Q3 2020 GreenTree Hospitality Group Ltd Earnings Call
This time all participants are in a listen only mode. After managements prepared remarks, there will be a question and answers. The question. As a reminder, today's conference is being recorded I would like now of trying to turn the meeting over to your host for today's call Mr. Rene back on the state of Christiansen pretty cheap Greentree its investor relations for.
Please proceed.
Thank you Mike.
Hi, everyone and thank you for joining us green for each earnings release was distributed it on do you have to date needs a bit about on the <unk>, Yeah watch side I don't mind I am go on.
It's one is on PR newswire services.
We also posted a powerpoint presentation that accompanies our comments on just seeing what are you a website.
On the call kind of Green tree on the show on the extreme chairman and Chief Executive Officer.
Ms, sending a young chief financial Officer, Ms., Megan borne by stresses on the sales and marketing and.
I missed a Niki Chang.
Mr. She will present, the company's stood called a 2020 platform on sober view for.
All by the swine, who will discuss the business a beverage items and Michelle will then discuss find the chosen guidance.
Yeah, we'd be a opinion on to answer your questions during the Q in the session we treat funnel.
Before we begin I'd like to remind you the discount for school contains forward looking statements within the meaning of section on 21 of the Securities and Exchange Act of 1930 for the answer Mandy and as defined in the U.S. Private Securities Litigation Reform Act of 95.
These forward looking statements can be identified by Terminologies, such a change made we expect I guess the page.
James future intends plans believes estimates continue kind of good.
The <unk> are likely to go in for what confident outlook and she made a mistake nodes.
Any statements that I'm, not a historical facts, including statements about the company and its industry on forward looking statements.
Such statements are based up on managements current expectations and color on markets in the up the wedding conditions and relate to events that involve known and unknown risks uncertainties and other factors all of which of the if you go to predict and many of which are beyond the company's control.
Which may cause the company's actual results performance or achievements to differ on lucky or the from those into the forward looking statements.
You should not place undue reliance on these forward looking statements.
Further information regarding these and other risks uncertainties or factors is included in the Companys filings with the U.S. Securities and Exchange Commission.
Well the information provided including the forward looking statements made during discount on school I collect is off to Disney.
The company does not undertake any obligation to update the forward looking statement as a result of new information future events or otherwise, except as required under applicable law.
It is now my pleasure to introduce our chairman and Chief Executive Officer Mr. on extreme the associates. Please go ahead.
Thank you a big money and thanks, everyone for joining our third quarter a funding call today.
Let's start with the highlights on slide number five.
Our business continued to recover a deal in the third quarter a despite the some resurgence of the actions in certain regions.
Compared with the second quarter of 20, it can be.
Ron Paul you create a 32.9% true 100, the 20 RMB.
Total revenue, which increased the 28.6% to 266.9 million RMB.
Non-GAAP adjusted EBITDA increased 46.6% for 130 for mailing on the B, we can margins improved to 50.2%.
Core net arming.
Non-GAAP EPS increased a 28.8% to 92.4 nailing on the way the margin 34.6%.
We expanded our need for upscale also on the Lucky brand a further of the all new openings for this quarter, 28.4% well the med for Upskill on the Lucky well, Josh that's a historical high for quarterly New hotel openings.
This year has been like no other income history of the Greentree.
While year over year, a comparisons all waiting for him.
I looked at a few key metrics for the first of the fleet Quadras well help to realize you can see the with the progress we have made a huge the pen banding hate her businesses back in January.
Let's take a look at slide the number of six total revenue income from operations adjusted EBITDA, a non-GAAP on the core on that on him.
Non-GAAP all of you raised the consistently for three consecutive quarters since the low in Q1, and we the improving margins.
Let's look at the slide seven out of a blended 80 on equally 12.9% year over year to 151 on be on.
Occupancy dropped a true 79.1%.
And Rob Paul a decreased a 19.8% the two 120 on the.
If we exclude the hotel in the used truck for on cheap as well.
I'll talk for a same hotel equate the 16.3% for 100, the 25 on the Nevertheless, we continue to expand our market the questions across China we.
We opened a 162, a new hotels you on the third quarter for a poll to all 4000, the 195 whole cash in operation.
We ended the quarter a week.
1000, the 100, the tenfold cash in our pipeline.
GAAP, 70.2%, yeah over a year.
Total revenue for the quarter, a walk to work under the 66.9 million on the.
A 8.6% a decrease compared to that for the first quarter of 2019.
Gross profit the equates to a 22.5 per cent for 158.8 mailing on B.
Net income decreased 16.2% of true 85.6 kneeling on the.
On non-GAAP adjusted EBITDA decreased a 24.3% the two 130 for nailing the RMB net.
