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GreenTree Hospitality Group Ltd.

GreenTree Hospitality Group Ltd.GHG決算レポート

NYSE

GreenTree Hospitality Group Ltd. is a pure play franchised hotel operator, headquartered in Shanghai, China, with the majority of its hotels both franchised-and-managed. In 2017, GreenTree was the fourth largest economy to mid-scale hotel group in China based on the number of hotel rooms according to China Hospitality Association.

What changed in GreenTree Hospitality Group Ltd.'s 20-F — 2023 vs 2024

Top changes in GreenTree Hospitality Group Ltd.'s 2024 20-F

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Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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The occurrence of any of such events may have a material adverse effect on our business, financial condition and results of operations. Our growth depends on our ability to grow the number of hotels and restaurants in operation. Our growth depends on our ability to open and profitably operate new hotels and restaurants under both franchised-and-managed model and leased-and-operated model.
The occurrence of any of such events may have a material adverse effect on our business, financial condition and results of operations. Our growth depends on our ability to grow the number of hotels and restaurants in operation. Our growth depends on our ability to open and profitably operate new hotels under both franchised-and-managed model and leased-and-operated model.
Risks and uncertainties related to the restaurant business operated by Da Niang Dumplings and Bellagio include, but are not limited to, the following: ● if the quality of our dining experience declines, our restaurants may not continue to be successful; ● we may fail to maintain or enhance recognition and reputation of our brands; ● we may not be able to maintain and increase the sales and profitability of our existing restaurants; ● if we cannot obtain desirable restaurant locations or secure renewal of existing leases on commercially reasonable terms, our business, results of operations and financial condition will be adversely affected; ● food safety and foodborne illness concerns may have an adverse effect on our reputation and business; ● any significant failure to maintain effective quality assurance systems for our restaurants could have a material adverse effect on our business, reputation, results of operations and financial conditions; ● any significant liability claims, food contamination complaints from our customers or reports of incidents of food tampering could adversely affect our business, reputation, results of operations and financial condition; ● increases in the cost of ingredients used in our restaurants may lead to declines in our margins and operating results; and ● we rely on third parties for supplies and services and any shortage or interruption in supply could slow our growth and reduce our profitability.
Risks and uncertainties related to the restaurant business operated by Da Niang Dumplings and Bellagio include, but are not limited to, the following: ● if the quality of our dining experience declines, our restaurants may not continue to be successful; ● we may fail to maintain or enhance recognition and reputation of our brands; ● we may not be able to maintain and increase the sales and profitability of our existing restaurants; ● if we cannot obtain desirable restaurant locations or secure renewal of existing leases on commercially reasonable terms, our business, results of operations and financial condition will be adversely affected; ● food safety and foodborne illness concerns may have an adverse effect on our reputation and business; ● any significant failure to maintain effective quality assurance systems for our restaurants could have a material adverse effect on our business, reputation, results of operations and financial conditions; 33 ● any significant liability claims, food contamination complaints from our customers or reports of incidents of food tampering could adversely affect our business, reputation, results of operations and financial condition; ● increases in the cost of ingredients used in our restaurants may lead to declines in our margins and operating results; and ● we rely on third parties for supplies and services and any shortage or interruption in supply could slow our growth and reduce our profitability.
See “— Our hotels and restaurants being converted into franchised-and-managed hotels may not be able to obtain their own operational licenses or fail to pay us the rent materially and adversely affect our business and results of operations.” In respect of our franchising business, we are subject to a comprehensive disclosure requirement when recruiting and managing our franchisees.
See “— Our hotels and restaurants being converted into franchised-and-managed hotels may not be able to obtain their own operational licenses or fail to pay us the rent, which may materially and adversely affect our business and results of operations.” In respect of our franchising business, we are subject to a comprehensive disclosure requirement when recruiting and managing our franchisees.
Laws and regulations in China relating to security and privacy are becoming increasingly important. Any theft, loss, fraudulent, unlawful use or disclosure of customer, employee or company data could harm our reputation and result in remedial and other costs, liabilities, fines or lawsuits. Any failure to protect our trademarks and other intellectual property rights could negatively impact our business.
Laws and regulations in China relating to security and privacy are becoming increasingly important. Any theft, loss, fraudulent, unlawful use or disclosure of customer, employee or company data could harm our reputation and result in remedial and other costs, liabilities, fines or lawsuits. 27 Any failure to protect our trademarks and other intellectual property rights could negatively impact our business.
As a result, you may not have the same protection afforded to shareholders of companies that are subject to these corporate governance requirements. Our financial and operating performance may be adversely affected by epidemics, natural disasters and other catastrophes.
As a result, you may not have the same protection afforded to shareholders of companies that are subject to these corporate governance requirements. 30 Our financial and operating performance may be adversely affected by epidemics, natural disasters and other catastrophes.
The market price for our ADSs may be highly volatile and subject to wide fluctuations in response to factors including the following: ● negative media reports and coverage regarding us or other companies in the hospitality and restaurant industries; ● regulatory developments in our target markets affecting us, our customers or our competitors; 36 Table of Contents ● announcements of studies and reports relating to the quality of our solutions or those of our competitors; ● actual or anticipated fluctuations in our quarterly results of operations and changes or revisions of our expected results; ● changes in financial estimates by securities research analysts; ● conditions in the travel, hospitality and restaurant industries; ● changes in the economic performance or market valuations of other hospitality or restaurant companies; ● announcements by us or our competitors of new brands, acquisitions, strategic relationships, joint ventures or capital commitments; ● addition or departure of our senior management; ● fluctuations of exchange rates between the RMB and U.S. dollar; ● potential litigation or administrative investigations; ● release or expiry of lock-up or other transfer restrictions on our outstanding ADSs or ordinary shares; ● sales or perceived potential sales of additional ordinary shares or ADSs; and ● general economic or political conditions in China.
The market price for our ADSs may be highly volatile and subject to wide fluctuations in response to factors including the following: ● negative media reports and coverage regarding us or other companies in the hospitality and restaurant industries; ● regulatory developments in our target markets affecting us, our customers or our competitors; ● announcements of studies and reports relating to the quality of our solutions or those of our competitors; ● actual or anticipated fluctuations in our quarterly results of operations and changes or revisions of our expected results; ● changes in financial estimates by securities research analysts; ● conditions in the travel, hospitality and restaurant industries; ● changes in the economic performance or market valuations of other hospitality or restaurant companies; ● announcements by us or our competitors of new brands, acquisitions, strategic relationships, joint ventures or capital commitments; ● addition or departure of our senior management; ● fluctuations of exchange rates between the RMB and U.S. dollar; ● potential litigation or administrative investigations; ● release or expiry of lock-up or other transfer restrictions on our outstanding ADSs or ordinary shares; ● sales or perceived potential sales of additional ordinary shares or ADSs; and ● general economic or political conditions in China.
Our results of operations are subject to conditions typically affecting the hospitality and restaurant industries, including the following: ● changes in national, regional or local economic conditions; ● natural disasters or travelers’ fears of exposure to serious contagious diseases; ● changes in travel patterns, food patterns or consumption patterns; ● changes in governmental regulations that influence or determine wages, prices or construction costs; ● local market conditions such as an oversupply of, or a reduction in demand for, hotel rooms and restaurants; ● our ability to secure desirable locations for our hotels and restaurants; ● the attractiveness of our hotels and restaurants to potential guests and competition from other hotels and restaurants; 15 Table of Contents ● changes in occupancy and room rates for our hotels, as well as average checks, average daily tickets and average daily sales per store for our restaurants; ● increases in operating costs and expenses due to inflation and other factors; ● our ability to develop and maintain positive relations with current and potential franchisees; ● the performance of managerial and other employees of our hotels and restaurants; ● issues related to food safety and instances of food borne diseases; ● risks arising from failures to uphold effective quality assurance systems across our restaurant operations; ● potential exposure to significant liability claims due to customer complaints regarding food contamination or incidents of food tampering; ● shortages or interruptions in the availability and delivery of food products and other essential supplies; ● fluctuations in prices of raw materials, which may impact our cost structure; and ● labor shortage, increase in labor costs and large personnel mobility.
Our results of operations are subject to conditions typically affecting the hospitality and restaurant industries, including the following: ● changes in national, regional or local economic conditions; ● natural disasters or travelers’ fears of exposure to serious contagious diseases; ● changes in travel patterns, food patterns or consumption patterns; ● changes in governmental regulations that influence or determine wages, prices or construction costs; ● local market conditions such as an oversupply of, or a reduction in demand for, hotel rooms and restaurants; ● our ability to secure desirable locations for our hotels and restaurants; ● the attractiveness of our hotels and restaurants to potential guests and competition from other hotels and restaurants; 12 ● changes in occupancy and room rates for our hotels, as well as average checks, average daily tickets and average daily sales per store for our restaurants; ● increases in operating costs and expenses due to inflation and other factors; ● our ability to develop and maintain positive relations with current and potential franchisees; ● the performance of managerial and other employees of our hotels and restaurants; ● issues related to food safety and instances of food borne diseases; ● risks arising from failures to uphold effective quality assurance systems across our restaurant operations; ● potential exposure to significant liability claims due to customer complaints regarding food contamination or incidents of food tampering; ● shortages or interruptions in the availability and delivery of food products and other essential supplies; ● fluctuations in prices of raw materials, which may impact our cost structure; and ● labor shortage, increase in labor costs and large personnel mobility.
Our executive officers and directors beneficially own approximately 90.0% of our outstanding shares. These shareholders could exert substantial influence over matters requiring approval by our shareholders, including electing directors and approving mergers or other business combination transactions.
Our executive officers and directors beneficially own approximately 90% of our outstanding shares. These shareholders could exert substantial influence over matters requiring approval by our shareholders, including electing directors and approving mergers or other business combination transactions.
For example, in January 2019, we became a major shareholder of Argyle via an acquisition transaction. The sellers, including Argyle Hotel Management Group (Australia) Pty Ltd and its founder, Mr.
For example, in January 2019, we became a major shareholder of Argyle Hotel Management Group (Australia) Pty Ltd., or Argyle, via an acquisition transaction. The sellers, including Argyle and its founder, Mr.
During the past few years, we have sought to convert some hotels and restaurants from the leased-and-operated model over to the franchised-and-managed model through selling relevant business assets and handed over the management of such hotels and restaurants, in most of the cases pursuant to an asset, business and personnel transfer agreement, or Transfer Agreements, to certain individuals or entities that have subsequently entered into franchise agreements with us and have therefore become our new franchisees.
During the past few years, we have sought to convert some hotels and restaurants from the leased-and-operated model over to the franchised-and-managed model through selling relevant business assets and handed over the management of such hotels and restaurants, in most of the cases pursuant to an asset, business and personnel transfer agreement or an entrusted operation agreement, or Transfer Agreements, to certain individuals or entities that have subsequently entered into franchise agreements with us and have therefore become our new franchisees.
The failure of these 14 lessors to register lease agreements as required by law or to ensure that the hotel or restaurant properties are operated in compliance with their designated use may subject these lessors or us to fines or other penalties in the amount of up to RMB10,000 for each hotel or restaurant property or approximately RMB620,000 in aggregate, which may negatively affect our ability to operate the hotels and restaurants covered under those leases.
The failure of these 70 lessors to register lease agreements as required by law or to ensure that the hotel or restaurant properties are operated in compliance with their designated use may subject these lessors or us to fines or other penalties in the amount of up to RMB10,000 for each hotel or restaurant property or approximately RMB620,000 in aggregate, which may negatively affect our ability to operate the hotels and restaurants covered under those leases.
Under the HFCA Act and the rules issued by the SEC and the PCAOB thereunder, if we have retained a registered public accounting firm to issue an audit report where the registered public accounting firm has a branch or office that is located in a foreign jurisdiction and the PCAOB has determined that it is unable to inspect or investigate completely because of a position taken by an authority in the foreign jurisdiction, the SEC will identify us as a “covered issuer”, or SEC-identified issuer, shortly after we file with the SEC a report required under the Securities Exchange Act of 1934, or the Exchange Act (such as our annual report on Form 20-F) that includes an audit report issued by such accounting firm; and if we were to be identified as an SEC-identified issuer for two consecutive years, the SEC would prohibit our securities (including our shares or ADSs) from being traded on a national securities exchange or in the over-the-counter trading market in the United States. 14 Table of Contents In December 2021, the PCAOB made its determinations, or the 2021 determinations, pursuant to the HFCA Act that it was unable to inspect or investigate completely registered public accounting firms headquartered in mainland China or Hong Kong including our auditor, Ernst & Young Hua Ming LLP.
