SHANGHAI, Dec. 20, 2021 /PRNewswire/ -- Dear
Shareholders:
Thank you for your continuing support and confidence in
GreenTree Hospitality Group's people and leadership.
2021: A significant rebound
The outbreak of the Covid-19 pandemic adversely affected the
hospitality industry world-wide in the first quarter of 2020. In
China, the damage was much less
than elsewhere, as a result of a quick policy response. The
pandemic was better contained, and life returned to normalcy more
quickly than in the rest of the world. Domestic travel resumed
gradually.
Given our national footprint, our experience mirrored that of
the country as a whole. Our occupancy rates declined in January and
February 2021, due to the
implementation of travel restrictions and the government's
encouragement to the public to "stay local" during Chunyun,
the Spring Festival travel season, when annually some three billion
people set out to see friends and family. According to official
figures from China's Ministry of
Transport, the number of trips fell by 40.8% during the Spring
Festival season in 2021, compared to 2020. Travel restrictions were
lifted as the vaccination roll-out eventually covered most of the
population, and our occupancy rates rebounded quickly with the
unleashing of pent-up demand for domestic travel.
In March, April and May 2021, we
saw substantial month-over-month increases in Revenue per Available
Room ("RevPAR"), especially during the Tomb Sweeping holiday and
Golden Week. Unfortunately, at the end of July there was a
resurgence of Covid-19 in Nanjing,
the capital of Jiangsu Province
that led to renewed travel restrictions, with an inevitable impact
on travel in the region and beyond. Starting in the first week of
August, RevPAR decreased, and although it recovered quickly in the
second week of September, there were new outbreaks in several
cities that again depressed RevPAR in the first week of November,
to about 81% of its level before the pandemic. As a result of
sporadic outbreaks and clusters of Covid-19, although they were
swiftly contained, recovery and business momentum slowed during the
second half of the year.
Although we outperformed our industry peers, Covid-19 did have
an impact on our financial performance. At the same time, you can
see the resilience of our company in our first half 2021 financial
metrics. Compared to first half 2020, we saw steep increases across
all major measures. Total revenue increased 57.5% to RMB588.3 million; income from operations
increased 50.9% to RMB150.7 million;
net income increased 83.8% to RMB146.3
million; non-GAAP adjusted EBITDA increased 53.4% to
RMB175.2 million, and earnings per
share increased by 63.3% to RMB1.47.
We achieved this comeback by leveraging our strategic advantages
and doing everything in our power to support our franchisees and
front-line employees. This included direct help from our
operations, IT and engineering departments; fee waivers; loans for
hotel renovations and refurbishing; as well as professional
training.
We learned many lessons in 2020 and 2021 from dealing with the
unpredictable effects of the Covid-19 pandemic. We took advantage
of market opportunities to accelerate our expansion into mid-range
and high-end markets in key areas of national development,
including the Chengdu,
Chongqing and Wuhan metropolitan areas as well as Guangxi
Zhuang Autonomous Region and Fujian
Province. In the first half, we brought 23 new Leased and
Operated ("L&O") hotels into our fold, bringing the total
number of L&O hotels to 62 by the end of June, out of a total
of 4,542 hotels. All the new L&O hotels in the GreenTree
network are situated in popular transportation hubs, central
business districts, or government centers. We believe that they
will serve as anchor hotels and attract new franchisees to the
network.
After our initial public offering and listing on the New York
Stock Exchange in March 2018, we made
acquisitions to fuel growth and use our capital more efficiently.
Some of these brands have not performed as well as we had expected.
But I can share with you some good news from developments in the
current year. Some of our regional acquisitions made in 2021 are
becoming leaders in their local markets, including GreenTree Carrey
Hotel Management Group in Hubei
and GreenTree Manlv Group in Jiangxi. Also, by the end of the first half of
2021, we had launched 11 GreenTree e-sports hotels, empowering our
franchisees to capitalize on growing customer demand, with the
added benefit of higher RevPAR.
