GreenTree Hospitality (GHG) 21 Nov 242024 Q3 Earnings call transcript

Good day and welcome to the GreenTree Hospitality Group Third Quarter 2024 Financial Results Conference Call. [Operator Instructions]

Please note today's event is being recorded. I would now like to turn the conference over to Rene Vanguestaine. Please go ahead.

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

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

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

begin, believes, amended Securities will, or Litigation confident, contains as Reform similar Securities aims, future, These terminology in of we Act this the of Private like within and statements. outlook that XXXX. the plans, Act U.S. Section such continue, you conference statements forward-looking can XXXX of by as XXE Before Exchange going call expects, forward, anticipates, defined likely as to identified to, estimates, the be target, I'd remind statements may, and meaning forward-looking intends, are is of

industry, including statements from difficult forward-looking which or the risks, performance the predict unknown differ actual company's cause expectations that factors, the may statements. involve as are historical statements not relate many events and to statements. and market to which company's to of and about current well achievements are in that and known forward-looking other facts, of all are company the its based Any are materially control, upon uncertainties and current which beyond as are Such statements management's operating conditions and those results,

is information Commission. on Securities in these Exchange place included and U.S. uncertainties not the factors regarding or undue Further should You filings company's the other and risks, with these statements. forward-looking reliance

information, not as company today's information All conference date. call, as forward-looking current this does except statements as undertake otherwise, to law. a applicable forward-looking events update under including during any any of are or of statement the future new provided, required obligation The made result

Chairman It pleasure Alex ahead. is now Chief go Xu. introduce Executive Mr. Xu, Mr and please to Officer, my our

continued joining and that to pleased everyone, our following in last upgrading thank recover. economy hotel year's improved which have to environment, more back We're a portfolio. Hello, I'm first of as hotels on and our you our quarter focusing patterns the over for normalized year-over-year Rene. influenced this across has us the to business surge, today. Thanks, report X quarters pipeline year growing the Travel comparisons. third positive numerous

the on by We are track stimulus will the confident that implemented we benefit and government. from ongoing right are the measures

for remained X of the Our consumer and with count XX.X% XXX the of had a to year. following of The positive of of second operation past stable to XX.X% consecutive of store stores at unprofitable restaurant business' franchise a net stores stabilized continued now our number compared grow quarter. we the the closing over Such traffic. stores in as at end number the restaurants quarter year for income stores ago, accounted

We growing are number. on now focusing that

XX.X% a ADS revenues with turn a XX.X%. were hotel XX.X% million, decrease million, were Adjusted Hotel to XXXX, XXX, of XX.X%, RMB revenues XXX hotels, was of closure decrease RMB margin of million a partially the decrease a of non-GAAP the RMB XX.X%. a margin Please XX.X Compared Net Slide XX.X%. was a with a new Income XX.X%, XXX.X of was operations the L&O and in due a offset from of and year-over-year XX.X%. million, by RMB openings. with Total decrease XXX.X third X. XXX.X decreased of of EBITDA to decrease of to RevPAR XX.X% RevPAR of with RMB a restaurant of RMB decrease quarter RMB mainly was million, margin XX.X%. income decrease a X,XXX,

RMB Slide quarter decreased net performance adjusted decreased to RMB and for total F&M by L&O the decreased X year increased L&O to XXX our and our XXX. Slide by ADR in RMB F&M X XX%, in X.X% quarterly by X.X% hotels shows at detailed XX.X% our operating income revenues, L&O income hotels RevPAR the hotels trend XX.X%. from XX.X% from our hotels XX.X% and RevPAR our compared occupancy EBITDA. to our shows from F&M numbers decreased RMB operations, to to ago. for to for hotels third ADR a XXX. for by X.X% Occupancy hotels decreased XXX. to for of

membership in our our to membership Slide million most X.X year grew growth grow Individual sales. up the X a ago. from ago, direct million, which of from X XX year XXX programs, accounted million up for to highlights and corporate a the million, memberships

sequentially with increased but quarter ADS to year-over-year restaurant of performance RMB operating the shows decreased X from X. Slide X,XXX

expanded Tier Slide Slide with to lower especially in cities, business, across mid- strategic the our X Starting our XX. and we will review the hotel to I in further In segment upscale our businesses. execution XX South and China. in