Under the HFCA Act and the rules issued by the SEC and the PCAOB thereunder, if we have retained a registered public accounting firm to issue an audit report where the registered public accounting firm has a branch or office that is located in a foreign jurisdiction and the PCAOB has determined that it is unable to inspect or investigate completely because of a position taken by an authority in the foreign jurisdiction, the SEC will identify us as a “covered issuer”, or SEC-identified issuer, shortly after we file with the SEC a report required under the Securities Exchange Act of 1934, or the Exchange Act (such as our annual report on Form 20-F) that includes an audit report issued by such accounting firm; and if we were to be identified as an SEC-identified issuer for two consecutive years, the SEC would prohibit our securities (including our shares or ADSs) from being traded on a national securities exchange or in the over-the-counter trading market in the United States. 11 In December 2021, the PCAOB made its determinations, or the 2021 determinations, pursuant to the HFCA Act that it was unable to inspect or investigate completely registered public accounting firms headquartered in mainland China or Hong Kong including our auditor, Ernst & Young Hua Ming LLP.
As to these 76 ultimate owners, if they have not obtained and provided such title certificates because the relevant properties were constructed by such ultimate owners without having obtained or in violation of a construction project planning permit, our of such properties may be challenged or even invalidated by a government authority or relevant dispute resolution institution.
As to these 26 ultimate owners, if they have not obtained and provided such title certificates because the relevant properties were constructed by such ultimate owners without having obtained or in violation of a construction project planning permit, our of such properties may be challenged or even invalidated by a government authority or relevant dispute resolution institution.
In addition, the research and examinations that we conduct on both the hotel or restaurant properties and the potential franchisees before entering into franchise agreements, may not be sufficient for us to identify all relevant information. As a result, we may be in dispute with our franchisees, which may result in litigation filed by or against us.
Furthermore, the research and examinations that we conduct on both the hotel or restaurant properties and the potential franchisees before entering into franchise agreements, may not be sufficient for us to identify all relevant information. As a result, we may be in dispute with our franchisees, which may result in litigation filed by or against us.
In addition, based on the specific land use right certificates and property ownership certificates held by some of our lessors of the leased-and-operated hotels and restaurants, approximately 14 of the hotel properties we own or lease and operate are restricted to industrial and other uses, rather than qualified for hotel or restaurant operational use.
In addition, based on the specific land use right certificates and property ownership certificates held by some of our lessors of the leased-and-operated hotels and restaurants, approximately half of the hotel properties we own or lease and operate are restricted to industrial and other uses, rather than qualified for hotel or restaurant operational use.
Also, see “— Risks Related to Doing Business in China — It is unclear whether we will be considered as a PRC “resident enterprise” under the Enterprise Income Tax Law of the PRC, and depending on the determination of our PRC “resident enterprise” status, dividends paid to us by our PRC subsidiaries may be subject to PRC withholding tax, we may be subject to 25% PRC income tax on our worldwide income, and holders of our ADSs may be subject to PRC withholding tax on dividends on, and gains realized on their transfer of, our ADSs.” 10 Table of Contents PRC regulation of loans and direct investment by offshore holding companies to PRC entities may delay or prevent us from using the proceeds of our initial public offering to make loans or additional capital contributions to our PRC subsidiaries which would materially and adversely affect our liquidity and our ability to fund and expand our business.
Also, see “— Risks Related to Doing Business in China — It is unclear whether we will be considered as a PRC “resident enterprise” under the Enterprise Income Tax Law of the PRC, and depending on the determination of our PRC “resident enterprise” status, dividends paid to us by our PRC subsidiaries may be subject to PRC withholding tax, we may be subject to 25% PRC income tax on our worldwide income, and holders of our ADSs may be subject to PRC withholding tax on dividends on, and gains realized on their transfer of, our ADSs.” 7 PRC regulation of loans and direct investment by offshore holding companies to PRC entities may delay or prevent us from using the proceeds of our initial public offering to make loans or additional capital contributions to our PRC subsidiaries which would materially and adversely affect our liquidity and our ability to fund and expand our business.
In addition, if any incidents, particularly fire accidents, occur in any of the leased-and-operated hotels and restaurants that do not possess the relevant licenses, permits, title certificate or fire safety inspection certificate, or is located on properties where the actual use and the designated land or property use are inconsistent, there could be substantial negative publicity, thereby triggering large-scale government actions that impact our entire network of hotels and restaurants, which in turn will have a material adverse impact on our business, results of operations and financial condition. 31 Table of Contents We are subject to risks related to litigation filed by or against us, and adverse litigation results may harm our business and financial condition.
In addition, if any incidents, particularly fire accidents, occur in any of the leased-and-operated hotels and restaurants that do not possess the relevant licenses, permits, title certificate or fire safety inspection certificate, or is located on properties where the actual use and the designated land or property use are inconsistent, there could be substantial negative publicity, thereby triggering large-scale government actions that impact our entire network of hotels and restaurants, which in turn will have a material adverse impact on our business, results of operations and financial condition. 28 We are subject to risks related to litigation filed by or against us, and adverse litigation results may harm our business and financial condition.
If such transactions involving PRC taxable assets were subject to PRC enterprise income tax, our results of operations and financial condition could be adversely affected. 12 Table of Contents If additional remedial measures are imposed on the “big four” PRC-based accounting firms, including our independent registered public accounting firm, in administrative proceedings brought by the SEC alleging such firms’ failure to meet specific criteria set by the SEC with respect to requests for the production of documents, we could be unable to timely file future financial statements in compliance with the requirements of the Exchange Act.
If such transactions involving PRC taxable assets were subject to PRC enterprise income tax, our results of operations and financial condition could be adversely affected. 9 If additional remedial measures are imposed on the “big four” PRC-based accounting firms, including our independent registered public accounting firm, in administrative proceedings brought by the SEC alleging such firms’ failure to meet specific criteria set by the SEC with respect to requests for the production of documents, we could be unable to timely file future financial statements in compliance with the requirements of the Exchange Act.
As of December 31, 2023, we had outstanding options with respect to 940,500 Class A ordinary shares that have been granted to our employees, directors and consultants under the 2018 share incentive plan.
As of December 31, 2024, we had outstanding options with respect to 940,500 Class A ordinary shares that have been granted to our employees, directors and consultants under the 2018 share incentive plan.
For most of our franchised-and-managed hotels and restaurants and all but three of our leased-and-operated hotels and restaurants, we and our franchisees do not hold property ownership with respect to the premises under which those hotels and restaurants are operated.
For most of our franchised-and-managed hotels and restaurants and all but 3 of our leased-and-operated hotels and restaurants, we and our franchisees do not hold property ownership with respect to the premises under which those hotels and restaurants are operated.
In addition, the trademark “GreenTree Inn” in the U.S. was registered by a company owned by Mr. Alex S. Xu, our chairman and chief executive officer and currently used by a chain of 18 hotels in the U.S. owned by a company majority owned by Mr. Alex S. Xu.
In addition, the trademark “GreenTree Inn” in the U.S. was registered by a company owned by Mr. Alex S. Xu, our chairman and chief executive officer and currently used by a chain of 17 hotels in the U.S. owned by a company majority owned by Mr. Alex S. Xu.
The theft, loss, fraudulent or unlawful use of customer, employee or company data could harm our reputation or result in remedial and other costs, liabilities, fines or lawsuits. 29 Table of Contents The Regulation (EU) 2016/679 of 27 April 2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data, and repealing Directive 95/46/EC, known as the general data protection regulation, or GDPR, has imposed certain requirements on the processing of personal data relating to natural persons.
The theft, loss, fraudulent or unlawful use of customer, employee or company data could harm our reputation or result in remedial and other costs, liabilities, fines or lawsuits. 26 The Regulation (EU) 2016/679 of 27 April 2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data, and repealing Directive 95/46/EC, known as the general data protection regulation, or GDPR, has imposed certain requirements on the processing of personal data relating to natural persons.
See “— Failure to comply with government regulations relating to the franchise, hospitality and restaurant industries, construction, fire prevention, food hygiene, safety and environmental protection could materially and adversely affect our business and results of operations.” 16 Table of Contents As many factors affecting the operations of those hotels and restaurants are beyond our control, we cannot assure you that the quality of the services in our franchised-and-managed hotels and restaurants are consistent with our standards and requirements.
See “— Failure to comply with government regulations relating to the franchise, hospitality and restaurant industries, construction, fire prevention, food hygiene, safety and environmental protection could materially and adversely affect our business and results of operations.” 13 As many factors affecting the operations of those hotels and restaurants are beyond our control, we cannot assure you that the quality of the services in our franchised-and-managed hotels and restaurants are consistent with our standards and requirements.
If our independent registered public accounting firm were denied, even temporarily, the ability to practice before the SEC and we were unable to timely find another registered public accounting firm to audit and issue an opinion on our consolidated financial statements, our consolidated financial statements could be determined not to be in compliance with the requirements of the Exchange Act. 13 Table of Contents The audit report included in this annual report is prepared by an auditor which the U.S.
If our independent registered public accounting firm were denied, even temporarily, the ability to practice before the SEC and we were unable to timely find another registered public accounting firm to audit and issue an opinion on our consolidated financial statements, our consolidated financial statements could be determined not to be in compliance with the requirements of the Exchange Act. 10 The audit report included in this annual report is prepared by an auditor which the U.S.
If we fail to pay such rent, we may be required by our landlords to terminate the sublease arrangements and compensate their losses, if any, which may adversely affect our result of operations and our financial condition. 22 Table of Contents The leases of our franchisees and us could be terminated early, we and our franchisees may not be able to renew the existing leases on commercially reasonable terms and the rents paid by us or our franchisees could increase substantially, which could materially and adversely affect our operations.
If we fail to pay such rent, we may be required by our landlords to terminate the sublease arrangements and compensate their losses, if any, which may adversely affect our result of operations and our financial condition. 19 The leases of our franchisees and us could be terminated early, we and our franchisees may not be able to renew the existing leases on commercially reasonable terms and the rents paid by us or our franchisees could increase substantially, which could materially and adversely affect our operations.
The existing and future acquisitions or investments may expose us to potential risks, including risks associated with unforeseen or hidden liabilities, risks that acquired or invested companies will not achieve anticipated performance levels, diversion of management attention and resources from our existing business, difficulty in integrating the acquired businesses with our existing operational infrastructure, and inability to generate sufficient revenues to offset the costs and expenses of acquisitions or investments.
Company 2024 and recent transactions The existing and future acquisitions or investments may expose us to potential risks, including risks associated with unforeseen or hidden liabilities, risks that acquired or invested companies will not achieve anticipated performance levels, diversion of management attention and resources from our existing business, difficulty in integrating the acquired businesses with our existing operational infrastructure, and inability to generate sufficient revenues to offset the costs and expenses of acquisitions or investments.
For example, during the past three years, approximately 12.9% of our room nights were booked through OTAs., to whom we pay agency fees for such services.
For example, during the past three years, approximately 15.9% of our room nights were booked through OTAs to whom we pay agency fees for such services.
You may not realize a return on your investment in our ADSs and you may even lose your entire investment in our ADSs. 37 Table of Contents Substantial future sales of our ADSs, or other equity or equity-linked securities in the public market, or the perception that these sales could occur, could cause the price of our ADSs to decline.
You may not realize a return on your investment in our ADSs and you may even lose your entire investment in our ADSs. Substantial future sales of our ADSs, or other equity or equity-linked securities in the public market, or the perception that these sales could occur, could cause the price of our ADSs to decline.
There are no detailed rules or precedents governing the procedures and specific criteria for determining “de facto management body.” 11 Table of Contents The Notice Regarding the Determination of Chinese-Controlled Offshore Incorporated Enterprises as PRC Tax Resident Enterprises on the Basis of De Facto Management Bodies, or Circular 82, provides certain specific criteria for determining whether the “de facto management body” of a Chinese-controlled offshore-incorporated enterprise is located in China.
There are no detailed rules or precedents governing the procedures and specific criteria for determining “de facto management body.” 8 The Notice Regarding the Determination of Chinese-Controlled Offshore Incorporated Enterprises as PRC Tax Resident Enterprises on the Basis of De Facto Management Bodies, or Circular 82, provides certain specific criteria for determining whether the “de facto management body” of a Chinese-controlled offshore-incorporated enterprise is located in China.
