Q3 2023 H World Group Ltd Earnings Call
Thank you for standing by and welcome to the H World Q3, 2023 earnings conference call. All participants are in a listen only mode there'll be a presentation followed by a question and answer session. If you wish to ask a question you will need to press the star key followed.
Speaker 1: Thank you for standing by and welcome to the H world Q3 2023 earnings conference call. All participants are in a listen only mode. There'll be a presentation followed by a question and answer session.
Speaker 1: If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad.
The number one on your telephone keypad.
Speaker 1: I would now like to hand the conference over to Mr. Jason Chen, Senior IR Director. Please go ahead.
I'd now like to hand, the conference over to Mr. Jason Chen Senior IR Director. Please go ahead.
Okay.
Thank you.
Good morning, and good evening, everyone. Thanks for joining US today welcome to <unk> Group 2023 third quarter earnings Conference call.
Speaker 2: Good morning and good evening everyone. Thanks for joining us today. Welcome to Edgeworth Group 2023 Third Quarter Earnings Conference Call. Joining us today...
Joining us today is our chairman Mr Chi Chi.
Speaker 2: our CEO Mr. Jing Hui, our CFO Mr. Ji Hong, and our President Ms. Liu Xingxing.
Our CEO Mr. Jean Cui.
Our CFO, Mr <unk>, Hu and our precedent this law suit.
Speaker 2: following their prepared remarks. Management will be available to answer your questions.
Following our prepared remarks.
Two months, we'll be available to answer your questions.
Speaker 2: Before we continue, please note that the discussion today will include forward-looking statements made under the Safe Harbor Provision of the United States' Private Security Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties.
Four we continue please note that the discussion today will include forward looking statements made under the safe Harbor provision of the United States Private Securities Litigation Reform Act of 1995.
Forward looking statements involve luthiers risks and uncertainties as such our results may be materially different from the views expressed today.
Speaker 2: As such, our results may be materially different from the views expressed today.
A number of potential risks and uncertainties outlined in our public filings with the SEC.
Speaker 2: A number of potential risks and uncertainties are outlined in our public filings with the S.
Speaker 2: As what group does not undertake any obligations to update any forward-looking statements except as required and applicable law
<unk> group does not undertake any obligations to update any forward looking statements, except as required and applicable laws.
Speaker 2: On the call today, we will also mention adjusted financial measures during the discussion of our performance. Reconciliations of those measures to comparable gap information can be found in our earnings release that was distributed last Friday.
Today, we will also mention adjusted financial measures during the discussion of our performance reconciliations of those measures to comparable GAAP information can be found in our earnings release that was distributed last Friday.
Speaker 2: As a reminder, this conference call is being recorded. The webcast of this conference call, as well as supplementary slides presentation, is available at ir.hward.com. With that, now I will hand over the call to our CFO , Ms. He Ji Hong, for the opening speech. Ms. Hua, please.
As a reminder, this conference call is being recorded.
Cost of this conference call as well as supplementary slides presentation is available at IR Doc Edgewater Duck call.
With that now I will hand over the call to our CFO Ms. Kochi whole foods opening speech Mis club piece.
Speaker 3: Good morning and good evening, ladies and gentlemen. Thank you for joining each world's third quarter of the 2023 earning call today.
Good morning, and good evening, ladies and gentlemen, thank.
Thank you for joining H, what third fourth.
First quarter 'twenty to 'twenty, three earning call today.
Speaker 3: We are delighted to report that H-World delivered another strong quarterly financial result, reflecting the continuous healthy recovery of the lodging market in China.
We are delighted to report that each well it delivered another strong quarterly financial results, reflecting the continued healthy recovery lodging market in China.
In today's call Edgewater Group C O Jing Wei well first elaborate on the business performance and highlight our achievements.
Speaker 3: In today's call, H-World Group CEO Jing Hui will first elaborate on the business performance and highlight our achievements.
Oh, well that goes through the key financial numbers.
Speaker 3: As usual, we will have the Q&A session after management presentation.
As usual, we will have the Q&A session after management's presentation.
With this I will hand over to Mr. Jim Quake.
Speaker 2: Thank you, Ji-Hong. Please turn to page 3. As usual, we will review the recovery situation of Huazhou's recent RERPA.
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Speaker 2: The main reason is the increase in ADR caused by the change in product structure.
Speaker 2: But the rate of entry has also improved compared to the same period this quarter. By the end of the month, July to September , China-China Comprehensive Heat Packs will be restored to 132 units in 2019 respectively.
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Speaker 2: 128 and 128. This strong recovery data is due to the strong seasonal travel demand in July and August and the constant recovery of business travel.
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Speaker 2: At the same time, the performance of the company's Repa also reflects the excellent product quality and brand strength of Huazhou Hotel.
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Speaker 2: Since this year, the demand for leisure tourism in China has exploded better than we expected at the beginning of the year, but the company has always maintained a relatively cautious and optimistic attitude. We can see that this year, some holidays, such as Spring Festival, May Day, and holidays are indisputable. There is a concentration of tourism demand, but some changes in the consumption structure after the epidemic are also not to be ignored. Especially in the context of expanding domestic demand, we can clearly see a rapid increase in experiential consumption demand.
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Speaker 2: and from 2016 until now, the United States has given more than two sentences for those three domestic clans.
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Speaker 2: The overall October heat wave has recovered to 120% in the same period of 2019. We believe that the recovery of the macroeconomic sector is still fluctuating and uncertain in the short term, but Huazhou will continue to stick to the company's long-term strategic momentum, focus on and continue to enhance the company's brand, product, management and executive power, and continue to expand Huazhou China's hotel network and market share, and work hard for the company's long-term sustainable business development.
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Please turn to page three.
Speaker 2: Please turn to page 3.
Speaker 2: As usual, let's go through Lackadaisy-Hua-Chu's Reptile Recovery in her recent months.
As usual, let's go through legacy Quad to Revpar recovery, we've got recent policies.
Speaker 2: In the third quarter, we maintained our market leading performance since the year beginning. Our REFPA recovered to 129% of the 2019 level. The REFPA recovery continued to be supported by ADR growth, which was mainly driven by our product mix change.
In the third quarter, we maintained our market leading performance seems to ear bikini.
All our revpar recover to 129% after 2019 level. The Revpar recovery continued to be supported by ADR growth, which was mainly driven by our product mix change.
Speaker 2: Meanwhile, occupancy rate recovery also improved sequentially in this quarter.
Meanwhile, occupancy rate recovery also improved sequentially in this quarter.
Speaker 2: Breaking down into monthly numbers, our RefPi in July , August , and September recovered to 132%, 128%, and 128% of the 2019 levels in the corresponding months respectively.
Breaking down into mostly numbers all while Revpar in July August and September recovered to 132%, 128% and the 128% off the 2019 levels and the corresponding smallest is respectively.
Speaker 2: This strong set-off number was benefited from the strong leisure travel demand during the summer holiday season, as well as the continuous business traveling recovery.
This drove sat off number was benefited from the strong leisure travel demand during the summer holiday season, as well as the continuous business travel recovery.
Speaker 2: In addition, our REVPA performance reflected our hotel's superior product quality and brand power. We should continue to support our industry-leading position in operational performance.
In addition, our Revpar performance reflected all of our hotels superior product quality and brand power, which should continue to support our industry, leading position and operational performance.
Speaker 2: This year, the rebound of China's leisure traveling demand was better than our previously expected in the year beginning. Nevertheless, we keep our cautiously optimistic view on market outlook unchanged.
This year, the rebound of kindness leisure travel demand was better than our peer of yours to be expected in the year beginning.
Nevertheless, we keep our cautiously optimistic view on the market outlook unchanged. We certainly saw some pent up leisure travel demand doing some off the pixie, there's such as the Chinese new year may holidays and summer holiday.
Speaker 2: We certainly saw some pent-up leisure travel demand during some of the peak seasons, such as the Chinese New Year, May holidays, and the summer holiday. But the structural changes in Chinese consumers' consumption structure post-COVID should not be ignored. Especially the demand for experience-related activities were growing rapidly with government efforts on stimulating the domestic demand.
But the structural changes in Chinese consumers' consumption structure posted the Colgate should not be ignored.
Especially the demand for Prs related activities were growing rapidly we used to government efforts all stimulating the domestic demand.
Speaker 2: After the strong summer holiday season, our ref par recovered to 123% of the 2019 level during the Golden Week holiday.
After the strong summer holiday season, our revpar recover to a 123% after 2019 levels during the Golden week holiday.
For the entire most of October our Revpar do you recovered, 228% offset in 2019.
Speaker 2: For the entire month of October , our Red Cross due recovered 220% of that in 2019.
Speaker 2: In the short term, although the macro condition could possibly remain volatile and uncertain, we will continue executing company's long-term strategies with focus on building and enhancing our product brand management and execution capability.
In the short term, although the macro condition could it possibly remain volatile and uncertain.
We will continue executing culp these long term strategies, which focus on building and enhancing our products brand management and execution capabilities. We will continue to expand our hotel networks and to further gain market share to achieve our long term sustainable quality growth.
Speaker 2: We will continue to expand our hotel networks and the further game market share to achieve a long-term sustainable quality growth.
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Speaker 4: In the current macro environment, we once again emphasize that China's long-term and sustainable growth of the Relka will be driven by the Ruxia 4.0.
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Speaker 4: The first point is to continuously infiltrate low-tier cities that are extremely economically resilient, to help China achieve relatively stable performance in a fluctuating macroeconomic environment.
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Speaker 4: The adjustment and optimization of the China-Asia Joint Structural Structure and the establishment of regional branches make China-Asia land-based operations more surprising and efficient, and the ability to penetrate the region is further enhanced.
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Speaker 4: We believe that in the future, regional branches will continue to assist Huazhou to expand the network and quickly open up business opportunities in the Boluo region.
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Speaker 4: The third point is to continue to upgrade products and improve services to help Chinese hotels get higher premiums, whether they are in economic countries or in Chinese hotels.
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Speaker 4: Huazhou has continued to upgrade its products, through high-quality products, to maintain Huazhou's position in the limited-service market.
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Speaker 4: The fourth point is that the power of high-end brands optimizes the hotel structure of companies and increases the market share of high-end hotels. This year,
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Speaker 4: We have gained a lot of experience in the development of three major Chinese high-end brands.
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Please turn to page four with the current macro uncertainties, we want to rent ethics ice the local key points to drive our revpar to achieve long term sustainable growth.
Speaker 2: Please turn to page four. With the current macro uncertainties, we want to emphasize the low-fall key points to drive our rough path to achieve long-term sustainable growth.
Speaker 4: Firstly, for the penetrating into lower tears
Firstly further.
<unk> into lower tier cities that could help us to deliver relatively stable at a solid performers with macro volatility and uncertainties given lower tier cities market are more resilient.
Speaker 4: that could help us to deliver relatively stable and a solid performance with macro volatility and uncertainty.
Speaker 4: given lower tier cities markets are more resilient.
Secondly, the organizational restructuring and optimization enable us to achieve more efficient localized operations.
Speaker 4: Secondly, the organizational restructuring and optimization enable us to achieve more efficient localized operations.
Speaker 4: We have accomplished some initial success since the establishment of our regional headquarters. We believe those regional headquarters will continue to support the company's hotel networks expansion and to further penetration into regions that we were previously without.
We have accomplished some initial success since they stop the establishment of our original headquarters. We believe those regional headquarters will continue to support the company's hotel network expansion and the two further penetration into ridges that we were previously weak.
Speaker 4: Thirdly, the continuous upgrade and improvement of our products and services to achieve better real power premium.
Thirdly, the continuous upgrades and improvements of our products and services to achieve better Revpar premiums no matter economic sack months for me those skill segment, we are committed to keeping hence in our products and services in order to further strengthen our dominant market position in the limited service.
Speaker 4: No matter in economic segment or middle skill segment, we are committed to keep enhancing our products and services in order to further strengthen our dominant market position in the limited service hotel sector.
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Speaker 4: Lastly, further breakthrough in the upper mid-segment.
Lastly, further breakthrough in the upper mid segment.
To increase our market share and optimize our overall hotel network portfolio. This year, our upper mid scale segments achieved encouraging progress in operational performance, mainly supported by our three key brands.
Speaker 4: to increase our market share and optimizes our overall hotel network portfolio. This year, our automated skill segments achieved encouraging progress in operational performance, mainly supported by our three key brands.
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Speaker 4: Since the end of September , the number of hotels our company has taken over is 9,028 and 40% of them are in low-tier hotels.
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Speaker 4: The company has 2,935 hotels, 55% of which are located in Tianjin.
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Speaker 4: Compared to 2022, we see a small increase in the number of first and second-tier cities. This is due to the economic recovery of the first and second-tier cities after the epidemic this year.
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Speaker 4: But we are still advancing the coverage and penetration of low-tier cities. In low-tier cities, the number of Chinese hotels and hotels is increasing by 6%, to nearly 3,600.
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Speaker 4: The number of hotels in the tube has increased by 20% to more than 1,600.
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Speaker 4: The number of cities we cover has increased to 1,217.
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Speaker 4: Please turn to page 5. At the end of September , out of total 9,028 hotels in operation, there were 40% were located in the lower tier.
Please turn to page five.
At the end of September although off a total of 9028 hotels in operation. There were 40% were located in the lower tier cities and a 55% of our 2935 foot Chelsea in pipeline or in the lower tier cities on a year over year basis, we see.
Speaker 4: and 55% of our 2,935 hotels in pipeline were in the lower tiers.
Speaker 4: On a year-over-year basis, we see a small increase in the hotel preparation of proportion in the Tier 1 and Tier 2 cities, thanks to the economic recovery post-COVID in those top tiers.
Small increase in the hotel preparation.
Propulsion aimed at tier one tier two cities.
