Q4 2019 Earnings Call
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Nicole.
Thank you.
Once again for these conference calls.
Well go Thats Fine line will still remain on musicals, he's going to get us onboard and we thank you for your patience.
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Hello, ladies and gentlemen.
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Limited fourth.
All participants I notice.
I'll just because of concentration doubled your fourth.
Oh for California Me Busbar, one from its all the phone it at a time. So these conference calls being recorded a one alternative going over to your speaker wholesome. Its Ida Yu. Please go ahead.
Thank you.
Good morning, and no good evening.
<unk>.
That's true.
Welcome to watch fourth quarter, and a full year 2000, <unk> earnings conference call joining.
Joining us today these mr. ji.
Executive Chairman and CEO.
Any job except to.
Chile.
Touching wait and <unk>.
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<unk> CFO and Mr. Chen CFO.
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American that well be available.
Sure.
Before we continue please note that the discussion today will include forward looking statements made under the safe Harbor provision.
They private Securities Litigation Reform Act 1995.
Looking statements.
Current risks and uncertainties.
As such our results may be materially different from the views expressed it today.
Potential risks and uncertainties.
Our public filings with the FTC.
Want to group does not undertake no obligation to update.
When looking statements, except as required under applicable law.
Oh the core today.
Well I mentioned adjusted financial measures during the discussion our performance.
The combination of those measures to comparable GAAP information can be found in our earnings release, that's what's distributable earlier today.
As a reminder, this conference call. It seems the quoted the webcast conference call as well as supplementary slide presentation is available in the Investor Relations section of <unk> website at <unk> dot watching H.A.H.I. usage.
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Leveraging our into an already inflammation, Pat Walker <unk> <unk>.
To communicate our organized our collaborate calibre too.
So that already in place on the franchisees.
Timely.
We believe amazing.
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Well, we announced the new notably all on a note hey, Todd.
The audience.
Our business.
Exactly what China honestly, you up to put another type of their lives that are.
Our top.
Management.
30 to 50 salary cuts.
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For the Ficco customers with a book to open and provided them and reliable loan pool regular and special purpose.
For us during that offer it.
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So far I want to say just like what teach you mentioned.
Watchable has done a terrific job bronto.
Absolutely against the coffee Nike.
Oh boy teaching Bofa thought you ought to.
And then to the suite C.
He is a good onto the showing Vito.
On Wednesday, U.S., all cases, Magellan I'm going to using phones.
We book Gentiva splits for you to wait.
Ah switching with reaching kind stood us in the sense of that wasn't shibani.
So sees the outbreak in January 20, and the locked out enough time TP genuine twentys sard during the stage one module has demonstrated very Swift response.
We formed a centralized call center and 18 Regional Sop Command Center and we have had 14 43 meeting.
The all Hawesville, which I'm not going to.
That makes them and you can go.
The phone system so.
Leveraging the very powerful supplying chan, we enable each hotel and the staff with sufficient.
Efficient supply for the emergency [noise].
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So you the mandiant and can be easily.
So the woman you can go into the funny settlement on do going.
During the Chinese new year, we have most of the hotel managers back to their position and organize their work and a stable at stabilize their staff in the hotel.
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She led chain of issuing so she needs. So that you can go then can you.
So the issue.
So we did about echo P for the virus prevention and provide the the all staff training to help them to to prevent the virus.
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Jim.
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A week later, China has entered into the peak moment of the called and Nike. However, the operation all hotels did not stop.
So Jim woman, it's always orders, which yeah.
She loves so who that sort of a bundle.
Surging <unk>, Josh we didn't going equal easier onetime could shoot up on each year. So you said these women get a change in D. show, which is a culture.
As a leading hotel companies in China with a few hours social responsibility.
Accumulated they there are more than 500 hotels, which had been taken over by the government for medical uses and quarantine purpose.
Well, Jeff was when we did see that it would be Nielsen simply simple fade.
Just adding to that the government paid out for that.
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The seeds on cool so she's been vocal you are still with all the funds.
She gets wassa, you or would you to the food.
Well again will occur who came to the Genconn project.
We also provide prevention measures.
