GreenTree'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. We also posted a PowerPoint presentation that accompanies our comments to the same IR website. On the call from GreenTree are Mr. Alex Xu, Chairman and Chief Executive Officer and Mr. Lina Yang, Chief Financial Officer. Mr. Xu will present the company's performance overview of the fourth quarter and fiscal year of 2024, and Ms. Yang will then discuss financials and guidance. They will both be available to answer your questions during the Q and 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 [indiscernible] 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 forward looking statements can be identified by terminologies such as may, will, [indiscernible] anticipates, aims, future, intends, plans, believes, estimates, 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 expectations 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 [indiscernible] 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 U. S. Securities and Exchange Commission. All information provided, including the forward statements made during this conference call, are current as of today's date. The company does not undertake any obligation 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 Officer, Mr. Alex Schu. Mr. Xu, please go ahead. Thanks, Rene, and hello, everyone and thank you for joining us today Our performance in the fourth quarter was negatively impacted by the closure of 12 leased and managed hotels during the year.

And lower RevPAR compared to a higher base last year and the continued optimization of our restaurant business In our hotel business, we are simultaneously accelerating the opening of new hotels. With a planned four eighty in 2025 that's an increase from four zero five in 2024. And upgrading our existing portfolio with an absolute focus on quality to ensure higher standards of products and services. We believe that rejuvenation of our portfolio that was slowed down by the pandemic will be completed by the summer of twenty twenty six. While midscale remains our core segment, hotel openings in 2024 and our pipeline highlights our strategic commitment to expanding our mid to upscale segment. Where we expect the growth over the next two years to deliver a significant economy of scale. Finally, we'll continue the phased closure of leased and managed hotels. Especially in the lower tier cities retaining only select flagship properties in key cities to serve at showcase of our capabilities for the prospective franchisees. The strategic transformation of our restaurant business made further progress on our two priorities. At the end of the quarter, franchised and managed stores accounted for almost 90% of all stores That's up from 78% a year ago.

And the suite stores that benefited from more stable consumer traffic accounted for 50% of all stores up from 40% a year ago. Additionally, we have been rightsizing many of our stores reflecting the new economics reality to improve overall profitability We believe we now have a strong foundation to build on and will grow the overall numbers of restaurants in 2025 with a particular focus on franchise and managed as well as street stores. Please turn to Slide five. Compared with the fourth quarter of twenty twenty three, Hotel RevPAR was RMB116. Decrease of 9.6% and restaurant ADS was a decrease of 16.8% Total revenue was 304,500,000.0, a decrease of 18.2% Hotel revenues were RMB240.2 million, and a decrease of 17.1% mainly due to the closure of 12 Doubled Hotels in 2024 [indiscernible] a year over year decrease in RevPAR of 9%. Net income was negative $0.08 point RMB72.8 million mainly as a result of the impairment of goodwill and trademarks of our restaurant businesses impairment of assets, and the provisions for loan receivables related to franchise loans, adjusted net income defined as excluding these impacts was RMB77.3 million, an increase of 26.8% with a margin of 25.4%. Core net income was RMB57.8 million, decrease of 22.3% with a margin of 19%.

And adjusted EBITDA was RMB71.5 million, a decrease of 38.3% with a margin of 23.5%. Cash from operation was RMB74.2 million, it's up from a negative RMB13.5 million a year ago. Slide six shows detailed numbers for total revenues, net income adjusted EBITDA, and the core net income. Slide seven shows the trend in our quarterly operating performance. In the fourth quarter, compared to a year ago, RevPAR for our LO hotels decreased by 22.1% to RMB158 million RMB158 RevPAR for FM hotels decreased by 9.8% to ADR for our LO hotels was largely in line with that of last year. And ADR for our FM hotels decreased by 4.6% to 100 Occupancy at our LO hotels decreased to 65.5% from 66.9% and occupancy at our FM hotels decreased to 8.6% from 72.5%. Slide eight highlights the growth in our membership programs. Which accounted for most of our direct sales. Individual memberships grow to 102,000,000 up from 91,000,000 a year ago. And the corporate memberships grew to 2,170,000 up from 2,050,000 a year ago. Slide nine shows the operating performance of restaurant with the ADS decreasing year over year to 4,234 Starting with Slide 11, I'll review our strategy strategic execution across our businesses.

