GHG - Earnings call transcript Q3 2020 | GreenTree Hospitality Group Ltd.

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Operator

Hello, ladies and gentlemen, and thank you for standing by for GreenTree's Third Quarter 2020 Earnings Conference Call. [Operator instructions] As a reminder, today's conference is being recorded. I would like now to turn the meeting over to your host for today's call to Mr. Rene Vanguestaine of Christensen, GreenTree's Investor Relations firm. Please proceed, Rene.

Rene Vanguestaine

Matt. you, Thank thank and joining us. Hello, you everyone, for today earnings ir.XXX.com, on available was as earlier release distributed and our services. as PR is on GreenTree's well Newswire IR website at

accompanies also our website. We PowerPoint a presentation comments the same posted on IR that

GreenTree performance President call Alex Mr. XXXX Marketing; discuss Zheng, Mr. of Ms. will Officer; Sales from Chief Officer; Ms. IR Xu, guidance. Chief third-quarter Nicky Xu the the by will follow. which then Selina to followed and Yang, and Q&A company's On Financial Huang, and who available will will Manager. during overview, Megan business Ms. financials Executive are your be operations, the Chairman Yang Ms. Huang, questions They session, answer present and Mr. will Vice discuss and

company's results, statements. expectations upon in from beyond relate known which current differ going company to similar may industry, and predict all are its amended, XXXX. begin, performance and that and uncertainties we management's statements forward-looking which involve or forward-looking target, as and current of difficult the those future, forward-looking confident, Before operating that historical you like of Act Litigation the statements actual are risks, the not and statements such about remind identified terminologies anticipate, Exchange call by of as are Such expect, the likely I'd this are achievements statements will, and events statements the Section may, contains plans, Act conference that control, These as U.S. Private based meaning company's and including XXE factors, Securities defined to Securities facts, of in within market to are to, forward-looking and to other statements. cause or unknown believes, outlook the estimates, conditions the and intends, are Reform is statements. can continue, of and Any be of forward, aims, XXXX, which materially many

reliance and or date. these filings statements. made Alex obligation update please new this in Commission. current as undue You Securities these the The forward-looking of introduce should conference forward-looking or including risks, forward-looking information uncertainties go place provided, Chief as result U.S. the statements information information, the now regarding Xu, today's otherwise, ahead. Exchange pleasure Further to during not does company and with and of on except future is not All factors Xu. events undertake call, Mr. under is company's are included required to any our any as law. Chairman Officer, Mr. a It my Executive applicable statement other

Alex Xu

call you, earnings thanks, joining everyone, for Thank and today. our Rene, quarter third

Let's No. start on X. with the highlights Slide

with all hotel margin the other That's hotels. no the Compared improved the our resurgence the third historical XXX. revenues further. to Our earnings, XXX mid-to-upscales this has brands of luxury business in million the for some Core new a with despite increased XX.X%. XX.X increased RMB We of high recover increased continued quarter and luxury in RMB second Of like non-GAAP, million quarter This were the to XX.X% to XX.X% to certain regions. to increased RMB EBITDA million. to quarterly upscale XX.X% to Non-GAAP XXXX, RMB quarter, new Total been XXX.X XX.X%. GreenTree. adjusted XX.X% RevPAR with the margins year net expanded during infections made XX.X% openings and openings. history

back made hit a metrics I look important, in the always our pandemic since progress for considerable January. three are realize the at comparisons businesses year-over-year few help will first have quarters While key to we the

three consecutive earnings, at look Slide net with non-GAAP, non-GAAP from the consistently and in since operations, income revenues, adjusted a EBITDA quarters the and for lows core No. take Let's improving Total all QX X. margins. increased