Net income per share a d. out of that.
The basic and diluted equally 20% true it will pull on 81 on the on the.
For a net income play the EPS equates to a 32.1% the to feel a 0.90 RMB.
Let's now turn on slide number nine for an update on the impact of the covered the matching.
China has been balancing and then the controls on economic recovery, we've talked it not hers introduced a fault the company's safely we start the business on the people get back to the on almost 80 lives.
The result, we haven't seen a stand the recovery in the domestic a tourism on the business.
Leading for improved occupancy weighed a D.R. on the dropped calls do you on the third quarter [laughter]. Thanks for the pilots work on dedication of our staff on franchisees.
On the strong support of our loyal members.
Yes.
Third quarter, Greentree again outperformed the hospitality industry in China.
And our operating performance continued to tweak harbor.
Further sales.
Thanks to government policies on to encourage domestic consumptions trying to show the strong signs of economic a rebound in the fourth quarter for.
For example, the October of go the we saw over a 637, knowing the message the choice.
On a 79% of velocityshares level, which generated a 400, the 66.6 billion RMB in revenue.
A 69.9% of last year's level of plugging China's ministry of called trend tourism moving.
For the speaker is pointing to a considerable improvement compared to two June the suite a drag in both festival, which brought the only 48.8 million tourists on roughly half of last year's level.
Let's turn to slide the number of tank.
Riding on the recovery, we continue the to optimize our brands for.
That's on technology to capture a domestic a traveling the men.
We focused on Bachelor of serving our guests on the supporting our franchisees.
We strengthened our cooperation with the.
Hi, while managing the company and the expanded the joined the promotions for the local merchants.
As a result, our occupancy rate approached 85% the during the October Golden week net.
Nearing the nearly the same level as a last year.
In November our occupancy rate, we bombed at the twin nearly the same level as of last year.
On the rough part of the Colorado for almost a 95% of lost cash level, that's for a bolus October and a.
And he any of the recovery T O a november.
In summary, we weren't glad to see a need for improvement in the third quarter of Twentytwenty, a it's a we returned to a more normal economic activity on the living conditions in mainland China.
We continue to serve on protects all a guess.
Our employees constantly adapting our operations on the marketing campaigns for the evolving conditions.
While still a manager the increase income from operations net income on the adjusted EBITDA.
Oh, a margin can do you get the rise of thanks to all flexible cost the structure on the Master is we have a game implemented since the outbreak of Kobe Nike.
Having gone through the channel lends itself for the first nine months of Twentytwenty. We believe we continue.
True execute our gross strategy on the further enhance our partnership with a franchisee.
Because we have accumulated the extensive experience.
Well well prepared.
Should the pandemic lots of a much longer on the wall more confident in our ability in our ability to consistently achieve a profitable gross on the create long term value for our shareholders.
I will now pass the call a rough for making the long who will summarize our based on our business operations for the third quarter. Megan. Please go ahead. Thanks.
Thanks for that moving to slide 12 at the end up the sort of quarter, we had a slow down a 195 hotels in operation so the by 22% higher than a year ago.
37 of these hotel for a leap in operating on all channels and the force down the 180 Bucks a foot.
The 58 for franchise, a managed or FM hotels like the Midscale segment remains the core of our business with almost a 64% of all I'll also tell a.
Last year, we began to expanding share both the higher end any part of me second line fit.
[laughter] Asian continues to be in the third quarter during which the number of mid to upper upscale and luxury hotels increased to 8.5 percentage of the told a plus for you.
And the economy segment grew to a 27.5% of the total volume.
We have also increased our dominant position in she has a three and a small a city which for hold true.
60% to 67.3% held our hotels at the end of the set of course that the.
The strategy strategic move in college, our ability to cross market, our getting rid of brands and the location.
Oh Slide 13, you can see that in a certain for test we opened a 162 hotels compared to 181 in the third quarter 2019, one hotel with luxury segment.
55 in the mid to upscale second line 88 of the Midscale segment and a 36 in the economy.
We're in tier one cities for anyone in tier two city and the remaining 125 interest rate on the smaller cities in China, nearly 30% of newly opened hotels in the third quarter was a luxury and a net to upscale hotels.
During the third quarter, we also low 33 hotels, they do a trip right a great 26, due to non compliance with our brand and our purchase in the US and the force you to drop two related issues. So net net we added 129 hotels to our portfolio in the third quarter.
Slide 14 share of the gross in our pipeline of new hotels. Besides the trial. The 19, our pipeline increased the from 650 true on September 32019 to 1110 on September Thirtyth plenty plenty around a 41% of these hotels.
We are in the mid scale second line about 34% in the income the sector and around 25% in the mid to upscale and the luxury segment.
