23
GreenTree Hospitality Group Ltd. 2019 Q1 Results Presentation May 24, 2019 | Comfort Quality Value Convenience Notes: * currently being registered as trademark in PRC
GreenTree Hospitality Group Ltd.
2019 Q1 Results Presentation May 24, 2019|
Comfort
Quality
Value
Convenience
Notes: * currently being registered as trademark in PRC
2
This presentation does not constitute or form part of any offer for sale or subscription of or solicitation or invitation of any offer to buy or subscribe for any securities. Neither this
presentation nor any part of it shall form the basis of or be relied upon in connection with any contract or commitment whatsoever. Specifically, this presentation does not constitute a
“prospectus” within the meaning of the Securities Act of 1933, as amended.
Our historical results are not necessarily indicative of results to be expected for any future period. The financial data contained in this presentation for the periods and as of the dates
indicated are qualified by reference to and should be read in conjunction with our financial statements and related notes and “Management’s Discussion and Analysis of Financial Condition
and Results of Operations” included in our public filings with the U.S. Securities and Exchange Commission (the “SEC”).
This presentation includes certain non-GAAP financial measures, which are different from financial measures calculated in accordance with U.S. GAAP. Such non-GAAP financial
measures should be considered in addition to and not as a substitute for or superior to financial measures calculated in accordance with U.S. GAAP. In addition, the definitions of Adjusted
EBITDA and Margin and Core Net Income and Margin in this presentation may be different from the definition of such term used by other companies, and therefore comparability may be
limited. A quantitative reconciliation of non-GAAP financial measures to the most directly comparable U.S. GAAP financial measures has been included in this presentation.
Except for historical information, all of the statements, expectations, and assumptions contained in this presentation constitute forward-looking statements made under the “safe harbor”
provisions of Section 21E of the Securities Exchange Act of 1934, as amended, and the U.S. Private Securities Litigation Reform Act of 1995. These statements include descriptions
regarding the intent, belief or current expectations of GreenTree Hospitality Group Ltd. (the “Company”), its officers or its management with respect to the consolidated results of operations
and financial condition of the Company. The Company may also make written or oral forward-looking statements in its reports filed with or furnished to the SEC, in its annual report to
shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. These statements can be recognized by the
use of words or phrases such as “may,” “will,” “expect,” “anticipate,” “aim,” “estimate,” “intend,” “plan,” “believe,” “potential,” “continue,” “is/are likely to,” “confident,” “future,” words or
expressions of similar meaning. Such forward-looking statements are not guarantees of future performance and involve known and unknown factors, risks and uncertainties that may cause
our actual results, performance or achievements to be materially different from those expressed or implied by the forward-looking statements. Such factors and risks include, but not limited
to the following: the Company’s goals and growth strategies; its future business development, financial condition and results of operations; trends in the hospitality industry in China and
globally; competition in our industry; fluctuations in general economic and business conditions in China and other regions where we operate; the regulatory environment in which we and
our franchisees operate; and assumptions underlying or related to any of the foregoing. You should not place undue reliance on these forward-looking statements. Further information
regarding these and other risks, uncertainties or factors are included in the Company’s filings with the SEC, copies of which are available for free in the Investor Relations section of the
Company’s website at http://ir.998.com or upon request from the Company’s Investor Relations Department. All information provided, including the forward-looking statements made, in this
presentation are current as of the date hereof. Neither the delivery of this presentation nor any further discussions of the Company after the date hereof shall, under any circumstances,
imply that there has been no change in the affairs of the Company since such date. Except as required by law, the Company undertakes no obligation to update any such information or
forward-looking statements to reflect events or circumstances after the date on which the information is provided or statements are made, or to reflect the occurrence of unanticipated
events.
Disclaimer
3
Agenda
Performance Review 4
Operational and Financial Highlights 12
1
2
Appendix: Hotel Performance 203
4
1. Performance Review
V3.0
5
Q1 2019 Performance Overview
2,829 Hotels
225,757 Rooms
33+ million Individual Members
+20.0% YoY to RMB134M (2)
98.9% F&M Hotels(1)
ADR: +3.9% YoY to RMB162
-1.1% YoY to 78.1%
+2.5% YoY to RMB127
78.0% Revenue from F&M Hotels
As of March 31, 2019
Hotels Contracted for or
under Development
+20.1% YoY to RMB235M
Notes: 1. Franchised-and-managed hotels2. Adjusted EBITDA (non-GAAP) is calculated as net income plus other operating expenses, income tax expense, share of loss in equity investees (net of tax), interest expense, share-based compensation, depreciation and amortization,
losses on investments in equity securities and other expense net, but excludes other operating income, gains on investments in equity securities, share of gain in equity investees (net of tax) and other income net.