Measures for our customers for example, the 26, that's the cleaning process and also we provide health insurance for the staff and customers as well.
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Yes, some good to go the goals and.
Yeah, Mike I, sometimes you'll see that gives us lots would you able to equal if he said ginza Joseph immune shows.
Yeah.
In a second half of February.
The the Companys star to resume their work and the people returned to their job quadruple has already that enter into that stage three we thought to use multiple channels to do sale.
Did you each year that you show woman decision to school lunch you the young shipyards that one could evolve.
In no time, we provide the quarantine going for the returning worker.
Say some good each and get the well this is John one so.
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Jamie So you'll oak what people at boddington, so how much humans with GE GE then the.
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We provide to numerous measures to help our franchisees to navigate through this a coffee 19 for example, assisting all franchisees in obtaining bank loan.
We provide a legal consulting service, we've reduced our management fees for temporary moments and also we provide a different stuff is two to their stop back to work.
Cool you and she saw the tools woman.
Why don't you touch on South Dakota, she selection.
Also we mobilized all the stopping quadrupled to do all kinds of sales efforts in the company.
So you could you kind of what's out in a week.
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Total C.D. the.
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[noise] through all kinds of effort.
Right now we have 93.5% about hotels in operation up from the level, 50% Ah days ago over isn't going to can go away. So we bought a woman the the scheduling tool seems Williams from the goodwill machine.
Resins as within the time to do so the two woman Deanna.
Also say 10 close would you be yet well then we would have to how Youre Union engine.
It's you in engine.
I'm on page 11, or you can see our occupancy full operation Hotel has already reached 62% as of yesterday.
All the way up from a single digit stays the goes and we are well ahead of the industry peers.
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So we got a lot of a treat Asia and understanding from our franchisees.
I really appreciate how in providing a.
Timely supplies and also keep the hotel Ronny I just wanted to mentioned its two letters from some of our franchisees.
On page 12, it from an.
And the owner of Hanting Hotel me to Dawn. He said the inside of a difficult teeth in logistics locked Hodge with timely prohibition of emergency hotel 50 supplies made it possible to keep our hotel opened for Alagasco.
And on the next page and it's also from the owner Mr. Li Yu of hunting hotel in a tourist city croissant heat that I'm grateful to watch was outside sales team. The went out to help a few my room OTI travel really snow Dom No my hotel occupancy hit 70.
Five about 30% higher than branded a chain hotel next all joining hot true. It's my small kids choice I.
I mean, what you would accomplish anything like attaches I show when Judy system.
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I would like to invite my colleagues.
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Equally meant this work [laughter], usually a good morning, everyone as he wouldn't matter and doesn't while at the beginning of February we rapidly lounge that news as package, we called it a name and I seem to have sure I'll pass on page 14 for much more details.
I seem to offer who was higher than not of collecting late phase I safety I. Just did you say that's going to 80% intelligent compared to 70. This uncoated 19 health issue in children is complete Reefal members I seem to assess package it is applied across.
Hi, James for not only online or offline.
Accordingly.
Actually it was helpful, especially I'll I'll psyche goodly supplement to our online sales channel during the past that too much.
They actively sets the for all post Barneys flom local government culprits partners an individual traveling.
Oh, we couldn't be better, but with the development of combing. The 19, we how continuously capture the evolving eat flurry tiny worker, an inbound travel that combined online upside on the beach will be sales together, a multi dimensional site I did mention though direct sales job.
As shown on this joke capability and flexibility the flexibility in both good and challenging period.
Got it enabled by June to always outperform our peers.
Oh page 15 shows a summary of why do you got to leading intelligent uncontentious everything.
For the talked a few years ply gem had continued play basketball business. If patients are way to do win by technology and innovation such as our online booking at failed itself. So its checking take hot I didn't know what deliberate Oh, then become I was getting pilot studies and enhance.
Our leading position at this special period, when Kotkin requested for safety no I'm very happy to show some data points with you see Daniel <unk> took much 24, we held more than six Neely online Pima order and about one point that 1 million tons of online.
