Q4 2023 GreenTree Hospitality Group Ltd Earnings Call
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Speaker Change: Hello, Ladies and gentlemen, thank you for standing by.
Speaker Change: The green tree fourth quarter and fiscal year 'twenty to 'twenty three.
Speaker Change: Paul.
Speaker Change: Should you need assistance please.
Speaker Change: Signal a conference specialist by pressing sake, alright bye bye.
Speaker Change: After managements prepared remarks, there would be an opportunity to ask questions.
Speaker Change: To ask a question you May press Star then one on the telephone keypad.
Speaker Change: To withdraw your question please.
Speaker Change: Okay.
Speaker Change: Please note this event.
Speaker Change: <unk> recorded.
Speaker Change: I would now like to hand, the meeting I thought you heard today Rene thanks.
Speaker Change: Please go ahead.
Rene: Thank you Darcy.
Rene: Hello, everyone and thank you for joining us.
Speaker Change: Green trees earnings release will be distributed shortly and will be available on that one.
Our website that I dumped 99, eight dot com as well as on PR Newswire services.
Speaker Change: We have also posted a powerpoint presentation that accompanies our comments to the same IR website.
Speaker Change: On the call from Green tree are Mr. Alex Xu Chairman and Chief Executive Officer, Ms. Cindy Yang Chief Financial Officer, Ms. Megan Huang Vice President of sales and marketing and MS <unk> Zhao financial director.
Alex S. Xu: Mr. Hu would present, the company's performance overview of the fourth quarter of 2023.
Alex S. Xu: Followed by MS, Xiao, who will discuss restaurant business operations and Ms Young and MS. Zhao will then discuss financials and guidance.
Alex S. Xu: There will be available to answer your questions during the Q&A session, which will follow.
Speaker Change: Before we begin I'd like to remind you that this conference call contains forward looking statements within the meaning of section 21 E of the Securities Exchange Act of 1934 as amended and as defined in the U S. Private Securities Litigation Reform Act of $19 95.
Speaker Change: These forward looking statements can be identified by terminology such as May will expects anticipates aims future intends plans believes estimates continue target is or are likely to going forward.
Speaker Change: We don't outlook and similar statements.
Any statements that are not historical facts, including statements about the company and its industry are forward looking statements.
Speaker Change: Such statements are based upon management's current expectations and current market and operating conditions.
Speaker Change: And relate to events that involve known and unknown risks uncertainties and other factors.
Speaker Change: All of which are difficult to predict and many of which are beyond the company's control.
Speaker Change: Which may cause the company's actual results performance or achievements to differ materially from those in the forward looking statements.
Speaker Change: You should not place undue reliance on these forward looking statements.
Speaker Change: Further information regarding these and other risks uncertainties or factors is included in the company's filings with the U S Securities and Exchange Commission.
Speaker Change: All information provided including the forward looking statements made during this conference call.
Speaker Change: Current as of todays date.
Speaker Change: The company does not undertake any obligation to update any forward looking statement as a result of new information future events or otherwise.
Speaker Change: As required under applicable law.
Speaker Change: It is now my pleasure to introduce our chairman and Chief Executive Officer, Mr. Alex Xu Mr. Hu. Please go ahead.
Alex S. Xu: Thanks, Renee and Hello, everyone and thank you for joining us today.
Alex S. Xu: We had a good understate, both fourth quarter in our hotel business and continued to make progress in restructuring our restaurant business.
Alex S. Xu: Hotel Revpar increased 23, 3% year over year, reaching 110% of its fourth quarter of 2019 level during the October national holiday.
Restaurant average daily sales were up 14% year over year.
Alex S. Xu: We continue to streamline our hotel and the restaurant operations to increase efficiency and quality.
Alex S. Xu: We're working on optimizing our products and service standard to further improve our brand identity for each of our hotel brands.
Alex S. Xu: In our restaurant business, we are focusing on growing our network of franchisees as we expand the number of street stores, while reducing our footprints in shopping malls and supermarkets.
Alex S. Xu: Now please turn to slide five.
Alex S. Xu: Comparatively in the fourth quarter of 2022.
Alex S. Xu: Hotel Rob Pos.
Alex S. Xu: Was 128, RMB up 23, 3% and the restaurant a D S.
Alex S. Xu: <unk> 5433 RMB.
Alex S. Xu: 14%.
Alex S. Xu: Total revenues were $372 2 million RMB.
Alex S. Xu: Three 2%.
Alex S. Xu: Hotel revenues reached $289 6 million RMB up 21, 7%.
Alex S. Xu: The increase in total hotel revenues.
Alex S. Xu: Was partially due to the continued improvement in <unk> and the increase.
