Thank you. Good morning and good evening, everyone.

Welcome to Tongcheng Travel's 2026 second quarter results conference call. I'm Kylie Yeung, Investor Relations Director of the company.

Joining us today on the conference call are our Co-Chairman of the Board, Executive Director and CEO, Mr. Hope Ma; our CFO, Mr.

Julian Zheng; our Chief Capital Officer and President of Wanda Hotels and Resorts, Ms. Joyce Li.

For today's call, our management team will provide a review of the company's performance in the second quarter. Hope will brief us on the company's strategies, Joyce will discuss our business and operational highlights, and then Julian will address the details of financial performance accordingly.

We'll take your questions during the Q&A section that follows. As always, our presentation contains forward-looking statements.

Such statements are based on management's current expectations and current market operating conditions, and relate to events that involve known or unknown risks, uncertainties, and other factors, which may cause the company's actual results, performance, or achievements to differ from those in the forward-looking statements. This presentation also contains some unaudited non-IFRS financial measures.

They should be considered in addition to, but not as a substitute for measures of the company's financial performance prepared in accordance with IFRS. For a detailed discussion of non-IFRS measures, please refer to our disclosure documents in the IR section of our website.

Now, let me introduce our Chairman, Hope. Hope will be presenting in Mandarin, and our colleague will provide the English translation afterwards.

Hope, please go ahead. 谢谢

Carly。欢迎各位参加我们2026年第二季度业绩发布会。2026年第二季度，中国旅游市场开局良好，清明节假期及春假期间的旅游需求依然旺盛。然而，随着燃油费上涨带来的机票价格高企，推高了出行成本，导致长途出行需求阶段性承压。面对高燃油费带来的短期压力，我们积极调整运营策略，实施有针对性的成本管理措施，并持续提升运营效率，以应对外部挑战。另一方面，中国旅游消费品质化、体验驱动的趋势并未改变，沉浸式、体验型旅游需求持续增长。面对这一行业变化趋势，我们坚定长期战略，在不断夯实自身核心竞争力的同时，保持组织的敏捷性和敏锐度，以迅速应对市场变化。我们持续聚焦 OTA 国内业务，推动产品创新，提升服务水平和运营效率，进一步巩固在大众市场的领先地位。同时，我们加速国际业务规模扩张，加深与国际供应商的合作，不断丰富产品与服务，以更好地满足用户需求。期内，国际酒店与国际机票均实现了长足的增长，国际酒店日均间夜量创下新高。另外，作为公司第二增长引擎，我们的酒店管理业务聚焦规模的快速扩张，依托完善的品牌矩阵和先进的技术能力，迅速成长为中国领先的酒店管理集团。根据中国饭店协会2025年的中国酒店集团规模榜单，艺龙酒店科技与万达酒店及度假村的客房数在榜单中分别位列第7位与第22位。凭借清晰的战略布局、卓越的运营能力及灵活高效的组织能力，公司收入及利润在二季度继续稳健增长。在行业高质量发展的新阶段，我们始终注重用户价值提升，深入挖掘消费者的多样化需求，以更契合大众需求的产品与服务，提升用户出行体验。8月21日，我们完成了对嘀嗒出行的现金要约，实现了对嘀嗒的控股。此次收购是公司在出行领域战略布局的重要一步，有助于公司快速切入顺风车市场，完善产业链布局。展望未来，旅游行业面临的短期压力仍存在，但旅游强国建设十五五规划进一步凸显旅游业作为国民经济战略性支柱产业的地位，利好政策的出台有望为行业的长期稳健发展提供支撑。同时，我们看到以人工智能、大数据等为代表的数字技术加速融入旅游产业，驱动产业转型升级。我们认为 AI 时代带来的增长机会大于挑战。我们积极拥抱 AI 带来的技术变革，致力于将 AI 与业务场景深度融合，推动业务模式升级和优化业务流程，从而推动公司长远可持续发展。我们有信心在 AI 时代，通过清晰的战略布局与高效的战略执行能力，率先抢占增长机会，为利益相关者创造长期价值。接下来，Joyce 将向大家详细介绍2026年第二季度的业务表现和运营亮点。先请我们 IR 同事做一下翻译。

Thank you, Kylie, and welcome to our 2026 second quarter earnings call. China's travel industry was off to a solid start in the second quarter of 2026, with resilient travel demand during Qingming holiday and spring break.