Two the economic recovery post the Colgate and those top tier cities.
Nonetheless, we continue to push forward, our lower tier cities penetration strategy.
Speaker 4: Nonetheless, we continue to push forward our lower tier cities penetration strategy.
Speaker 4: In terms of absolute hotel number increase in the lower tier cities, our number of hotels in operation increased by 6% year over year to reach close to 3,600 hotels. And the number of hotels in pipeline grew around 20% year over year to over 1,600 hotels. And the number of cities that we covered reached to 1,217.
In terms of absolute hotel number increase in the lower tier cities, our number of ports housing operation increased by 6% year over year to reach close to.
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Speaker 4: With the strong support of the new contract number and the number of tube hotels this year,
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Speaker 4: The speed of power generation in the third quarter is the same as the previous year, and the rate of return continues to increase. The new power generation in the third quarter is 545 units, which is 28% higher than the previous year. In terms of power supply, the second quarter totaled 139 units, including 90 1.0 versions of Hanting, as well as economic power generation.
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Speaker 4: Huazhou continues to promote high-quality development strategies to clean up unqualified hotels, which will help the group's overall hotel quality continue to improve.
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Please turn to page six we continued implementing our sustainable quality growth strategies and to expand our hotel network by opening high quality hotels.
Speaker 4: We continue implementing our sustainable quality growth strategies and to expand our hotel networks by opening high-quality hotels.
Speaker 4: supported by strong new signings and hotels in pipeline. Our hotel openings in the third quarter increased most year over year and quarter over quarter. In the third quarter, we opened 545 hotels, up 28% year over year. And we closed 139 hotels, which was mainly included 94, 191.0 version and a soft economic hotel.
Supported by strong new signings and hotels in pipeline.
Hotel openings in the third quarter increased both year over year and quarter over quarter.
In the third quarter, we opened 545 hotels up 28% year over year.
And we closed 139 hotels, which was mainly included 90 690 94 hunting one zero version and a soft economic hotels.
Speaker 4: Under our sustainable quality growth strategy, we have been continuously cleaning up those unqualified hotels, which can help improve the overall quality of our hotel portfolios.
Our sustainable quality growth strategy, we have been continuously clean up those unqualified hotels, which can help improve the overall quality of our hotel portfolios.
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Speaker 4: Hanting 1.0, which is a financial software brand, fell from 26% at the end of 2020 to 8% at the end of September this year. At the same time, Hanting 2.7
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Speaker 4: from 14% at the end of 2020 to 29% at the end of September this year.
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Please turn to page seven the propulsion of 1.0 version and soft economic hotels decreased from 26% at the end of 2022 only 8% as at the end of September this year and over the same period, the proportion of <unk> to <unk>.
Speaker 4: please turn to page seven. The proportion of Hanting 1.0 version and soft economic hotels decreased from 26% at the end of 2020 to only 8% as the end of September this year. And over the same period, the proportion of Hanting 2.7 version and above increased from 14% to 27%.
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Speaker 4: Please turn to page 8. We emphasize that Huazhou will continue to serve as the core of the public service in the public service sector with economic nationality and medium-sized hotels.
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Speaker 4: As of the end of September , 55% of the company's hotels are economic national hotels.
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Speaker 4: 37% of the company's pipeline hotels are economic national hotels and 48% are mid-size hotels. The share of mid-size hotels has increased by 5%.
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Speaker 4: In the third quarter, 91% of newly opened hotels are economy-type nationals and mid-size hotels.
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Speaker 4: We can see that Huazhou is constantly improving the quality of Chinese hotels.
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Speaker 4: We will continue to focus on the limited-use hotel sector, which is made up of economic and Chinese-style hotels, in order to meet the needs of the vast number of citizens.
Speaker 4: And in the field of limited service hotels, with the increase in the number of Chinese consumers requesting accommodation, the proportion of Chinese residents will also gradually increase, in order to better match the consumption results of Chinese citizens.
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Please turn to page eight we emphasize that that economic and mid scale hotels will always be our core products.
Speaker 4: Please turn to page 8. We emphasize that economic and mid-scale hotels will always be our core product.
Speaker 4: as we strive to better serve Chinese mass consumer market.
As we strive to better serve Chinese mass consumer market.
Speaker 4: As of the end of September , 55% of our hotels in operation were economic.
As of the end of September 55% of our homes housing operation, where economic hotels, and a 37% were mysteel hotels, the proportion of Midscale hotels was up three percentage points year over year basis.
Speaker 4: and 37% were misfueled hotels. The proportion of misfueled hotels was up 3 percentage points on year-over-year basis.
Our hotels in pipeline.
Speaker 4: For hotels in pipelines, around 37% were economic hotels, and 48% were miscellaneous.
37% for economic hotels, and 48% were miscue.
Speaker 4: Proportion of mesquite hotels were up five percentage points
Proportion of Miscue hotels were up five percentage points year over year.
In the third quarter, 91% of the new hotel openings, where economic and mid scale hotels.
Speaker 4: In the third quarter, 91% of the new hotel openings were economic and mid-scale hotels.
As you can see while we are optimizing and enhancing our overall hotel product quality, our limited service hotel segments, which compromise.
Speaker 4: As you can see, while we are optimizing and enhancing our overall hotel product quality, our limited service hotel segments, which compromise economic and miscule segments, are always our key focus to continue improving in order to better meet the travel and accommodation needs for Chinese mass markets.
And <unk> segments are always our key focus to continue improving in order to better meet their travel and accommodation needs, but Chinese mass market.
It is worth noting that within the limited service segment. We are seeing the proposal of miscue is increasing which perfectly matched with consumers rising demand on better quality of commendation products.
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Speaker 4: As of the end of September this year, the number of mid- and high-end hotels that our company welcomes has reached 600 million. The growth rate is 18%, and the return rate is 8%. The number of mid- and high-end hotels in the pipeline is 357. The growth rate is 35%, and the return rate is 13%.
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Speaker 4: The rapid growth of the number of hotels in the pipeline reflects the brand strength of Huazhou's continuous improvement in the mid-to-high-end hotel track, and provides a strong platform for the development of Huazhou's future mid-to-high-end hotels.
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Please turn to page nine.
Speaker 4: Please turn to page 5. This year, we achieved encouraging breakthrough in the upper mid-segment.
This year, we achieved encouraging breakthrough in the upper mid segment.
Speaker 4: At the end of September , we had 605 hotels in operation, which represented a year-over-year and a quarter-over-quarter increase of 18 percent and 8 percent, respectively.
At the end of <unk> at the end of September we had 605 hotels in operation, which represented a year over year and quarter over quarter increase of 18% and 8% respectively.
And we had 357 hotels in pipeline.
Speaker 4: And we had 357 hotels in pipeline, which grew 35% year over year and 13% quarter over quarter.
Which grew 35% year over year, and 13% quarter over quarter.
Speaker 4: The strong pipeline growth reflects the rising brand awareness of our up-and-midscale hotels and provides solid support for the future development.
The strong pipeline growth reflects the rising brand awareness of our upper mid scale hotels and it provides solid support for the future development.
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Speaker 4: In the past three quarters, the number of contracts for Chengji has increased rapidly. As of the end of September this year, the number of Chengji 9-pin in the tube has reached 41 stores.
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We are in the upper mid scale segment, our two key brands, including <unk> and Crystal Orange, both achieved remarkable new signings this year last.
Speaker 4: Within the upper mid-scale segment, our two key brands, including InterCity and Crystal Orange, both have achieved remarkable new signings this year.
Speaker 4: Last year, we launched DSH's InterCity brand in China and opened several new leased InterCity hotels in Wuhan, Zhengzhou, Shenzhen, Shanghai, and so on. Over the past three quarters, the new signings of InterCity grow meaningfully.
Last year, we launched the edges, the inter city brands in China and opened several new leased inter city hotels in Wuhan, Zhengzhou, Shenzhen, Shanghai and Seoul.
Over the past three quarters, the new signings of interest at the grille meaningfully.
Speaker 4: As the end of September , we have 41 Indoor City Hotels in the pipeline, and the number of pipelines for Crystal Orange brands reached 108.
That's the end of September we have 41 indoor city hotels in the pipeline and a number of pipeline for Crystal Orange Brent reached 108.
The fast growing pipeline demonstrates that our <unk> and crystal Orange products and our brands are getting more recognized and accepted by our franchisees.
Speaker 4: The fast-growing pipeline demonstrates that our in-the-city and crystal-orange products and brands are getting more recognized and accepted by our franchisees.
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So we view that Gucci keyhole incisions here conclude our business review and update for the third quarter of 2023 with that I will now turn the call over to our CFO. Mr. GE hold do discuss the edge operational updates and our groups financial performance the whole piece.
Speaker 4: Here concludes our business review and updates for the third quarter of 2023. With that, I will now turn the call over to our CFO , Ms. He Ji-hong, to discuss DH's operational updates and our group's financial performance. Ji-hong, please.
Speaker 3: Thank you, Jinghui. I will now elaborate DH's activities so far this year.
Thank you Kimberly I will now elaborate DHS activity so far this year.
Please turn to page 11.
Despite a Germany slow economic recovery post Covid revpar for the H portfolio outperformed overall general market, you'll see that it's relevant.
Speaker 3: Despite Germany's slow economic recovery post-COVID, REFPA of DH Portfolio outperformed the overall German market using relevant RGI data.
Data.
Speaker 3: In Q3 2023, year-over-year cost growth is in line with revenue growth despite inflationary pressure in Europe after excluding one-off adjustment and restructuring costs.
Third quarter 2023 year over year cost growth is in line with the revenue growth despite inflationary pressure in Europe after excluding one off adjustments and restructuring costs.
Our priority remains to control and reduce cost through business restructuring as well as never may change and technology.
Speaker 3: Our priority remains to control and reduce costs through business restructuring as well as leveraging on technology.
Speaker 3: At the same time, we are repositioning the current hotel product design to reflect the demands of the modern travelers.
At the same time, we have.
Repositioning the current hotel product design to reflect demand of the modern <unk>.
Speaker 3: We are also spending effort in strengthening our presence in Middle East and exploring new international markets such as Asia Pacific.
We are also spending ethic in strengthening our presence in middle East and exploring new international markets, such as Asia Pacific.
Speaker 3: I'm now going to highlight the financial performance in the next section.
I'm now going to highlight the financial performance in the next section.
Please turn to page 13.
Speaker 3: Our hotel network continued to expand in the third quarter of 2023.
Our hotel network continued to expand in the third quarter 2023.
Speaker 3: Total number of rooms in the operation increased 11% year over year, and it reached 885,756.
Total number that you see now.
Operation increased 11%.
Year over year and reached 885756.
Speaker 3: Hotel turnover increased 55% year-over-year and reached 23.5 billion renminbi.
Hotel turnover increase of 55% year over year and reached $23 5 billion renminbi.
Please turn to page 14.
Speaker 3: Legacy Huazhou blended RASPAR, recovered to 129% of 2019 and achieved RMB 278.
Legacy <unk> blended revpar recovered to 129% of 2019 and achieved again maybe 278.
This was primarily driven by <unk>.
Speaker 3: This was primarily driven by ADR increase, which was 33% over Q3 2019 and 27.7% of Q3 2022.
<unk>, which was 23, 3% over Q3, 2019, and 27, 7% of Q3 tiny tiny tenant.
Okay.
Speaker 3: Occupancy still lags Q3 2019 by 1.8 percentage points.
Next Q3 2019 by one eight percentage point.
Speaker 3: Nevertheless, the occupancy of 86% is quite a high benchmark for the size of our total portfolio.
Nevertheless, the occupancy of 86% is a quite a high benchmark for the <unk>.
Five of our total portfolio.
Please turn to page 15.
Legacy D H blended revpar increased a full point of 5% year over year and achieved an <unk> 79.
Speaker 3: Legacy DH blended Ravpar increased 4.5% year-over-year and achieved Euro 79.
<unk> remained flat compared to third quarter 2022, but the occupancy increased by two five percentage point.
Speaker 3: ADR remained flat compared to Q3 2022, but occupancy increased by 2.9 percentage point.
Please turn to page 16.
Total revenue of <unk> increased 54% year over year.
Speaker 3: Total revenue of each world increased 54% year over year, achieving 6.3 billion renminbi.
<unk> six 3 billion renminbi.
Speaker 3: Legacy Huazhou revenue increased 62% year-over-year, achieving 5.1 billion RMB.
It does feel quadro revenue increased 62% year over year, achieving $5 1 billion renminbi.
Speaker 3: This achievement was possible through, first, strong domestic travel demand, especially during the summer holidays.
This achievement and what the possible.
Strong domestic travel demand, especially during the summer holiday.
Speaker 3: Second, continue the product upgrade and improvement of product mix.
Second continue to protest the upgrades and improvement of product mix.
Speaker 3: And third, market penetration and synergy through regional offices.
And as said market penetration and sustained through regional offices.
Speaker 3: Revenue from Legacy DH also improved 26% year-over-year, driven by higher REVPA and higher hotel turnover.
Revenue from our legacy D. H I also improved 26% year over year, driven by higher Revpar and higher hotel turn all of that.
Please turn to page 17.
And I guess, you've had your operating income achieved $1 9 billion renminbi.
Speaker 3: Legacy Huazhou Operating Income achieved RMB1.9 billion in Q3 2023.
Third quarter 2023.
Speaker 3: Compared to Q3 2022 and Q2 2023, this is a significant improvement.
Compared to third quarter, 2022, and our second quarter 2023.
This is a significant improvement.
This is achieved through revenue increase and at the same time close to management effort for both hotel costs and.
Speaker 3: This is achieved through revenue increase and, at the same time, cost management effort for both hotel costs and HG&A expenses.
SG&A expenses.
