Q4 2023 H World Group Ltd Earnings Call
Q2, IP 23 earnings conference call.
At this time all participants are in a listen only mode. After the speaker's presentation, there will be question and answer session.
To answer questions. During the session you will need to press star one on your telephone you would adhere an automated message sizing. Your hand is raised to withdraw your question. Please press star one again please.
Please be advised that today's conference is being recorded.
It is now my pleasure to hand, you over to <unk> Senior IR director Mr. Jason Chien. Please go ahead.
Thank you.
Good morning, and good evening everyone.
Thanks for joining us today welcome to toward group, Tucson, and 23 fourth quarter and full year earnings conference call.
Joining us today is our chairman Mr Chi Chi.
Our CEO, Mr. Jean Cui and our CFO, Mr Don't Dream.
Following their prepared remarks management will be available to answer your questions.
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.
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 etch.
<unk> group does not undertake any obligations to update any forward looking statements, except as required under applicable laws on.
On the call 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 yesterday.
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 Dot that's what dot com.
With that now I will hand over the call to our CEO, Mr. Jim <unk> to discuss our business performance in 2023, Mr. Jing. Please.
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In Tucson in 'twenty, three the domestic probably industry experienced strong momentum of recovery.
Along with the robust rebound off the industry Ashworth continued implementing our sustainable high quality growth strategy and achieved great results first of all let's take a look at our achievements in 2023.
Please turn to page three.
Thanks to the strong leisure demand and the gradual recovery of business demand post the pandemic in Tucson in 'twenty, three our China business achieved a robust recovery with revpar recovered to 122% of the 2019 level for the whole year.
Entering into 2024, we still see our Rev par performing Saturday so far.
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All of our hotel network continued to expense play.
Turn to page four.
Excluding the economic softer brand, we opened a total of 1641 hotels in 2023 reached a record high in terms of annual opening number.
At the same time, we closed 789 hotels in 2023.
However.
Excluding the low quality economic softer brand and hunting 1.0 version closer were only 273 equal to house, a slight increase from 237.
Seven in 2022.
The high closure number in 2023 demonstrated our determination to remove or upgrade to more quality hotels and accelerated manner, which is in line with our sustainable quality growth strategy.
In terms of our pipeline by the end of 2023, our hotels in pipeline reached 3000, and a 61 another record high.
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The limited service segment remains our key strategic focus our economic in the middle scale products, which target the mass market are the key drivers of our network expansions.
<unk> Dong, our hotels in operation hotels in pipeline and hotel opening in 2023, the propulsion of economic and the middle scale hotel, where 92%, 85% and 90% respectively.
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That's what has set a specific brand strategy named iron triangle to develop the economic in the middle skills segments.
Iron ore triangle strategy consists of our three key brand, namely hunting Villa hotel and Orange.
In 2023, we have upgraded products for all these three brands.
Turn to page six.
Firstly, our hunting products were being constantly upgraded the propulsion of hunting 1.0 version, where six months significantly declined from 28, 5% as of 2022, only four 4% as of 2023, while the proportion of hunting to 7%.
And above version steadily increased from only 34, 4% as of 2022, 70 171, 2% as of 2023.
The first flagship brands with the longest history within the group hunting has maintained its market competitiveness and attractiveness to customers and our franchisees through continuous product innovation and upgrades.
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Please turn to page seven we launched it in U S to version 5.0 or <unk> hotel at the end of last year. The new version further elaborates lifestyle of Oriental Astra Tech acetate and shows confidence in distinctive Chinese style service.
Starting from the stage of design <unk>.
<unk> Hotel 5.0 version implements the concept of sustainable development.
US adopting prefabricated design intelligent lighting system and environmentally friendly constructions.
<unk> implementations could largely help reducing environmental pollution and energy consumption.
Additionally, we also explored new business models in the public area <unk> area of G Hotel 5.0 version.
We introduced an innovative key space or tea house in G hotels pubs.
Public area and also further strengthening the cooking products, which is the scenario based the retail business.
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Lastly, our Orange brand, we launched low Haas version in 2023, please turn to page eight.
After only one year post.
Official launch Orange low hogs version has already gained tremendous popularity in the market.
Our soft Tucson in 'twenty three the low Haas products accounted for 58% of the total pipeline of Orange brand.
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Ed toward continued to expand geographic coverage of our hotel network.
Please turn to page nine.
