Q4 2024 GreenTree Hospitality Group Ltd Earnings Call
Good day, and welcome to the Greentree Hospitality Group Ltd. 4th quarter in fiscal year of 2024 Financial Results Conference Hall.
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Please note today's event is being recorded.
Speaker Change: I would now like to turn the conference over to Rene Vanguestaine with Christensen. Please go ahead.
Rene Vanguestaine: Thank you Rocco, hello everyone and thank you for joining us.
Rene Vanguestaine: Greentree's earnings release was distributed earlier today and is available on our IR website at ir.998.com, as well as on PR NewsWire services.
Rene Vanguestaine: We also posted a PowerPoint presentation that accompanies our comments to the same IR website.
Unknown Speaker 0. Okay.
Speaker Change: On the call from Greentree, Mr. Alex Xu, Chairman and Chief Executive Officer, and Mr. Lene Yang, Chief Financial Officer.
Speaker Change: Mr. Xu will present the company's performance overview of the fourth quarter and fiscal year of 2024, and Mrs. Yang will then discuss financials and guidance.
Speaker Change: There will both be available to answer your questions during the Q&A sessions which follows.
Speaker Change: Before we begin, I'd like to remind you that this conference call contains forward-looking statements within the meaning of Section 21P of the Security Exchange Act of 1934.
Speaker Change: as amended and as defined in the U.S. Private Securities Relitigation Reform Act of 1995.
Speaker Change: These forward-looking statements can be identified by terminologies such as may, will, expects, anticipates, aims, future, intends, plans, believes.
Speaker Change: estimates continue target is or are likely to going forward confident outlook and similar statements.
Speaker Change: Any statements that are not historical facts, including statements about the company and its industry are forward-looking statements.
Speaker Change: Search statements are based upon management's current expectations and current market and operating conditions.
Speaker Change: All of which are difficult to predict and many of which are beyond the company's control which may cause the company's actual results, performance or achievements to defer materially from those in the forward-looking statements.
You should not place on your 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: The company does not undertake any obligation to update any forward-looking statement as a result of new information, future events or otherwise, except as required under applicable law.
Speaker Change: It is now my pleasure to introduce our Chairman and Chief Executive Officer Mr. Alex Xu. Mr. Xu, please go ahead.
Speaker Change: Thanks Rene, and hello everyone, and thank you for joining us today.
Speaker Change: Our performance in the fourth quarter was negatively impacted by the closure of 12 or least unmanned hotels during the year.
Speaker Change: In our hotel business, we are simultaneously accelerating the opening of new hotels.
Speaker Change: and upgrading our existing portfolio with an absolute focus on quality to ensure higher standards of products and services.
. . . . .
Speaker Change: We believe that rejuvenation of our portfolio that were just slowed down by the pandemic will be completed by the summer of 2026.
Speaker Change: where we expect the growth over the next two years to deliver a significant economy of scale.
Speaker Change: Finally, we'll continue the phased closure of least unmanaged hotels, especially in the lower
Speaker Change: Retaining only select flagship properties in key cities to serve at the showcase of our capabilities for the prospective franchisees.
Speaker Change: The strategic transformation of our restaurant business made further progress on our two priorities.
Speaker Change: That's up from 78% a year ago and the three stores that benefited from more stable consumer traffic accounted for 50% of all stores up from 40% a year ago.
Additionally, we have been providing many of our stores.
We're selecting the new economic reality to improve overall profitability.
Speaker Change: We believe we now have a strong foundation to build on and will grow the overall numbers of restaurant in 2025 with a particular focus on franchise and managed as well as street
please enter slide 5
Speaker Change: Compared with the fourth quarter of 2023, Hotel Vropa was 116 R&D, a decrease of 9.6% and the
Rene Vanguestaine, Unknown Executive, Yiping Yang
a decrease of 16.8%
and the decrease of 18.2 percent.
Speaker Change: Net income was negative $8.72.8 million RMB, mainly at the result of the impairments of goodwill and trademarks of our restaurant businesses, impairment of assets and the provisions for long receivables were laid at the two franchise loans.
