Q1 2021 GreenTree Hospitality Group Ltd Earnings Call
Hello, ladies and gentlemen, and thank you for standing by for Greentree first quarter 2021 earnings conference call.
At this time all participants are in a listen only mode.
After managements prepared remarks.
That will be a question and answer session.
As a reminder, today's conference call is being recorded.
I would now like to turn the meeting a lucky a host for todays call to Mr. Rene Vanguards theme of Christiansen Green Tree's Investor Relations firm. Please proceed Rene.
Yes.
Thank you Melanie.
Hello, everyone and thank you for joining us.
Great Free earnings for these first distributed earlier today and he's a day their dog on a website.
Website, and I have talked 99, a dot com.
And that's why he's on PR newswire services.
Reminder, we also posted a powerpoint presentation that accompanies our comments to just see IR website.
On the call from Green tree and Mr. Alex Xu Chairman and Chief Executive Officer, Ms, Sydney, and a young Chief Financial Officer, Ms. Megan Huang device price.
He is on the sales and marketing and he's a niki Jen.
And my nature.
Mr Hu and presented the company's first quarter 2021 to a 4 months overdue.
Followed by MS, Wang who will discuss business operations and Michelle and will then discuss find insurance and guidance.
And so they would be available to answer your questions during the Q&A session, which will follow.
Before we begin I'd like to remind you that discomfort on school contains forward looking statements within the meaning of section 21 E of the Securities Exchange Act of 1930 for.
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Such statements are based upon management's current expectations and current market and operating conditions and relate to events that involve known and unknown risks uncertainties and other factors all of which are difficult to.
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You should not place undue reliance on these forward looking statements.
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Presenting these and other risks uncertainties or factors.
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All information provided including the forward looking statements made during discomfort on school.
And as of today's date.
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Are we going to a new information future events or otherwise.
Except as required under applicable law.
And just now my pleasure to introduce our chairman and Chief Credit Officer, Mr. Alex Xu and Mr. She please go.
And it's not that.
Thanks for a game and thanks, everyone for joining our 2021 and first quarter earnings call today.
In this report we will highlight our Q1 and hotel developments and performance thin and we will go into the details of our operations.
Go ahead, and a financial performance.
Because of the impact of COVID-19 on our operations in 2020, particularly in the first quarter and we will also occasionally provide Q1.2019 members for a more meaningful comparison.
Please turn.
And to slide 5.
We are glad to see our outstanding performance continued in the first quarter compared with Q1 and 2020 Revpar increased 35, 1% to a 95.5 RMB.
Total revenues increased a 50.
<unk>, 3.3% to 241.2 million RMB.
Income from operations increased 64, 9% to a 61.4 million RMB with a margin of $25.4 per cent.
Net income turned a positive.
Stay tuned and 66 million RMB with a margin of 27, 4%.
Non-GAAP adjusted EBITDA increased 74, 3% to 64 million RMB with a margin of $26.5 per cent.
And a core net income non.
Non-GAAP increased 58, 3% to $43.9 million R&D with a margin of 18, 2%.
Earnings per share increased to 6.8 to RMB and a total revenues exceeded Q1, 'twenty and 19.
However income from operations and adjusted EBITDA for half of Q1, and 2019 with a reasons offline later.
On a slide 6.
Shows considerable progress we have made since the pandemic and begin in January.
<unk> 20.
Total revenues income from operations adjusted EBITDA and a non-GAAP core net income all increased on marketplace compared with Q1, 2020.
Total revenues were up over a Q1, 2020 because of new hotel openings.
Great.
This was partially offset by a lower railcar from existing hotels for a lower income from operations and adjusted EBITDA compared with Q1, and 2019 resulted from costs related to newly opened hotels and the increasing consulting fees.
And while Revpar recovery was slowed down by the resurgence of COVID-19, and most proud of China and recover to a new only 75% of Q1 and 2019.
Let's now turn to slide 7 for <unk>.
First quarter saw a robust recovery.
Currently in occupancy rate on the raw power compared with Q1, 2000, and <unk>, we outperformed the industry by leveraging our strategic advantages, including continue the deployment of hotel management systems and technologies and expensive footprint in tier 3.