In the number of hotels.
Alex S. Xu: Yeah.
Alex S. Xu: Ian coming from operations increased to $23 1 million RMB with a margin of six 2%.
Alex S. Xu: Adjusted income from operations, excluding other general expenses, which include the provisions for trademark.
Alex S. Xu: Especially Q2 due to the acquisition of the restaurant business loan receivable related to franchisee loans.
Alex S. Xu: And impairments of assets.
Alex S. Xu: Increased to $99 2 million RMB with a margin of 26, 7%.
Alex S. Xu: Net income was seven 4 million RMB with a margin of 2% adjusted EBITDA that's non-GAAP.
Alex S. Xu: 161.3 mailing RMB, that's up two 1% with a margin of 31, 3%.
Alex S. Xu: Slide six shows detailed numbers for total revenue income from operations net income and adjusted EBITDA.
Alex S. Xu: On slide seven.
Alex S. Xu: Revpar was 128 RMB.
Alex S. Xu: At the bottom of the slide you can see the weekly raw power performance in the fourth quarter compared with the 2019.
Alex S. Xu: Raw power during the October National holiday was 110% of its pre pandemic levels, but the trend that the bang for the rest of the quarter till the end of the year.
Alex S. Xu: Even compared with 2019.
Alex S. Xu: Slide eight shows the trend in our quarterly operating performance.
Alex S. Xu: In the fourth quarter compared to a year ago.
Alex S. Xu: <unk> PA for our hotels increased to 161 RMB.
Alex S. Xu: Raw par for our FM hotels increased to 127 RMB.
Alex S. Xu: A D R for all hotels increased to 241, RMB and ADR for our FM hotels increased to 175 RMB.
Alex S. Xu: Occupancy at our hotels increased to 72, 5%.
Alex S. Xu: And at our FM hotels increased to 66, 9%.
Alex S. Xu: Slide nine highlights the growth in our membership programs, which accounted for most of our direct sales individual memberships grow to 91 milling up from 78 milling a year ago and the corporate memberships grow to 2.5 milling.
Alex S. Xu: That's up from 194 million a year ago.
Alex S. Xu: Slide 10 shows the operating performance of restaurant with a D S up 14% year over year.
Alex S. Xu: At 5000, and 433, RMB, but down sequentially due to seasonality.
Alex S. Xu: Starting with slide 12.
Alex S. Xu: I will review, our strategic execution across our businesses.
Alex S. Xu: In our hotel business, we further expanded in the mid to upscale segment and increased our penetration in tier three cities and the lower cities.
Alex S. Xu: As you can see on slide 13.
Alex S. Xu: We continue to grow our mid to upscale segment with 474 hotels.
Alex S. Xu: That's 11, 2% for our total portfolio at the end of the quarter.
Alex S. Xu: While the mid scale segment remains the core of our hotel business with a 17, 2%.
Alex S. Xu: We continue our expansion into the higher end segment.
Alex S. Xu: Economic segment remained stable at 18, 6%.
Alex S. Xu: Please turn to slide 14.
Alex S. Xu: We continued to expand in tier three and the lower cities.
Alex S. Xu: The 73, 5% for all hotels in our current pipelines are in such cities and we will further capitalize on the substantial opportunities in such locations.
Alex S. Xu: On slide 15.
Alex S. Xu: We continue to focus on increased profitability in our restaurant business.
Alex S. Xu: We closed unprofitable stores, mostly in shopping malls in the supermarkets.
Alex S. Xu: We increased the proportion of franchised and managed the restaurants.
Alex S. Xu: And expanded the number of street stores.
Speaker Change: Next Selena young and Alan Joe will review operating and financial highlights.
Thank you.
Selena Young: Please turn to slide 17.
Selena Young: In the fourth quarter total revenues increased three 2% year over year.
Speaker Change: $372 2 million a heartbeat.
Selena Young: The increase was primary due to continued improvement in Revpar.
Selena Young: And the increase in the number of hotels.
Selena Young: Total hotel revenues increased 21, 7% to $289 6 million compared.
Selena Young: Compared to the fourth quarter of 2022.
Selena Young: Total revenues from <unk> hotels, well $162 9 million RMB.
Selena Young: Six 5% year over year.
Selena Young: While total revenues from <unk>.
Selena Young: All hotels increased 48, 9%.
Q1 hundred five point, Brian Mcgee.
Okay.
Speaker Change: On slide 18.
Brian Mcgee: How about hotel operating costs and expenses increased 9% year over year to $252 2 million RMB.
Brian Mcgee: Excluding other general expenses.
Brian Mcgee: 15 off probation for trademark, especially due to acquisition of the restaurant business.
