Trip.com Group Limited (TCOM): 5 FORCES Analysis [Nov-2025 Updated]

You're looking at Trip.com Group Limited's competitive landscape as of late 2025, and honestly, the picture is one of massive scale fighting intense pressure. Despite reporting a strong Q3 2025 net revenue of RMB18.3 billion (US$2.6 billion), the core battle remains: suppliers hold pricing power while customers face near-zero switching costs, a classic Online Travel Agency (OTA) squeeze. We see this pressure reflected in their cost of revenue, which was 18% of that revenue in Q3, even as they pour billions into tech to keep up with rivals like Booking Holdings and Expedia Group. If you want the full, unvarnished breakdown on how supplier leverage, customer churn risk, and the threat of direct booking channels are shaping Trip.com Group Limited's strategy right now, you need to dig into the five forces below.

Trip.com Group Limited (TCOM) - Porter's Five Forces: Bargaining power of suppliers

You're looking at the supplier side of Trip.com Group Limited's business, and honestly, the power dynamic here leans heavily toward the suppliers. This is where the inventory-the actual seats and rooms-comes from, and those providers hold significant leverage over an online travel agency (OTA) like Trip.com Group Limited.

Major global airlines and hotel chains are the primary gatekeepers for inventory and pricing. When travel demand is this strong, their pricing power increases, which directly impacts Trip.com Group Limited's cost of revenue. For instance, for the full year of 2024, Trip.com Group Limited's transportation ticketing revenue reached RMB20.3 billion (US$2.8 billion), growing 10% year-over-year. More recently, for the third quarter of 2025, outbound flight bookings climbed to around 140% of the volume seen in the same period in 2019. That kind of sustained, above-pre-pandemic volume growth gives suppliers, especially major carriers, the upper hand in rate negotiations.

The reliance on third-party distribution technology also concentrates power. Global Distribution Systems (GDS) are an oligopoly, meaning a few large players control the vast majority of the market access. This structure inherently limits Trip.com Group Limited's options for accessing real-time inventory.

Trip.com Group Limited must manage the financial terms dictated by these suppliers. Specifically, the company has to negotiate commission rates, which are known to range from 5% to 15% per transaction for hotel reservations, which accounted for 40% of total revenue in full year 2024. Furthermore, to lock in favorable inventory access or pricing tiers, Trip.com Group Limited often enters into long-term contracts, typically averaging 3-5 years, which limits its near-term flexibility to switch suppliers or react to sudden market shifts.

Supplier leverage is demonstrably high, and you see this reflected in the overall market dynamics. The strong performance in 2024 and early 2025, where outbound bookings for Trip.com Group Limited exceeded pre-COVID levels, means suppliers are less incentivized to offer deep discounts to secure volume.

The key pressure points for Trip.com Group Limited regarding its suppliers include:

• Managing commission rates on hotel bookings, which were 40% of 2024 revenue.
• Navigating the GDS oligopoly, where Amadeus holds over 40% market share.
• Adhering to contract terms averaging 3-5 years in length.
• Dealing with strong airline pricing power given that outbound flight bookings hit 140% of 2019 levels in Q3 2025.

Finance: draft a sensitivity analysis on a 100-basis-point increase in average supplier commission rates by next Tuesday.

Trip.com Group Limited (TCOM) - Porter's Five Forces: Bargaining power of customers

You're looking at Trip.com Group Limited's customer power, and honestly, it's a constant battle to keep users from jumping ship. In the Online Travel Agency (OTA) space, the customer holds significant leverage because the barriers to exit are so low. We estimate the direct financial switching costs are defintely low, at only 2-3% of the total booking value. This low friction is compounded by the intense price transparency in the market; customers easily compare prices across OTAs like Booking.com and Expedia, which is a major pressure point. To put this in context, customer switching behavior is cited as a challenge by 57% of the OTA market landscape.

The threat of customers leaving is real, and the industry data reflects this high churn potential. While Trip.com Group Limited's specific annual customer churn rate isn't public, the general OTA sector faces high customer turnover, with some estimates suggesting it nears 20% annually. What this estimate hides is that even a small number of negative interactions can trigger a switch; industry data suggests customers defect after just 2.4 negative experiences. This means that even with strong overall demand, like Trip.com Group Limited's Q2 2025 net revenue hitting RMB14.8 billion ($2.1 billion), retaining that revenue requires constant, high-quality engagement.