And a lower cities and.
Our industry, leading loyalty program as well as the hard work of our franchisees and the staff.
Slide 8 shows our monthly Rob for a recovery as a percentage of percentage of 2019.
We remain very encouraged.
By the strong recovery in China.
While our occupancy rate declined in January and February 2021, due to the implementation of travel restrictions and the government state and local policy during the Chinese Spring Festival.
Founded a quickly offer.
As with a more people get vaccinated and.
For pent up demand in China, and travel restrictions are lifted.
We saw a substantial amount or amongst a sequential increase you borrow a prior year March April and May.
Especially due and a plumber sweeping holiday and.
For this week.
As we expected this holidays really offered in a resurgence in travel with 213 million domestic tourists traveling during the Golden week.
Turning to the report from the Ministry of Culture, and tourism fleets represent 103.
Moving to percent of the numbers of domestic tourists in the same period, and 2019 and a year over year growth of 1 had a 19, 7%.
Please turn to slide 10 to begin the discussion of our strategic focus on to share with our.
And with everyone, what we have done and the first quarter and New Hotel development.
And besides technology related research and development member development.
Our current growth strategy focuses on 3 key price first we're adding hotels.
In strategic locations and second that we are further expanding and tier 3 on lower cities and third we are further penetrating the mid to upscale segment.
Let's take a look at slide 11 during the quarter, we accelerated our expansion into the mid to high end.
In Central China source, each east, China, and southwest China, We opened a 3 hotels on the <unk>.
And have 20, and I'll also tell us and our pipeline all well located around transportation hubs Central business district, and the government centers.
Please.
Market into a slide 12.
Have a past 4 years, a vast majority of a new hotel openings have been trying to subscribing Q3 on a lower cities.
68, 5% for all new hotels.
And our current pipelines are located in the city.
Please as a testament to the soundness of this strategy during the pandemic for pace of recovery at our hotels and such cities was consistently faster.
And then in other cities until the end of 2020 wind business recovery in tier 2 cities accelerates.
City EBITDA.
This combination of our existing footprint and our strong performance and this city's gave us a real competitive advantage to capture future opportunities and China's booming hospitality industry.
Now please turn to slide 13.
Salary and we have been continuously growing our high end segment over the past few years.
And by the end of the first quarter of this year hotels in this segment increased to 9.2% of our total portfolio.
Paradise for only 2.2.
And in 2017 this year, we plan to open more hotels in the mid to upscale and the luxury segments.
Slide 14 shows the impressive growth in both our individual on a corporate membership programs.
Which accounted for most of.
2% to 2% of all direct sales in the first quarter.
Individual members memberships grow through a 59 million from 46 million on a corporate memberships grow to $1.7 million from 1.5 and year over a year.
In closing I would like.
Feedback our team franchisees and shareholders for their tremendous efforts and support throughout the quarter and we achieved a steady growth and opened a more hotels in new strategic locations. Despite some resurgence of COVID-19 in China.
We are optimistic.
And to think that travel will continue to recover the vaccine rollouts accelerate this would help us deliver even better results.
Next quarter.
I will now pass the call over to Megan Huang who will summarize our business operations for the first quarter.
Mr. <unk>. Please go ahead.
Thank you Alec.
Please turn to slide 16, which highlights for <unk>.
And in our operating.
And magic over a year from the impact from COVID-19, blended ADR increased 8% to 151 RMB occupancy rate increased to $16.1.
And for tend to stick to a 3.4% and a revpar increase of 35, 1% to 96 RMB.
Accelerate the expansion of our market presence across China opening 201, new hotels in a first quarter net.
Moving to slide 17.
And 1 picking up a third quarter, we had for 460 for hotels in operation.
7.7% for more than a year before.
43 of these hotels on leased and operated on all hotels.
Hotels, and a 4421 warfarin and manage.
And the air FM hotels and.
While the net scale segment remains a core of our business with 64, 2% of our hotels.
And that's here, we continued our expansion and maintenance, both a higher and economy segment.
This expansion accelerated in the first quarter and.
A number of net to upscale and luxury set a luxury hotels and now accounts for a 9.2% of our total portfolio wide. The economy segment remained stable at 26, 6% and.
