GreenTree Hospitality (GHG) 25 Jun 242024 Q1 Earnings call transcript

Good day, and welcome to the GreenTree Hospitality Group First Quarter 2024 Financial Results Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Rene Vanguestaine. Please go ahead.

Thank you, Betsy. Hello, everyone, and thank you for joining us. GreenTree's earnings release was distributed earlier today and is available on our IR website at ir.998.com as well as on PR Newswire services.

also the PowerPoint same we our that reminder, to comments IR a posted presentation a accompanies As website.

Financial Q&A Ms. On will Ms. Mr. then the Director. discuss Yang, Mr. Officer; company's present ], Alex are the financials Ms. overview Chief Selina Xu, first of which Chairman Xu quarter Ellen call and Chief Financial from Zhao Officer; and questions will performance session, to GreenTree XXXX, and the [ will your guidance. Zhao They be for the Ms. available answer Yang and follows. and Executive during

are achievements those predict which in many and forward-looking to management's market of statements. to which the to from beyond Act Before performance including continue, statements and difficult of within the not by I'd to plans, the as and may that U.S. industry, are expectations as forward-looking Private company based may, defined involve about be cause this control, future, known of Such is that events statements. expects, and uncertainties Reform all the going statements. Any that terminology the company's statements are statements current confident, current upon statements target, Section believes, to, or risks, and statements such are we of Act identified begin, and differ of and of intends, operating in XXE the remind conditions XXXX. anticipates, company's call likely you are other actual forward, factors, Litigation meaning Securities aims, which forward-looking relate Securities forward-looking will, amended its estimates, the results, like as similar contains Exchange conference historical materially facts, can or and These unknown and outlook are XXXX

company and are as other Exchange with these included You these Securities place statements. including provided, the the company's in does is new Executive or Commission. All introduce information, update made obligation my Mr. to the required filing applicable and our should Xu, or during law. It forward-looking pleasure go and Further Xu. a ahead. The information events current reliance date. is undue any of Chairman otherwise, uncertainties conference to Officer, Mr. statement U.S. forward-looking not risks, statements call, today's except forward-looking not result under regarding as on now undertake as information of factors future any Alex please this Chief

and and revenue hotel further and hotels. We we our metrics in increases everyone, Hello, increase expanded businesses completing deliver with the portion improve as robust we Rene. restaurant new while thank increase substantial grow will significant were us we our the progress managed EBITDA. the mixed franchisees our some improvements more number street hotels in Thanks, as on year-over-year these further a XX.X% network, consumer more both joining upgrading net environment, a to behavior delivered operating in of a continuously are in large Against portfolio. this continues our with Conditions for incomes. in to in today. Overall, first evolve quarter our scenario, of we you competitive an We profitability. business business absolute are and an open hotel of adjusted stores. in repositioning upgrades X.X% We made our believe as we focus

traffic regional We to centers shopping to of restaurants our the have our closures supermarket-anchored stores. completed in the due foot less

ADS, on the and X.X% with revenues million continued X. X,XXX, RevPAR attributable down store forward of of million, Hotel X.X%. revenue the down recovery XXX in focused L&O down turn XXX.X we reposition per That's shows XX.X%. Slide strong completed XX.X%. was a the income and to margin execute growth, operating from XX.X strategy were our this business. Income daily that's our XX% a L&O XXXX, margin We in with RMB quarter That's X.X% was hotel the shows have was with million on where Slide store, XXX. RMB count regions was up Compared are brand XX.X to with to income by from compared reached and our income quarterly increased our RevPAR XX.X hotels XX.X% adjusted in EBITDA. Slide a RMB operations X RMB revenues, non-GAAP quarter first numbers Net phase for strategy restaurant have RMB operations, EBITDA, total Adjusted this performance RMB million, the to up revenue million. trend to XXX.X now recognition. Please to RMB of decreased XX.X%. RevPAR of year sales detailed increased our X.X%. of first again net that's as and to margin average X.X% Total RMB restaurant a to hotels for XXX.X RMB the we in a million. that's ago. up X

L&O Individual our X% million, ago, the of to across X Occupancy million, RMB from hotels X.X% year-over-year X X,XXX, XXX. XX our RMB X.X% with X.X% business, L&O further to to upscale and grew hotels hotels our increased due most million corporate for the F&M expanded penetration hotels performance the to decreased which XX.X% year membership mid restaurants down to up in million results operating of up hotel and will execution in grew we cities accounted but our programs, segment of from our I XX.X%. Slide F&M our seasonality. Starting shows and XXX. XX in direct for a mainly highlights and sequentially. the Tier lower at at and by our membership to increased our by F&M for China. X with ADS RMB memberships occupancy ago. Slide strategic the our year XX. X.XX X.X% growth our up sales. In That's X.XX a Slide the South at businesses. to review to by However, in to decreased increased by X.X% ADR RMB hotels ADR by XXX RevPAR increased for

can total end the to As we XX, continue of XXX XX.X% to the mid Slide quarter. upscale at see with you segment portfolio grow our of hotels, that's on our

the mid-scale hotel to segment turn our While the ended XX. at XX.X%. Please business remains the the economy XX.X%, core Slide quarter of at segment