Strategic focus for 2022 and beyond
Looking to the future, the Covid-19 pandemic has helped us
demonstrate our value to our franchisees. We will continue to
invest in renovating existing properties and identify new and
creative ways to improve direct sales and membership support. In
the next phase, we look to expand scale based on our existing
brands and increase brand value through more efficient design and
engineering. We are focusing our efforts on high-growth regions
such as the Yangtze River Delta and Pearl River Delta, as well as
the major metropolitan areas of Chengdu, Chongqing and Fuzhou.
At the corporate level, we plan to increase investment in
marketing and diversify our sales channels. We also intend to
strengthen our supply chain so that we can make resources available
to ensure that the up-front, one-time investments made by our
franchisees are up to the highest market standard at the lowest
cost.
Information technology is another key area of focus at the
corporate level. We were among the first of our hotel group peers
to migrate all our systems to the cloud. Artificial Intelligence
("AI") technology is part of the wave of the future for hotel
operations. By providing self-check-in and check-out as well as
room service robots, we will save labor, improve efficiency, and
increase customer satisfaction. This will be especially important
given the decline in China's
working age population.
We will also explore markets for "wellness" and "rural
revitalization." These have become new areas of policy emphasis
with China's rapidly aging
population. As with some of our neighboring countries in
Asia, growing numbers of elderly
will require substantial investments in senior care and community
care. We want to grow our hotel portfolio through hotel design and
hotel management services to be prepared to facilitate the growing
senior travel market. This will raise the standard of living in
rural regions, and have a positive impact on and contribute to
communities by creating employment opportunities.
There are many uncertainties ahead that may affect the economy
and the travel market. But we are confident that we can both
weather whatever may come, and build value for you, our
shareholders, as well as our employees and the travelers whom we
serve to the best of our abilities.
Sincerely,
Alex S. Xu
Chairman and Chief Executive Officer
GreenTree Hospitality Group Ltd.
About GreenTree Hospitality Group Ltd.
GreenTree Hospitality Group Ltd. ("GreenTree" or the "Company")
(NYSE: GHG) is a leading hospitality management group in
China. As of June 30, 2021, GreenTree had a total number of
4,542 hotels. In 2020, HOTELS magazine ranked GreenTree Top 12
Ranking among 225 largest global hotel groups in terms of number of
hotels in its annual HOTELS' 225. GreenTree was also the fourth
largest hospitality company in China in 2020 based on the statistics issued
by the China Hospitality Association.
GreenTree has built a strong suite of brands including its
flagship "GreenTree Inns" brand as a result of its long-standing
dedication to the hospitality industry in China and consistent quality of its services,
signature hotel designs, broad geographic coverage and convenient
locations. GreenTree has further expanded its brand portfolio into
mid-to-up-scale and luxury segments through a series of strategic
investments. By offering diverse brands, through its strong
membership base, expansive booking network, superior system
management with moderate charges, and fully supported by its
operating departments including Decoration, Engineering,
Purchasing, Operation, IT and Finance, GreenTree aims to keep
closer relationships with all of its clients and partners by
providing a brand portfolio that features comfort, style and
value.
For more information on GreenTree, please visit
http://ir.998.com.
For more information, please contact:
GreenTree
Ms. Selina Yang
Phone: +86-21-3617-4886 ext. 7999
E-mail: ir@998.com
Mr. Nicky Zheng
Phone: +86-21-3617-4886 ext. 6708
E-mail: ir@998.com
Christensen
In Shanghai
Ms. Constance Zhang
Phone: +86-138-1645-1798
E-mail: czhang@christensenIR.com
In Hong Kong
Ms. Karen Hui
Phone: +852-9266-4140
E-mail: khui@christensenIR.com
In the U.S.
Ms. Linda Bergkamp
Phone: +1-480-614-3004
Email: lbergkamp@ChristensenIR.com
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SOURCE GreenTree Hospitality Group Ltd.