We kept on penetrating in lower tier cities in China.
As of Tucson in 'twenty, three around 40% of hotels in operation were located in tier three and four and below cities.
Presenting a two percentage point increase compared to 2022.
At the same times, 55% of hotels in pipeline, we are located in lower tier cities.
Also the percentage number were lower compared to 2022.
It's absolute number will hire.
As of 2023, the number of city coverage was 1257 added 131, new cities penetration compared to 2022.
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In addition, our capabilities of localized the development and operation in the previously less penetrated or weak areas in China has been improving significantly and we achieved our initial results post all post to our organizational restructuring by establishing original headquarters.
Please turn to page 10.
In our south West and Central China, The total new signings in Tucson in 'twenty, three increased more than 100%, 80% and a 40% year over year respectively.
An increase of more than 200%, 130% and 110% compared to the pre COVID-19 year of 2019 proxy.
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Please turn to page 11.
Our upper mid scale segment development is continuously progressing.
As of the fourth quarter of 2023.
645, upper mid scale hotels in operation, representing a 23% year over year increase and a 7% quarter over quarter increase and that there were 386 of upper Midscale hotels in pipeline, representing 34% year over year.
<unk> and 8% on increased on a sequential basis.
Combining hotels in operations and hotel seen pipelines together the total number of our premise.
Upper mid hotels reached 1031 in 2023.
We are very glad that we had achieved our target which was set in the second quarter of 2021.
Ever it is still far from enough.
We'll continue to strengthen our footprint in the upper mid scale segment, mainly through our core brands and strive to become a leading brand in the market in the foreseeable future.
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Please turn to page 12.
Being one of our core brands in the upper mid scale segment intra city brand launched its new products in 2022 and have them broken.
<unk> of its pipeline hotels has quickly increased the true 53 at the end at the year end, demonstrating the high market recognition and acceptance of the brands and the products.
Turning to page 13 at the same time, the Crystal Orange Gan, a good momentum of new signings as well.
At the end of 2023, the number of hotels in pipeline reached 119, which doubled from the beginning of 2023.
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Lastly, let's review our performance in regards to the membership and the Central reservation system.
Please turn to page 14, the total number of members continued to increase to $228 million in 2023.
<unk> has ranked number one worldwide.
Direct bookings through our Central Reservation systems was 60 to 62, 6% in 2023.
Presenting nine percentage points increase on a year over year basis.
All in all we continued meaningful our membership program and our central Central Reservation system.
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After discussing our achievements in 2023, let's now go through our key strategic forecast in 2024, please turn to page 15.
Service excellence centric sustainable growth quality growth will be the strategic focus of <unk> in 2024.
This strategic focus is divided into three major areas.
Firstly high quality Hotel network expansion.
In the limited service segment, we will continuously expand our footprint nationwide by executing our iron triangle strategy with focus on less penetrated areas and the lower tier cities.
In the upper Middle segment.
Or selected service segment, we will consistently implement our multi brand strategy to further strengthen our presence.
Secondly, customer centric product upgrades and service excellence.
In terms of product quality, we will continue to upgrade older hotels and introduced new products for each brands to meet our customers' diversified fleet.
In terms of service quality 2024 marks the beginning of year of service excellence for export.
It means that we are going to put more emphasis on service, which provided to both our customers and our franchisees to continuously enhance their experiences and satisfaction.
Lastly, the Digitalized based organizational capability enhancement.
Continued improvement on both products and the service quality, whether it be difficult in the absence of a strong support from a strong organizational and the digitalization capability.
We are going to further enhance our management capability and operational efficiency in the areas such as supply chain optimization integrate integrated marketing program talent reserve.
<unk> capability finished alone.
Through a comprehensive digitalization process.
By doing so it could help us to establish a solid foundation to support our business development in a rapid and sustainable manner.
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Please turn to page 16 in terms of our OLED business. There are four major strategic focus.
Firstly transforming to asset like model.
Secondly, continuously focusing on cost reduction and the profitability improvement.
Shortly further strengthening direct sales via etch rewards global loyalty program and lastly.
Looking for the APAC and the middle East gross opportunity.
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All our both our 2023 review and our 2024 strategic focus discussions now I will hand over the call to our CFO, Mr. Diligent to discuss our 2023 fourth quarter and full year of operational and financial review Smith adult season.
Thank you Jim good morning to everyone.
Let's go through our operational and financial review for the fourth quarter and full year of 2023.