Brian Mcgee: Loan receivables related to franchisee loans.
Brian Mcgee: And impairment of assets.
Our total hotel operating costs and expenses increased three 1% year over year.
Brian Mcgee: Amount of the total hotel operating costs at <unk>.
Brian Mcgee: <unk> costs increased seven 6% to 154 6 million RMB.
Brian Mcgee: Power to the fourth quarter of 2022.
Brian Mcgee: The increase was mainly due to higher consumer brands and the higher cost of general managers our franchise the match hotel.
Brian Mcgee: The increase of our hotels.
Brian Mcgee: And partially offset by lower utility.
Brian Mcgee: Selling and marketing expenses were 8.3 million RMB.
Brian Mcgee: Year over year increase of only.
Brian Mcgee: Eight 9%.
Brian Mcgee: G&A expenses were $49 7 million RMB.
Brian Mcgee: <unk> 45 per cent compared with same quarter of 2022.
Brian Mcgee: The decrease was mainly due to lower staff related expenses and lower bad debt.
Brian Mcgee: Turning to slide 19.
Brian Mcgee: Income from hotel operations increased <unk> 3 million to $47 4 million RMB year over year.
And that income off hotels was <unk>, you want maybe RMB compared $7 5 million RMB in the fourth quarter of 2022.
Brian Mcgee: Adjusted EBITDA increased 8.8.
Brian Mcgee: <unk>.
Brian Mcgee: 82, 8% to 107.7 million RMB and core net income increased from $47 8 million to $61 7 million RMB, yes, it will be.
Brian Mcgee: Next let me turn the call over to Alan.
Alan Joe: As a director of our restaurant business.
Alan Joe: Okay.
Alan Joe: Hi.
Yes.
Alan Joe: Yeah.
Alan Joe: Okay.
Alan Joe: Yes.
Alan Joe: Sure.
Alan Joe: Hello.
Alan Joe: Thank you.
Alan Joe: Yeah.
Alan Joe: Okay.
Alan Joe: Yeah.
Alan Joe: Yeah.
Alan Joe: Okay.
Alan Joe: Please turn to slide 20.
Fourth quarter total restaurant revenues well.
Alan Joe: 7.7 media RMB.
Alan Joe: Attempting 9.2%.
Alan Joe: Year over year decrease.
Alan Joe: Mainly due to that.
Alan Joe: At the close of L O stores.
Alan Joe: Partially by increase in ABS.
Alan Joe: So we'll see that revenue breakdown for F M restaurants and restaurants.
Alan Joe: On slide 21.
Alan Joe: Other operating costs and expenses decreased 16 coins.
Alan Joe: 7% a year over year to 118.1 media RMB.
Alan Joe: Also I was a young chan in materials costs personnel costs and the rents.
Alan Joe: Turning to slide 22 lots.
Alan Joe: Loss from our restaurant operations.
Alan Joe: <unk> nine media RMB.
Alan Joe: Also.
Alan Joe: P.
Alan Joe: Linda to media RMB.
Alan Joe: Adjusted EBITDA increased two 4 million RMB year over year core net income was 21 point to seven media RMB.
Speaker Change: Next sitting now well, there's always that profitability of our group. Please.
Thank you Kent.
Speaker Change: Slide 23.
Speaker Change: Net income for Avs, that's basic and diluted.
Speaker Change: 11 <unk>.
Kent: Group core net income for Adi, that's basic and diluted non-GAAP, what 87 cents.
Speaker Change: B.
Speaker Change: Let's now take a look at slide 24.
Speaker Change: As of December 31st 2023.
Speaker Change: The company had total cash and cash equivalents.
Cash short term investments.
Speaker Change: Maximus E active curative and time deposits.
Speaker Change: 1377, one.
Speaker Change: 1 million.
Speaker Change: This compared to $1331 4 million RMB as of September 32023.
Speaker Change: The minor decrease was primary due to investment in property and the repurchase of ordinary shares.
Speaker Change: Partially offset by primary.
Speaker Change: Partially offset by bank loans and the repayment from our franchisees.
Speaker Change: On slide 25.
Speaker Change: For the year of 2024, we expect total revenues of our organic hotels to grow 7% to 12% year over year.
Speaker Change: Total combined revenues from our restaurants, and organic hotel business to grow 3% to 5% year over year.
Speaker Change: This concludes our prepared remarks, operator, we're now ready to begin the Q&A session. Thank you.
Speaker Change: Thank you.
Speaker Change: We'll now begin the question and answer session.
Speaker Change: A question you May press Star and one on your touch Shanghai.
Speaker Change: If youre using a speakerphone please pick up your handset before pressing the key.