Let's look X. Slide at

X.X% RMB Net XX.X% And were decreased profit up income RMB XX.X% year XX.X%. same Gross decreased compared of revenues dropped we year. Occupancy RMB the XXX.X RMB blended hotels third hotels XX.X% Net to RMB XX.X% across China. income the hotels hotels for basic our to over that's XX.X% to hotels expand presence over to net We X,XXX per to Our and RevPAR for XX.X for with RMB million. to total decreased quarter XXX. in XX.X% year million. We to XX.X% XX.X% decreased EBITDA adjusted during our an being pipeline, decreased X.XX. Nevertheless, non-GAAP the decreased If XXX decrease to opened for year million. ADS, XXX. used XX% diluted, Total X.XX market XXXX. new XXX.X decreased to core decreased ADS the operation. the quarter XXX. continue and million, RevPAR ended of quarantine, quarter a ADR we RMB quarter XXX in third to to RMB X,XXX A income per RMB exclude

Let's now the and balancing update introduced controls has economical to safely resort as company No. the an people X the normal daily turn lives. for pandemic the COVID-XX. with of to recovery impact Slide China been get help back the business on measures and on positive

consumptions, and of the members. quarter, in result, quarter. leading the the quarter, hospitality operating domestic GreenTree, China designed industry tireless fourth ADR thanks Further, again, our support seen to recover. a business, improved our outperformed third in tourism signs continued to China in strong showed rebound encourage of policies the strong economic staff performance and third and RevPAR government we rate, thanks of to loyal during the In to domestic and and a to the and dedication franchisees work have our As occupancy recovery sustained

of or the Golden the in example, million Dragon June's revenue, brought Festival, last These RMB to October year's XX.X XX.X% and an a considerable to China's For XXX.X Ministry which half which of three-day according level. saw Tourism. Boat of Culture only a level, generated level point year's year's over roughly domestic a or tourists to million compared figures Week improvement last XXX XX% tourists of last billion

to the technology Slide the to management our turn strengthened franchisees. better XX. and companies our our products We travel promotions to on expanded with local our Let's We optimize brands, continued supporting demand. capture No. Riding with and cooperation travel we and joint focused merchants. serving guests domestic recovery, the on

continued level occupancy same a XX% occupancy the Week, almost the of the during third As as quarter our a in economic both in in rate to activities we for a rebounded the of until nearly recovery room more result, for year. improvement the nearly that's were year In summary, to as returned In October approached and XXXX Mainland RevPAR November. to November, to rate we last see and conditions October level, new the same normal last last year's Golden living China. glad recovered as level of XX% our

adapting campaigns net We guests, and and our employees, conditions constantly the continued income increase EBITDA. our marketing operations and to protect our while evolving our to managing from adjusted operations, still serve to income

long-term our continued and the continue XXXX, we to the have since to our Because the our ahead. consistently And well to third are structure I we execute we for growth measures achieve of and who our strategy gone Megan, to ability are further and months thanks we please operations COVID-XX. the nine rise, Our flexible outbreak challenges Megan with to will believe of franchisees. create growth experience, we much more quarter. should the the through confident accumulated Having go lasts first pass summarize our we value now profitable cost prepared, our longer. business the margin call in shareholders. Huang, over pandemic partnership of will for our extensive enhance have implemented

Megan Huang

you, Alex. Thank

almost XX.X% luxury the higher to This hotels the the our and hotels Moving ago. operation, economy XX to leased began And higher Last to continued we of portfolio. had and economy remained of portfolio. quarter, the which core a to or hotels while of increased the segment the segment XX% of end quarter, and or we mid-scale year expansion managed, X.X% X,XXX the of At third Slide the during were into these end hotels grew segment. with number XX. all of hotels total the third than our operated, L&O, hotels. X,XXX in franchise in the and mid-to-upscale and both XX.X% business of were expand F&M, total year,

We in of Six XX% mid-scale our XX, two XXX position hotels. compared XX.X% the called increased in XXX opened enhance Nearly was at quarter, dominant in see hotels our of luxury the our our can Tier quarter in XX the the in the hotel you and in were XX third XX and in XX which segment, tires, cities, On One have cities XXX hotels the smaller economy Tier end opened Slide the mid-to-upscale to XXXX. locations. in cities the also were three third in Tier the China. segment. cross-market that third hotels in ability quarter the of luxury segment different and strategic the smaller moves and three mid-to-upscale to one and we brands remaining newly Tier in and third in to segment, These quarter.