We of expand capitalize current restaurant increasing substantial the and in on locations. On hotels and Tier lower X of we such such continued profitability XX, to on further and are XX.X% our and businesses. our the will cities to in pipeline continued the in focus cities we opportunities Slide

of X-pronged, proportion XX.X% compared Stores year is at to quarter XX.X% F&M Street strategy increase XX% managed restaurants a stores and close the compared stores. and the ago, end for and XX.X% year Franchised for expand L&O of Our accounted street stores number accounted of a unprofitable to the the ago.

and the highlights. Selina and Zhao review our will Next, Ellen financial operating Yang

million. primarily you, increase expenses by which the XXXX. first improvement marketing turn total costs million was In L&O hotels X.X% The in XX. was year. mainly bad first mainly increase to of year-over-year increased the increase XX.X more higher quarter Slide sales X.X% to to XXX.X of in to RMB F&M numbers. hotels due to year Thank opened compared the the decrease was to quarter, revenues hotels hotel XX.X% hotels. Selling and business Alex. Please million decrease F&M to resulting X.X% continued were million. On with in of X.X due last higher the over the hotels RevPAR. development L&O RMB XX.X the million, and total the in RevPAR, to offset due of personnel due compared quarter L&O and increased year, attributable XXX.X over were administrative Total newly RMB reversal and million, same for That's hotel rental The receivable. RevPAR, number year accounts the decreased to of costs decrease hotels hotels million. operating XXX.X costs expenses costs utilities operating expenses increase to L&O in revenues increased costs, improvement while and RMB a from year from and in to hotel L&O million, XX.X% F&M General operating the were the XX, Among due over to mainly debt hotels down year of year, Total RMB and RMB Slide XXX.X XXX.X up revenues total RMB XX.X% RMB

and and costs to to in Turning Slide of growth revenues XX. the Thanks expenses. control

million the profitability from RMB XX XX XXX.X last Our RMB to was over from first in year quarter RMB million XX.X and XX.X quarter. first million, million million hotel of increased XX year. improved from of Income RMB the income to year XX.X% hotel business increased million compared million year. operations over increased RMB RMB Adjusted to to net in RMB XX year. core hotels its Net income EBITDA

me turn of Director Ellen, to let the Financial call our business. restaurant over the Next,

year on restaurant core year RMB loss million, to opening and XX.X to million to and costs X.X year. over continued Income we restaurant restaurant these Slide restaurant RMB stores. net L&O was over revenues measures income the XX.X% turned year. Net RMB from and led our increased total breakeven. operations X.X% XX, XX. profitability. stores Adjusted decreased managed more the unprofitable In Slide profit quarter, Please million. business, year X.X turn down improved franchised over EBITDA to to million. And were XX.X expenses to Total closing XX.X% RMB from year reposition and the first And

review group. of will our Selina Next, the profitability

ADS, restaurant income non-GAAP, segment Please XX.X% in to stable and hotel the net core RMB the turn and in continuous increased income basic by per performance that's to per increased and Slide segment, growth X.XX. to that's XX.X% ADS, basic group by diluted, RMB the Thanks net XX. our of to revenue better and X.XX diluted

Slide at look a take now Let's XX.

in the our for cash we of in XX, equity X,XXX.X down investments months Slide we As X,XXX.X increase and franchisees. On X total mainly time of restricted our due was and based of year, drawing quarter to of cash, securities to this bank our speaking. grow end as and first the to operating previous year-over-year company continued the last first guidance compared on hotel revenue repayment equivalents, RMB XX% investments, of deposits expect improvement to the million of maintained RMB the facilities XX, The from that performance, X% had business performance cash million March XXXX, year. short-term in

We restaurant begin from to Operator, the now the our significant are are given revenue ready guidance Q&A unpredictability concludes Thank resulting for withdrawing the we you. repositioning. This session. prepared our business, remarks. strategic

Nan Fang comes [ Capital. with The We will [Operator ] QX question begin now question-and-answer today the Instructions] session. from first

on is Does the dividend our about The can you future? And elaborate question one GreenTree? distribute to restaurant what's second the is, dividend on the policy plan the company first have strategy special opening? the in of