The demand for service quality is a direct driver of cost and effort for Trip.com Group Limited. The pressure is evident in the massive marketing spend across the sector; in 2024, the four largest OTAs, including Trip.com Group Limited, collectively spent $17.8 billion on sales and marketing. For Trip.com Group Limited specifically, sales and marketing expenses represented 22% of its Q1 2025 net revenue, totaling RMB3.0 billion (US$413 million). This high spend is necessary to acquire and retain customers who are quick to complain if service falters. While I couldn't source the exact 15% increase in customer complaints for 2024, the high marketing investment and the industry challenge of customer switching behavior confirm that service quality is a critical battleground.

Trip.com Group Limited is fighting this power dynamic by aggressively deploying technology to boost stickiness. The use of AI tools, like TripGenie, is central to improving the user experience and locking in customers. Here's a quick look at the numbers showing how Trip.com Group Limited is using AI to counter low switching costs:

The AI strategy is delivering measurable results in user behavior, which translates directly into reduced customer power by increasing the value derived from the platform. The focus is on personalization and efficiency, making the platform more indispensable with every interaction. The impact of these tools on user engagement is staggering:

• TripGenie usage and unique visits saw growth between 180% to 200% year-over-year in Q3 2025.
• AI chatbots now handle 80% of customer inquiries, improving efficiency.
• In 2024, TripGenie traffic surged by 200% and total conversations rose by 200%.
• Product development expenses for Trip.com Group Limited in Q1 2025 were 25% of net revenue, signaling heavy investment in these tools.

If onboarding takes 14+ days, churn risk rises. Finance: draft 13-week cash view by Friday.

Trip.com Group Limited (TCOM) - Porter's Five Forces: Competitive rivalry

Rivalry is intense, you see it in the sheer scale of the global giants Trip.com Group Limited battles daily. We're talking about Booking Holdings and Expedia Group, which command massive international footprints. Here's a quick look at how they stack up on a couple of key metrics we have for late 2025:

Still, the fight isn't just overseas. Competition from domestic Chinese OTAs like Qunar definitely pressures margins within the home market. It's a constant battle for the local traveler's wallet, even as Trip.com Group Limited sees strong domestic booking resilience.

This environment demands serious investment in customer acquisition. You can see this pressure reflected directly in the spending figures. For the second quarter of 2025, Trip.com Group Limited's sales and marketing expenses hit RMB3.3 billion, which translates to about US$464 million. That spend represented 22% of the net revenue for that quarter, which was RMB14.8 billion.

To counter this, Trip.com leverages its domestic advantage. It has the largest selection of both domestic and international hotels in China on its platform. This stickiness as a one-stop shop helps keep customers locked in, especially for short- and mid-haul travel segments where they dominate.

Anyway, maintaining that edge requires constant technological upgrades. Rapid innovation, like AI-driven services, is essential to stay ahead of the curve. For instance, product development expenses rose by 12% in Q3 2025, reaching RMB4.1 billion (US$574 million) as the company poured resources into big data and machine learning to enhance the booking experience and personalization.

The results of this competitive push are visible in segment performance. For example, in Q2 2025, inbound bookings on the platform grew by more than 100% year-on-year, showing that their technology and focus on international recovery are paying off against global rivals in that specific niche. The competitive intensity forces these high operational investments.

• Inbound bookings growth (Q2 2025): more than 100% year-on-year.
• Sales & Marketing as % of Net Revenue (Q2 2025): 22%.
• Product Development Spend (Q3 2025): RMB4.1 billion.
• Global Competitor Revenue (Booking Holdings): $23.7B.
• Global Competitor Revenue (Expedia Group): $13.7B.

Finance: draft 13-week cash view by Friday.

Trip.com Group Limited (TCOM) - Porter's Five Forces: Threat of substitutes

You're looking at the competitive landscape for Trip.com Group Limited, and the threat of substitutes is definitely a major factor you need to model. Honestly, when customers can bypass you entirely, that pressure is real. The primary substitute threat comes from travelers choosing to book directly with the service providers themselves.

Direct booking via airline and hotel websites is the main threat. This channel offers the supplier a way to own the customer relationship and avoid commission fees, which they pass on as value or use to fund loyalty programs. For instance, in 2023, direct channels captured 38.4% of online travel bookings. This is a significant slice of the pie, showing that a large segment of the market prefers or is comfortable transacting outside of an Online Travel Agency (OTA) like Trip.com Group Limited.

