While the international travel market remains depressed due to global lockdowns and consumer sentiments, China's domestic travel market has rebounded since the easing of lockdowns. We believe that this could be an indicator of strong demand for domestic travel in 3Q20 (seasonally the strongest quarter) as outbound travel spending converts into high-end domestic travel activities instead. Domestic travel-focused OTAs like Tongcheng-Elong, Fliggy (Alibaba), and Meituan Dianping are better positioned to capitalize on this rebound compared to international peers like Trip.com.
Jie Sun, CEO of Trip.com, makes mention of this potential rebound in the quote below:
"We expect certain outbound demand will be converted into the high end of the products and long-haul products in the summer months. So our team is working very hard to develop products that can satisfy the high-end customers' need because this year, they will not be able to go abroad as they do every year."
-Jie Sun, Trip CEO
This is further supported by the chart below, showing how domestic airline capacity has been improving - recovering from a peak year-on-year drop of 71% on February 24 to just 33% on April 22.