Your gross margins reached like 82% for the last three quarters. Is there any reason — and you talked about investment in sales and marketing, but that’s sort of below the gross margin line. Is there any reason we should not expect the gross margin stay where they are? And were there structural reasons behind a recent increase in gross margins?
Jane Sun: Thanks for your question. First of all, we look at our growth in the long term. So there are a couple of baselines we look at. The first one is the GDP growth rate. So, if the GDP growth rate is somewhere between 4% to 5%, we believe the travel industry will outpace the GDP growth rate by a couple of percentage because people who can afford to travel normally makes more higher income. So GDP — travel probably will grow at about 8% to 10%. And we will also outpace the travel industry growth by being more efficient by moving more offline to online. So somewhere around 3 to 4 times the GDP growth rate is what our team is aiming at. Therefore, we cannot say the short term what we want to do. But in the long run, that is the goal for our team to strive for.
So, we always plan our business three years, four years out in order to make very consistent investment. If you look at the COVID three years, our engineering team made tremendous progress during the slowdown season. That is why when the industry recovered, we’re able to take care of the pent-up demand. So, we believe the growth into the next three to five years is very sustainable. Secondly, on the margin, we believe the healthy and sustainable gross margin is our goal. In the short run, if you want to even grow the market and margin higher, we can do that. But we didn’t want to do it in a way that we sacrifice the long-term investment. So we are committed to grow our business with healthy margin between 20% to 30%. And we will continuously make long-term investments, particularly in the area of product engineer and also customer services.
So that’s the promise we have for our customers, for our partners and for our shareholders. Thank you.
Operator: Next, we have Wei Xiong from UBS. Please go ahead.
Wei Xiong: My question is regarding our pure international business, especially on the Trip.com side. I was wondering, could management share the current revenue contribution from Trip.com to the group revenue? And how should we think about this growth in the next three to five years? Also, in addition, what are our strategies to continue achieving such high growth? Thank you.
Cindy Wang: Sure. Trip.com represents approximately 6% of the total group revenue in the Q3, and its revenue contribution has been steadily approaching that of Skyscanner. And we expect the Trip.com to surpass Skyscanner in terms of revenue contribution in the near future. With regard to the growth strategy in the next three to five years, we expect that Trip.com will maintain a robust mid-double-digit growth rate, becoming one of the primary growth drivers for the whole group. In terms of different markets in Asia, Trip.com is targeting to become the leading OTA. The combined size of its top market in the Asia Pacific region exceeds that of the mainland China in terms of total gross booking. And Trip.com has already established a pretty solid foothold in this region with comprehensive local operations.
Despite starting with comparatively small market share, Trip.com is confident in expanding its presence through its all-in-one mobile app, competitive offerings, high-quality services. And we are continuously — we work continuously to grow our brand awareness in this region. And in the euro market, our near-term focus is more on the air travel. The air market in Europe is about twice the size of China’s in terms of gross booking. This represents a significant opportunity for the group to capitalize through synergies among different brands within the group. Furthermore, we are strategically expanding our service offering into other markets while upholding our ROI return standards. Thank you.
Operator: Next, we have James Lee from Mizuho. Please go ahead.
James Lee: Can you guys maybe talk about — maybe elaborate your strategy and plans to continue gaining share in the OTA space? Where do you see the most substantial opportunity? Now, in relation to those opportunities, are the kind of the foundational investment already made to drive those share gains, or do you need to kind of accelerate the investment pace to capitalize that opportunity?
Jane Sun: We look at different regions with different angles. For domestic, we further provide excellent products for our high quality of the customers by enhancing our customer services and product innovation. And for the third tier, fourth tier cities, we further penetrate into these cities by offering the product that — with lots of incentives in service and pricing. So, we believe domestic China will still have a long way to go in terms of serving 1.4 billion customers. The second opportunity is outbound customers with the supply side, which includes the visa applications as well as the flight capacity improving. We’ll be able to take more customers abroad and enable them to see the rest of the world. The third priority is the global customers.
Because the inventory we developed for our outbound customers can also be utilized by our global customers. We will be able to empower the customers from overseas to travel abroad. So different segments, we look at different opportunities. But for each segment, we feel there is a lot of upside for us to drive to. And we will make sure we make investment to address our customers’ needs. Particularly in product and engineering and services, our customers from different regions will have different requests. The majority of the investments are being made. We just need to continuously making improvements so that our customers’ new requests are being addressed. Thank you.