and to property-related During to upgrade, our the four XX third with and brand due brand noncompliance quarter, we due issues. Three operating hotels. also closed due XX standards to then

X,XXX XXX Despite on shows So increased performance new September quarter. net-net, COVID-XX, XX% on XX% these the and mid-scale shows sector in pipeline of portfolio hotels. in Around about XX mid-to-upscale the Slide segments. growth XX% economy and we third quarterly added our XX, pipeline our XX segment, the operating XXXX. XX, XXXX to September Slide XXX the around luxury from the to hotels in in in of are hotels the trend. the our

RMB hotels our hotels see, Occupancy occupancy of hotels our for As F&M hotels hotels second for decreased to ADR to RMB XX.X% XXX. RevPAR XX.X%. increased our ADR hotels increased L&O to for RevPAR increased quarter, for F&M XXX. RMB to to for RMB to and the compared increased you XXX. increased can L&O our to F&M our L&O our XXX.

As Chairman RevPAR from quarter second Xu noted, to rebound levels. continued

was our in In status. impacted ramp-up L&O L&O performance to COVID, addition six hotels by hotels

X.XX and individual members, We XX. corporate million X.XX to Slide as XX now million members about XX of million from Turning up million XX. now June have loyal and

With around pass due call and corporate over our the all Selina nights of Yang. primarily room XX.X% the During quarter, that, were our to members. I'll sold CFO, to individual

Selina Yang

Slide XX. Thank you, Megan. turn Please to

to decrease impact year our hotels decreased for X.X% During due over reduction RMB essential XXX revenues to from growth hotels RevPAR XX.X which XXX quarter RMB RMB in sublease XXX.X this a as and income RMB year revenue total X.X% from to RMB RevPAR the the lower over decreased quarter, in due million. to The while F&M total revenue primarily Total third decreased to was million million. X.X% L&O total the XX.X% sequential XX as resulted recognition. to QX. represents second COVID-XX, increase Nevertheless, primarily partial well of revenues, in QX

Slide Turning XX. to

the Third and operating rent, were and quarter to which up year. RMB million, costs mainly higher The was Urban, operation hotel costs amortization over consolidation depreciation of hotels of higher decrease under third XXX L&O was attributable the hotels year in XX.X% quarter, operating in operation of hotels construction, increase which the newly three opened acquired main five of XXXX. L&O November for costs. there and In are accounted

the hotel expenses COVID-XX. primarily million operating expansion X.X%, cooperate to increase increased company's of to costs social come costs which increased the number Hotel to mainly hotels. platforms, marketing aero of became L&O because costs, Excluding related F&M business third due the and due to Selling The internet hotels increase QX over was development. others and prevalent a quarter XX.X% in levels year-over-year of with RMB attempt and first XX.X X.X%. mainly -- attributable in into F&M were our to operating more hotels

in over administrative year XX.X% by consolidation management increase amortization second primarily increased this investment property expenses costs and equipment, attributable consulting and total X.X% XXX.X Urban. to Excluding of with expenses year quarter fees, quarter increased year higher depreciation quarter, fees to decreased and decreased quarter. expenses Overall, the year. marketing and were XX.X X.X% higher over X%. expenses our to year research The million, and development, above general XX.X% over million. and over RMB RMB G&A expenses selling Compared advertising QX, year up and was operating grew of in and from Argyle and

and to second XX.X% due margin in income equity to that can RMB to XX.X%. you in XX.X% gross Net XX.X%, And quarter. adjusted to expenses year-over-year core million. year XX.X%. compared decreased the margin investment see decreased decline XXX million. impact EBITDA XX.X% gross from Slide and mainly to this decreased to decreased margin increased All decreased RMB net XX.X% increased XX.X%. quarter-over-quarter, decreased QX, On and gains EBITDA XX.X securities from increased On Excluding of the quarter. with turn increased Compared to by and the one gross year costs XX, XX.X% profit increased income by year XX.X% The decreased in with was decreases the Gross these with net margin to year-over-year XX.X%. margin see primarily And adjusted from to the XX, you XX.X% COVID-XX. X.X% were QX, over and Net core XX.X% ago. adjusted to XX.X adjusted X% L&O Please XX.X%. operating by net margin XX% to decreased Compared by EBITDA was net XX. EBITDA due by compared XX.X% XX.X% RMB from decreased hotel million operating debt costs, margin XXX.X to to profit RMB from XX.X%. The total million core Slide margin income with Slide and core net XX.X% XX.X%. income increased