Speaker Change: To withdraw your question Please press star one.
Speaker Change: Once again.
Speaker Change: More than one if you wish to ask a question.
Speaker Change: At this time, all closed momentarily to assemble our roster.
Speaker Change: Thank you. Your first question comes from James from Morgan Stanley. Please go ahead.
James: Thank you.
James: Operator, good morning management. Thank.
James: Thank you so much for this opportunity to ask the question and congratulations on the fourth quarter result.
James: And also good work on narrowing the losses in the restaurant business.
James: My question is.
Speaker Change: I still have not gotten a good time to look at the results in details but.
Speaker Change: Im looking at the revenue guidance that suddenly not just kind of mentioned.
Speaker Change: Just wanted to check with you for the full year guidance of 2024, 7% to 12%.
Speaker Change: For hotel business.
Speaker Change: What are we.
Speaker Change: Factoring in in terms of drivers from Revpar and also drive us.
Speaker Change: Hotel opening and.
Speaker Change: How is our hotel opening plan.
Speaker Change: For 2024.
Speaker Change: Yes, that's my question. Thank you.
Speaker Change: Okay.
Speaker Change: Okay. Thanks, Dan.
Speaker Change: 7% to 12% of the hotel revenue up eight consist of let's see.
Speaker Change: Following factors.
Speaker Change: We expect to continue the improvement of the overall raw par, but only slightly ways. The 2023.
Speaker Change: So.
Dan: That's around.
Dan: 2% cross sell.
Dan: <unk>.
Dan: The raw power growth.
Dan: The balance of the growths are roughly.
Dan: 10%.
The hotel numbers growth.
Because we planned about.
Dan: The detailed the number of hotels opened.
Dan: We plan to be about 500.
Dan: Selina correct me if I'm incorrect.
Dan: That number.
Dan: Then.
Dan: Also.
Dan: We will have a number of hotels.
Dan: In the transition period that is.
Dan: Have a relatively older portfolio comprised with some of the new starts.
Dan: Comparator group, so like the last quarter, we have taken down in the <unk>.
Dan: Last year after the.
Dan: Pandemic, many hotels into renovation stage.
Dan: Then reduced by the.
Dan: Renovation stage.
Dan: Then combined we have been into a 7% to 12% of total revenue. Okay. So that stand because consist of that number and to further elaborate.
Dan: Why the.
Dan: Only 2% of the railcar over 2023.
Dan: Why not be a little bit more.
Dan: <unk>.
Dan: Because last year, we have seen a revpar increase.
Dan: A lot stronger than 2022 because of the post the pandemic.
Dan: Also many I think pent up demand.
Dan: The tier three cities, where we have a larger percentage and over 73% the tier three.
Dan: Cities, the raw price increase I think.
Dan: The higher single digits, comparing with a double digits, 15% to around 15% to 13% and third in the first tier second tier.
Dan: So we expect that.
Dan: Yes.
Dan: The third tier raw product rose to be.
Relatively flat 2023.
Dan: 224 are comparing with a 2023.
Dan: And we have more seasonality and the up and downs for instance.
Speaker Change: We have observed.
Speaker Change: During the holiday season and during the weekend.
Speaker Change: We see a sharp.
Speaker Change: Increase.
Speaker Change: For instance, during the Chinese Spring Festival.
Speaker Change: In the PA.
Speaker Change: The raw ADR and occupancy.
Speaker Change: But then trended down and also relatively sharply just like in the.
Speaker Change: Fourth quarter at National.
Speaker Change: Holiday and so imbalance and that they will be.
Speaker Change: Trending to.
Speaker Change: To be a little bit the upward then 2023.
Speaker Change: We will continue to add new products and new products has a better.
Speaker Change: Identity and can offer more family and Alicia oriented elements. So we will expect a stronger <unk>.
Speaker Change: A stronger a rep that has shrunk or a raw price increase and the falling et.
Speaker Change: Several years after we complete this transition period, so Dan that Sam.
Speaker Change: Our assessment tier.
Speaker Change: Thank you thank you Alex.
Speaker Change: Can I just follow up with one question on the Rev. Par I saw that fourth quarter.
Revpar growth of <unk> two.
Dan: 2019 was mainly driven by ADR and also occupancy.
Dan: Still although recovered, but still I think around 10% below 2019 level.
Dan: So a six percentage point below 2019 fourth quarter level. So I'm just wondering Alex for your 2024.
Dan: And if you look at the chart. We are now may be around 90% of 2019 as of March.
Dan: Are you seeing this year 2020 for gas seeing occupancy increase year on year versus 2023, but.
Dan: ADR was a flat to decline so resulting in this 2% increase all you would say is 1% plus 1% both outgoing.