However, this positive momentum was later tempered by higher fuel surcharges, which drove up airfares and travel costs, resulting in temporarily pressure on long-haul travel demand. Facing short-term headwinds arising from higher fuel surcharges, we proactively adjusted operating strategies, implemented targeted cost management initiatives, and continuously enhanced operational efficiency to navigate the challenging market environment.

On the other hand, the growing trend towards quality-oriented and experience-driven travel consumption remained intact, characterized by increasing consumer demand for immersive experiences. In light of this structural shift, we remained committed to our long-term strategy, continuously strengthened our competitive advantages while maintaining the organizational agility and flexibility needed to respond swiftly to evolving market conditions.

We stayed focused on our core OTA business, further strengthening our market position in China's mass market through continuous innovation in travel products, enhancing service quality, and improving operational efficiency. Meanwhile, we accelerated the expansion of our international business, deepened our partnerships with global suppliers, and continued to enrich our outbound product and service offerings to better address users' evolving travel needs.

During the quarter, both our international accommodation and international air ticketing business demonstrated impressive growth, with international room nights sold reaching a record high. In addition, our hotel management business, positioned as the company's second growth engine, continued to focus on its rapid network expansion, supported by a comprehensive brand portfolio and advanced technological capabilities.

It has rapidly grown into one of China's leading hotel management groups. According to the 2025 ranking of the China Top Hotel Groups released by the China Hospitality Association, Elong Hotel Technology platform and Wanda Hotels and Resorts ranked number 7 and number 22 respectively in terms of room count.

Underpinned by our clear strategic positioning, strong operational capabilities, and organizational agility, we continued to achieve solid growth in both revenue and profit during the second quarter. As the travel industry enters a new phase of high-quality growth, we remain unwaveringly focused on enhancing user value.

We deep dive into evolving user needs, and deliver products and services that better meet the needs of the mass market, thereby enhancing the overall travel experience. On August 21st, we completed a general cash offer for all issued shares of Dida Inc., and as a result, have become the controlling shareholder of Dida.

This move represents an important step in our strategic expansion within the mobility sector, enabling us to rapidly enter the carpooling market, and deepening our value chain integration. Looking ahead, while the travel industry continues to face near-term challenges, the approval of the 15th Five-Year Plan for building China into a strong tourism nation further underscores the role of the tourism industry as a strategic pillar of the national economy.

We expect these policy frameworks will provide a solid foundation for the industry's long-term sustainable development. Meanwhile, the rapid integration of AI technologies, including artificial intelligence and big data, is accelerating the transformation and upgrading of the travel industry.

We believe the AI era presents more opportunities than challenges. We are proactively embracing AI-driven technological transformation, and are committed to deeply integrating AI into our business scenarios, to further optimize our business model and operational efficiency, thereby fostering the company's long-term sustainable growth.

Amidst the AI era, we are confident that with our clear strategy and outstanding execution capabilities, we are well positioned to capture the emerging growth opportunities, and create long-term value for all our shareholders. Next, I will hand over the call to Joyce.

She will share with you our business and operational highlights of the second quarter of 2026. Joyce, please go ahead.

Thank you, Hope. China's travel market was marked by a challenging macro environment in the second quarter, as elevated airfares, mainly driven by higher fuel surcharges, weighed on long-haul travel demand.

Against this backdrop, we remained disciplined in our execution, and delivered solid operational results across all business lines. In the second quarter, our accommodation business sustained its underlying demand resilience.

Although higher airfares dampened long-haul travel, local and short-distance travel demand maintained a growth trajectory, underpinning steady hotel bookings. We continue to observe a structural shift in consumer preferences towards higher-quality hotels.

The proportion of higher-star hotel room nights sold on our platform increased further during the quarter by approximately 3 percentage points, leading to a decent year-over-year increase in our ADR. To capitalize on users' growing appetite for experience-driven travel, we curated destinations with strong experiential appeal and launched differentiated, interactive marketing campaigns.

These efforts drove room night growth in these regions at a pace faster than the overall platform. During the quarter, we continued to enhance our engagement programs for high-value members by offering more exclusive benefits and elevating service quality.