In our hotel business, we further expanded in the mid to upscale segment and in Tier two, Tier three and lower cities. As you can see on Slide 12, we continue to grow our mid upscale segment with five fifty three hotels That's 12.5% of our total portfolio at the end of the quarter. While the mid scale segment remains the core of our hotel business at 67.3% we continue our expansion into the higher end markets. Also continued to grow our economy segment ending the quarter at 20.2%. Please turn to Slide 13. Our current pipeline is growing in Tier two cities we also opened more hotels in such cities. On Slide 14, continue to turn around our restaurant business to ensure that it is sustainably profitable going forward by focusing on areas with greater foot traffic We have closed our old stores and opened the new FM stores. Completing the strategic transformation to our new business model As a result, F. M. Restaurants accounted for 89.6% at the end of the quarter compared to 78.4% a year ago. And the street stores accounted for 50.5% compared to 39.7% a year ago. Next, Selina will review operating and financial highlights.

Thank you, Alex.

I will first review our hotel business. Please turn to Slide 16. In the fourth quarter, total hotel revenues were RMB240.2 million, a 17.1% year over year decrease. The decrease was mainly attributable to our LO hotel segment and a 9.8% decrease in RevPAR in our FM hotel segment. Our L and O hotel segment was impacted by the closure of 12 hotels the year of 2024 while in 2023 it benefited from a one time revenue recognition of recognition rooms and a successful lawsuit against the sublease Total revenues from LO hotels were RMB91 million, a 27.5% year over year decrease Excluding the impact of the above mentioned factors, same LO hotel revenue in the fourth quarter of twenty twenty four decreased by 2.4% year over year. Total revenues from FM hotels were RMB148.2 million, a 9% year over year decrease. Mainly due to a 9.8% decrease in F and M Hotels RevPAR On Slide 17, total hotel operating costs and expenses decreased 10.5% year over year to RMB225.7 million. Operating costs increased 9.5% to RMB139.9 million year over year The decrease was mainly attributable to the closure of 12 LO hotels in 2024 which resulted in lower rental consumer growth food and beverage and staff related costs.

Selling and marketing expenses were million, a year over year increase of 61.7%. The increase was mainly attributable to the reclassification of selling staff related expenses previously recorded as G and A expenses. Excluding this factor, selling and marketing expenses increased by 22.2% year over year. General and administrative expenses were RMB39.7 million down 20.1% compared with the same quarter of 2023. Decrease was mainly due to lower consulting fees lower bad debt due to accounts receivables and the lower G and A staff related expenses. Turning to Slide 18, The decline in revenue resulted in a decrease in profitability for our hotel business [indiscernible] lower operating costs and expenses. Cash from hotel operations however, increased from 18.4 percent million to RMB68.8 million year over year. Net income was million compared to RMB8.1 million in the fourth quarter of twenty twenty three. Adjusted EBITDA 34% to RMB71.1 million and core net income decreased 24.2% to RMB46.1 million year over year. Next, let me review our restaurant business. Please turn to Slide 19. In the fourth quarter, restaurant revenues were million a 25.8% year over year decrease. The decrease was mainly due the closure of LLO stores and a 16.8% decrease in ADS Same store revenue decreased by 3.1% RMB31.2 million Total costs and expenses increased by 98.7% year over year to RMB187.4 million mainly due to the impairment of goodwill and trademarks Excluding these impairments, total costs and expenses for restaurant business decreased by 14% year over year.