Speaker 3: On legacy DH side, operating costs increase in line with the revenue increase.
Our legacy ph site operating costs increased in line with our revenue increase.
Speaker 3: On SG&A's side, there are some one-off effect and restructuring costs booked in Q3 2023.
I see in <unk>, there are some one off effects and restructuring costs booked in Q3 2023.
Taking these effort at the SG&A cost also increased proportionally with the revenue increase compared to Q3 tiny tiny inhaler.
Speaker 3: Taking these efforts out, the SG&A cost also increased proportionally with the revenue increase compared to Q3 2022.
Please turn to page 18.
Speaker 3: Legacy Huazhou adjusted EBITDA, achieved 2.1 billion RMB in Q3 2023, and adjusted net income, achieved 1.4 billion RMB.
Legacy <unk> adjusted EBITDA achieved $12 1 billion Renminbi in Q3, 2023, and adjusted net income achieved one 4 billion.
Legacy <unk> adjusted EBITDA was 65 million getting be in Q3 2023.
Speaker 3: Legacy DH Adjusted EBITDA was RMB65 million in Q3 2023.
Speaker 3: Adjusted net income fell into negative territory of minus 37 million RMB.
Adjusted net income.
Fell into negative territory at minus 37 million.
On the group level operating cash flow was $1 2 billion renminbi.
Speaker 3: On the group level, operating cash flow was 1.2 billion renminbi.
Speaker 3: The fluctuation compared to Q2 2023 is due to a short-term change of timing of franchisee fee payment at the end of September .
The fluctuation compared to Q2 2023 is it due to short term change or a timing of franchisee fee payment at the end of September.
Please turn to page 19.
The group you see in a net cash position as of end of September.
Speaker 3: The group is in a net cash position as of end of September . There's a net cash of 3.9 billion renminbi and I'll utilize the bank facility of 2.7 billion renminbi.
There was a net cash of $3 9 billion renminbi and utilize the bank facility of $2 7 billion renminbi.
Please turn to page 20.
We estimate the revenue in Q3, Q4, 2023 will be a growth of 41% to 45% compared to Q4 2022.
Speaker 3: We estimate the revenue in Q4 2023 will be a growth of 41% to 45% compared to Q4 2022.
Excluding these excluding the edge and legacy of fragile revenue is estimated to grow 48% to 52% compared to Q3 2022.
Speaker 3: Excluding DH, legacy Huazhou revenue is estimated to grow 48% to 52% compared to Q3 2022.
This and the management presentation.
Speaker 3: This ends the management presentation. I hand over to Mr. Chen Yibo.
I'll hand over to you said tangible.
Operator, we can start the Q&A session. Please.
Okay.
Thank you.
Speaker 1: Thank you. If you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star 2.
Do you wish to ask a question. Please press star one on your telephone and wait for your name to be announced.
If you wish to cancel your request please press star two.
You're on a speaker phone please pick up the handset to ask your question.
Your first question comes from Ben <unk> from Morgan Stanley. Please go ahead.
Speaker 1: The first question comes from Mr. Dan Chee from Morgan Stanley . Please go ahead.
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Speaker 5: First of all, I would like to congratulate the company for achieving a very good quarterly performance. What I would like to ask is mainly about the funding management side.
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Speaker 5: We see that there will be a board meeting on the 3rd of this week which is about the company's stock market dividend We and many investors are very concerned about this I don't know if the company's management team has any more details to share with us like how we should predict the time and the stock market amount For example, will it be a special dividend or will there be some regular dividend opportunities?
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Speaker 5: Good morning, management. First of all, congratulations on a very strong quarter result. I have a question regarding the recent announcement of board resolution on cash dividend. I'm wondering if the company can share a bit more details on this dividend payment. For example, timing, what to expect, the size of the dividend that is proposed, and whether is it a regular or special dividend.
Good morning management.
Are all congratulations on the very strong second quarter results.
I have a question regarding the recent announcement of a resolution on cash dividend I'm wondering if the company can share a bit more detail on this dividend payment.
For example, timing.
What do you expect size of the dividend that is proposed and whether it is regular or special dividend.
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Speaker 4: I think we will discuss the specific dividend policy and the dividend ratio immediately after the board decision.
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Okay.
Let me answer your question first.
Yes, our board is considering a cash dividend.
And once we got approval from the board every solution we will immediately.
<unk> released to the market in terms of the exact policy and the payout ratio and I want to add another point is as to what the business is going to be more as a like a.
We definitely because he wants to be well management on the cash and profit going forward.
Okay.
Speaker 3: Just a little bit to add to Mr. Jinghui's comment, Huazhou, especially Huazhou, China has recovered very well. We are very confident that especially Chinese lodging market will continue to recover. So we expect a very stable cash flow in our future operations.
It's a little bit to add to kill me taking place comment.
Hi to especially the final China has recovered very well.
We are very confident that especially Chinese lodging market will continue to recover.
So we expect a very stable cash flow in our future operations and with this kind of stable cash flow and our net earnings we would like to retire some of our earnings back to.
Speaker 3: And with this kind of stable cash flow and net earnings, we would like to return some of our earnings back to our investors. So we will resume our continuous, stable, base dividend policy, as well as special dividend policy from time to time if our cash flow shows a very strong performance.
To our investors. So we will resume our continuous stable base dividend policy as well as a special dividend policy from time to time, if we our cash flow.
So very strong performance and please just be patient we have a couple of days until the poll resolution is.
Speaker 3: And please just be patient. We have a couple of days until the board resolution is decided, and we will announce it in time. As for the cash payment, we will expect it around early next year.
And decided and we will announce it in time.
As for the cash payment, we will expect it around early next year.
Okay.
Speaker 5: Called the C things on her dog. Based on thatshe.
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Your next question comes from runoff Leung from Bank of America. Please go ahead.
Speaker 1: Your next question comes from Ronat Leon from Bank of America, please go ahead.
Speaker 5: Good morning, management team. I have two questions. The first question is about the forecast for next year. Does the management team have any preliminary forecast for next year's RAFT and opening of stores?
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Speaker 5: The second question is related to the first question and the previous question. Currently, the cash flow of the company and the asset-asset balance sheet are very strong.
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Speaker 5: In fact, is there an ideal structure for a stock portfolio? What would it look like?
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Speaker 5: My first question is about the outlook for 2024. So would management have any preliminary forecast for the Roth Park growth and the hotel openings for 2024? My second question is about balance sheet. So right now the company has a very strong balance sheet and cash flow. So what do you think is the optimal capital structure for the company? Thank you very much.
My first question is about the outlook for 2020 full so what management have any pre new money forecast for their Ralph power growth.
Hotel openings for him to go to full lifecycle.
My second question is about balance sheet. So right now the company has a very strong balance sheet and cash flow. So what do you think.
Optimal capital structure for the company. Thank you very much.
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Speaker 4: I will answer the first question first. We will answer the second question after the quarterfinals.
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Speaker 4: But in general, we are always optimistic about the future of China.
Speaker 4: I am seeing a growth in consumer attitudes when the industry is under the hybrid cycle.
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Speaker 4: China has a lot of leading brands, and we are still enjoying the popularity of the leading brands. So we will continue to keep a cautious overall trend in the future, but specific guidance will be given in the next few decades.
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Let me, let me translate the first answer.
Speaker 4: So, in terms of the expectation for next year, in terms of the rough time, the new openings, we will be giving the guidance to the market when we release our fourth quarter earnings probably next year.
So in terms of the expectations for next year in terms of the Revpar and the new openings will be keeping.
Keeping the guidance to the market when we release, our fourth quarter earnings.
Earnings are probably next year.
Speaker 4: But I just want to add, we are still keeping our conservatively optimistic view for the China business.
But I would just want to add we are still keeping our conservatively optimistic view for the China business. Given we think we are still having the best products a market leading position and then we show a steel are getting benefits from the continuously try ratio improvements and further consolidate shut off the mark.
Speaker 2: Given we think we are still having the best products a market-leading position And we should still getting benefits from the continuously tri-racial improvements and for the consolidation of the market
So again, we keep our conservative your optimistic view unchanged. Thank you.
Speaker 4: So again, we keep our conservatively optimistic view and change.
Speaker 3: Okay, I will take over the question about the cash structure. As you can see, Rona, from our balance sheet for the third quarter, we have a very strong cash net.
Okay, I will take all of it will take over the question about the capital structure as you can see a run up from our balance sheet.
Quartet, we have a very strong cash and net cash position and I'm very confident that with the business improving and quoted a court date, yet our cash position will remain very strong.
Speaker 3: And I'm very confident that with the business improving quarter by quarter, year by year, our cash position will remain very strong.
Speaker 3: So as a part of the effort to reward our investors we already announced our dividend payout policy and this policy will continue.
As a part of the FX to reward our investors.
<unk> announced our dividend payout policy and entities policy will continue and we also do not exclude the possibility to do some share buyback.
Speaker 3: And we also do not exclude the possibility to do some shared buyback at appropriate time as well.
At the appropriate time as well from from debt and equity position.
Speaker 3: From our debt and equity position, you can see that we still have 500 million U.S. dollars
You can see that we still have them.
500 million you asked all day.
And convertible bonds at this moment.
Speaker 3: convertible bonds at this moment. And this will still take some time to mature and we will continue to leverage some of the bank facilities for our short-term working capital because the Chinese interest rate is very low. So please to be assured that the financial management team of H World will look into our cash position very diligently.
It will still take some time to mature and we will continue to leverage some of that benefit.
Bank facilities for our short term working capital because the Chinese interest rate is very low so.
Sure.
Our financial management team of each work well when looking into our cash position very diligently manage our cash and manage our reward program to investors at the same time also leverage the lower interest environment in China, and we will also continue to manage the overall.
Speaker 3: manage our cash and manage our reward program to our investors, and at the same time also leverage the lower interest environment in China. And we will also continue to manage the overall debt position so that we do not fall into any potential issues.
Debt position, so that we do not fall into any potential issues.
So is there any how Johnson <unk> Johnson.
Oh.
Your next question comes from Simon Cheung from Goldman Sachs. Please go ahead.
Speaker 1: The next question comes from Simon Chung from Goldman Sachs, please go ahead.
Speaker 5: Good morning, thank you for the presentation. I have two questions. The first question is, I see that your home appliances are obviously much faster than other companies. I would like to know why is that? And I remember in the last two quarters, you shared some of the situation in Huanan. I don't know if you can share the latest situation. This is the first question. And the second question is, I would like to know, many investors are interested to see, for example, in October , as you just shared, the RETPAR dropped a little bit. I would like to know the trend you see, for example, in November or December . I don't know what you think in your mind right now. And what do you think is the reason for the fall in October ? For example, is it the lease or the business?
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Speaker 5: I have two questions. The first question is in relation to the hotel opening. I've noticed that H2O has actually been able to achieve a much faster hotel opening than a lot of the peers. I'm wondering what are the reasons and whether management could share with us what's the latest update with the Southern China strategies? And then the second question is in relation to the fourth quarter. We have noticed quite a bit of a meaningful downward trend in October . I'm wondering whether it's cyclical or structural. What is the outlook going into November and December and whether there are any reasons in relation to business versus leisure travel?
So I have two questions. The first question in relation to the.
Hotel opening I have noticed that.
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Kelvin China strategies and then the second question in relation to the fourth quarter Revpar, we have noticed quite a bit of a meaningful.
Meaningful.
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Speaker 4: Let me answer the question about business. Indeed, after this year's epidemic, the entire development of China's business sector has been affected by the pandemic. In the past year and a half, we have seen an increase in the number of customers and the number of employees. In the past year and a half, we have seen an increase in the number of customers and the number of employees. In the past year and a half,
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Speaker 5: I believe this is mainly due to a few factors. First, in the past few years, Huazhou has continued to build on the investment brand of China's Xifeng market. For example, our Hanting Quanjing.
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Speaker 4: it received positive feedback on both the product upgrades and the market finding. They are experiencing good results with a consistent product price increase. This is also seen fast in our prediction. In the last few years we have focused on trying to
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Speaker 4: We continue to cultivate the second-most growing brand in China, and in the past year we have achieved a very good brand building effect. Our latest 3.0 is very good.
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Speaker 4: This year, after the release of the first quarter, it has achieved very good growth. So the first thing I want to talk about depends on some of the leading brands that our Chinese team has built, and the continued high-level development.
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Speaker 4: The second positive factor is that in the past few years, in our lower city...
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Speaker 4: before to the market and grow up rapidly. Through the constant adjustment of the organization and the construction of development capacity, we can achieve the initial goal.
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Speaker 4: We have a record 40% shareholding in China's Borough market, including China, Hainan and Huaxi. We have a record 40% shareholding in China's Borough market, including China, Hainan and Huaxi.
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Speaker 4: Thirdly, we have shown in the PVT that Huazhou continues to exert strength in the mid-to-high-end market.
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Speaker 4: With the improvement of our products and brands, I believe that in the future, we will be able to make great strides in the contract and market coverage of Chinese high-end products.
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Speaker 4: and the rapid realization of signing contracts, as well as the restoration of high-end new brands in three areas.
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Speaker 4: Okay, to answer your first question, post-COVID, since this year, we achieved quite good progress in terms of the new signings and the pipeline.
Okay to answer your first questions.
The COVID-19 since this year.
We achieved quite good progress in terms of the new signings in the pipeline increase.
Speaker 4: This was mainly attributed to several reasons.
This was mainly attributed to several reasons firstly as for our market leading brands, especially in the limited service segment, including hunting and.
Speaker 4: Firstly, it's for our market-leading brands, especially in the limited-service segment, including Hanting and G-Hotel. Over the last several years, we keep enhancing our product.
G hotel over the last several years.
Enhancing our product quality and they're doing a lot of product upgrades and further enhance our brand reputation.