Election during the same period and why do I climbed two hotels, a walk away as itself. So its checking takata machine processed for mono wouldn't be they cut them. They Robert de lever to food and this applies to get full about 200 afford T cell.
And the time.
Oh paid 16, the other income technologies to to improve our thesis he and I too want to why do look at well equipped our staff with the most efficient look at to generate event to two way communication and to enable us.
A code a consistently high quality hotel network across most of them 400 cities in China.
During the past the too long we.
We havent you should timely and complete I hope he got line, so etch tools to our hotel staff. We how quickly collected we're hungry to sell didn't stop house until online at <unk>.
This is very important that they just keep in mind. The Kona 19 broke out during the Chinese new year holiday. So a good number of Ingram east returning to the at home town for family the Union.
In addition, we have provided 24 hour hotline the a psychological co selling keep our hotel staff mentally healthy at Vail.
Of course.
Every hotel manager that made a lot of port twice a day for our close monitoring.
I take into account for about exit the next page of 17, so far Baidu has down very successfully job with these were catch them and stop Crows infection.
Yes, yes, it's either.
How the occupancy at the branded the change of 15 to 20, but based upon playing higher than our second o'clock pm.
With that I would kind of cool or to appeal, who will walk you through our operational and financial did as well to find a knife steel. Please.
Thank you thinking Oh, good morning, everyone.
As shown on slide.
Slide 19 at the end of tool Onenine, we had a total number of 5618 point no with 536876 on rooms operation and increase of 27% from the end of two or one eight.
We accelerated our hotel openings at the second half of what nine.
Our total the total revenue, but a little over and I won't tell level has reach.
But your 5 billion renminbi, an increase of 19% from a year ago.
Turning to page 20.
For the full year into one line. Despite the economy hate when our blended revpar was steady increase by zero by 1%.
Excluding all soft brands with the low HDR, our blended revpar increased by 8.8%.
<unk> increased by 3.6% contributed by an increasing mix of meat and upscale and operate a hotel with high IDR. However, the increase in 80 hour was offset by three percentage point decrease in occupancy.
The lower occupancy was largely attributable to the thought the macro economy and borrowing.
Focusing on Revpar numbers on a quarter by quarter basis may sometimes missed out the bigger picture on a company called competitive strengths.
Switching gear up even look at the mall the trend.
On page 21.
We set out our blended revpar for the last 12 years and compare that with two of our peers in China.
Watch all had consistently recalled the high Ya Blender route of pop on Petwo appears either in an up cycle on on the Dol cycle [noise].
More importantly, this company did they get has widening seems to want things.
<unk>.
Reflects bottles coal company this trend in our corporate operational capabilities.
Please see our financial results on slide 22.
Our net revenues grew by 8.5% in Q4 and 11.4% for the full year optimal one nine.
Aligned with our previous guidance.
Breaking down the revenue growth into one line net revenues from a leasing albright upheld improved by 20% year over year and net revenue from our Manachised and franchised hotels was 32% year over year.
In total wireline revenue contributed by our asset like Manachised business models accounted for 29.8, but then in the total revenues.
4.7 percentage point from 5.1% into one eight.
We expect the contribution from all Manachised business will continue to increase going forward.
We have made cause causes somebody made good progress in our Midscale Hotel segment.
As shown on slide penetrating into one night the revenue from me an upscale hotel.
Leased by 23% to 6 billion.
Accounting for 50, so both of them off total net revenues up from 50% a year ago.
Let's now turn to slide 20 fall on the operating income and margin.
The reported income from operations was 2.1 billion.
[laughter] 150 than last year.
The reporting operating margin was 18.8% four or five percentage points lower compared to one eight.
The law operating profit and margin was mainly due to our investment in hotel development teams.
Upgraded upscale hotel and I'd capabilities.
Moving this investment the pro forma income from operations would have been 2.5 billion compared to 2.3 billion last year.
The pro forma operating margin would have been spending 2.8%.
0.7 percentage lower compared to the pro forma margin recall that last year.
Hello Pro forma margin was mainly due to a certain one time compensation received in total one eight totaling 79 million.
And also a one time lease related compensation paid into one night of 24 million.
SP update that our last quarter. They recalls Ah Onez calls we have increased the hit call off all the live development team.