Speaker Change: Just my last question. Thank you Alex.
Alex S. Xu: Okay. Thanks, Dan.
Alex S. Xu:
Alex S. Xu: The two actually are interrelated, if we lower the ADR.
Alex S. Xu: And then the occupancy.
Alex S. Xu: There will be increased so balanced.
Alex S. Xu: As a opt.
Alex S. Xu: Optimal rate, but we do not know.
Alex S. Xu: What's the optimum.
Alex S. Xu: First our strategy off.
Alex S. Xu:
Alex S. Xu: Achieving the optimum bra par.
Alex S. Xu: The increase however.
Alex S. Xu: <unk>.
Alex S. Xu: This is our plan.
Alex S. Xu: We plan to have a slight increase of the ADR.
Alex S. Xu: But the occupancy.
Alex S. Xu: We expect to be relatively stable, so we would like.
Alex S. Xu: Like to increase the run rates and then.
Alex S. Xu: So we expected that most of the growth.
Alex S. Xu: Should be the ADR and then whilst the ADR rates to certain levels then.
Alex S. Xu: We'll try to then further increased occupancy the occupancy.
Some of the occupancy is a resulted from the seasonality and also I said the sharp.
Alex S. Xu: Up and down and the balance.
Alex S. Xu: Yes.
Alex S. Xu: Power pattern for the 2000 22020 at the end of 2023 to 224, we find.
Alex S. Xu: There is a little bit higher.
Alex S. Xu: A trend in terms of bad quality and leisure and the family related travel. So that's more seasonal than the constant demand for the business travels so which also resulted in the.
Alex S. Xu: In a blend that realm.
Alex S. Xu: Relatively little bit lower occupancy.
Alex S. Xu: So our internal projections to beyond the.
Alex S. Xu: <unk>.
Alex S. Xu: The increase primarily resulted from ADR.
Speaker Change: Thank you thank you Alex.
Speaker Change: Okay.
Speaker Change: Thank you once again, if you wish to ask a question. Please press star one on your telephone.
Speaker Change: And one to ask a question.
Speaker Change: The amendment to allow for any final questions about yourself.
Speaker Change: Thank you we have a follow up question from Dan Shaw from Morgan Stanley. Please go ahead.
Speaker Change: Hi.
Dan Shaw: I have another follow up question on the hotel opening.
Dan Shaw: I'm wondering.
Dan Shaw: For management, what's the plan for your leased hotel <unk> Hotel is for 2024.
Do we still have.
Dan Shaw: Hotels in the pipeline and.
Dan Shaw: Are we still continue to build.
Speaker Change: Net additions in the sand on hotels. Thank you.
Speaker Change: Okay.
As we previously stated that.
We will only build the.
Speaker Change: I will also tell us the key like tier one and the transportation hub at the showcase hotels.
Speaker Change: Currently I think there is we we plan a one to two showcase.
Speaker Change: I will also tell us four hour.
Speaker Change: Note that down.
Speaker Change: Uh huh.
Speaker Change: Flag ship brand, such as Greentree, eastern and Green tree yen.
Speaker Change: So it's a single digit numbers there.
Speaker Change: Currently we're evaluating and that we are we.
Speaker Change: We are still focused on continuing to grow.
Speaker Change: Our hotel in the franchise and manage that is our core.
Speaker Change: Competitiveness and strengths.
Speaker Change: So let me elaborate at the hour.
Speaker Change: Overall business strategy again, the light of this question.
Speaker Change: 2023 is a transitional year I think that.
In the past, we're trying we have evaluated the potential for acquisitions.
Speaker Change: And.
Speaker Change: Growing of the business so with many different approaches.
Speaker Change: That.
Speaker Change: We've also many more brands.
And now with the Covid and post Covid and we have.
Speaker Change: Transitioning into.
Speaker Change: Focusing more on the traditional and the fundamental approach to the hotel operations of the hotel management.
Speaker Change: That is.
Speaker Change: Our objective is to deliver consistent.
Speaker Change: Service and products to our customers.
Speaker Change: And we need to upgrade our little bit the aging portfolio. So we have taken a larger number of hotels and the caving or a franchisee.
Speaker Change: Six months.
Speaker Change: Most of the time to harvest the one year time.
Speaker Change: To renovate towards newer standard, which would find we can substantially increase the ADR occupancy and therefore all of our product.
And it will continue to build our team to be more proficient and more efficient.
Speaker Change: In both they are career growth and their productivity.
Speaker Change: And delivering a consistent service quality to our customers.
Speaker Change: And then.
Thirdly.
Speaker Change: We're trying to implement.