Okay. this good X Selina. question, questions. the I'll Appreciate for take

while. dividend suspended the the a continued pandemic to policy for dividend, policy, due the we dividend Regarding impact, actually

think I after we lift make policy have continued dividend but discussion, Now the the continue next dividend the this, to announcement with we'll internal what planned discussed quarter, we of regarding policy like our and before, the and year second pandemic, we had made resumption. an

special the the our growth. buyback to Regarding like evaluate our shareholders' business to the addition to we always also also for position extent in practices. possible, sound dividend, cash needs would we share value the more and and have enhance dividend will to investment And

and to restaurant is to Then, we that second business the brand standard quarter, the local growth what to hotels. competitive landscape. our high-efficient expertise we generate combine the your is have and with can we discussion, number return for yet is a Okay. better it, franchised we've the the restaurant internal after doing quarter. restaurant the local and of quarter year, business resources, with regard second and balance we'll last therefore, much and of our our trend strength complete the of the see for been And some That franchisees' recognition first improved, in system operating the and versus the of our in but more can model, openings being question, and

year-end. I XX will And more so, the restaurant by to we XX plan think, open, new to

become is total business of this the at by as on that's building size should more restaurant profitability answered or and So we restaurant add sound your I we explore couple business the roughly the a and year foundation, than model bit are and each business we're the shrinking And that restaurant emphasized, plus like point. space another to Nan, moment. make question. the in the to actually restaurant of think focusing The smaller is ADS important the little because of on deploying our the minuses. I will smaller was the efficient. teams end restaurants. And size the so and think, the restaurant a one scale store XXX further would reason size to down, And opening operating I hope, more I

okay? so, restaurant ADS I that's X-point-percent like So somewhat think is the reason down another or

comes next The from UBS. question Betty with [ Du ]

the My question business. hotel is regarding

economy, the there downtrading how does upper company's any affect As RevPAR? there are mid-scale is an and travel, divergence in segments? between this And consumption obvious among trend mid-scale

rephrase, Okay. quarter, that because bit. for second me little ask Betty, let trending you the the missed RevPAR did I a

impact Yes. segments? hotel what's and RevPAR between trends especially different on segments, of Basically regarding the downtrading, there's economy the RevPAR, upper whether consumer mid-scale and

Okay.

segment, I'll second trending observed that on the same our the Selina. trend Regarding quarter. first regarding But quarter, our RevPAR the down is we the second as leave rate quarter down the to RevPAR for at trending

caused first for of upgrade. RevPAR part or upgrade, substantial we in are in we X the being taken through semi-operation months hotels to quarter, our typically a going go drop. through that the waiver drop The to reduction our large to hotels out gave receive upgrade also by have is analyzed year the X find number fee We the of our RevPAR of and

affected RevPAR occupancy as global affects and therefore, the So, our it well.

the second pandemic. hotel to quarter to number hotels because continue of be because we a we'll upgrades So, the years substantial of X needs do the of upgraded have

so, upgrading that process, our accelerating RevPAR. the And will we're reduce and

lower the trending Selina. the expect RevPAR to segment or which with at first upscale leave we I'll that scales quarter. And And or mid down mid to similar to regard down, our trending so, rate scales

And for than the we compare for total takes scale company, our the is the growth last will the example, for middle hotels. largest by of with economy segment year, our is second indicator the okay, indicator, the our used year-over-year segment ratio quarter basically, we followed the of find, portion rate in better If best, mid-to-upscale, economy the portfolio. we as

impact So, our that maybe I think has on an performance. total

with Alpha [Operator Sachs. Instructions] The Wang comes from next question Goldman

questions, may. X if have I I

unchanged. one year-on-year, to-date is, down and quarter the first slightly The in RevPAR our just maintained you guidance quarter we full-year has given been second mentioned but first revenue

full-year give full-year drivers to the So, sense we're achieve of revenue a us could looking at? what the you are what RevPAR And guidance?

is the even in though than existing add also together second with existing hotels and new down a in L&O good-performing the revenue RevPAR hotel RevPAR. RevPAR though hotels new And that the drop also the for Even hotels the the hotels first hotels. we and have very the revenue of L&O revenue makeup more the F&M of portfolio, loss our consists the total for hotels, and increased the addition, also trending quarter, in some adding existing

revenue So, and so will our increase to the XX% our L&O according about XX%. or hotels F&M new to That's analysis.

blended X% increase So, I'm to taking down the using arriving RevPAR decrease, so numbers, XX% revenue together, year. for them to you the ballpark

some For certain brand instance, already new of hotels, the have we boutique excellent regions. performing our in introduced F&M