Alex mentioned, we also fortified our already a dominant position in tier 3.
And suddenly lower cities and at the end of the first quarter 67, and 3 our hotel for empty cities. This debt a strategic advantage enhance our cross marketing metrics.
On slide 18, you can see that in the first quarter, we opened 200.
Sorry, and on the 1 hotels compared to a 60 to 80 for first quarter 2023 hotels, who are in the luxury segment 33 in the net to upscale segment 136, and the mid scale segment and a 30 in the economy segment 9 were in tier 1 cities 60.
And in tier 2 cities and the remaining 127 in tier 3 and a lower cities in China set.
74% of newly opened hotels in the first quarter were in the mid to upscale and luxury segments of the market.
And with close to 77 hotels 6 do too.
If I ran and upgraded certainly due to noncompliance with our brand and operating standard and a 41 due to property related issues.
Net net we added 120 for hotels to our portfolio.
During the quarter.
Slide 19 shows the growth and our.
Pipeline of new hotels, despite COVID-19, our pipeline increased from 1186 on December 31, 2022, 1 on 265 on March 30 for 'twenty 'twenty 1.
Around 41% on faith, New hotels are in the Mexico.
And second on about 32% in the economy sector and around 27% in the mid to upscale and the luxury segment.
Slide 20 shows our quarterly operating performance trends.
And the first quarter Revpar from our for our L. A hotels increased to 19.5 RMB.
RMB Revpar for our FM hotels increased $2.96, RMB ADR for all I'll also tell it's increased to 180 for RMB and ADR for our App on the hotels increased to 150 R&D.
Occupancy at our L. A hotels increased to 51.7.
7% and occupancy rates at our hotels increased to 63, 7%.
As mentioned earlier on.
And so on the first quarter was negatively impacted by the implementation of travel restrictions and the government state and local policies during the Chinese Spring festival with that.
And I'll pass the call over to our CFO Miguel.
And we're making.
Please turn to slide 21.
And that's 50.
Total revenues increased 53, 3% year over year to 241.
And to meet and RMB per dose.
Revenue for S and hotels increased by 51 from 2% to a 177 and 29 media on B Y a code a rack Neil from L. A hotels increased to 66% to a $56.1 million RMB.
On.
On slide 22.
Total hotel operating costs were a $197.7 million RMB a 14th.
What is reported 8% year over year increase.
And a 51, 6% increase compared a waste the first quarter 2019.
Rich.
Which are many a turbo to higher rents and increase it and other costs due to the expansion of our F N and are on hotels.
And the first a quarter a hotel operating costs were a 122.2 media on B, that's a 52.8% comparable.
But first a quarter 2019.
The increase was related to higher rent due to more air hotels, both near and opened and in a pipeline.
Besides hotel operating costs in the first quarter 2021included costs for AGA.
And urban category and not consolidated in the first a quarter 2019 members.
Excluding these factors hotel operating costs increased by 3.4 and 5% comparable with the first quarter 2019, which is many a kitted flow to the increasing number.
And of our stuff.
And marketing expenses were 18 point and 1 million on.
A year over year increase a 1.6% a.
A decrease of $26.6 per cent compared with a first quarter 2019.
Yeah.
General and administrative expenses were a 56 million a M b a y.
What kind of a 17, 5% compared with the first quarter 2019.
The increase was mainly attributable to increased a consulting fees and factored that in the first a quarter attaching 19.
G&A expenses for a AGA and urban were not consolidated in our performance.
Excluding these factors, Ken and 8 compared with first quarter 2019 increased a biased right for a 3% magnitude would flow to the increasing investment to research and development.
And newly added and stuff.
Turning to slide 23.
Income from operations defined as Iraq, and he was -2 to operating costs and expenses.
Code to a 61 point for me and me.
And on B, representing a year over year increase of.
A 64, 9%.
The increase was many viewed the standard recovery you know revpar for high and number of hotels and better control costs and expenses during this quarter.
Operating margin was $25.4 per cent compared.
It's a replay a 6% a year ago.
Comparable with a first quarter 2019 income from operations decreased by 45, 1% and margin decreased from 47, a 25% to a 25.4%.
