(Yicai) Sept. 17 -- Trip.com Group, the Chinese internet travel giant that has begun offering space tours priced from CNY5.1 million (USD760,00), fell into the red in the second quarter after regulators imposed a CNY5.2 billion (USD775 million) penalty on the firm for abusing its dominant position in online hotel bookings.

The net loss was CNY2.4 billion (USD361 million) for the three months ended June 30, compared with net income of CNY4.9 billion a year earlier, Trip.Com's second-quarter earnings report showed on Sept. 15. Factoring out the penalty, the Shanghai-based company would have posted a CNY2.7 billion profit.

The State Administration for Market Regulation announced on July 25 that under Articles 57 and 59 of China’s Anti-Monopoly Law, it was imposing a CN5.2 billion penalty on Trip.Com for using traffic allocation rules to force hotels into exclusive deals and low-price parity, bringing a more than five month-long investigation to an end.

It comprised a CNY3.5 billion fine, forfeiture of CNY1.7 billion of illegal gains, and a CNY122 million (USD18 million) refund to affected hotel operators.We accept the decision and are moving forward with the implementation of the requirements set forth by the regulator.

“We fully accepted the regulator's decision, and we view the conclusion as a good opportunity to reinforce our core strategic path,” Chief Executive Jane Sun said on Trip.Com’s earnings conference call yesterday.

Trip.Com’s shares [HKG: 9961] ended 2 percent lower at HKD316.80 (USD40.31) each in Hong Kong today, after rising 3.9 percent yesterday. Its New York-listed stock [NASDAQ: TCOM] added 3 percent to USD40.43 yesterday. Stock markets in China and elsewhere retreated today after the US Federal Reserve raised its main interest rate for the first time since 2023.

Revenue Breakdown

Second-quarter revenue rose 6 percent to CNY15.7 billion (USD2.3 billion), while adjusted earnings before interest, taxes, depreciation, and amortization fell 6.1 percent to CNY4.6 billion.

By segment, revenue from accommodation bookings rose 6 percent to CNY6.6 billion, while that from transportation ticketing fell 1 percent to CNY5.4 billion. Revenue from packaged tours and corporate travel rose 8 percent to CNY1.2 billion and 11 percent to CNY771 million, respectively.

The company expects some short-term volatility in its domestic business, as partners transition to its new operating model and adjustments are made to its market operations.

Global business remained an important source of growth in the quarter. Revenue from Trip.Com’s international platform climbed more than 50 percent, and revenue from inbound travel expanded at a high double-digit rate.

The Asia-Pacific region remained the main growth driver, while the European and American markets expanded faster but from smaller bases. In the first half, bookings for first-class and business-class air tickets surged over 70 percent, and that for customized travel soared sevenfold.

Trip.Com plans to serve 200 million inbound tourists over the next five years and expand its international reach in terms of destinations, travel experiences, and local merchants, Sun said.

Artificial intelligence was a key area of investment for Trip.Com in the quarter, with AI-assisted orders via TripGenie skyrocketing fivefold, with nearly 60 percent of interactions related to bookings.

AI-related capital expenditure will increase in the near term, primarily focusing on application development and model fine-tuning, rather than on building large foundational models from scratch, Trip.Com said, adding that long-term investment will likely remain manageable.

Editor: Futura Costaglione