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United States securities and exchange commission logo
September 14, 2022
Cindy Xiaofan Wang
Chief Financial Officer
Trip.com Group Limited
968 Jin Zhong Road
Shanghai 200335
People s Republic of China
Re: Trip.com Group
Limited
Form 20-F for the
Fiscal Year Ended December 31, 2021
Filed April 27,
2022
File No. 001-33853
Dear Ms. Wang:
We have reviewed your filing and have the following comments. In
some of our
comments, we may ask you to provide us with information so we may better
understand your
disclosure.
Please respond to these comments within ten business days by
providing the requested
information or advise us as soon as possible when you will respond. If
you do not believe our
comments apply to your facts and circumstances, please tell us why in
your response.
After reviewing your
response to these comments, we may have additional comments.
Form 20-F for the Fiscal Year Ended December 31, 2021
Item 3. Key Information, page 5
1. Please disclose
prominently that your VIE structure involves unique risks to investors. If
true, disclose that
these contracts have not been tested in court. Explain whether the VIE
structure is used to
provide investors with exposure to foreign investment in China-based
companies where Chinese
law prohibits direct foreign investment in the operating
companies. Your
disclosure should acknowledge that Chinese regulatory authorities could
disallow this
structure, which would likely result in a material change in your operations
and/or a material
change in the value of the securities you are registering for sale,
including that it could
cause the value of such securities to significantly decline or become
worthless. Provide a
cross-reference to your detailed discussion of risks facing the
company and the
offering as a result of this structure. Supplementally provide us with
your proposed revised
disclosure.
Cindy Xiaofan Wang
FirstName LastNameCindy
Trip.com Group Limited Xiaofan Wang
Comapany 14,
September NameTrip.com
2022 Group Limited
September
Page 2 14, 2022 Page 2
FirstName LastName
2. Your disclosure about the legal and operational risks associated with
being based in or
having the majority of the company s operations in China should make
clear that these
risks could result in a material change in your operations and/or the
value of the securities
you are registering for sale or could significantly limit or
completely hinder your ability to
offer or continue to offer securities to investors and cause the value
of such securities to
significantly decline or be worthless. This disclosure should also
address how recent
statements and regulatory actions by China s government, such as
those related to the use
of variable interest entities and data security or anti-monopoly
concerns, have or may
impact the company s ability to conduct its business, accept foreign
investments, or list on
a U.S. or other foreign exchange. Finally, please disclose whether
your auditor is subject
to the determinations announced by the PCAOB on December 16, 2021;
whether and how
the Holding Foreign Companies Accountable Act, Accelerating HFCAA, if
enacted, and
related regulations do and will affect your company; that trading in
your securities may be
prohibited under the HFCAA and Accelerating HFCAA, if enacted, if the
PCAOB
determines that it cannot inspect or investigate completely your
auditor, and that as a
result an exchange may determine to delist your securities.
Supplementally provide us
with your proposed revised disclosure.
3. Please revise Item 3, including the risk factors, to state that you
have been included on the
conclusive list of issuers identified under the HFCAA on our website,
and acknowledge
the ramifications of such identification, including volatility in the
trading price of your
common stock. Supplementally provide us with your proposed revised
disclosure.
4. Clearly disclose how you will refer to the holding company,
subsidiaries, and VIEs when
providing the disclosure throughout the document so that it is clear
to investors which
entity the disclosure is referencing and which subsidiaries or
entities are conducting the
business operations. Refrain from using terms such as we or
our when describing
activities or functions of a VIE. For example, disclose, if true, that
your subsidiaries
and/or the VIE conduct operations in China, that the VIE is
consolidated for accounting
purposes but is not an entity in which you own equity, and that the
holding company does
not conduct operations. Supplementally provide us with your proposed
revised disclosure.
5. We note your carve-out of Hong Kong and Macau in your definition of
China and the
PRC . Please clarify that the legal and operational risks
associated with operating in
China also apply to operations in Hong Kong and Macau. Revise to
clarify which of your
entities are domiciled in or have operations in Hong Kong and/or
Macau, and discuss the
applicable laws and regulations in Hong Kong and/or Macau, as
applicable, as well as the
related risks and consequences. Supplementally provide us with your
proposed revised
disclosure.
6. Please amend your disclosure here and in the summary risk factors and
risk factors
sections to state that, to the extent cash in the business is in the
PRC or a PRC entity, the
funds may not be available to fund operations or for other use outside
of the PRC due to
interventions in or the imposition of restrictions and limitations on
the ability of you, your
subsidiaries, or the consolidated VIEs by the PRC government to
transfer cash. Please
Cindy Xiaofan Wang
FirstName LastNameCindy
Trip.com Group Limited Xiaofan Wang
Comapany 14,
September NameTrip.com
2022 Group Limited
September
Page 3 14, 2022 Page 3
FirstName LastName
provide cross-references to these other discussions. Supplementally
provide us with your
proposed revised disclosure.