X,XXX a the the in X,XXX region in RMB in high per entire RMB brand per season of low one a part, day. of RevPAR newer instance, over we per became the expect For in our and have achieved Western season, room per day room star the

other side, hotels. But revenue in of XX%. are on the total the the the expected revenue increase drop those restaurants, contributing for So, to we

the anticipate we competitiveness where least increase the the groups, in dramatically. at we're operating locations restaurant previously, So, didn't

the instance, centers. For stores manage least we the observed number franchise then in of lot. area decreased those size, and to And restaurants a in and reduce we only traffic larger expanded to supermarket therefore, to We made fee. where shopping plus, we locations our restaurant and large at restaurants footprint, anchored the in exposure a have decision those collect a the large foot have regional strategic a business

in is that's revenue restaurant total XX% resulted side the So down. the for

our and total because the drag however, line increase, will bottom restaurant the enhanced. bit. group's little boost a the get and will that EBITDA down revenue combined, so a be performance profitability entire the So repositioning But

the business hope and line will build the line top both we we So, our on growth. bottom

that year, that's to So our Alpha, our answered the RevPAR revenue. the your impact for full I questions. hope,

next ] [Operator is QX [ Fang The Nan from Instructions] follow-up question a with Capital.

the about expansion your question I other a higher-end you speak little for bit segments? into have you. Can

Okay then.

mid-to-upscale increased have our segment We continuously.

are the products the of have I located of some and services, group's ADR. standard several also Eastern. impact a We improving positive on continue have desirable we such closed less continuously think And for that And both as will as that the products. we the result, systematically to brands GreenTree the a

the we also as, and Eastern, L&O hotel of instance, showcase operated most For you become and for developing area we to that GreenTree focus area, dramatically, some we because resources that and brand, on leased you the already our with larger potential branded will franchisee similar to developing that business ] regional boutique and L&O put next confident that can mid-to-upscale hotels And and combined become addition this segment hotel into we and develop we're we're developed will of quarter. And such hotels. And the I a hotels there if report are think, check our our our positive efforts to the see I concerted and portion [ that local, and you has larger is star. can the Snow reported pandemic more, mid-to-upscale the in that hope news cultural-based think, more like that after hotels segment. in the you the increased has performance have we'll in gone, think we

The question from Sachs. Alpha Goldman Wang follow-up is next with a [Operator Instructions]

could you down year? opening this by looking we hotel follow-up on another F&M, kindly are target update break of hotel versus what kind side. the L&O Then, if at targeting? is are question we provide expansion And And what of we an

XXX, managed. for we year of going like and Okay. total to are them is be I XX% reported opening planned we the think hotel Alpha, franchised last time, primarily the

few franchised couple been always hotels, hotels. very, a on but L&O our do and of and still very or And has showcase the them so, we focus managed may select

UBS. from Mee ] comes question with Bruce next The [ Instructions] [Operator

hotel regarding a the I question also openings. have

a So, new how lower-tier breakdown you please the could cities? Tier and openings? much give be how will For be will X example, in in us of much geographic cities

the yes. most XXX And to open about X cities. hotels and hotels Tier I remaining are is to the XX%, X in XX% among to about the Actually, Tier that and new cities, lower in be this opened the think to hotels X in still year, the XX% open XX% Tier

team have that build part And Northeastern. strong Southwestern add Eastern we the a we and Southeastern, space the that, in where to Southern nationwide Bruce, we of like China, to in very the enhancing the team be white have region, but China on are used the more team, also

We have added results. great members, seeing development more we're and

our So, new close continent to spread business evenly there, to of China. And across development spread XXX are after the going we the hope, is a driver hotels, the pandemic. more be evenly

and safety So, we're the historically because to efficiency benefit of membership the continue to the and businesses. our area, more the that. in company continuously margin, service and enhance addition existing want as X are to made continue to pandemic that's program, focusing best though improving some more our the a and enhance continue will contribution showcase future improve membership portfolio enhance operation profitable we our we'll hotels and We had and delivery our still ], of among technology well. other than building of strategies the the in our our hopefully increase even continued that The the on percentage [ which

line. and we all to in of to contributing the plus restaurant I continuously. and and reason answered And to have company's And earlier a combined business the the why reinstated. stronger we're that's now business, dividend grow and of have our we So, share planned buyback having think be of policy repositioning foundation the we'll as are the continuous lines with the the business also all with bottom that profitability

building growth, for we of our can enhance as that all our company that and okay? hope that, career shareholder the So both a value customers well as franchisees, stronger we employees'

This conference remarks. for concludes turn our Selina I Instructions] question-and-answer closing Yang the session. to like [Operator any over would to back

and closing, of management on team, the behalf call. your we thank Thank in your GreenTree you, entire GreenTree today's interest in In you operator. participation for

free feel have you reach If to us, contact further Thank please you. any require us. you to information Thank or plans again.

now concluded. has for attending today's presentation. you conference Thank The

You now disconnect. may