Speaker Change: or a net income worth 57.8 million R&D, a decrease of 22.3% with a margin of 19%.
Speaker Change: and adjusted EBDA was 71.5 million RMB at the increase of 38.3% with a margin of 23.5%.
Speaker Change: Catch from Operation World 74.2 million R&D, it's up from a negative 13.5 million R&D a year ago.
Rene Vanguestaine, Unknown Executive, Yiping Yang
Speaker Change: Slide 6 shows detailed numbers for total revenues, net income, adjusted EBDA, and a coordinate income.
Speaker Change: Slide 7 shows the trend in our quarterly operating performance. In the first quarter, compared to a year ago, Rau Paa for our LL Hotel is decreased by 2.1% to 158 million, 158 RMB.
Speaker Change: Rau Pa for FM hotels decreased by 9.8% to 115 RMB
Speaker Change: Occupancy at our all hotels decreased to 65.5% from 66.9% and occupancy at our FM hotels decreased to 68.6% from 72.5%
Rene Vang
Speaker Change: Flight 8 highlights the growth in our membership programs, which are counted for most of our direct sales.
Speaker Change: Individual membership scroll to 102 million, up from 91 million a year ago, and a cropped membership scroll to 2.17 million, up from 2.05 million a year ago.
Rene Vang
Speaker Change: Slide 9 shows the operating performance of restaurant with the ADS decreasing year to 4,234 RMB.
Speaker Change: Starting with slide 11, our review, our strategy, strategic execution across our businesses.
Speaker Change: In our hotel business, we further expand it in the mid-to-upskill segment and in tier 2, tier 3 and lower cities.
Speaker Change: As you can see on slide 12, we continue with the to grow our mid-opsilio segment with 553 hotels.
Speaker Change: That's 12.5% of our total portfolio at the end of the quarter.
Speaker Change: While the mid-scale segment remains the core of our hotel business at 67.3%, we continue our expansion into the higher end markets.
Unknown Speaker 05.
Speaker Change: Please turn to slide 13. Our current pipeline is growing in truth to cities and we also opened more hotels in such cities.
On slide 14.
Speaker Change: We continue to turn around our restaurant business to ensure that it is sustainably profitable going forward by focusing on areas with greater foot traffic.
Speaker Change: We have closed our author's stories and open the new FM stories.
Speaker Change: Completing the Strategic Transformation to our new business model. At the result, Alpha Wang Restaurant accounted for 89.6% at the end of the quarter compared to 78.4% a year ago.
Speaker Change: and the street stores accounted for 50.5% compared to 39.7% a year ago.
Next, Selena will review operating and final highlights.
Thank you, Alex. I will first review our hotel business.
Please turn to slide 16.
Speaker Change: In the fourth quarter, total hotel rest news were 240.2 million RMB, a 17.1% year-over-year decrease.
Speaker Change: The decrease was managed to go to our Aero Hotel segment, and a 9.8% decrease in rapa in our SM hotel segment.
Rene Vang
Speaker Change: Our ARO Hotel segment was impacted by the closure of 12 hotels in the year 2024.
Speaker Change: While in 2023, it benefited from a one-time, right-new recognition of recognition rooms and successful lawsuit against the subplates.
Speaker Change: Telecom Wrath News Broad Air All Hotels were 19.1 million RMB, a 27.5% year-over-year decrease.
Speaker Change: Excluding the impact of the above-mentioned factors, same ARO Hotel Ratio in the fourth quarter of 2024 decreased by 2.4% year-over-year.
Speaker Change: Total revenues from FM hotels were 148.2 million RMB, a 9% year-redecreate.
Many due to a 9.8% decrease in FM hotel's rap part.
All Slide 17
Operating costs increased 9.5% to 100% 9.9 million RMB year-over-year.
Speaker Change: The decrease was managed to build to the closure of tailed air hole tails in 2024, which resulted in lower rental, consumable, foot and beverage, and sub-related costs.
Speaker Change: Then in the marketing spaces were a 13.5 million RMB, a year-over-year increase of 61.7%.
Speaker Change: The increase was monitored both to the reclassification of semi-stop related expenses previously
Speaker Change: Excluding this factor, Sally and the marketing expenses increased by 22.2% year-over-year.