The result has been positive.
We've seen our new hotel openings accelerated in Q4 and the on open pipeline hotels doubled in 2216 at the end of 2.19.
Pat to 1105 last year.
The fossil hotel network expansion will bring in revenue and operating profits when they open.
Another area, where we have invested in our ITD talent pools.
As GE and seeking explaining yeah presentation earlier.
Our technology [noise].
I will.
Allow us to drive for operational efficiencies and best the better customer experience, possibly during the challenging operating environment during the call it and I think Albrecht.
As did she mentioned earlier, we have recalled at a high all like central.
Renovation and all my payments.
Our technology team is also working on a good number of other project, which we will incorporate into our hotel operations.
We will share these developments with you at a later time.
Automation during our earlier earnings call presentation in the previous quarters, we made a certain strategies devote deployment into upscale hotel segment by expanding our team and securing a number of strategically located properties in Shanghai, Beijing Hunk, Joe engine to four hour obstacles.
Hello.
It has caused our payroll costs and a pre opening expenses to increase as come back to last year.
I will tell us we'll start to generate revenue into Htwo van de opens.
We believe this investment will be additional revenue and drive margin expansion in the coming periods.
In this quarter.
We have we also recorded a low other operating income compared to what Hey, This is mainly due to the reason I mentioned about it we just want all companies they shouldn't be Steve.
And Oh boy and one off at least relate the composition into or whatnot.
The pre operating expenses as a percentage of net revenue was 4.5%.
By 2.0 percentage points. The increase was mainly attributable to the construction of upscale brand hotels into one night.
Yes, you an expensive and other operating income I suppose that you have net revenue increased by zero point trip in each point year over year.
The increase in selling and marketing expenses was mainly due to expansion, although sales and marketing team to strengthen our direct show channels increased bank charges for online payments and higher commission fees paid to online travel agencies and this and the increase in general and administrative expenses was.
Mainly due to investments to expand our hotel development teams upscale brands withheld and I think have equities.
Turning to page 25.
Our adjusted EBITDA increased by 2.4 percentage points.
3.3 billion compared to 3.2 billion last year.
The non-GAAP pro forma adjustments mentioned on this page include the unrealized gain or losses from the fab at a change of equity securities related to our investments such as a cautious Walter Bahama, just but also take into account of all the investment in develop a team I think capabilities and upscale Brett.
Yes.
[noise], excluding these before my long get but just one into or whatnot, our pro forma adjusted EBITDA increased by 2.4 percentage point year over year to 2.7 billion, while our pro forma EBITDA margins also improved by 1.2 percentage points to 33.7 million from the between fault from 32.
By percentage last year.
Let's move onto the financial impact from the corporate 19 to our China pieces on page 27.
As mentioned by two quick earlier this pandemic has a significant impact on our business.
The strict about effective containment measures by the Chinese government, such as travel restrictions and lot though.
As call our hotel occupancy I refer you to drop significantly for three months period.
I think for Fabry and they expect it to take another for that frame, what two or more money to recover.
I expect the impact of this pandemic well pause our revenue to dropped by 44, 45% to 50% in Q1, two or tool you know in China.
Oh Hell make our major hotel operating costs, such rental and people costs, however, I relate to be fixed.
This connection we have taken decisive actions to start negotiating with our lead loss on rental relief and all deferment.
Be adopted a private that cash flow security method, where we wouldn't bet was to reduce or eliminate all discretionary spending.
Free it called in hit all fit reduce enforcement on all our capital expenditure based on our cash flow situations.
The objective is to be a safety cash reserve balance to account for any other or sort of unforeseen circumstances.
We also took this opportunity to streamline our office it calls and reorganized our corporate activities. So that you will come off from this pandemic leaner and more efficient.
Based on all asking it the cash short haul excluding any bank borrowings well in the reach all 400 to 500 million renminbi.
There's a lot downhole has since you due to the pandemic module has reach out to our Bang for the Paul Our bank has been very possible.
They are reducing interest rate on that bank facilities to below the bank lending rates more importantly, the also extend the additional facilities to watch.
