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Trip.com Group has been steadily building its business back up in recent quarters.

The China-based online travel agency reported a 70% increase in bookings year-over-year during its recent fourth quarter and full-year 2023 earnings release. Accommodation, transportation and packages revenue all saw significant gains and the OTA’s chairman James Liang described 2023 a “significant journey of reconnecting with the world” for China.

But how does Trip.com Group plan to continue this momentum? In what segments does it see opportunity and where is it applying generative artificial intelligence to its operations? PhocusWire discussed the road ahead with Schubert Lou, chief operating officer of Trip.com Group at ITB Berlin in March.

The topic of globalization was a big part of the recent earnings call. Can you frame the strategy in two or three sentences?

It’s a user-centric approach providing the right solutions for all our users around the world, which requires globalization with the right amount of localization. The other angle is that we are very Asia-focused with a tendency to expand into Europe as our second big region and go from there. That is the priority. On top of that it really is bringing the insights we have and sharing them with our partners. I think we’re in a better position to do that than many other platforms and actually have more willingness to do it than many other platforms. We’re not too big to be arrogant. We’re open in terms of what we see from users and can we tailor it to a better user experience?

 What makes you say you’re in a better position than many others?

We have always had this one-stop shop, so we understand that it’s a very involved effort to get the pieces to work together. But at the same time you do get a lot of synergy, and you serve your customer better. And we’re in a better position because we’ve been at it longer.

Would you say that before the COVID crisis Trip.com Group had gained a lot of ground in Europe but that you lost it because of the pandemic?

It actually forces us to look at those markets in a more focused way. We were doing so well in China outbound but that tended to overcrowd the other stuff. The pandemic stopped that, we had no business anywhere cross-border so we had to focus on domestic everywhere. So, the pandemic changed our course to get that right in that two-and-a-half year window. Then when everything went back up, we had another leg to stand on not just China outbound but the expansion of Trip.com domestic and Trip.com outbound to all locales. So it did initially impact us, but it also changed our course to something more productive.

How are you planning to market yourself in Europe?

From a business standpoint we’re trying to identify our strength, which is what we call Europe long-haul. We’re arguably in a top position or one of the better ones out there and that becomes our way of wedging into the market. Booking.com is excellent, the market leader, it would be hard to influence that in any way. At the same time the airlines are very particular in what they want and what they don’t want and that back and forth is also unpredictable. What we’re good at is fantastic experiences and suppliers and pricing in certain parts of the world, so why don’t we leverage that as our conduit into this market? Medium- to long-haul would be our niche and then we’re building our branding on top and the combination should serve us quite well.

How is air capacity looking out of Asia?

Domestic China is now 2019, probably 2019-plus. Because of 2023, the outbound wasn’t as strong as before. People tended to travel domestically, so that part is definitely better. In terms of outbound capacity, we’re now seeing good momentum since November last year, Why? Visa-free, timed with a year of recovery for Cathay, Singapore, Thai Airways. They’re now getting their footing in terms of staffing and funding and all that, and I think those two forces are coming together where we see better recovery.

We’re still seeing a staffing challenge in accommodation They have no incentive to open more rooms, because they can’t hire fast enough. And they are charging higher average daily rates and are very profitable, so there’s a bit of that hesitation still but we’re thinking that is also going to improve. Overall I would say Asia will outpace the rest of the world this year just because it was behind in 2023. I think it was probably minus 10% last year, and I think it will be plus 5% this year compared to the the market. By mid-year or the late third of this year, I think everyone will be 2019-plus. 

When I looked at your earnings, everything was going in the right direction. What would the challenges be to that going forward?

I would say a few areas. One is our internal execution. I think we are also expanding so fast that we need to catch ourselves a bit. Our staffing needs to catch up or we may not be able to carry the momentum. Other forces? There’s still a lot of uncertainty that could be in Europe and could impact our business. Generally I find China finding its own footing and Southeast Asia is getting healthier so I think that is on our side to continue the growth.

Let’s talk about generative artificial intelligence. You’ve got the consumer facing service, TripGenie. What other use cases are you considering for AI?

That’s what we consider corporate value. That side of things we are definitely quite active on in generative AI. It’s now being used in product development, customer service, language translation and we’re also doing some work in B2B product features in terms of recommendations and training. In general these are the internal tracks where generative AI has been helpful in getting us more productive and providing better value and quality for customers.

Is there one area that sticks out where you see significant success in employing generative AI?