These efforts further increased repeat purchases and strengthened user loyalty. As for our international accommodation business, we continued to enrich our global hotel supply, particularly by deepening partnerships with local suppliers in Southeast Asia and South Korea, to secure more high-quality hotel supplies with competitive pricing.

At the same time, we stepped up cross-selling with our international air ticketing business by executing more precise marketing campaigns aimed at outbound travelers. In addition, we refined our international hotel products and services to better address users' travel needs and pain points.

As a result, our international room nights sold delivered exceptional growth of more than 50% in the second quarter. Our transportation business faced significant headwinds in the second quarter.

The sharp rise in fuel surcharges translated into elevated airfares, which materially suppressed users' travel demand. We responded swiftly, reducing marketing expenses and streamlining our organizational structure.

These decisive actions demonstrated the resilience of our transportation business amid market turbulence. Throughout the quarter, we remained unwavering in our commitment to user experience.

Our algorithm-powered waiting system continued to deliver diverse, reliable, end-to-end travel solutions. We further integrated more intra-city and short-distance transportation options into our travel itineraries, making journeys more seamless and convenient for our users.

On the marketing front, we continued to innovate. In response to the fuel surcharge burden, we launched the Fuel-Free Wednesdays campaign.

For first-time international travelers, we introduced the Regret-Free Card that addressed users' concerns over cancellation fees, substantially lifting conversion rates. Additionally, we leveraged AI to assist users in identifying the best-value flight options that matched their budget and schedule preferences, thereby facilitating more informed booking decisions.

In terms of our international air ticketing business, we stayed true to our differentiated strategies of competitive pricing plus high-quality service, a proposition that has firmly established itself in the minds of our users. During the second quarter, we collaborated with local partners across key overseas markets and rolled out targeted marketing campaigns around popular overseas destinations.

As a result, our international air ticketing revenue maintained a strong growth momentum in the second quarter. Our hotel management business remains a cornerstone of our growth strategy, and is positioned as the company's second growth engine.

In the first half of 2026, our Elong Hotel Technology platform sustained its rapid expansion trajectory, with a strategic focus on well-recognized hotel brands. The platform continued to enhance hotel operational efficiency and revenue performance through a comprehensive suite of technology solutions.

Meanwhile, we further optimized our membership operations by upgrading the member check-in experience through smart hardware integration. Following its consolidation in October 2025, Wanda Hotels and Resorts completed a smooth and effective integration process, revitalizing its organization and strengthening its core operational capabilities.

Leveraging post-merger synergies, Wanda Hotels and Resorts has sped up its expansion strategy, strengthened its brand presence, and increased its market share in China's high-end hotel segment. In the first half of 2026, it pursued a refined geographic expansion, concentrating on core cities and popular tourist destinations to accelerate new hotel openings.

Beyond China, it quickened its pace of international expansion, deepening its presence in overseas markets, and bringing homegrown Chinese hotel brands onto the global stage. With more than 300 hotels, resorts, and commercial complexes in operation as of June, the business has reached a key strategic milestone in its development.

As of June 30th, the total number of hotels in operation exceeded 3,500, with over 2,000 in the pipeline, underscoring the strong growth momentum of our hotel management business, and our steadfast dedication to becoming the industry leader in China's hotel management sector. In August, we completed the voluntary conditional general cash offer for all issued shares of Dida, and obtained control of the company.

This transaction marked a strategic step in expanding our transportation business and strengthening our market position. By leveraging the complementary strengths of the two companies, we aim to better serve users with broader range of mobility options, particularly in short- and medium-haul transportation.

At the same time, Dida is expected to benefit from our extensive user base and advanced technology capabilities, supporting its return to a growth trajectory. We are confident that this strategic transactions will create meaningful synergies and long-term value for both companies and our stakeholders.

In the second quarter, the Weixin ecosystem remained an important traffic source for us. We continued to optimize our operational efficiency within the ecosystem during the period.

Our standalone application, a key vehicle for new user acquisition, sustained solid growth in the second quarter, with DAUs reaching an all-time high of more than 5 million ahead of the May Day holiday. Tapping into users' evolving preferences for a sense of ritual and relaxation, we launched weekend marketing campaigns centered around the weekend getaway theme, deepening interaction with the younger user cohort.

Furthermore, we continuously deepened our penetration among younger demographics and enhanced brand awareness. For the 12 months ended June, our cumulative travelers served exceeded 2 billion, with annual paying users reaching 254 million, indicating per-user purchase frequency surpassing 8 times.