7. To the extent you have cash management policies that dictate how funds
are transferred
between you, your subsidiaries, the consolidated VIEs or investors,
summarize the
policies and disclose the source of such policies (e.g., whether they
are contractual in
nature, pursuant to regulations, etc.); alternatively, state that you
have no such cash
management policies that dictate how funds are transferred.
Supplementally provide us
with your proposed revised disclosure.
8. Disclose clearly that the company uses a structure that involves a VIE
based in China and
what that entails, and provide early in the summary a diagram of the
company s corporate
structure, identifying the person or entity that owns the equity in
each depicted entity. The
diagram should not use solid lines to denote relationships with the
VIE; instead, with
respect to relationships with the VIE, it should use dashed lines
without arrows. Disclose
the uncertainties regarding the status of the rights of the Cayman
Islands holding company
with respect to its contractual arrangements with the VIE, its
founders and owners, and
the challenges the company may face enforcing these contractual
agreements due to legal
uncertainties and jurisdictional limits. Supplementally provide us
with your proposed
revised disclosure.
9. We note your disclosure that the Cayman Islands holding company
controls and receives
the economic benefits of the VIE s business operations through
contractual agreements
between the VIE and your Wholly Foreign-Owned Enterprise (WFOE) and
that those
agreements are designed to provide your WFOE with the power, rights,
and obligations
equivalent in all material respects to those it would possess as the
principal equity holder
of the VIE. We also note your disclosure that the Cayman Islands
holding company is the
primary beneficiary of the VIE. However, neither the investors in the
holding company
nor the holding company itself have an equity ownership in, direct
foreign investment in,
or control of, through such ownership or investment, the VIE.
Accordingly, throughout
your filing please refrain from implying that the contractual
agreements are equivalent to
equity ownership in the business of the VIE. Any references to control
or benefits that
accrue to you because of the VIE should be limited to a clear
description of the conditions
you have satisfied for consolidation of the VIE under U.S. GAAP.
Additionally, your
disclosure should clarify that you are the primary beneficiary of the
VIE for accounting
purposes. Supplementally provide us with your proposed revised
disclosure.
10. In your summary of risk factors, describe the significant regulatory,
liquidity, and
enforcement risks with cross-references to the more detailed
discussion of these risks in
the Risk Factors section. For example, specifically discuss risks
arising from the legal
system in China, including risks and uncertainties regarding the
enforcement of laws and
that rules and regulations in China can change quickly with little
advance notice; and the
risk that the Chinese government may intervene or influence your
operations at any time,
or may exert more control over offerings conducted overseas and/or
foreign investment in
China-based issuers, which could result in a material change in your
operations and/or the
Cindy Xiaofan Wang
FirstName LastNameCindy
Trip.com Group Limited Xiaofan Wang
Comapany 14,
September NameTrip.com
2022 Group Limited
September
Page 4 14, 2022 Page 4
FirstName LastName
value of your securities. Acknowledge any risks that any actions by
the Chinese
government to exert more oversight and control over offerings that are
conducted overseas
and/or foreign investment in China-based issuers could significantly
limit or completely
hinder your ability to offer or continue to offer securities to
investors and cause the value
of such securities to significantly decline or be worthless.
Additionally, each summary
risk factor should have a cross-reference to the relevant individual
detailed risk factor.
Supplementally provide us with your proposed revised disclosure.
11. Please remove the materiality qualifier in regards to the permissions
and approvals that
you are required to receive (see, for example, page 7). Revise this
section and elsewhere
in the filing as appropriate to discuss required permissions and
approvals, as opposed to
"licenses and permits." Revise your disclosure to address whether you
are required to
obtain permissions or approvals from the CSRC or CAC to operate your
business or list
your securities. Also describe the consequences to you and your
investors if you, your
subsidiaries, or the VIEs: (i) do not receive or maintain such
permissions or approvals, (ii)
inadvertently conclude that such permissions or approvals are not
required, or (iii)
applicable laws, regulations, or interpretations change and you are
required to obtain such
permissions or approvals in the future. Disclose whether or not you
relied on the opinion
of counsel in determining whether you have received all required
permissions and
approvals; if you did not, disclose why and on what basis you made the
determination that
you have or have not received all required permissions and approvals.
Expand this section
to address required approvals in Hong Kong and/or Macau.
Supplementally provide us
with your proposed revised disclosure.