Speaker Change: General and administrative expenses were 39.7 million RMB, down 20.1% compared with the same quarter of 2023.
Speaker Change: The decrease was made due to lower consulting fees, lower bed beds due to accounts receivables and the lower gene A staff-related expenses.
Turn into Slide 18
Speaker Change: The decline in revenue resulted in a decrease in profitability for our hotel business despite lower operating costs and expenses.
Speaker Change: Cash from hotel operations. However, increased the fraud 18.4 billion RMB to 68.8 million RMB year
Speaker Change: Net income was 28.4 million RMB compared to 8.1 million RMB in the fourth quarter of 2023.
Speaker Change: A death DB that is 34% to 71.1 million RMB and a colonized income decreased 24.2% to 46.1 million RMB here over here.
Next.
Let me review our restaurant business.
Please turn to slide 19.
Speaker Change: In the fourth quarter, restaurant revenues were 65.1 million RMB, at 25.8% yield per year decrease.
and a 16.8% decrease in ADS.
The install revenue decreased by 3.1% to 31.2 million RMB.
Speaker Change: Total cost and expenses increased by 98.7% over year to 187.4 million RMB, many due to the impairment of goodwill and trade months.
excluding these impairments,
Speaker Change: Total cost and expenses for restaurant business decreased by 14% year-over-year to 67.3 million.
Dr. Xu, Yiping Yang,
Dr. Rene Vanguestaine
Rene Vanguestaine, Unknown Executive, Yiping Yang
Speaker Change: The improvement in profitability of our restaurant business due to our strategic execution.
Dr. Chen, D. Chen, D. Chen
Speaker Change: Class for Operations 10 Pastives at 5.5 million RMB in the fourth quarter of 2024.
Speaker Change: Next income, excluding the impairment of goodwill and trade marks, increased the 44.3% to 18.9 million RMB in the fourth quarter.
Next, I will review the profitability of our group.
Please tend to slide 21.
Speaker Change: Group cash from operations, despite the rough new decrease in the year-over-year from 9th 13.5 million RMB to 74.2 million RMB.
Unknown Executive, Yiping Yang Unknown Executive, Yiping Yang
Speaker Change: Net income in the fourth quarter, excluding the impairment of goodwill and treatments of our restaurant business, impairment of assets, and provisions for long receivables related franchise loans.
Increased the fraud 60.9ml on B to 77.3ml on B.
Speaker Change: Adjust GBDAR was 71.5mm on B, compared to 115.8mm on B one year ago.
A Korn Act Income was 57.8 million from B.
Rene Vang
Or Flight 22.
Speaker Change: Net Income ADR's basic and diluted for our hotel business increased year-over-year to 29 cents on B. That's four cents a year, thoughtless.
Speaker Change: and Kornat Income per ADR's basic and diluted follow-up hotel business was 45 cents on B at $6.00 a.m.
Speaker Change: Group net income for ADS, that's basic diluted, was net gives 70 Rmb, since Rmb, that's 10 cents US dollars.
Speaker Change: and Group Connect Income for ADS, basic diluted was 57 cents on B, that's 8 cents a year
Let's now look at slide 23.
Speaker Change: As of December 31, 2024, the company had total cash and cash equivalence, restrict cash, short-term arrestments, arrestments in active securities have deported.
Speaker Change: of 1,839.1 mA compared to 1,883.9 mA as of September 30, 2024.
Speaker Change: The decrease was primary due to dividend distribution to our shareholders and the investment in property, partially offset by cash from operating activities.
On slide 24
Speaker Change: Taking into account the recovery in long-term chance and short-term industry fluctuations.
Speaker Change: We expect total revenues of our organic hotel business for the full year of 2025 to be flat compared to their 2024 level.
Speaker Change: This concludes our preparing remarks. Operator, we are now ready to begin the Q&A session. Thank you.
Speaker Change: Thank you. If you would like to ask a question, please press stars and one on your telephone keypad.
Speaker Change: If your question has already been addressed, you'd like to withdraw your question. Please press star them to.
