GreenTree Hospitality Group (GHG) Q2 2024 earnings summary

Executive summary

• Q2 2024 total revenues declined 20.5% year-over-year to RMB 329.7 million, with hotel revenues down 14.8% and restaurant revenues down 37.8% due to lower RevPAR, ADS, and closures of unprofitable stores.

• Net income dropped 38.9% year-over-year to RMB 62.3 million (margin 18.9%), while core net income (non-GAAP) rose 2.4% to RMB 70.2 million.

• Adjusted EBITDA fell 34.5% year-over-year to RMB 83.1 million (margin 25.2%).

• Strategic focus included upgrading hotels, expanding into mid-to-upscale segments, and increasing presence in Tier 3 and lower cities.

• Restaurant business returned to profitability after strategic repositioning toward franchised street stores.

Financial highlights

• Hotel revenues were RMB 264.6 million, down 14.8% year-over-year, mainly due to a 10.8% drop in RevPAR and closure of some LO hotels.

• Restaurant revenue fell to RMB 65.3 million, reflecting business repositioning and closure of underperforming stores.

• Income from operations was RMB 84.4 million (margin 25.6%), net income RMB 62.3 million (margin 18.9%), and adjusted EBITDA RMB 83.1 million (margin 25.2%), all down significantly year-over-year.

• Group net income per ADS decreased 39.9% to RMB 0.61, while core net income per ADS (non-GAAP) rose 2.4% to RMB 0.69.

• Cash and equivalents rose to RMB 1,737.2 million as of June 30, 2024, up from RMB 1,517.1 million at March 31, 2024, due to property disposal and loan repayments.

Outlook and guidance

• Full-year 2024 hotel business revenue is expected to remain flat versus 2023, reflecting RevPAR declines, new hotel openings, and ongoing remodeling.

• Revenue guidance for the hotel business adjusted to -2% to +3% year-over-year, reflecting closures of certain leased-and-owned hotels.

• Plan to open 480–500 new hotels in 2024, with a disciplined focus on quality and franchisee profitability.

• Third quarter RevPAR is anticipated to decline at a similar rate as Q2, with some recovery in August.

• Dividend policy resumed with a $0.10 per share/ADS cash dividend, payable to holders as of September 30, 2024.