Please now turn to page 18.
In 2023, we continue to expand our hotel network overall and number of rooms increased 13% year over year to over 912000 by the end of this industry.
To over 809000 as of end of last year.
Our hotel over for the full year of 'twenty country was RMB 18, 4 billion, representing a 62% increase compared to 2022.
Excluding the H, let's see <unk> hotel can number grew 66% year over year to RMB 73 3 billion.
Now, let's turn to page 19.
China lifted the travel restriction in late 2022, we saw a strong rebound in leisure travel and a gradual recovery in business travel throughout 2033.
Blended revpar for Alexia bar to reach RMB 242.
Representing a recovery of 122% compared to the two.
2019 level and a year over year increase of 54%.
Our robust revpar growth was primarily driven by ADR, which raised 27% to RMB 299 in 2023.
Which was mainly due to a product mix change as well.
<unk> product upgrade over the last few years.
Occupancy rate also improved throughout the year to 81% for the full year of 2033.
The page 20.
For the AG business.
Full year 2023 blended Revpar grew 14, 5% year over year to euros 71.
Which was driven by what was the increase in ADR and a 7%.
The increase in occupancy rate to 63%.
Please turn to page 21.
And for Q2.
<unk> thousand three our total revenue for the group group increased 51% year over year to RMB five 6 billion.
Exceeding our previous guidance of 41, 45% year over year growth.
For the full year of 2023, our group revenue increased 58% year over year to RMB $21 9 billion.
Of which legacy auto achieved 64% year over year revenue rose to RMB 17 4 billion.
And at the age grew 39% year over year to RMB four 4 billion.
The revenue growth of legacy <unk> was driven by a strong travel demand in China as well as our continued product grade and the market penetration is relatively recent offices.
For the H its revenue growth was attributable to the market recovery on network expansion as well as a favorable exchange rate.
Now please turn to page 22.
Hotel operating costs were RMB 4 billion in the fourth quarter of 2023.
And RMB 14, 3 billion for the full year of 2033.
The year over year increase was primarily due to our business recovery and the Q2 increase in the fourth quarter was mainly due to RMB 200 million impairment loss on the legacy at your level as well as RMB 462 million impairment from legacy G. H.
The increase of our hotel operating costs was slower than our revenue growth.
<unk> operating leverage of the business.
Pre opening expenses reduced meaningfully as we continue to execute our asset life strategy and become more selective opening lease and owned hotels.
Yeah.
SG&A expenses were RMB 917 million in the fourth quarter of 2033.
And RMB three 2 billion for the full year of 2023.
The year over year increase in SG&A or mainly due to increased personnel costs.
OTA commissions and promotion expenses, along with the recovery.
Overall, we achieved operating leverage and deliver income from operations of RMB $757 million.
The fourth quarter of 2003, and RMB four 7 billion for the full year of 23, three compared to <unk>.
Operating loss in the fourth quarter.
The full year.
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Turning to page 20.
Yeah.
Legacy <unk> reported adjusted EBITDA of RMB, one 3 billion in the fourth quarter.
733, and RMB six 8 billion for the full year 2033.
Please take note that the reported adjusted EBITDA consistent.
Several.
One off items, including around RMB 519 million gains from setting a course shares.
And other investments.
And around the 213 million RMB is COVID-19 related.
Subsidy and the rent reduction for the full year of 23.
And also a.
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Unrealized foreign exchange gain of RMB 71 during the year of 2033.
For the full year of penetrate III, our DH business reported a positive adjusted EBITDA of RMB 87.
Our group adjusted net income were RMB $657 million in the fourth quarter of 23, three and RMB four 1 billion for the full year of 2033.
Compared to a net loss.
In the fourth quarter and a full year of 2022 operating cash flow improved significantly reached RMB two 4 billion in the fourth quarter of 2023.
The RMB seven seven.
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Now please turn to page 24.
As of December 2033, the group had RMB 10, 5 billion cash cash equivalent restricted cash and time deposits on hand.
As it was in a solid net cash position was RMB five one.
2 billion net cash including time deposits.
We also had RMB two 8 billion Unutilized bank facilities.
End of last year.
Now, let's turn to page 25.
In November 2023 with declare a.
Approximately USD 300 million in cash dividends, which include <unk>.
<unk> $200 million regular dividend and a desktop that 100 million special dividend.