+58.8% YoY to RMB134M
1,320,000+ Corporate Members
+17.5% YoY to RMB155M
Basic and diluted
net income per
ADS:RMB1.33 (US$0.20)
102 New Hotel Openings for Q1
Occupancy:
RevPAR:
Revenue:
Gross Profit:
Adjusted EBITDA
（non-GAAP） :
Net Income:
481
6
2019Q1 Important Events
Wumian and GreenTree apartment
Membership program integration
Acquired 8.27% of shares in Gingko
Education Group.
Entered into an agreement to acquire a
60% equity stake in Argyle Hotel Group. It
operates and manages 103 hotels, with
16,223 hotel rooms(1).
Acquired 4.95% of shares in New
century. It operates and manages 150
hotels, with 34,286 hotel rooms(2) .
2019 Q1
Entered into an
agreement to acquire a
70% equity stake in
Urban Hotel Group,
which has 600+ hotels(3).
2019 Q2
Note1. The hotel number and hotel rooms number are as of end of 2018. 2. From the 2018 annual report of Zhejiang New Century Hotel Management Co., Ltd. 3. The number of hotels within the scope of this cooperative investment transaction is more than 600.
7
Continued Strategic Focus on the F&M Model
97.6
98.4
98.9 98.9 98.9
95
96
97
98
99
100
2015 2016 2017 2018 19Q1
71 75 77 78
29 25 23 22
0
20
40
60
80
100
2016 2017 2018 19Q1
F&M Hotels L&O Hotels
98.9% of Our Hotel Portfolio are F&M Hotels F&M Hotels Contribute ~78% of Our Revenue
% of F&M hotels Revenue, %
8
29
33
15
20
25
30
35
Dec 31, 2018 Mar 31, 2019
Loyal Membership Growth
1,270
1,320
500
750
1,000
1,250
1,500
Dec 31, 2018 Mar 31, 2019
MM (Million members)
Individual Membership Growth Increase in Corporate Members
‘000
94.2% of rooms nights sold through direct sales
9
RevPAR Growth by Quarters
115124
131123
119129
139
129
124135
145
132
127
92
111117
108 100
131
145
135
117
142
152
137
119
50
100
150
16Q1 16Q2 16Q3 16Q4 17Q1 17Q2 17Q3 17Q4 18Q1 18Q2 18Q3 18Q4 19Q1
F&M L&O
Quarterly RevPAR
RMB
117 119
50
100
150
18Q1 19Q1
124 127
50
100
150
18Q1 19Q1
RevPAR YoY Growth for F&M HotelsRevPAR YoY Growth for L&O Hotels
RMB RMB
F&M Quarterly Growth Trend
L&O Quarterly Growth Trend
10
430
481
0
125
250
375
500
Dec. 31, 2018 Mar. 31, 2019
Growing Hotel Pipeline
Increasing Hotel Pipeline Growth in business to Mid-to-up-scale and Economy Segments contributes to a More Diversified Portfolio
GreenTree Eastern, Gme, Gya
& VX
Vatica and Shell
2016 2017 2018 2019Q1
Business to
Mid-to-up-
scale
1.5% 2.2% 3.9% 4.3%
Mid-scale 90.4% 86.6% 79.2% 77.7%
Economy 8.1% 11.2% 16.9% 18.0%
% of Total Hotels
Number of hotels contracted for or under development
Shell VaticaGreenTree
EasternVX
87 91
13 9
141
5108
123
40
55
70
85
100
115
130
2018/12/31 2019/3/31
11
348387
117
121
465 508
0
100
200
300
400
500
2018/12/31 2019/3/31
GME GYA
11
Further Development of Business to Mid-to-up-scale Brands
● Mid-to-up-scale business hotels designed
to be a calm and unique haven for
business travelers
● Mid-to-up-scale smart, fashionable and
trendy hotels highlighting individuality● Mid-to-up-scale leisure hotels that combine
youthful trends with artistic interiors to
create a “Very Relaxing” space for travelers
● Price: RMB 280–350
● Grand opening of 4 in Q1 2019
● Pipeline:27 ● Pipeline:28
● Price: RMB 280–350
● Grand opening of 3 in Q1 2019
● Pipeline:22
● Price: RMB 280–350
● Grand opening of 2 in Q1 2019
12
2. Operational and Financial Highlights
13
1,932
2,263
2,728
2,328
2,799
32
26
29
26
30
1,964
2,289
2,757
2,354
2,829
0
500
1,000
1,500
2,000
2,500
3,000
2016 2017 2018 18Q1 19Q1
Hotel Openings / ClosuresIncreasing Number of Hotels in Operation