And then.
It should bode to costs related to a near to open air and hotels.
And the impact from travel restrictions and January and February during the Chinese Spring Festival.
On a same slide net income increased to 66 million RMB and net income.
Income margin increased debt to try and 7.4%.
Adjusted EBITDA increased by 74 point, a 3% to a 64 million on B.
And the adjusted EBITDA margin increased to try a 6.5% year over a year.
Core net income.
We used a 58, 3% to a 43 points a night media on B.
And core net margin was $18.2 per cent.
Compared with a first quarter of 2019, adjusted EBITDA decreased by 43, 2% and a margin decrease there right.
And 1 point of 3%.
The core net income decreased by 52, a 24 per cent and a margin decreased by 21%, which are mainly attributable to lower revpar across the board and L. A hotels newly opened in the pipeline.
Please turn to slide 10 before net income for Adi was a point 68 on B. That's your thought on Tencent.
Up from the loss of 11, RMB, 1 year ago, a point elaborate on day, 1 year ago and that for a 1 point for 3 on B.
And slip a quarter or 2019.
Core net income for a D. S. That's basic and diluted non-GAAP was points for industry. That's your thought on a seventh gens on B a.
From.
<unk> 27 on B and a yield for 2020.
And down from <unk> 91 at a be a fourth quarter 2019.
Now, let's take a look and slide 25.
And the smart city for a tiny tiny 1 the company had total cash and a cash equivalents.
Cash and shipped from your regimens.
He left a message of equity securities and time deposits of 1 point to 7 beat it on a b.
Compared to 1 point might be there on the end of December for the first 10 to 20.
The decrease from the fourth quarter with a primary to the go to loans to franchisees.
Hi on the marriage of prepaid a rack and deposits.
And acquisition costs on our air all hotels.
And all of a set by the Jordan Downs, a bang for city of cheese.
The cash and cash equivalents per watt us with enough capital as we continue to be.
And that execute our growth strategy, including a potential acquisitions and support our franchisees.
On Slide 26, you can see a significant impact with COVID-19 has had on our business.
Assuming that a damage remain.
And on control and China, We expect total revenues for the for a year or 2021 to grow 48% to 53% over a 10 detainee levels and.
And she had a 5% to put a percent over the year on for 2019.
This concludes.
Our prepared remarks.
Operator, we are now ready to begin the Q&A session. Thank you.
We will now begin the question and answer session.
To ask a question you May Press Star then 1 on your Touchtone phone if.
If you like using a speaker phone.
Please pick up the handset before pressing the keys.
To withdraw your question. Please press Star then 2.
At this time, we will pause momentarily to assemble a roster.
Yeah.
Your first question comes from Praveen Chaudhry with Morgan Stanley.
Please go ahead.
Okay.
Hi, Thanks, very much for taking my call Hi, Alex how are you on.
I have a couple of questions. The first 1 is would you talk.
Understand this is the first quarter result, but would you tell us anything about the current outlook.
In terms of a how the revpar.
It's trending as well as the opening.
Since the first quarter ended.
And also if you can talk about any particular reason for the first quarter results to be a little bit later than usual. Thank you so much.
Okay.
Thanks for vein.
A.
You can see from the a paragraph.
Slide 8.
The.
First quarter, a raw par was only about 75% a fee a pre COVID-19 level.
But after a day.
April pretty much raw par a increased to 100% level and sometimes even higher.
A cases more than a 180, a worth more than 108% or a 6% and higher.
The.
The debt, let's say after a bubble of the pre COVID-19.
And at the.
At the a COVID-19 resurgence is a controlled for.
A railcar recoveries and very rapid so we're pretty confident and.
And I see a recovery.
Recovery will continue so the slide 8 you can refer to that all the way I think to be a.
And of June.
So a stack and the issue is and.
And we have a hired a consultant we have.
Have a accessing the a situation.
Because in the past.
And many many a and <unk>.
Vascular has asked us a.
What we should do a way.
And with more Chinese companies are a.
Seeking alternative listings, so we hire a debt.
A.
Consult and assessing the situation and a bad then I think as a result of that the numbers of the first quarter and get delayed.
