How Trip.com Built a $160 Billion Travel Empire (While Screwing Its Best Customers)

Today I'm looking at Trip.com (TCOM), the Chinese travel giant that processes more bookings than Expedia or Booking.com.

The quick hits:

• Four Oracle/banking buddies quit their jobs in 1999 to build China's first online travel agency

• Now worth $41.5 billion with $160B in annual bookings

• 82% gross margins and $2.3B net income

• Operating margins: -6% → 33% in three years

• Built a dominant position in China (85% of revenue) to fund money-losing international expansion

• Cash on hand: $12.8 billion (they're basically a bank that sells travel)

• Got caught systematically charging loyal customers higher prices (Chinese courts weren't amused)

One of the more interesting thing that came out of my research is that they have 6,000+ physical stores. Given that the travel industry in the US used to be dominated my the mom-and-pop travel agencies, I find it compelling to see an online travel agency grow a physical footprint.

Trip.com operates a franchise model where local operators run physical travel agencies under their various brands (Ctrip, Qunar, Traveling Bestone), with franchisees bearing the costs of real estate, labor, and store fit-out. The company provides the technology platform, booking systems, and brand recognition, while franchisees earn commissions on travel bookings made through their stores. This capital-light approach allowed rapid expansion. How to build a fortress in an emerging market before going global

I'm going to be thinking about ways that this physical + digital model could be deployed in North America. Especially with the tailwind of a franchise model. It’s compelling!

With that, I'll see you tomorrow!

Nick

TL;DR

• One of the world’s largest OTAs by GMV, ~$160B in 2024

• Built fortress in China (85% revenue concentration) to fund global expansion

• Four Oracle/banking veterans founded in 1999, now worth $41.5B

• AI-driven platform with 82% gross margins and $2.3B net income (2024)

• Key lesson: Monopolistic positioning in emerging markets enables global ambitions, but systematic price discrimination destroys trust

The 30,000-Foot View

Trip.com operates a commission-based marketplace connecting travelers with airlines, hotels, and tour operators. The platform processes $160 billion in annual bookings while taking 8-15% cuts on hotels and 2-5% on flights.

Revenue Mix:

• Accommodation reservations: 43%

• Transportation ticketing: 36%

• Packaged tours: 10%

• Corporate travel: 4%

• Other services: 7%

Key Stats:

• Market Cap: $41.5 billion

• FY 2024 Revenue: $7.3 billion

• Gross Margin: 82%

• Net Income: $2.3 billion

• Employees: 36,249

Company History

• 1999: Four friends quit Oracle/Lehman to launch Ctrip.com in Shanghai

• 2003: NASDAQ IPO at $18/share, doubles on day one

• 2015: Acquires 45% of rival Qunar via Baidu share swap, monopolizing Chinese OTA market

• 2016: Jane Sun becomes CEO; acquires Skyscanner for £1.4 billion

• 2019: Rebrands to Trip.com Group for international push

• 2020-2022: COVID destroys 50% of revenue but maintains fortress balance sheet

• 2023-2024: Record $160 billion gross bookings in "revenge travel" boom

• 2025: Q1 results show 60% international growth, $400M buyback announced

Show Me the Money

Stand-out features:

• Negative net debt (massive cash position of $12.8B)

• Operating margins expanded from -6% to 33% in three years

• CapEx remarkably stable at ~$0.5-0.6B despite massive growth

• Net income hit $2.3B in 2024 (RMB 17.1B)

Financial Data

The N.O.O.B. Nine — Competitive Powers

The Nerd Out on Business Nine is made up of Hamliton Helmer's famous "7 Powers" of competitive advantage (Scale Economies, Network Economies, Counter-Positioning, Switching Costs, Branding, Cornered Resource, and Process Power) combined with two of my own (Data Flywheel and Distribution Advantage).

Average Score: 4.1/5 - Trip.com has formidable strategic advantages, particularly in scale and data.

Memorable Marketing

Trip.com discovered that inspiring wanderlust beats listing features. Their content-first pivot drives engagement without discounting.

Key Campaigns:

• "100 Ways of Travel" (2024): 100-day UGC challenge offering $5,000 in credits. Result: Platform-wide engagement surge through gamification

• "Just Like That" (2022): Post-pandemic reunion stories with 100+ influencers. Tapped perfectly into emotional demand

• Content Strategy: Trip Moments social features show 30% purchase rates within one month

Tactical Takeaways:

• Turn customers into content creators through challenges

• Focus on emotional outcomes over features

• Build community into transactional businesses

• Use gamification instead of discounts

• Partner with micro-influencers locally

AI Uses & Opportunities

Current Uses:

• TripGenie serves 3M users with 2x conversion rates

• Wendao LLM trained on 20B travel datasets

• 70% automated customer service resolution

• Dynamic pricing and fraud detection

Future Potential:

• Emotion recognition for mood-based recommendations

• Predictive assistance solving problems before they occur

• Licensing AI technology to smaller OTAs

• Premium AI planning subscriptions

Bumps in the Road

Trip.com faces serious trust issues threatening international expansion:

• Price Discrimination: Chinese courts found them guilty of "killing loyal customers" – charging repeat users higher prices

• Regulatory Challenges: Chairman's Weibo suspended for COVID policy criticism

• Operational Failures: Customers report non-existent bookings, hidden fees, unresponsive service

• Brand Recognition: Minimal awareness in Western markets despite being world's largest OTA

• Cultural Issues: Continued discrimination despite legal rulings suggests deeper organizational problems

Your Swipe File

• Build monopolies in emerging markets first – China dominance (85% revenue) funds international expansion

• Vertical integration beats pure platforms – 6,000+ physical stores provide touchpoints digital competitors lack

• AI enhances, doesn't disrupt – TripGenie doubles conversions but doesn't change the business model

• Never discriminate against loyal customers – Short-term revenue gains aren't worth reputational catastrophe

• Every business needs to become a media company – Content-first strategy proved inspiration beats interruption