Speaker 4: quality and doing a lot of product upgrades and further enhance our brand reputation and a wellness that definitely benefits us for the increasing in the new signings. And also, especially in the middle skill segment, last year
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Last year.
Speaker 4: Uh, we we try to use the orange to become our second Membrane, uh in this particular segment and since the first quarter when we launched orange 3.0 version The the products itself has been very much well accepted by by the market and franchisees hence, um Achieved quite good new signings since then
We tried to use the orange to become our second membranes. In this particular segment and since the first quarter, we launched Orange three zero version.
The product itself is being very much well accepted by the market and franchisees hence.
Achieved quite good new signings Kingston.
Speaker 4: Thirdly, it's because of the lower tier city penetration as well as further enhance our presence in our previously weak market, including the southern part of China, western part of China, and the middle part of China. This is the benefit from our organizational restructuring and further strengthening our business development capability on the ground.
Certainly is because of the lower tier cities penetration as well as further who has our presenting our previously weak market, including the southern part of China, Western part of China, and the middle part of China.
This is the benefits from our organizational restructuring and further strengthen our business development capability on the ground.
Speaker 4: Currently, these three previously weak regions contributed more than 40% of our new signings year to date.
Currently this free previously weak reaches contributed contributed more than 40% of our new signings year to date lastly, it is further.
Speaker 4: And lastly, it is further breaking through into the upper mid-segment and mainly because of the InterCity brand as well as the Crystal Orange brand, as I mentioned previously in our prepared remarks and also presentation, and we strongly confident on the further breakthrough and increased market share for this particular segment.
Breaking through into the upper <unk> settlement.
And mainly because of the inter city brands as well as the Crystal Orange spreads as I've mentioned previously where appropriate remarks, and a presentation and then.
Strictly confidence all to further our breakthrough and increase the market share for this particular segment.
Speaker 5: Regarding the second question, regarding the RealCard situation, I will simply repeat it. Because, it's true, if you pay attention, October is also usually, after the Golden Week, usually the monthly...
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Speaker 4: What you doing here, you know you Sha. Thank you. This is the centant onic Ross Ed ition you.
In years, where you might use.
Yeah, thanks, either because it depends on the government's decision.
That's in tonnage.
Speaker 4: ary 18 G to in the rough half with the two talks of the TRI.
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Speaker 4: Sound D Y J public that, So that would be about.
It sounds like there's a couple of them and you saw that everybody that's out of the blue cartridge.
But in terms of the second question on the Revpar trends.
Speaker 4: In terms of the second questions on the rough part trend, so for the October this is pretty normal seasonality because normally post the golden week holiday there was a low season following So this is a normal seasonality impact
For the October this is pretty normal seasonality because normally posted the golden week holiday deal with the low season. Following so this is a normal seasonality impact.
Speaker 7: And for the entire fourth quarter, we are expecting the rough power recovery to be in range of 115 percent to 120 percent compared to the same period of 2019.
Until fourth quarter are we are expecting the revpar recovery to begin in rents of 115% to 120%.
Compared to the same period of 2019.
Okay.
Your next question comes from <unk> from <unk>.
Go ahead.
So as everybody Tom William <unk> Joshi saw Nobody's phones, using these EOG would touch on is just how many go called ha now could we if there's always agile you'll.
Speaker 8: Thank you, Management. I have a question. We have conducted an investigation of the downstream market. Can you share with us your main observations? Do you think there is still a great opportunity in the downstream market? And after being the regional headquarter, do you think there is any place that needs to be strengthened to help us seize the opportunity in the downstream market? I will translate it into English. Thank you, Management. You have been to some low-tier cities to do some field research.
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Speaker 8: So, could you please share with us your main observations, which make you feel that there are lots of opportunities in low-tier cities? And in order to assist the low-tier market opportunity, we have established regional headquarters, and is there any other capability that we need to strengthen? Thank you.
Could you please share with us your observations, which makes you feel that there are lots of opportunities in low tier cities and in order to seize the market opportunity. We have established regional headquarters and is there any other capability that we need to strengthen thank you.
Speaker 4: China's urbanization has been a hot topic in the past few years, although it has already achieved 65% urbanization in the first half of the year. We can see that a large part of the lower urban market is also affected by the urbanization of the lower urban market.
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Speaker 4: I think this is very obvious. The population of the lower city is still increasing. Secondly, due to China's development of high-speed rail,
Speaker 4: Also, they assure very clear information of the activities on China's highways, which allows the circulation of the people internationally, especially in areas with large state gema engagement.
Consequent to the rule.
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Speaker 4: So I think these two factors are very important. One is the continuous progress of urbanization in China. The second is the internal circulation.
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Speaker 4: China still has a very big opportunity, especially in the rural market, which has a population of about 1 billion, right? It's a very, very huge, huge market.
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Speaker 4: how to meet the needs of consumers and the needs of the Chinese people in the summer market. This is also the role of Huazhou as an investment company.
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I'm sure you get surprises a week of which year to the tune of how they shop.
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Speaker 4: Okay um so clearly um despite the the urbanization rate have already achieved over 65 percent this year uh we're still seeing that there's further organization uh progressing uh in the lower tier cities and we're also seeing the population actually is also increasing in the lower tier.
Okay.
So clearly despite the urbanization rates have already achieved over 65%. This year, we're still seeing that there is further organization progressing in the lower tier cities and we are also seeing the population actually is also increasing in the lower tier cities.
Speaker 4: In addition to that, the high-speed railway trend, further development, as well as the highway networks further expanding, and we are seeing, you know, the number of passengers
Addition to that.
The high speed railway trend further developments as well as the height.
The highway networks further expanding and that we were seeing you know the the number of passengers transported by the high speed railway trend. This year achieved a historical high. This is mainly supported by a lot of government efforts are stipulating that domestic demand.
Speaker 4: transported by the high-speed railway trend this year achieved a historical high. This is mainly supported by a lot of, you know, government efforts stimulating the domestic demand, which increased a lot of, you know, population mobilities.
<unk> increased a lot of you know population liabilities.
And for the lower tier cities, we also observed that that.
Speaker 4: And for the lower-tier cities, we also observed that it is really a high-resilient market, and more importantly, the lower-tier cities contain over 1 billion population. We think still there is a lot of huge opportunities to further discover.
It is really a high resilient market and more importantly, the lower tier cities controls over 1 billion population.
Still there is a lot of a huge opportunities to further discover.
Speaker 4: As a leading company, H4Z is striving to further provide good products and services to match the demand for better accommodations in the lower tier facilities.
As a leading company export is driving to further providing good products and services to two two to match and to match the demand for our bedroom accommodations.
In the lower tier cities.
Speaker 4: And the second question is also very good, it is also something that the management team is doing. In addition to the summer market, it is a brand new market for Huazhou.
All right.
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All of them.
Speaker 4: I think the most important thing is to get closer to our users.
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Speaker 4: how to better meet their needs is also a very important topic for the next phase. So to sum up, how to build a better society is a very important topic for the next phase.
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Speaker 4: Okay, so the organizational restructuring is definitely creating some of the benefits and in line with our low-adversity penetration strategy. So basically we want to be more close to our customers and more close to our franchisee.
Okay. So the organizational restructuring is definitely creating some of the benefits and in line with our electricity is penetration strategy.
So basically we want to be more close to our customers in a more close to our franchisees and they choose to be more localized because especially for the franchisees sites.
Speaker 7: and to be more localized, because especially for the franchisee side, we are seeing a lot of, you know, new type of franchisees, basically some of them are self-owned properties, some of them are, you know, local, small and middle property developers, as well as some of the business owners. We want to be close enough to them and understanding their demand, as well as our customers.
We are seeing a lot of new franchise, new type of franchisees basically some of them self owned properties are some of them are you know local small and middle property developers as well as some of the business owners, we want to be close enough to tell them and understanding the arcade led as well as our customers.
<unk>.
Citizens.
Your next question comes from <unk> Li from Citigroup. Please go ahead.
Hey, thanks.
Speaker 9: Thank you. We do pay attention to the company's economic layout in the mid-to-high-end. Especially the speed of signing up is faster than expected. I am also a consumer of results. Regarding the results, I would like to ask two questions.
Thank you Glenn.
<unk> ended the quarter with you.
When we get a chance.
Hey, Bill.
Sure.
Josh glad which means you don't Wanna without some formulary wins you guys require.
Speaker 9: One is about the existing Chengji stores. Is there any more business data to share? For example, like ADR, Reopar, etc. In addition, what are the characteristics of Chengji stores in our pipeline, including the image of the joint vendor? These are the two main questions.
Alright.
But again, the milken ability here.
Please go ahead. Thank you.
Sure.
Meanwhile, the one argument.
Good morning, gentlemen, Guangdong Dongguan.
Yes, Jonathan <unk>.
Jonathan can you go horizontal.
Hello, John Josh is on the language.
Speaker 9: Let me translate my question in English. We notice IndyCity is gaining traction among flight transits. So could you tell us more about the current business situation, such as ADR route path? Besides, can you share what cities are the distribution of IndyCity in the pipeline? And what are the features of flight transits? Thank you.
Let me translate my question in English, we notice in the <unk> is gaining traction among franchisees. So could you tell us more volatile the solid color in Dubuque, and ECS agent, such as ADR Revpar and besides <unk> on distribution of <unk> in the top line and what art features.
Franchisees. Thank you.
Speaker 4: Okay, let me answer this question. Thank you for taking care of our brand. Indeed, after last year's introduction, we will continue to build our ability to wait for products and serve.
Whatever.
Yeah.
And helix series of <unk>.
Oh, that's issue that's all the time you get there.
And then we've hired tools within the week.
Speaker 4: There are not many stores that are open right now. Although we have more online reviews than our main products in RealPart and QuanJuDao, I think it's because we don't have enough samples to show you more. But we have achieved very good revenue returns and a very good brand influence at DianZhuang.
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Speaker 4: This is something that I am very confident about.
So the fees on who's on switching.
Are there things yet.
Speaker 4: So there's a lot that I've learned from this course —
Indeed, if either an email and which was a kind of a woman switches, which almost all of a sudden he'd be able to open.
Speaker 4: There are two main categories. The first category is in the industry, it is a very leading project. Because the investment of a result is very large. Basically, it needs to be divided into three categories.
Hungry man fees on top of that Jonathan.
One of them was all anyway, you guys can get it holds it beyond that.
Yes, you got that sense in those two months so he's in good.
Speaker 4: So the head of the industry, not just the head of Huazhou, but also the head of a lot of industries are joining us.
Engage on top of the two.
Virginians, possibly even ahead of Copel Johan honiton over the telephone at charter.
And towards that you got from pilot to that hopefully that myself.
Speaker 4: It have her. So the to amms of information. The o log, just I mean an- is E even for caasa to concechildren twent years to consu see that.
Yes, I mean as you see even for Teva.
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Right.
Speaker 4: they will be realities. India has seen progress in Taiwan now, and strengths can be seen in most of the world market. We enjoy similar demographic exchanges in several continents, and this will continue in the future. As the state of operations is getting better, Taiwan's share of tailored investor groups will definitely also grow. The Chinese Yuan The revisedérable capital investment and package of China'semarket is expected to demand an increase. China Nitpick Support China's cash exchange
Visits in G. So Sheila to issue what do you think that there's room for that.
You can see that you all mentioned that.
Jim the EZ Io jewelry. This is a new renewed some interest.
You guys your answer which is.
Speaker 4: things today are far from the tradition and it seems that one cannot say if the situation will improve tomorrow or the day after tomorrow.
So you're seeing that either.
On the Eva Mendes or would it gotcha.
Tissue.
Okay. Thank you just to answer your questions.
Speaker 4: Okay, thank you. Just to answer your questions.
Speaker 4: And thanks for focusing on our intercity brands. Since we launched last year and opened several least intercity hotels in several cities, so for this already-opened hotel, given, you know, the scale is relatively small, we don't think it is...
Thanks for I'm.
Focusing on our intercity Burns since we launched last year and opened several of these.
Interested in your hotels in several cities.
So for this already opened hotel given you know the.
The scale is relatively small we we we don't think it is.
Speaker 4: suitable for now to compare or to release the ADR or REF part to the market at this moment because it is quite selective and we have only, you know, several inter-cities.
Suitable for now to compare or to release, the eight year old revpar to the market at this moment because it's quite selective in that we have all the you know several indoor cities are hotels in operation.
Speaker 4: Hotels in operation, but if you really want to talk about these hotels operational data So all the eight years and the rough process be already But doing better than our competitors
But if you really wants to talk about these hotels operational data. So all the eight years and the rough process already.
But doing better than our competitors.
Speaker 4: But we are very confident to see the brand is getting more accepted and aware by our franchisees and the market.
But we are very confident to see the brand is getting more.
Accepted and aware out by our franchisees in the market.
Speaker 4: And for the franchisees, we are seeing definitely a different type of franchisees compared to our limited service segment. There are two types of franchisees. One is definitely the industry-leading franchisee, because the intercity hotel requires a relatively big amount of capex investment. So a single intercity hotel requires around $30 million to $50 million RRB capex. So
And fourth our franchisees are we are seeing definitely a different type of franchisees courtyard travel limited service documents are just too tight haul franchisees one is definitely to be the industry, leading franchisee because the inter city hotels across a relatively big amounts of Capex investment so.
A single.
Interest in the hotel REIT costs around 30 million to $50 million Capex. So the only dose very much leading position.
Speaker 4: only those very much leading position, leading franchises can afford that much car parks. And second, we also see a lot of, you know, property developers or local property developers and property owners which used to, you know, doing business with those international brands are now finding us as intercity to be a substitute because we are definitely leading in terms of the operational capability.
Leading franchisees can't afford that much capex and second we also see a lot of you know property developers are local property they have a robust property owners.