To 67,300,000.0 The improvement in profitability of our restaurant business due to our strategic execution Cash from operations turned positive at RMB5.5 million the fourth quarter of twenty twenty four Net income excluding the impairment of goodwill and trademarks increased to 44.3% to RMB18.9 million in the fourth quarter. Next, I will review the profitability of our group. Please turn to Slide 21. Group cash from operations despite the revenue decrease increased year over year from negative RMB13.5 million to RMB74.2 million Net income in the fourth quarter excluding the impairment of goodwill and trademarks of our restaurant business, impairment of assets, and provisions for loan receivables related to franchisee loans increased from RMB60.9 million to RMB77.3 million. Adjusted EBITDA was RMB71.5 million compared to RMB115.8 million one year ago and core net income was RMB57.8 million On Slide 22, net income per ADS basic and diluted for our hotel business increased year over year to RMB0.29. That's US0.04 dollars And core net income per ADS basic and diluted for our hotel business was RMB0.45, that's $06 a year dollars Group net income per ADS basic and diluted negative $17.17 that's US0.10 dollars and group core net income per ADS basic and diluted was RMB0.57 that's US0.08 dollars Let's now look at Slide 23 As of 12/31/2024, the company had total cash and cash equivalents restricted cash, short term investments, investments in equity securities time deposits, of million compared to RMB1883.9 million as of 09/30/2024.

The decrease was primarily due to dividend distribution to our shareholders and investment in property partially offset by cash from operating activities. On Slide 24, taking into account the recovery in long term trends and short term industry fluctuations, We expect total revenues of our organic hotel business for the full year of 2025 to be flat compared to their 2024 level. We expect to open approximately four eighty hotels and close about 200 hotels for net addition of two eighty hotels. This concludes our prepared remarks. Operator, are now ready to begin the Q and A session. Thank you.

Thank you. Today's first question comes from Bruce Lee with UBS. Please go ahead.

Hi, Alex. Hi, Selina. Thanks for taking my question. So I have a question on the hotel RevPAR. So may I know what's your assumption RevPAR assumption on your full year flat organic hotel revenue forecast? And secondly, what's your observation on the recent RevPAR trend? And what's your expectation on the business travel demand outlook in this quarter and the rest of the year? Thank you. Okay. Thank you. And the RevPAR trend, our expectation for the year of 2025 is going to be flat because we observed the first quarter we have down about 5% in RevPAR. And we expect the that's compared with a little bit higher base of last year. And the second and third quarter we see a gradual recovery and to be flat the RevPAR for the year. So in terms of the demand, we do see more cyclical demand that is more from leisure side and especially during the weekend and also during the holidays. So we do observe [indiscernible] tick up in terms of the leisure travelers than the business travelers? So those are the two observations we have [indiscernible] that's why we expect that the for the full year the RevPAR we expect in our company we should maintain we should be maintaining the flat level?

Thank you.

And our next question comes from Frank Ma with Clarkson Capital. Please go ahead. [indiscernible] Your line is open. Please proceed. Okay. Okay. Thank you, management.

Have two questions. The first one is, can you give please give us an overview of the strategy for the hotel business in 2025. And in particular, how fast we are making progress in upgrading older hotels And the second one is, can you provide a bit of color on our strategy for the hotel [indiscernible] Going forward. Why are we closing so many of those?

Thank you.

Okay. Thanks, Frank. [indiscernible] Selena pick up his questions. Okay. In terms of our hotel business in 2025, we do plan and from our pipeline and from our compilation of the interest parties, we have planned to open four eighty new hotels That's about 20% more than that of 2024. And that's one our core focus The second is upgrading of our existing portfolio, the aged hotels. We still have 700 to 800 of those that needs to be upgraded [indiscernible] hopefully that's going to be done by the summer of twenty twenty six. And we are [indiscernible] tremendous amount of progress in terms of incentivizing our hotel owners because right after the pandemic, they need a couple of years recovery time to accumulate some capital to start upgrading the existing hotels And then the third is we're improving the overall efficiency in terms of our management system and our team and so that we can better support both the new franchisees and the existing franchisees for the businesses. So with that, we feel that in 2025, we are able to have a fresher portfolio of the hotels And in terms of the closing of LO leased and operated hotels, That's for a couple of reasons.