And that's basically the only reason thanks prevent.
Thanks, Alex.
That's helpful can I ask you 1 more question about lower tier cities, where you have been a normally more dominant compare to your peers.
But lately, we are a hearing and seeing that many other oh for your peers are also.
Trying to grow.
In lower tier cities.
So first do you think the competition is heating up and lower tier cities. How are you going to manage that competition.
And second is.
Do you think there are any competitive advantage that you have developed overtime and low.
Third tier cities, which will help you more than your peers. Thank you.
A.
China has a lot more lower tier cities and a first and second a city so.
On the economy grow and be a.
China is a lifting the economy and a across the board and we feel again the opportunities of the growth opportunities.
And to be more in.
And a third another search here on other tier cities and.
We have a.
And adding resources to impose a tier 3 and a lower tier city for many years.
And then to manage across a wide range and.
Wide area networks requires.
And there's a lot of resources.
Some companies and a path to try to quickly expanded into the lower and and other tier cities.
As you can see the result, a not that easy so I think we have some advantages.
GAAP getting on a cumulative.
Emulating the experience and resource.
On the system and managing effectively.
In those areas I think that gave us a real advantage over.
Many many months a hat however, a.
I think a lot of other people realize also.
Communication and both cities and the competition are heating up everywhere not only at the FERC.
A sitting but also in the first and the second share.
It's a fee.
A urban development reached a peak.
Element is a start.
Spreading.
And there are off to the literature and other tier cities and.
But we still are confident prevent that.
And we will have a real competitive advantages in these areas and as I said managing a wide area networks requires a cumulated resources.
And in the system.
Yeah.
Thank you Alex and.
All the best.
Thank you for them.
Again, if you have a question. Please press Star then 1 day.
Your next question comes.
And there is on with Bank of America. Please go ahead.
Hi, Hi, good morning, Heart and Hi, Good morning, Alex Good morning, a Sabrina and I have 2 questions first question and sorry, I'm just can you provide a little bit more information about our.
From a lease and operate a hotel and a.
And the presentation that we noticed that there or free major 1 opened during the first quarter a would you mind to share about a operating matrix in terms of rough part and roughly about a profitability after a ramp up.
And I think they've been and.
And for like for 5 months now a what.
What kind of a margin and profitability should we expect and then secondly, also we are seeing about 20, more a lease and operate a hotel and a pipeline and what.
A kind of a P&L impact shall we expect for this year and in terms of pre opening cost and in terms of a capex and how should we budget that for the rest of the year and then finally, a 1 more questions on that and so I could always see about 1200 hotels.
What's the what and the pipeline so should we assume a most of them a we'll be able to open a.
And the next and 6 to 12 months.
Yeah.
A billy thank you.
Our first question a war.
Okay.
Charles a hill, H, a or a comp our reasons and.
And to make those decisions and stuff, adding L. A hotels and then the operating matrix I'll leave that to them Serena for you to answer a.
And we have been.
Keep in Pes, we try and expand into.
A southeast southwest and.
Area.
In the past all a stronghold is in a China central region and a.
Especially for the a.
Shanghai, a delphi area.
And a.
We have been trying to accelerated our growth into those a weak area a white space.
Through you know franchised and managed and a last.
Last year and the Fisher a.
You know, there's new opportunities emerge.
Where are we are able to find a son and a special because listing hotels a batch.
Impacted by the Covid, which we were able to.
A acquirer or you and bashed, a with a much much.
Lower.
A cost than we are.
Merge to leave we are able to a just a secure and news sites and start building those hotels.
So most.
Most of those a conversion from existing hotels and.
Most of the night and the C. T. We feel even during the current and timeframe they may.
May be impacted by the Covid and Morris, a probably a heavily and in a China central area, but eventually with them with Covid.
A crisis strong jaws opportunity and those hotels and a win.
A further benefited from the opening up for the borders for.
[noise] instance, and 19.
Which is a.
And next with a southeast Asia and.
And so that fee.
But that's the rationale behind it on the web.
Selecting a strategic locations and the strategic cities, which a kantar.
Price to a friend.
On a street penetrate quickly into the week and white space of Green tree and a cost so.