Upgrade our existing technology platform to incorporate the new features especially some of the new.
Speaker Change: Applications in the technology industries.
Speaker Change: To further.
You improve your hands.
Speaker Change: Sure.
Speaker Change: Frontline employees ability to.
To serve our customers.
Speaker Change: And then combined we're also have a restaurant two great brands.
Speaker Change: Sarah.
Speaker Change: Matt not many brands can withstand.
Speaker Change: The pressure on the competition in the restaurant business for over 20 years.
Speaker Change: And Fortunately, we have two great brands, <unk> and Danielle dumplings.
Speaker Change: And so we have started.
To build the brand.
And to use the core it.
Speaker Change: Experience.
Speaker Change: Understand that to expand in the franchised and managed model listen we have managed fee increased fat, which will further increase I think our profitability in the restaurant business.
Speaker Change: And slowly.
Speaker Change: We already seen the seed and trend and see we're not obvious from the previous year by now with the travel trends to be more leisure.
Speaker Change: And also more family oriented we find that Alicia elements such as the timings.
Speaker Change: Becomes more essential part of the future hotels, so we do see.
Speaker Change: More opportunities for synergies between the hotels and the restaurants.
Speaker Change: And so that's our business.
Speaker Change: The strategy will continue to focus on the fundamentals will find that that that the hotels. So we have build with <unk>.
Speaker Change: Half.
Speaker Change: Established with our franchisees.
Speaker Change: Continue to perform a very robust.
Speaker Change: And that.
Our service quality, we can see slowly becoming.
Speaker Change: Increasingly become more satisfactory to our customers and the customer satisfaction satisfaction scores improve.
Speaker Change: Moving so after the even after this.
Speaker Change: Post COVID-19 transition period.
A lot of hotels.
Speaker Change: All of that has we're in Trs that even with that conditions, we slowly improved our customer service scores. So we do see a great fundamental to be built in the in the last year. This year and next one to two years for a strong.
Speaker Change: Growth growth in the near future.
Speaker Change: Yes.
Speaker Change: Thank you once again, if you wish to ask a question. Please.
Speaker Change: One on your telephone.
Speaker Change: Next question comes from Simon Jason Goldman Sachs. Please go ahead.
Speaker Change: Thanks for taking my question.
Speaker Change: Three quick questions.
Speaker Change: On slide eight where you laid out the lease and augment the franchise Revpar performance individually.
Simon Jason: I can't help to basically we all felt that really handle.
Speaker Change: Gross profit is much stronger than the franchise.
Speaker Change: So when Alex you mentioned that you are modeling or expecting a 2% revpar growth.
Just wondering that's obviously.
Speaker Change: <unk>.
Speaker Change: Exposures could there be keep increasing.
Speaker Change: The.
Speaker Change: The performance of the franchise.
Speaker Change: About half of them or would that be any way that would track overall revpar performance two percentage points on an individual basis, let's say.
Speaker Change: From your observations.
Speaker Change: Are you seeing any possibility that the franchise starting with tobacco just generally wanted to get a sense how youre.
Speaker Change: Thinking of the respective shipments and an aggregate overall against a tough question and then a second one is in relation to the profitability of your business.
Speaker Change: Great to see you.
Speaker Change: You have some leverage.
Speaker Change: In the last two quarters.
Speaker Change: But wanted to and you also mentioned some synergy benefits our opportunity to business can you just.
Briefly.
China about how you think the margins.
Speaker Change: Maybe the medium time always respected business.
Speaker Change: Maybe two or three year time and equally.
Speaker Change: Just also wanted to get a sense, how you're thinking about the topline growth for the accurate number of hotel and restaurant because obviously for restaurants for example, retail Shaw.
Speaker Change: Our restaurant count by quite significantly over the last one year or so.
Speaker Change: That hotel Com for Dolphins is that some medium term target that you have in annual Mike. Thank you.
Speaker Change: Okay, great great questions.
Speaker Change: <unk>.
Speaker Change: I will leave the third question to Selina about.
Speaker Change: Restaurant business revenue churn.
Selina: Because the restaurant business. The revenue has a sharp drop because we have closed the many direct owned.
Selina: At least now operated restaurants.
Selina: Due to the.
Selina: Impact from the traffic lower traffic to the shopping malls and the supermarket to anchor the malls.
Selina:
Selina: So.
Selina: Even though.
Selina: The number of.
Selina: The restaurant.
Selina: The segment the change that we have led to an increased number of the <unk>.
Selina: Franchise managed the restaurant, while the number of directly owned have dropped but the impact of the revenue was much larger but going back to the <unk>.
Selina: First question leased operated and.
Selina: Franchised.
