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spk05: Good day and thank you for standing by. Welcome to the Huazu Group Limited T1 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, Mr. Jason Chen. Thank you. Please go ahead.
spk02: Thank you, Lynden. Good morning and good evening, everyone. Thanks for joining us today. Welcome to Huazhou Group's 2021 First Quarter Earnings Conference Call. Joining us today is our founder and CEO, Mr. Jiqi, our president, Mr. Jinghui, our chief digital officer, Ms. Liu Xingxin, our CFO, Ms. Cheng Hui, our Deputy CFO, Mr. Li Dong, and Ms. Yifei. Following their prepared remarks, management will be available to answer your questions. Before we continue, please note that the discussion today will include forward-looking statements made under the safe harbor provision of the United States Private Decree Replication Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, our results may be materially different from the views expressed today. A number of potential risks and urgencies are outlined in our public filings with the SEC. Huazhou Group does not undertake any obligations to update any forward-looking statements except as required applicable laws. On the call today, we will also mention adjusted financial measures during the discussion of our performance. Reconciliation of those measures to comparable gap information can be found in our earnings release that was distributed yesterday. As a reminder, this conference call is being recorded. The webcast of this conference call as well as supplementary slide presentation is available on Huazhou Group's website at ir.huazhou.com. With that, now I will turn the call over to Mr. Ji, please.
spk03: Good morning and good evening, everyone. Thank you for joining us today. As you all know, at the beginning of this year, the resurgence of COVID-19 in several cities posed a challenge to the lodging industry and later led to the state local guidance by the government before Chinese New Year holiday. After this small January and February, we are very pleased to see a strong recovery in March especially after the National People's Congress meeting in Beijing. Huazhou's real power recovered to 95% of 2019 level in March, compared with only 56% in February, and the good news continues in April and May. During Labor Day holiday, our real power recorded 25% growth compared with the same period of 2019. In terms of the macroeconomy, despite the impact of COVID-19 resurgence, we saw China's economic remain resilient with GDP in the first quarter, achieving 19.3% growth compared with 2020, and 10.3% growth compared with 2019. As the vaccination process is taking place smoothly in China, we are confident that China's economy will further recover from the pandemic and drive the growth of business travel. Meantime, we also observed more diversified demand for the travel experience especially regarding the leisure travel and upscale hotels. We are exploring different opportunities, of which some details will be discussed by Jinghui later. With that, I will turn the call to Jinghui to update our recent business development. Thank you.
spk02: Thank you, Jiqi. Before we move on to today's topic, please allow me to briefly introduce Thanks, DT. Moving to our business updates, I would like to take the opportunity to introduce again our new finance management team. Chen Hui, CFO of Huazhou Group. She was the CFO of Xijia Group Limited, a Huazhou's affiliate company from March 2018 to February 2020. From 2014 to early 2016, she served as Huazhou's Executive Vice President of Finance, responsible for internal financial management and as Chief Financial Officer. Her previous work experiences also include CFO of HomeInns Group and financial director of Trip.com. She has deep financial management expertise in the travel and hotel industries in China. 我们的Debate CFO李栋,2020年6月加入华驻担任总会计师之职。 同年12月被任命为华驻中国的CFO。 Mr. Li Dong, deputy CFO, he has served as chief accounting officer of Huazhou since June 2020 and chief financial officer of Huazhou China region since December 2020. Before joining Huazhou, he was the financial planning and analysis head of Asia Pacific, Middle East, and the North Africa regions of PepsiCon, Inc. Debtor CFO Ye Fei joined Huazhou in 2016 as a strategic investor and vice president of the capital market. He is in charge of the acquisition and investment of Huazhou, the establishment of a heavy asset fund, and the management of the core enterprise after the investment. Before joining Huazhou, he was a director of the direct investment department at Central Capital. Ms. EFA, Deputy CFO, she has served as Huazhou's Vice President of Strategic Investment and Capital Market since March 2016, and is in charge of Huazhou's investment and portfolio management globally. Prior to joining Huazhou, she was the Director of CITIC Capital's Direct Investment Team. First of all, I would like to talk about the expansion of Hegemen Store. For Huazhou, Now moving to our business updates. First of all, I would like