Trip.com Group Limited (TCOM) Q4 2020 Earnings Report, Transcript and Summary

Thank you for standing by, and welcome to the Trip.com Group 2020 Q4 Earnings Conference Call. All participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. [Operator Instructions] I would now like to hand the conference over to Michelle Qi, Senior Director. Please go ahead.

Thank you. Good morning, and welcome to Trip.com Group's 2020 Q4 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 the 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 fourth quarter of 2020 as well as outlook for the first quarter of 2021. After the 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 on the call today. Looking back at 2020, it was a year filled with both challenges and opportunities. Despite the negative impact of pandemic, we have continued to innovate our products, improve our service and strengthening collaboration with our partners. This result demonstrated our strong resilience and helped to make us stronger as a company. As a result, we further gain market share across all product lines, as domestic channel maintained a strong recovery momentum throughout the year. We are fully prepared to take additional market share in the upcoming global recovery. Going forward, we will continue to focus on the domestic markets in terms of supply chain, product innovation, content capabilities, quality and technology. At the same time, we are pushing ahead with our global ambition for international travel recovery and seeking for opportunities in the long run. Our focused efforts have not only in our products gained additional market shares during the pandemic, but also laid a solid foundation for new growth drivers beyond COVID. Today, I would like to shed some light on the latter. First of all, product supply chain is our core competence which have built over the decades of operation. Therefore, we are best positioned to expand the breadth and depth of our product offerings to capture users evolving demand, such as the unique and in-depth experiences as alternatives for outbound travel, and short-haul and the staycation trips, which are incremental to the typical long-haul sites. This is a near-term goal that's already started to bear fruit. We are glad to see reservation for short-haul travel and in-destination activities achieved strong year-over-year growth despite industry fluctuations in the past winter. Secondly, we are working hard to strengthen our content capabilities, which is highly synergistic with our core part business and can bring meaningful revenue sources in the years to come. We expect to follow a three-step strategy in developing our content roadmap. First, we'll continue to enrich content collections in terms of category and formats. We believe comprehensive content offering will help attract new users and improve the engagements in terms of frequency and time spent on our apps. Next, we will strengthen the integration of content generation. Effective recommendation and product innovation to improve conversion rates, especially for the short-haul products. A complete loop from contents to transactions perform a virtuous cycle that benefits our sustained growth. Third, the deep integration of content capabilities, products and our quality user-base and extensive marketing network enables us to serve as a tourism marketing hub for branding, promotion and other marketing activities, leading to incremental revenue opportunity in tourism and pan-industry advertising and marketing. Last but not least, we continue to upgrade our service quality and technology capability in order to safeguard a smooth and effortless delivery of our products to our end users, that remain our core competencies. And we'll continue to invest and further our leadership compared with peers in the travel space. Finally, looking beyond COVID, we remain deeply excited by the global travel opportunities. We believe that international markets, presents an attractive long-term growth potential for a one-stop travel platform. One that could be multiple of China's domestic markets, particularly for international travel partners Trip.com Group is uniquely positioned to reach a truly global audience through our brand portfolio from a marketing perspective. With that, I will turn the call over to Jane for operating highlights.