Slide 16 shows the importantly operation for a moment train as you can see compared to the second quarter Revpar for our L. hotels increased to 121 R&D Rep. Pablo I'll ask on hotels increased to a 120 RMB 80 off of our Alphatec sales decreased.
For 171, RMB 80, awful a lot FM hotels increased to 151 R&D.
Occupancy for our Alcatel interest to 17.6% and occupancy for our add on hotels increased to 79.3%.
That's a trend in the she noted.
Revpar continued to rebound from the SEC second quarter levels.
In addition to Toby Oh, Oh, all hotel portfolio for was impacted by a sick of hotels in France, Australia.
Turning on slide seven for now have a about 52 million loyal individual members and a 1.61 million for pregnant.
Up from the 49 million and a 1.56 million as of June 30.
During the quarter a run the nikkei, 2.5% of all the Nye for stuff directly primary due to our individual on a corporate members.
That's a tough call over to our CFO to mean the yeah.
Thank you for Makena.
The 10, just like 18 during the third quarter total revenue decreased 8.6 price snack you over here do you try and get the TC 90 day R&D.
Total revenue for I asked on the hotel decreased 8.9, a sad she true hundreds of me the RMB lack of the revenue for air on the couch it.
Great that's quite a nice price tag to 66.8 media on B.
No the Craig what kind of the rate due to the impact of coal, we 19, which we Downey E. No one on Rockpile and where a Carson a reduction and then John family income recognition.
Now the net this represents a chemistry class.
Okay. Thanks, you're right Oh wait a second quarter total revenue.
Kind of range Youd, rather talk gross brought a Nike RMB <unk> due to the onetime good times the RFP in Q3.
Turning to slide 19.
Quoted a hotel operating cash well, a 108 million RMB.
I need a 3.8% year over year.
The inquiry, what many of its about too high a record high.
Hi, a depreciation and on the heavy share.
Ask on sorry, the nation of operation cost of urban which was the result of quite easy November of 2019.
In the second quarter. They are a three air on hotels newly opened the operation and a five year old house on the construction.
Which accounted for that May increase of hotel operating income.
Excluding the air Oh, <unk> operating income.
Cost related to the absolute house and other increased debt 0.8, okay.
Primary due to the expansion of our business and then Brad I'll ask on a hotel.
Okay operating cost increase yes, 17.8% Oh, the Q2 level of many of you to more of a hotel that's common interest the black net.
Sat in the marketing expenses were 21 point of Threed media hobby in the third quarter.
Well, the yet increase of 2.3%.
The increase was the many of the kids.
Hi, Anthony first attack CIT to cooperate with eight net so just the kind of fall, which we can elaborate on to be turns of coal we 19.
Excluding the above national advertising the sadness the Mckee Spanky in this quarter increased the 40.1 of the stats you over a year and increase the street price superset portion or all the quarter.
Q3 general and administrative he spent the rest 44.8 million hobby.
I jumped on three [laughter], yeah over a year.
Yeah, you raised was primary attributable to a higher depreciation and on how do you know of our top tier and the equipment.
Increased the last the men the research and development.
Hi, a consultant fee.
And it's kind of sort of like consolidation of spanky for Apple and part of it.
Compared to a we sit in the quarter can a I see a grade by 7%.
Overall total operating costs and expenses grew 17.9% year over year to a 174.5 media hobby.
Excluding the err on the operating cost.
A hotel operating costs and expenses increased 6% kind of how the we why here of coal.
On Slide 10, you why you see that gross profit increased 22.5% year over year to one time kind of 58.8 of media a hobby in this quarter.
Gross margin decreased the fraud going to keep friends lack of hsas to fit nicely with the SEC.
Net income decreased the 16 friendship debt.
The 85 point me the a hobby.
Net marking decreased the thoughts that he frackers debt to a 72 point of rent a center.
Oh, the year over year, the crazy, what kind of range each of the impact of currency banking.
Compared with Q2 gross profit increased by 61.2%.
And gross margin increased just for all 56.1 of the sad to 59.1, 0.5%.
Net income decreased by 8.6% of quarter over quarter as a volume decreased the for off once the plant for the statue study to point a breakfast day.
Many of due to the decline in Ghana, Ryan rest of men the equity cure a kid so how do we Jack Jack in the quarter.
On slide 20 true you can see debt adjusted EBITDA decreased 94.3 picks back here over a year to what kind of studies for media hobby.
And just to give you a marquee equates to 50 for interest I say.
Core net income decreased the studies, one point fivex debt to 92 point for media hobby and of corn ex Marty what sort of used 4.6%.
Compared with the waste Q2, adjusted EBITDA increased the price what pricing for debt and adjusted EBITDA margin increased the for our 42.3% to a 50.2%.