to emphasize again our quality hotel expansion strategy. It is very important for Huardu to have a super large skill growth capability based on quality hotel expansion strategy. It is the backbone to support Huardu's long-term sustainable growth. Last quarter, we actually announced a very detailed definition of our quality hotel. And actually, since the third quarter last year, we started to clean up those low-quality hotels in our portfolio, especially those soft bread. This year, we would not only continuously improve standards of quality for the hotels in operation, but also gradually improved the quality requirements and standards for pipeline and new signings. Specifically, for our non-standardized brands, due to the low standardization rate, we observed some inconsistencies in terms of the quality standards for both construction and new signings. Therefore, we will further improve quality standards for our non-standardized brands by requiring them to redo the construction if we found some quality issues, and actively reviewing our pipelines to detect and remove those unqualified hotels. I need to emphasize again that Huazhou's development is certainly around the customer-centric principle. Therefore, we would not only chase for the hotel expansion speed by sacrificing the quality. Now I will move to our current updates in terms of the recovery. Please turn to page three. As mentioned, since March, due to the elimination of travel restrictions, our recovery trend has significantly increased. April has exceeded the level before the epidemic in 2019, and RERPA has recovered to 100% from the same period in 2019. This trend is still continuing in May. I am very happy that as of May 23, RERPA has increased by 7% compared to 2019. Business and leisure needs are in continuous recovery. As mentioned by Jiqi earlier, all RevPAR recovered strongly after traveling restrictions being removed since later March. RevPAR started to tend to positive growth in later April. Full months of April recovered to the same level of 2019. The trend continues in May. As of May 23rd, RevPAR grew by 7% compared to the same period of 2019. Both business and leisure traveling are recovering steadily. But I still need to remind you that there are still some residences of COVID-19 in China, and therefore we will keep our provision measures carefully and keep the situation happen for our healthy growth in the future. In general, the recovery of the three-line and the lower-line cities is better than that of the second-line. In March, the recovery of the three-line and the lower-line cities began to exceed the same level as in 2019. In April, the recovery of the two-line cities began to exceed the same level as in 2019, and the recovery of the first-line cities was relatively good. This further shows the strong resilience of the economic growth of the low-line cities. We observed that the recovery trend is different among different city tiers. Please turn to slide four. We observed that lower tier cities recovered better than higher tier cities. In March, REFPA in tier three and below cities had exceeded 2019 level, and in April, REFPA in tier two cities also exceeded 2019 level, while tier one cities are slightly lagging behind. That again shows the resilient economic conditions in lower tier cities. 因此我们在下层市场的战略布局仍然持续推进。 请大家翻到第五页。 截至今年的3月31号, 我们在银酒店中的38%分布在三线及以下城市。 Pipeline的酒店中有54%分布在三线及以下城市。 未来低线城市的酒店占比将会持续增加。 截至5月24号, Our lower tier cities penetration strategy is further progressing. Please turn to page 5. At the end of March, 38% of our hotels in Paris are located in the tier 3 and below cities, and 54% of our pipelines are from lower tier cities, which could lead to more contribution from the lower tier cities in the future. As of March 24th, we have penetrated into 741 cities in China. Now please turn to slide 6. Apart from the larger city's penetration, we are further exploring the new opportunities in the lifestyle hotel segment. Firstly, for our own brand, the Crystal Orange, its new flagship store will be soon opening in Shanghai. This is the new Crystal Orange 2.0 version. We would like to provide new products to the business travelers from the lifestyle perspective with better and warm services. The products will provide customers unique, elegant, and exquisite lifestyle experiences during their journey. 其次,我们近期还完成了对CityGoal品牌的收购。 进一步吩咐了华族旗下中高端生活方式酒店的品牌居正。 请大家看到第七页。 Certainly, we are pleased to announce that we recently completed an acquisition of Citigo Hotel. Such acquisition would further enrich our lifestyle brand portfolio. Please turn to slide 7. Citigo's brand positioning is a lifestyle hotel with fun, targeting younger generations, creating a new concept space with functions of accommodations, catering, leisure, shared office, and social networking in the center of the city. 第八頁將介紹一下Citigo品牌的一些基本情況。 品牌創立於2017年,截止今年的5月1日。 