Selina: The <unk> trend.
As we have said earlier, we build the leased and operated at a showcase hotels so naturally.
Selina: With a showcase hotels and they tends to bahram.
Selina: Rob ADR wise.
Uh huh.
Has the service elements more complimentary services for the family to the businesses. So as a result.
Selina: The ADR has been improved.
Selina: Much higher than the balance of the larger base and franchised restaurants.
Selina: Franchise hotels.
Selina: But we do see that trend will be probably similar because of many many franchised.
Selina: Our hotels are going through the renovations lines after the reservation system.
We expect the ADR.
Selina: We will grow at the same level.
Selina: And we our our folks in the strategy and then right.
Selina: Right now <unk> been focusing on the ADR driven.
Selina: Gross strategy because.
Selina: You have and you always have the option of lower your price a little bit the increased occupancy and thereby.
Selina: Taking the higher a little bit different market shares have resulted in the increase of the same level of ADR, but.
Selina: Revpar with ADR increases I think we have more up more room and about the potential.
Selina: And then to move the quality of the products into it higher and higher level. So for the next two years and we expect that that similar levels of growth for both hotels.
Selina: And.
Selina:
Hotels.
Selina: So that's one thing another thing is that the hotels, because we have gone through renovations with a lower base. So the percentage of all hotels have gone through the renovation is higher than the FM hotels.
Selina: Also drive up the ADR increase a little bit higher so I hope that I hope that answers the question.
Speaker Change: For the for your first.
Speaker Change: For the second question regarding the.
Speaker Change: Ah <unk> and also the.
The restaurant business.
Speaker Change: We have.
Speaker Change: Experimental.
Speaker Change: Moving the restaurant with a hotel is combining the Brooks breakfast delivery.
Speaker Change: To be a three meals for the restaurant.
Speaker Change: And we have.
Speaker Change: <unk>.
Speaker Change: In some good.
Speaker Change: Result, such as in <unk>.
Speaker Change: Hotels in Shanghai.
Speaker Change: That increase the revenue substantially.
Speaker Change: But doing moving the largest staff in the restaurant into the hotels and.
Speaker Change: Ah requires a new system and new operating standards. So we are.
Speaker Change: During the second.
Speaker Change: Experiment in the second tier city, so the first tier city will have down and.
Speaker Change: Many elements.
Speaker Change: We need to.
Speaker Change: Take into consideration for instance, the competition landscape of F&B.
Speaker Change: In the in the <unk>.
Speaker Change: In the buildings some of the buildings that we leased hotels already have other restaurant services.
Speaker Change: And then also the space constraints.
Speaker Change: And.
Speaker Change: And the thirdly, the staff constraints and.
Speaker Change: And so that so taking.
Speaker Change: Taking those three factors, we have taken a more of an experiment.
Speaker Change: Fisher I know, we'll have another couple of them opened.
Speaker Change: It's scheduled to be in the summer. So we will report to you the results of the synergy.
Speaker Change: That in that area and right now I think.
Speaker Change: Jeremy and forming a standard in the system and building a bedrock fundamentals I'm, making sure.
Speaker Change: We're not also introducing that some of the uncertainty in the higher competition the restaurant business into the stable hotel business. So those are the.
Speaker Change: Elements.
Speaker Change: <unk>.
Speaker Change: That we're considering so third question Simon could you. Please repeat the third question, which we think has to do with hotels versus FM going forward.
Simon Jason: Oh No my question, it's actually more related to broadly speaking.
Simon Jason: The number of hotel and now you're running at slightly over $4 and restaurant at over 200 now.
Simon Jason:
Simon Jason: Here that you have a hotel with rocket additions.
Simon Jason: For this year, but more of like a near and medium term.
Simon Jason: Do you have any target.
Simon Jason: Mike in terms of the comp for both respective happens.
Simon Jason: Yeah.
Simon Jason: Mhm.
Speaker Change: Okay. Thanks.
Speaker Change: I'd say.
Speaker Change: Simon that our.
Speaker Change: Sure.
Speaker Change: Our.
Speaker Change: And the plan and it's always that let's build the fundamentals then.
Speaker Change: <unk>.
Speaker Change: We will.
Speaker Change: We'll build a growth plan that is compatible with our current resources.
So that.
Speaker Change: We can continue to improve our brand standard and brand identity.
Speaker Change: So we plan.
Speaker Change: Internally the next.
Speaker Change: Three to five years and continue to grow our hotels by the numbers, but.
And to 15% per year.
Speaker Change: And slowly hopefully after we build a stronger fundamental build a stronger base, we can even further accelerated.
Speaker Change: The growth.