Growth with Low Closure Rate
% F&M
Hotels98.4% 98.9% 98.9% 98.9%
F&M Hotels L&O Hotels
44 48 80 102
357 377
474
(88) (100) (86) (30)(100)
0
100
200
300
400
500
600
2016 2017 2018 19Q1
Opened in
Q1 2017
Net
Increase in
Total Hotels313
Hotels Opened Hotels Closed
Number of hotels
Breakdown of New Hotel Openings in Q1 2019
Mid-scale, 44
43.1%
Economy, 44
43.1%
Business to Mid-to-
up-scale, 14
13.8%
Tier 1 Cities, 6
5.9%
Tier 2 Cities, 20
19.6%
Other Cities, 76
74.5%
By Brand Segments By City Tier(1)
Note1. Tier 1 cities refer to Beijing, Shanghai, Shenzhen and Guangzhou; Tier 2 cities refer to the 32 major cities, other than Tier 1 cities, including provincial capitals, administrative capitals of autonomous regions, direct-controlled
municipalities and other major cities designated as municipalities with independent planning by the State Council
Opened in
Q1 2016
325 468 72
98.9%
Opened in
Q1 2018
401425
554
14
Improving ADR and Stable Occupancy Lead to Sustained RevPAR
Growth
ADR
RMB
Occupancy
%
RevPAR
RMB
149 152 155 162 159
168
193 200
0
50
100
150
200
16Q1 17Q1 18Q1 19Q1
F&M Hotels L&O Hotels
% ADR
YoY Growth
2.0% 3.9%
14.9% 3.6%
77 7880
78
58 5961 60
0
20
40
60
80
100
16Q1 17Q1 18Q1 19Q1
F&M Hotels L&O Hotels
% Occupancy
YoY Growth
115 119
124 127
92
100
117 119
0
30
60
90
120
150
16Q1 17Q1 18Q1 19Q1
F&M Hotels L&O Hotels
% RevPAR
YoY Growth
0.9% (1.1%)
1.6% (0.9%)
3.5% 4.2%
8.7% 17.0%
The Company has achieved a steady 2.5% RevPAR YoY growth.
2.0%
5.7%
1.5%
1.1%
2.5%
2.1%
15
Revenue Growth
Total Revenue
RMB (M)
196
235
0
50
100
150
200
250
300
18Q1 19Q1
Revenue from F&M Hotels
RMB (M)
150
183
0
50
100
150
200
18Q1 19Q1
Revenue from L&O Hotels
RMB (M)
46 52
0
25
50
75
100
18Q1 19Q1
16
Operating Cost and Expenses
Total Operating Costs and Expenses(1)
RMB (M) % of Revenue
95
130 48.4%
55.4%
0
50
100
150
200
18Q1 19Q1
Hotel Operating Costs
RMB (M) % of Revenue
64
80
32.5%
34.0%
0
40
80
18Q1 19Q1
35%
25%
45%
55%
65%
Note1. Total operating costs and expenses consist of hotel operating costs, selling and marketing expenses, general and administrative expenses and other operating expenses.
35%
0%
Selling and Marketing Expenses
RMB (M) % of Revenue
10
25
5.3%
10.5%
0
10
20
30
18Q1 19Q1
15%
0%
General and Administrative Expenses
RMB (M) % of Revenue
20
26
10.4%
10.9%
0
10
20
30
18Q1 19Q1
15%
0%
17
132
155
67.5%66.0%
0%
15%
30%
45%
60%
75%
0
50
100
150
200
250
18Q1 19Q1
Gross Profit % Margin
112
134
57.0% 56.9%
10%
30%
50%
70%
0
50
100
150
200
250
18Q1 19Q1
EBITDA % Margin
RMB (M)
Gross Profit and Margin
% RMB (M)
Adjusted EBITDA and Margin(1)
%
Profitability
Notes: 1. Adjusted EBITDA (non-GAAP) is calculated as net income plus other operating expenses, income tax expense, share of loss in equity investees (net of tax), interest expense, share-based compensation, depreciation and amortization,
losses on investments in equity securities and other expense net, but excludes other operating income, gains on investments in equity securities, share of gain in equity investees (net of tax) and other income net.2. Core net income is calculated as net income plus share-based compensation, losses on investments in equity securities (net of 25% tax), other expense (net of 25% tax), income tax expenses related to dividend distribution outside
PRC and Losses from joint venture closure, but excludes government subsidies (net of 25% tax), gains on investments in equity securities (net of 25% tax) and other income (net of 25% tax).