We believe that with the help of Huazhou's platform, Citigroup's development will receive more assistance, and at the same time, it will give Huazhou more opportunities to explore and develop in the field of lifestyle. Slide 8 shows some basic information of Citigo Hotel. The brand was established in 2017, as of May 1, and has totaled 28 hotels in operation with over 4,800 hotel rooms covering 13 cities. From the latest operating data, in April 2021, Citigo's rough part in Tier 1 city achieved RMB 384 and RMB 217 in Tier 2 cities. We believe that Huazhou's strong platform capability could further enhance and accelerate Citigo's future development, and in return, the brand could help further enrich Huazhou's lifestyle brand and create more opportunity for Huazhou to explore in the lifestyle segment. Last quarter, we announced the establishment and the company. We are very happy to tell you that in May, our JV company already has two hotels, Moving to our high-end hotel development. In last quarter, we announced our joint venture with Sunac. We are very pleased to update you that there will be two hotels from the JV soon open in May. One will be the first Steigenberger brand hotel in China, and another one will be the Song Hotel. Both hotels are located in Jinan. Slide 9 and slide 10 show some photos of these two hotels. We are continuously progressing in our high-end hotel segment penetration, not only from the joint venture, but also for other brands. I will now turn it over to Liu Qingxin to discuss our recent development of direct sales and technology.
spk08: Thanks, Qinghui. Good morning and good evening, everyone. As we all know that direct sales and technology capabilities are critical elements of FlyJuice's three-in-one super-component business strategies. We continuously put a lot of effort to grow our member base and strengthen our direct sales capability together with full digitalization to our hotel operation. Please turn to slide 12. Our hotels remain the key channels for us to acquire the new members. By the end of March in 2021, our total number increased by 12.5%. to $174 million compared to last year. More importantly, our central reservation contribution achieved a historical high at 15.7% after COVID, improved by 8 percentage points compared to the first quarter of 2020. We are very pleased to see our CRS contribution further enlarge which was migrated from the offline traffic, such as the working customer. Moving to slide 13, during the first quarter, we successfully launched our HWORD app, the version 3, on March 28. After that, we saw our MAU increased by 5% in April, comparing with one month ago. Moreover, we are in a dominant leading position compared to our peers as our monthly active users are two times higher than all other nine hotel groups accumulated MAUs. With more membership privileges providing to our members in the new version of app, we believe it would further improve our user experience and customer loyalty, hence to draw up much more active members and includes the repurchasing rate. Moving to slide 14, in actual version 3, we also embedded a creative and advanced online check-in function for members. This online function is integrated with our 30-second check-in and zero-second check-out, the queues in the hotel. Such function would create a very convenient check-in and check-out service for customers. which helped them to save a lot of waiting time and hence improve their overall hotel stay experience. More importantly, with further usage penetration of this function, our hotel could further improve our operational efficiency as there will be less staff needed for front desk, which used to help customers for checking and out procedures. We could use this manpower saving to further improve our hotel service. Last but not least, technology applications could also lower the stress of staff recruitment. For example, with a self-checking queue, computer skills may not be a must for recruiting front desk staff. Going to slide 15, as of May 23rd, There are over 4,500 hotels had already installed self-check-in kiosks. Penetration of orders check-in with 13 seconds achieved to 15,000%. We are targeting this service deployment in all hotels within 2021. Moving to slide 16, even considering the impact of the resurgence of COVID-19, and state local policy. We still achieved a very good result of our to-be billing. The room nights contributed from the corporate customs reached over 3,000 million with contribution rate of 9.7% of total room nights sold. In the longer term, we believe that our corporate customs were not only contributing additional room nights to us, but also bring us the opportunities for new user acquisition. We observed that a lot of customers who use their corporate account to book our hotels are not yet our member personally. Therefore, we see there are still a lot of rooms to convince such customers to become our individual members. On the right-hand side of this slide, Our new experiment of B2B2X Alliance, the fourth traffic strategy, which launched last quarter, will also achieve some initial outcomes. We have partners with eight large traffic aggregator platforms in the