Tier We cities. hotels more the also added in X

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

XX.X%, higher segment continue core at mid-scale hotel we our segments. business of end remains the into While expansion our the the

ending quarter XX.X%. also continued our the grow economy at segment, We to

hotels XX. our the Both of Please in X to Tier are turn the current operations cities. in growing and pipeline Slide

going is to ensure greater On Slide it we foot sustainably traffic. to continue XX, areas restaurant turn focusing our with around profitable on forward by business that

to opened stores business completing our new F&M and We L&O model. the have strategic stores, closed transformation

XX.X% the for F&M XX.X% XX.X% and a XX.X% to year a for of compared the As year accounted ago. restaurants at result, compared stores street accounted quarter end ago, a to

operating review will highlights. Selina financial the Next, and

hotel of the a quarter quarter, L&O revenues, of decreased XXXX. hotels, to of The disposal Alex. the hotels to due decrease you, attributable were Total million the the in and to XX.X% L&O third Please mainly hotel RMB to XXX.X business. decrease from year-over-year. RMB Thank will XX.X% In revenues total first property revenues RevPAR I XX. of Slide million, third reduction XXX.X to decrease the our review was second X turn sublease closing a in the of hotels in year-over-year quarter. primarily X.X% compared

Total by X.X% hotels to in to due RevPAR, decreased XX.X% revenues new partially XXX.X from F&M decrease million. primarily RMB offset a openings.

expenses closing to RMB costs associated costs because XXX.X Slide than decreased less operating Total costs of XX, Costs X.X% L&O year-over-year. the hotels. Operating XXX.X and revenues to year-over-year decreased decreased RMB On million. X.X% hotel of with the million

million, million, marketing XX.X of RMB of expenses million were increase X.X XX of in quarter lower XX.X% expenses with a same mainly year-over-year The General long for bad debt due was RMB RMB RMB XX.X provisions to an to was expenses. aged decrease The accounts last million. year. were compared up administrative and advertising mainly and decrease Selling due increase receivables.

revenue million our decreased RMB to decrease year-over-year. to business hotel XX.X RMB Turning profitability XX. and hotel operating RMB quarter XX.X RMB costs lower of million year-over-year. was third income XX.X% million operations XXX.X compared XX.X% decreased Adjusted resulted RMB core the for in in net a The to to decreased from EBITDA XXX.X XXXX. despite million XX.X Slide Net to in million and RMB million expenses. XXX.X in decline Income from income

due to XX. the substantially of ABS our of closure quarter, better adjusted business of mentioned, business from and X.X Alex lower review to completed me let for was personnel to stores. restaurant Total business. million XX.X% due billion, Please expenses cost the turn In third decreased XX.X our Slide management as X.X of year-over-year, L&O million, Slide EBITDA mainly million. and RMB model. were RMB channel cost on sales XX% XX, to decrease strategic income Next, were Total RMB XX.X commissions. And for we restaurant transformation the RMB expenses operations revenues a year-over-year

profitability basic group. decreased X.XX. diluted XX year Next, by income compared Please by net ADS turn XX.X% loss of to exchange review That diluted million negatively RMB net net income was ADS by core ago. X.XX, a decreased XX% RMB that's foreign income and of and I basic Group to RMB non-GAAP our XX. and Group XX.X million to approximately at Slide per million. a RMB XXX.X the RMB impacted to will

take Slide at now look XX. a Let's

of company September cash cash deposits and equity and securities as RMB XX, repayments equivalents, of The in and inflow from attributable franchisees. investments had continued investments, the total operating million XXXX, to time short-term As compared June XXXX. of cash increase X,XXX.X X,XXX.X restricted mainly of million cash, was loans XX, RMB to

for our This so the business XX, hotel X% XXXX is to the performance the Slide X year our now on of decline. compared we of review year to strategic anticipate full net this far and a and On operating decrease that year end of quarter XXXX. revenue approximately quarter third based to of contributed L&O the the and in at led of closure half nearly the travel lower-than-expected third particular our hotels hotels for

are to This Thank remarks. prepared concludes Operator, ready begin the Q&A you. now our session. we