down net the non-GAAP the from one per from was RMB ago down due in RMB in X.XX, and down of That's up ADS, $X.XX, second ADS quarter with of in RMB XXXX. RMB X.XX, year net the second to earnings from a ago, gains securities ADS $X.XX since income from from U.S. income in equity and U.S. mainly Core quarter per investment the second XXXX. in quarter year decline X.XX RMB for of X.XX was dollar, diluted, Third X.XX RMB of quarter. basic dollar, X.XX

XX. a look Let's now take Slide at

in outflow in cash, restricted investments equity from increase of from investments, activities, in cash second XX, of of September as had RMB securities of RMB to quarter active was investment departing and Hotels acquisition primarily equivalents, sale inflow compared and the the fees. had XXXX. to cash billion cash for attributable franchisees, cash loans securities X.X and X.X short-term As XX, operating changes deposits and billion by of L&O total company to XXXX, offset June the securities active dividends value from and The

and the cash cash equivalents continue and XX. to provide support franchisees. and we our to investments potential As with us resources On Slide evaluate

As Alex our mentioned, on impact business. had has a COVID-XX significant

our So with far, previous in are line forecast. our operations XXXX, in

ready Thank you. China Q&A of Operator, QX, prepared XXXX. begin we year the pandemic revenues control we are decline the remains the in on XX% Assuming compared to in This to XXXX full remarks. expect XX% in for total our now to concludes session.

Operator

with [Operator instructions] Our first ahead. go Goldman question comes from Sachs. Please Justin Kwok

Justin Kwok

that. to for on very some your in the give also opening second The over have RevPAR, or the Perhaps net my question. to Perhaps mind quarter Hi. have during you M&A it's on I'll one Good color regarding the as openings of number Would taking pipeline? was see you first on side? plan high. the year questions. that other your morning. in side. It question One fourth XXXX, the that the Thanks number opening, five for question the last on the the opening. on And opening coming nice now given the RevPAR the the not third X,XXX quarter and seems

last in RevPAR month As you rate XXXX of room already your moment? for should already to the from fourth that the pre-COVID in back were you where the we be where level, is outlook are are on the quarter the back the the the some think mentioned, you occupancy But we one rate? And And for on level November, XXXX, the COVID. And looking already? side, at in M&A. room whether and we before what's the on to

of still have as you X.X think you billion resources. RMB I mentioned,

been the for or that coming like COVID. this more too to are you the seeing much no see for stage? now We measures that target the fire you out? viable helping you government Or you. into at situation think have no Are cell XX targets months actually look you Thank

Alex Xu

OK.

I later, -- ask the question. like bit of clarification terms you in more of a Justin, would second to little

some and our relationships been a reasons. Regarding bit that to the We to beneficial to of to third that beneficial, that risk are want the soft portfolio. launch And -- sacrifice build with mutually hotels always profitability their a our for a responsible we not build long-term quarter the and first openings sake is little we for a with company our franchisees. that franchisees GreenTree has goodwill increased question, franchisees. continued want going adding

of Our and total primarily services. products portfolio standardized consist

So to are the normal a that was franchisees. put if that going requires and time, you down from considerable revenue, close of third And the to level. quarter, amount second quarter, in investment XX% at generate the And RevPAR enough that now they yield. the not still hotel open of the

openings, if I the run. relationship you create that push that a can not think long I think good the in so And may

the we've very So And open, typically We're are we them if in they to take and are owners, to able negotiate an with they encourage to the bit end. that extent been don't time. can hotels open. to little they a more asset that trying this that extension extent have then own push leasing not to we extent considerate do the we the or the

that's so philosophy. the our And and position

a we're so success for trying And higher maintain rate our to franchisees.