The core net income increased the price kind of sweet went into effect at the corner of Marty What's study for.
Good day.
Please turn to slide 23.
The quarterly net income for 80 at what I'd be.
<unk> 81 of your dollar.
Traffic, yes, sorry for all Ernie.
80 as of on the one price Oh why line here a call and now for all I'd be a 1.0 why in the second quarter of two side of the times.
Many of you true the decline in gas price back to amend the equity securities since the second quarter.
Core net income for the 80 average basic and diluted non.
Yeah, well on Beep Frankson night, he that you're a starter searching you sat down for a RMB one point of thought he turned on yet a girl opt for.
The <unk> RMB for instruments.
Some of the two of the second quarter of two is back on track.
[noise], let's now take the looking at like kind of you for.
As of September 32 started on time, he the company had told a cash and cash cash equivalents, we keep the cash share kind of you bascome it.
In fact, a net equity securities and had a department of 1.8 feet on the.
Compared to 1.7 beat a hobby as of June so a team to south of that time.
The increase on the second quarter was a primary actually there's about a two cash flow from operating activities.
Generally a fair value of active communities.
And the dividends for a actually securities.
And also a sad buying loans to franchisee.
The rest of men in the debt ratio of Aero tariff.
And a cash outflow for acquisition.
The the cash and cash cash equivalents for a white house was at the resources and the continued to evaluate potential you my estimates.
On to support our franchisee.
On slide 25.
As Eric mentioned.
19, you have to have a significant impact on our business.
So far in true you time to eat you saw intently cranky all the operations are in line with our priorities for cash.
Let's see a means of 10 Daddy remained constant show in China into fall, we expect decline into the rack news of tap for staff the 15% for the for a year techie 20 compared to a true 2000 Nike.
This concludes our prepare the remarks.
Operator, we're now ready to begin the Q on a session. Thank you.
We will now begin the question and answer session class. A question you May Press Star then one on your touched on a if you are using a speakerphone. Please pick up your handset before pressing the keys if at any time. The question has been interest and he would like to withdraw your question. Please press Star then too.
This time, we will pause momentarily to assemble a roster.
Our first question comes from Justin Kwok with Goldman Sachs. Please go ahead.
Hi, good morning, Thanks for taking my question.
A perhaps how a half a three questions on one on the opening of yada on the wrap on the last one on on the M&A side, perhaps the first a question on the opening a it seems that a the number of openings during the fourth quarter was not as high would you mind to give some color on the fourth quarter.
Moving on the net openings I and also Youre a plan for the coming year in 2021, given that now you have over a thousand a number in your pipeline the.
The second question regarding the revenue it's a it's a very nice to see that a you mentioned a in the in the month of November the occupancy is already back to where you a a before the cold that.
But on the run rate site, where where are we at the moment and what's your outlook for the fourth quarter on the room rates.
And whether you think that into the 2021, we already back to the peak, hoping that for when we should be looking for some growth in basketball from the 2019 level already and the last one on M&A I think that you mentioned a you'll you'll have you still have a 1.8 billion.
Renminbi of resources a.
We are now a like 10 months into the call that a you actually see more pockets coming out or do you think that a pick up on the measures have been helping the the situation too much that is actually no fire. So on no why a whole pocket for you to look for at the stake. Thank you.
Okay a justin.
In terms of a lead trial, what a lot of to ask you a little bit more a clarification on the second question regarding the first question for you through the quarter for opening so a is a little bit the the soft and at that the.
For several reasons.
Greentree has always been a responsible companies and that the we we want to be on the loan from a.
Beneficial mutually beneficial relationships with all franchisees a.
We want to be on a computer the launch of the goodwill with our franchisees.
And that that we are not going to sacrifice a franchisee for you know that the profitability on their increased the risk for the sake of adding hotels to our portfolio.
A you know our portfolios of consisted primarily of standardized hotel products and services on bad that requires a consistent with the amount of the investment the from the franchisees.
On the knowing a second quarter third quarter on a the.
Revenue for the railcar with steel of 20% of fountain on the a closed.
Close to that of the normal level.
And if you put on the hotel opened the I've got a time inotera, the I'm not going to generate a generates a.
The the enough a year ago.
On the so I think the bad if you can push.
Pushed the openings I think that maybe.
You know a Kuwait.
Not a good relationship being below the line. So we didn't break on say the way in bad debt and what type of who it flow to the extent of you don't have the old Clinton, we typically do not imply I saw you courage on the push them opened onto the extend to be on able to negotiate the an extension the with the owner.
It could extend the the on the lease.
Leading the hotel a so if you're on the asset then it can take a little bit more time on that a a so that's our a position on the philosophy on.