In the meantime, our 12-month ARPU reached RMB80, representing a year-over-year increase of approximately 10%. We are committed to harnessing AI to deliver superior services while enhancing the company's overall operational efficiency.

We proactively pursue strategic collaborations with leading third-party AI platforms to seize first-mover advantages in the AI era. For the second quarter, we further deepened our partnership with the Weixin ecosystem.

As one of the first OTAs to integrate with the Weixin AI assistant, we are actively contributing to the development of the Weixin AI ecosystem. In the near term, our focus is on building and validating our capabilities within this ecosystem, spanning user intent understanding, content search, service invocation, and end-to-end transaction loop.

Our proprietary AI trip planner, DeepTrip, continued to iterate on its capabilities to better understand user needs and deliver customized travel itineraries. During the second quarter, we strengthened DeepTrip's memory capabilities, enabling it to incorporate users' historical preferences and deliver more precise, personalized services, while enhancing both information discovery efficiency and the decision-making experience.

In customer service, we further advanced automation functions powered by AI. Beyond the high degree of automation already achieved for routine ticketing and hotel booking modifications and cancellations, we extended AI applications to scenarios such as compensation claim tracking and abnormal order detection, which has significantly boosted both customer service efficiency and user experience.

Moreover, we deepened AI integration into every manual process, equipping our customer service staff with a diverse set of AI tools that help them understand user inquiries rapidly and accurately, and thus resolving issues promptly. Looking ahead, we will continue to invest in AI across our customer service operations, systematically building up service workflows and user data to serve users with ever-greater efficiency.

I'll stop here and turn the call over to our CFO, Julian, who will walk you through our detailed financial results for the second quarter. Julian, over to you.

Thank you, Joyce. Good evening, everyone.

While travel demand in early April this year remained resilient, China's travel market has faced headwinds since May, as a significant increase in fuel costs pushed up airfares. The higher airfares have weighed on demand for long-haul travel, creating near-term pressure on China's travel industry.

Despite the short-term challenges, we proactively adjusted our marketing strategy and optimized our cost structure, while taking steps to improve operational efficiency over the long term, enabling us to once again deliver solid performance across our businesses. During the quarter, both our top line and bottom line achieved steady growth amidst the challenging macro environment.

Our total revenue reached RMB5.0 billion, representing a 6.8% year-over-year growth from the same period of 2025. Through enhanced operational efficiency and precise marketing investments, our adjusted net profit reached RMB851 million, representing a 9.8% year-over-year growth.

Our core OTA business recorded a solid growth, with revenue increasing 8.4% year-over-year to RMB4.3 billion for the quarter. The revenue of our accommodation reservation business reached RMB1.5 billion in the second quarter of 2026, representing an 8.0% increase from the same period of 2025.

The increase was mainly driven by the continued growth in our ADR, along with a modest increase in hotel room nights sold. Our blended take rate for the accommodation business remained stable through streamlined marketing strategies.

Our international accommodation segment maintained strong growth momentum, driven by the successful execution of our cross-selling strategies, as well as more targeted marketing initiatives. Meanwhile, we further optimized our product offerings and deepened our partnerships with global suppliers.

Supported by these initiatives, our international accommodation revenue increased to 4% of our total accommodation reservation revenue in the second quarter, compared with a 2.8% in the same period last year. Our transportation ticketing revenue for the second quarter was RMB1.8 billion, representing a slight decrease of 2.3% compared with the same period of 2025.

Short-term headwinds arising from higher fuel prices and the resulting increase in airfares weighed on long-haul travel demand. To address these challenges, we proactively adjusted our marketing strategies and streamlined our organizational structure.

During the quarter, we continued to enhance our monetization capabilities by refining our VAS offerings and strengthening cross-selling across short-distance transportation services, such as carpooling and airport transfers. In our international air ticketing business, we maintained competitive pricing strategies while further improving our service quality.

As a result, our international air ticketing business continued to deliver robust revenue growth, and accounted for 8.6% of the total transportation ticketing revenue, rising by 2.3 percentage points year-over-year. Our other business continued to perform decently, with revenue reached RMB1.0 billion in the second quarter, representing a year-over-year increase of 35.7%.