first quarter, such as China Mobile, Jingdong, and Didi, and so on. We are also very pleased to see this new experiment start contributing room nights to use with roughly 3,200 orders per day in average during the first quarter. Going forward, we would seek more opportunities, more cooperation with the various target traffic platforms to further attract new members as well as more room nights through the contribution. Moving to slide 17, for our one decentralization project in Europe, the DH, we are very pleased to see that we had completed our basic IT infrastructure and architecture and the solutions. We have also rolled out the first hotel pilot project in the Wernselep, Kampenhagen city, to do test running. Once the testing result is satisfied, We will gradually roll out the full implementation globally at the middle of this year. With that, now I will turn the call to Yifei to discuss our Q1 operational and financial review. Thank you. Thank you, Xixi. Good morning or good evening to everyone. Let's move on to our operational and financial review for the first quarter of 2021. As shown on slide 19, our hotel rooms expanded by 15% in Q1 2021 to 662,000 compared to 575,000 in Q1 2020, excluding DH. Lexi Huazhou's hotel rooms expanded by 18% year-on-year to roughly 638,000 in Q1 2021. For our hotel turnover in Q1 2021, despite COVID-19's resurgence impacts in China and prolonged lockdown in Europe, our total hotel turnover still grew at 66% year-on-year to RMB 8.2 billion in Q1 2021. This is mainly due to our continuous network expansion as well as the low base for China's business last year. but unfortunately offset by the high base of DH last year. Excluding DH, Lexi Huazhu's hotels turnover doubled in a year to RMB $7.9 billion in Q1 2021 and recorded a 10% increase if compared to Q1 2019. Turn to page 20. Lexi Huazhu's blended REF PAR for Q1 is RMB $138. which has recovered to 77% of 2019 level. The ADR in Q1 2021 has recovered to 95% of 2019 level to RMB 209, while occupancy in Q1 is 15 percentage point lower compared to 2019. This was mainly due to the COVID-19 resurgence and the stay local policy in January and February. However, our RAPAR started recovering strongly since late March. Turn to page 21. Our Lexi DH business has been negatively impacted by the second and third wave of pandemic since September 2020. German government imposed a lockdown from last November and it may extend it to early June this year. Therefore, our Lexi DH blended RAPAR for Q1 2021 declined by more than 70% to 13 euro compared to 2021 Q1. The ADR dropped by 23% to 69 euro, and the occupancy dropped by 33 percentage points compared to 2020 Q1. On slide 22, the total match revenue grew by 16% year-on-year to RMB 2.3 billion, in Q1 2021. Excluding DH, Lexi Huazhou recorded a 69% year-on-year growth rate to RMB 2.2 billion. The revenue growth was better than our previous guidance, thanks to the strong recovery in late March. Breaking down the revenue of Q1, leased and owned revenue decreased by 8% year-on-year to RMB 1.4 billion. mainly caused by the decrease of leased hotels in Europe. Excluding DH, lease and owned revenue of Lexi Huazhou grew by 56% year-on-year to RMB 1.3 billion. Net revenue from monetized and franchised hotels grew by 93% to RMB 897 million, mainly driven by the year-on-year growth rate of Lexi Huazhou. Due to the significant drop of leased and owned revenue of DH in Q1 2021, monetized and franchised revenue contribution enlarged to 39% in Q1 2021 compared to 23% in Q1 last year at the group level. For Lexi Huazhou, as our hotel expansion was mainly through asset-life model, the revenue contribution from monetized and franchise model also expanded to 41% compared with 35% a year ago. Now let's move to the cost and profitability session on slide 23. In Q1 2021, the reported operating loss was RMB $575 million, narrowed from RMB $857 million in Q1 2020, but expanded from a quarter ago because mainly due to the COVID-19 resurgence and the state local guidance in China and also prolonged lockdown in Europe. Excluding DH, Lexi Huazhou's operating loss in Q1 was RMB 172 million, narrowed by 560 million RMB compared to the loss of 731 million RMB in Q1 2020. The hotel operating costs and other operating costs for Q1 2021 was RMB 2.5 billion, a slight increase compared with last year, in which Lexi Huazhou recorded RMB 2 billion hotel operating costs, indicating a 21% year-on-year growth. The increase was mainly attributable to the higher rental cost of the new upscale hotels, higher personnel costs as we keep growing the hotel network rapidly, and higher depreciation and amortization costs, which were related to the upscale hotel openings and upgrading of existing hotels. As we mentioned in previous quarters, Our future expansion of upscale hotels were mainly used as a life model. Therefore, our pre-opening cost declined by 81% year-on-year and 40% queue-on-queue to only RMB 21 million in Q1 2021. Our SG&A in Q1 2021 increased by 9% year-on-year to RMB 406 million, mainly