Having leased sooner we're attention the that one is to got open. soft. quarter, that that I always to going the in that so they're the to the third financial little been first, then trying you later, And probably hotels see is And second, why GreenTree in market our the said there that or are health. bit openings reputation has pay a that, franchisees' think already will

really no probably quarter, there in moment, more or we if XXX or resurgence cases. of plus minus more than So range. I projected that at less, think XXX, that probably fourth this And is opening the the in we'll

the over continue dramatic increased see November in that think operation, a increase our I performance third quarter. our October, with to now November's operation, performance, so on the with especially And will

Third quarter down look year. X% last the And or you still the we're consistently. in we XX%, only, RevPAR. more last think, I less in same fourth down how of achieving to depend like period was than But quarter, XX% already on XX% over already the are

to the that more normalized we're able help confident franchisee realize So to return we are and good a profitability.

the that's fourth opening hotel of So the quarter. on

able you the better I that your question, Justin, to so so can you? a Now am provide answer RevPAR, to on rephrase

Justin Kwok

Sure.

the the thanks opening. First, color on for

there year-over-year for On stage? we basis. still that the that expecting easily mentioned investors are are pre-pandemic overall, all room occupancy the year room think, are looking the or back you we travel the November some the for concerned room be or what on as economy, to room with mid-end RevPAR way you. XX% rate? or rates this the closed, the at the international least at? still Because of rates still on at there some the are your hotel's the What the months. side, end rates? still into down down over is are already the to What to Where pressure, RevPAR for Are pricing XXXX? Thank part given double-digit a Or the rates you year high level on the early I expectations you next will the room couple year, for the of later

Alex Xu

OK.

to that's last X% in on level less than period, primarily resulted very a And GreenTree RevPAR ADR. we that down about Justin year’s pretty from occupancy, the the the side, same portfolio. the close the decrease on see in the our that at resume was RevPAR for much

head, last to down same XXX% about top is the X% the the last recovered it of was recovered year, room year's of So level. rate Occupancy so the almost other number. on rate XXX% words, my XX%. In from room

same So the will continue we we, trend at the moment, that at to this year-end. expect

I done. to procedures government, that thanks rigorous and control policy the they think by have the I pandemic think

great in our I Chinese controlling think done government that a has the spread. job

for the continue international What is the an so resumed next China recover. And the that lacking level. tourism. is we consumption hope it domestic cross-border normal to And year, our best will are with to

the domestic that to depressed really room rest And domestic the and of looking hotels range, the think will the maybe price segment. of And hotel consumption rest which spread hotel year But for may bit, a so a we that depress are -- robust. the I also next five-star because especially value-priced China. will our be the the forward to rate will luxury great as we're confident year of

to do will travel other surrounding, the For we trade. tourism the and cross-border for it population a countries, larger takes think to the a cross-border quite have vaccine few have the while to and it of lot. opening and not for some of -- a Southeast penetrate for Asia, the We We increase take time a because hotels. be

that's Vision and the Selina our projection. OK. So maybe to Megan, to on add internal anything that?

There the issues. that smaller are that third question regarding to I are running think there And are we so local Justin, size open. are into you believe have, And smaller we medium brand that --

last I opened, think the wait And are year the see. still and from this to continued the people hotels are year, the return taking of and experience investment. pressure

for smaller smaller regional especially brand a so or hotel And groups.

So that. our we open keep eye for

there have that will we approach. think this this that those said, see. to uncertainties. But I think operating us to for And explore. created what And typically pandemic We with disciplined for we benefit some companies we'll very opportunities a and be is wait

Operator

UBS. go ahead from Our Bruce Please comes Mi Bruce. next question with

Bruce Mi

questions. my for taking you Thank

have one openings. long-term I the hotel question So on

years. some two and the their some even opening its hotel other company, plan see next operations hotels Chinese they in I the major to So lifted next plan groups, they of three number hotel double in years for

GreenTree the question if which up will my driver? main is So speed the brand growth segment be openings? Thanks. And which also or yes, will