The remarkable growth was mainly attributable to excellent performance of our hotel management business. Our tourism business recorded a revenue of RMB643 million, representing a year-over-year decrease of 2.9%.

In the second quarter of 2026, our outbound packaged tour business underwent a consistent pressure, caused by rising fuel costs and the persistent geopolitical uncertainties. In terms of profitability, our gross profit increased by 9.6% year-over-year to RMB3.3 billion, with gross margin rising to 66.7% for the second quarter of 2026.

In the second quarter, the operating profit of our core OTA business achieved RMB1.1 billion, with 26.4% margin. Our adjusted EBITDA increased by 7.3% year-over-year and reached RMB1.3 billion.

Adjusted net profit grew by 9.8% to RMB851 million, with a 17.1% margin, up from 16.6% in the second quarter of 2025. Adjusted basic EPS for the second quarter was RMB0.36, with a year-over-year growth of 5.9%.

Service development and administrative expenses in the second quarter of 2026 increased by 16.8% from the same period of 2025, due to the one-off expenses caused by organizational restructuring. Excluding share-based compensation charges, service development and administrative expenses in total accounted for 17.5% of revenue in the second quarter, compared with 15.4% of revenue in the same period of 2025.

Selling and marketing expenses in the second quarter of 2026 increased by 5.8% from the same period of 2025. Excluding share-based compensation charges, selling and marketing expenses accounted for 32.6% of revenue in the second quarter, compared with 32.8% of revenue in the same period of 2025.

As of June 30, 2026, the balance of cash and cash equivalents, restricted cash, and short-term investment was RMB1.5 billion. For the second quarter, the Chinese travel industry was grappling with challenges of heightened airfares, caused by rising fuel costs amid the ongoing conflict in the Middle East, which continuously exerted pressure on the travel industry.

Turning to the second half of this year, we expect summer travel demand to be somewhat softened, reflecting the impact of frequent extreme weather. In addition, fuel prices remain an area of uncertainty for the second half of the year.

We will continue to closely monitor external developments and respond swiftly to changing market conditions. Overall, we remain optimistic about the future prospects of the Chinese travel market.

With a clear strategy and strong execution capabilities, we are well positioned to navigate market uncertainties and capture long-term growth opportunities. We will remain committed to focusing on our core OTA business, reinforcing our leadership in the mass market, while proactively expanding our international business.

With respect to our hotel management business, we will focus on network expansion, while placing greater emphasis on improving operational efficiency. Furthermore, we will continue to embrace the opportunities presented by technological revolutions, and accelerate the integration of AI across our business operations to further enhance operational efficiency.

Finally, as an industry-leading ESG advocate, we remain committed to continuously improving ESG performance and delivering sustainable long-term value to all stakeholders. With that, operator, we are ready to take questions now.

Thank you.

Hi, thanks management for taking my questions, and congratulations on the solid results. My first question is about the travel demand.

How was the overall performance over the summer vacation, and what is the status of advanced bookings for Mid-Autumn Festival and National Day holidays, and what is your outlook for these holidays? Excluding the impact of higher fuel and air ticket prices, how is underlying travel demand trending?

My second question is on the competition. How would you assess the recent competitive landscape, and have you observed intensifying competition from AI chatbots and other content platforms?

Thanks.

Thank you for the questions, Qiuting. The start of the summer travel season was somewhat softer than expected, like what we mentioned in prepared remarks, mainly due to the extreme weather conditions at major tourism destinations, especially during the middle July 2026.

As the summer holiday progressed, the demand showed signs of improvement in the first week of August, supported by lower airfares following the reduction in fuel surcharges. However, adverse weather conditions in the second week of August resulted in widespread flight cancellations, which temporarily disrupted the travel demand.

Looking ahead, we will closely monitor travel demand trends through the upcoming National Day holiday, which will provide a useful indicator of how demand is evolving. Our focus remains on enhancing user value through better products and services, more seamless and personalized travel experiences, and stronger cross-selling and value-added service capabilities, to drive user value and our ARPU growth.

We will also place greater emphasis on improving internal efficiency, which we believe will further optimize our long-term cost structure, and enhance operational resilience while maintaining healthy profitability. Looking beyond the near term, we continue to believe the long-term fundamentals of China's travel industry remain solid.