So we were taught a month and a higher or a successful rate a success rate for all the franchisee on the so that that is why I think in the first of the second third quarter, you will see that the openings a is a little like the soft on the Greentree has always been the one that a in.
Probably a GAAP the on a reputation the much of the will probably the pay attention for the franchisees the financial health.
Having said that on the hotels from the already leased a.
Sooner or later they will go on the open so I think bad debt. This moment, a we forget the them in the fourth quarter will probably a opening more than 200, a more or less the probably into on a 20 for you in that plus or minus range and if there is a no a really on a resurgence of a key.
Cases on the.
So now I think that the waves of our operation with a big increase operation.
Especially on the Novembers performance in October November performance will continue to see a dramatic increase over our third quarter, a simple to was still down a like 16% to 19% depending on how you looked at the on the low power, but then the a fourth quarter, we're ready for the only I think the in a less the 5%.
Consistently.
On the already achieving a 95% of a more over the line same period of last year. So we're more confident that we are able to on a help the franchisees to realize a good return on a normalized the profitability. So that's of the on the hotel opening.
Of for the a fourth quarter.
No I'm, just saying on the a on the so Paulo so can you.
Rephrase your question for the and I mean, I'm able to provide a bad times the team.
Show a effect for stuff I saw the color on the opening on the rectified.
You mentioned that the occupancy for November is already back to the pre corporate level on the yields a year basis, a way are we for the room rate a we still a double digit down on the run rate on.
This day, a what are you looking at or what are you expecting for the room rate a into the later part of the a or early 2021, because I think a hope for all of their upcoming Festus concern that give them the international the international travel is to close.
With the high end hotels Rep, Oh, the room rates do with on easily 20% yields a year or the way to the meat and on to the economy that will still be some pricing pressure at least for the next couple of months what are your expectation on the room rates. Thank you.
Okay, just on that on the gross cost side the that the net even.
In each of our occupancy rate the we see a pretty much very close to you on for the losses this level of to the as a greentree and the portfolio.
And the fees for all Paul we are down about 5% less than a lot that 5% the on the sincerely that that's primarily a.
A lease all just from the decrease in the AR. So the run rate he was about 5% the down from last year. So the same level on the.
So now the weather really to recover the true 95% occupancy on must recover the on the in off the top of sort of 100% of lost us number.
So we.
We at this moment the expected them you know.
And the a at the same trend will continue for the year and.
I think thanks for the illegally.
And you know that a a pandemic a control policy and procedures by the government I think that the have down I think the all of the Chinese government has done a great job.
Yeah on controlling the spread the.
On the so for the next year a.
Oh it hit all the best Hope that you know that the China will continue to recover and a we'd be a domestic consumption resumed for the normal level of what we're lacking in international cross border.
Four of them on the so I think a bad the room weighed on me and because of the five star a luxury hotel so maybe on a.
The price the bed, which will also be price the rest of the.
Well a spread on the and the through the rest of the hotel segment.
And the but we are confident that the the domestic consumption and the especially at all in a price range of a value price hotel will be a robot.
So on the we're looking for the to a really a a great deal for next year for a domestic China.
For the surrounding for Southeast Asia for other countries. We have a few hotels do not we do not have a lot of.
We can go and take a while because it takes the vaccine and for quite some time is to be a you know that the.
[laughter] penetrate the larger population on that to a true you increased the opening of the a cross border travel and tourism and a fee on the cross border trade. So that's a that's how a of isn't on the internal on.
A internal the projection.
So the non investment again for anything else the S.
Okay.
On the so regarding the fee if for the question you have adjusted that well a we are a open on the things that the we believe there are the.
There are a smaller to medium size the smaller local brand of the ads are running the into your shoes I think people are still taking a wait and see on the therefore palace opens up a bit this year and a lot here on.
The continued to experience a.
A pressure from not for you were trying to back and pay a divestment.
On the so, especially for a smaller regional brand on a smaller hotel group. So we all know what we keep our eye open for that a.
We have to wait and see but.
We think that on.
And what the opportunities for us to explore.
On this month is a disciplined dynamic quite a bit some uncertainties on the I think will benefit the world typically will benefit the for those companies that are picking the very disciplined approach.
Our next question comes from Bruce Me with you'd be EPS. Please go ahead.
Chris your line of might be muted.
Oh, sorry, I missed my line.
A sense of management for taking my questions. So I have one question on the non pump.
Hotel openings, so I see some other major Chinese hotel groups the lifted the or a hotel opening is kind of a for the next two years to you as a company they plan to double the number of for testing of operations.
In the next three years. So on my question is will Greentree also speed up and the openings and a if he is a wish segment, which Brian will be the moving goes for ever. Thanks.