Customer service by far. That’s going to be the trend for a little while just because it makes so much sense. The number of questions in customer service is finite. You’re not going to get a big deviation because you’re booking hotels, rooms and other services. It’s really about getting all the variables and being able to resolve the long-tail cases where it’s complicated such as baggage allowance across three legs of a trip. These are not necessarily covered by machine learning. Right now our challenge is getting towards multiple languages. AI can do that but not with quality, it’s not yet up to our comfort level. Translation quality is sitting at [around] 80-85% but you want it to be accurate.

Are there other emerging technologies that you’re excited about?

Based on the learning within TripGenie, our own generative AI travel assistant, we’re seeing users are more engaged, asking more specific questions, finding more content. What I’m hoping to see is what I call AI-assisted in-trip experiences – this is a sub-segment of travel. I think pre-travel bookings are otherwise personalized, automated and you’re not going to get a lot of incremental gain. But the in-trip experiences part where there’s a long line or customers don’t understand what that guide is talking about, it’s all over the place.

Quote

What I’m hoping to see is what I call AI-assisted in-trip experiences … I think pre-travel bookings are otherwise personalized, automated and you’re not going to get a lot of incremental gain. But the in-trip experiences part where there’s a long line or customers don’t understand what that guide is talking about, it’s all over the place.

Schubert Lou – Trip.com Group

All of us have tried one of those life-changing tours where you learn so much with an awesome tour guide, but a week later you get a different tour guide with a completely different experience. How can that be maintained to give a consistent quality? Initially I thought [Apple] Vision Pro is out and I’ll wear it everywhere but it’s not there yet, so I don’t see it being life-changing. Nor is AI Pin from Humane, but I think tour guides are able to get a lot out of that and then provide a better service for their travelers.

Is the experiences segment a gap for Trip.com Group?

We’re still very much pre-booking. We are working with partners and trying to enhance the post-booking experience. It’s not necessarily a gap in our booking flow, but it’s a gap in terms of user feedback. In order to get our customers to be more loyal we want to be able to provide the end-to-end service to them rather than just pre-travel booking. It’s more about what kind of tour can you book when you’re in-journey. Right now what we’re hearing is that the in-journey part is not ideal.

Business travel is something that Trip.com does and that you feel is an opportunity, but is it fair to say you’re still formulating the strategy?

It’s fair to say we’re exploring. We’re trying to expand our footprint in Asia first. Right now what we’re running into is this multi-culturalism where there is a little difference between Japan and Singapore, for example, and the cultural gaps are noticeable. They’re running into that localization challenge so how do I provide a canned solution but with 40% localization needed to be blended into it. We need to adapt to those local needs. It did take Trip.com, the international arm of Trip.com Group, a number of years to get that right. It does take that insight, understanding of tweaking your product, talking to your customer multiple times to get a single feature right.

In general they [business travelers] have higher expectations and are slightly lazier. So, that population is a little more tricky, you don’t have a typical user, you have to do the research, you have to understand where they’re coming from. It will take some time for them to full immerse themselves in that. The market itself is very big, the existing offerings are 20 years old, canned solutions and there’s so much more we can do. 

Are there any priorities for any of your segments? Any that you want to put a lot of focus into?

Right now what we’re looking at is to really hone in on customer experience. I think it’s horizontal to our product offering meaning it goes across all of them. We’re putting a lot of effort into user research to understand what they’re looking for especially what we call cross-selling. That’s an area where we say to teams “Hey, you have all these different things happening, why can’t you help each other?” And they say they can but that users don’t like the experience. There’s a lot of learning we can gain from that, it’s more a synergistic approach of working together instead of just saying “You do your own thing, I’ll do my own.”

The second area is direct users, the app users. We’re very much an app company. It’s not that online and mobile web isn’t important, but we think this is going to be a dominant experience so want to make that even better. One category lower is our brand awareness we’re somewhat well known but we need to improve. We were very careful what we said and what we didn’t say in the past. Right now we’re a contributing player and know the industry more than people think we do.

Sales and marketing expenses are up there with the best of OTAs. Do you see yourselves using that investment any way differently to other OTAs?

Our approach, because of the direct focus, we don’t want to rely on any sort of meta. Google is not necessarily our worry. More on the positive side is how can we get our brand out there and work with our partners? We are a student of the game, we play the game, we learn about the game. At the same time we collaborate with partners to create a holistic solution. We have a number of new product experiences being trialed such as live-streaming, TripGenie, VisionPro, we’re just experimenting all the time and sharing that insight with partners. You’re going to see more and more of that approach. I think we’re more willing to experiment just because we’re so new still to other markets.



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