12. Revise the second risk facor on page 46 to acknowledge the risk, given
recent statements
by the Chinese government indicating an intent to exert more oversight
and control over
offerings that are conducted overseas and/or foreign investment in
China-based
issuers, that any such action could significantly limit or completely
hinder your ability to
offer or continue to offer securities to investors and cause the value
of such securities to
significantly decline or be worthless. Supplementally provide us with
your proposed
revised disclosure.
Item 5. Operating and Financial Review and Prospects
B. Liquidity and Capital Resources
Liquidity , page 104
13. The disclosure in regard to net cash provided by/used in operating
activities appears to
repeat information already provided in the statement of cash flows of
how operating cash
flow was derived for a period. Please provide a quantitative and
qualitative analysis of the
change in operating cash flows between periods, including the material
reason(s)
underlying the change. Please note that merely citing changes in
results, working capital
items and noncash items reported in the statement of cash flows may
not provide a
sufficient basis to understand changes in operating cash between
periods. Refer to Item 5
of Form 20-F, in particular instruction 9 to instructions to Item 5,
section III.D of Release
Cindy Xiaofan Wang
FirstName LastNameCindy
Trip.com Group Limited Xiaofan Wang
Comapany 14,
September NameTrip.com
2022 Group Limited
September
Page 5 14, 2022 Page 5
FirstName LastName
No. 33-6835, section IV.B.1 of Release No. 33-8350 and Release No.
33-10890 for
guidance.
Notes to the Consolidated Financial Statements
Note 2. Principal Accounting Policies
Revenue Recognition
Accommodation reservation services, page F-23
14. You disclose here you have no obligation for cancelled hotel
reservations and
commissions from hotel reservation services rendered are recognized
when the reservation
becomes noncancellable. Please clarify for us and in your disclosure
the circumstances in
which reservations may be cancelled if revenue cannot be recognized
until the reservation
is noncancellable. Clarify when reservations are considered to be
noncancellable.
Transportation ticketing services, page F-23
15. You disclose here you have no obligation for cancelled airline ticket
reservations and
losses due to obligations for cancelled ticket reservations are
minimal. Please clarify for
us and in your disclosure the circumstances in which you would
recognize a loss for
cancelled reservations when you have no obligation for such. Clarify
when you consider
reservations to be noncancellable.
16. You disclose you received a "significant" volume of requests for order
cancellations and
refunds in fiscal 2020 connected with the COVID-19 pandemic but that
the amount of the
associated reversal of commission revenue was not material. Please
tell us the amount of
revenue that was reversed. Also, tell us why revenue was reversed if
revenue is only
recognized when the reservation is noncancellable.
Allowance for expected credit losses, page F-24
17. You disclose for fiscal 2020 you facilitated and processed a
significant volume of
reservation cancellation requests from end users due to the COVID-19
pandemic, causing
a significant increase of the accounts receivables due from the
customers (i.e. the travel
suppliers) due to the fact that you paid the refunds to the end users
on behalf of your
customers for which you expected to be reimbursed by your customers.
Please explain to
us why you paid the refunds to end users when you disclose you have no
obligation for
cancelled reservations.
Packaged tours, page F-24
18. You disclose the majority of your packaged-tour products and services
revenues are
recognized on a net basis during the years ended December 31, 2019,
2020 and 2021.
Please tell us and disclose as appropriate the percentage of revenue
represented by
"majority."
Cost of revenues, page F-25
Cindy Xiaofan Wang
Trip.com Group Limited
September 14, 2022
Page 6
19. You disclose cost of revenues includes the direct cost of expenses
incurred by your
transaction and service platform which are directly attributable to
the rendering of your
travel related services. You disclose in "Product development" these
expenses include
expenses to maintain, monitor and manage your transaction and service
platform. Please
clarify for us and in your disclosure which platform costs are
recorded as cost of revenues
and product development and how you distinguish the proper
classification of the
expenses.
General
20. Please amend throughout your filing to refer to the variable interest
entities as VIEs
rather than consolidated affiliated Chinese entities. You
currently refer to them by both
terms, which may be confusing to investors. Supplementally provide us
with your
proposed revised disclosure.
We remind you that the company and its management are responsible for
the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action
or absence of
action by the staff.
You may contact Stephen Kim at 202-551-3291 or Doug Jones at
202-551-3309 if you
have questions regarding comments on the financial statements and related
matters. Please
contact Ryan Lichtenfels at 202-551-4457 or Lilyanna Peyser at 202-551-3222
with any other
questions.
FirstName LastNameCindy Xiaofan Wang Sincerely,
Comapany NameTrip.com Group Limited
Division of
Corporation Finance
September 14, 2022 Page 6 Office of Trade
& Services
FirstName LastName