At the end of toll Onenine watching ahead, I'm, you and utilize bank facilities of 1.7 billion.
At March 36, which is yesterday module head and utilize bank facilities of 2.1 billion.
So I spent four facilities will allow us to a sufficient cash resources to face with any other the beat that may be forthcoming.
I also like to share with you on our other liquidity position.
As of December two Onenine module had to stop them bank borrowings shut.
And that totaling 8.5 billion Reminbi, approximately 1.2 billion U.S. dollar.
Vishal does that comprises all.
Syndication loan or 500 million on what the football or 475 million.
230 million U.S. dollar a bank borrowings that has been fully pledged cash.
The short term syndicate syndication model favourite millions.
Previously used for the acquisition Dr. saw wrench into one seven.
And it was due in may for Htwo. This indication rule has been fully refinanced in January two two or by the new syndication loan that is due in December two or two too which is two years away.
The call, but above all in all 435 million.
What a 5.3 note expiring in November two two or talking to.
The reason why be reclassified these noting shots of that because of the three year could eat up embedded in these over the ball.
The Phebe Investor has the right to put the not back to the company on November 2nd store tool, which it later this year.
If watershed, though the what would the fall below say the U.S. dollar.
With that did they invest so we'll whole onto this know until expiring in November two two old when they invest the Kansas, but I did decline, but no into watershed at a predetermined right.
Well somebody 45 years dollars or request of the company, we pushed it but you said look from them on that date.
The remaining balance all the shop, so that was bank borrowings 40 pledge by cash.
This is for the dividend planning purposes. This loan would be repaid using the cash pledged to the banks.
In January we reached a new syndication loan totaling 1 billion U.S. dollar to refinance our old indication will all 5 million.
That's all I mentioned the boat and also for the acquisition of Deutsche Hospitality.
This indication rule requires watches net debt to EBITDA ratio to be cat would be the 4.5 times.
As mentioned our efforts to reduce our Paul mentioned the vote will have a positive impact on our cash flow.
However, according to the accounting treatment under the U.S. get any rental cost reduction will have to be spread out throughout the life of the least periods.
This will not be helpful to our EBITDA.
Into a tool but in foot locker yet.
In this connection we have proactively seeking a 12 month waiver for our syndication Ben.
We execute the approval from the tree arranger banks.
And they are helping us to secure the single approval from the participating banks based on our initial discussion with a major part is what is a bad in China. The result is expected to be favorable.
Coming to the financial impact of public 19 on board hospitality on page 38.
Firstly.
So that he had a good stocking towards low.
Exceeded the monthly revenue bucket in both January and February this year.
However.
Due to the corporate 19, the local government has requested.
Eight adequate.
Also studied quote the hotel costs and the spread.
Therefore, we expect the business will be affected in Q2 and Q3, just yet [noise].
Similar to our actions in China.
He has started negotiating with the landlord studies for the rental payments.
He had been very supportive.
In addition.
I'm also put our spot on the temporary follow and foods allow it house.
We can all be also reduced discretionary spending and kept expenditures.
[noise] the journal of the Germans, although it is also making arrangements to compare to the company for the most Bob on the hurdle.
We expect the maximum cash yet to be in the range off a 30 to 60 million Euro and be also in discussion with our local banking Frank but for the banking football. They have also been supportive.
Turning to page 29 on guidance.
They expect all net revenue for poor Tortue, one declined by 15% to 20%.
All 45 to people that you would exclude the revenue from bought hospitality.
We maintain our Ross auto opening pop at a 1600 1100 indoor tool all yet again, we estimate that I will tell cautious of in the range of 352 450.
Including the plant closure of 302, 350, and another 50 to one of her hotel impacted by corporate 19.
With that this open the floor two questions.
[noise], ladies and gentlemen, there will not begin to question answer session. So if the question. You May proceed part one from its on the phone, though is the suite, where it needs to be announced to cancel your.
Depressed about again, it's far 100 saw the phones off the question.
First question comes from the line of Justin Kwok from Goldman Sachs. Your line is often the Justin.
Good morning, Thanks for taking my question and hope everyone. This thing a safe and healthy I got three question to related to the second half the last one.