Once again, let's start the one to ask a question.
Speaker Change: Today's first question comes from Bruce Me with UBS. Go ahead.
and the rest of the year. Thank you.
Rene Vanguestaine, Unknown Executive, Yiping Yang
Rene Vanguestaine, Unknown Executive, Yiping Yang
Speaker Change: Okay, thank you. And the Royal Park Trend, our expectation for the year of 2025 is going to be flat.
Speaker Change: Because we observe the first quarter, we have done about 5% in rare parts.
Speaker Change: and we expect that that's compared with a little bit higher base of last year and the second third quarter we see a gradual recovery and to be flat the rural part of the year.
So, um,
Speaker Change: In terms of the demand, we do see more cyclical demand, that is...
Speaker Change: More from leisure side and especially during the weekend and also during the holidays. So we do observe a take up in terms of the leisure travelers.
than the business travelers.
So those are the two observations we have and
Speaker Change: That's why we expected the, for the four year, the RAPA, we expected in our company, we should maintain, we should be maintaining the flat level.
Rene Vanguestaine
Thanks, Alex. That's very clear. Thank you.
Rene Vanguestaine, Unknown Executive, Yiping Yang
Dr. Yang, Yuxuan Mi, Alpha Wang, Lewen Liu, Greentree Hospitality Group Ltd.
Dr. Rene Vanguestaine
Rene Vanguestaine, Unknown Executive, Yiping Yang
Hello, Frank Ma, your line is open, please proceed.
Unknown Speaker 0
Speaker Change: Okay, okay, thank you, management. I have two questions. The first one is, can you give please give us an overview of the strategy for the total business.
in 2025.
Speaker Change: and the in particular how fast we are making progress in upgrading older hotels.
Speaker Change: The second one is the kind you provide the details, colors, our specialty for the hotel, L.O. segment, going forward.
Why are we closing so many of those? Thank you.
Thank you.
Speaker Change: Okay, thanks Frank, that Selena pick up those questions. Okay, in terms of our hotel business in 2025, if
That's about 20% more than that of for 2024.
and that's one.
Our Court of Focus
Speaker Change: The second is upgrading of our existing portfolio, the age totals.
We still have a 7-800 of those.
Speaker Change: that needs to be upgraded and hopefully that's going to be done by the summer of 2026.
Speaker Change: and we are making a tremendous amount of progress in terms of incentivizing our hotel owners.
Speaker Change: You know, because right after the pandemic, they need a couple of years recovery time to
to start upgrading the existing hotels.
Speaker Change: And then the third is where improving the overall the efficiency in terms of our management system and our team.
Speaker Change: and so that we can better support both the new franchisees and existing franchisees for the businesses.
Speaker Change: So with that, we feel that in 2025, we are able to have a fresher and portfolio of the hotels.
Speaker Change: and in terms of the closing of L.O., at least in the operating hotel.
That's for a couple of reasons, one.
Speaker Change: and we feel that those in the second tier or third tier locations that are no longer ideal to be a flagship hotel locations.
Speaker Change: So, we want to focus on our resource, the QI, flexion hotels, and also on the franchise and manage the segment.
Unknown Executive, Yiping Yang
Speaker Change: and sometimes it's a mutual discussion issues and our focus is going to be bringing the focus into the franchise and the management of sectors.
Speaker Change: So that's our strategy and our focus in the future, and we'll continue to evaluate the L O Hotel segment to make sure it does not consume a lot of additional resources from ourselves.
Dr. Xu, Yiping Yang
Dr. Xu, Yiping Yang,
Rene Vanguestaine
OK, got it. Thank you, Alex.
Speaker Change: Thank you, and as a reminder, if you like to ask a question, please catch stars in one.
Speaker Change: Our next question comes from Alex Xu with current capital. Let's go ahead.
Alice Xu: Hello, thanks for giving me a question. My first question is in our restaurant business we're increasing the proportion of streets.
Alice Xu: Street Stores, and the reducing the number of more restaurants. Let's try to continue that's my first question.
Rene Vanguestaine
Okay.
Speaker Change: Yes, we do expect that the trend to continue. The number of shopping malls and the traffic to the malls.
