Tongcheng Travel Earnings Call Highlights Profitable Growth

Tongcheng Travel Holdings Limited ((HK:0780)) has held its Q4 earnings call. Read on for the main highlights of the call.

Tongcheng Travel Holdings delivered an upbeat earnings call that balanced strong financial momentum with a candid view of emerging risks. Management highlighted double‑digit growth in revenue, profit and margins, boosted by a richer hotel mix, AI‑driven efficiencies and the Wanda hotel acquisition, while acknowledging softer tourism, slower transportation growth and a more competitive marketing environment.

Strong Quarterly Top-Line and Profit Growth

Tongcheng Travel posted a solid fourth quarter with net revenue reaching RMB 4.8 billion, up 14.2% year on year, as gross profit climbed 18.5% to RMB 3.2 billion. Adjusted EBITDA surged 28.6% to RMB 1.3 billion and adjusted net profit rose 18.1% to RMB 779.8 million, pushing adjusted basic EPS to RMB 0.33, up 17.9% from a year earlier.

Robust Full-Year Financial Performance

For 2025, net revenue rose 11.9% to RMB 19.4 billion, underpinned by a 16% increase in core OTA revenue to RMB 16.5 billion and gross profit growth of 15.7% to RMB 12.9 billion. Adjusted net profit jumped 22.2% to RMB 3.4 billion and adjusted EBITDA advanced 26.9% to RMB 5.1 billion, driving adjusted basic EPS up 20.8% to RMB 1.45.

Accommodation Business Momentum and Mix Upgrade

The accommodation segment remained a growth engine, with 2025 reservation revenue up 16.8% to RMB 5.5 billion and fourth-quarter revenue rising 15.4% to RMB 1.3 billion. The company reported record room nights sold, a roughly five‑percentage‑point increase in high‑quality hotel mix and a modest year‑on‑year rise in average daily rates, signaling successful mix upgrade.

International and Outbound Growth

International travel showed promising traction as international room nights climbed nearly 30% in 2025 and overseas air ticketing topped 7% of transportation ticket revenue in the fourth quarter. Management noted that outbound travel currently contributes only about 5–6% of total transport and accommodation revenue but expects that share to rise to roughly 10–15% over the next two to three years.

Traffic, User Base and Monetization Improvements

User metrics continued to trend upward, with annual paying users reaching 253 million in 2025, up 6% year on year, and monthly paying users increasing to 46 million on the same growth rate. The platform has now served over 2,034 million passengers with an annual purchase frequency above eight times per user, while ARPU improved 5.5% to RMB 76.8, reflecting better monetization.

Product & AI Adoption Driving Efficiency

Artificial intelligence is becoming a core pillar of Tongcheng Travel’s operations, now handling about 80% of customer inquiries and significantly easing service workloads. Its DeepTrip AI travel planner, embedded into air‑ticketing and customer service, has attracted around 6.8–7 million users since launch, with management crediting AI for notable efficiency and productivity gains.

Hotel Management Scale-Up via Wanda Acquisition

The 2025 acquisition of Wanda Hotels and Resorts expanded Tongcheng Travel into upper‑upscale and luxury segments and strengthened its resort offerings. Supported by the eLong technology platform, which now operates more than 3,000 hotels with over 1,800 in the pipeline, other business revenue, including hotel management, surged 53% in Q4 to RMB 916.7 million and 34.4% for the year to RMB 3.1 billion.

Healthy Cash Position and Increased Shareholder Return

The company closed 2025 with a solid balance sheet, holding RMB 12.3 billion in cash, restricted cash and short‑term investments as of December 31. Reflecting confidence in its cash generation and earnings trajectory, Tongcheng Travel proposed a final cash dividend of HKD 0.25 per share, an increase of 38.9% year on year, reinforcing its commitment to shareholder returns.

User Engagement and Channel Expansion

Tongcheng Travel continued to deepen engagement across its ecosystem, with stand‑alone app average daily active users jumping more than 30% in 2025. Complementing this, the company grew traffic via its Weixin Mini Program and broadened its reach with social and media marketing campaigns aimed at younger users, enhancing brand visibility and funnel conversion.

Tourism Revenue Decline and One-Off Impairment

Not all segments moved in tandem, as tourism revenue for 2025 slipped 6.9% to RMB 2.9 billion and fourth‑quarter tourism revenue of RMB 777.5 million was broadly flat versus a year earlier. Profitability in the tourism unit was further weighed down by a one‑off goodwill impairment, which management flagged as a non‑recurring but noticeable drag on segment margins.

Rising Marketing Spend Intensity

The company is spending more to defend and grow market share, with fourth‑quarter selling and marketing expenses up 22.7% year on year excluding share‑based compensation. These costs increased to 32.4% of revenue from 30.2% a year earlier, signaling a higher marketing intensity that could limit near‑term margin expansion even as it supports user growth.

Slower Transportation Revenue Growth

Transportation ticketing showed more modest momentum, with Q4 revenue up 6.5% year on year to RMB 1.8 billion and full‑year 2025 revenue rising 9.6% to RMB 7.9 billion, lagging the faster‑growing accommodation and core OTA businesses. Management acknowledged that transportation remains a key traffic driver but faces slower growth, reinforcing the focus on improving take‑rate and cross‑selling value‑added services.

Outbound Disruptions and Limited Current Contribution

Outbound travel growth was constrained by external disruptions, including recent flight cancellations on certain international routes that caused localized declines in travel, such as to Japan. While the current revenue contribution from outbound transportation and accommodation stands at only about 5–6%, these events temper short‑term upside in a segment management still views as a major long‑term opportunity.

Regulatory and Geo-Political Uncertainties

Management highlighted a cautious stance toward regulatory and geopolitical risks, including recent antitrust probes affecting online travel peers and tensions in regions such as Northeast Asia and the Middle East. They reported no material impact so far but warned that these factors could influence industry cooperation, competitive dynamics and travel patterns, and thus bear close monitoring.

Limited Forward-Quarter Quantitative Guidance

Investors looking for precise near‑term targets may be disappointed, as the company declined to provide detailed room‑night growth guidance for 2026, citing short booking windows and a volatile macro backdrop. This leaves revenue expectations for the coming quarters less granular, though management emphasized confidence in its strategic direction and demand trends.

Guidance and Outlook for 2026

Looking ahead, Tongcheng Travel outlined a 2026 plan centered on “high‑quality” growth, prioritizing domestic core OTA, faster accommodation expansion than transportation and stable accommodation take‑rates with improved transportation take‑rates via cross‑sell and value‑added services. The company aims to scale outbound so international revenue reaches roughly 10–15% of total within two to three years, rapidly ramp up Wanda‑driven hotel management margins and pursue disciplined, ROI‑focused marketing while doubling down on AI adoption to sustain efficiency gains.

Tongcheng Travel’s earnings call painted a picture of a platform in healthy expansion mode, translating traffic, product upgrades and AI into double‑digit top‑ and bottom‑line growth. While softer tourism, slower transportation growth and higher marketing spending present near‑term challenges, the company’s strong balance sheet, growing dividend, strategic hotel assets and clear technology roadmap suggest that the growth story remains firmly intact for long‑term investors.