• The Company's operations and performance were severely impacted by the outbreak of COVID-19 that resulted in the lock-down of certain cities, business closures, and restrictions on travel imposed by governments around China.
• A total of 3,998 hotels with 292,716 hotel rooms were in operation as of March 31, 2020, compared to 3,957 hotels and 290,026 hotel rooms as of December 31, 2019.
• Total revenues decreased 33.1% year-over-year to RMB157.4 million (US$22.2 million)^[1].
• Adjusted EBITDA (non-GAAP) decreased 64.5% year-over-year to RMB47.6 million (US$6.7 million)^[1]
• Net income decreased 110.6% year-over-year to net loss of RMB14.1 million (US$2.0 million)^[1].
• Core net income (non-GAAP) decreased 69.9% year-over-year to RMB27.7 million (US$3.9 million)^[1].
• Net loss per ADS (basic and diluted) was RMB0.11 (US$0.02)^[1].
• Core net income per ADS (basic and diluted) (non-GAAP) of the Company was RMB0.27 (US$0.04)^[1].

SHANGHAI, June 5, 2020 /PRNewswire/ -- GreenTree Hospitality Group Ltd. (NYSE: GHG) ("GreenTree", the "Company", "we", "us" and "our"), a leading hospitality management group in China, today announced its unaudited financial results for the first quarter ended March 31, 2020.

First Quarter 2020 Operational Highlights

• As of March 31, 2020, the Company had 35 leased-and-operated ("L&O") hotels and 3,963 franchised-and-managed ("F&M") hotels in operation in 342 cities across China, compared to 30 L&O hotels and 2,799 F&M hotels in operation in 292 cities as of March 31, 2019. The geographic coverage increased by 17.1% year over year.
• During the quarter, the Company opened 62 hotels, a decrease of 40 comparing to 102 hotels in the first quarter of 2019. Among the hotels opened, 7 were in the mid-to-up-scale segment, 37 in the mid-scale segment, and 18 in the economy segment. Geographically speaking, 3 hotels were in Tier 1 cities^[2], 13 in Tier 2 cities and the remaining 46 in Tier 3 and smaller cities in China.
  The Company closed 21 hotels, 5 due to brand upgrade, and 8 due to their non-compliance with the Company's brand and operating standards. The remaining 8 were closed for property related issues. The Company added a net opening of 41 hotels to its portfolio.
• As of March 31, 2020, the Company had a pipeline of 1,025 hotels contracted for or under development, among which 56 hotels were in the luxury hotel segment, 200 in the mid-to-up-scale segment, 403 in the mid-scale segment, and 366 in the economy segment.
• The average daily room rate, or ADR, for all hotels in operation, was RMB150, a decrease of 7.8% year-over-year.
• The occupancy rate, or OCC for all hotels in operation was 47.3%, compared with 78.1% in the first quarter of 2019.
• The revenue per available room, or RevPAR, which is calculated by multiplying our hotels' ADR by its occupancy rate, was RMB71, representing a 44.1% year-over-year decrease.
• As of March 31, 2020, the Company's loyalty program had more than 46 million individual members and over 1,520,000 corporate members, compared to approximately 44 million and over 1,510,000 corporate members as of December 31, 2019. The Company had approximately 93.6% of room nights sold directly.

"The outbreak of COVID-19 severely impacted our business in the first quarter as a result of the lock-down of certain cities, business closures, and restrictions on travel imposed by governments around China." said Mr. Alex Xu, Chairman and Chief Executive Officer of GreenTree. "However, it also presented new opportunities that we were able to capture successfully thanks to the extreme dedication of our staff and franchisees who worked relentlessly to guarantee the safety and health of our guests, including medical staff, volunteers and travelers that needed to be quarantined. Our overall performance was better than the average performance across the hospitality industry in China. Our occupancy rate has rebounded and exceed 65% on average in the second half of May, from a low of 21.5% at the end of January.

The Board and our entire management team would like to extend our heartfelt thanks to all our franchisees, employees, guest and medical professionals, police, firefighters, and community leaders who have helped us weather this unprecedented crisis and resume our business rapidly.

As we have emerged from the crisis and as the Chinese economic recovery strengthens, we are well positioned to deliver another year of outstanding services to our guests, strong performance to our franchisees, and sustainable growth to our shareholders."

Total revenues were RMB157.4 million (US$22.2 million)^[1], representing a 33.1% year-over-year decrease. The decrease was primarily due to the impact of COVID-19, which resulted in declined RevPAR of L&O hotels and F&M hotels, temporary closure of hotels in certain regions according to local governments' requirements, delay in new hotel openings, as well as partial reduction and extension of sublease income. Additionally from February 1, 2020 to March 31, 2020, we reduced franchise management fees and central reservation system ("CRS") usage fees, by 50% to support our franchisees.