We also repurchased about a U S dollar $122 million worth of shares from the market during the fourth quarter of 'twenty three.
Fourth quarter.
As we become more asset light cash rich will continue to reward our shareholders dividend.
Now please turn to page 26 on items.
For the Uh Huh.
After 2034.
We expect to grow 12% to 16% compared to first quarter last year.
All 11% to 15% excluding the age for a full year of 2024, we expect revenue to grow.
Eight 4% year over year.
8% to 12%, excluding the H will further accelerate our high quality network expansion setting our gross hotel opening target of around 1800 hotels in 2024.
We expect to close about 650 hotels quicker.
With that.
We're ready to take your questions operator, please open the line for Q&A.
Thank you.
Til assay class Chang. Please press star one one on your telephone and wait for your name to be announced to be Joel. Your question. Please press star one again.
Please standby, while we compile the Q&A roster once again Thats star one one for questions.
Our first question comes from the line of Dan <unk> from Morgan Stanley. Please ask your question Dan.
Good morning.
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We would like to understand the visa contract.
Signing process.
Yes.
Do you have a do we have the target for this year on signing.
In particularly on products and city distribution.
Do you see any significant differences.
When compared with last year.
When it comes to the hotel opening.
Congratulations again on the recall high opening last year.
I remember the old Mr. Tim mentioned about one bottleneck.
Off annual hotel opening is supply chain and also construction.
Will you increase your gross opening target to 1800 hotels this year another record high.
Does it mean that we now have made progress in this bottlenecks issue should we expect gross opening to gradually increase every year going forward keep signing keeps up thank.
Thank you that's all.
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Okay. Yeah, let me answer your first questions. So over the last several years a we did do some of the right things in terms of to improve our capability.
In terms of organizational oppression.
But we also get benefits from three major areas. One is the benefits from the continuous to be churn ratio improvements in the market, especially you're gonna be benefitting the top tier a companies like it Schwartz.
By giving this a benefits that.
We as well as our continuously efforts on building our brand awareness.
We indeed are getting.
Good position in terms of getting into the leading position in different segments, such as unlike economic in the middle skill that we have sold several brands.
The leading position, but second the benefits from the lower tier cities.
Penetrations, we catched the opportunities arose here are several several years back and we started to build our organizational capability, our human resources to support the lower tier cities penetration opportunities.
Lee is we also are.
Catched the opportunity for the for example, the consumption upgrades and also the leisure travel demand.
The increase which helped us to to.
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Given our established a capability we are confident that we can be having another good new signings for this year as well as in your opening up for.
For the year are just like we just give the guidance for the 1800.
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In terms of the supply chain.
Youre right last year, just because of a ride post the pandemic there was a capacity bottleneck as well as given the industry recover it was very robust, but however, we don't think there's going to be a supply chunk gonna be the problem or the positive going forward.
In fact, they're going to be a very good support to <unk>.
Factors for us.
For future sustainable high quality growth.
Oxygen thank you.
Thank you Dan.
Our next question comes from the line of Simon Cheung from Goldman Sachs. Please ask your question Simon.
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Thank you Gwen.
That's my first question is on that.
So.
Don just earlier mentioned that there's a that the.
The company has a greatly benefit from free macro or structural trends in the.
This year over the last several years.
Wondering what he has observed.
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From my email.
Second question relates to <unk>.
The margin in the course of last year, they did quite well in terms of EBITDA margins, particularly in the China business.
And wondering if the management can whether they can share with outside costs. That's why the margin guidance for 2025.
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What are your opinions and needed to be doing Julien.
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So the deal with that.
Ah Okay.
Okay. Let me answer your first questions apart from those freight benefits that I just mentioned going forward, we think the China luxury market definitely has the opportunity, especially on the service excellence from.
No matter or there is an economic or I mean, those skew upper middle skills documents, we observed that that the customers has been.
More and more looking for a value for money a good products good service product.
So for us, we definitely going to be around their demands the customer centric Chu Chu further build up our capability.
Difference in the many aspects, including the operational capability sales capability as well as marketing capability to fulfill their demand and our our management goal is to to.
Helped the China Chinese laundry company to be the world class in the upcoming future, but and also including those matured market. Maybe for example, with some of the market aren't getting very mature, but we think there are still a lot of opportunities to reduce market again through the product upgrades through a probe.
Good good service to the customers. So all in all we think going forward the opportunity you're going to definitely from the service excellence together was the sustainable growth.