The performance of our hotels a varies for instance, you behind performance on a really good.
In the a 19.
And because the door a true b cell stage and countries are still closed and so 90 and face a.
More heavily impacted once she is a more I think that the a.
And the other cities, but we think a ways.
Pine.
And passed a that those hotels will perform and really.
Well okay.
Thank you Alex a.
And I see share more information in terms of a order or a hotel.
Here's a first a cautionary and we had a 43 air or a hotel and the Rep high for.
We compare with a first quarter of 2019 day Revpar decrease debt by 20% a and for for a total portfolio I'm, a wrap patty cleaner by Chinese for Ken.
On your 4.5% so that means the and all hotels outperformed it and our total portfolio and for the second a cautionary on what do they have a.
And as a more and more than 10 and a hole.
Towers added into our portfolio and now we can and see that a red power for our air Hotel and for a second quarter and increased increase debt by more than a.
5% easily comparable with a.
And of 10 to 19. So that's also outperformed the total portfolio. Thank you.
Yeah.
Thanks, a lot.
And then.
A.
And when we turn on a faithful Italian.
Interest and fees and I think there'll be some impact all from.
Occupancy during.
During the conversion period, and that's a fee you can.
The numbers for you.
The first quarter, a I'll also tell us occupancies low birth and the.
And then here.
On hotel.
Tell us on the on.
As a side of that that the.
We have a all.
All the costs included a hotel opening cost in our numbers. So we have traditionally not a soft plaguing the opening cost a.
And you know the open class from the reported numbers. So we did.
We went on fee I don't think that a what we should be able to see a lot of a major impact from a hotel opening cost a drag down the net operating income.
And and in terms of the opening pipeline.
And what should we expect a the opening pace.
For the next 6 to 12 months.
Are we.
That's a I forgot to ask you a young.
Sure.
<unk>.
Yes, most of it for 100 hotels will open and that you know next day you might say.
A 6 to 18 months.
Why are we use 18 months because there are some hotels on.
Newly built.
And so it takes much longer time and.
On.
And before the conversion hotels, a but we should expect a majority of them should be the openness from a 6 to 12 months.
We signed him well for extended for her and.
So and.
We'll continue to see I think for second quarter openings.
It's about a 1 it's a little bit less than the first quarter a but.
And I still a substantially higher.
And.
And a.
Similar to last year, a year before I think.
1 thing to a exact number it's a big swing that has a better.
Yeah and and.
The opening for the second a quarter, we have been more than a 117.
Mhm.
Thanks, a lot. Thank you.
Your next question comes from Ingrid Zhang with UBS. Please go ahead.
Hi, many thanks, Alex for Sunday Night, and Megan on for taking my question I have a 2 questions about the the reason the trends for the first us.
Can you please comment on a little bit about the impact from a hold on slot and.
And the reason a resurgence of Covid cases.
And is.
And if possible can you please share with us a when do we expense our revpar to a return to their timing and 19.
<unk> a manitex.
Okay. So.
I didn't get a thank you so much for that question I didn't get a quietly a quite the first question and you said the impact from 19.
On the comp impact from first a hold off a lot and importantly.
Importantly, the reason a resurgence of Covid cases on yeah that the COVID-19.
Covid outbreak starting from Nanjing.
Yeah.
Okay.
Thank you.
On the.
A a COVID-19 cases.
Covid management and I think in the past a we have indicated that debt would be and prepare for the occasionally.
So I can see T a.
A resurgence of Covid.
We have a chapter from both also for a a slot for crashes and going on.
We quickly after a suicide.
And we saw the.
Newscast.
And our company's a policies a immediately alert.
Not only the corner on but early on.
On potential affected on a hotel.
Pos tool be prepared for the flood control and.
And to a prepare ourself on the so and for that on.
And for our hotels in the region, a way have not been affected the odds of a fan and.
Even with a hotels are.
Hosting some of the local a local restaurants and I think a for them.
For the next a couple of weeks and a distance a well, we hope well resume back to normal.
But with a 19 and with a ninth U a COVID-19 a at the same thing some of them for all hotels will be on it.
Or in the process of being taken up by a government as the Covid hotel and so that's a.
I think a in terms.