driven by the increase of Lexi Huazhu, but offset by cost saving of DH. Excluding DH, SG&A for Lexi Huazhu increased by 31% year-on-year to RMB $299 million. The increase was mainly attributable to the increase of selling and marketing expenses related to revenue recovery, and also the increase of headcounts for our BD team to support penetration into lower tier cities and also affected by less government subsidies booked in the Q1 2021 compared to Q1 2020. Turn to page 24. Our adjusted EBITDA laws narrowed to RMB 133 million compared to RMB 704 million a year ago. DH was the main drag for this quarter, excluding DH, Lexi Huazhou would have recorded a positive adjusted EBITDA of RMB 207 million compared to a loss of RMB 631 million in Q1 2020. In Q1 2021, we recorded adjusted net loss of RMB 451 million narrowed from RMB 1.1 billion a year ago. Excluding DH, Lexi Huazhou recorded an adjusted net loss of $150 million compared with $981 million RMB loss in Q1 2020. The non-GAAP pro forma adjustment mentioned on this page excludes unrealized gains or losses from fair value change of equities related to some of our investments. For example, in Q1, we recorded RMB $238 million fair value increase of Accord shares we hold. Coming to the cash position, we kept the net debt of RMB 5.2 billion by the end of Q1, and there's no risk of breaching the financial covenants of the US dollar 1 billion syndication loan. Our cash balance was 5.7 billion RMB, and the unutilized bank facilities were 6.5 billion RMB. This cash and bank facilities will allow for Huazhou to further pay down the existing bank debt in 2021 and also to be used for any unforeseen circumstances. As mentioned in previous presentations, the lockdown in Germany has greatly affected DH's business. Therefore, the average occupancy of DH in Q1 was 19%. and the rate further dropped to 15% in April and May. Having said that, daily newly diagnosed figures in Germany are decreasing steadily. As of May 22nd, about 40% of Germans had received at least one shot of vaccine. In several regions like Berlin, the travel restrictions are partially lifted, and we expect to see more travel for the vaccinated people in June. To compensate the business loss, the German government has extended the scope and duration of government subsidies, including short-time worker compensation and extra government subsidies. As of April 2021, DH has received 12.7 million euro short-time worker compensation, which is expected to further increase as the lockdown extends. Additionally, DH had applied for government subsidy to compensate the loss both in 2020 and 2021. The prolonged lockdown will certainly impose pressure on DH's revenue, but the impact will be partially offset by the government subsidy at the EBITDA level. We will only record that income upon the recipient of the formal confirmation of such cash. We also continue to negotiate for rental deduction Compared with 5.4 million euro waiver achieved in 2020, the year-to-date waiver of 2021 has amounted to 4.2 million euro. We'll continue to work on rental deduction through the years. The number quoted here are related to cash savings, but the P&L impact actually varies depending on the term of waiver. In addition, we have also put our staff on temporary furlough, frozen our headcounts, and reduced discretionary spending, and also capex. We are also in discussion with local banks in Germany for additional coronavirus age loans. The banks have been supportive to us. Turning to page 28 for guidance. For the second quarter of 2021, we now expect the total revenue to grow by 87% to 89% compared to second quarter of 2020, excluding the age we expect the revenue to grow by 90 to 92%. To provide a more meaningful guidance, we expect the total revenue to grow by 27 to 29% if compared to the same period of 2019, excluding the 2021 revenue expected to grow by 20 to 22%. For the full year of 2021, COVID-19's resurgence in January and February slowed down our hotel open plan in the first quarter. Also, echoing Jinghui's point previously, we put more emphasis on quality hotels expansion. We now plan to revise down our non-standardized hotel brand opening for the full year. Considering the above two factors, we lower our gross opening target of 2021 from 1,800 to 2,000 hotels to 1,600 to 1,800 hotels. However, even with the slight downward adjustment of gross opening, our revenue guidance for Lexi Huazhou remains unchanged at 50% to 54% growth compared to 2020, or 15% to 19% growth compared to 2019. due to the better than expected recovery and the limited time impact of the hotel openings in the later part of the year. The prolonged lockdown period in Germany has caused the recovery much slower than previous expected. Therefore, we adjust the full year group revenue growth guidance to be in the range of 44% to 48% compared to 2020. or 31% to 35% growth compared to 2019, from previous guidance of 50% to 54% growth compared to 2020, and 36% to 40% growth compared to 2019. With that, let's open up for Q&A.