Yeah.
Hi, Simon.
Just your second question regarding cost and profitability, while we continue to strive for a healthy growth in our service excellence.
We'll.
Also you're going to focus on and improve our management system streamlined operation and meticulously measure all I ask every dollar that we spend.
So our overall goal is still to strive for a operating leverage and that's.
Oracle.
Yeah.
Thank you Simon Thank you.
Uh huh.
Our next question comes from the line up Ronald Leung from Bank of America. Please ask your question Martin.
Yeah.
Why go with Wayne Towne.
How's that somehow a fifth anything away that you might have.
Well being a one tier one Eugene and Oh, I need something that.
If it goes off pilot he said some more.
So I saw the easy to sit in IL 10, a sedan. They go Oh Roth pie that you see some more hey, let's see what the Eagle and Pete.
Well the one piece of it.
So two 1 billion. So when you take all four.
Would you pay down some of the data for them yet.
But anyhow, that's why it doesn't seem that way.
If they go with feet on the T cell a case, where you saw it tick up a G T. That's worth it.
So it's a more.
So you can kind of I guess on what the final stage or the meals Townsville novel House C&I kind of no doubt.
Oh yeah.
Oh, my gosh, they've all found yet.
Once data.
The two questions that I have my first question is about the rock pop growth outlook, what is management's expectations for their revpar growth in <unk> 'twenty 'twenty four and also full year 2024.
My second question is about the enhancement of the surface quality.
Could management F. EIS are what could be the areas that the company didn't do well enough in terms of the surface quality and it is possible to provide any specific in knees and hips.
To enhance service quality into Q4 and beyond thank you very much.
Okay.
Susan.
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Yeah.
Okay.
Let me answer your first question in terms of the Revpar. So.
Again last year posted pandemic and for the entire year, we clearly see that the Revpar recovery was mainly driven by a very strong leisure travel and demand, but however, the business travelers demand was relatively slower compared to the leisure it in terms of the recovery.
Therefore, given the high base of Tucson, Sri Tucson, 20 straight Rev. Par knowledge is on 24 week and there'll be a little bit conservative. So that's why for the full year, we export that the rough parking to be flattish to low single digit growth on a year over year basis for.
For your second question in terms of the service quality. So definitely the service excellence is not our short term goal, but long term I'm. So for US we put this into our strategy.
So we think it's going to help us to grow into the next stage.
Clearly we are seeing that not only that we are rapidly growing our networks, but also the customers are evolving rapidly as well. We are now facing a lot of you know on a diversified group of new customers and we are trying to use both products and service.
Two to further improve their experience and the satisfaction for example Ah.
Just give you an example for the new group of customer like they are they are there are a lot of you know marathon events host everywhere in China. So how we can fulfill their demand, but 30 minutes might not be the same as those are general business travelers. So again.
What I want to emphasize is the service excellent strategy, it's not the shots on goal for the company, but it's a long term goal for us it's not a slogan it's actually it's our management.
Goal to bring the company grow into the next stage. Thank you.
Thank you Mariano.
Our next question comes from the line of javelin.
Lynn found C. ICC. Please ask your question Cynthia.
But anytime what's on Kelly's agile jump on the phone.
But I'm glad with an easy to do that take a rep. How do you guys are thinking about getting.
I hope all quite sure how are you going to Joe Shan, just you won't kind of logging and budgets that they had ever seen handle whaling.
And Shannon I think that's something that didn't necessarily cause ocean Alexander Nah Nah women to hijack all restaurant yeah. Yeah I'll hold your question was how much do you don't see it wasn't there since you gave him the revpar that I think once you back out the washout. So I'll translate my question to English so what's the Revpar guidance for Q1.
Would you mind share with that and we got a higher gross opening and Napa opening this year, which we think it's never a good thing and it's a real high quality growth.
So considering that we are opening hotels with higher Revpar. Meanwhile, clothing hotels with bad performance. So how much percentage of Revpar growth will be contributed by this makes all great. Thank you.
Thanks, Joe for a questions here.
In the first quarter, our Revpar, probably will grow around the low single digits.
And as you mentioned, we will maintain a healthy growth with serious accidents. However.
In the meantime, we also encourage you to look at.
Like drivers other than Revpar Revpar is definitely one off of drivers, but you know work.
A rapidly shifting from a.
Having a monitor assay line model and the more and the more you know.
