GreenTree Hospitality Group (GHG) Q3 2024 earnings summary

Executive summary

• Q3 2024 saw significant declines in revenue and profitability across both hotel and restaurant segments, with total revenues down 22.5% year-over-year to RMB 357.0 million and net income down 44.4% to RMB 65.2 million, as travel patterns normalized and economic recovery continued.

• Restaurant business net income remained positive for a second consecutive quarter after a strategic shift to franchised street stores and stabilized store count.

• Strategic focus included expansion into mid-to-upscale hotel segments and increased penetration in Tier 2 and lower-tier cities.

• Membership base continued to grow, with corporate members up 6.2% and individual members up 13.6% year-over-year.

• The company opened 109 hotels in Q3 and stabilized its restaurant count at 182 after strategic closures.

Financial highlights

• Total revenues were RMB 357.0 million, down 22.5% year-over-year; hotel revenues were RMB 286.9 million, down 15.4%.

• Net income was RMB 65.2 million, a 44.4% decrease year-over-year, with a margin of 18.3%.

• Adjusted EBITDA (non-GAAP) was RMB 122.5 million, down 32.1%, with a margin of 34.3%.

• Group net income per ADS decreased by 44% to RMB 0.65; core net income per ADS (non-GAAP) decreased by 26.1% to RMB 0.92.

• Cash and equivalents, including restricted cash and investments, totaled RMB 1,883.9 million as of September 30, 2024, up from RMB 1,737.2 million at June 30, 2024.

Outlook and guidance

• Full-year 2024 hotel revenue is expected to decrease by approximately 8% compared to 2023, mainly due to lower-than-expected Q3 travel and strategic hotel closures.

• Management expects Q4 2024 to perform better than Q3, with optimism for improved performance in 2025 as new hotels come online.