Thanks, James. Good morning everyone. I would like to start with a quick overview of Q4 and the full year of 2020. Despite the industry fluctuations and a weaker seasonality in the winter in Q4. we are glad to see that Trip.com Group delivered solid performance and consistently outgrow the industry average across the product lines. Total net revenue saw a further narrowed year-over-year decline in Q4 to 40%. As domestic accommodation reservation, air ticketing business, ground transportation and other domestic travel products recovered nicely in Q4. In addition, we achieved positive non-GAAP profit margin of 10% in the fourth quarter. On a full year basis, our core OTA brands delivered GMV of RMB395 billion, or USD61 billion, again leading the industry worldwide. For full year 2020, thanks to our efficiency improvement and a strong cost control, we were able to achieve 2% non-GAAP operating profit margin. Today, I would like to share some operating highlights in four areas: first, mid-to-high end travel market; second, low tier city penetration; third, our new strength in higher frequency categories; and forth, improvements of our content capabilities. First, we continue to improve our product competitiveness and increase market share in the fourth quarter, especially in the middle-to-high end market. Our middle-to-high end hotel bookings reached the double-digit growth year-over-year far exceeding the industry average by 15% to 20%. In addition, high quality niche and boutique travel has become an important alternative for our previously outbound customers. We saw an average spending on domestic package tours grew significantly year-over-year in the fourth quarter, especially for our mobile users. Second, we gained further market share in the low tier markets. In 2020, more than 40% of our new customers came from third tier cities and below. Transportation products have become important channels to acquire new users with whom we can cross-sell other products. Third, as James mentioned, we worked hard to unlock our new streams in highly frequent categories such as short-haul and staycation. We attracted more diverse and high-quality partners to our platform to expand our product offerings and also broaden the scope of collaboration with existing partners. The number of our in-destination activity and suppliers increased by over 25% year-over-year by the end of last year. As a result, short-haul and the local travel has become a key contributor to our recovery. In the fourth quarter, our hotel GMV for the same province space increased by over 20% year-over-year and reservation for attraction and activities increased almost 100%. Such strong performance for short-haul and local travel extended into the past Chinese New Year holiday. Compared to the same period in 2019, our hotel GMV for the same province space achieved 20% year-over-year growth and reservation for local attractions and activities more than tripled. Over the past year, we focused on improving our content offering. We believe that content will generate unique and long-term, long-lasting value in user engagement as well as the new earnings power. By the end of 2020, our content channels contributions to the total app traffic more than doubled compared to the beginning of the year and the visit time of our information seems more than tripled during the year. Our livestream and special deals channel have now become a place where people come to find attractive deals, which contributed approximately 5 billion GMV during the past year. We are also glad to see the initial development in advertisement revenue opportunities. Our domestic advertising and marketing revenue increased significantly year-over-year in the fourth quarter and maintained an overall positive growth throughout the year. In the future, we will continue to build our content ecosystem with concerted efforts. The ecosystem will enable our users’ engagement and make our platform a comprehensive marketplace. Turning to the year of 2021, the domestic travel demand remains resilient despite industry headwinds due to the small outbreaks and tightened travel restrictions during the Chinese New Year holiday. Our domestic hotel and air reservation quickly rebounded post the holiday and reached full recovery recently, compared to the same period in 2019. We are fully confident that the domestic market will come back with the growth trajectory in the year of 2021, due to the effective pandemic control and wide distribution of vaccines. Around the world cross-border travel is still under pressure. However, the domestic travel under Trip.com has started its recovery. According to China Tourism Academy an increased distribution of effective COVID-19 vaccine worldwide, global travel were resumed its order in the new year. We are optimistic and will be fully prepared to take advantage of upcoming recovery in the international travel. Finally, I would like to thank our team again for their dedicated efforts and commitment in maintaining quality service during this challenging time. As always, we are committed to leading the best in industry practice for all our stakeholders, including our customers, business partners, employees, shareholders, and communities. Lastly, we released our first ESG report, which cover our approaches and efforts in developing an inclusive work place, promoting responsible travel and providing quality user experience. Going forward, we'll continue to improve our efforts in ESG to lead our sustainable growth in the long-term. With that, I will now turn the call over to Cindy.

Thanks, Jane. Thanks everyone. For the fourth quarter of 2020, Trip.com Group reported net revenue of RMB5 billion, representing a 40% decrease from the same period in 2019. The further narrowed decline reflects a continued recovery of our China domestic market, especially for short-haul and staycations. I'd like to first go through some business highlights that drives the recovery of our domestic revenues. Accommodation reservations for China domestic market sustained positive growth in Q4 with mid-to-high end hotel reservations growing at double digits, inter-province hotel GMV grew by more than 20%. Domestic air revenue maintained positive year-over-year growth in Q4, despite the higher base in a previous year with transportation bookings for early Chinese New Year holiday. Reservations for domestic in destination activities achieved a strong growth during the quarter, mainly driven by short-haul trips. Recovery for domestic package product was slower due to industry fluctuations with small outbreaks of COVID cases in this quarter. International business is still under pressure. However, similar to what we experienced in China, our brand, Trip.com, also saw strong roles for domestic hotel reservations in many markets. Gross margin was 82% for the fourth quarter of 2020, increased from 79% for the same period in 2019, and 81% for the previous quarter. The increase of gross margin was mainly helped by favorable change in product mix and continued improvement in service efficiency. In the mid-to-long-term, we still expect the gross margin to be around 75% to 80%. Total non-GAAP operating expenses decreased by 36% from the same period in 2019 and increased by 14% from the previous quarter, thanks to our largely flexible cost expenses structure and efficient operating management. During the past year, we have further streamlined our operations across business lines. In addition to certain adjustments related to COVID. In addition, our improvement on content and cross-selling have further led the marketing efficiencies. Product development expenses for the fourth quarter decreased by 20% to RMB2.2 billion from the same period in 2019 and increased by 8% from the previous quarter. The sequential increase was mainly due to the normalization of our personnel arrangement. Sales and marketing expenses for the fourth quarter decreased by 50% to RMB1.2 billion, from the same period in 2019 and increased by 9% from the previous quarter. The sequential increase was mainly due to the increased marketing spending in response to continue to travel demand recovery. Excluding share-based compensation charges, non-GAAP operating margin was 10% for the fourth quarter of 2020, compared to 12% in the same period in 2019. Diluted earnings per ADS were RMB1.65 or US$0.25 for the fourth quarter of 2020. Excluding share-based compensation charges and fair value changes of equity security investments and exchangeable senior notes, non-GAAP diluted earnings per ADS were RMB1.75 or US$0.27 for the fourth quarter of 2020. As of December 31, 2020, the balance of cash and cash equivalents, restricted cash, short-term investment, held to maturity time deposit and financial products was RMB59.6 billion or US$9.1 billion. Now turning to the first quarter of 2021, as James shared early, we saw significant variability in the booking trends in the first two months of 2021, mostly due to COVID-related travel restrictions during the Chinese New Year. Our visibility for the full quarter is still very limited as of today, due to the ongoing volatility of the recovery pace and the short booking window. Therefore, we will not provide a full quarter guidance this time. Instead, I'd like to share some color on our recent performance. We have sustained better than industry performance across major business lines. And in the first quarter of Q1 – in the first half of Q1, the recovery of our domestic hotel reservation led the industry average performance by around 15% against the same period of 2019. In particular, hotel reservations for intra province travel at in destination activity reservations maintained solid growth. After the holiday, we've seen that travel demand quickly rebounded and our hotel and air ticketing achieved the full recovery recently compared with the same period in 2019. We remain fully confident on the general trends that the domestic market is getting back to the growth trajectory and increasingly more positive on the potential reopening of international travel, encouraged by the wide availability of vaccines a relaxation of travel restrictions. We are fully prepared to continue gaining market share, capturing the opportunities during the recovery domestically and internationally. With that operator, please open the line for questions.

Thank you. [Operator Instructions] Your first question comes from Alex Yao from J.P. Morgan. Please go ahead.

Thank you, management for taking my question. So I have a question on the content strategy, James, you talked briefly on your content strategy in the prepared remarks. Can you elaborate a bit more on the strategy, particularly from competition perspective, how do you plan to compete against the more established content platforms with exposure to travel such as Xiaohongshu and Douyin? Thank you.

Yes. First, we are the largest travel transaction platform in China. So many of our users are they used to writing authentic reviews and travel journals platform. The more importantly strong product and connection capability allows to make content to transaction conversion easy and frictionless. For example, our live stream channel delivers the highest conversion rate in travel industry last year. So for these reasons we have competency that we will be one of the golden platforms for users, the seatbelt travel inspirations and value for in a shorter and long haul travel demand.

Thank you. Your next question comes from Thomas Chong from Jefferies. Please go ahead.

Hi, good morning. Thanks management for taking my questions and congratulations on the recovery after Chinese New Year. My question is more about the competitive landscape in lower tier cities. Can management talks about the pricing trend in lower tier cities, as well as our strategy in lower tier cities this year. Thank you.

Yes. For the lower tier cities, we are putting lots of airports fully utilizing the comprehensiveness of our platform. First of all, our transportation products offer the links for us to further penetrate into the low tier cities and our cross sell capability enable us to cross sell all the products our platform. Secondly, not only we have the online platform, we also have thousands of the lower tier cities offline stores, which enable us also to sell products in these cities. We will be able to input even more products, including hotel, transportation products, package tours, local activities into these offline stores as well to enable us to further penetrate into these cities. And certainly, because of the upcoming trend, we are also making sure our product is very competitive in terms of coverage, as well as the pricing to make sure the people in the cities get the best deal when they select products from different product align. So our efforts for the lower tier cities is going to be strengthened. And also we have special teams to look at specific markets such as for people who are retired, et cetera, these segments also presents different opportunities for our new businesses. Thank you.

Thank you. Your next question comes from Ronald Keung from Goldman Sachs. Please go ahead.

Thank you. Thank you, James, Jane, Cindy and Michelle. I guess my question kind of follows on the competitive landscape, particularly want to hear about the hotel, given very good performance you mentioned 15 percentage points about the industry. I see that should be the overall industry. And how do we see that amongst the online players with more booking online, I see. So what is online penetration for hotel – for the overall industry now for online penetration and between say ourselves plus our associates hotel, how do we see ourselves doing amongst within the online trend maybe versus other players, including the [indiscernible] and other players within the online space. Thank you.