<unk> have a revenue and in terms of.
And.
The income impact days and.
He is going to be probably offset.
By that.
But the good thing he said that and.
And I think that now for a guest and.
And all of our employees a get impacted by the resurgence and that there is a steel relatively speaking compared with on.
Broad numbers from that there's a very a very small number.
People get impacted and 19, so we think they've.
And the government is taking a a very very strong measure to prevent the a crisis from spreading so we are very confident that classes will be controlled and 2 to 3 weeks and typically that's the time period and then just like a Guangdong.
A couple of months ago, and a business will go back to normal I think that a.
China has a very strong and a very effective.
And Covid control and mitigation policy.
Assuming there's a potential impact a person getting on identified and.
And there will be a having a state of quarantine.
Stay home policy under that a people are getting checks and.
On every well.
And they often on.
And so we do not a.
We do not at least a we do not think visual a half a a.
You know a major impact.
A or companies.
<unk> performance.
Yeah.
And so please allow me to answer your second question and.
Actually we observed that they think the April our revpar and begin to return to that.
The level of the year of 2019, especially in May I forgot price increase, thereby street percentage, if we compare with a 10 and 19 leveled and day.
In June our Revpar a.
Still kit and keeps a positive for you for a compare with the 10 and 19, even and see it.
And in the third quarter net I mean, a for a very beginning of July T and now all of a red hot and for them to almost the same level of the 2019.
And that is something that and.
On X.
Your next question comes from Simon and young with Goldman Sachs. Please go ahead.
Hi, everyone and thanks for taking my question and then also a presentations.
And for your questions Yeah.
Just on earlier on you mentioned, a post second quarter, you're adding.
170 hotels and also can you give us a sense about the full year on number.
<unk> and if you can perhaps give us a sense about the breakdown between now and then franchisees that would be very helpful.
And then the second question just wanted to get a sense about your EBITDA margin.
<unk>.
Oh, and the franchisees because as you add more L. O I suppose that's going to be a baidu T for duty margins.
And on <unk>, you mentioned that you know it would take some times a for a 40 a L. A you know.
To wrap up and then suddenly you know you mentioned about hiring a.
A consultant to can see the at least staying elsewhere.
Just wondering whether you can share anything we for.
And so what are the conclusion a.
And at least it elsewhere what are some of the key consideration and yeah. Thank you.
Yeah.
Okay. So for the first a question for you and I am a shale.
With more detailed information for the for a year.
And you know a pan on.
The number of new hotels, and we don't be more than a 700, and we're likely to open and almost 800 hotels this year.
And between them.
And steel.
For most of them a franchise debt and to manage the hotel a only we had opportunity to teach here Oh and his operating hotels, and a strategic foundation and a need that weight and a wheel and cash opportunity to add more and more and a hotel.
And.
But a second question and and.
And she was a second quarter and we can pick up their EBITDA margin. We are a it was.
Approaching 40% doesn't mean, a recovered better than the first quarter and a normally our EBITDA margin was up about a 50%.
And for a target for this year.
And as a third a question a assignment that then a.
We are our consultant a working really hard and a attack we will.
For those that could report to you the per well.
It should be made.
A.
And if I see a a.
To a extend a loan.
And we're able to report to you.
Yeah.
This concludes our question and answer session I would now like to turn the conference back to Selina for any closing remarks.
Thank you operator and another question.
Your next question comes from Donald Lu with China resistance.
Please go ahead.
Hi, Hi management, a can you hear me.
Yes.
Alright.
Thanks for taking my question.
I have 2 questions for the first its like for the our hotels, a weird like what's the like torture or what's the return on a real looking for a restaurant.
That's my first 1.
So this will basically was a return threshold for us to do it.
Alright, no investments that's a first question and for the second question. So are so a so I stood up a for growth target. We have for on a top line. It's about 25 to a further for a central this year. So can I assume debt like a 20% on visits coming from D. A.
And what sports a hotel.
With a group a portal numbers on that.
On a 5 or 6 coming from a revpar improvement. Thank you.
Okay. Thanks, a bond right.
Yeah.
The.
The hour.
Our leased and operated hotels and investment criteria is still roughly about and that we prefer to be 3 payback period.