It's used to doing.
Doing business with international brands.
No.
Finding us as interest rates to be a substitute.
Because we are definitely leading in terms of the operational capability.
Okay.
Bill.
There are no further questions at this time I will now hand back to Mr. Chen for closing remarks.
Speaker 1: There are no further questions at this time. I will now hand back to Mr. Chen for closing remarks.
Thank you everyone for taking your time with US today, and we look forward to see you in upcoming quarter. Thank you bye bye.
Speaker 4: Thank you everyone for taking your time with us today, and we look forward to see you in upcoming quarter. Thank you, bye bye.
Yeah.
That does conclude our conference for today. Thank you for participating you may now disconnect.
Speaker 1: That does conclude our conference for today. Thank you for participating in MENA.
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Speaker 1: ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? Thank you for standing by and welcome to the H-World Q3 2023 earnings conference call. All participants are in a listen-only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. I would now like to hand the conference over to Mr. Jason Chen.
Speaker 10: I.
Speaker 1: Thank you for standing by and welcome to the H-World Q3 2023 Earnings Conference Call. All participants are in a listen-only mode. There will be a presentation followed...
Thank you for standing by and welcome to the H World Q3, 2023 earnings Conference call.
All participants are in a listen only mode there'll be a presentation followed by a question and answer session.
Speaker 1: If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad.
You wish to ask a question you will need to press the star key followed by the number one on your telephone keypad.
Speaker 1: I would now like to hand the conference over to Mr. Jason Chen, Senior IR Director. Please go ahead.
I'd now like to hand, the conference over to Mr. Jason Chin Senior IR Director. Please go ahead.
Okay.
Thank you.
Speaker 4: Good morning and good evening, everyone. Thanks for joining us today. Welcome to Edgeworth Group 2023 third quarter earnings conference call. Joining us today.
Good morning, and good evening, everyone. Thanks for joining US today welcome to <unk> Group 2023 third quarter earnings Conference call.
Joining us today is our chairman Mr Chi Chi.
Speaker 4: our CEO , Mr. Jinghui, our CFO , Ms. He Jihong, and our President, Ms. Liu Xinxin.
Our CEO Mr Inquiry.
Our CFO, Mr. <unk>, Hu and our precedent is low season.
Speaker 4: Following their prepared remarks, management will be available to answer your questions.
Following their prepared remarks management will be available to answer your questions before.
Speaker 4: Before we continue, please note that the discussion today will include forward-looking statements made under the safe harbor provision of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainty.
Before we continue please note that the discussion today will include forward looking statements made under the safe Harbor provision of the United States Private Securities Litigation Reform Act of 1995.
Forward looking statements involve inherent risks and uncertainties as such our results may be materially different from the views expressed today.
Speaker 4: As such, our results may be materially different from the views expressed to date.
A number of potential risks and uncertainties are outlined in our public filings with the SEC.
Speaker 4: A number of potential risks and uncertainties are outlined in our public filings with the S.
Speaker 4: S.W.O.R.D. group does not undertake any obligations to update any forward-looking statements except as required by applicable laws.
<unk> group does not undertake any obligations to update any forward looking statements, except as required by applicable laws.
On the call today, we will also mentioned adjusted financial measures during the discussion of our performance reconciliations of those measures to comparable GAAP information can be found in our earnings release that was distributed last Friday.
Speaker 4: On the call today, we will also mention adjusted financial measures during the discussion of our performance. Reconciliations of those measures to comparable gap information can be found in our earnings release that was distributed last Friday.
As a reminder, this conference call is being recorded the webcast of this conference call as well as supplementary slides presentation is available at IR <unk> com.
Speaker 4: As a reminder, this conference call is being recorded. The webcast of this conference call as well as supplementary slides presentation is available at ir.edward.com. With that, now I will hand over the call to our CFO , Ms. He Jihong, for the opening speech. Ms. He, please.
With that now I will hand over the call to our CFO Ms <unk> <unk>.
Opening speech Misra please.
Good morning, and good evening, ladies and gentlemen, thank you for joining <unk> third quarter 2023 earnings call today.
Speaker 3: Good morning and good evening, ladies and gentlemen. Thank you for joining H-World third quarter 2023 earning call today.
We're delighted to report that HR. It delivered another strong quarterly financial results, reflecting the continued healthy recovery lodging market in China.
Speaker 3: We are delighted to report that H-World delivered another strong quarterly financial result, reflecting the continuous healthy recovery of the lodging market in China.
In today's call HOS group CEO, Jean <unk> will first elaborate on the business performance and highlight our achievements.
Speaker 3: In today's call, H World Group CEO Jin Hui will first elaborate on the business performance and highlight our achievements. I will then go through the
I will then go through the key financial numbers.
Speaker 3: As usual, we will have the Q&A session after management presentation. With this, I will hand over to Mr. Jin Hong.
As usual, we will have a Q&A session after management's presentation.
With this I will hand over to Mr. Jim Quake.
Okay.
So the whole chain.
Hi, Jeff and design yet.
Speaker 4: Please turn to page 3 and follow the usual procedure to review the recovery situation of Huazhou's recent RERPA.
Finally from an analytical hydro teams here of how that group with some call.
Speaker 4: In the third quarter, China continued to maintain a good start to the recovery from the beginning of the year.
These aren't you too hard those onboard sushi bar, so let's dig into it Youll you hired.
Wafer with high Revpar.
Speaker 4: RELPA has recovered 129% since the same period in 2019.
With that Angel and you don't see the filings you biopsy tool.
Are those all rather than up.
Speaker 4: is mainly driven by the increase in ADR caused by the change in product structure.
So the issue. So we are seeing with Jacobs being like Adi that's on that so that you don't.
Speaker 4: But the entry rate recovery has also improved in this quarter. In terms of months, from July to September , the China-China Comprehensive Heat Pack recovered to 132, 128, and 128 in 2009 respectively. This strong recovery data is due to the strong seasonal leisure and travel needs in July and August , as well as the constant recovery of business travel.
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Speaker 4: At the same time, the performance of the company's Repa also reflects the excellent product quality and brand value of Huazhou Hotel.
Joe you'll hear this I mean, you heard from Andy.
Speaker 4: This has helped us to continue to lead the Chinese hotel industry.
So our boswell elements Ags, either so sure you need to have worked with in Hollywood.
Speaker 4: Since this year, the demand for leisure tourism in China has exploded better than we expected at the beginning of the year, but the company has always maintained a relatively cautious and optimistic attitude. You can see that this year, some holidays, such as Spring Festival, May Day, and holiday, are undeniably a concentration of tourism demand. But some changes in the consumption structure after the epidemic are also not to be ignored. Especially in the context of expanding domestic demand, we can clearly see a rapid increase in experiential consumption demand.
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Speaker 4: Throat since Barbarian Zhou, often. What was the office ideal inn so much you got him.
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Speaker 4: The overall October heat wave has recovered to 120% in the same period of 2019. We believe that the recovery of the macroeconomic sector is still fluctuating and uncertain in the short term, but Huazhou will continue to firmly implement the company's long-term strategic momentum, focus on and continue to improve the company's brand, product, management and executive power, and continue to expand Huazhou China's hotel network and market share, and work hard for the company's long-term sustainable business development.
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Thank you Joel.
Speaker 2: Please turn to page 3.
Please turn to page three.
Speaker 4: As usual, let's go through Lackadaisy-Hua-Chu's REF part recovery in the recent months.
As usual, let's go through legacy <unk> Revpar recovery with our recent losses in.
Speaker 4: In the third quarter, we maintained our market leading performance since the year beginning. Our REFPA recovered to 129% of the 2019 level. The REFPA recovery continued to be supported by ADR growth, which was mainly driven by our product mix change.
In the third quarter, we maintain our market leading performance since the year, beginning our revpar recover to a 129% after 2019 level. The revpar recovery continued to be supported by ADR growth, which was mainly driven by our product mix change.
Speaker 4: Meanwhile, occupancy rate recovery also improved sequentially in this quarter.
Well occupancy rate recovery also improved sequentially in this quarter.
Breaking down into monthly numbers, our Revpar in July August and September recovered to 132%, 128% and the 128% after 2019 levels in a corresponding Moses respectively.
Speaker 4: Breaking down into monthly numbers, our RefPi in July , August and September recovered to 132%, 128% and 128% of the 2019 levels in the corresponding months respectively.
Speaker 4: This strong fad off number was benefited from the strong leisure travel demand during the summer holiday season, as well as the continuous business traveling recovery.
This strong set of number was benefited from the strong leisure travel demand during the summer holiday season, as well as the continuous business travel recovery.
Speaker 4: In addition, our REVPA performance reflected our hotel's superior product quality and brand power. We should continue to support our industry-leading position in operational performance.
In addition, our Revpar performance reflected our hotel's superior product quality and brand power, which should continue.
To support our industry, leading position and operational performance.
This year, the rebound of China's leisure travel demand was better than our pervious, we expected in the year Bikini.
Speaker 4: This year, the rebound of China's leisure traveling demand was better than our previously expected in the year beginning. Nevertheless, we keep our cautiously optimistic view on market outlook unchanged.
Nevertheless, we keep our cautiously optimistic view on the market outlook unchanged. We certainly saw some pent up leisure travel demand doing some of the <unk> such as the Chinese new year may holidays, and summer holiday, but the structural challenges in Chinese consumers' consumption structure posted the Colby so not.
Speaker 4: We certainly saw some pent-up leisure travel demand during some of the peak seasons, such as the Chinese New Year, May holidays, and the summer holiday. But the structural changes in Chinese consumers' consumption structure post-COVID should not be ignored, especially the demand for experience-related activities were growing rapidly with government efforts on stimulating the domestic demand.
Be ignored.
Especially the demand for <unk> related activities were growing rapidly with the government's efforts are stimulating the domestic demand.
Speaker 4: After the strong summer holiday season, our rest part recovered to 123% of the 2019 level during the Golden Week holiday.
After the strong summer holiday season, our revpar recover to a 123% of the 2019 level during the Golden week holiday.
Speaker 4: For the entire month of October , our Red Cross due recovered 220% of that in 2019.
Most of October our Revpar do you recover 228% of that in 2019.
Speaker 4: In the short term, although the macro condition could possibly remain volatile and uncertain, we will continue executing company's long-term strategies with focus on building and enhancing our product brand management and execution capability.
In the short term, although the macro condition could possibly remain volatile and uncertain.
We will continue executing companies long term strategies, which focus on building and enhancing our products brand management and execution capabilities. We will continue to expand our hotel networks and to further gain market share to achieve our long term sustainable quality growth.
Speaker 4: We will continue to expand our hotel networks and the further game market share to achieve a long-term sustainable quality growth.
Hi, Jeff.
T for Ya.
Speaker 4: In the current macro environment, we once again emphasize that China's long-term and sustainable R&D growth is driven by the Luxia 4.0 project.
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Speaker 4: The first point is that in extremely economically resilient low-tier cities, continuous penetration helps China achieve relatively stable performance in a fluctuating macroeconomic environment.
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Speaker 4: The adjustment and optimization of the Chinese-Chinese organization structure and the establishment of regional branches make the Chinese-Chinese land-based operations more surprising and efficient, and the ability to penetrate the region is further improved.
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Speaker 4: We believe that future regional branches will continue to assist China to expand the network and quickly open up business opportunities in the Boluo region.
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Speaker 4: The third point is to constantly upgrade products and improve services to help Chinese hotels achieve higher premiums, whether they are in economic countries or in Chinese hotels.
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Speaker 4: Huazhou continues to upgrade and upgrade its products. Through high-quality products, we are striving to stabilize Huazhou's position in the limited-service market.
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Speaker 4: Fourth, the development of high-end brands has optimized the hotel structure of the company and increased the market share of high-end hotels. This year, our high-end brand division has gained valuable business experience under the development of three major high-end brands.
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Please turn to page four with the current macro uncertainties, we want to rent emphasize the local key points to drive our revpar to achieve long term sustainable growth.
Speaker 4: Please turn to page four. With the current macro uncertainties, we want to re-emphasize the low-fall key points to drive our rough path to achieve long-term sustainable.
Speaker 4: Firstly, for the penetrating into lower tears.
Firstly further penetrating into lower tier cities.
Speaker 4: that could help us to deliver relatively stable and a solid performance with macro volatility and uncertainty.
That could help us to deliver relatively stable and a solid performance with macro volatility and uncertainties given lower tier cities market are more resilient.
Speaker 4: given lower tier cities markets are more resilient.
Speaker 4: Secondly, the organizational restructuring and optimization enable us to achieve more efficient localized operations.
Secondly, the organizational restructuring and optimization enabled us to achieve more efficient localized operations.
Speaker 4: We have accomplished some initial success since the establishment of our regional headquarters. We believe those regional headquarters will continue to support the company's hotel networks expansion and to further penetration into regions that we were previously without.
We have accomplished some initial success since they started establishment of our original headquarters.
We believe those regional headquarters will continue to support the company's hotel networks expenses and the two further penetration into ridges that we were previously weak.
Speaker 4: Thirdly, the continuous upgrade and improvement of our products and services to achieve better ref power premium.
Certainly the continuous upgrades and improvements of our products and services to achieve better revpar premiums.
Speaker 4: No matter in economic segment or middle skill segment, we are committed to keep enhancing our products and services in order to further strengthen our dominant market position in the limited service hotel sector.
No matter in economic segments for me those skill segment, we are committed to keeping hence in our products and our services in order to further strengthen our dominant market position in the limited service Hotel segment.
Speaker 4: Lastly, further breakthrough in the upper mid-segment.
Lastly, further breakthrough in the upper mid segment.
To increase our market share and optimize our overall hotel network portfolio. This year, our upper mid scale segments achieved encouraging progress in operational performance, mainly supported by our three key brands.