In 2021, 2022 and 2023, approximately 12.9% of our room nights were booked through OTAs to whom we pay commissions for such services. If these intermediaries and consolidators become the primary channel through which our guests make their bookings, they may be able to negotiate higher commissions, reduced room rates, or other significant concessions from us.
In 2022, 2023 and 2024, approximately 15.9% of our room nights were booked through OTAs to whom we pay commissions for such services. If these intermediaries and consolidators become the primary channel through which our guests make their bookings, they may be able to negotiate higher commissions, reduced room rates, or other significant concessions from us.
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.” Following the Statement of Protocol signed between the PCAOB and the China Securities Regulatory Commission and the Ministry of Finance of the PRC in August 2022 and the on-site inspections and investigations conducted by the PCAOB staff in Hong Kong from September to November 2022, the PCAOB Board voted in December 2022 to vacate the previous 2021 determinations, and as a result, our auditor, Ernst & Young Hua Ming LLP, is no longer a registered public accounting firm that the PCAOB is unable to inspect or investigate completely as of the date of this annual report or at the time of issuance of the audit report included herein.
Following the Statement of Protocol signed between the PCAOB and the China Securities Regulatory Commission and the Ministry of Finance of the PRC in August 2022 and the on-site inspections and investigations conducted by the PCAOB staff in Hong Kong from September to November 2022, the PCAOB Board voted in December 2022 to vacate the previous 2021 determinations, and as a result, our auditor, Ernst & Young Hua Ming LLP, is no longer a registered public accounting firm that the PCAOB is unable to inspect or investigate completely as of the date of this annual report or at the time of issuance of the audit report included herein.
The measures taken by the U.S. and Chinese governments may cause investors to lose confidence in Chinese companies and counterparties, including us. 6 Table of Contents Furthermore, there have been media reports on deliberations within the U.S. government regarding potentially limiting or restricting China-based companies from accessing U.S. capital markets, and in January 2021 the New York Stock Exchange, or the NYSE, resolved to delist certain China-based companies in compliance with an executive order issued in November 2020.
The measures taken by the U.S. and Chinese governments may cause investors to lose confidence in Chinese companies and counterparties, including us. 3 Furthermore, there have been media reports on deliberations within the U.S. government regarding potentially limiting or restricting China-based companies from accessing U.S. capital markets, and in January 2021 the New York Stock Exchange, or the NYSE, resolved to delist certain China-based companies in compliance with an executive order issued in November 2020.
If such agreements cannot be renewed on satisfactory terms upon expiration, our results of operations could be materially and adversely affected. 17 Table of Contents Failure to comply with government regulations relating to the leased-and-operated and franchised-and-managed business models, hospitality and restaurant industries, construction, fire prevention, food hygiene, safety and environmental protection could materially and adversely affect our business and results of operations.
If such agreements cannot be renewed on satisfactory terms upon expiration, our results of operations could be materially and adversely affected. 14 Failure to comply with government regulations relating to the leased-and-operated and franchised-and-managed business models, hospitality and restaurant industries, construction, fire prevention, food hygiene, safety and environmental protection could materially and adversely affect our business and results of operations.
Based on the nature and composition of our income and assets, and the valuation of our assets, including goodwill, we do not believe we were a PFIC for our 2023 taxable year.
Based on the nature and composition of our income and assets, and the valuation of our assets, including goodwill, we do not believe we were a PFIC for our 2024 taxable year.
If we are subject to severe penalties or incur significant legal fees in connection with labor law disputes or investigations, our business, financial condition and results of operations may be adversely affected. 9 Table of Contents The Labor Contract Law prohibits an employer to establish staff dispatching companies to place workers with themselves or their subsidiaries.
If we are subject to severe penalties or incur significant legal fees in connection with labor law disputes or investigations, our business, financial condition and results of operations may be adversely affected. 6 The Labor Contract Law prohibits an employer to establish staff dispatching companies to place workers with themselves or their subsidiaries.
However, as of December 31, 2023, because our lessors failed or were reluctant to provide necessary documents for us to register the leases, 104 lessors of our leased-and-operated hotels and restaurants had not obtained registrations of their leases from the relevant authorities as required despite our repeated requests to these lessors to obtain registrations, as required under our lease agreements with them.
However, as of December 31, 2024, because our lessors failed or were reluctant to provide necessary documents for us to register the leases, 70 lessors of our leased-and-operated hotels and restaurants had not obtained registrations of their leases from the relevant authorities as required despite our repeated requests to these lessors to obtain registrations, as required under our lease agreements with them.
We have increased the number of our total hotels in operation in China from eight as of December 31, 2005 to 4,238 as of December 31, 2023, and completed our acquisition of Da Niang Dumplings and Bellagio, two leading restaurant chain businesses in China, in 2023.
We have increased the number of our total hotels in operation in China from eight as of December 31, 2005 to 4,425 as of December 31, 2024, and completed our acquisition of Da Niang Dumplings and Bellagio, two leading restaurant chain businesses in China, in 2023.
We also may incur substantial costs in connection with evaluating hotel and restaurant properties and negotiating with property owners, including ones that we are subsequently unable to lease or franchise. 24 Table of Contents The growth in the number of hotels and restaurants is subject to numerous risks, many of which are beyond our control.
We also may incur substantial costs in connection with evaluating hotel and restaurant properties and negotiating with property owners, including ones that we are subsequently unable to lease or franchise. 21 The growth in the number of hotels and restaurants is subject to numerous risks, many of which are beyond our control.
Risk of a material slowdown in China’s economic growth rate may be based on several current or emerging factors, including: (i) occurrence of unusual circumstances; (ii) overinvestment by the government and businesses and excessive credit offered by banks; (iii) a rudimentary monetary policy; (iv) excessive privileges to state-owned enterprises at the expense of private enterprises; (v) the dwindling supply of surplus labor; (vi) a decrease in exports due to weaker overseas demand; (vii) failure to boost domestic consumption; and (viii) challenges resulted from international situations. 4 Table of Contents We face various legal and operational risks and uncertainties as a company based in and primarily operating in China.
Risk of a material slowdown in China’s economic growth rate may be based on several current or emerging factors, including: (i) occurrence of unusual circumstances; (ii) overinvestment by the government and businesses and excessive credit offered by banks; (iii) a rudimentary monetary policy; (iv) excessive privileges to state-owned enterprises at the expense of private enterprises; (v) the dwindling supply of surplus labor; (vi) a decrease in exports due to weaker overseas demand; (vii) failure to boost domestic consumption; and (viii) challenges resulted from international situations, for instance the tariff war. 1 We face various legal and operational risks and uncertainties as a company based in and primarily operating in China.
As such, we were required to satisfy additional disclosure requirement for SEC-identified issuers that are also foreign issuers in our annual report as of December 31, 2022 and for the year then ended. See “Item 16I.
As such, we were required to satisfy additional disclosure requirement for SEC-identified issuers that are also foreign issuers in our annual report as of December 31, 2022 and for the year then ended.
If such strategies are not successful, our business, financial condition and results of operations may be materially and adversely affected. 26 Table of Contents If we fail to maintain our relationships with our individual members and corporate members, our business and growth prospects could be materially and adversely affected.
If such strategies are not successful, our business, financial condition and results of operations may be materially and adversely affected. If we fail to maintain our relationships with our individual members and corporate members, our business and growth prospects could be materially and adversely affected.
Instead, we and our franchisees rely on leases or contracted management arrangements with third parties who either own the properties or lease the properties from the ultimate property owner. As of December 31, 2023, 32 of the ultimate owners of the properties of our leased-and-operated hotels or restaurants failed to provide us with the relevant title certificates.
Instead, we and our franchisees rely on leases or contracted management arrangements with third parties who either own the properties or lease the properties from the ultimate property owner. As of December 31, 2024, 26 of the ultimate owners of the properties of our leased-and-operated hotels or restaurants failed to provide us with the relevant title certificates.
Properties that we develop could become less attractive due to market saturation, oversupply or changes in market demand, with the result that we may not be able to recover development costs as we expect, or at all. 21 Table of Contents We also may acquire or develop owned-and-operated hotels and restaurants on a limited, case-by-case basis to seize unusually attractive business opportunities.
Properties that we develop could become less attractive due to market saturation, oversupply or changes in market demand, with the result that we may not be able to recover development costs as we expect, or at all. 18 We also may acquire or develop owned-and-operated hotels and restaurants on a limited, case-by-case basis to seize unusually attractive business opportunities.
Any failure to effectively and efficiently manage our expansion may materially and adversely affect our ability to capitalize on new business opportunities, which in turn may have a material adverse effect on our business, financial condition and results of operations. 25 Table of Contents Acquisitions, financial investment or strategic investment may have an adverse effect on our ability to manage our business and harm our results of operations and financial condition.
Any failure to effectively and efficiently manage our expansion may materially and adversely affect our ability to capitalize on new business opportunities, which in turn may have a material adverse effect on our business, financial condition and results of operations. 22 Acquisitions, financial investment or strategic investment may have an adverse effect on our ability to manage our business and harm our results of operations and financial condition.
Any decrease in the market value of our ADSs may result in our becoming a PFIC. 41 Table of Contents If we are a PFIC for any taxable year during which you hold our ADSs or Class A ordinary shares, our PFIC status could result in adverse U.S. federal income tax consequences to you if you are a U.S.
Any decrease in the market value of our ADSs may result in our becoming a PFIC. 38 If we are a PFIC for any taxable year during which you hold our ADSs or Class A ordinary shares, our PFIC status could result in adverse U.S. federal income tax consequences to you if you are a U.S.
Historically, we have derived a portion of our revenues from our individual members and from our cooperation arrangements with certain corporate members such as banks, airlines and other large companies. In 2021, 2022 and 2023, we sold approximately 87.1% of our room nights through our direct sales channels.
Historically, we have derived a portion of our revenues from our individual members and from our cooperation arrangements with certain corporate members such as banks, airlines and other large companies. In 2022, 2023 and 2024, we sold approximately 84.1% of our room nights through our direct sales channels.
Although our franchise agreements typically allow us to terminate the agreements under many circumstances, our franchisees may dispute our termination or our claim and in such cases we have to submit such disputes for the settlement by courts or arbitration. For example, as of December 31, 2023 we had 6 pending legal proceedings with franchised-and-managed hotels or restaurants.
Although our franchise agreements typically allow us to terminate the agreements under many circumstances, our franchisees may dispute our termination or our claim and in such cases we have to submit such disputes for the settlement by courts or arbitration. For example, as of December 31, 2024, we mainly had 27 pending legal proceedings with franchised-and-managed hotels or restaurants.
As a result of the foregoing, our public shareholders may have more difficulty in protecting their interests through actions against us, our management, our directors or our major shareholders than would shareholders of a corporation incorporated in a jurisdiction in the United States. 40 Table of Contents The ability of the SEC, the U.S.
As a result of the foregoing, our public shareholders may have more difficulty in protecting their interests through actions against us, our management, our directors or our major shareholders than would shareholders of a corporation incorporated in a jurisdiction in the United States. 37 The ability of the SEC, the U.S.
If new franchisees do not cover those terminated franchises, our results of operations and financial conditions could be materially and adversely affected. 20 Table of Contents Our hotels and restaurants being converted into franchised-and-managed hotels and restaurants may not be able to obtain their own operational licenses or fail to pay us the rent materially and adversely affect our business and results of operations.
If new franchisees do not cover those terminated franchises, our results of operations and financial conditions could be materially and adversely affected. 17 Our hotels and restaurants being converted into franchised-and-managed hotels and restaurants may not be able to obtain their own operational licenses or fail to pay us the rent, which may materially and adversely affect our business and results of operations.
Political tensions between the United States and China have escalated in recent years due to, among other things, the trade war between the two countries since 2018, the PRC National People’s Congress’ passage of Hong Kong national security legislation and decision of the National People’s Congress on improving the electoral system of the Hong Kong, the imposition of U.S. sanctions on certain Chinese officials from China’s central government and the Hong Kong Special Administrative Region by the U.S. government, the imposition of sanctions on certain individuals from the U.S. by the Chinese government, as well as various executive orders and proposed regulations announced in August and November 2023, indicating that the U.S. government would issue new regulations relating to artificial intelligence and cloud computing, including restrictions in investment into Chinese companies engaged in artificial intelligence, semiconductors and microelectronics, and quantum information technologies sectors, as well as potential restrictions in provision of cloud-computing services to China-based companies.