They tend to Europe.
<unk>.
Two questions on the effect on our collective offends on how management and seeing the potential behavioral change for the travel industry regarding both the business travel and leisure travel after the and tie a uncle. The 19 is being settled how would you expect the the weight. This is a way leisure travel.
So would behave differently going forward.
Second question on the effect that's about the competition landscape.
With so 2019 actually to focus on the Investor was on some of the new entrants into the trying them, our cats and dogs and some of the mid two smaller chains, I guess being turning a lot more aggressive and going into extension how do you see either landscape in 2020 and 21.
Okay last one is actually on the Dodge hospitality.
So how would management guide in terms of the EBITDA contribution for this segment of the world for this.
We acquired them a company you do dolphin 20, given the operating leverage how should infested to think about the contribution. Thank you.
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You like eating that you apply to DTY, that's just what I thought I take it not usual limiting tia due to an Italian wishes whole your allowance chunkiness. She is on them lead Hi, Sheila woman Jean Pierre you initially it isn't going to level, John that teenage social, but then I teach and if he wants what he does change out. So that you can do in fact, when I'm done at William.
No.
Do you couldn't though we choose Shanda Oh Gee gut.
Okay.
So oh, sorry, Mr. Lear has several and sorry, she let me just translate the first part of her answer so before the Colby 19, I think the you know the patch enough the business travel and leisure traveler remain the same during the pen damage, yes, we have to say the traffic on business.
Travelers did slow down because Ah because the business opic activity has been stopped however that demand up local customers did the right and as far too. We you know we <unk>, we we have to fusco sales capabilities no matter its online and offline.
We combine them together just like on what to do we mentioned before we we equipped our at no cost sales with equipment. We also promote all staff.
Among the organization.
Hi to let do show you sounded clearing that you got to do and who D, which he had her would you why not for me. It really does this isn't a squeeze hinder your did anything John I will leave you with you on the hedges easy to do to tell you I mean do so he will kind of the downside to that I should just two class a used your teeth, either deca Chen food on that show.
Good on that don't question that I thought I mean, they could or something.
And so we will further develop all cooperate dosed attitude toward the two business travelers need and we also anticipate the rise up leisure demand in the upcoming April and in a in short we will you utilize all kinds of tools to no grab a graph all.
Sales opportunities.
Oh quite you know the since our teams are the apart.
With us.
So as our genes and but she chooses.
So what gives you mentioned.
You know the meat.
We want to use the Joe's total shoes I said in humans also so.
So first of all our as we mentioned before in the presentation. The scale in fact and also the chain capability will really us a make the leading companies like ours extend out to read the pandemic.
Ought to be showing button, but each in the father was.
Joe who say salary.
Students will be goal, Jeff goldblum, but the most things.
Paju isn't advantage in terms, our upper high efficiency and cost control, which will further stand out in the in the future competition compared to the high cost operator.
Well, what do we will open in the other two machine Omega loves it even though what I said, yes, she wasn't that some war.
Each insurgency, you went up and get into other.
Ah whittling launching the Gonzaga flew a woman's I could you do you just let's hope what somebody the other showing the gross revenue.
Some of it.
We are very positive about our growth potential in the next three years I'll targets is open one I'm, sorry, 10000 hotels in 1000 city I'm very pleased to report that we have already sign up 300 over hotel no matter, it's a hot Brad.
And so brand in our network in Q1.
[noise] [noise] junior.
Yes.
So when he had some you know some positions on them.
Mm Hmm <unk> yeah.
Mm.
Okay. Thank you.
Yes, Jenny we can't hear you.
No no.
Page you know, it's me acquainted <unk> lucky to contribute significantly to all of that.
Based on Twinkie 19 knows that.
Ah Pro Simone even though you did that include new accounts for about 35%, Oh, well Gee that Puma.
Okay.
Got you took a major 11 contributed.
Hi, I learned that because they'll be open until someone there would be a merging with much lower than our China operation. So the postage contribution expectation was only oh, we go onto the 5% to 10%.
Well this year a used the couldn't 19th situation with the little bit.