A boost thinks that the yet the hotel opened leases on is our men focus a and even the in the in the past a.
Two years and the in the future.
As I said, we want to be a responsible company that the water.
Open the hotels, the only if it's a profitable hotels for our franchisees because a.
We're a focus on the long term relationships with a lot of the gross long term relationship group our franchisees.
On the we have a for you.
For unhappy with the plan the by a 20 between the four we also a plan I believe the through the well again, the gross and that the through our.
The M&A, we would like to also we think on through our natural gross and that the our franchisee kind of.
The new the opening of new hotels, and also a double or a hotel portfolio on trying to approach the 10000, but again, we want to on Montana or on the.
The beauty of the you know our responsibility for franchisees long term a profitability as you can see a.
Our success rate in the hotel openings on the by matching the hotel closure of because every time you close a hotel.
It's a next to the impact for the relationship with the franchisees on the you have the also waste a lot of on the expenditures and a assets on the is a a bad impact for the environment as well and the two interest the wasteful. So we're trying to be a a very a response.
A sporting that end of.
And on the through that process now I believe we can easily a for you on hand is responsible for approach on.
On our portfolio will you. Please I'll see you in a very very.
Meaningful way so.
So to summarize our on a gross plan. So that's a by 20 million for years that's on a.
Well, we want to be.
Right.
Thank you.
Our next question comes from just Shang Koo with CLS say please go ahead.
Alex Selena Megan and the people taking the question a I have two questions on it all the local one by one of the first one is all your so called plenty of a franchise hotel take rates a.
So I think you mentioned that Youre franchise revenue this quarter on was declining by 20 percentage, but I think a in terms of average number of hotels a year over year basis value a number of rooms increased also by twice.
On a such a temp sense a franchise revenue year on year decline.
Our take rate was stable. So I was wondering if you have a any.
Any more a way.
Waiver on franchise on management fee on during the quarter.
<unk>.
[noise] a defeat I think of that Okay, [laughter] actually the study not yeah. It's a keeping a good question a hi, yes, yes, a high.
Considering the our franchisees are facing more difficulties that a hand the call with Nike.
The cost and I'm crying for too low or the I take rate of all they see our take rate actually on now a we have some quick curious a winner we are receiving its actually a kind of off application.
For those franchisees day.
A a for the franchisees how would you have down on a good jumping in the pre the idea of.
Yeah, and and a and has a standard a how do you know is a decoration and we actually see the range here.
Net interest and a some of their a franchise a franchise fees and the go on going fees. That's why the take rate in a the a in the <unk> I think the second of all time this quarter and liquidity could be a lower it and then a that'd be for therapy for that public 19.
The okay. So think so could you maybe elaborate more on one of the criteria are and the or is there any differences across your brands and the the you cleanse the.
Debt the franchisees pay what they should be a over the next year or are they just will help labors got one knocks on.
People clearing fees on going forward.
Oh, Thank you a and to the opera debt he thinks a.
The most of the applications coming from the brands, including cranes, Greentree shopping and a sound we detect the our hotel brands, including Greentree Eastend, Ang G.M. EG Rite aid and the VX, especially for those hotels newly opened it and doing the COVID-19.
And then secondly, and a aren't in the our daily operation and they are they have thought of tenders in the gross to floral and gift for those hotels each of the eight especially for those hotels had a life one of the wind here about line here a if there a according to the I guess Tariq but for.
If they are any of the job. So that's a that's for those kind of off the how a T. I a more likely to get approval for a extension off their on going into FY <unk> basically to a pretty curious for the application.
The t., Okay. So let me ask that the waiver is an extension of right not another way of or actually.
Let me add a couple of things that the a it's a <unk>.
I think the revenue for the data and the is not drop the 220% of revenue for the franchise I think that the only dropped about 10%. So that's about roughly a 10% of the gap.
And that is a attributed the to a few reasons why on these and if there is a a lot of getting to a number of newly opened the hotels, we have a weaver.
Because the non profitable on a week, we incurred a hint opened a.
On the second.
The second reason is that a because we also have at the Oh, a hotel consolidated have a low for for all par and.
On the that that the mix changes a bit so a combination of them resolve the Dan a.
It would not the you know that the 2020 a for offset the so ginger.
The addition, so thats a.
When the a in the several reasons of factors contribute to that okay.
For me thanks.
So maybe a gross so the second question, perhaps a according to what you said just now on the call I think youre on Revpar recovery in November.
On was actually.
The.
And on our peer companies say, so my I understand if this is related to the.
The difference is of course different city tiers. For example, maybe just reaching for cities a recovery better in November a compared to October.