Political tensions between the United States and China have escalated in recent years due to, among other things, the trade war between the two countries since 2018, the PRC National People’s Congress’ passage of Hong Kong national security legislation and decision of the National People’s Congress on improving the electoral system of the Hong Kong, the imposition of U.S. sanctions on certain Chinese officials from China’s central government and the Hong Kong Special Administrative Region by the U.S. government, the imposition of sanctions on certain individuals from the U.S. by the Chinese government, restrictions in investment into Chinese companies engaged in artificial intelligence, semiconductors and microelectronics, and quantum information technologies sectors as well as various executive orders and proposed regulations including potential restrictions in provision of cloud-computing services to China-based companies.
If the value of our brand image is diminished or if our brands do not continue to be attractive to guests and franchisees, our business and results of operations may be materially and adversely affected. 27 Table of Contents Our results of operations may fluctuate significantly due to seasonality and other factors.
If the value of our brand image is diminished or if our brands do not continue to be attractive to guests and franchisees, our business and results of operations may be materially and adversely affected. 24 Our results of operations may fluctuate significantly due to seasonality and other factors.
Xu, our founder, chairman and chief executive officer, as he owns 83.9% of voting power of GTI, which entitles Mr. Alex S. Xu to nominate or replace all directors of GTI, and determine how GTI exercises the voting power in our company. As long as GTI or Mr. Alex S.
Xu, our founder, chairman and chief executive officer, as he owns 84.5% of voting power of GTI, which entitles Mr. Alex S. Xu to nominate or replace all directors of GTI, and determine how GTI exercises the voting power in our company. As long as GTI or Mr. Alex S.
The reserve fund can only be used to increase the registered capital and eliminate further losses of the respective companies under PRC regulations. As of December 31, 2021, 2022 and 2023, total statutory reserves of our PRC subsidiaries were RMB149.4 million, RMB150.2 million and RMB152.4 million (US$21.5 million). These reserves are not distributable as cash dividends, loans or advances.
The reserve fund can only be used to increase the registered capital and eliminate further losses of the respective companies under PRC regulations. As of December 31, 2022, 2023 and 2024, total statutory reserves of our PRC subsidiaries were RMB150.2 million, RMB152.4 million and RMB155.3 million (US$21.3 million). These reserves are not distributable as cash dividends, loans or advances.
GTI beneficially owns 84.7% of our Class A ordinary shares, 100% of our Class B ordinary shares and 94.0% of the aggregate voting power of our total issued and outstanding share capital. The voting power of our company owned by GTI is indirectly owned by Mr. Alex S.
GTI beneficially owns 84.8% of our Class A ordinary shares, 100% of our Class B ordinary shares and 94.1% of the aggregate voting power of our total issued and outstanding share capital. The voting power of our company owned by GTI is indirectly owned by Mr. Alex S.
A “Domestic Agency” shall be a domestic company participating in the equity incentive plan or a domestic institution which is qualified for asset custody business as chosen by us according to PRC law. 8 Table of Contents We adopted our 2018 share incentive plan in January 2018.
A “Domestic Agency” shall be a domestic company participating in the equity incentive plan or a domestic institution which is qualified for asset custody business as chosen by us according to PRC law. 5 We adopted our 2018 share incentive plan in January 2018.
If our restaurant brands, reputation, profitability and ingredient prices are not sufficiently attractive, we may be unable to attract potential franchisees and retain existing franchisees. 23 Table of Contents We may not be able to successfully attract new franchisees and compete for franchise agreements and, as a result, we may not be able to achieve our planned growth.
If our restaurant brands, reputation, profitability and ingredient prices are not sufficiently attractive, we may be unable to attract potential franchisees and retain existing franchisees. 20 We may not be able to successfully attract new franchisees and compete for franchise agreements and, as a result, we may not be able to achieve our planned growth.
As a result, fluctuations in exchange rates may have a material adverse effect on your investment. 7 Table of Contents Rapid urbanization and changes in zoning and urban planning in China may cause our hotel and restaurant properties to be demolished, expropriated or otherwise affected.
As a result, fluctuations in exchange rates may have a material adverse effect on your investment. 4 Rapid urbanization and changes in zoning and urban planning in China may cause our hotel and restaurant properties to be demolished, expropriated or otherwise affected.
For example, for the year ended December 31, 2023, we terminated 238 franchised-and-managed hotels and 24 franchised-and-managed restaurants that did not comply with our brand and operating standards, respectively. If a significant number of our existing franchise agreements are terminated early, our revenue and profit may decrease in the future.
For example, for the year ended December 31, 2024, we terminated 206 franchised-and-managed hotels and 27 franchised-and-managed restaurants that did not comply with our brand and operating standards, respectively. If a significant number of our existing franchise agreements are terminated early, our revenue and profit may decrease in the future.
See “Our Business — Legal Proceedings.” The outcome of legal proceedings is uncertain, we cannot predict with certainty the cost of defense, the cost of prosecution or the ultimate outcome of thereof, including remedies or damage awards, and adverse results in such litigation and other proceedings may disrupt our business, materially and adversely affect our reputation, results of operations, financial condition and prospects.
We cannot predict with certainty the cost of defense, the cost of prosecution or the ultimate outcome of thereof, including remedies or damage awards, and adverse results in such litigation and other proceedings may disrupt our business, materially and adversely affect our reputation, results of operations, financial condition and prospects.
Due to the disparate voting rights attached to shares in these two classes, GTI owns approximately 94.0% of the total voting power of our issued and outstanding ordinary shares. Mr. Alex S. Xu, our founder, chairman and chief executive officer, by virtue of this 83.9% voting power of GTI, which entitles Mr. Alex S.
Due to the disparate voting rights attached to shares in these two classes, GTI owns approximately 94.1% of the total voting power of our issued and outstanding ordinary shares. Mr. Alex S. Xu, our founder, chairman and chief executive officer, by virtue of this 84.5% voting power of GTI, which entitles Mr. Alex S.
Our success could be adversely affected by the performance of our franchised-and-managed hotels and restaurants. As of December 31, 2023, we franchised-and-managed approximately 98.5% of our hotels, and we derived 64.2%, 62.2% and 58.4% of our revenues from those hotels in 2021, 2022 and 2023, respectively, which include revenues from membership fees of franchised-and-managed hotels.
Our success could be adversely affected by the performance of our franchised-and-managed hotels and restaurants. As of December 31, 2024, we franchised-and-managed approximately 98.8% of our hotels, and we derived 62.2%, 58.4% and 58.6% of our revenues from those hotels in 2022, 2023 and 2024, respectively, which include revenues from membership fees of franchised-and-managed hotels.
As of December 31, 2023, we have received 74 software registration certificates for certain of our proprietary information and operational systems including our Central Reservation System (CRS), Property Management System (PMS) and certain other quality control systems.
As of December 31, 2024, we have received and maintained 63 software registration certificates for certain of our proprietary information and operational systems including our Central Reservation System (CRS), Property Management System (PMS) and certain other quality control systems.
In any event, we may not be able to obtain all permits, licenses, certificates and other approvals required by government regulations, which could negatively impact our business and significantly harm our reputation. As of December 31, 2023, we operate 65 leased-and-operated hotels.
In any event, we may not be able to obtain all permits, licenses, certificates and other approvals required by government regulations, which could negatively impact our bu siness and significantly harm our reputation. As of December 31, 2024, we operated 55 leased-and-operated hotels.
Furthermore, we have made loans to third parties including our franchisees, and other entities with which we have a business relationship or strategic cooperation.
Company if any recent status Furthermore, we have made loans to third parties including our franchisees, and other entities with which we have a business relationship or strategic cooperation.
As of December 31, 2023, one of the abovementioned new franchisees was still using our permits for the relevant hotel or restaurant. All of these franchisees have executed a supplementary agreement which requires them to stop using and return to us our permits upon execution of the supplementary agreements.
As of December 31, 2024, some of the abovementioned new franchisees were still using our permits for the relevant hotel or restaurant, most of which are our restaurant franchisees. All of these franchisees have executed a supplementary agreement which requires them to stop using and return to us our permits upon execution of the supplementary agreements.
As such, we were not identified as an SEC-identified issuer in 2023 and we do not expect to be so identified in 2024 either. However, the PCAOB may change its determinations under the HFCA Act at any point in the future.
As such, we were not identified as an SEC-identified issuer following the filing of our annual reports in 2023 and 2024 and we do not expect to be so identified following the filing of our annual report in 2025 either. However, the PCAOB may change its determinations under the HFCA Act at any point in the future.
We are a public company in the United States subject to the Sarbanes-Oxley Act of 2002. Section 404 of the Sarbanes-Oxley Act of 2002, or Section 404, requires that we include a report of management on our internal control over financial reporting in our annual report on Form 20-F.
Section 404 of the Sarbanes-Oxley Act of 2002, or Section 404, requires that we include a report of management on our internal control over financial reporting in our annual report on Form 20-F.
As a result, our business and results of operations may be adversely affected. 32 Table of Contents In addition, our franchisees may suspend or terminate their cooperation with us voluntarily or involuntarily due to various reasons, including disagreement or dispute with us, failure to maintain requisite approvals, licenses or permits or to comply with other governmental regulations, and events beyond our or their control, such as inclement weather, natural disasters, transportation interruptions or labor unrest or shortage.
In addition, our franchisees may suspend or terminate their cooperation with us voluntarily or involuntarily due to various reasons, including disagreement or dispute with us, failure to maintain requisite approvals, licenses or permits or to comply with other governmental regulations, and events beyond our or their control, such as inclement weather, natural disasters, transportation interruptions or labor unrest or shortage.
These measures may cause decreased economic activity, which in turn could lead to a reduction in demand for our services and consequently have a material adverse effect on our businesses, financial condition and results of operations. 5 Table of Contents Uncertainties with respect to the Chinese legal system could adversely affect us.
These measures may cause decreased economic activity, which in turn could lead to a reduction in demand for our services and consequently have a material adverse effect on our businesses, financial condition and results of operations. 2 Uncertainties with respect to the Chinese legal system could adversely affect us. We conduct our business primarily through our subsidiaries in China.
The labor contract law and the implementing rules impose requirements concerning, among others, the execution of written contracts between employers and employees, the time limits for probationary periods, and the length of employment contracts.
The labor contract law and the implementing rules impose requirements concerning, among others, the execution of written contracts between employers and employees, the time limits for probationary periods, and the length of employment contracts. The interpretation and implementation of these regulations are still evolving.
If we were to have a dispute with an OTA, the volume of our room inventory booked through such OTA may decline, or the OTA may block reservations of our rooms or remove our hotels from their website entirely, pending resolution of the dispute.
If we were to have a dispute with an OTA, the volume of our room inventory booked through such OTA may decline, or the OTA may block reservations of our rooms or remove our hotels from their website entirely, pending resolution of the dispute. As a result, our business and results of operations may be adversely affected.
In addition, in your capacity as an ADS holder, you will not be able to call a shareholders’ meeting. 43 Table of Contents
In addition, in your capacity as an ADS holder, you will not be able to call a shareholders’ meeting. 39
The interpretation and implementation of these regulations are still evolving, our employment practices may violate the labor contract law and related regulations and we could be subject to penalties, fines or legal fees as a result.
Our employment practices may violate the labor contract law and related regulations and we could be subject to penalties, fines or legal fees as a result.
The PRC legal system is based on written statutes and their interpretation by the Supreme People’s Court of the PRC. Unlike common law systems, prior court decisions may be cited for reference but have limited precedential value. Since the 1970s, the PRC government began to promulgate a comprehensive system of laws and regulations governing economic matters in general.
Unlike common law systems, prior court decisions may be cited for reference but have limited precedential value. Since the 1970s, the PRC government began to promulgate a comprehensive system of laws and regulations governing economic matters in general.
Amounts of net assets restricted include paid up capital and statutory reserve funds of our PRC subsidiaries amounted to RMB936.8 million, RMB898.6 million and RMB901.5 million (US$127.0 million) as of December 31, 2021, 2022 and 2023, respectively.
Amounts of net assets restricted include paid up capital and statutory reserve funds of our PRC subsidiaries amounted to RMB898.6 million, RMB901.5 million and RMB834.7 million (US$117.6 million) as of December 31, 2022, 2023 and 2024, respectively.