Kevin And with [indiscernible] today [ comes [Operator question Wong from ] Instructions] first Capital. our

I to I would like if have may. two,

is, compared the trend other one the you the first to of company's can The talk your third industry? about the peers? quarter in performance How does

question second even profitable turning turned about business. in business is QX that QX. the my in restaurant And the and seems better It

So QX? what you for expect do

those this Thanks Alex. Kevin, Okay. for is two questions.

higher compared like-to-like, hospitality the aged of our I the hotels, percentage hotels. we of has industry in think year, trend portfolio terms a In the have legacy for

more hotels. compared result better record that So accumulated the downward hotels opened with we newly that aged have legacy end. as in opened we a our And hotels years, more our We have RevPAR so newly hotels has during the than a XX trend the much track severe a performance of noticed impact is portfolio.

XX, October, the after observed trend. the a downward But an travel improvement have see like industry. occupancy trend the we in more and in mid-August, is the pressure in August So we more also downward noticeable happily

adding we fourth outperforming X will better average quarter. new And online. our products or So reversed of more with to than and will be the expect third the coming our and more with hotels the performing portfolio, the trend be quarter substantial X think newer be we industry the year will our that in

So that's the side. on hospitality

On stores. drop the in the foot model restaurant, number X business really, the shopping foot supermarket of management located repositioned traffic, and improvement trying heavily stores and really to into in in severe substantial in the because in, those the we're instance, closed the the And and and also business past, the relied side restaurant, our also secondly, traffic, we for chain, supply are with on we team. chain supply have hard are worked the of the the made system malls our model. The reposition

select to a can side. a add I the continue in the be to point continued to result, average stores think pace, new as the industry our and out the to chain make own as than performed locations to see restaurant at that sustained. better new happy I we you, profitability So so profitability, we have We're will sure

segments contributing we all to So the have bottom business line.

So will the consumer affordable the price. what because the that are And and this the still we we that's, at more is see restaurant will Kevin, how the will deliver about cautious is more restaurant, and think, a can consumer for. in we majority looking trend optimistically of how business trend change, shift value I

so continuing two we're operating restaurant our improve questions. model. much So for you Thank these to

from [ Betty Today's UBS. with Du [Operator comes question Instructions] ] next

forward? And have supply going expectations Would for in I fast demand XXXX? first some two you sector continue supply and questions. on more your expansion us current the is, the color landscape could give also

second the your my macro X would next conditions? the years to X to be, what in amid planning take And improve to measures RevPAR current company further are question

a big getting are thanks, great ] deal, [ Last normalized but more and surge Betty. competition after pandemic period. into we finished. The was a year, the intensified So there a industry's

So we see normalized a environment. this year, I competing think

on new and more However, and side, supply not side lot there the demand has brands the I are hotels, think, caught up. new

franchise industry-wide not the hotels result As has was there. as models -- we'll the that, a as from because our hotels downward older lot segment, see a our more much hotels franchise decrease. And see downward RevPAR of our the pressure L&O you can

new pretty the are confident lot in our be to products locations So going a more we competitive. are new

on the second both hotels openings we the So new well city, we in many, the the had RevPAR our And we as city. better pipeline hotel a substantially hotels new performance in we'll the as only tier the more not many have pipeline. year, expect in a third also tier XXXX for because see in the in

The second provincial of tier the and centers economic cities. consists city primarily regional the capital

further our hotels showcase will I regions performance. have locations think help X in once that cities will those those better to improve we hotels' newer Tier that presence hotels our

very XXXX So our own performance. overall, outlook and we are optimistic about

QX I improvement of more pattern said project year But down RevPAR, difficult light GreenTree's in think, of in earlier, resilient. however, of an the the already. the really, business we it see to this year terms the And environment. I to Kevin is as In model travel because next has been write of economic