For the hotel business, the majority of the hotel booking still is offline. So with the concerted efforts by every player, there are more volumes moving online. And we are gaining lots of shares through this movement. As we discussed from lower tier, from mid to high-end, we are outpacing the industry of growth by 15% gaining market share in that segment. In the lower tier cities, we're also putting concerted efforts to make sure our price is the best penetrating into the lower tier cities. And certainly, we also offer a comprehensive one-stop shopping platform to everyone who are interested in using our platform to travel. So all these efforts give us the advantage leading the industry growth.

Thank you.

Thank you. Your next question comes from Binnie Wong from HSBC. Please go ahead.

Hi, good morning management. Thank you for taking my question. I have two questions here and one – two short questions. One, is there also a follow-up on the competitive landscape in the domestic market. We understand that some of your peers are stepping up subsidies, right. And especially, even like to the hotel right on the hotel side. So how do we see that will trend in terms of the online subsidies, like, be able to step up on that, especially, we also see sales and marketing step up in the fourth quarter? And then also, I guess your thought in terms of our cross-selling efforts, right? It terms of like when you get like our retention and also the cross-selling, any metrics that you can share with us – for us to see in terms of our user retention and also cross-selling there'll be very helpful, for us to better understand our strategy for the year. Thank you.

Yes. With regard to the competition, I think our strategy is, as Jane explained, our strategy is quite consistent and also time proven. For the high-end hotels, price subsidy have improved ineffective. We keep focusing on strengthening our core competence in the inventory service, as well as the content, especially during the pandemic. We not only strengthened our collaborations with our hotel partners by launching a broader range of room and now offerings at very attractive prices, but also develop the pre-order offerings, which allow our users to locking in a competitive pricing while enjoy a great flexibilities in determining the actual travel date. We also launch that channels like a short-haul holidays and fresh sale to help hotels run targeted marketing. These are – these kind of efforts to some extent, further strengthening our strategic partnership with almost all the major mid to high end hotels in the China market. Therefore, our market share increased significantly against tier players. And we are very confident that we will continue to leading the edge. For the low end hotel, in this segment, we did notice that customers tend to be more price sensitive. Therefore, we will continue to meet the price competitiveness in the targeted market and acquire new users was competitive by lower end hotels. We also work very closely with our third-party partners, especially in the tier 4 and tier 5 cities to help our inventory bull market share against appears in this segment. As our low end hotel business has very limited contribution to our total revenue, as well as the net profit. Any competition in this area have limited impact to group level financial performance. In the long run, our value proposition is a much more sustainable for hotels as we focus on bringing new customers and incremental demand from other places, instead of serving as just inserted paid channel to great hotels existing local demand online.

Okay. Thank you. And I just have quick follow-up also on the margin side, if we think about like the margin, because 3Q was very good margins and then 4Q is because of seasonality and also our high investment. In structural positive drivers, we should expect in 2021 on the market side, thank you.

Yes. The total non-GAAP cost and operating expenses decreased around 39% yield a year in Q4, largely – since to our largely flexible cost expensive structure and their efficient operating management. During the past year, we have further streamlined our operation of cross business lines, in addition to certain adjustments related to COVID. In addition, our improvements, our content and cross-selling have further lift marketing efficiency. Our non-GAAP sales and marketing expenses deep increased now in a Q. Looking forward in 2021, we expect modest increase in our personnel expenses in 2021, while we did expect that total headcount will largely be stable, especially for our core businesses. Sales and marketing expenses are largely discretional and be adjusted in accordance with our business recovery. And we will continue to adapt and how I driven strategy. We believe our improvement on content and cross selling will help improve our marketing efficiency. But at the same time, we will also reserve certain budgets in the short-term to develop our strategic – long-term strategic project, for example, the content ecosystem and to prepare for the recovery and our potential growth in the international market.

Thank you.

Thank you. [Operator Instructions] Your next question comes from Jed Kelly from Oppenheimer. Please go ahead.

Good morning management. Thank you for taking my questions. Just sort of looking like big picture, the global OTAs and online travel, there's a lot of investor enthusiasm. These companies are going to emerge from the pandemic with structurally higher margins. Do you see that's the case for you? Do you think you can come out of this with higher margins? Thank you.