Structural growth drivers, including the increasing popularity of experiential travel and nearby short-haul getaways, together with continued government initiatives to stimulate tourism consumption, should continue to support the industry's long-term development. With our differentiated positioning, disciplined execution, and an efficient operating model, we are confident in our ability to navigate different market environments and deliver long-term value for both our users and our shareholders.

In terms of the competition landscape, Joyce may have her voice.

Sure. We do have observed that some of the platforms are enhancing the visibility of travel-related service.

In our view, this reflects the huge growth potential of the travel sector, rather than a fundamental change in the industry structure. In the travel industry, user acquisition is only one part of the operations.

More importantly, long-term competitiveness depends on comprehensive supply capabilities, pricing and inventory management, fulfillment quality, and post-booking customer service. These capabilities require significant operational experience, sophisticated infrastructure, and industry know-how, which cannot be built easily.

In addition, travel consumption is typically low- or middle-frequency, and scenario-driven. The users tend to prioritize reliability, service quality, and overall experience when they're making the booking decisions.

As a result, user retention and repeat purchase are more closely tied to service capability than to traffic exposure alone. Competition in China's OTA market has always been dynamic, and we have successfully navigated different competitive cycles over the years.

We believe our competitive strength lies in our strong operational capabilities, comprehensive supply of products and services, and a long-standing understanding of our user needs, and our reliable service delivery. Now our strategy remains unchanged: continuously enhancing our user experience, enriching our product and service offerings, and improving the operational efficiency.

We believe these capabilities will continue to strengthen our competitive position and support sustainable long-term growth. Thank you.

Next question, please.

Thank you

Oh, sorry. All right.

Thanks management for taking my questions, and congratulations on decent results. I have two questions.

First is that, following the reduction in airline fuel surcharges on 5th August, have you seen any improvement in travel demand or booking trends? Could you give us more color on the performance for each segment under core OTA in the third quarter and full year 2026?

What are the pricing and the take rate trends? The second is about our costs.

What will be the trend of cost structure, including selling and marketing, COGS, and G&A in the third quarter and second half this year? What will be the margin trend of core OTA ahead?

Thank you.

Thank you for the questions, Brian. The first question, as we mentioned earlier, the travel industry experienced some demand softness during the summer holiday, mainly due to the extreme weather conditions.

Taking into account the current environment, we expect that the growth of our core OTA business in quarter three to moderate from quarter two. For accommodation business, we expect the room nights sold to face some near-term pressure year-over-year, mainly due to the impact of extreme weather on travel demand.

However, the ADR is expected to be supported by a favorable shift in hotel mix, with room nights sold for three-star or above hotel continue to grow. Our blended take rate is also expected to benefit from further optimization of our marketing strategies and more efficient user subsidy allocations.

For our transportation business, we expect the revenue continue to see some near-term headwinds year-over-year, primarily due to compliance-related adjustments to our train ticketing business. Air ticket volume is expected to recover in quarter three, and our blended take rate is expected to trend positively, supported by deeper cross-selling of short- and medium-haul transportation services.

For our other business, we expect the revenue in quarter three to grow at a similar pace to quarter two, mainly driven by the strong growth momentum of our hotel management business. As for the fourth quarter, it is still too early for us to have clear visibility.

However, given the softer travel demand during the summer holiday due to extreme weather conditions, we see potential for some of the deferred travel demand to be released during the upcoming National Day holiday. In terms of the cost structure and the profitability trends, in the second quarter, against a more challenging marketing backdrop, we responded proactively by implementing an organizational restructuring to further streamline our operations and improve execution efficiency.

While this resulted in a one-off expenses of approximately RMB58 million, which temporarily increased the combined ratio of our service development and general administrative expenses to revenue rate to 17.5% in quarter two, our underlying cost structure continued to improve. Excluding this one-off expenses, the combined ratio of service development and G&A expenses would have been 16.4%, our adjusted net profit in quarter two would have been 18.2%.

As this restructuring costs are non-recurring, we expect that the combined ratio of service development and general and administrative expenses to benefit from the absence of these costs from quarter three onward. However, we will continue to make disciplined marketing investments to support the business growth.

For the second half of 2026, we will continue to optimize operating efficiency, deepening the application of AI technologies across our business, and further refine our marketing investment allocation to support stable profitability. Thank you for the question.

Thank you.