One, is a lot of them are because of the lease expired. And we feel that those second tier, third tier locations that are no longer ideal to be a flagship hotel locations. We want to focus on our resources on the Tier one flagship hotels and also on the franchise managed segment. And the the closure of leased and operated hotels really will depend on the lease term. Once the lease term is up for renewal, we'll carefully carefully review the status to see whether we should make the further investment continue to extend the lease term or terminate and sometimes it's a mutual discussion issues. And our focus is going to be [indiscernible] the focus into the franchise and manage the sectors. So that's our strategy [indiscernible] and our focus in the future. And we'll continue to evaluate the L [indiscernible] To make sure it does not consume a lot of additional resources from ourselves.

Okay. Got it.

Thank you, Alex.

Thank you. Next question comes from Alice Hsu with Con Capital. Please go ahead.

Hello. Thanks for taking my question.

My first question is in our restaurant business, we're increasing the proportion of of street street stores and reducing the number of mall restaurants. Do you expect this trend to continue? That's my first question.

Okay. Yes, we do expect that trend continue. The number of shopping malls and the traffic to the malls I think are changing very fast. So in addition, the rent and all the expenses associated be a renter in the mall is also very high. And plus the mall has certain operating hours that's also limiting sometimes the traffic And we have not [indiscernible] [indiscernible] Therefore, we have focused on the opening of the street [indiscernible] Where at least we have this stable consumer traffic, food traffic and we can control our own operating hours And the result are really showing that in light of the very competitive environment, in this food businesses, that we are still maintaining a profitable operation while we are transforming from [indiscernible] older existing legacy brand into our fresher and more trendy concept. So we are making, I believe, a great progress in that end.

And we'll continue to focus on that end. And the second is, we're also changing and adjusting the size of the restaurant to make sure they are the most economical, most efficient and deliver the best profitable result to our franchisees So that's the overall plan and strategy for our food business for the 2025.

Thank you. My second question is at the end of twenty twenty four, we had 182 restaurants. The same number as three months earlier. You mentioned that the business transition is over. What can we expect in 2025? That's my second question.

Yes. We in terms of net openings, we have not done a good job. And we have not pushed really hard in terms of opening new restaurant, especially considering the sentiment in the marketplace? But this year, I think that we see with the profitable operation for our existing restaurant And we we feel confident that the trend and also the pipelines we should be able to deliver 60 new openings of the restaurants for the year of 2025.

Awesome. Thank you.

Thank you. And our next question is a follow-up from Frank Ma at Kixing Capital. Please go ahead.

Thank you. Thank you. I have one more question.

Questions.

You have talked on previous earnings call about the initiatives to increase the trading liquidity in our share. Any progress on this? Thank you.

Thank you.

We have evaluated a number of options to increase liquidity And we have a plan the reverse [indiscernible] which took a little bit longer time than we originally planned. And once that is done, I think that our liquidity should increase substantially The second is the last couple of quarters have been a transitional quarter. We've been trying to uplifting, upgrading our existing portfolios, opening up new hotels, And so we have a focus on really running a profitable operation for both restaurant and hotel businesses. And trying to have a strong cash flows and stable dividend and eventually eventually I think that we'll earn the confidence and of our shareholders. And that they will potentially also increase the share price and the liquidity So and we feel that the merger and other available financing will be available to us in the near future. And I would make those announcement as soon as they become available to you.

Thank you. Thank you, Charlie.

And have a day.

Thank you. This concludes the question and answer session. I'd like to turn the conference back over to Selena Yang for any closing remarks.

In closing, on behalf of the entire GreenTree management team, we thank you for your interest in GreenTree and your participation in today's call. If you require any further information, or have plans to meet us, please feel free to contact us. Thank you all.

Thank you.

Thank you. This concludes today's conference call.

We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.