For be hotels in because our bit instance, see company portfolio, the second from city. when as you in the can in by of have the may not third-tier our cities, mix side you little is tier a more hurt we and high RevPAR the first --

a which the a other as related incomes tier of our with income, hotel some high in first as as result, portfolio peers, our not So fee city. compared are has large

than cities. the the and cities second- has However, margin higher profit first-tier third-tier a

cost a second, tier profit higher basically, city. The first-tier smaller rent, is personnel margin higher than much as and the the you cities result, have third

a and third So stable we from has the withhold cities grow, market profitability the least, the pressure and for at the withstand be our to the will lot our tier the room least fluctuations. second RevPAR will more to and/or pressure expect franchisee and say

your So XXXX. I questions ] Betty, hopefully, [ answered regarding

comes question Instructions] Security. Lewen today China with next from Liu [Operator Our

I questions. And Okay. have two

achieve the about is hotel quarter -- like situation. [indiscernible]. they We the see see The financial double-digit first OTAs industry as can like we of still despite the in growth third portfolio

year. do you side, is question. the like first as your So following for -- the my about next what hotel for power bargaining think This

I have like like we new see project Guizhou investment [indiscernible]. about, And in that an probably question a is second or the in

I think slowed share you color So some Can X quarter this project? there. on

with overall and And hotel I share share, the online double-digit of really that agencies. the we understandable demand not Thanks, industry, offline Lewen. that's more -- With hospitality agencies think period. in I double-digit. that because taking are market closely digital terms all is regard to OTAs moving online into necessarily travel the are And the taking we reputable growth increased the think and from of working travel the

long as we as business think with in costs. profitable, commission I affordable the mutually can bring

will the win-win the I ecosystem new and think new become that situation.

-- younger use average and tools are will trend, become that and we that we that the the digital consumer younger to think the reservations. And make they

them. notice closely And we that taking basically so are of trend working and with

the hotels, partners or well-known working X we with the have will project, and which into There to is noticeable Guizhou potentially group we we future. regard With are the government for near -- to ideal local X-star in And sought strategic in X-star, X a the showcase, star make bring projects help workable, there reposition, that's asset a hotels are reopen there. in that future. that, they that reopen cooperation, the to that the it reposition our has over and

to So local and work the we're to asset the government happy opportunity to really with have make the nonperforming work.

next with Today's question [indiscernible]. Instructions] ] Victor [Operator comes Lee [ from

questions. two have I

the quarter performance is lower we quarter. one about expected. first in The was The the is in second see than dividend. now the announced the And dividend third

the to in to the So you continue have any dividends paying do plan future?

question market plan is the in several company to the about tell us Can mentioned the the passes previously liquidity. boost company liquidity improve you since second is to the the has my that you And capital considering liquidity. how

there timetable is now? any So progress on

will net ] always like see I it a -- And drops, like the income XX%. Victor. that third dividend, we With can the Victor, question. in. regard large Selina, [ you and will to number jump the Thanks, looks though answer of quarter even dropped

is as you XX the cause really RMB drop of of of However, the foreign we in currency Selina is paper the pretty confident to that loss million are mentioned of a the drop, because some report, end, the in the of of as quarter, third at deposit portion is dollars U.S. conversion a have the loss basically, we there paper there. the million the because a beginning XX exchange RMB

worked better eventually slowly. is their the there debt bad receivable. pretty a of confident the Then little given aged lot that million, will I a XX long the for improve and them accounts hotel franchisee provision performance, work a be bit a have hotel the performance think to We're opportunity RMB we also out out, for

of be back. some so will And those paid

So result in hotels, more that's so being we percentage we have addition, than legacy because a have a the the RevPAR of industry. hotels improved. in result a and decrease And large legacy the

also of large We performance. opened better see a had number a newly that hotels

the basis, on will we going-forward and significantly. So operating EBITDA think our income also improve

our announced. strategy the the a past result, we continue. dividend we'll we As plan policy the like And will not deviate have in from and stated past,

Regarding have, of that the become the of the direct that long to will as and GHG are as merge result we hopefully, parent company result, And reorganization. the GHG shareholders in our parent the and our we and also is our some shareholders analysts liquidity, liquidity the through investors And I a boost with shared the going increase -- think, the a help a of that company will our with company liquidity. will therefore, will in and run.

current. that's our analysis, think that's our I

-- but process, We because be are approval soon. schedule hopefully, still completed a of and will there are approving, on number that so

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

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

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

Thank you.

all Thank you. concludes call. We today's presentation. for today's This attending conference thank you

disconnect wonderful and evening. now or your day a you. have may You lines, Thank