spk05: Thank you. To ask a question, you will need to press star 1 on your telephone. To withdraw your question, press the pound or hash key. Your first question comes from Billy Ng from Bank of America. Your line is open.
spk06: Hello. Good morning. I have two questions. First of all, I just want to ask about the current trend, particularly in May. I think from the presentation you guys mentioned that the rough part already recovered to 107% of the 2019 level. I just wonder if we exclude the five days May 1st holidays period, do we still see positive growth compared to 2019 for the rest of May? And also in particular, would like to know a bit more about the trend of the lease and operator hotel recently. And then my second question is about the new opening target. We understand that the revised downward of the new opening target is a result of the company pursuing higher quality openings and has a higher standard for the new joiner. I just have a question of like, I think this adjustment has been going for a while. When do you expect the opening page can reaccelerate again? And also in particular, in the new opening target of the 16 to 1800 number, how many of them are still using the soft brand model, and how many will be using our main core brand. Thanks a lot, and thank you, and good morning management.
spk07: Okay.
spk02: After the five-day holiday, China's performance has also grown. Compared to 2019. So you can see that China's business recovery is very good. This is the first information I can share with you. Okay, so the overall REFPA trend in May, we saw it very satisfactory. As we mentioned in the presentation, our month-to-date REFPA growth by 7% compared to 2019, even though excluding the five-day holidays in the beginning of May. the remaining of the days, the rough past do achieve a positive growth compared to 2019. Okay, but we still have to be a little bit more cautious that there were still some of the COVID-19 resurgents happened in May, such as Anhui Province and Shenyang. Normally, from our observation, every time there was a resurgence of COVID-19, it will take like roughly two weeks to recover for that city. But overall, for the recovery trend, we still maintain our conservatively optimistic perspectives for the overall recovery trend. Regarding the second question, I would like to provide one number for your reference. In 2019, the growth of the reliance on softwares opened more than 500 stores last year. This year, our forecast for the whole year will be reduced to about 200 stores. 所以在整个围绕合格门店的发展上面,华族将持续地开展这样的品质提升和合格门店的战略。 For the second question, I just want to mention one number to you. For our Elan brand, actually in 2019, we opened up roughly over 500 Elan during 2019. But this year, we are just planning to open roughly 200 Elan, which means... 300 decline. So our overall perspective and strategy is still concentrating on the quality hotel expansions. 在下层的经济型市场里面,我们推出了标准化的你好,去配合汉亭去更多的在整个下层市场布局我们的门店的网络。 For our lower tier cities penetration, so we actually are going to utilize more Nihao brand as a standardized brand to complement our hunting brands for the lower tier cities penetration. Thank you.
spk07: Thanks a lot. Thank you. Thanks, Jizhong and Jason. Thanks. Thank you.
spk05: Your next question comes from C.G. Lin from CICC. Your line is open.
spk01: Hi, thank you, management. I have two short questions. And the first one is still on the hotel opening. I want to know that are we still confident with the 10,000 targets at end of 2022? And the second question is on Citigo. So why we decide to acquire Citigo at this point? and how we finance the acquisition. Thank you.
spk02: For the 10,000 hotels in 1,000 cities target, actually we are still progressing to achieve this target. Even though with the COVID-19 impact, we are still seeing our new signings gradually being better compared to last year. Therefore, we are still pretty confident that we could achieve this 10,000 hotels in 1,000 cities by the end of 2022 or later in the first quarter 2023. So for our lower cities penetrations, actually we're progressing pretty quickly. Now we have signed up over 1,000 hotels in lower tier cities. And in addition to that, for our obscure or high-end hotel market over the last year, after a lot of preparation internal of the company, actually we are also progressing pretty satisfactorily in this area. Also, we observed that the new consumer, the younger generation, and the lifestyle hotel segment, the trend is booming up. That's why we are exploring into this segment by leveraging our own brands, such as Crystal Orange, Manxing, and also the currently acquired Citigo brand, to further penetrate in this area as well. Okay.
spk08: I just wanted to provide a little bit more color on the Citigo. The entire enterprise value for this acquisition is 750 million RMB. actually imply in terms of a ramp up EBITDA level for the full year perspective, the valuation multiple, EBITDA multiple is actually in the range of eight to nine times, which is a pretty fair and attractive valuation considering this brand's unique position and also the prospect of future growth. And in terms of a cash source, it's actually, if you notice that we have more than 10 billion RMB cash available including also the unutilized bank facilities. So there's no problem of financing for this acquisition.
spk01: Thank you.
spk05: Your next question comes from from HSBC. Your line is open.
spk04: Hi. Thank you. Like management, I want to ask a question regarding the new 2021 for your guidance for what your brand, the total revenue growth versus 2019 remain unchanged in a seat at a like a 15 to 19%. Even though the hotel openings are than before. So I want to ask what is the current rep or assumptions for what brand versus 2019? Thank you.
spk08: So we are positive about the REFPAR recovery of the Huazhou site. In our forecast, actually, we forecast like Q2, it will be like 97% of the recovery. And also in Q3 and Q4, it will be 104% and 100% recovery compared to 2019 number. it's a same hotel level perspective. Because if you talk about blended Red Park, it's a little bit hard to compare it with 2019 on the same scale level. So if you talk about blended, it will be 4% to 5% increase in general.
spk04: Okay, great. So may I clarify on same hotel Red Park basis, it's 97% in 2Q, 104% in 3Q and 100% in 4Q, right?
spk08: Yeah, it's a general guidance, but I think, yeah, certainly we'll keep updating this number.
spk04: Okay, and does this guidance for revenue growth include the contribution from GTGO acquired in May?
spk08: It is not.
spk04: Okay, thank you.
spk05: Your next question comes from Tian Hou from TH Capital. Your line is open.
spk09: Yeah, good morning, management. I have a couple questions. One is I look at the tiered city expansion plan. The lower tiered cities is going to be a majority part of the pipelines. So let's say by the end of the year or by the end of next year, what portion of the Huaju legacy hotels are going to come from lower tier cities and tier three and below? So for the tier three and below and also tier one, tier two, what are the difference between the ARPU and the potential occupancy rates? So that's the number one question. I'm going to finish all the questions. The second one is how many hotels Sandenberg is going to open in China this year, and also Song Hotels. How many hotels does the company expect to open under those two brands? That's the second. The third one, which is the last one, in terms of corporate customers, I saw the corporate customer contribution increasing. What is the company's outlook in terms of corporate customer contribution in the total revenues. That's my three questions. Thank you.
spk02: Okay. Okay, I'll answer the first and second questions first. In the fifth page of the PPT, we have a plan for the down-to-earth market and the current signing channels and some data sharing. In the past year, we have been focusing on the development of the downstream market. We have already added more than 50% of stores in the pipeline, from three lines and three lines below. This amount is very significant and completely in line with our strategy. In terms of the layout of the entire city, we have just mentioned that it covers 741 cities. In the next step, we hope that there will be coverage and layout in 2,000 cities in China. So I don't know if this data can answer your question.
spk09: Regarding the second solution... There is another question. Because we are moving towards the downstream market, each city's level 1 and 2
spk02: The second question is about JV's plan. It should be said that in the next few years, we will continue to Okay, I will do the translation for the first question. For the lower tier cities, actually in our slide number five, we provide some of the numbers in terms of our breakdown in terms of our hotel operation pipelines. Given that we have been putting a lot of efforts last year for the low tier cities penetrations, actually our pipeline, over 50% of our pipeline comes from tier 3 and below cities, which is going to help us to further enlarge our hotel from the lower tier cities by the year of this year. And also in terms of the roof part differences compared to the lower tier cities and the higher tier cities, Actually, we have been observing that the lower tier cities actually have a better REFPA recovery compared to the higher tier cities. But I think after the ramp-up period, definitely the lower tier cities would have slightly lower REFPA compared to the higher tier cities. But for us, our take rate will be the same for all hotels, no matter they are in higher tier cities or lower tier cities. And for the second question, in terms of the JV, for the upcoming years, we have been further cooperating with the Suna under the joint venture, and we are going to develop mainly on the Steigenberger and the Song Hotel brand. And currently, we have over 30 hotels in pipeline. As you know, the growth of the Chinese tourism market is very rapid. So we are very happy to see that, including Hua Jian Tang and some holiday hotels, As you may know that the leisure traveling is recovering and growing pretty good in China, and we believe in the longer term it's still kind of booming. Therefore, for our high-end brands such as Dagenberger and Blossom Hills, under the joint venture, we are very confident that the development in the future will be good.
spk08: To be the business, let me make a brief reply. We believe this is a growth point that will stay in the mainstream in the future. At present, we are also optimistic about the continued growth of this business. It is worth mentioning that in this 70% ratio, there is a super-progressive 60% on the line. Therefore, we are also optimistic that the B2B technology will be able to
spk02: For the corporate customers, actually it is a very important source for our further growing our traffic and we are still very optimistic in terms of their corporate customers' growth in the future. And more importantly, currently the corporate customers contribute roughly 10% of the total room nights. But out of the 10%, over 60% of the room nights are sold through online channel, which is very good for us. And for the future development, we will still leverage our technology capability to further using the tech connection to further develop this area.
spk08: Second, in addition to continuing to pay attention to China's largest commercial companies in the past three days, we will also continue to bring our Chinese business team to the third and fourth-tier cities across the country, combined with the increase in local and provincial businesses. This part will also cover all provinces throughout the country this year.
spk02: We were not only focusing on the top 3,000 public listed companies in China. We are currently penetrating to even lower tier cities by leveraging our strong direct sales team to do a lot of local sales. And we are planning to penetrate to every single province in China this year. Thank you.
spk05: Your next question comes from Melody Chan from Jefferies. Your line is open.
spk10: Thank you for taking my question. I have two short questions. Can management share that if we have any other acquisition plans that would ally with our high quality hotel strategy and also how is our view on the market consolidation post-COVID.
spk02: Thank you. Sorry, what's your second question in terms of the market consolidation?
spk10: Hi. So what is our view on the market consolidation and the competitive landscape about the change hotel market share? Thank you.
spk02: Okay. This is the first question. The second question is In terms of the market and competition, we are very happy to see a few dimensions in the economic sector. Huazhou has opened up more to the development of the lower market, such as the original empty market or the market of the weak market. In the mid-range market, we are facing the trend of market consumer growth, which also shows a very plentiful space for market development. We also want to maintain continuous high-speed development in the mid-range market around the whole world, oranges and a series of lifestyle brands. In the high-end market, we should focus more on competition with traditional international management companies. Therefore, Huazhou is developing at different levels in different fields. In the high-end market, we use China's local customers to better understand the local customers' ability and China's technical efficiency to expand the market of international management companies. We also hope that Okay, for the first question in terms of M&A plan, we always keep our eyes open and we always have an open attitude. We have been discussing with many potential partners, but there is no clear target or deals done yet. So we will be updating you as long as there is something confirmed. And in terms of the market consolidation and competitive landscape, actually for the economic segment, so we are doing the penetrating and we are better compared to our peers because the lower tier cities has plenty of rooms for penetrating. And in terms of the middle skill, leveraging on the consumer consumption upgrade, so we will leverage our various brands such as G Hotel, Orange, and the newly acquired the City Gold and the Lifestyle brands to further growing our market share in this area. And in terms of the high-end and upscale segment, we are actually competing with those international hotel groups. We would use our core competencies such as technology and operational capability to create a diversified competition and trying to grab some market share from them. Thank you.
spk10: Thank you.
spk05: There are no further questions at this time. I would like to hand the conference back to our speakers.
spk02: Thank you everyone for taking time with us today and we look forward to contact with you again in upcoming quarter. Thank you and bye-bye.
spk05: This concludes today's conference call. Thank you for participating. You may now disconnect.
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