Alex Xu

two even hotel our past main years the in Bruce, focus and the in thanks. That opening future. is

plan the only have the hotels growth, franchisees open four-and-a-half-year with want four-year, responsible I focused on we want relationships And the for profitable relationships, to long-term franchisees. hotels long-term because we're -- long-term our a As the said, that our we XXXX. we a to company by be

and natural through our continue opening that the and We to also plan, M&A, and we I our think, growth growth our like organic believe, through also, the we through franchisees would we hotel and to and trying also our to profitability. But long-term approach portfolio want to as duty, and our our again, new XX,XXX. franchisees our of to responsibility maintain double hotels

the can to matching to impact waste success hotel relationship I a hotel and of as the the assets. the mean hotel, As in see, the it's it's you rate openings negative time a expenditures a you bad to every and it's franchisees. with environment closure lot wasteful. our have by and well because a And just the you close impact

So And responsible increase, our I we're trying be very obviously, that to in -- through can And that easily way. in it a process, believe responsible very will end. this meaningful if we approach. very, maintain portfolio

So that's by be. want growth to four years, XX summarize our so plan, we that's -- in where to

Bruce Mi

you. Thank

Operator

comes Liu Please Our with CLSA. next Jisheng question ahead. go from

Jisheng Liu

go questions. two one. I by have Maybe I'll one

First on 'XX your take hotel one third quarter franchise is rates.

a franchise think that by increased stable. was year-on-year in such XX% decline, number XX if of was of think terms revenue mentioned hotels, XX%-ish. rate this I you quarter -- our franchise rooms But by revenue So of basis, I average also your declining your take year-over-year number

was you franchise have wondering So fee management on waiver during done quarter? you. the I if Thank any more

Alex Xu

I -- think OK. that

Selina Yang

in question. a It's our considering Selina. facing are is This Yes, COVID-XX. franchises more good the difficulties

of or with lower their Some for take rate are planning take rate. their to them

some kind have receiving applications. we criteria now, of where such are we Here a

a why a quarter quarter the done the standard rate years this in since of fees. For some the and fees those job second the decoration, franchisees, looks and previous and That's are little extend considering bit in take which ongoing a the to has COVID-XX. hotels their we lower before than have -- good franchise

Jisheng Liu

Or on one-off waivers could over just any But fees the elaborate franchisees the OK. requiring what maybe there And criteria years? plan across they And is going the brands? pay you differences will to that be what are? get do they should your you next not are more forward?

Selina Yang

in Thank some from especially Eastern To scale applications GreenTree our brands, those brands, including coming statistics, the and of the GYA the COVID-XX. GME, in hotel opened for VX, most including newly during hotel you. hotels and the of GreenTree

good one are the about standards those and to if fee. there they for more operation, more especially their to likely that's one hotels year, And their get performance, if daily according rules above in to some job, have hotels, follow. -- has extension and than for Secondly, life ongoing of of those is those for historic they the approval hotels, for a their kind year

this criteria basically application. look to is So at their for

Jisheng Liu

OK.

the that an means waiver actually? what that right, waiver So the not is extension,

Alex Xu

think me a to not that only of for I Let about end revenue XX%. couple dropped revenue XX%. that I the dropped the things add think, The for is had franchise,

have waiver that So reasons. we mix about that's roughly reason opened our a have newly consolidated attributable a a bit. lower the there's to hotel second the opened. few of number is, they hotels, One gap. currently of have XX% because not And we And is we a RevPAR also because are profitable, is and the changed a

offset. them that XXXX fully the not resulted are of in a combination with So

addition. in Jisheng, So

that. one of to and several factors reasons contribute that's So

Jisheng Liu

OK.