So is that rate, it's a bad or do you see any update on the of course support anything to two obviously, a comparative basis stats you of performing better than your peers.
I kind of I can add some color for that because we analyze the that our recovery.
I think that that the across the board the a.
And we have.
Vincent you know we indicated the we took a number of measures on the sales the marketing side of the thanks Emagins team the.
The they are more of glasses or you know the like a travel management companies on dose of that increased our a sales and marketing in for an online including a a day.
A a a you know with a a a.
A certain internet companies a cross promotion so all of them I think the resolved at the non in the bad for the occupancy in the November so a dependent the bunch.
But the it's a you know what the true cities the breakdown of I'll leave that for.
Yeah, Alex a yes exactly like a at you on conventions just over a year over year decrease in November.
What or most of the thing and it'll be a decreased as a oh October and the <unk> and not the mentality for too much at the <unk> interest.
In terms of the C.D.T. as I like to share a without our second piece of a in the third quarter of a wrap hockey crazy into a street was indeed, a that's about 8.8%.
Uh huh.
None of them.
Yeah, I I see a for the November and December the same train debt a that he yeah. We had decreased in Q3 was a deal it's at least a a mouse oh the city of here and a for a in terms of the settlements wrap hard to create the in the media to upscale what Lisa.
For our Danny Brent.
Okay, great. Thanks, I'm going off of a follow up on just on the previous question then on the go back sort of true afterwards.
So it just went on it you mentioned that you have a long term let's.
Let's say target book so the 24, so have a tense on hotels that means actually you may need to reach more than one sold and hotel costs, a little bit well net openings per year just hit the targets. So that actually includes the you would be increasing your hotel openings per year over the next for years.
So a.
You are saying also that you are responsible company. The you don't want your franchisees take on too much leverage for any risks of before opening of the auto so.
Actually you are also where the old guidance. So what is the confidence behind that and where do you see the.
The key gross fibers over the next for years. Thank you.
Thanks, Vincent that the.
You know the we just looking for the a hotel on the pipeline on the we also a on a.
Recently observed on another trend that is.
I'm a bit we have not focused on on the so called the soft for brand conversion day.
A we have a.
We have the observed in a we have the also have some real industries, a a demand in that and the because our technology systems of all of our overall.
A a French fries and the management the fees on going management fees a steel at the low is the in the industry. So were the most the value of Brenda.
The two next a few you're a safe and a I think thats, especially the next year a.
A we should be of to see some more demand the from the you know the the newly a newly constructed hotels require a it's a brands of for the technology support and the sales and marketing support. So we think of that would be more coming on the front that in on the second day that we already have.
Oh for and a lot in the pipeline on the so we are also evaluating adding more on the front price developers.
On the so they're just I think there is a sense of the market is that the that's a market its a huge.
The so many for costs on on a you know non brand. The we still think that the market on the especially on the many a second for the tier cities. The store so many local and a non branded hotels there.
On the we.
We we do they we do with the statistics of all the time because of we have.
We have a franchise developers more a major cities every day, we a cumulative of data and that that the even on the second the third tier cities in a block of the hotels you see typically that even the second choice. It is this the kind of a a 50 of them 50% of them on.
No Brian on a third tier city you see you know that the 60, 70% I know Brian.
And the the a hotel operation I believe in the future is going to be more on the more on a brand centric because the technology for on a a a successful for population on the connectivity of requires is beyond the a a independent hotel ARPU.
The second approach. So we believe our a you know value or a value proposition that she was a right there and a we want to be a.
On a responsible for a need for female for our franchisees profitability, but the also the demand is there the demand that we are I a with a you know where we are I think we are a in the past the two of three years way improving on the platform technology Connectivities and a you can I think.
We'll break glad to see on October or November as a performance demonstrated the all of them the paying off for us as we on the becoming a you know the recovery.
Become more normalized.
Our next question comes from Billy Ng with Bank of America. Please go ahead.
Thanks, Good morning, I think first of all congratulations on the solid results on our just have one follow up question.
I think some of your peers mention about the competition dynamics change a in.
In particular, a supply for the heart and the scene has come down on.
Have you seen or have you seen any day now I'll have you see a any thing on the ground does suggest that a.
The price coming down.
Competition become a little bit less and also in terms of finding a new.
The franchisees or how to use the.
Oh the.
The.
Requirement the attitude of friends and where the as many suggest that day they they.
Want to a team of with a big franchise company or a brand company like for like you guys.
Well typically.
The.
When you say supplies coming down on you mean supplies of a meaningful cash on the for sure.
We have just like that the.
If if the without Kobe, the we probably had a lot more on supply some more opening of hotels and for franchisees hotel owners, a more cautious right now and a so the on the I think the rent a on the lease of the range of the hotel is also kind of.