• Total revenues from leased-and-operated hotels were RMB33.8 million (US$4.8 million)^[1], representing a 34.8% year-over-year decrease. The decrease was primarily due to RevPAR decrease of 53.6%, temporary closure of certain hotels, and partial reduction and extension of sublease income, and partially offset by the revenue contributed by 6 L&O hotels of the Urban Hotel Group ("Urban").
• Total revenues from franchised-and-managed hotels for the first quarter of 2020 were RMB123.6 million (US$17.5 million)^[1], representing a 32.6% year-over-year decrease. Initial franchise fees increased by 2.4% year-over-year, mainly attributable to the gross opening of 62 hotels and contribution from historical amortization under ASC606, which was adopted since the first quarter of 2019. The 35.2% decrease from the first quarter of 2019 in recurring franchisee management fees and others was primarily due to the delay in new hotel openings, RevPAR decrease of 43.8%, as well as the abovementioned reduction by 50% of franchise management fees and CRS usage fees.

Hotel operating costs were RMB89.8 million (US$12.7 million)^[1], representing a 12.2% increase from the first quarter of 2019. The increase was mainly attributable to the higher depreciation and amortization, and the consolidation of operation costs of Argyle Hotel Management Group (Australia) Pty Ltd ("Argyle") and Urban. Excluding the impact from newly consolidated entities, hotel operating costs for this quarter decreased 3.9%, which was primarily due to a decrease in salaries of regional general managers, decreases in utilities, consumable, food and beverage, that resulted from the declined occupancy rate.

Selling and marketing expenses were RMB17.8 million (US$2.5 million)^[1], representing a 27.7% year-over-year decrease. The decrease was mainly attributable to decreases in cost for advertising, travelling and meals, because of measures taken to control the spread of COVID-19, including the lock-down of certain cities, business closures, and restrictions on travel. Excluding Argyle's and Urban's expenses, selling and marketing expenses in this quarter decreased 34.0%.

General and administrative expenses were RMB28.7 million (US$4.1 million)^[1], representing a 11.7% year-over-year increase. The increase was primarily attributable to increased legal and accounting consulting fees, and the consolidation of expenses from Argyle and Urban. Excluding Argyle and Urban, G&A expenses decreased by 15.5%, mainly due to the decrease in staff related costs and compensation expenses.

Gross profit was RMB67.6 million (US$9.6 million)^[1], representing a decrease of 56.4% from the first quarter of 2019. Gross margin was 43.0%, compared to 66.0% a year ago. The decrease was primarily due to decreased revenues as a result of COVID-19.

Income from operations totaled RMB37.2 million (US$5.3 million)^[1], representing a year-over-year decrease of 66.7%. The decrease was mainly due to decreased revenues resulting from lower RevPAR, temporary closure of certain hotels, and delays in new hotel openings. Operating margin, defined as income from operations as percentage of total revenues, was 23.6%, compared to 47.5% a year ago.

Adjusted EBITDA (non-GAAP) was RMB47.6 million (US$6.7 million)^[1], representing a year-over-year decrease of 64.5%. Adjusted EBITDA margin, defined as adjusted EBITDA (non-GAAP) as a percentage of total revenues, was 30.2%, compared to 56.9% in the first quarter of 2019.

Net loss was RMB14.1 million (US$2.0 million)^[1], representing a year-over-year decrease from net income of 110.6%. Net margin was -9.0%, compared to 56.9% a year ago. The year-over-year decrease was primarily due to revenue decrease and losses from investments in equity securities, partially offset by interest income.

Core net income (non-GAAP) was RMB27.7 million (US$3.9 million)^[1], representing a year-over-year decrease of 69.9%. The core net margin, defined as core net income (non-GAAP) as a percentage of total revenues, was 17.6%, compared to 39.2% one year ago.

Loss per ADS (basic and diluted) was RMB0.11 (US$0.02)^[1], down from earnings per ADS of RMB1.33 one year ago. Core net income per ADS (basic and diluted) (non-GAAP) was RMB0.27 (US$0.04) ^[1], down from RMB0.91 in the first quarter of 2019.

Cash flow. Operating cash outflow was RMB48.4 million (US$6.8 million)^[1] as a result of an operational net income loss because of COVID-19. Investing cash inflow was RMB155.0 million (US$21.9 million)^[1], which was primarily attributable to proceeds from short-term investments and partially offset by loan to franchisees. Financing cash inflow was RMB10.4 million (US$1.47 million)^[1].

Cash and cash equivalents, restricted cash, short-term investments, investments in equity securities and time deposit. As of March 31, 2020, the Company had a total balance of cash and cash equivalents, restricted cash, short term investments, investments in equity securities and time deposits of RMB1,613.9 million (US$227.9 million)^[1], as compared to RMB1,809.3 million as of December 31, 2019, primarily due to loans to franchisees, losses from investment in equity securities, and investment on upgrade decoration.