Core Net Income/Net Income and Margin(2)
RMB (M)
78
92 84
134
0
50
100
150
200
250
18Q1 19Q1
39.9%
39.2%
43.1%
56.9%
Core Net Income Net Income
%
30%
10%
60%
Core Net Income Margin Net Income Margin
40%
50%
20%
18
Cash and Cash Equivalents
RMB (M)
2,261
122 (208)
2,181
6
0
500
1,000
1,500
2,000
2,500
Cash & Cash Equivalents, RestrictedCash, Short-Term Investments,
Investments in equity securities andTime deposit (Dec 31, 2018)
Cash from Operating Activities Distribution to the Shareholders Others Cash & Cash Equivalents, RestrictedCash, Short-Term Investments,
Investments in equity securities andTime deposit (Mar 31, 2019)
(1)
(2) (2)
(1)
Note1. Investments in equity securities include securities and investment in Gingko and New Century which is recorded in Long-term investments account. 2. Time deposits are the time deposit certificates, which last over three months.3. Others include effect of exchange rate changes on cash and cash equivalents
(3)
Total cash and cash equivalents, restricted cash, short-term investments, investments in equity securities and time deposit of
RMB2,181M as of March 31, 2019
19
Guidance
• Expect total revenue for the full year of 2019 to grow 20-25% from 2018
Thank you!
Q&A
20
Appendix: Hotel Performance
21
Our Brands Price (RMB)
Year
Founded
Hotels
in Operation
Hotel Rooms
in Operation
300–600 2012 91 9,732
280–350 2017 32 2,924
270-400 2018 1 62
150–400 2008 294 23,090
180–400 2004 1,901 164,181
4000/month 2018 2 129
130–300 2013 121 8,923
99–260 2016 387 16,716
Total 2,829 225,757
Our Hotel Brands
Notes: data as of March 31, 20191. Wumian Hotel’s English trademark is currently being registered.2. GreenTree Alliance Hotel brand changed to GT Alliance Hotel in 20183. * Currently being registered as trademark in PRC
(1)
Business to
Mid-to-up-scale
Mid-Scale
(Shell Hotel)
(2)
Economy
(2)
22
Hotel Breakdown by Segment
Number of Hotels in Operation Number of Hotel Rooms in Operation
2018Q1 2019Q1 2018Q1 2019Q1
Economy hotels 287 508 15,810 25,639
Vatica 111 121 8,280 8,923
Shell 176 387 7,530 16,716
Mid-scale 2,012 2,198 173,456 187,462
GreenTree Inn 1,755 1,901 152,821 164,181
GT Alliance 257 294 20,635 23,090
无眠酒店 （Wumian Hotel） - 1 - 62
GreenTree Apartment - 2 - 129
Business to Mid-to-up-scale 55 123 6,286 12,656
GreenTree Eastern 55 91 6,286 9,732
VX - 13 - 1,142
Gme - 14 - 1,337
Gya - 5 - 445
Total 2,354 2,829 195,552 225,757
(1)
Notes:1. Wumian Hotel’s English trademark is currently being registered.
23
Hotel Operational Data
2018Q1 2019Q1
Total hotels in operation 2,354 2,829
Leased and owned hotels 26 30
Franchised hotels 2,328 2,799
Total hotel rooms in operation 195,552 225,757
Leased and owned hotels 3,301 3,790
Franchised hotels 192,251 221,967
Number of cities 266 292
2018Q1 2019Q1
Occupancy rate (as a percentage)
Leased-and-owned hotels 60.5% 59.6%
Franchised hotels 79.6% 78.4%
Blended 79.2% 78.1%
Average daily rate (in RMB)
Leased-and-owned hotels 193 200
Franchised hotels 155 162
Blended 156 162
RevPAR (in RMB)
Leased-and-owned hotels 117 119
Franchised hotels 124 127
Blended 124 127
