GreenTree(GHG) - 2021 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total revenues increased by 16.3% year-over-year to RMB310.4 million [18] - Income from operations decreased by 45.6% to RMB54.9 million, with a margin of 17.7% [20] - Net income decreased by 61.5% to RMB33 million, with a margin of 10.6% [20] - Non-GAAP adjusted EBITDA decreased by 33.5% to RMB73.7 million, with a margin of 23.7% [20] - Earnings per share decreased by 59.3% to RMB0.33 [21] Business Line Data and Key Metrics Changes - The company opened 182 new hotels in Q3 2021, less than planned due to COVID-19 impacts [14] - At the end of Q3 2021, the company had 4,626 hotels in operation, a 10.3% increase year-over-year [15] - The mid-scale segment accounted for 62.9% of all hotels, while mid to upscale and luxury hotels accounted for 11.2% of the total portfolio [15] Market Data and Key Metrics Changes - RevPAR decreased by 1.4% to RMB118 compared to Q3 2020 [8] - Occupancy rates recovered to 84.3% of their 2019 level, outperforming the industry average [9] - RevPAR for leased and operating (LO) hotels increased to RMB146, while RevPAR for franchisee-managed (FM) hotels decreased to RMB117 [17] Company Strategy and Development Direction - The company is expanding its hotel network in the mid to upscale segment and into Tier 3 and lower cities [11] - 68.7% of new hotels in the current pipeline are located in Tier 3 and lower cities [12] - The company aims to optimize its management and operating systems to improve hotel quality and performance [12] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the current pandemic wave due to their resilient business model and experienced team [12] - The company expects total revenues for the full year of 2021 to grow by 25% to 30% over 2020 levels and by 7% to 12% over 2019 levels [22] Other Important Information - Total hotel operating costs increased by 48.3% year-over-year to RMB258.8 million, primarily due to the opening of new LO hotels [18] - The company closed 98 hotels in Q3 2021, with 59 closures due to noncompliance with brand standards [16] Q&A Session Summary Question: Hotel pipeline and opening expectations - Management expects to open about 700 to 800 hotels next year, despite a slower pace of openings due to COVID-19 impacts and higher requirements for hotel openings [24][25] Question: Future hotel closures - Management indicated that the closure rate will likely not exceed the levels experienced in 2021, as they aim to stabilize RevPAR [27][30] Question: Expansion of LO hotels - Management does not plan to significantly increase the number of LO hotels unless opportunities arise in areas with weak presence [31][32] Question: Margin trends and loss-making hotels - Newly opened hotels contributed a loss of RMB32 million, impacting margins; excluding these, EBITDA margin would increase to 38.5% [36]