Holders of ADSs have fewer rights than shareholders and must act through the depositary to exercise their rights. Holders of our ADSs do not have the same rights as our registered shareholders. As a holder of our ADSs, you will not have any direct right to attend general meetings of our shareholders or to cast any votes at such meetings.
Holders of our ADSs do not have the same rights as our registered shareholders. As a holder of our ADSs, you will not have any direct right to attend general meetings of our shareholders or to cast any votes at such meetings.
However, our communication with our franchisees could be found in violation of these requirements in the future. 19 Table of Contents We may terminate franchise agreements earlier under certain circumstances, and we may have disputes with our franchisees which may materially and adversely affect our business and result of operations.
In the past, we have not received penalties in relation to such requirements. However, our communication with our franchisees could be found in violation of these requirements in the future. 16 We may terminate franchise agreements earlier under certain circumstances, and we may have disputes with our franchisees which may materially and adversely affect our business and result of operations.
In addition, the securities market from time to time experiences significant price and volume fluctuations that are not related to the operating performance of particular companies. These market fluctuations may also materially and adversely affect the market price of our ADSs.
In addition, the securities market from time to time experiences significant price and volume fluctuations that are not related to the operating performance of particular companies.
We intend to diversify our brand portfolio and mix of hospitality offerings with existing brands, including GreenTree Eastern, Gem, Gya, Vx, Geli, Deep Sleep, Greentree Inns, GT Alliance, Vatica and Shell to cover market segments from economy to business and mid-to-up-scale.
We intend to diversify our brand portfolio and mix of hospitality offerings with existing brands, including GreenTree Eastern, Gem, Gya, Vx, Geli, Deep Sleep, Greentree Inns, GT Alliance, Vatica and Shell to cover market segments from economy to business and mid-to-up-scale. 23 In addition, the strategy to diversify our mix of hospitality offerings may increase the cash needs of our operations and may distract our management’s attention and energy.
To the extent that we need to convert U.S. dollars we receive into RMB for our operations, appreciation of the RMB against the U.S. dollar would have an adverse effect on the RMB amount we would receive.
Any significant revaluation of the RMB may materially reduce any dividends payable on, our ADSs in U.S. dollars. To the extent that we need to convert U.S. dollars we receive into RMB for our operations, appreciation of the RMB against the U.S. dollar would have an adverse effect on the RMB amount we would receive.

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Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Risk Factors — Risks Related to Our Business — Failure to comply with government regulations relating to the leased-and-operated and franchised-and-managed business models, hospitality and restaurant industries, construction, fire prevention, food hygiene, safety and environmental protection could materially and adversely affect our business and results of operations.” In January 2006, the State Council promulgated the Regulations for Administration of Entertainment Places and amended them on February 6, 2016 and on November 29, 2020.
Risk Factors — Risks Related to Our Business — Failure to comply with government regulations relating to the leased-and-operated and franchised-and-managed business models, hospitality and restaurant industries, construction, fire prevention, food hygiene, safety and environmental protection could materially and adversely affect our business and results of operations.” 65 In January 2006, the State Council promulgated the Regulations for Administration of Entertainment Places and amended them on February 6, 2016 and on November 29, 2020.
Risk Factors — Risks Related to Doing Business in China — Failure to comply with PRC regulations regarding the registration requirements for employee stock ownership plans or share option plans may subject the PRC plan participants or us to fines and other legal or administrative sanctions.” The STA has issued certain circulars concerning employee share options and restricted shares.
Risk Factors — Risks Related to Doing Business in China — Failure to comply with PRC regulations regarding the registration requirements for employee stock ownership plans or share option plans may subject the PRC plan participants or us to fines and other legal or administrative sanctions.” 75 The STA has issued certain circulars concerning employee share options and restricted shares.
Our agent for service of process in the United States is Law Debenture Corporate Services Inc., located at 801 2nd Avenue, Suite 403, New York, New York 10017. B. Business Overview Hotel Business We have the strong direct sales channels coupled with an established membership program.
Our agent for service of process in the United States is Law Debenture Corporate Services Inc., located at 801 2nd Avenue, Suite 403, New York, New York 10017. 40 B. Business Overview Hotel Business We have the strong direct sales channels coupled with an established membership program.
In addition, we have enabled greater accessibility to our internal systems by our employees through the addition of e-Meetings as well as e-Human Resources, or e-HR, and e-Learning systems. e-HR system . Our e-HR system enables comprehensive tracking of the organizational and personnel information of our company.
In addition, we have enabled greater accessibility to our internal systems by our employees through the addition of e-Meetings as well as e-Human Resources, or e-HR, and e-Learning systems. i-HR system . Our i-HR system enables comprehensive tracking of the organizational and personnel information of our company.
Article 118 stipulates food and beverage business operators which emit fume and violate the provisions of this Law in failing to install and use fume purification facilities properly or failing to adopt other fume purification measures and emit fume beyond the emission standards shall be ordered by the supervision and administration authorities determined by the local People’s Governments of county level and above to make correction, and be subject to a fine ranging from RMB5,000 to RMB50,000; offenders who refuse to make correction shall be ordered to suspend production and rectify; Offenders who violate the provisions of this Law in undertaking new establishment, alteration and expansion of food and beverage business operations which emit fume, odor and waste gases within residential buildings, commercial cum residential buildings which have not installed complementary dedicated flue, and commercial floors of commercial cum residential buildings adjacent to residential floors, shall be ordered by the supervision and administration authorities determined by the local People’s Governments of county level and above to make correction; offenders who refuse to make correction shall be ordered to close down, and be subject to a fine ranging from RMB10,000 to RMB100,000. 68 Table of Contents With the purpose of guaranteeing food safety and the safeguarding the health and life safety of the public, the SCNPC enacted the PRC Law on Food Safety in February 2009 and amended the same on April 24, 2015, on December 29, 2018 and on April 29, 2021.
Article 118 stipulates food and beverage business operators which emit fume and violate the provisions of this Law in failing to install and use fume purification facilities properly or failing to adopt other fume purification measures and emit fume beyond the emission standards shall be ordered by the supervision and administration authorities determined by the local People’s Governments of county level and above to make correction, and be subject to a fine ranging from RMB5,000 to RMB50,000; offenders who refuse to make correction shall be ordered to suspend production and rectify; Offenders who violate the provisions of this Law in undertaking new establishment, alteration and expansion of food and beverage business operations which emit fume, odor and waste gases within residential buildings, commercial cum residential buildings which have not installed complementary dedicated flue, and commercial floors of commercial cum residential buildings adjacent to residential floors, shall be ordered by the supervision and administration authorities determined by the local People’s Governments of county level and above to make correction; offenders who refuse to make correction shall be ordered to close down, and be subject to a fine ranging from RMB10,000 to RMB100,000. 64 With the purpose of guaranteeing food safety and the safeguarding the health and life safety of the public, the SCNPC enacted the PRC Law on Food Safety in February 2009 and amended the same on April 24, 2015, on December 29, 2018 and on April 29, 2021.
If the issuer meets the following circumstances at the same time, it is recognized as a domestic enterprise indirectly issuing and listing abroad: (i) The operating revenue, total profit, total assets or net assets of the domestic enterprise in the most recent fiscal year, any one of which accounts for more than 50% of the relevant data in the issuer’s audited consolidated financial statements for the same period; (ii) The major parts of the business activities are carried out in the territory or the main premises are located in the territory, or the majority of the senior management responsible for business management are Chinese citizens or have their usual place of residence in the territory. 82 Table of Contents Regulations Relating to Employment The PRC National People’s Congress promulgated the Labor Contract Law which became effective on January 1, 2008 and was amended on December 28, 2012, and the State Council promulgated implementing rules for the labor contract law on September 18, 2008.
If the issuer meets the following circumstances at the same time, it is recognized as a domestic enterprise indirectly issuing and listing abroad: (i) The operating revenue, total profit, total assets or net assets of the domestic enterprise in the most recent fiscal year, any one of which accounts for more than 50% of the relevant data in the issuer’s audited consolidated financial statements for the same period; (ii) The major parts of the business activities are carried out in the territory or the main premises are located in the territory, or the majority of the senior management responsible for business management are Chinese citizens or have their usual place of residence in the territory. 77 Regulations Relating to Employment The PRC National People’s Congress promulgated the Labor Contract Law which became effective on January 1, 2008 and was amended on December 28, 2012, and the State Council promulgated implementing rules for the labor contract law on September 18, 2008.
Regulations on Protection of Information on Networks On December 28, 2012, SCNPC issued the Decision of the Standing Committee of the National People’s Congress on Strengthening Information Protection on Networks, pursuant to which network service providers and other enterprises and institutions shall, when gathering and using electronic personal information of citizens in business activities, publish their collection and use rules and adhere to the principles of legality, rationality and necessarily, explicitly state the purposes, manners and scopes of collecting and using information, and obtain the consent of those from whom information is collected, and shall not collect and use information in violation of laws and regulations and the agreement between both sides; and the network service providers and other enterprises and institutions and their personnel must strictly keep such information confidential and may not divulge, alter, damage, sell, or illegally provide others with such information. 72 Table of Contents On July 16, 2013, the Ministry of Industry and Information Technology, or the MIIT, issued the Order for the Protection of Telecommunication and Internet User Personal Information.
Regulations on Protection of Information on Networks On December 28, 2012, SCNPC issued the Decision of the Standing Committee of the National People’s Congress on Strengthening Information Protection on Networks, pursuant to which network service providers and other enterprises and institutions shall, when gathering and using electronic personal information of citizens in business activities, publish their collection and use rules and adhere to the principles of legality, rationality and necessarily, explicitly state the purposes, manners and scopes of collecting and using information, and obtain the consent of those from whom information is collected, and shall not collect and use information in violation of laws and regulations and the agreement between both sides; and the network service providers and other enterprises and institutions and their personnel must strictly keep such information confidential and may not divulge, alter, damage, sell, or illegally provide others with such information. 67 On July 16, 2013, the Ministry of Industry and Information Technology, or the MIIT, issued the Order for the Protection of Telecommunication and Internet User Personal Information.
Regulations on Environmental Protection On February 29, 2012, the SCNPC issued the amended Law on Promoting Clean Production , which regulates service enterprises such as restaurants, entertainment establishments and hotels and requires them to use technologies and equipment that conserve energy and water, serve other environmental protection purposes, and reduce or stop the use of consumer goods that waste resources or pollute the environment. 74 Table of Contents According to the Environmental Protection Law of the People’s Republic of China promulgated by the SCNPC on December 26, 1989 and amended on April 24, 2014 and the Environmental Impact Assessment Law of the People’s Republic of China promulgated by the SCNPC on October 28, 2002 and most recently amended on December 29, 2018, respectively, the Regulations Governing Environmental Protection in Construction Projects promulgated by the State Council on November 29, 1998 and amended on July 16, 2017, hotels shall submit a Report on Environmental Impact Assessment and an Application Letter for Acceptance of Environmental Protection Facilities in Construction Projects to competent environmental protection authorities for approvals before commencing the operation.
Regulations on Environmental Protection On February 29, 2012, the SCNPC issued the amended Law on Promoting Clean Production , which regulates service enterprises such as restaurants, entertainment establishments and hotels and requires them to use technologies and equipment that conserve energy and water, serve other environmental protection purposes, and reduce or stop the use of consumer goods that waste resources or pollute the environment. 69 According to the Environmental Protection Law of the People’s Republic of China promulgated by the SCNPC on December 26, 1989 and amended on April 24, 2014 and the Environmental Impact Assessment Law of the People’s Republic of China promulgated by the SCNPC on October 28, 2002 and most recently amended on December 29, 2018, respectively, the Regulations Governing Environmental Protection in Construction Projects promulgated by the State Council on November 29, 1998 and amended on July 16, 2017, hotels shall submit a Report on Environmental Impact Assessment and an Application Letter for Acceptance of Environmental Protection Facilities in Construction Projects to competent environmental protection authorities for approvals before commencing the operation.
Risk Factors — Risks Related to Doing Business in China — PRC regulation of loans and direct investment by offshore holding companies to PRC entities may delay or prevent us from using the proceeds of our offerings to make loans or additional capital contributions to our PRC subsidiaries which would materially and adversely affect our liquidity and our ability to fund and expand our business.” 79 Table of Contents In October 2019, the SAFE promulgated the Notice for Further Advancing the Facilitation of Cross-border Trade and Investment , or the SAFE Circular 28, which, among other things, allows all foreign invested enterprises to use Renminbi converted from foreign currency denominated capital for equity investments in China, as long as the equity investment is genuine, does not violate applicable laws, and complies with the negative list on foreign investment.