Speaker 4: to increase our market share and optimizes our overall hotel network portfolio. This year, our automated skill segments achieved encouraging progress in operational performance, mainly supported by our three key brands.
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Speaker 4: Since the end of September , the company has rented 9,028 hotels, 40% of which are on the ground.
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Speaker 4: Compared to 2022, we see a small increase in the proportion of first and second-tier cities. This is due to the economic recovery of the first and second-tier cities after the epidemic this year.
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Speaker 4: But we are still pushing for the coverage and penetration of low-tier cities. In low-tier cities, the number of Chinese hotels and hotels is 6% higher, close to 3,600 homes.
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Speaker 4: The number of hotels in the tube has increased by 20% to more than 1,600.
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Speaker 4: The number of cities in China has increased to 1,217.
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Please turn to page five as.
Speaker 4: Please turn to page 5. At the end of September , out of total 9028 hotels in operation, there were 40% were located in the lower tier.
At the end of September although off totaled 9000, and the 28 hotels in operation. There were 40% were located in the lower tier cities and a 55% of our 2935 foot Chelsea in pipeline or in the lower tier cities on a year over year basis, we see.
Speaker 4: And 55% of our 2,935 for Chelsea pipeline were in the lower tiers.
Speaker 4: On a year-over-year basis, we see a small increase in the hotel appropriation of proportion in the tier one and tier two cities, thanks to the economic recovery post-COVID in those top tier
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Propulsion in the tier one or tier two cities.
Two the economic recovery post COVID-19 when those top tier cities.
Speaker 4: Nonetheless, we continue to push forward our lower tier cities penetration strategy.
Nonetheless, we continue to push forward, our lower tier cities penetration strategy.
Speaker 4: In terms of absolute hotel number increase in the lower tier cities, our number of hotels in operation increased by 6% year-over-year to reach close to 3,600 hotels. And the number of hotels in pipeline grew around 20% year-over-year to over 1,600 hotels. And the number of cities that we covered reached to 1,217.
In terms of absolute hotel number increase in the lower tier cities, our number of hotels in operation increased by 6% year over year to reach close to.
3600 hotels and a number of hotels in pipeline grew around 20% year over year to over 1600 hotels and the number of cities that we cover it reached to 1217.
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Speaker 4: In support of the strong number of new contracts and the number of tube hotels this year
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Speaker 4: The speed of power generation in the third quarter is the same as the previous year, and the rate of power generation in the third quarter continues to increase. The new power generation in the third quarter is 545 units, which is 28% higher than the previous year. In terms of power supply, the second quarter had 139 units of power supply in total, including 90 1.0 versions of Hanting, as well as economic power generation.
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Speaker 4: Huazhou continues to promote high-end development strategies to clean up unqualified hotels, which helps to continue to improve the quality of the group's overall hotels.
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Please turn to page six we continued implementing our sustainable quality growth strategies and to expand our hotel network by opening high quality hotels.
Speaker 4: We continue implementing our sustainable quality growth strategy.
Speaker 4: and to expand our hotel networks by opening high-quality hotels.
Supported by strong new signings in hotels in pipeline, our hotel openings in the third quarter increased both year over year and quarter over quarter.
Speaker 4: supported by strong new signings and hotels in pipeline. Our hotel openings in the third quarter increased both year over year and quarter over quarter. In the third quarter, we opened 545 hotels, up 28% year over year. And we closed 139 hotels, which mainly included 94 Hanting 1.0 version and a soft economic hotel.
In the third quarter, we opened 545 hotels up 28% year over year.
And we closed 139 hotels, which was mainly included 90 690 94 hunting one zero version and a soft economic hotels.
Speaker 4: Under our sustainable quality growth strategy, we have been continuously cleaning up those unqualified hotels, which can help improve the overall quality of our hotel portfolios.
Our sustainable quality growth strategy, we have been continuously cleaning up those unqualified hotels, which can help improve the overall quality of our hotel portfolios.
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Speaker 4: Hantian 1.0, which is a financial software brand, fell from 26% at the end of 2020 to 8% at the end of September this year. At the same time, Hantian 2.0
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Speaker 4: please turn to page seven. The proportion of Hanting 1.0 version and soft economic hotels decreased from 26% at the end of 2020 to only 8% as the end of September this year. And over the same period, the proportion of Hanting 2.7 version and above increased from 14% to 27%.
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Speaker 4: Please turn to page 8. We emphasize that China will continue to serve the public with economic nationality and moderate hotel as the core.
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Speaker 4: As of the end of September , 55% of the hotels in the company are economic nationals.
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Speaker 4: 37% of the company's pipeline hotels are economic national hotels and 48% are mid-size hotels. The share of mid-size hotels has increased by 5% on average.
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Speaker 4: In the third quarter, 91% of the newly opened hotels are economic national and medium-sized hotels.
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Speaker 4: We can see that Huazhou is constantly improving the quality of Chinese hotels.
Speaker 4: We will continue to focus on the limited-service hotel sector, which is made up of economic and Chinese-style services, in order to meet the needs of the vast number of residents.
Speaker 4: And in the field of limited service hotels, with the increase in the number of Chinese consumers requesting accommodation, the proportion of Chinese residents will also gradually increase, in order to better match the consumption structure of Chinese citizens.
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Speaker 4: Please turn to page 8. We emphasize that economic and mid-scale hotels will always be our core product.
Please turn to page eight we emphasize that that economic and mid scale hotels will always be our core products.
Speaker 4: as we strive to better serve Chinese mass consumer markets.
As we strive to better serve Chinese mass consumer market.
Speaker 4: As of the end of September , 55% of our hotels in operation were economic.
As of the end of September 55% of our hotels in operation, where economic hotels, and a 37% were misdeal hotels, the proportion of Midscale hotels was up three percentage points year over year basis.
Speaker 4: and 37% were misfueled hotels. The proportion of misfueled hotels was up 3 percentage points on year-over-year basis.
Speaker 4: For hotels in pipeline, around 37% were economic hotels, and 48% were miscellaneous.
Our hotels in pipeline.
37% for economic hotels, and a 48% with Q4.
Speaker 4: Proportion of mesquite hotels were up five percentage points
A portion of miscue hotels were up five percentage points year over year.
In the third quarter, 91% of the new hotel openings, where economic and mid scale hotels.
Speaker 4: In the third quarter, 91% of the new hotel openings were economic and minuscule hotels.
Speaker 4: As you can see, while we are optimizing and enhancing our overall hotel product quality, our limited service hotel segments, which compromise economic and miscule segments, are always our key focus to continue improving in order to better meet the travel and accommodation needs for Chinese mass markets.
As you can see while we are optimizing and enhancing our overall hotel product quality.
Limited service hotel segments, which compromise economic and Midscale segments are always our key focus to continue improving in order to better meet their travel and accommodation needs for Chinese mass market.
It is worth noting that within the limited service segment. We are seeing the proposal of miscue is increasing which perfectly matched with consumers rising demand a better quality of accommodation product.
Speaker 4: It is worth noting that within the limited service segment, we are seeing the proportion of miscule is increasing, which perfectly match with consumers' rising demand on better quality of accommodation products. ????????,???????
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Speaker 4: As of the end of September this year, the number of mid-to-high-end hotels in our company's camp has reached 605. The growth rate is 18%, and the return rate is 8%. The number of mid-to-high-end hotels in the pipe is 357. The growth rate is 35%, and the return rate is 13%.
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Speaker 4: The rapid growth of the number of hotels in the pipe reflects the brand strength of Huazhou in the mid-to-high-end hotel track and provides a strong platform for the development of Huazhou's future mid-to-high-end hotels.
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Speaker 4: Please turn to page 5. This year, we achieved encouraging breakthrough in the upper-mid segment.
Please turn to page nine this.
This year, we achieved encouraging breakthrough in the upper mid segment.
At the end of <unk> at the end of September we had 605 hotels in operation, which represented year over year and quarter over quarter increase of 18% and 8% respectively.
Speaker 4: At the end of September , we had 605 hotels in operation, which represented a year-over-year and a quarter-over-quarter increase of 18 percent and 8 percent with respect...
Speaker 4: And we had 357 hotels in pipeline, which grew 35% year-over-year and 13% quarter-over-quarter.
And we had 357 hotels in pipeline, which grew 35% year over year and 13% quarter over quarter.
Speaker 4: The strong pipeline growth reflects the rising brand awareness of our up-and-midscale hotels and provides solid support for the future development.
The strong pipeline growth reflects the rising brand awareness of our upper mid scale hotels and provide solid support for the future development.
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Speaker 4: In the past three quarters, the number of sign-ups for the Chengji brand has increased rapidly. As of the end of September this year, the number of Chengji hotels in Guangdao has reached 41 stores.
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Speaker 4: The number of orange crystals in the tube has reached 108.
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Please turn to page 10.
Speaker 4: Within the upper mid-scale segment, our two key brands, including InterCity and Crystal Orange, both have achieved remarkable new signings this year.
Using the upper mid scale segment, our two key brands, including inter CD and Crystal Orange, both achieved remarkable new signings this year.
Speaker 4: Last year, we launched DSH's InterCity brand in China and opened several new leased InterCity hotels in Wuhan, Zhengzhou, Shenzhen, Shanghai, and so on. Over the past three quarters, the new signings of InterCity grew meaningfully.
Last year, we launched the edges, the inter city brands in China and opened several new leased inter city hotels in Wuhan, Zhengzhou, Shenzhen, Shanghai, and so over the past three quarters, the new signings of interest at the grille meaningfully.
Speaker 4: At the end of September , we have 41 inner-city hotels in the pipeline, and the number of pipelines for Crystal Orange brands reached 108.
At the end of September we have 41 indoor city hotels in the pipeline and a number of pipeline for Crystal Orange brand reached 108.
Speaker 4: The fast-growing pipeline demonstrates that our in-the-city and crystal-orange products and brands are getting more recognized and accepted by our franchises.
Fast growing pipeline demonstrates that our industry and a crystal orange products and our brands are getting more recognized and accepted by our franchisees.
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<unk> Seahawk and Seascape here conclude our business review and update for the third quarter of 2023 with that I will now turn the call over to our CFO. Mr. GE hold do discuss <unk> operational updates and our groups financial performance the whole piece.
Speaker 4: This here concludes our business review and updates for the third quarter of 2023. With that, I will now turn the call over to our CFO , Ms. He Ji-hong, to discuss DH's operational updates and our group's financial performance. Ji-hong, please.
Thank you Kimberly I will now elaborate DHS activity so far this year.
Speaker 3: Thank you, Jinghui. I will now elaborate DH's activities so far this year.
Please turn to page 11.
Speaker 3: Despite Germany's slow economic recovery post-COVID, REFPA of DH Portfolio outperformed the overall German market using relevant RGI data.
Despite a germany slow economic recovery post COVID-19 rest half the H portfolio outperformed overall general market using relevant ICI data.
In third quarter 2023 year over year cost growth is in line with the revenue growth despite inflationary pressure in Europe after excluding one off adjustments and restructuring costs.
Speaker 3: In Q3 2023, year-over-year cost growth is in line with revenue growth despite inflationary pressure in Europe after excluding one-off adjustment and restructuring costs.
Speaker 3: Our priority remains to control and reduce costs through business restructuring as well as leveraging on technology.
Our priority remains to control and reduce cost through business restructuring as well as leveraging technology.
At the same time, we are repositioning the current hotel product design to reflect the demand of the modern calendars.
Speaker 3: At the same time, we are repositioning the current hotel product design to reflect the demands of the modern travelers.
Speaker 3: We are also spending effort in strengthening our presence in Middle East and exploring new international markets such as Asia Pacific.
We are also spending effort in strengthening our presence in middle East and exploring new international markets, such as Asia Pacific.
I'm now going to highlight the financial performance in this in the next section.
Speaker 3: I'm now going to highlight the financial performance in the next section.
Please turn to page 13.
Our hotel network continued to expand in the third quarter 2023.
Speaker 3: Our hotel network continued to expand in the third quarter of 2023.
Speaker 3: Total number of rooms in the operation increased 11% year over year, and it reached 885,756.
Total number of rooms.
The operation increased 11%.
Year over year and reached 885756.
Hotel turnover increase of 55% year over year and reached $23 5 billion renminbi.
Speaker 3: Hotel turnover increased 55% year-over-year and reached 23.5 billion RMB.
Please turn to page 14.
Legacy <unk> blended revpar recovered to 129% of 2019 and achieved again maybe 278.
Speaker 3: Legacy Huazhou blended RASPAR recovered to 129% of 2019 and achieved RMB 278.
Speaker 3: This was primarily driven by ADR increase, which was 33% over Q3 2019 and 27.7% of Q3 2022.
This was primarily driven by ADR increase.
With 20, 33% over Q3, 2019, and 27, 7% of Q3 2022.
Speaker 3: Occupancy still lags Q3 2019 by 1.8 percentage points.
Okay P&C steel next Q3 2019 by one eight percentage point.
Speaker 3: Nevertheless, the occupancy of 86% is quite a high benchmark for the size of our total portfolio.
Nevertheless, the occupancy of 86% is a quite a high benchmark for the size of our total portfolio.
Please turn to page 15.
Legacy ph blended revpar increase of four 5% year over year and achieved an <unk> 79.
Speaker 3: Legacy DH Blended RAVCAR increased 4.5% year-over-year and achieved Euro 79.
Speaker 3: ADR remained flat compared to Q3 2022, but occupancy increased by 2.9 percentage point.
ABR remained flat compared to third quarter 2022, but the occupancy increased by two five percentage point.
Please turn to page 16.
Speaker 3: Total revenue of each world increased 54% year over year, achieving 6.3 billion renminbi.
Total revenue of <unk> increased 54% year over year, achieving six 3 billion renminbi.