So maybe to go I have. question second I'll the

say. now to recovery peer the just what said our RevPAR was call, according So in I on November you think companies actually your and

differences understand if this So may city the I across to is tiers. related different

Tier November to recovering October. four example, maybe cities For are compared better in three,

Or that? peer to data see related better than do could that anything support basis comparative that you is on peers? your a performing are any So you that

Alex Xu

take I because can the add number extensive -- a some And we I we and board. sales we on the have measures indicated we across of that color that the -- to think marketing certain thanks online, are analyze including are recovery, that certain travel management and companies sales they that and cross internet like the in also to side, companies aggressive our Megan's team and increased our with that more -- marketing they promotion.

in occupancy a better think, them, the I November. of in So all resulted

Selina. breakdown, leave to it So depending I'll tier -- but the cities

Selina Yang

just didn't it's our Yes, same Alex. almost much. Thanks, November Jisheng, was year-over-year and the year too you differ over October, as decrease decrease like, as mentioned, in

statistics RevPAR our you to in decrease As share was that's the leased, -- three Tier third X.X%... quarter, our city like I'd in in terms tiers, the of about

Alex Xu

talking He's November, December.

Selina Yang

Yes. I see.

the For tiers. the the segment, RevPAR mid-to-upscale least terms the of brands. same was there organic our in the still year-over-year the of three trend, November Tier is city And amount December, least decrease in with all and decreased for that in

Jisheng Liu

I just a go queue the Great. may previous question, may the and afterwards. follow-up OK. to on I have back

Alex, X,XXX have year for let's a to you target more mentioned long-term, may when That to means, just reach So need openings hotel hit that to say, net so target. per actually, that you XXXX XX,XXX you hotels. crossover than have

per actually that would that your you next be increasing implies openings the hotel four years. over So year

leverage So take to want you you franchisees are on are a don't you company much that or that also saying opening too responsible hotels. before any your risks

also guidance. are your raising you running actually, So

is the behind do years? four confidence key drivers So see where over that? the you next what And the growth

Alex Xu

That in look just we pipeline. we observed hotels focused have the still are because brand conversion, management some have the franchise Jisheng. the the that not have Thanks, And another at that industries and recently and fees, if observed we trend so-called is the also fees, on also soft end we technology demand lowest systems, in our in our industry. the overall we management ongoing have

the marketing -- require through technology some should next constructed support think, few valued especially if demand from year, hotels the brand see So the we're brand. support, be And able more I the the support. newly sales the and next we most years, and to the

loss more timing from in there And be So we end. that that a have pipeline. secondly, we already will the think

we the are on more adding So also developers. evaluating, franchise

And so that's market huge. think a that's I

third in operating -- tier tier third On future, are even to beyond a believe, you of is are no We And because so the hotels, and do in connectivity you second hotels XX% have we many that XX%, more brand. all the the and cities, market -- they the that is them because you lot the that that of accumulate operation, cities typically going they're the be second, see, successful a many that nonbrand, franchise on the time major of the data. tier statistics day. the local we every third and cities, hotels, I XX% cities, hotel in cities, hotel the see many even still no the And block operation, centric see still on developers especially we there. on tier an for are technology So requires think approach. more And hotel second, brand. brand independent nonbranded

believe for the we of is we our platform, And The in glad profitability, become or demand, recovery be think the is see off all October, two also performance are but that are normalized. I the we to there. I technology, proposition -- improving November's we're And demonstrated more there. value want all the paying think become connectivities. -- to So franchisees' we past years, responsible our we right our very as are three demand them

Operator

Ng of go America. from comes Bank question Next with ahead. Billy Please

Billy Ng

morning. Good Thanks.

I follow-up one And First of the have just results. question. solid all, congratulations on

anything think for guys? come you have become mentioned ground also, franchisees, I company you brand in less? the they competition bit franchise supply peers signing Competition seen any suggest the to have in of like a terms difference? Have some the little team change, that that dynamic supply And a overall new seen down? attitude about as Or suggests want on data? your company particular, many of you down. requirement, industry coming or the up has And you big that seen whether with

Alex Xu

for down, And you supplies of Billy. hotels. you new OK, mean coming sure. supplies When say

are We have and probably like just if that hotels opening the a COVID, franchisees we more had without now. right supplies, of hotels -- more more cautious lot

And lease think also the so down of hotels rent little -- the bit. coming the the is I rent, a

pressure create or the a bit more little pressure at hotel, will probably little bit a that -- on year the year last least, So before.

