential financial implications in the coming quarters? Thank you.

Thank you. Despite the pandemic inference, our content strategy continues to progress in terms of the content generations and user engagement, pathway into the new user needs under the pandemic. And to better serve the travel demands of our younger generation. We first, we focused on providing inspiring content, help user expose for ideas and tips to get better foods, activities, transportation and accommodation experience, especially for their local and short trips. In the second quarter, the amount of the daily average user generated content increased by 16% year-over-year and the number of KOL further increased by 17% over the previous quarter. And we are also delighted to see user engagement level remain stable compared with that in the previous quarter. And the average view duration continue to see sequential improvement, average number of content views by producer also increases by about 50%. Besides the live streaming and information feeds, those are the product people may question maybe quite familiar with. We also created the bucket list of travel topics based on service quality and customer feedback to help users make well informed decisions. For example, our domestic hotel bucket list has picked up the high quality hotels and alternative accommodation properties under different travel scenarios in various regions across country to build strong user cases, and respond to the user aspiration, which also helped to -- help us to improve the conversion rate. In terms of the financial impact of the content, as I explained, we think the support or the improvement on the conversion is the top priority in terms of the content. And on top of that, we also see significant efficiencies of cost savings on the sales and marketing. And due to the very helpful content that's helped us to have a better engagement on our platform. And the content product itself also generated very healthy top line as well as the bottom line to our total financial. Thank you.

Thank you. And that concludes our question and answer session. I will now hand the call back over to Senior Director of Investor Relations, Michelle Qi for any closing remarks.

Thanks. Thank you everyone for joining us today. You can find the transcript and the webcast of today's call on investors.trip.com. We look forward to speaking with you on the third quarter of 2022 earnings call. Thank you. And have a good day. Thank you.

Ladies gentlemen, this concludes today's conference call. Thank you for participating. And you may now disconnect.