But a you know our German team the European team. They also do their best known to your point towards protecting our customers and stuff and also no show a the business to sue the water and I expect we'll move on to the one that situation stabilizes.
Oh no. We appreciate you know the leadership team Trabi alone.
They have done a very good jobs lungs.
Alright, Thanks for taking my question, perhaps I'll lead sometimes water handling thank you.
Hello.
Our next question comes from the line Oh.
Baby Boom from Bank of America, your let us know up and really.
Okay. Thanks, a good morning, everyone and appreciate all these are important data point and information and we really appreciate that share.
On a timely basis I have two questions. One one is regarding your current occupancy rates, 62%, which is very encouraging just wonder can you break down the <unk>, 62%, how much is related to corn seed demand how much is scissors and how much is.
Yeah, there's still an easier labs can you give us some color on that number and then I have not a correction.
Two when she should we want them.
Well she goodies.
Sure.
Okay.
Okay.
Good.
Into what I would I sat she has inherent woman does really fine <unk> beauty with isn't sorry, I didn't mean jumped up a you'll bad guy that typically like I do again has to go like these are two for the three or four.
Uh huh.
Uh huh.
So just like a Julie mentioned acumen and if there are over 500 hotels have be taken over by the government has a crunching per person.
A little bit kinda I'm not sure content I want to accrue to the I seem to attend.
Stay tuned could Ah I take a 10 year do something that I should William.
So we find out so called the safety rules or current quarantine room actually I'll take a pound 80% of the room soda.
I guess I'll do the youngest athletes contact you buy a bunch of Washington, Dinesh nicer your women through it any easier I couldn't do they ship and de clean energy that she has I'm going to and Uh huh.
And 50% of the demand is actually from a local demand a local business like the people returning to work.
I see 2 billion shall not seen tend to occur young I see Oh wait. She is to go if I go about how you T., we 60 black tea go into the I seem to the time Kigali too.
So majority of a business is actually for the returning worker of for the cooperate eat returning work for the corporate need and also the the corn to them for their customers are told kind of education I want me excited I didn't do that either shallow should it occur now are you there.
<unk>.
And in a meat of March we start to find the demand from the real business travelers start to pick.
[laughter] and can I follow up on that as you see the leisure travel picking up a bit during the may pursue golden week.
They made first our you're talking about my first go to <unk> Okay.
Yeah, I need a huge income function a woman you kind of say clear don't catching clearly elan ideal could entity that shunshun I think your thumb in Oh amid teaching the I'd say jirka digital audio Tempe, Argentina, but long term retention.
Okay. So we expect the that demand from Malaysia will come up at the.
The second half of April and we're preparing different dose package for that wafer demand I T or me as I told you that Suji limited time going to issue I on them go down because again you can British again, I like we want to that we'd like to do that you know I would assume she was yet.
We also started do do presales promotion for for our customers.
[noise] enabled them to apply their travel mm in advance throughout the year.
She goes when I do that you see there credentials.
<unk>.
Okay.
But second questions regarding the CB Ah I think you mentioned about to be put option.
And I'm just wondering if I understand correctly is that it's the ship high speeds are most $30 and does that put pumps and will not be will not be possible. They can still used to put option or to put option has to be used when the chip cards close $30 and I'd also like up any.
You would like because I think this would be currently its trading below par so like and plan to to abandon itself there's opportunities.
Okay.
You see he does he has a three year put on the which is on that on on the on November 2nd of tool the investor can choose to put the notes back to the company eat our.
The probability of fall for them to put back the desktop to the company, even just do the share price of default, we looked wants to build a turkey and maybe that to you before below $27 then to properly even higher so even though the I just want to be clarify even if the if the share price on July 29.
Made in may not be hurt the investor will put yes, yes, [laughter] low 27, it's more likely than not but they will put that shifts. So what we had been bringing in your dream pretty pretty painful that you said, though we actually lining up early I think are working on two measures, including but not limited to a a ranking for.
Line of Ah.
For the good at.
No credit to breached the purchase of DCB for the future issuance that would help us to agree draw the facility to buyback miszewski that he buyback or does not give the investor choice to put the shed on November 2nd I'll just yet.