Yes. As I explained, I think in terms of the long-term margin, we still think, although in the very short-term, because of the volatility on the top line. We – especially for the Q1, as well as the 2021 we probably cannot provide at this moment clear guidance in terms of the margin. But in the long run we still think the original 20% to 30% margin is very achievable for us. Compared with international peers in terms of sales and marketing efficiencies, Trip.com probably is the most efficient players in the markets, because we as always we focus on gaining market share by growing our own customer, especially the mobile app customers and we will continue to focus on this. And in addition, this year because of the pandemic we also noticed the content product will help us significantly improve our conversion rates as well as the stickiness of our users. Therefore, we think we can have some leverage, especially compared with the global peers on the sales and marketing side. Thank you.

Great.

Thank you. Your next question comes from James Lee from Mizuho. Please go ahead.

Great. Thanks for taking my question. Jane, maybe can – is there any way you can help us understand maybe some of the policy support for the travel industry that's coming up this year? And what kind of signs should we look for possible lifting in restriction for outbound travel? Should we think about those signs as a widely available vaccine in Asian countries or where the government going to consider reestablishment of the green channel that we talked about earlier? And also kind of as we look beyond the pandemic right now, do you have a sense, when you talk to hotel partners in general, they'll rely more on the OTAs? Certainly we saw that trends in the U.S. as OTA gained market share post the financial crisis? Just curious what you're thinking there. Thanks.

Thanks, James. Let me illustrate the answers in a couple of layers. First of all, for domestic travel, during the January and February timeframe, during the winter season there were small outbreaks of the virus. So we stay put for the whole country, there were quickly content there's more outbreaks. And after the Chinese New Year, we have seen very good recovery for domestic travel. So we expect the Chinese domestic travel will have a very strong rebound in this year. And our team is very well prepared in terms of service capability, content generation, our technology investment, so we are very positive in for recovery for the Chinese domestic travel. Secondarily, with the vaccine is being adopted by more and more countries, there were a couple of things we would like to see. First of all, for medical experts across the world, they need to form a consensus in terms of – for the people who have taken medicines – taken vaccines, how long do they need to be quarantined when they return to their home country or when they enter into another country, if any. Secondly, with the consensus built by the global medical experts, every country will form their policy in terms of opening up of green lanes, opening up of special channels for travelers. And totally, once the countries, every country has their policies ready, OTAs with a strong investment in technology, we will make sure the cross-borders information as well as the service capability is coupled with the policy in-force by every country. And make sure all the information and services is very well supporting our customers when they go across. So our team is making the right investment in terms of information assimilation, in terms of the technology capability to support our customers. Now looking into different continents, we believe China in most nations controlled the virus very well, so the domestic travel is leading the recovery among all the global players. And secondarily, many countries in Asia have also demonstrated their abilities to well control the virus, countries, such as Singapore, Japan, Korea have done very well. So we expect these countries in domestic will recover very well. And we're hopeful that with the effectiveness of the vaccine, we'll be able to see some kind of recovery in green lanes, in limited travel as the test of the water leading the recovery for cross-border transactions. Thank you.

Thank you. Your next question comes from Natalie Wu from Haitong International. Please go ahead.

Hi, good morning. Thanks for taking my question. Just to follow up with the sales and marketing question. I want to get a rough sense of a propelled discussion in marketing plan in the first half of this year given your full recovery of domestic business posted Chinese New Year. And I wonder if there's any change of sales and marketing spending, how I relate it to the criteria loosening or tightening across different channels during the pandemic? Also wondering, if you can give us an update of your app MAU last year and how much of that is newly acquired, first time user and if you have observed any demographic features and cohorts that will be grateful – that will be great? Thank you.

Thank you, Natalie. The sales and marketing expenses for us are largely discretional and we will continuously monitor our returns based on our ROI and the criteria is pretty consistent, not loosening or tightening our ROI threshold, but we were swiftly adjusted our sales and marketing budget based purely on the return. And starting, as we explained, starting from last year, we did notice that the content as well as the content including the, for example the live streaming as well as the fresh sales, significantly help us to improve our conversion rate. Therefore our overall marketing efficiencies has been improved. And moving into 2021, we will continuously to make investment in our content product and hopefully our marketing efficiencies will continuously improving. Sorry. What's your second question?

About new users, firstly, it's about your app MAU, just wondering if you can give us an update of your app MAU last year? And how much of that is – those like a newly acquired first time user? And also then if there's any new demographic feature or user cohort related with the new user?

