Trip.com slashes salaries for chairman, CEO to zero and halves executives’ pay as Covid-19 outbreak delivers heavy blow to travel industry
- Other executives will reduce their salary by as much as half, chief executive says in internal letter
- Global tourism could suffer US$50 billion in income loss, UN agency estimates
Trip.com Group, China’s largest online tour agency, said its top executives are taking drastic cuts to their salaries, as the global travel industry has taken a heavy blow from the global coronavirus outbreak.
The company’s Chairman James Liang Jianzhang and Chief Executive Jane Sun Jie will stop accepting a salary starting from March, while other executives of the Beijing-based company, formerly known as Ctrip.com, will halve their salaries until the travel industry recovers from the outbreak, Sun said in a staff letter that was circulated online. Trip.com’s spokesman confirmed Sun’s letter as true and accurate.
“The situation [of the coronavirus outbreak] in China has stabilised but remains uncertain globally,” Sun wrote in the staff letter. “While we stay optimistic about the future, we also have to remain rational and prepare for a long-term battle against the virus.”
Front-line employees at Trip.com’s client-facing services department are still eligible for a pay rise, but other employees will be placed under a salary freeze, Sun said.
Trip.com does not disclose the individual salaries of its senior management but said it paid its nine directors including Liang and Sun a combined US$1.7 million in cash compensation in 2018. It also paid executives excluding Liang, Sun and Vice Chairman Fan Min a combined US$1.6 million in cash, who received separate compensation as executive directors.
To contain the spread of the virus, local authorities in mainland China placed an estimated 50 million people under home quarantine, cancelled flights and imposed roadblocks between cities and provinces. As the disease began to spread overseas, other countries have taken dramatic measures as well. Italy placed up to 16 million people in its northern provinces under lockdown over the weekend.
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The global tourism industry could suffer a loss of as much as US$50 billion in international visitor spending this year, according to the World Tourism Organisation under the United Nations. In the Asia-Pacific region, international tourist arrivals could decline by 9 to 12 per cent in 2020, compared with a 5 to 6 per cent growth forecast in early January before the disease hit, the UN agency said in a statement on Thursday.
Shares of Trip.com have plunged by 24 per cent since their January 17 in New York to US$29.82 in recent trading. The company has waived cancellation fees for customers who booked flight tickets and hotel rooms before late January,
The number of customer calls Trip.com received spiked by over 10 times after the disease broke out, and the company has used its own cash to refund over 1 billion yuan (US$144 million) to customers in advance payment on behalf of airlines and other tourism service providers, Sun said in an interview with Chinese media earlier this month.
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The company had to delay its annual earnings release to March 19 from February 27 as a result of the outbreak.
“The revised date would give the company more time to observe business condition and provide visibility for the first quarter of 2020,” it said in a statement last month.
Trip.com last week launched a collaboration with hundreds of tourist destinations in China to invest 1 billion yuan in an industry fund to stimulate spending after the crisis passes.
Liang owned 2.1 per cent of Trip.com while Sun’s stake was 1.2 per cent, according to the company’s 2018 annual report.