Risk Factors — Risks Related to Doing Business in China — PRC regulation of loans and direct investment by offshore holding companies to PRC entities may delay or prevent us from using the proceeds of our offerings to make loans or additional capital contributions to our PRC subsidiaries which would materially and adversely affect our liquidity and our ability to fund and expand our business.” 74 In October 2019, the SAFE promulgated the Notice for Further Advancing the Facilitation of Cross-border Trade and Investment , or the SAFE Circular 28, which, among other things, allows all foreign invested enterprises to use Renminbi converted from foreign currency denominated capital for equity investments in China, as long as the equity investment is genuine, does not violate applicable laws, and complies with the negative list on foreign investment.
If anyone operates telecommunications business without authorization or beyond its scope of business, the State Council’s department in charge of the information industry or the telecommunications administration authority of the province, autonomous region or municipality directly under the central government shall, ex officio, order rectification of the matter, confiscate the illegal income and impose a fine of up to five times the amount illegal income; if there is no illegal income or if the illegal income is less than RMB50,000, a fine of not less than RMB100,000 and not more than RMB1 million shall be imposed; if the case is serious, the perpetrator shall be ordered to suspend operations and undergo rectification. 77 Table of Contents On June 10, 2021, National People’s Congress of the People’s Republic of China adopted the Data Security Law of the PRC, is hereby promulgated, effective September 1, 2021.
If anyone operates telecommunications business without authorization or beyond its scope of business, the State Council’s department in charge of the information industry or the telecommunications administration authority of the province, autonomous region or municipality directly under the central government shall, ex officio, order rectification of the matter, confiscate the illegal income and impose a fine of up to five times the amount illegal income; if there is no illegal income or if the illegal income is less than RMB50,000, a fine of not less than RMB100,000 and not more than RMB1 million shall be imposed; if the case is serious, the perpetrator shall be ordered to suspend operations and undergo rectification. 72 On June 10, 2021, National People’s Congress of the People’s Republic of China adopted the Data Security Law of the PRC, is hereby promulgated, effective September 1, 2021.
The GreenTree Academy coordinates to compile and disseminate training materials, monitors progress and assesses training results. We currently have 34 dedicated staff to organize and coordinate the training activities delivered by the GreenTree Academy. In addition, we also have an e-Learning Program in place through which all training materials are organized and uploaded to our internal website.
The GreenTree Academy coordinates to compile and disseminate training materials, monitors progress and assesses training results. We currently have 28 dedicated staff to organize and coordinate the training activities delivered by the GreenTree Academy. In addition, we also have an e-Learning Program in place through which all training materials are organized and uploaded to our internal website.
Risk Factors — Risks Related to Our Business — Failure to comply with government regulations relating to the leased-and-operated and franchised-and-managed business models, hospitality and restaurant industries, construction, fire prevention, food hygiene, safety and environmental protection could materially and adversely affect our business and results of operations.” 69 Table of Contents The PRC legal framework governing fire prevention is set forth in the Fire Prevention Law which was adopted on April 29, 1998 and amended on April 29, 2021.
Risk Factors — Risks Related to Our Business — Failure to comply with government regulations relating to the leased-and-operated and franchised-and-managed business models, hospitality and restaurant industries, construction, fire prevention, food hygiene, safety and environmental protection could materially and adversely affect our business and results of operations.” The PRC legal framework governing fire prevention is set forth in the Fire Prevention Law which was adopted on April 29, 1998 and amended on April 29, 2021.
The Measures clarify that data processors who violate the provisions of these Measures shall be dealt with in accordance with the provisions of the Cyber Security Law of the PRC, the Data Security Law of the PRC, the Personal Information Protection Law of the PRC and other laws and regulations; if a crime is constituted, criminal responsibility shall be investigated according to law. 78 Table of Contents On November 14, 2021, the Cyberspace Administration of China promulgated the Regulations on the Administration of Network Data Security (Draft for Comment), which further regulates Internet data processing activities, emphasizes the supervision and management of network data security, and further stipulates the obligations of Internet platform operators, such as establishing data-related platform rules, privacy policies and algorithm policy disclosure systems.
The Measures clarify that data processors who violate the provisions of these Measures shall be dealt with in accordance with the provisions of the Cyber Security Law of the PRC, the Data Security Law of the PRC, the Personal Information Protection Law of the PRC and other laws and regulations; if a crime is constituted, criminal responsibility shall be investigated according to law. 73 On November 14, 2021, the Cyberspace Administration of China promulgated the Regulations on the Administration of Network Data Security (Draft for Comment), which further regulates Internet data processing activities, emphasizes the supervision and management of network data security, and further stipulates the obligations of Internet platform operators, such as establishing data-related platform rules, privacy policies and algorithm policy disclosure systems.
We have not set aside a reserve fund for litigation its which we are the defendant, because we believe that we are not likely to lose such litigation, or that if we were to lose such litigation, such loss would not have a material effect on our financial condition and results of operations.
We have not set aside a reserve fund for litigation in which we are the defendant, because we believe that we are not likely to lose such litigation, or that if we were to lose such litigation, such loss would not have a material effect on our financial condition and results of operations.
The STA issued a Public Notice Regarding Certain Corporate Income Tax Matters on Indirect Transfer of Properties by Nonresident Enterprises , or STA Public Notice 7, on February 3, 2015, which replaced or supplemented certain previous rules under the Circular on Strengthening Administration of Enterprise Income Tax for Share Transfers by Nonresident Enterprises, or STA Circular 698. 84 Table of Contents Under STA Public Notice 7, an “indirect transfer” of assets, including equity interests in a PRC resident enterprise, by non-PRC resident enterprises may be re-characterized and treated as a direct transfer of PRC taxable assets, if such arrangement does not have a reasonable commercial purpose and was established for the purpose of avoiding payment of PRC enterprise income tax.
The STA issued a Public Notice Regarding Certain Corporate Income Tax Matters on Indirect Transfer of Properties by Nonresident Enterprises , or STA Public Notice 7, on February 3, 2015, which replaced or supplemented certain previous rules under the Circular on Strengthening Administration of Enterprise Income Tax for Share Transfers by Nonresident Enterprises, or STA Circular 698. 79 Under STA Public Notice 7, an “indirect transfer” of assets, including equity interests in a PRC resident enterprise, by non-PRC resident enterprises may be re-characterized and treated as a direct transfer of PRC taxable assets, if such arrangement does not have a reasonable commercial purpose and was established for the purpose of avoiding payment of PRC enterprise income tax.
In addition, our lessors are typically required to notify us in advance if they intend to sell or dispose of the subject property, in which case we have a preemptive right to purchase the property on conditions and terms equivalent to those being offered by the lessor. 49 Table of Contents Hotel Performance The following table presents certain selected operating data as of and for the dates and periods indicated.
In addition, our lessors are typically required to notify us in advance if they intend to sell or dispose of the subject property, in which case we have a preemptive right to purchase the property on conditions and terms equivalent to those being offered by the lessor. 45 Hotel Performance The following table presents certain selected operating data as of and for the dates and periods indicated.
Companies may be subject to administrative punishments, orders to correct any instances of non-compliance within a stipulated period, as well as a fine ranging from RMB10,000 to RMB30,000 for any violation of these administrative measures. 81 Table of Contents Regulations on Offshore Financing SAFE promulgated the Circular on Relevant Issues Concerning Foreign Exchange Control on Domestic Residents’ Offshore Investment and Financing and Roundtrip Investment through Special Purpose Vehicles , or SAFE Circular 37, on July 4, 2014, which replaced the former circular commonly known as “SAFE Circular 75” promulgated by SAFE on October 21, 2005.
Companies may be subject to administrative punishments, orders to correct any instances of non-compliance within a stipulated period, as well as a fine ranging from RMB10,000 to RMB30,000 for any violation of these administrative measures. 76 Regulations on Offshore Financing SAFE promulgated the Circular on Relevant Issues Concerning Foreign Exchange Control on Domestic Residents’ Offshore Investment and Financing and Roundtrip Investment through Special Purpose Vehicles , or SAFE Circular 37, on July 4, 2014, which replaced the former circular commonly known as “SAFE Circular 75” promulgated by SAFE on October 21, 2005.
If such investor fails to or refuses to undertake such rectification, it would be ordered to dispose of the equity or asset and to take any other necessary measures so as to return to the status quo and to erase the impact to national security. 66 Table of Contents Regulations on Mergers and Acquisitions Under the Measures on Reporting of Foreign Investment Information, foreign investors undertaking a merger and acquisition of a non- foreign investment enterprise in China shall submit an initial report through the Enterprise Registration System at the time of completion of change registration for the target enterprise.
If such investor fails to or refuses to undertake such rectification, it would be ordered to dispose of the equity or asset and to take any other necessary measures so as to return to the status quo and to erase the impact to national security. 62 Regulations on Mergers and Acquisitions Under the Measures on Reporting of Foreign Investment Information, foreign investors undertaking a merger and acquisition of a non- foreign investment enterprise in China shall submit an initial report through the Enterprise Registration System at the time of completion of change registration for the target enterprise.
Risk Factors — Risks Related to Our Business — Failure to comply with government regulations relating to the franchise business model, hospitality and restaurant industries, construction, fire prevention, food hygiene, safety and environmental protection could materially and adversely affect our business and results of operations.” 67 Table of Contents Since 2018, management for waste sorting and recycling has been implemented across the country, and corresponding management regulations and administrative penalties have been formulated for companies/persons who violate the waste sorting and recycling management regulations, such as the Article 57 of Regulations on the Management of Domestic Waste in Shanghai.
Risk Factors — Risks Related to Our Business — Failure to comply with government regulations relating to the franchise business model, hospitality and restaurant industries, construction, fire prevention, food hygiene, safety and environmental protection could materially and adversely affect our business and results of operations.” 63 Since 2018, management for waste sorting and recycling has been implemented across the country, and corresponding management regulations and administrative penalties have been formulated for companies/persons who violate the waste sorting and recycling management regulations, such as the Article 57 of Regulations on the Management of Domestic Waste in Shanghai.
This section summarizes the principal PRC regulations currently relevant to our business and operations. 65 Table of Contents Regulations on Foreign Ownership The Foreign Investment Law of the PRC enacted by the National People’s Congress, or the NPC, on March 15, 2019, and the Regulations for Implementation of the Foreign Investment Law of the People’s Republic of China, or the Implementation Regulations, promulgated by the State Council, both of which became effective on January 1, 2020 replaced the trio of existing laws regulating foreign investment in China, namely, the Sino-foreign Equity Joint Venture Enterprise Law, the Sino-foreign Cooperative Joint Venture Enterprise Law and the Wholly Foreign-invested Enterprise Law, together with their implementation rules and ancillary regulations.
This section summarizes the principal PRC regulations currently relevant to our business and operations. 61 Regulations on Foreign Ownership The Foreign Investment Law of the PRC enacted by the National People’s Congress, or the NPC, on March 15, 2019, and the Regulations for Implementation of the Foreign Investment Law of the People’s Republic of China, or the Implementation Regulations, promulgated by the State Council, both of which became effective on January 1, 2020 replaced the trio of existing laws regulating foreign investment in China, namely, the Sino-foreign Equity Joint Venture Enterprise Law, the Sino-foreign Cooperative Joint Venture Enterprise Law and the Wholly Foreign-invested Enterprise Law, together with their implementation rules and ancillary regulations.
In addition, approximately 66.0% of our individual members are between the ages of 20 and 40, which represents the youthful core of our loyal guest community whose spending power is expected to grow in years to come.
In addition, approximately 61.0% of our individual members are between the ages of 20 and 40, which represents the youthful core of our loyal guest community whose spending power is expected to grow in years to come.
Announcement 39 came into effect on April 1, 2019 and shall prevail in case of any conflict with existing provisions. 86 Table of Contents Regulations Relating to Lending According to the General Lending Provisions promulgated by the PBOC in 1996, only financial institutions may legally engage in the business of extending loans, and loans between companies that are not financial institutions are prohibited.
Announcement 39 came into effect on April 1, 2019 and shall prevail in case of any conflict with existing provisions. Regulations Relating to Lending According to the General Lending Provisions promulgated by the PBOC in 1996, only financial institutions may legally engage in the business of extending loans, and loans between companies that are not financial institutions are prohibited.