Speaker Change: But right now because we have a number of issues of experience and lessons we have learned through the past M&A, which also resulted in some of the <unk>.
Speaker Change: Legacy problems.
Speaker Change: So consumers have the internal resources.
Speaker Change: Two restructuring those kind of businesses and also to restructuring.
The restaurant and making sure that the restaurant has a robust logistics system support.
Speaker Change: To grow the franchise and the manage of models and the way the hotels landscaping, it's a very clear and the restaurants, we're still getting a.
Speaker Change: We're trying to learn the lessons and patterns of our strengths.
Speaker Change: Which area such as community store, the Street's front stores.
Speaker Change: And also the.
Speaker Change: High traffic area such as.
Speaker Change: Transportation subway stations.
Speaker Change: And so.
Speaker Change: Once we have firmly build.
Speaker Change: Profitable robust business model thin.
Speaker Change: Well, it's either grow more quickly.
Speaker Change: So that's our.
Speaker Change: The next.
Speaker Change: Midterm plan.
Speaker Change: Sorry, I haven't looked at the numbers here potentially the restaurant are you done with all the crusher.
Speaker Change: But you know your hotel restaurants.
Speaker Change: <unk> pretty much bottomed and luckily steady lease in the coming quarters.
Speaker Change: Sorry Simon.
Speaker Change: Okay.
Simon Jason: That is correct.
Simon Jason: The.
Simon Jason: Right now, we say a substantial completion I think the restaurant reorganization is substantially.
Simon Jason: Completed.
Simon Jason: And so now we can focus the instead of.
Simon Jason: Closing our transitioning.
Simon Jason: Working on restructuring of the unprofitable stores.
Simon Jason: That now we can.
Simon Jason: Our focus on growing the <unk>.
Simon Jason: Franchise and more profitable stores.
Simon Jason: The legacy issues of the restaurant side.
Simon Jason: Salmon is.
Simon Jason: Primarily resulted then.
Simon Jason: I think some of the locations.
Simon Jason: Our.
Simon Jason: <unk> had the higher rent.
Simon Jason: And the continued continuing to reducing the traffic reduced traffic.
Simon Jason: And so it's on.
Speaker Change: I'd say, it's a more challenging and that.
Speaker Change: To stay.
Speaker Change: Profitable even.
Speaker Change: After our staff put into more efforts on the <unk>.
Restaurants, we have already.
Speaker Change: Closed.
Speaker Change: Substantially closed so we do we will expect that a number of restaurants.
Speaker Change: And we're also growing.
Speaker Change: Albeit initially I think slowly.
Speaker Change: As we see.
Speaker Change: Stated.
Speaker Change: The pattern on the system.
Speaker Change: Steel margin.
Speaker Change: And the.
Speaker Change: The restaurants.
Speaker Change: The competition in the restaurant.
Speaker Change: Strong growth and we are regionally estimate and expect it.
Speaker Change: And so we do not that we do not know the trend will continue but we still think that the restaurant business I think it will be more.
Has a more characteristics and challenging than the hotel business.
Speaker Change: If I may.
Speaker Change: Very final follow up question, just you mentioned number of hotel that you're planning for some upgrades.
Speaker Change: So all of your $4 or an issue with how many of them are going to offer upgrades.
Speaker Change: And they're receptive receptions of Baidu franchisee holiday.
Speaker Change: Wellington.
Speaker Change: Got it.
Speaker Change: Do the upgrades when you compared to your assessment of the entire portfolio.
Speaker Change: Right now.
Speaker Change: About half I think that that my last my last numbers came in about <unk>.
Speaker Change: Half of them are.
Speaker Change: Oregon.
Speaker Change: Yes.
Speaker Change: Renovations.
Speaker Change: And I think another.
Speaker Change: Have we expect them to be complete in the next three years.
Speaker Change: Next two to three years.
Speaker Change: Understood. Thanks, a lot for the answers thank you.
Speaker Change: Okay. Thank you. Thanks, Simon My question really appreciate it.
Speaker Change: Okay.
Speaker Change: I would like to turn the conference back over to Selina Yang for any closing remarks.
Speaker Change: Okay.
Yiping Yang: In closing half of the entire Greentree management team. We thank you for your interest in our company and your participation in today's call.
Yiping Yang: If you have it require any further information or have plans to reach to us.
Speaker Change: Feel free to contact us thank you.
Speaker Change: Everybody.
Speaker Change: Okay. Thank you.
Speaker Change: Thank you the conference has now concluded.
Speaker Change: Thank you for attending today's presentation you may now disconnect.
Speaker Change: [music].
Speaker Change: Yeah.
Speaker Change: Okay.
Speaker Change: Yes.