GreenTree Hospitality Group Ltd. Q3 FY2021 earnings call

• Strategy: Further expand mid to upscale segment and Tier 3+ cities. Optimize management and operating system. - Operational metrics: Blended ADR increased 7.7% to RMB163, occupancy decreased 6.7%. Opened 182 hotels, closed 98 hotels. Individual members grew to 66 million, corporate members to 1.8 million. - Financials: Total revenues up 16.3%, income from operations down 45.6%, net income down 61.5%, non-GAAP adjusted EBITDA down 33.5%.

Total revenues increased 16.3% year-over-year to RMB310.4 million. Total revenue for FM hotels was RMB194 million, while total revenue from LO hotels increased 59.4% to RMB106.5 million. RevPAR decreased 1.4% to RMB118. Occupancy rates decreased 6.7% to 72.4%. The mid-scale segment remains the core with 62.9% of hotels, mid to upscale and luxury hotels account for 11.2% of the portfolio, and economy segment is stable at 25.9%. 67.7% of hotels are located in Tier 3 and lower cities.

• Full year 2021 total revenues expected to grow 25%-30% over 2020 levels and 7%-12% over 2019 levels. - Next year's hotel openings expected to be around 700-800.

• Impact of COVID-19 on operations. - Hotel closures due to noncompliance with brand and operating standards and property-related issues. - Potential further COVID resurgence affecting performance.

Q: Billy Ng asked about the pipeline of hotels and opening expectations for the next few quarters.

A: Alex Xu said next year's hotel openings are expected to be about 700 to 800.

Q: Dan Xu asked about hotel closures and LO hotels expansion.

A: Alex Xu discussed reasons for closures and plans for LO hotels expansion.

Q: Simon Cheung asked about margin trends and loss-making hotels.

A: Selina Yang said newly opened 24 hotels in 2021 brought a loss of RMB32 million, and about half of those 24 are still loss-making.