GreenTree Hospitality Group, a leading franchised hotel operator in China, announced its unaudited financial results for the third quarter ended September 30, 2018.
Highlights
A total of 2,558 hotels with 209,463 hotel rooms were in operation as of September 30, 2018, as compared to 2,434 hotels and 201,275 hotel rooms as of June 30, 2018.
Total revenues increased 21.6% year-over-year to RMB256.8 million (USD37.4 million) for the third quarter of 2018. Total revenues increased 21.7% year-over-year to RMB695.1 million (USD101.2 million) for the first nine months of 2018.
Adjusted EBITDA (non-GAAP) increased 24.2% year-over-year to RMB156.5 million (USD22.8 million)for the third quarter of 2018. Adjusted EBITDA (non-GAAP) increased 24.6% year-over-year to RMB409.2 million (USD59.6 million) for the first nine months of 2018.
Net income increased 36.3% year-over-year to RMB152.4 million (USD22.2 million) for the third quarter of 2018. Net income increased 15.2% year-over-year to RMB339.8 million (USD49.5 million) for the first nine months of 2018.
Core net income (non-GAAP) increased 30.3% year-over-year to RMB125.3 million (USD 18.2 million) for the third quarter of 2018. Core net income (non-GAAP) increased 27.6% year-over-year to RMB320.1 million (USD46.6 million) for the first nine months of 2018.
As of September 30, 2018, the Company had a strong pipeline with a total of 504 hotels contracted for or under development. For the third quarter of 2018, the Company opened 145 F&M hotels and one L&O hotel, compared to 109 F&M hotels for the third quarter of 2017.
Operational Highlights
As of September 30, 2018, GreenTree had 30 leased-and-operated ("L&O") hotels and 2,528 franchised-and-managed ("F&M") hotels in operation in 278 cities across China, compared to 26 L&O hotels and 2,408 F&M hotels in operation in 267 cities as of June 30, 2018.
The Company opened 145 F&M hotels and one L&O hotel, 73 in the mid-scale segment, 21 in the business to mid-to-up-scale segment and 52 in the economy segment. Of the hotels opened, 10 hotels were in Tier 1 cities, 28 in Tier 2 cities and the remaining 108 hotels in other cities in China, while the Company closed a total of 22 F&M hotels in the quarter.
The average daily room rate, or ADR, for all hotels in operation, was RMB167 in the third quarter of 2018, an increase of 4.4% year-over-year.
The occupancy rate for all hotels in operation was 87.2% in the third quarter of 2018, a decrease of 0.2% year-over-year.
The revenue per available room, or RevPAR, which is calculated by multiplying our hotels' ADR by its occupancy rate, was RMB146 in the third quarter of 2018, representing a 4.3% year-over-year increase.
As of September 30, 2018, the Company had approximately 26 million individual loyal members (of which approximately 20 million are paid members) and over 1,020,000 corporate members, compared to approximately 24 million (of which approximately 19 million are paid members) and over 930,000 respectively, as of June 30, 2018.
The Company sold approximately 94.9% of its room nights through its direct sales channels, including its individual loyal members and corporate members, while online travel agencies, or OTAs, only contributed approximately 5.1%.
Revenue
Total revenues for the third quarter of 2018 were RMB256.8 million (USD37.4 million), representing a 21.6% increase over third quarter 2017. Total revenues for the first nine months of 2018 were RMB695.1 million (USD101.2 million), representing a 21.7% increase over first nine months of 2017.
Total revenues from leased-and-operated hotels for the third quarter of 2018 were RMB57.4 million (USD8.4 million, representing a 19.7% year-over-year increase. Total revenues from leased-and-operated hotels for the first nine months of 2018 were RMB151.3 million (USD22.0 million), representing a 10.6% year-over-year increase.
Total revenues from franchised-and-managed hotels for the third quarter of 2018 were RMB179.7 million (USD26.2 million), representing a 20.3% year-over-year increase. Total revenues from franchised-and-managed hotels for the first nine months of 2018 were RMB489.1 million (USD71.2 million), representing a 23.5% year-over-year increase.
Gross profit for the third quarter of 2018 was RMB180.7 million (USD26.3 million), representing a year-over-year increase of 19.5%. Gross profit for the first nine months of 2018 was RMB488.3 million (USD71.1 million), representing a year-over-year increase of 23.1%.
Net income for the third quarter of 2018 was RMB152.4 million (USD22.2 million), representing a year-over-year increase of 36.3%. Net income for the first nine months of 2018 was RMB339.8 million (USD49.5 million), a year-over-year increase of 15.2%.
Guidance
For the full year 2018, the Company reaffirms total revenue growth guidance of 20-25% from 2017.