Franchise advantage has hotels will be opened throughout the year and therefore.
Therefore, you know if it will be different drivers that.
Drive our growth in the future and that's something we can discuss.
While we while we are opening more and more mid upscale hotels. We are also single into low.
Low tier cities, so the impact of new hotels to our Revpar will be blended.
Thank you Joseph.
Thank you again.
Thank you.
Next question comes from the line of lithium Lynn found Citi. Please ask your question Leah.
Sorry, I should say.
I think I've got any pending right now.
What did they all got momentum.
I know you said that hi, Dan So I mean, we'll come out and just schedule she spoke about.
Keith.
Does it bother you sent them the damage on that more.
Hum.
Okay.
It doesn't sound that you can't keep it.
Yeah Glenn.
But I can eat that doesn't want Mike how are you Anthony agenda that you cannot have any badges.
That number was.
What's your opinion D Oh, yeah yeah.
Yeah.
Yeah.
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Yes.
Okay.
Media and Youll be fine with that.
Oh I'm sorry.
When you translate that across the enterprise and it's all my question is why not Oh I want to follow up on that that's all that you can actually pick up that's the opening Oh sorry, yeah.
Yeah, So Lana Chan I'll hop out about like a franchise company.
That is not currently in the market given the macro conditions and also.
The company going to I cant provide more support to the franchisee and then my second question is on the overseas.
The etch business and Oh, he liked to have like a puppy eat up a lot youre and if so how would you like to further drive the possibility yeah any topic.
Yeah.
Oh, well I shouldn't say that deal and stuff.
John on the song to the Oh, So Jim Honda So.
These are hard to zombies, we ball supplier to the homebuilders won't be done sooner.
Saturday console.
Well I'm interested to see that.
Julian.
So it sounds on the Trulia for the gentlemen.
And then Shanghai Concord that beyond that you couldn't find them in the fluids on the old ones and that's what why is she a treaty that tool that's into the teens here.
No.
Yeah, No I can do a lot of that yamana toilet tissue that Acadia.
So they'll come hospitality suite.
I don't see a Boston I'm going to try to innovate.
Sheena Chew on that thought and publishing the general developments with you and I assume that that would be the challenges outlets, whether it's within of course, you will know Britain's.
Switching to Asia, and the German unleash Kobe disciplined either zone.
Oh boy.
So.
Oswald caused around them.
I mean, if I'm in the.
Teaching moment Duncan I'm honestly, unless you want without causing an element Yamaha and Coliseum and the tumor may be doing in general.
And then Luca.
Carbonite had me a woman from yet the gentleman hundreds into the to the food within the teens, yet, though so we ought to think about what your Indian Asia ones with its okay.
Sure.
Let me answer your first question in terms of the franchisee so definitely a healthier return or ROI for franchisees and the very important.
That's what we are putting a lot of efforts.
To helping them to get a good return to open.
Every hotel.
To make the money.
So we definitely will again provide you a good service just like when we discussed it before we also going to provide a good service to the franchisees and also some of the supportive policy to help them too to continuously open a good hotels.
For example, the existing franchisees are we definitely take in helping them to open hotels and we see a good return and then from the new franchisees, especially for the new regions and segments. For example, the lower tier cities and the upper mid segment are we are we are dealing with a lot of new franchisees that was.
Not existing before for example, a lot of in the low coal.
Property companies are garments as well as space Oes.
So.
All in all that's for the franchisees definitely what we are trying to do is waste providing good service and a supportive policies just to ensure that every hotel stay open we're going to have a good return and ROI.
Yeah.
I'm going to answer your second question about the H profitability and cost structure.
Firstly in the wintertime.
Ph will move steadily.
Light business model, and we are making progress.
That area.
And secondly.
The H is try their best to achieve operational efficiency and by creating a lean mean organization.
Thirdly, we are actually in a meticulously measuring all eye on all major caf II and operational spending and DH business level and it was all about aster as you know we are determined to help the Asian gradually improve their profitability.
And gradually turn cash flow positive.
Thank you Lydia for a question.
Thank you.
We have reached the end of the question and answer session. Thank you very much for all your questions I'll now turn the conference back to the management team for any additional closing comments.
Thank you everyone for taking your time with US today, and we look forward to seeing you in upcoming quarter. Thank you and bye bye.
Thank you that concludes today's conference call. Thank you for participating you may now disconnect.