But at this moment a.
Due to the higher a ranch higher and get them.
A improvement clause.
On higher a cost.
Cost across the border and we really are targeting less than 4 years payback period. So that's how we're a threshold by may 2 investment and the all hotels, that's 1 criteria.
And second criteria is a really we have to.
Those are on investment in those areas with high impact that is N a.
Right.
You know that attracting more on a.
Sales and marketing.
On a helping sales and marketing team and by building the.
From a Boston for instance, in a T O D area transportation hub and so I'm harping on this.
To and to gain more.
Brand awareness and hustle and attracting more members and so those are the a key set.
Hotels, so in terms of the 25% to 30% for the.
Our revenue growth targets, our 2019 pre COVID-19 and.
About 50% debt was 22020.
You can see the numbers, a primarily growing from F N a hotel.
For more.
And <unk> to a close to 7 to 800, and then and.
I think we will a boom.
Mission for you would have about when T. A.
Oh hotels from a pipeline a which.
Which will also give them a contributor to that number.
And.
C a F M and hotel contribution and.
And it will be a little lower because it would be already impacted by the first quarter as 25% the loss of the revenue.
From FM hotels, because the timber.
And so we could grow a power only.
And our and a 75% to a pre COVID-19 level and.
And so that's the math on whether a Dom and Michelle. Thank you. So and you have any and maybe what I can share a more detailed information.
And I was a little crafter 25 percentage, 30% are resonating.
Recovery, if we compare with a year of 2019, a mountain and about a 10% of it and.
And contributions from our new and it can't all hotels and remaining coming from our existing Arrow hotels and also for our S. M. A hotel so <unk> and.
And the inverse and our current forecast for the for a year a revpar.
If everything go and smooth I mean, nothing special and due to the COVID-19 recession and think of the COVID-19, maybe they wrap how will be and feed a cover 2 there and level of the attendee and Nike or even a little bit higher.
And then 2019, otherwise and maybe.
And the range of my.
A -2 percentage you party or a 2% in terms of the rapid increase and the and the remaining contribution coming from day, a number of hotels increase thank you.
Okay, very clear and Frank and management.
Your next question comes from Jerry Huynh with WG I. Please go ahead.
Hi, I had 2 quick questions on 1 is the the gross debt of the company and increased very modestly.
Especially relative to the past can you just talk about within either a the short.
Short term debt is.
And then the second question is a.
The share price as a company has recently hit an all time low and yet.
You have over $200 million of net cash on your balance sheet.
And any consideration to them.
Increase shareholder returns.
<unk> a either through a.
A dividends or share.
Share buyback, a especially just given.
And where shares are now.
Okay.
Let me take this a questions Jerry Thank you for them for a quick good questions.
On a fee that the a draw down on.
Yeah.
And I mentioned that a bank facilities and go.
And as a mentally for a maintaining our a banking relationships and.
On a because we may experience and the next year all day.
On the future.
<unk> speed at a.
Accelerated growth for so we.
We want to make sure we have a good banking relationships by.
Occasionally a using debt facilities. So that's primarily the reason for a occasionally drawing down a bit.
Bank facility, even though we have.
Cash on a balance.
Balance sheet.
In terms of a second a share price.
And we.
We understand a feed market that have different sentiment and occasionally.
It's a fundamental off a company remain to be very solid and a solid and we believe.
And so on.
We are very much.
Much confident at that at the for sure.
And a price war.
I think that would eventually reflects a company's fundamental and what would be doing.
In terms of a fascia in terms of the whether the a shareholder.
Leave for Torrance and those various programs.
We will have a meeting with outwards retro to discuss a.
About a <unk>.
Situation and will report to you if that's a.
And if he's a fee.
And the board of director and decide to take any action.
Thank you very much.
Again, if you wish to ask a question. Please press Star then 1.
Yeah.
This concludes our question and answer session.
I would now like to turn the conference back over to Selina for any closing remarks.
Thank you a upgrades and.
And clothing on behalf of the entire Greentree management team. We thank you all for your interest and participation in today's call. If you require any further information or have plans.
I think for US please contact Anne Thank you all.
Thank you.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
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