Our IoT enabled guest rooms to allow guests to control the room temperature, lights, window shades and provide room cleaning service, wake-up call service and hotel check-out appointment as well as requesting electronic invoices through their mobile phones or other room facilities. 60 Table of Contents Internet Service System Our Internet Service System consists of our website (www.998.com), our mobile apps for smartphones running iOS, Android or other operating systems, and our WeChat mini-program for the purpose of reserving rooms.
Our IoT enabled guest rooms to allow guests to control the room temperature, lights, window shades and provide room cleaning service, wake-up call service and hotel check-out appointment as well as requesting electronic invoices through their mobile phones or other room facilities. 56 Internet Service System Our Internet Service System consists of our website (www.998.com), our mobile apps for smartphones running iOS, Android or other operating systems, and our WeChat mini-program for the purpose of reserving rooms.
Under the Foreign Investment Law, foreign-funded enterprise engaging in production or operation activities shall comply with the provisions on labor protection and social insurance in laws and administrative regulations, handle the tax, accounting, foreign exchange and other matters according to the relevant laws, administrative regulations and relevant provisions of the State, and accept supervision and inspection by relevant competent departments. 83 Table of Contents Regulations Relating to Tax Income Tax and Withholding Tax The EIT Law applies a uniform 25% enterprise income tax rate to PRC resident enterprises, including both foreign-invested enterprises and domestic enterprises.
Under the Foreign Investment Law, foreign-funded enterprise engaging in production or operation activities shall comply with the provisions on labor protection and social insurance in laws and administrative regulations, handle the tax, accounting, foreign exchange and other matters according to the relevant laws, administrative regulations and relevant provisions of the State, and accept supervision and inspection by relevant competent departments. 78 Regulations Relating to Tax Income Tax and Withholding Tax The EIT Law applies a uniform 25% enterprise income tax rate to PRC resident enterprises, including both foreign-invested enterprises and domestic enterprises.
On September 28, 2023, the Cyberspace Administration of China issued the Provisions on Regulating and Facilitating Cross - border Flow of Data (Draft for Public Comments). 73 Table of Contents Regulations Relating to Internet Content and Information Security The Administrative Measures on Internet Information Services specifies that internet information services regarding news, publications, education, medical and health care, pharmacy and medical devices, among other things, are to be examined, approved and regulated by the relevant authorities.
On September 28, 2023, the Cyberspace Administration of China issued the Provisions on Regulating and Facilitating Cross - border Flow of Data (Draft for Public Comments). 68 Regulations Relating to Internet Content and Information Security The Administrative Measures on Internet Information Services specifies that internet information services regarding news, publications, education, medical and health care, pharmacy and medical devices, among other things, are to be examined, approved and regulated by the relevant authorities.
Failure to comply with the tax payment obligations by the non-PRC residents will result in penalties, including full payment of taxes owed, fines and default interest on those taxes. 85 Table of Contents The STA issued the Announcement of State Taxation Administration on Promulgation of the Administrative Measures on Non-resident Taxpayers Enjoying Treaty Benefits (“STA Circular 35”) on October 14, 2019, which became effective on January 1, 2020.
Failure to comply with the tax payment obligations by the non-PRC residents will result in penalties, including full payment of taxes owed, fines and default interest on those taxes. 80 The STA issued the Announcement of State Taxation Administration on Promulgation of the Administrative Measures on Non-resident Taxpayers Enjoying Treaty Benefits (“STA Circular 35”) on October 14, 2019, which became effective on January 1, 2020.
In 2021, 2022 and 2023, our corporate members and loyal members booked 72.9%, 75.2% and 72.0% respectively, of room nights in our hotel network. Our strong direct sales channels, coupled with an established membership program, effectively deliver large volumes of guests with reduced sales and marketing expenses and enhance customer loyalty. ● A suite of state-of-the-art technologies and tools.
In 2022, 2023 and 2024, our corporate members and loyal members booked 75.2%, 72.0% and 72.0%, respectively, of room nights in our hotel network. Our strong direct sales channels, coupled with an established membership program, effectively deliver large volumes of guests with reduced sales and marketing expenses and enhance customer loyalty. 41 ● A suite of state-of-the-art technologies and tools.
During the past three years, we sold approximately 87.1% of our room nights through our direct sales channels, while OTAs contributed approximately 12.9% of our room nights. The extensive network of individual members and corporate members provides us with a stable base of repeat guests, which is in turn an attractive marketing message to potential franchisees.
During the past three years, we sold approximately 84.1% of our room nights through our direct sales channels, while OTAs contributed approximately 15.9% of our room nights. The extensive network of individual members and corporate members provides us with a stable base of repeat guests, which is in turn an attractive marketing message to potential franchisees.
GreenTree Aide creates, assigns, prioritizes and monitors individual and group tasks and keeps track of all aspects of a hotel’s daily operations in the following respects. 57 Table of Contents For the hotel’s daily operations and sales tasks, hotel regional manager teams use this app to record their patrol plans, highlight the hotel’s problems inspected by them in each hotel and track the solving process of each problem.
GreenTree Aide creates, assigns, prioritizes and monitors individual and group tasks and keeps track of all aspects of a hotel’s daily operations in the following respects. 53 For the hotel’s daily operations and sales tasks, hotel regional manager teams use this app to record their patrol plans, highlight the hotel’s problems inspected by them in each hotel and track the solving process of each problem.
We have found this training program to be effective in initiating and motivating our new hires. 62 Table of Contents Competition China’s hospitality industry is fragmented, highly competitive and ripe for consolidation, especially among branded hotel chains. We compete with other branded and stand-alone hotels for guests in each of the markets where we operate.
We have found this training program to be effective in initiating and motivating our new hires. 58 Competition China’s hospitality industry is fragmented, highly competitive and ripe for consolidation, especially among branded hotel chains. We compete with other branded and stand-alone hotels for guests in each of the markets where we operate.
In addition, in new areas where we have no existing hotels we also develop leased-and-operated hotels which may help to expand our local franchised-and-managed hotel network. Hotel Development Team. Our hotel development team consisted of 265 members as of December 31, 2023, many of whom have over two years of experience in real estate development and construction.
In addition, in new areas where we have no existing hotels we also develop leased-and-operated hotels which may help to expand our local franchised-and-managed hotel network. Hotel Development Team. Our hotel development team consisted of 246 members as of December 31, 2024, many of whom have over two years of experience in real estate development and construction.
We believe that this service underscores our commitment to our service-oriented culture and strengthens the relationships we have with our franchisees. 56 Table of Contents GreenTree Academy and e-Learning Program. GreenTree Academy formed in 2006, is our internal hotel management school. Each of our general manager candidates is required to complete a one-month training program through the GreenTree Academy.
We believe that this service underscores our commitment to our service-oriented culture and strengthens the relationships we have with our franchisees. 52 GreenTree Academy and e-Learning Program. GreenTree Academy formed in 2006, is our internal hotel management school. Each of our general manager candidates is required to complete a one-month training program through the GreenTree Academy.
Through this system our HR department is able to dynamically manage information about our employees and more efficiently administer standard programs as to wages, welfare benefits, work attendance, vacations and performance. Such data are securely stored on the system and allow our HR department to supervise the training and development of our personnel. 58 Table of Contents e-Learning system .
Through this system, our HR department is able to dynamically manage information about our employees and more efficiently administer standard programs as to wages, welfare benefits, work attendance, vacations and performance. Such data are securely stored on the system and allow our HR department to supervise the training and development of our personnel. 54 e-Learning system .
The PMS enables us to monitor the operations of each hotel in our network and to regularly obtain fundamental business data for analysis by our management. 59 Table of Contents Management information system (MIS) We have launched a proprietary management information system, or MIS system, which serves as the backbone of our technology and IT infrastructure and is applied in all aspects of our business operations.
The PMS enables us to monitor the operations of each hotel in our network and to regularly obtain fundamental business data for analysis by our management. 55 Management information system (MIS) We have launched a proprietary management information system, or MIS system, which serves as the backbone of our technology and IT infrastructure and is applied in all aspects of our business operations.
We also encourage our franchisees to follow our employment practices since we believe that these practices will help employees of our franchised-and-managed hotels improve productivity, increase job satisfaction, and feel a similar sense of ownership loyalty to us and our brands. Employees of Leased-and-Operated Hotels As of December 31, 2023, we had 697 employees working for our leased-and-operated hotels.
We also encourage our franchisees to follow our employment practices since we believe that these practices will help employees of our franchised-and-managed hotels improve productivity, increase job satisfaction, and feel a similar sense of ownership loyalty to us and our brands. Employees of Leased-and-Operated Hotels As of December 31, 2024, we had 550 employees working for our leased-and-operated hotels.
If the franchisor fails to comply as ordered, the relevant commerce authority may impose another fine ranging from RMB50,000 to RMB100,000 and publicly announce the franchisor’s violation. 75 Table of Contents The term of a franchise contract shall be no less than three years unless otherwise agreed by franchisees.
If the franchisor fails to comply as ordered, the relevant commerce authority may impose another fine ranging from RMB50,000 to RMB100,000 and publicly announce the franchisor’s violation. 70 The term of a franchise contract shall be no less than three years unless otherwise agreed by franchisees.
We aim to strengthen our leadership position and gain greater market share by attracting new franchisees while encouraging our existing franchisees to expand their hotel business under our brand and management. 48 Table of Contents Franchise Agreements and Cost Structure. Our franchise agreements typically carry terms of 10 to 20 years.
We aim to strengthen our leadership position and gain greater market share by attracting new franchisees while encouraging our existing franchisees to expand their hotel business under our brand and management. 44 Franchise Agreements and Cost Structure. Our franchise agreements typically carry terms of 10 to 20 years.
Furthermore, holders of 70% of equity interest in Yibon Hotel Group Co., Ltd., or Yibon, have the right to exchange their equity interest in Yibon into our shares within a certain period after Yibon delivered a consolidated financial report for the year of 2019 audited by “big four” accounting firm in accordance with a formula using Yibon’s net profit achieved in the year of 2019 as calculation basis.
Furthermore, holders of 70% of equity interest in Yibon have the right to exchange their equity interest in Yibon into our shares within a certain period after Yibon delivered a consolidated financial report for the year of 2019 audited by “big four” accounting firm in accordance with a formula using Yibon’s net profit achieved in the year of 2019 as calculation basis.
We record estimated liabilities for points that are expected to be redeemed in the future, by estimating points that will be forfeited based on historical data. We have accumulated a strong base of loyal hotel guests, including over 2.1 million corporate members and approximately 90.5 million individual members as of December 31, 2023.
We record estimated liabilities for points that are expected to be redeemed in the future, by estimating points that will be forfeited based on historical data. We have accumulated a strong base of loyal hotel guests, including over 2.2 million corporate members and approximately 102.5 million individual members as of December 31, 2024 .
Each general manager serves as the primary contact point between our headquarters and every hotel, and works closely with our corporate level departments in managing the performance of the hotels for which the general manager is responsible. 55 Table of Contents Key features of our hotel management include the following: Pricing .
Each general manager serves as the primary contact point between our headquarters and every hotel, and works closely with our corporate level departments in managing the performance of the hotels for which the general manager is responsible. 51 Key features of our hotel management include the following: Pricing .
The expiration dates of our trademarks fall between 2023 and 2033, including “GreenTree Inn.” Once the ten-year term of our registered trademarks has expired, we will be able to renew our trademark registrations for another ten years upon paying a renewal fee.
The expiration dates of our trademarks fall between 2024 and 2034, including “GreenTree Inn.” Once the ten-year term of our registered trademarks has expired, we will be able to renew our trademark registrations for another ten years upon paying a renewal fee.
These hotels feature spacious lobbies and our uniform GreenTree Inns decorative style, and provide free high-speed Internet access, cable television, conference rooms, business centers and exercise facilities. Most of our GreenTree Inns hotels provide food and beverage through onsite restaurants. 52 Table of Contents GT Alliance .
These hotels feature spacious lobbies and our uniform GreenTree Inns decorative style, and provide free high-speed Internet access, cable television, conference rooms, business centers and exercise facilities. Most of our GreenTree Inns hotels provide food and beverage through onsite restaurants. 48 GT Alliance .
During the past three years, we sold approximately 87.1% of our room nights through our direct sales channels, while OTAs contributed approximately 12.9% of our room nights. We have also accumulated a vast base of loyal individual members and corporate members.
During the past three years, we sold approximately 84.1% of our room nights through our direct sales channels, while OTAs contributed approximately 15.9% of our room nights. We have also accumulated a vast base of loyal individual members and corporate members.