<unk>.
Alright, thank you thanks.
Thank you. Your next question comes from the line also Yahoos Muslim do stop at all your let us know opinion.
Hi, Yes money management chip.
A couple questions.
What itself a pre opening expense.
In 2020, so I I could imagine match it could be much lower than last year.
[noise] yet [laughter].
Sorry.
Oh, Okay I have my two questions. So the number two is set for the hotel that said Gutzman yeah use for you know coring team that patients.
What are you going to do with those hotels afterwards.
Thank you.
Okay.
Let me answer the first question then I'll quickly to answer the second one or the pre opening expenses. He not to auto is expected to come down by at least like a 50%. So the pre opening expenses to be in Rachel like 150 million I talked to a comeback to a dual onenine offer all 500 million.
Mhm.
So when people whatever [laughter] parcels isn't going to toggle tend to buy them can get two boats and doing so you changed into that would you buy when the roof.
A true soon doesn't do couldn't have a bunch of the.
The hotels to the beauty.
And it can be.
So here was that build and says if we're able to the food. All this was a real funding to be because.
Oh pardon me this old when you all to Switzerland gets issuance of being the younger so cheap.
The DCH if somebody that for me.
Oh, you probably though this is also point to current fishing shutdown that goody good trends within the figures show good <unk>.
Okay through our hotel network over close to 6000, we have already has over millions of customers staying with US right. Now we don't have any single case, though so cross infection, but we did fine confirmed cases of some of our guests.
We strictly for our SLP and the report to the I relate to the government authorities and then provide quarantine a sub adds to the guest and also the hotels in in a in the no time.
Oh, no has some clarification or to the bank 101 of the management It got <unk> corn can put soon.
Two totally different types of corn <unk>. The majority of the question can you provide actually on for workers Trimble from one part of the country and go back to work not important the country No China government creepy, we clearly anyone who has tripled from one.
Please to another before they go back you know to work and again back to their normal meaning they seem to be or some equipment that into they separately.
In another please note that 14 days. So then you know alone could become needs you know how to a utility room for that purpose and every time, we prolong decision, making its good companies to meet their needs.
The only or no put down here you know off the are very very simple took a need to you to quarantine patients. So I don't think you know a new drugs you put those hotels after old tweaked cleaning process to get back to doing that.
Okay. That's very helpful. I may have one more question. So I read some news <unk> said, the hotels actually very hard to chew up to maintain business. So last year. We had side you know recruit a lot to my friend Casey and added a lot to hotels under our.
<unk> work do you see some closure Oh those franchisees you recorded last year and eating that 2020, and so what's our what are you on my too much to help them to stay distinct.
Keith.
Hi, I'm no. Let me get your question. So for that Beaumont is that a as Jeanswear has mentioned earlier if that though you have actually help you. During this period, we help them them. One do you have done to keep the open and number two is that we also provide posada seats to though to the landlord. So that'd be could help them to negotiate with a lot a lot to reduce or.
Give further rental repayments isn't much too and them and treat that the using opening of every piece of you actually trying to help them to manage human resources. So that they could optimize the head count to do for the lower occupancy in the hotels do independent make sure. It used to treat animal for you that though we have also reach out Im Yes also Jim had mentioned these days.
Also our banks to help the franchisees vehicle, we introduced the banks to reading through the banks do the to differentiate themselves. We don't providing guarantees on quad two spot to provide a shot of financing at the low interest rate to help them to kick started operations. So that they could you know get over it and get out of the game.
So with that is that the response has been very positive the bankruptcy bearable, it's been over very supportive.
And and as I mentioned in my guidance is the in addition to our normal plant closure, we estimate that approximately 100 250 hook out to because due to the called igniting pandemic.
Okay. That's very helpful. Thank you that's on that question. Thank you good luck.
Thank you.
There are no further questions at this time, though I know Heidelberg do you have assumptions for final remarks.
Oh, Thank you [laughter] picking on time with us today, and we look forward to.
A little more give you more update a in the future. Thank you goodbye.
[laughter], ladies and gentlemen, do not know todays conference call. Thank you for participating you may now disconnect.
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