Legacy Quadro revenue increased 62% year over year, achieving $5 1 billion renminbi.
Speaker 3: Legacy Huazhou revenue increased 62% year-over-year, achieving 5.1 billion RMB.
This achievement and what the possible.
Speaker 3: This achievement was possible through, first, strong domestic travel demand, especially during the summer holidays.
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Strong domestic travel demand, especially during the summer holiday.
Second continue to protest the upgrades and improvement of product mix.
Speaker 3: Second, continue the product upgrade and improvement of product mix.
Speaker 3: And third, market penetration and synergy through regional offices.
NSX market penetration and as synergy through regional offices.
Revenue from our legacy D. H I also improved 26% year over year, driven by higher Revpar and higher hotel turn all of that.
Speaker 3: Revenue from Legacy DH also improved 26% year-over-year, driven by higher REVPA and higher hotel turnover.
Please turn to page 17.
Let me see a fragile operating income achieved $1 9 billion renminbi.
Speaker 3: Legacy Huazhou Operating Income achieved RMB1.9 billion in Q3 2023.
Third quarter 2023.
Compared to third quarter 2022, and our second quarter 2023. This is a significant improvement.
Speaker 3: Compared to Q3 2022 and Q2 2023, this is a significant improvement.
This is achieved through revenue increase and at the same time cost management effort for both hotel costs and SG&A expenses.
Speaker 3: This is achieved through revenue increase and, at the same time, cost management effort for both hotel costs and HG&A expenses.
On legacy BH side operating cost increase in line with our revenue increases.
Speaker 3: On legacy DH side, operating costs increase in line with the revenue increase.
Our SG&A side, there are some one off effects and restructuring costs booked in Q3 2023.
Speaker 3: On SG&A's side, there are some one-off effect and restructuring costs booked in Q3 2023.
Speaker 3: Taking these efforts out, the HGNAA cost also increased proportionally with the revenue increase compared to Q3 2022.
Taking these effort at the SG&A cost also increased proportionally with the revenue increase compared to Q3 tiny tiny inhaler.
Please turn to page 18.
Negative adjusted EBITDA achieved $12 1 billion renminbi in Q3, 2023, and adjusted net income achieved one 4 billion.
Speaker 3: Legacy Huazhou Adjusted EBITDA achieved 2.1 billion RMB in Q3 2023 and Adjusted Net Income achieved 1.4 billion RMB.
Speaker 3: Legacy DH adjusted EBITDA worth 65 million RMB in Q3 2023.
Legacy <unk> adjusted EBITDA was $65 million going be in Q3 2023.
Speaker 3: adjusted net income fell into negative territory of minus 37 million renminbi.
Adjusted net income.
Fell into negative territory at minus $37 million.
Speaker 3: On the group level, operating cash flow was 1.2 billion renminbi.
On the group level operating cash flow was $1 2 billion renminbi.
The fluctuation compared to Q2 2023 is it due to short term change or a timing of franchisee fee payment at the end of September.
Speaker 3: The fluctuation compared to Q2 2023 is due to a short-term change of timing of franchisee fee payment at the end of September .
Please turn to page 19.
Speaker 3: The group is in a net cash position as of end of September . There's a net cash of 3.9 billion renminbi and I'll utilize the bank facility of 2.7 billion renminbi.
The group is in a net cash position as of end of September there was a net cash of $3 9 billion renminbi and utilize the bank facility of $2 7 billion renminbi.
Please turn to page 20.
We estimate the revenue in Q3, Q4, 2023 will be a growth of 41% to 45% compared to Q4 2022.
Speaker 3: We estimate the revenue in Q4 2023 will be a growth of 41% to 45% compared to Q4 2022.
Speaker 3: Excluding DH, legacy Huazhou revenue is estimated to grow 48% to 52% compared to Q3 2022.
Excluding these excluding the edge and legacy of Quadro revenue is estimated to grow 48% to 52% compared to Q3 2022.
This ends the management presentation.
Speaker 3: This ends the management presentation. I hand over to Mr. Chen Yibo.
Okay. So you said tangible.
Operator, we can start the Q&A session. Please.
Okay.
Speaker 1: Thank you. If you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star 2.
Thank you if you wish to ask a question. Please press star one on your telephone and wait for your name to be announced.
If you wish to cancel your request please press star two.
You're on a speakerphone, please pick up the handset to ask your question.
Your first question comes from Ben <unk> from Morgan Stanley. Please go ahead.
Speaker 1: First question comes from Mr. Dan Chee from Morgan Stanley . Please go ahead.
I'll touch on now.
Speaker 5: First of all, I would like to congratulate the company for achieving a very good quarter's performance. What I would like to ask is mainly about the funding management side.
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Speaker 5: We see that there will be a board meeting on the 3rd of this week which is about the company's stock market dividend We and many investors are very concerned about this I don't know if the company's management team has any more details to share with us like how we should predict the time and the stock market amount For example, will it be a special dividend or will there be some regular dividend opportunities?
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Speaker 5: I don't know if it's convenient for me to go into some details here. Thank you. I'll translate it here.
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Good morning management first of all congratulations on the very strong second quarter results.
Speaker 5: Good morning, management. First of all, congratulations on a very strong third quarter result. I have a question regarding the recent announcement of board resolution on cash dividend. I'm wondering if the company can share a bit more details on this dividend payment. For example, timing, what to expect, size of the dividend that is proposed, and whether is it a regular or special dividend.
Have a question regarding the recent announcement of bought resolution on cash dividend.
Wondering if the company can share a bit more details on this dividend payment.
For example, timing.
What do you expect size of the dividend that is proposed and whether is it regular or special dividend.
Thank you.
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Speaker 4: I think we will discuss the specific dividend policy and the dividend ratio immediately after the board decision.
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Speaker 4: At the same time, I would like to add that under the strategic expansion of the brand and management of Huazhou in the future, we are also considering making the entire company sustainable.
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Speaker 4: Let me ask you a question first. Yes, our board is considering a cash dividend, and once we get approval from the Board of Reservations, we will immediately release to the market in terms of the exact policy and the payout ratio. And I want to add another point, as to what the business is going to be more like, we definitely want to be well-managed on the cash and net profit going forward.
Let me answer your question first.
Yes, our board is considering Ah.
Cash dividend.
And once we got approval from the board every solution we will immediately.
<unk> released to the market in terms of the exact the policy and the payout ratio and I want to add another point as to what the business is going to be more asset light.
We definitely wants to be well management on the cash and net profit going forward.
Okay.
Speaker 3: Just a little bit to add to Mr. Jinghui's comment, Huazhou, especially Huazhou, China has recovered very well. We are very confident that especially Chinese lodging market will continue to recover. So we expect a very stable cash flow in our future operations.
Just a little bit to add to me taking place comment.
Especially if I to China has recovered very well.
We are very confident that especially Chinese lodging market will continue to recover.
So we expect a very stable cash flow in our future operations and with this kind of stable cash flow and our net earnings we would like to retire some of our earnings back to.
Speaker 3: And with this kind of stable cash flow and net earnings, we would like to return some of our earnings back to our investors. So we will resume our continuous, stable base dividend policy, as well as special dividend policy from time to time if our cash flow shows a very strong performance.
To our investors so we will resume our COO.
Continued stable base dividend policy as well as a special dividend policy from time to time, if we our cash flow.
So it's a very strong performance.
Speaker 3: And please just be patient. We have a couple of days until the board resolution is decided, and we will announce it in time. As for the cash payment, we will expect it around early next year.
Please just be patient we have a couple of days.
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Decided and we will announce it in time.
As for the cash payment we will.
Got it.
Early next year.
Yeah.
Okay.
Speaker 5: ??,???????,????,??? Okay, thank you, Mr. Jin and Mr. He. I'm looking forward to it. Thank you.
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Sure.
Your next question comes from runoff Leung from Bank of America. Please go ahead.
Speaker 1: Your next question comes from Ronat Leon from Bank of America, please go ahead.
Hey, Glenn.
Speaker 5: Good morning. I have two questions. The first question is about the forecast for next year. Does the management have any preliminary forecast for next year's RAFPA and opening of stores?
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Speaker 5: The second question is related to the first question and the previous question. The cash flow of the company and the asset-asset balance sheet are very strong. Is there an ideal structure for the asset-asset balance sheet? Let me ask my questions in Chinese.
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Speaker 5: My first question is about the outlook for 2024. So would management have any preliminary forecast for the Roth Park growth and the hotel openings for 2024? My second question is about balance sheet. So right now the company has a very strong balance sheet and cash flow. So what do you think is the optimal capital structure for the company? Thank you very much.
My first question is about the outlook for 2020 full so what management has any premium or any forecast for the Ralph power growth.
Hotel openings for two full lifecycle.
My second question is about balance sheet. So right now the company has a very strong balance sheet and cash flow. So what do you think.
Optimal capital structure for the company. Thank you very much.
Yeah.
Speaker 4: I will answer the first question first. We will answer the second question after the quarter's financial report.
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Speaker 4: But in general, we are very optimistic about the future of China.
Speaker 4: and the changes in the consumer market.
And as your franchise operated county, Susana type yeah.
Okay. Thanks, a lot.
Speaker 4: China has many leading brands, and we are still enjoying the popularity of leading brands. So we will continue to be cautious in the future. But the specific direction will be revealed after this quarter of the year.
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Speaker 4: So, in terms of the expectation for next year, in terms of the rough part and the new openings, we will be giving the guidance to the market when we release our fourth quarter earnings probably next year.
So in terms of the expectation for next year in terms of the Revpar and the new openings.
They'll be giving.
Keeping the guidance to the market when we release, our fourth quarter earnings.
Earnings are probably next year.
Speaker 4: But I just want to add, we are still keeping our conservatively optimistic view for the China business.
But I would just want to add we are still keeping our conservatively optimistic view for the China business. Given we think we are still having the best products a market leading position and that we should still getting benefits from the continuous the charter ratio improvements and further consolidate shut off the mark.
Speaker 4: Given we think we are still having the best products a market-leading position And we should still getting benefits from the continuously tri-racial improvements and for the consolidation of the market
Right.
Speaker 4: So again, we keep our conservatively optimistic view and chat.
So again, we keep our conservatively optimistic view unchanged. Thank you.
Okay, I will take all of it will take over the question about the capital structure as you can see from our balance sheet.
Speaker 3: Okay, I will take over the question about the cash structure. As you can see, Rona, from our balance sheet for the third quarter, we have a very strong cash net.
We have a very strong cash net net cash position and very confident with the business improving and quarter.
Speaker 3: And I'm very confident that with the business improving quarter by quarter, year by year, our cash position will remain very strong.
Quarter by quarter, and yet our cash position will remain very strong.
Speaker 3: So as a part of the effort to reward our investors we already announced our dividend payout policy and this policy will continue.
As part of the FX total reward our investors.
<unk> announced our dividend payout policy and entities policy will continue and we also do not exclude the possibility to do some share buyback.
Speaker 3: And we also do not exclude the possibility to do some share buyback, you know, at appropriate time as well.
At the appropriate time as well.
Speaker 3: From our debt and equity position, you can see that we still have $500 million U.S.
Some from our debt and equity position.
You can see that we still have.
500 million you ask on that.
And convertible bond at this moment.
Speaker 3: convertible bonds at this moment and this will still take some time to mature and we will continue to leverage some of the bank facilities for our short-term working capital because the Chinese interest rate is very low. So please to be assured that the financial management team of H World will look into our cash position very diligently.
This will still take some time to mature and we will continue to leverage some of that benefit.
Bank facilities for our short term working capital because the Chinese interest rate is very low so.
Please sure.
Our financial management team of HOS, well, well look into our cash position very diligently manage our cash and manage our reward program to investors at the same time also leverage the lower interest environment in China, and we will also continue to manage the overall debt.
Speaker 3: manage our cash and manage our reward program to our investors and at the same time also leverage the lower interest environment in China and we will also continue to manage the overall debt position so that we do not fall into any potential issues.
Position.
Not to fall into any potential issues.
So as any Johnson <unk> Johnson.
Okay.
Your next question comes from Simon Cheung from Goldman Sachs. Please go ahead.
Speaker 1: The next question comes from Simon Chung from Goldman Sachs, please go ahead.
Speaker 5: Good morning, thank you for sharing, I have two questions, the first question I want to ask is to see that your power speed is obviously much faster than other peers I want to know what the reason is, and I remember in the last two quarters, Mr. Jin, you shared some of the situations in the Huanan area, I don't know if you can share some of the latest situations This is the first question, and the second question, I want to know, a lot of investors are interested in seeing, for example, in October , you just shared that Rappaport has slightly dropped I want to know the trend you see, for example, in November or December , I don't know what your thoughts are in your heart And what do you think is the reason for the fall in October , for example, in terms of leases or business?
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Speaker 5: I have two questions. The first question is in relation to the hotel opening. I've noticed that H2O has actually been able to achieve a much faster hotel opening than a lot of the peers. I'm wondering what are the reasons and whether management could share with us what's the latest update with the Southern China strategies? And then the second question is in relation to the fourth quarter. We have noticed quite a bit of a meaningful downward trend in October . I'm wondering whether it's cyclical or structural. What is the outlook going into November and December and whether there are any reasons in relation to business versus leisure traveling?
So I have two questions. The first question in relation to the.
Hotel opening I have noticed that.
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And what's the outlook going into November and December.
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Speaker 6: Thanks a lot. Xiexie.
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Speaker 4: Let me answer the question about business. Indeed, after the pandemic this year, the overall development of China's business sector has been very good. However, due to the COVID-19 pandemic, we have not been able to continue our business development. We have not been able to continue our business development. We have not been able to continue our business development.