Speaker Change: I think are changing very fast. So in addition, the rent and all the expenses associated to be a renter in the mall is also very high. And the plus the mall has certain operating all works. That's also limiting sometimes the traffic.
Speaker Change: The results are really showing that the light of the very competitive environment in the food of the businesses.
Speaker Change: that we are still maintaining a profitable operation while we are transforming from the older and existing legacy brand into a fresher and more 20 concept.
Speaker Change: So we are making, I believe, a great progress in that end. And we'll continue to focus on that end. And the second is we're also changing and adjusting the size of the restaurant.
Speaker Change: To make sure there are the most economic or most efficient and deliver the best profitable result to two-hour franchisees.
Speaker Change: So that's the overall plan and the strategy for our food business for the 2025.
Speaker Change: Thank you. My second question is, at the end of the 20.4, we had 182 restaurants. The same number as we mouth earlier. You mentioned that the business transition is over. What can we expect in 2025? That's my second question.
Speaker Change: Yes, we in terms of net openings, we have not done a good job and we have not pushed really hard in terms of opening the new restaurant, especially considering the sentiment in the marketplace.
Speaker Change: But this year, I think that we see with the profitable operation for our existing
Rene Vanguestaine
Awesome. Thank you.
Rene,
Rene Vang
Speaker Change: Thank you, and our next question is a follow-up from Frank Ma at Xixing Capital. Please go ahead.
Speaker Change: Unknown Speaker 05. Thank you. Transcription by CastingWords Transcription by CastingWords
Speaker Change: Thank you, thank you. Actually, I have a lot more questions.
Speaker Change: You have talked about previous earnings call about the need service to increase the trading liquidity in our shares, and in progress on this. Thank you.
Rene Vang
Rene Vanguestaine, Unknown Executive, Yiping Yang
Thank you.
Speaker Change: The second is the last couple of quarters have been the traditional quarter. We've been trying to uplifting, upgrading our existing portfolios, opening up new hotels.
and so we have a focus down really.
Riding a profitable operation for both restaurant and hotel businesses.
Speaker Change: and trying to have a strong cash flows and stable dividend, and eventually, eventually I think that will earn the confidence and of our shareholders.
Speaker Change: and that there will potentially also increase the share price and liquidity.
Speaker Change: And we feel that the merger and other available financing will be available to us in the near future and I would make those announcements as soon as they are become available to you.
Rene Vanguestaine, Unknown Executive, Yiping Yang
Rene Vang
Thank you. Thank you. That is kind of have a day.
Speaker Change: Thank you, and as a reminder, if you'd like to ask a question, please start with one at this time. We'll pause for just a moment to assemble our roster.
Dr. Rene Vanguestaine
Dr. Yang, Yuxuan Mi, Alpha Wang,
Speaker Change: This includes the question and answer session. I'd like to turn the conference back over to William Yang from the closing remarks.
Selena Yang: Including, on behalf of the entire Greentree Management team, we thank you for interesting Greentree and the participation in today's call. If you require any further information or have plans to read us, please feel free to contact us. Thank you all.
Thank you.
Thank you.
Selena Yang: Thank you. This includes today's conference hall. We thank you all for attending today's presentation. It may not have a lecture online, but have a wonderful day.
Dr. Wang, Yuxuan Mi, Alpha Wang Dr. Wang, Yuxuan Mi, Alpha Wang,
Yiping Yang: Director of Photography, Yiping Yang Production Manager, Yiping Yang Production Assistant, Yiping Yang Production Assistant, Yiping Yang Production Assistant, Yiping Yang Production Assistant, Yiping Yang
Dr. Wang, Yuxuan Mi, Alpha Wang, Lewen Liu, Greentree Hospitality Group Ltd. Sponsored
Speaker Change: Chief Detective Anderson, Unknown Investigator, The America's Got Talent, National Elementary School board of funders, Hugo Chavez, Schmidt, Dave Milan, Ruben Mezquita, Tong Yang, Kim won abstracts in the Vietnam war, with a $204,000 bond. 謝謝 Alison Byrdsie and