On down a little bit of.
So a.
The will create a lead the pressure a little bit more pressure probably on the hotels the at least the last year or the year before.
And a.
So the so vis a vis supply itself the hotel.
It's definitely I think of that is less.
And at that the compare on a without a code of it.
But that also means that the of supplies for a new hotel is a standardized of products that the the a and it's also become less so I think the investor is a me few on.
Less comfortable with the spending more on.
Bill It a.
The a to be on a new hotels.
So we have a different the dynamics in terms of Brenda competition a come.
Division gross between the branded company.
A the a so the the the so the demand for a a support a.
In terms of so since the reverse for instance, a best friend the initial application fees notes. The first year on the opening a a during the ramp up here of the fees a.
The also have a impacting the then.
So, but the overall, we believe that a the dynamics change as a true favor to more established the company with the more resources and we see we also and a and have observed for that a lot of the smaller company a local brand at that day, either on a running for major loss on a.
Close down so that so the the.
The a mark conditions favors through the larger and more established a platform for the near future I.
Billy if the situation I think the next year, we'll probably continue to be in the a not fully recover the mode on the so the opportunity will be there for a price to take true.
The the more opportunities.
I see okay, and just one follow up questions of actually a.
When I stop.
The <unk> I also mean, including the assisting a hotel inventory of cost.
Different companies on a across the nation.
Do you see a on number of hotels coming down too.
Not all the same occupancy, but and puts a.
But overall, a maybe non brand the oh the a.
A small a friend or hotel.
I believe that's a good question Thats a great the observation by the way a yes indeed the.
So in the past that a in the past on here as there are many many properties some before on.
Thats still on the for industrial a warehouse and the being covered the the into.
Hotel use.
But the regulation of the Bloomington becomes a tightened the quite a bit in a not a lot of the city's after a your initial credit expires they no longer a.
The extend the a 60, a nolan to extend the permit the so those hotels property that zone, the differently, especially on the industrial.
On the warehouses, the and the offices the main at the feed me how can be close department at the Lake we on the go back to the normal use so we see that kind of shrinkage in bad debt on the other side of the the you know the suburban there a new development.
The city of May also require a day second developers.
To add on.
To a having a portion of their a the.
Element to be used for the hotel and the apartment. So we're also trying to partner with the some of the on real estate developers in China.
And ER, a with a strategic partnership where we can become a when the build a new development.
On that they can supply our us have given us the first right of refusal to do the whole house there. So.
So and Thats, a very very good the observation Billy on the it has it started the wave the I think the major cities I think that trying to Atlanta will continue so the zoning regulation will be more strength, which is a really beneficial to a hotel industry interest.
In general.
Yes.
Thanks.
Our next question comes from Nate Day, which had a Renaissance. Please go ahead.
Hi, a management thanks for taking my question on congratulations to the strong resolving a source for car a I just have a small question regarding the recovery of leisure segment, because I think the business a business customer segment is the carbon pretty good. So what is the current breakdown between the leisure segment net business second in terms of.
A group distribution and how does it compare with a the years normal years like 2019.
A few have had the numbers specific numbers for for sure because he's the leisure leisure travelers.
Okay. So the Oh, we didn't a because of our leisure travelers on.
A nod and you know didnt consist of a major component of our interest.
Our portfolio of.
But we did the oprah's are you the.
The city.
Well, we have like a function of.
On the previous a three course for the the biggest who for the for the ones for the two of the performance was a you know that the was quiet on the suffer the quite a bit.
On the third quarter, we cover the sharply.
But the all and Thats, the Buda and there's a the impact is a lot more I think is a.
Is that a is a worse still continue to be worse than the let's see the major cities in the third the moisture a seed he can be on a.
And in in the in the a and for the business travelers on for the for the essential for since for travelers on.
On the so that's Oh, we don't I didn't have that number right now on the front end by a you found the right.
Thanks, Eric So actually you mentioned on the <unk>.
As already caught up with the last years level. So Matt I assume this is a big because of more business travelers in the recent months and looking at the into the future is the list for truck leasing a segment is also a recovery. So we are expecting actually a better occupancy rate versus a 2019 and I think this way.
Oh, we do not the know how of that the leisure side, the because I think that the the.
The travel.
From our a just a from a hour a month of meetings.
On the leisure side is always a little bit a lagging behind the.
And that our a than the.
The.
A less the a the cases of totally week isn't a totally on the control a worldwide.
We still think that the leisure travelers the will a.
Continued to be impacted.
Yes.
Thank you Alex Thanks, a sense for management.
Thank you.
This concludes our question and answer session I would like to turn the conference back over to Miss a lean the gang for any closing remarks.
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Thank you all.
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