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Speaker 5: I believe that this is mainly due to a few factors. The first is that in the past few years, Huazhou has continued to build on the investment brand of China's Xifeng market. For example, our Hanting,
Challenging this year.
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Speaker 4: The price hike in production went up fairly quickly. So we got some great significant raising levels. In fact, this is well in the forecast. Moreover, if you have, over the past few years, paid close attention to the following Patch Fix. On to… You can confirm it. Yes, I did. It is on the production flow report page. You can confirm it, along withthrough the products.
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Speaker 4: We have been continuously cultivating the second-most growing Chinese brand. In the past year, we have also achieved a very good brand building effect. Our Juzi's latest 3.0
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Speaker 4: after the release of the first quarter of this year, it has achieved very good growth. So the first thing I want to point out is that some of the leading brands that our Chinese team has built have continued to rise.
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Speaker 4: The second positive factor is that in the past few years, in our downstream market,
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Speaker 4: Especially in the past, the South China Sea and the Central China Sea markets, which were relatively weak in China, through the continuous adjustment of our organization and the construction of development capabilities, we have achieved great success.
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Speaker 4: The Chinese wholesale market three years ago from China to Hunan to India accounts for over 140-plus percent of all Chinese wholesale imports.
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Speaker 4: So the growth in this area has greatly improved China's signatory position in the Chinese market.
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Speaker 4: Thirdly, we have shown China's continued momentum in the mid-to-high-end market in the PVT.
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Speaker 4: With the improvement of our products and brands, I believe that in the future, we will be able to meet the expectations of China's high-end contracts and market coverage.
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Speaker 4: and the rapid realization of signing contracts, as well as the restoration of new high-end brands in three areas.
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Speaker 4: To answer your first question, post-COVID, since this year, we achieved quite good progress in terms of the new signings and the pipeline.
Also your first questions.
Post COVID-19 since this year.
We achieved quite good progress in terms of the new signings in the pipeline increase.
Speaker 4: This was mainly attributed to several reasons.
This was mainly attributed to several reasons firstly is for our market leading brands, especially in the limited service segment, including hunting.
Speaker 4: Firstly, it's for our market-leading brands, especially in the limited service segment, including Hanting and G-Hotel. Over the last several years, we keep enhancing our product.
G hotel over the last several years.
Enhancing our product quality and they're doing a lot of product upgrades and further enhance our brand reputation.
Speaker 4: quality and doing a lot of products upgrades and further enhance our brand reputation and a wellness that definitely benefits us for the increasing in the new signings. And also, especially in the middle skill segment, last year
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Increasing in the new signings and also especially in the middle scale segment.
Last year.
Speaker 4: We we try to use the orange to become our second Membrane in this particular segment and the since the first quarter when we launched orange 3.0 version The the products itself has been very much well accepted by the market and franchisees hence Achieved the quite good new signings since then
We tried to use the orange to become our second membranes. In this particular segment and since the first quarter, we launched Orange three zero version.
The product itself is being very much well accepted by the market and franchisees hence.
Achieved quite good new signings Kingston.
Speaker 4: Thirdly, it's because of the lower tier city penetration as well as further enhance our presence in our previously weak market, including the southern part of China, western part of China, and the middle part of China. This is the benefit from our organizational restructuring and further strengthening our business development capability on the ground.
Certainly.
Because of the lower tier cities penetration as well as further enhance our presenting our previously weak market, including the southern part of China, Western part of China, and the middle part of China.
This is the benefits from our organizational restructuring and further strengthen our business development capability on the ground.
Speaker 4: Currently, these three previously weak regions contributed more than 40% of our new signings year to date.
Currently this free previously weak reaches contributed contributed more than 40% of our new signings year to date lastly, it is further.
Speaker 4: And lastly, it is further breaking through into the upcoming segment, and mainly because of the InterCity brand as well as the Crystal Orange brand, as I mentioned previously in our prepared remarks and presentation, and we are strongly confident on the further breakthrough and increased market share for this particular segment.
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And mainly because of the interest 80 brands as well as the Crystal Orange spreads as I mentioned previously our appropriate remarks, and presentation and strongly confidence Alta further breakthrough and increase the market share for this particular segment.
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So under each of those in a couple of them and you saw that everybody that's adequate Patricia tissue.
But in terms of the second question on the Revpar trend. So for the October this is pretty normal seasonality because normally posted the golden week holiday deal with the low season. Following so this is a normal seasonality impact.
Speaker 4: In terms of the second questions on the rough part trend, so for the October this is pretty normal seasonality because normally post the golden week holiday there was a low season following So this is a normal seasonality impact
Speaker 7: And for the entire fourth quarter, we are expecting the rough power recovery to be in the range of 115 percent to 120 percent compared to the same period of 2019.
Until fourth quarter.
We are expecting the revpar recovery to begin a branch of 115% to 120%.
Compared to the same period of 2019.
Okay.
Yes.
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Speaker 8: Thank you, management team. I have a question. Our management team has conducted a survey of the downstream market. Can you share with us the main observations? Do you think there is still a great opportunity in the downstream market? And after being the regional headquarters, do you think there is any place that needs to be strengthened to help us seize the opportunity in the downstream market?
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Speaker 8: So thank you management, you have been to some low tier cities to do some field research.
So thank you management you have seen to some low tier cities to do some theory search. So could you. Please share with US your my observations, which makes you feel that there are lots of opportunities in low tier cities and in order to seize the market opportunity. We have established regional headquarters and is there any other capable.
Speaker 8: So, could you please share with us your main observations, which make you feel that there are lots of opportunities in low-tier cities? And in order to assist the low-tier market opportunity, we have established regional headquarters, and is there any other capability that we need to strengthen? Thank you.
Reality that we need to strengthen thank you.
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Speaker 4: China's urbanization has been a hot topic in the past few years, although it has already achieved 65% urbanization in the first half of the year. We can see that a large part of the downstream market is also affected by the urbanization of the downstream market.
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Speaker 4: I think this is very obvious. The population of the lower-income market is still increasing. Secondly, due to China's high-speed rail development,
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Speaker 4: So I think these two factors are very important. One is the continuous progress of urbanization in China. The second is the internal circulation.
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Speaker 4: China still has a very big opportunity, especially in the rural market, which has a population of about 1 billion, right? It's a very, very huge, huge...
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Speaker 4: My position is to satisfy consumers who work in the urban sector on how to satisfy their needs while maintaining the cfd market.
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Speaker 4: Okay, so clearly despite the urbanization rate have already achieved over 65 percent this year, we're still seeing that there's further urbanization progressing in the lower tier cities, and we're also seeing the population actually is also increasing in the lower tier.
So clearly despite the urbanization rates have already achieved over 65%. This year, we're still seeing that there is further organization progressing in the lower tier cities and we are also seeing the population actually is also increasing with the lower tier cities.
Speaker 4: In addition to that, the high-speed railway trend, further development, as well as the highway networks further expanding, and we are seeing, you know, the number of passengers
Addition to that.
The high speed railway trend further developments as well as the high.
The highway networks further expanding and that we were seeing you know the the number of press interest.
Transported by the high speed railway a trend this year achieved a historical high. This is mainly supported by a lot of government efforts are stimulating the domestic demand.
Speaker 4: transported by the high-speed railway trend this year achieved a historical high. This is mainly supported by a lot of, you know, government efforts stimulating the domestic demand, which increased a lot of, you know, population mobilities.
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Speaker 4: And for the lower-tier cities, we also observed that it is really a high-resilient market. And more importantly, the lower-tier cities contain over 1 billion population. We think still there is a lot of huge opportunities to further discover.
And for the lower tier cities, we also observed that that.
It is really a high resilient market and.
More importantly, the lower tier cities cultures over 1 billion population.
Think steel there is a lot of a huge opportunities to further discover.
Speaker 4: As a leading company, H4Z is striving to further provide good products and services to match the demand for better accommodations in the lower tier cities.
And as a leading company.
What is driving to further providing good products and a service to a true match and matched.
Matched to the demand for a better accommodations.
In the lower tier cities.
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Speaker 4: It has also greatly influenced our cornerstone trading and some small farmer's markets adopted vegetal produce. There is a significant Leader's Domain impact.
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Speaker 4: Okay, so the organizational restructuring is definitely creating some of the benefits and in line with our low-adversities penetration strategy. So basically, we want to be more close to our customers and more close to our franchise.
Okay. So the organizational restructuring is definitely creating some of the benefits and in line with our lower tier cities penetration strategy.
So basically we want to be more close to our customers in a more close to our franchisees and they choose to be more localized because especially for the franchisees sites.
Speaker 7: and to be more localized. Because especially for the franchisee side, we are seeing a lot of, you know, new franchisees, new type of franchisees, basically. Some of them are self-owned properties. Some of them are, you know, local, small and middle property developers, as well as some of the business owners. We want to be close enough to them and understanding their demand, as well as our customers.
We are seeing a lot of new franchise, new type of franchisees basically some of them are self owned properties. Some of them are you know local small and middle property developers as well as some of the business owners, we want to be close enough to tell them and understanding their demand as well as our customers.
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Your next question comes from <unk> Li from Citigroup. Please go ahead.
Speaker 9: Thank you, Manager Cheng. We are indeed concerned about the company's economic layout in the entire mid-to-high-end sector. Especially, the speed of the growth of the company's performance is actually more than expected. I am also a consumer of performance. Regarding performance, I would like to ask two questions.
Hey, thanks, everybody for us.
Thank you Glenn.
Good quarter.
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Speaker 9: One is about the existing Chengji stores. Is there any more business data to share? For example, like ADR, Repa, etc. In addition, what are the characteristics of Chengji stores in our pipeline, including the image of the joint vendor? These are the two main questions.
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Speaker 9: Let me translate my question in English. We notice IndyCity is gaining traction among flight transits. So could you tell us more about the current business situation, such as ADR route path? Besides, can you share what cities are the distribution of IndyCity in the pipeline? And what are the features of flight transits? Thank you.
Let me translate my question in English.
<unk> is gaining traction among franchisees so could you tell us more about the solid color on the businesses in Asia, such as ADR Revpar and besides <unk> on distribution of <unk> in the top line and what are the features of franchisees. Thank you.
Speaker 4: Okay, let me answer this question. Thank you. In terms of our brand, after last year's introduction, we have continued to build our product and service capabilities.
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Speaker 4: There aren't many stores that are open right now. Although we have more online reviews than our main products in Reolpa and QuanJuDao, I think it's because we don't have a lot of samples, so we don't have enough to show you more. But we have achieved a very good return on investment and a very good brand influence.
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Speaker 4: This is something that I am very confident about.
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Speaker 4: Above all, the company's public attentions are among the most important.
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Speaker 4: There are two main categories. The first category is the top-notch projects in the industry, because the investment of a project is very large, and the foundation needs to be built.
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Speaker 4: So the entire head of the industry, not just the original head of Huazhou, but also the head of many industries joined us.
In total the two.
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Speaker 4: In terms of current operations, it is far superior to the original tradition.
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Okay. Thank you just to answer your questions.
Speaker 4: Okay, thank you. Just to answer your questions.
Speaker 4: Thanks for focusing on our intercity brands. Since we launched last year and opened several least intercity hotels in several cities, so for this already opened hotel, given the scale is relatively small, we don't think it is.
Thanks for.
Focusing on our intercity Burns since we launched last year and opened several leased.
Interestingly hotels in several cities.
So for this already opened hotel given.
The scale is relatively small we we don't think it is.
Speaker 4: suitable for now to compare or to release the ADR or REF part to the market at this moment because it is quite selective and we have only, you know, several indoor cities.
Suitable for now to compare or to release, the eight year of Revpar to the market at this moment because it's quite selective in that we have only you know several indoor cities are hotels in operation, but if you really want to talk about these hotels operational data so all the age and the rough process.
Speaker 4: hotels in operation. But if you really want to talk about these hotels' operational data, so all the ADRs and the rough parts have been already doing better than our competitors.
Uh huh.
But doing better than our competitors.
Speaker 4: But we are very confident to see the brand is getting more accepted and aware by our franchisees and the market.
But we are very confident to see the brand is getting more.
Accepted and aware out by our franchisees in the market.
Speaker 4: And for the franchisees, we are seeing definitely a different type of franchisees compared to our limited service segment. There are two types of franchisees. One is definitely the industry-leading franchisee, because the intercity hotel requires a relatively big amount of capex investment. So a single intercity hotel requires around 30 million to 50 million RRB capex. So
And fourth our franchisees, we are seeing definitely a different type of franchisees culture through our limited service document.
There are two tight oil franchisees, one is definitely the industry leading franchisee.
Because the inter city hotels across a relatively big amounts of Capex investment so a single.
Interest in the hotel REIT costs around 30 million to $50 million <unk> capex, so only those very much leading position.
Speaker 4: only those very much leading position, leading franchises can afford that much car parks. And second, we also see a lot of, you know, property developers or local property developers and property owners which used to, you know, doing business with those international brands are now finding us as InterCity to be a substitute because we are definitely leading in terms of the operational capability.
Leading franchisees can't afford that much capex in the second we also see a lot of you know property developers local property table robust property owners.
It's used to dream.
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No.
Finding us as interest rates to be a substitute.
Because we are definitely leading in terms of the operational capability.
Okay.
Bill.
There are no further questions at this time I will now hand back to Mr. Chen for closing remarks.
Speaker 1: There are no further questions at this time. I will now hand back to Mr. Chen for closing remarks.
Thank you everyone for taking your time with US today, and we look forward to see you in upcoming quarter. Thank you bye bye.
Speaker 4: Thank you everyone for taking your time with us today and we look forward to see you in upcoming quarter. Thank you. Bye bye.
Yeah.
Speaker 1: That does conclude our conference for today. Thank you for participating you may now.
That does conclude our conference for today. Thank you for participating you may now disconnect.