Sure. Hi, good evening, management.

Thank you for taking my questions. First, I want to follow up on the easing of fuel surcharges in early August.

After that change, how do you view the outlook for outbound travel demand for the rest of the year, and has this changed your outbound strategy in any way? Second, this year, the OTA industry has experienced some regulatory adjustments.

Looking ahead into the second half this year and next year, do we see any areas that might get additional regulatory attention? Also, how do we assess the industry's [unclear] adjustments in the first half?

Thank you.

Thank you, Wei Xiong, for your questions. In terms of outbound travel, while higher fuel surcharges created the headwinds for overall travel demand, as we mentioned, during the second quarter, our international business remained resilient, with users generally adjusting their destination choices rather than canceling their trips altogether.

We continued to see healthy demand across short- and medium-haul destinations, including South Korea, Malaysia, Thailand, Singapore, Hong Kong, and Macau. Our international air ticketing business continued to deliver strong revenue growth, supported by our differentiated value proposition of competitive pricing and high-quality service, as well as target destination marketing campaigns.

Meanwhile, as we mentioned in the prepared remarks, our international accommodation business remained exceptional growth, with our international room nights sold increasing by more than 50% year-over-year, thanks to our successful execution of cross-selling strategy. Looking into the second half of this year, we are encouraged by the easing of fuel surcharges since early August.

While it is still early to assess the full impact, we believe the lower airfares should help gradually improve outbound travel demand. In terms of strategy, I shall say there has been no change.

We'll continue to optimize our product offerings and marketing initiatives in line with evolving travel demand, while further strengthen cross-selling between outbound transportation and accommodation products. At the same time, we'll remain focused on enhancing the quality of our growth through disciplined marketing investments and strong operational efficiency.

The contribution from outbound business to our core OTA revenue continued to increase steadily. We expect that outbound revenue contribution to increase to around 9% at the end of this year, supported by growing business volume and expanding user base, and improving operational leverage.

Overall, we expect international business to continue expanding in scale, and become an increasingly meaningful contribution to our revenue. In terms of the question about regulatory environment, well, we believe the regulatory compliance will always remain an important focus for us and other market players.

We did not see any material change to our business strategy or day-to-day operations. Tongcheng has always been committed to operating in full compliance with applicable laws and regulations.

We will continue to strengthen our platform governance, enhance consumer protection, and maintain a fair and healthy marketplace for users and business partners. Looking ahead, we believe the industry will increasingly compete on service quality, user experience, and operational capabilities.

With our strong execution, differentiated positioning in the mass market, and continuous investment in technology, we are well positioned to capture long-term growth opportunity in China's travel industry. Thank you.

Thanks for the opportunity, and congratulations on the solid results. I have two questions all regarding the accommodation business.

The first one is that we observed that Tongcheng's ADR has outperformed the broader industry for several consecutive quarters. How do you view the industry ADR outlook for the second half of this year, and do you expect Tongcheng to continue outperforming the market?

My second question is that we noticed that some OTA industry peers are adjusting their hotel traffic distribution system. Will this kind of adjustment bring any changes to Tongcheng's hotel take rate, and whether it will change Tongcheng's future hotel supply or supply chain partner strategy?

Thank you.

Thank you for the questions, Liu Yang. First, let's talk about the ADR.

The industry ADR started the second quarter on a very solid footing, supported by a very resilient travel demand in April. However, as we mentioned, following the sharp increase in fuel surcharges from May onwards, higher airfares weighed on long-haul travel demand, resulting in a noticeable moderation in industry ADR growth during May and June.

While on our platform, the ADR continued to outperform the broader industry, primarily driven by ongoing improvements in our hotel mix and continued user upgrades toward high-quality accommodation. The proportion of three-star and above hotel room nights on our platform increased by approximately 3 percentage points year-over-year in the second quarter, the same pace as the first quarter, supporting continued healthy growth in our ADR.

In addition, we remained disciplined in our marketing investments, and continued to optimize our operations. These initiatives have enabled us to maintain healthy take rates while driving sustainable business growth in our accommodation segment.

Overall, we believe our differentiated positioning and disciplined execution and continued consumer upgrades will enable us to sustain ADR outperformance versus the broader industry. Based on these trends, we expect ADR improvement to remain as supportive factor for our accommodation revenue growth over the coming quarters.