COVID-19 Update

Thanks to the Chinese Government's efforts to contain the spread of COVID-19, the outbreak has come under control in China. Since March, travel between cities has gradually returned to normal and a growing number of companies have resumed business.

Thanks to the effective policies and financial assistance from central and local governments and support measures from GreenTree, most franchisees have now resumed business operations. Occupancy rate has rebounded and exceed 65% on average in the second half of May, up substantially from the low of 21.5% on January 31, 2020.

Guidance

Due to the impact of COVID-19, the Company expects a decline in total revenues in the second quarter of 2020 of 18%-23% year-over-year, and a decline in total revenues of 10%-15% for the full year 2020, compared to 2019.

The guidance set forth above reflects the Company's current and preliminary views based on our recovery speed and may not be indicative of the final financial results for future interim periods and the full year.

Conference Call

GreenTree's management will hold an earnings conference call at 9:00 PM U.S. Eastern Time on June 4, 2020 (9:00 AM Beijing/Hong Kong Time on June 5, 2020).

Dial-in numbers for the live conference call are as follows:

Participants should ask to join the GreenTree call, please dial in approximately 10 minutes before the scheduled time of the call.

A telephone replay of the call will be available after the conclusion of the conference call until June 11, 2020.

Dial-in numbers for the replay are as follows:

Additionally, a live and archived webcast of this conference call will be available at .

Use of Non-GAAP Financial Measures

We believe that Adjusted EBITDA and core net income, as we present it, is a useful financial metric to assess our operating and financial performance before the impact of investing and financing transactions, income taxes and certain non-core and non-recurring items in our financial statements.

The presentation of Adjusted EBITDA and core net income should not be construed as an indication that our future results will be unaffected by other charges and gains we consider to be outside the ordinary course of our business.

The use of Adjusted EBITDA and core net income has certain limitations because it does not reflect all items of income and expenses that affect our operations. Items excluded from Adjusted EBITDA and core net income are significant components in understanding and assessing our operating and financial performance. Depreciation and amortization expense for various long-term assets, income tax and share-based compensation have been and will be incurred and are not reflected in the presentation of Adjusted EBITDA. Each of these items should also be considered in the overall evaluation of our results. Additionally, Adjusted EBITDA and core net income does not consider capital expenditures and other investing activities and should not be considered as a measure of our liquidity. We compensate for these limitations by providing the relevant disclosure of our depreciation and amortization, interest expense/income, gains/losses from investments in equity securities, income tax expenses, share-based compensation, share of loss in equity investees, government subsidies and other relevant items both in our reconciliations to the corresponding U.S. GAAP financial measures and in our consolidated financial statements, all of which should be considered when evaluating our performance.

The term Adjusted EBITDA and core net income is not defined under U.S. GAAP, and Adjusted EBITDA and core net income is not a measure of net income, operating income, operating performance or liquidity presented in accordance with U.S. GAAP. When assessing our operating and financial performance, you should not consider this data in isolation or as a substitute for our net income, operating income or any other operating performance measure that is calculated in accordance with U.S. GAAP. In addition, our Adjusted EBITDA and core net income may not be comparable to Adjusted EBITDA and core net income or similarly titled measures utilized by other companies since such other companies may not calculate Adjusted EBITDA and core net income in the same manner as we do.

Reconciliations of the Company's non-GAAP financial measures, including Adjusted EBITDA and core net income, to the consolidated statement of operations information are included at the end of this press release.

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 March 31, 2020, GreenTree had a total number of 3,998 hotels. In 2018, GreenTree ranked among the Top 12 worldwide in terms of number of hotels in "World's Largest Hotel Companies: HOTELS' 325", published by HOTELS magazine, and was as well the fourth largest hospitality company in China in 2018 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

Safe Harbor Statements

This press release contains 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.  In some cases, these forward-looking statements can be identified by words or phrases such as "may," "will," "expect," "anticipate," "aim," "estimate," "intend," "plan," "believe," "potential," "continue," "is/are likely to," "confident," "future," or other similar expressions. GreenTree may also make written or oral forward-looking statements in its reports filed with or furnished to the U.S. Securities and Exchange Commission, 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. Any statements that are not historical facts, including statements about or based on GreenTree's current beliefs, expectations, assumptions, estimates and projections about us and our industry, are forward-looking statements that 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: GreenTree'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 is included in the Company's filings with the U.S. Securities and Exchange Commission. All information provided, including the forward-looking statements made, in this press release are current as of the date of the press release. Except as required by law, GreenTree 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.

-Financial Tables and Operational Data Follow-

For more information, please contact:

GreenTree
Ms. Selina Yang
Phone: ext. 7999
E-mail:

Mr. Nicky Zheng
Phone: ext. 6708
E-mail:

Christensen

In Shanghai
Ms. Constance Zhang
Phone:
E-mail: 

In Hong Kong 
Ms. Karen Hui 
Phone:  
E-mail: 

In US 
Ms. Linda Bergkamp 
Phone:
Email: