GreenTree Hospitality Group Ltd. American depositary shares, each representing one Class A ordinary share

Pardon me, everyone. This is the conference operator. Today's call will begin in approximately four minutes. Thank you for standing by. And once again, we will begin in approximately four minutes. Thank you. Thank you. Hello, ladies and gentlemen. Thank you for standing by for Green Tree's second quarter of 2024 earnings conference call. At this time, all participants are in listen-only mode. After management's prepared remarks, there will be a question and answer session. As a reminder, today's conference call is being recorded. I would now like to turn the meeting over to your host for today's call, Mr. Rene VanGusten of Christensen. Please proceed, Rene.

Thank you, Rukul. Hello, everyone, and thank you for joining us. Green Tree's earnings release was distributed earlier today and is available on our IR website at ir.998.com, as well as on PR Newswire services. As a reminder, we also posted a PowerPoint presentation that accompanies our comments to the same IR website. On the call from Green Tree are Mr. Alex Hsu, Chairman and Chief Executive Officer, Ms. Celina Yang, Chief Financial Officer, and Mr. Jason Zhang, our new Financial Director. Jason replaces our former Financial Director, Ms. Alan Zhao, who officially retired earlier this month. Mr. Xu will present the company's performance overview of the second quarter of 2024, and Ms. Yang and Mr. Zhang will then discuss financials and guidance. They will all be available to answer your questions during the Q&A session which follows. Before we begin, I'd like to remind you that this conference call contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 as amended and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These overlooking statements can be identified by terminologies such as may, will, expects, anticipates, aims, future, intends, plans, believes, estimates, continue, target, is or are likely to, going forward, confident, outlook, and similar statements. Any statements that are not historical facts, including statements about the company and its industry, are forward-looking statements. Such statements are based upon management's current expectation and current market and operating conditions, and relate to events that involve known and unknown risks, uncertainties, and other factors, all of which are difficult to predict, and many of which are beyond the company's control. which may cause the company's actual results, performance, or achievements to differ materially from those in the forward-looking statements. 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 US Securities and Exchange Commission. All information provided, including the forward-looking statements made during this conference call, are current as of today's date. The company does not undertake any obligations to update any forward-looking statement as a result of new information, future events, or otherwise, except as required under applicable law. It is now my pleasure to introduce our Chairman and Chief Executive, Mr. Alex Chu. Mr. Xu, please go ahead.

Thanks, Rene. And hello, everyone, and thank you for joining us today. In the second quarter, we faced the challenges as China's economy continued to recover. We believe both consumers and business exercised caution in discretionary spending, which had a negative impact on our overall performance. However, we continued to upgrade a number of hotels in our portfolio in order to better respond to increasing competition. While we believe this will help our performance in the future, second quarter hotel revenue did decrease 14.8% year over year. We continued to execute on our strategy to return our restaurant business to profitability by moving away from lease and operated restaurant in supermarkets and the regional shopping centers towards franchise the three stores. As a result, the net income turned positive this quarter after breaking even last quarter compared to losses in both corresponding quarters a year ago. Our focus is now fully on growing the number of franchise street stores and stores with stable consumer traffic. Please turn to slide five. Compared with the second quarter of 2023, hotel rough par was 125 RMB, down 10.8%. And the restaurant ADS, that's average daily sales per store, was 4,737 RMB, down 22.1%. Total revenues were 329.7 million RMB, down 20.5%. Hotel revenues were 264.6 million RMB, that's down 14.8%, mainly due to a 10.8% year-over-year decrease in rural power and the closure of some old hotels, and partially offset by new openings. Restaurant revenue decreased to 65.3 million RMB as we continued to execute on our strategy to reposition this business and closed a number of underperforming restaurants. Income from operations decreased to 84.4 million RMB with a margin of 25.6%. Net income was 62.3 million RMB, down 38.9%, with a margin of 18.9%. Adjusted EBITDA non-GAAP was 83.1 million RMB, down 34.5%, with a margin of 25.2%. Slide 6 shows detailed number of total revenues, income from operations, net income and adjusted EBITDA. Slide 7 shows the trend in our quarterly operation performance. In the second quarter, compared to a year ago, Royal Power for our LO hotels decreased by 7.3% to 177 RMB. Royal Power for our FM hotels decreased by 10.9% to 124 RMB. ADR for our LO hotels decreased by 2.1% to 250 RMB. and ADR for our FM hotels decreased by 4.4% to 117 RMB, 171 RMB. Occupancy at our LO hotels was down 3.9% to 70.7%, and occupancy at our FM hotels was down 5.3% to 72.6%. Slide 8 highlights the growth in our membership programs, which accounted for most of our direct sales. Individual memberships grow to 96 million, up from 84 million a year ago, and the corporate memberships grow to 2.1 million, up from 1.96 million a year ago. Slide 9 shows the operating performance of restaurants with ADS down 22.1% year-over-year at RMB 4,737, but up sequentially. Starting with slide 11, I will review our strategic execution across our businesses. In our hotel business, we further expanded in the mid to upscale segment and in tier three and the lower cities in South China. As you can see on slide 12, we continue to grow our mid to upscale segment with 505 hotels. That's 11.8% of our total portfolio at the end of this quarter. While the mid-scale segment remains the core of our hotel business at 69%, We continue our expansion into the higher end segment. The economy segment ended the quarter at 19.2%. Please turn to slide 13. We continued to expand in tier three and the lower cities and 72.3% of our hotels in our current pipelines are in such cities and will further capitalize on the substantial opportunities in these locations. On slide 14, we continued to focus on increasing the profitability of our restaurant business. To achieve this, we have implemented a three-pronged approach to reposition the business. First, closing unprofitable stores. increasing the proportion of FM stores, and expanding the number of street stores. Franchised and managed restaurants accounted for 86.9% at the end of the quarter, compared to 72.3% a year ago. And street stores accounted for 45.4% compared to 37.9% a year ago. Next, Selena Yang and Jason Zhang will review operating and financial highlights.