without also all But has that less. that for for I supplies new compared also means products our the hotels supplies standardized is the become hotels the that that is think, so definitely, -- And COVID. less the

think comfortable to less may to new hotels. more So build feel investors spending the I

branded terms the brand different competition of we -- in company. between have competition dynamics So

of to initial smaller overall, demand also brands period local of end. for or And believe that we certain impact favor we loss more they also company, support the fees down. major the with instance, fee in established for the the either waivers, fees terms company into in first a out in application lot dynamics But changed year, have an run ramp-up the the have opening during So more to observed that and the closed and resources.

near more not think the It's be So the mode. the the I the continue market probably favors believe. year conditions to situation, that through fully larger platform -- future, established that for that next I so recover will and

more to opportunities. And so take for take the there opportunity to will be us

Billy Ng

supply, different one but hotel GreenTree, not including the existing across when also see smaller too? and just see. other the Actually, asked nonbranded question. or the hotel? brand companies And overall I coming down, across follow-up I I mean you overall, inventory Do nation. of Obviously, maybe number hotels

Alex Xu

great a the a great question. That's Yes, that's way. indeed. observation, by Billy,

converted cities hotel that initial no for past properties and there the I of many before the expires, years, are in zoned or lot quite permit regulations tightened of city government longer a your industrial after warehouse, being they're mean, into extends this The permit. becomes So use. XX many, the bit. a were

those and going to offices to go the use. and normal it closed to definitely the So the may the have and that back industrial properties are are be hotels' permanently expire warehouses

And shrinkage new require in also the the the to suburban portion at hotel a used development city So be department. may the their having a on certain there's we and that of see end. that kind of area other developers development, the side, to

and we the So build with -- the can of And us strategic some our we with new a where real to level a also we trying China. partnership developers there. can brought have -- to partner in development hotels they are supply given when estate first

I major think, observation, So the that's And Billy. a started with, good very, it cities. very

trend I think continue. that will

industry is general. So the regulation which to a beneficial in really be will more strict, zoning hotel

Operator

from next comes question with Nate Our China go Deng Please Renaissance. ahead.

Nate Deng

is think in room breakdown I is question congratulations of and distribution? just like the segment the segment years Thanks the management. a good. to for pretty business leisure business the small have I my leisure in third recovering of normal result with regarding What XXXX? the strong taking does quarter. terms between customer segment and -- year's segment the compare Hi recovery it because current how question And

Alex Xu

numbers -- the specific numbers leisure? for have you Do

Selina Yang

leisure? For

Alex Xu

Leisure. Leisure.

Selina Yang

segment. Yes. travelers Leisure

Alex Xu

OK.

major suffered quarter a did previous didn't the like observe two have leisure lot a our because but quite mean, And subdued, under the the that a the quarters still consist impact function. three quarter in travelers -- of quarter two, where was and third previous cities, I bit. quarters, performance quite So more. The -- sharply, component we is in our we portfolio. one, a recovered the But

think the essential third, to travelers. worse worse still in the major than for be for is continue and the I -- tier the -- the or fourth business -- business the let's travelers cities see, cities

front I now number of so that -- have didn't -- us. we right And that's in don't

Nate Deng

Alex. Thanks

you has last up mentioned augmented caught So rate with already actually, year's level.

I recent leisure is segment this may assume So also into months. looking And travelers more because of recovering. business is the if in future, the the

way? expecting are actually rate occupancy this XXXX. think we So Can I versus better a

Alex Xu

We leisure think impacted. a side just know because be our And travel -- always the under from side leisure travels totally case the think do believe, to bit leisure not from worldwide, how the the will I we lagging our leading, our that little I -- is that unless is that behind. that market -- still the control continue

Operator

conference would like for question-and-answer session. Ms. to over Selina Yang turn any the I back our concludes remarks. This closing to

Selina Yang

participation interest of the thank your today's and call. In team, management we entire GreenTree you closing, on in behalf for

have or you visit any require contact you Thank us, please further If us. a plan all. to information

Alex Xu

And thank you.

Operator

Thank now you is today’s concluded. attending for conference The presentation.

You now may disconnect.

GreenTree Hospitality (GHG) 3 Dec 202020 Q3 Earnings call transcript