The overall OTA market share has seen some fluctuation, which is important context for you. The data suggests the OTA market share dropped from 45% in 2022 to 41.3% in 2023. Still, online bookings overall-which include both OTA and direct supplier sites-hold a dominant position, accounting for 69.6% of the global travel and tourism market in 2023. To put the scale in perspective, the global OTA market valuation is estimated to be between US$305 billion and US$861 billion depending on the scope, with forecasts showing a stable growth CAGR of 5.36% to 6.42%.

Here's a quick look at some of the market share dynamics we are seeing:

Beyond direct supplier sites, Google Travel and metasearch engines offer a powerful alternative discovery path. These platforms aggregate inventory, often showing prices from OTAs and direct suppliers side-by-side. As of November 17, 2025, Google announced substantial expansions to its AI-powered travel tools, including global availability of its Flight Deals feature across more than 200 countries and agentic booking capabilities. This means Google is moving closer to completing the transaction itself, not just providing a link, which directly substitutes the core function of Trip.com Group Limited.

Also, emerging models like subscription travel services also pose a risk. While the overall market size for travel subscriptions was estimated in the several billion dollars range recently, the sentiment is strong. A study indicated that 90% of current travel subscribers would maintain or increase spending over the next 12 months. This model offers recurring access to benefits, which appeals to frequent travelers seeking cost savings and convenience, effectively locking them into an alternative ecosystem.

You should keep an eye on these key substitute characteristics:

• Direct channels offer greater personalization and loyalty benefits.
• Google Travel now features AI itinerary creation and agentic booking.
• Subscription services promise cost savings for frequent travelers.
• Inbound travel bookings for Trip.com Group Limited surged over 100% year-over-year in Q3 2025, suggesting strong demand that could be captured by direct channels or new models.
• Trip.com Group Limited's Q3 2025 net revenue was RMB18.3 billion (US$2.6 billion), showing the scale of revenue at risk from substitution.

Trip.com Group Limited (TCOM) - Porter's Five Forces: Threat of new entrants

The threat of new entrants for Trip.com Group Limited remains a structural concern, though the sheer scale of capital and operational infrastructure required acts as a powerful deterrent. Building a global network capable of competing with Trip.com Group's established inventory-which underpins its massive revenue base-demands an initial outlay that few new players can sustain.

The financial muscle Trip.com Group possesses is a direct barrier to entry. As of June 30, 2025, Trip.com Group reported a balance of cash and cash equivalents, restricted cash, short-term investment, and held to maturity time deposits and financial products totaling RMB94.1 billion (approximately $13.1 billion). This war chest allows Trip.com Group to aggressively price, acquire technology, or outspend new entrants on marketing and supplier negotiations, making a direct, head-to-head challenge extremely costly for a startup.

Furthermore, maintaining parity in product offering requires massive, sustained investment in technology and product development, which is not a one-time cost. New entrants must commit significant resources just to keep pace with Trip.com Group's ongoing innovation cycle. For instance, Trip.com Group's commitment to this area is clear from its recent spending:

The Q2 2025 product development expenses were RMB3.5 billion (or $489 million), and this spending trend continued, rising to RMB4.1 billion (or $574 million) in Q3 2025. This level of continuous expenditure on personnel and R&D creates a high hurdle rate for any company attempting to launch a globally competitive platform from scratch.

Still, the threat is not zero. Disruptive technologies, particularly in artificial intelligence, can lower entry barriers for specific, niche travel segments. We see evidence of this shift, with over 59% of Online Travel Agency (OTA) companies increasing investment in AI-driven personalization and chat-based assistance tools. For example, a competitor launched an AI-driven product, Trip Matching, in May 2025, converting social media content into travel itineraries. This suggests that a new entrant focusing narrowly on a high-value niche-like luxury experiences or specialized eco-tourism-might bypass the need to immediately replicate Trip.com Group's entire 1.4 million hotel network.

The primary barriers to entry are:

• The massive capital needed to match scale.
• Trip.com Group's RMB94.1 billion cash position.
• High, sustained R&D spending, like RMB3.5 billion in Q2 2025.
• The established global supplier relationships.

New entrants must find a technological wedge, not a capital match.