Yes. Our app MAU has been quite consistently increasing, especially with more and more content in our app. We did notice the stickiness of our users increased significantly. In terms of new users, we did notice that more and more percentage of our new users coming from the lower tier cities, especially if coming from the third, fourth, as well as five tier cities. They may not make booking at the first time, but they will spend some time looking at the content that we provide on the app at the beginning.

Got it. Thank you.

Thank you.

Thank you. Your next question comes from Alex Poon from Morgan Stanley. Please go ahead.

Thanks management for taking my question. My question is mainly related to the overall new revenue opportunities coming out of COVID. In a post-COVID world, you mentioned actually many things, particularly I want to understand the content strategies and how this new content strategy can drive up the long-term conversion paying user conversion. And also you talk about many other things, actually like advertising, short hauls, vacation, local attraction, cross selling, low tier city, efficient marketing, high online penetration. So, trying to understand on the overall basis, not just domestic marketing, also the international opportunities, how much – how should we quantify all these new revenue opportunities as we go out of COVID? Thank you very much.

Yes. I think this is a new space for us. We traditionally only wasted most of our money from commission. So it's really coming out of the sales budgets of airlines, destinations, and hotels. Of course, as we know, they also have a marketing budget and branding budget, probably just as large and the same order of magnitude, and just as a large sales budgets. So this is the area that we hope to through our marketing and platform and our content capability to be able to tap into near future.

Yes. In addition, as we have seen, China's infrastructure has been developed quite significantly penetrating into many areas and China is a very big country. So during the lockdown period, James and I and our team have been visiting different provinces and there are great potential leading our customers, not only to the most the famous attractions, but also many, many other newly developed attractions. So the vacation, local attractions represents new opportunities for us to gain market share. And lastly, I think, we are also be very prepared to further taking market share when the cross-border transaction opens. I think this is a great opportunity almost every country or the travel industry related job opportunities being depressed during this pandemic. So there is a search of the demand for us to drive the volume into this area. So we are working very closely with the players in the global places to make sure once the vaccine is adopted, once the cross-border transaction take place, we'll be very well-prepared to bring the Chinese customers into these areas.

Thank you.

Thank you. Your next question comes from Brian Gong from Citigroup. Please go ahead.

Yes, thanks management for taking my questions. So my question is regarding the margins. So we have done a lot of, in low cost saving measures in secondary intelligently [ph] to which also reflected in our financials. So my question is, if we assume full recovery of auto bond and the international travel and a decent growth on domestic travel, say in 2022 or 2023. What would our operating margin be under that scenario compared to pre-COVID-19 level? Yes, thank you.

Yes, we, although there are some of volatilities in the margins due to the COVID, but in general, we still targeting at the 20% to 30%, non GAAP operating margin, which we think is very achievable if everything resumed normal. Thank you.

Thank you.

Thank you. Your next question comes from Tian Hou from T.H. Capital. Please go ahead. Apologies. That question has disconnected. That does conclude our time for questions. I would now like to hand the conference back to Senior Director, Michelle Qi.

Hello. Hello. Hello. Hello.

Get back.

Tian? Hi, Tian

Hi, Tian.

I was muted, to be plied. [ph] Okay. So, okay. This is the question. So first I'd say congratulations on Q4, this is really not easy to bring back top line, bottom line back to almost normal. So as the company refocus the business to domestic. I do believe domestic is going to be really great, 2021. So the company did mention a lots of possibilities. So in the short haul and the high frequency product in the travel market, now what's the company's plan to develop into it and what you saw advantage that is my question. So, I'm very excited for the two products. So I want to know more detail about that. Thank you.

Thank you, Tian. First of all, I think we – as we very focused on the travel verticals, all the content will be more relevant for our customers look for their, for example, we can get away of vacations and same tours. And secondly, thanks to our very strong product team, our short haul vacation product, especially the hotel-related packages of very competitive, insurance, of both pricing, as well as the coverage. Our live streaming and the special deals channels have become the go-to platform for travelers that seek value for money deals. The travel market is immense and we are confident that our growth potential will be further a lot to especially in the quality travel markets segment. Thank you.

Okay. Thank you. Thank you. That does conclude our time for questions. I would now like to hand the conference back to Senior Director, Michelle Qi.

Thank you. Thanks everyone for joining us today. You can find the transcript and webcast of today’s call on investors.trip.com. We look forward to speaking with you on the first quarter 2021 earnings call. Thank you and have a good day.

Thank you very much.

Thank you.

Thank you.

That does conclude our conference for today. Thank you for participating. You may now disconnect.