In terms of the take rates, actually, based on our current assessment, we have not observed any material impact from the new traffic distribution system and the commission mechanisms on our hotel operations, and user traffic, or financial performance. Our cooperation with the strategic partners remains stable.

We have always been committed to complying and fair cooperation, and continue to work closely with our hotel partners to create long-term value and support sustainable growth for all parties. Also, we'll continue to monitor the implementation and any broader industry developments, but based on what we have seen to date, we do not expect the change to have a meaningful impact on our business and the take rate from accommodation business.

Thank you for the questions.

Hi, good evening management. Congrats on the solid set of results, and thank you for the question opportunity.

I just got one question here. Could you share the latest progress of your collaboration with Weixin's AI assistant?

What are your expectations for the partnership and its potential contribution over the longer term? Thank you.

Thank you for the question. Our collaboration with Weixin's AI assistant, Xiao Wei, is progressing well.

As one of the first online travel platforms to participate in the pilot program, we complete the initial integration during the second quarter, and have now entered the testing and continuous optimization phase. At this stage, Xiao Wei itself remains in the pilot phase.

Our current focus is therefore not on driving near-term traffic, but on working closely with Tencent to explore how AI can better understand user travel intentions, retrieve relevant content, facilitate service invocation, and ultimately support transaction completion within the Weixin ecosystem. Looking ahead, we believe AI assistant has the potential to become an important intelligent traffic entry point within the Weixin ecosystem, as it evolve from the information retrieval to task execution.

Backed by our long-standing strategic partnership with Tencent, we believe Tongcheng is well positioned to participate in this evolving AI ecosystem. As technology and user adoption continue to mature, we expect this collaboration to create new opportunities for user acquisition, user engagement, and transaction conversion over the long term.

Thank you.

Hi, thanks for picking my questions. I just have one small questions.

In relation to your hotel management business, you have gave some hotel numbers on the pipeline, etc. Can you perhaps further elaborate a bit more on the revenue and the profitability of the business, your expectation going forward?

I also remember you mentioned briefly about your overseas expansions for this hotel management business. Can you perhaps share a bit more color on that front as well?

Thank you.

Thank you for the question. In terms of the hotel management business, our hotel management business remains one of the company's key growth drivers.

Going forward, our strategy will focus on complementary development of Elong Hotel Technology and Wanda Hotels and Resorts. For Elong Hotel Technology, we will continue to prioritize high-quality network expansion, with a strategic focus on well-recognized hotel brands.

At the same time, we will further strengthen our technology capabilities by providing a comprehensive suite of AI-enabled digital solutions to improve the hotel operating efficiency and enhance hotel performance. We'll also continue to optimize our membership ecosystem and elevate the guest experience through smart technologies, further enhancing the customer loyalty and hotel operating efficiency.

For Wanda Hotels and Resorts, our focus is on strengthening our leadership in upscale and luxury hotel segments. Building on our recent milestone of 300 opened hotels, we'll continue to accelerate our expansion in China, while broadening the international growth opportunity.

Beside, we are also replicating our successful integrated resort models, such as our flagship Changbai Mountain Resort, across new destinations to drive high-quality growth. Internationally, following on our recent additions in Southeast Asia and our debut in Africa, we are building a strategic network in many global markets.

On the digital front, our strategic integration with Tongcheng has resharpened our technology foundation, positioning us to further drive efficiency and enhance guest experience. By consistently delivering high-quality products and services, we aim to expand our market presence, strengthen our brand influence, and build Wanda into a leading Chinese premium hotel brand with growing global recognition.

Another strategic priority is to further strengthen our membership ecosystem. Supported by more than 35 million eLong Club members and approximately 24 million Wanda Club members, we have built a strong membership foundation spanning both mass and premium segments.

Going forward, we will continue leveraging both loyalty programs alongside our OTA platform to drive higher direct booking penetration, strengthen customer loyalty, and improve traffic conversion across our hotel network. Looking ahead, Elong Hotel Technology and Wanda Hotels and Resorts will enable us to offer a comprehensive hotel management platform that creates great value for hotel owners, and strengthen our long-term competitiveness.

Thank you.

Thank you. We're concluding the call now.

If you wish to check out our presentation and other financial information, please visit the IR section of our company website. Thank you and see you next quarter.