Various disputes in connection with the properties we lease or with the franchise agreements may occur from time to time, which may cause our hotel operations to be affected or terminated in the worst-case scenario. As of December 31, 2023, we had six pending legal proceedings in connection with the franchised-and-managed hotels.
Various disputes in connection with the properties we lease or with the franchise agreements may occur from time to time, which may cause our hotel operations to be affected or terminated in the worst-case scenario. As of December 31, 2024, we mainly had 14 pending legal proceedings in connection with the franchised-and-managed hotels.
PRC courts will support a company’s claim for interest in respect of such lending as long as the annual interest rate does not exceed four times of the applicable one-year loan prime rate (“ LPR ”). 87 Table of Contents C.
PRC courts will support a company’s claim for interest in respect of such lending as long as the annual interest rate does not exceed four times of the applicable one-year loan prime rate (“ LPR ”). 81 C.
We do not, however, encourage franchisees to open too many hotels simultaneously to ensure that their existing hotel operations receive due attention and that our guests enjoy the consistent quality services they deserve. As of December 31, 2023, we had 480 franchisees who repeatedly opened hotels with a total number of 1,070 hotels under our brands.
We do not, however, encourage franchisees to open too many hotels simultaneously to ensure that their existing hotel operations receive due attention and that our guests enjoy the consistent quality services they deserve. As of December 31, 2024, we had 516 franchisees who repeatedly opened hotels with a total number of 1,147 hotels under our brands.
Copyright . Copyright in the PRC, including copyrighted software, is principally protected under the Copyright Law and related rules and regulations. Under the Copyright Law, the term of protection for copyrighted software is 50 years. 76 Table of Contents Trademark . The PRC Trademark Law and its implementation rules protect registered trademarks.
Copyright . Copyright in the PRC, including copyrighted software, is principally protected under the Copyright Law and related rules and regulations. Under the Copyright Law, the term of protection for copyrighted software is 50 years. 71 Trademark . The PRC Trademark Law and its implementation rules protect registered trademarks.
As of December 31, 2023, we had 4,173 franchised-and-managed hotels, accounting for 98.5% of all of our hotels in operation. For our franchised-and-managed hotels, we license our relevant brand to property owners, lessors or existing hotel operators who become our franchisees, and we give the franchisees the right to use our brand name, logo, operating manuals and procedures.
As of December 31, 2024, we had 4,370 franchised-and-managed hotels, accounting for 98.8% of all of our hotels in operation. For our franchised-and-managed hotels, we license our relevant brand to property owners, lessors or existing hotel operators who become our franchisees, and we give the franchisees the right to use our brand name, logo, operating manuals and procedures.
As of December 31, 2023, we had approximately 2.1 million corporate members and 90.5 million individual members, who have registered with us and enjoy a range of different benefits, including discounts on room rates and priority in making hotel reservations.
As of December 31, 2024, we had approximately 2.2 million corporate members and 102.5 million individual members, who have registered with us and enjoy a range of different benefits, including discounts on room rates and priority in making hotel reservations.
Firstly, as a result of one of our strategies to build a dense network of hotels in the most affluent regions in China with high growth potential, 44.4% of our hotels were located in the Greater Yangtze River Delta region, while 9.6% of our hotels were located in Beijing/Tianjin/Hebei province as of December 31, 2023.
Firstly, as a result of one of our strategies to build a dense network of hotels in the most affluent regions in China with high growth potential, 44.2% of our hotels were located in the Greater Yangtze River Delta region, while 9.7% of our hotels were located in Beijing/Tianjin/Hebei province as of December 31, 2024.
As of the same date, our hotel development team was led by 44 managers. Each regional manager has in-depth knowledge of the target markets in the specific region, and draws on local knowledge to supervise the identification, evaluation and selection of suitable hotel properties by our business development employees. 54 Table of Contents Franchised-and-Managed Hotel Development.
As of the same date, our hotel development team was led by 26 managers. Each regional manager has in-depth knowledge of the target markets in the specific region, and draws on local knowledge to supervise the identification, evaluation and selection of suitable hotel properties by our business development employees. 50 Franchised-and-Managed Hotel Development.
None of our restaurants’ employees is represented by a labor union. As of December 31, 2023, out of our restaurants’ 738 employees, 491 were self-operated restaurant-based staff. We believe that our employees are our company’s greatest resource and that developing and retaining a team of capable and motivated staff is critical to our success.
None of our restaurants’ employees is represented by a labor union. As of December 31, 2024, out of our restaurants’ 518 employees, 411 were self-operated restaurant-based staff. We believe that our employees are our company’s greatest resource and that developing and retaining a team of capable and motivated staff is critical to our success.
As a result of one of our strategies to build a dense network of hotels in the most affluent region in China with high growth potential, 44.4% of our hotels were located in the Greater Yangtze River Delta region, while 9.6% of our hotels were located in Beijing/Tianjin/Hebei region as of December 31, 2023.
As a result of one of our strategies to build a dense network of hotels in the most affluent region in China with high growth potential, 44.2% of our hotels were located in the Greater Yangtze River Delta region, while 9.7% of our hotels were located in Beijing/Tianjin/Hebei region as of December 31, 2024.
The following map depicts the geographic coverage of our hotel network as of December 31, 2023. ​ 46 Table of Contents We expand into a new city if it meets our selection criteria, especially potential for economic growth, geographic location and affordability of long-term rent.
The following map depicts the geographic coverage of our hotel network as of December 31, 2024. 42 We expand into a new city if it meets our selection criteria, especially potential for economic growth, geographic location and affordability of long-term rent.
A predominant proportion of our room night sales was generated from our strong direct sales channels comprising our website and mobile app. In 2021, 2022 and 2023, approximately 87.1% of the room nights in our hotel network were sold through our direct sales channels, while OTAs contributed approximately 12.9% of our room nights.
A predominant proportion of our room night sales was generated from our strong direct sales channels comprising our website and mobile app. In 2022, 2023 and 2024, approximately 84.1% of the room nights in our hotel network were sold through our direct sales channels, while OTAs contributed approximately 15.9% of our room nights.
Yibon recorded a net loss in 2019, and such holders were unable to exchange for our shares based on Yibon’s financial results of 2019. Besides, we have an option to require the original shareholder to redeem the 30% investment. 61 Table of Contents Employees We had 2,892, 2,063 and 2,523 employees as of December 31, 2021, 2022 and 2023, respectively.
Yibon recorded a net loss in 2019, and such holders were unable to exchange for our shares based on Yibon’s financial results of 2019. Besides, we have an option to require the original shareholder to redeem the 30% investment. 57 Employees We had 2,063, 2,523 and 2,339 employees as of December 31, 2022, 2023 and 2024, respectively.
The following table shows the breakdown of our membership by age: ​ ​ ​ ​ ​ ​ Age Group ​ ​ Age 21 to 30 ​ 25 % Age 31 to 40 ​ 41 % Age 41 to 50 ​ 23 % Others ​ 11 % ​ 53 Table of Contents Our loyal membership program increases membership retention rate, enhances members’ loyalty and commitment to our services and encourages individual members and corporate members to repeatedly use our central reservation system as well as other membership services, substantially keeping our low dependence on third party reservation channels.
The following table shows the breakdown of our membership by age: Age Group Age 21 to 30 20 % Age 31 to 40 41 % Age 41 to 50 24 % Others 15 % 49 Our loyal membership program increases membership retention rate, enhances members’ loyalty and commitment to our services and encourages individual members and corporate members to repeatedly use our central reservation system as well as other membership services, substantially keeping our low dependence on third party reservation channels.
On March 11, 2018, we redesignated 7,954,048 of our Class B ordinary shares as Class A ordinary shares. As of December 31, 2023, 84.7% of our Class A ordinary shares and 100% of our Class B ordinary shares are owned by GTI, our parent company.
On March 11, 2018, we redesignated 7,954,048 of our Class B ordinary shares as Class A ordinary shares. As of December 31, 2024, 84.8% of our Class A ordinary shares and 100% of our Class B ordinary shares were owned by GTI, our parent company.
Both restaurant brands focus on offering healthy and affordable fast food and casual dining services to mass consumers. Our restaurant business generated a combined revenue of about RMB441.6 million (US$62.2 million) in 2023. Business operational data Our restaurant business had 194 locations in 53 cities as of December 31, 2023.
Both restaurant brands focus on offering healthy and affordable fast food and casual dining services to mass consumers. Our restaurant business generated a combined revenue of about RMB278.6 million (US$38.2 million) in 2024. Business operational data Our restaurant business had 182 locations in 53 cities as of December 31, 2024.
Risk Factors — Risks Related to Our Business — The legal rights of our franchisees and us to use certain leased properties could be challenged by property owners or other third parties, which could prevent our franchisees or us from operating the affected hotels or increase the costs associated with operating these hotels.” Regulations on Usage of Land or Property The regulations governing the land or property usage mainly include the Land Administration Law of the People’s Republic of China adopted by the Standing Committee of the National People’s Congress on June 25, 1986, and most recently amended on August 26, 2019, and the Regulations on the Implementation of the Land Administration Law of the People’s Republic of China promulgated according to the Order of the State Council No. 256 on December 27, 1998 and further revised in accordance with the Decision of the State Council on Revising Certain Administrative Regulations on July 29, 2014 and September 1, 2021.
Risk Factors — Risks Related to Our Business — The legal rights of our franchisees and us to use certain leased properties could be challenged by property owners or other third parties, which could prevent our franchisees or us from operating the affected hotels or increase the costs associated with operating these hotels.” Regulations on Usage of Land or Property The regulations governing the land or property usage mainly include the Land Administration Law of the People’s Republic of China adopted by the Standing Committee of the National People’s Congress on June 25, 1986, and most recently amended on August 26, 2019, and the Regulations on the Implementation of the Land Administration Law of the People’s Republic of China promulgated according to the Order of the State Council No. 256 on December 27, 1998 and further revised in accordance with the Decision of the State Council on Revising Certain Administrative Regulations on July 29, 2014 and September 1, 2021. 66 According to the above regulations, as to state-owned land and land collectively-owned by farmers, construction entities shall use such land, construction according to the stipulations of the land use right lease contract or according to the provisions of the approval documents relevant to the allocation of land use rights.
If our employees fail to pay or we fail to withhold their income taxes according to relevant laws and regulations, we may face sanctions imposed by the tax authorities or other PRC governmental authorities. 80 Table of Contents Further, a notice concerning the individual income tax on earnings from employee share options jointly issued by the Ministry of Finance, or the MOF, and SAT, on March 28, 2005, and its implementing rules, provide that domestic companies that implement employee share option programs shall (a) file the employee share option plans and other relevant documents to the local tax authorities having jurisdiction over them before implementing such employee share option plans; (b) file share option exercise notices and other relevant documents with the local tax authorities having jurisdiction over them before exercising by the employees of the share options, and clarify whether the shares issuable under the employee share options mentioned in the notice are the shares of publicly listed companies; and (c) withhold taxes from the PRC employees in connection with the PRC individual income tax.
Further, a notice concerning the individual income tax on earnings from employee share options jointly issued by the Ministry of Finance, or the MOF, and SAT, on March 28, 2005, and its implementing rules, provide that domestic companies that implement employee share option programs shall (a) file the employee share option plans and other relevant documents to the local tax authorities having jurisdiction over them before implementing such employee share option plans; (b) file share option exercise notices and other relevant documents with the local tax authorities having jurisdiction over them before exercising by the employees of the share options, and clarify whether the shares issuable under the employee share options mentioned in the notice are the shares of publicly listed companies; and (c) withhold taxes from the PRC employees in connection with the PRC individual income tax.
As of the same date, we had 42 self-operated restaurants and 152 franchised restaurants.Our restaurants’ average daily sales per store decreased by 18.1% from 2021 to 2022. We are committed to food quality and safety. We have implemented quality control measures that standardize food quality and safety in its supply chain and its restaurants.
As of the same date, we had 18 self-operated restaurants and 164 franchised restaurants. Our restaurants’ average daily sales per store decreased by 16.8% from 2023 to 2024. We are committed to food quality and safety. We have implemented quality control measures that standardize food quality and safety in its supply chain and its restaurants.
In 2021, 2022 and 2023, our corporate members and individual members book approximately 72.9%, 75.2% and 72.0%, respectively, of room nights in our hotel network.
In 2022, 2023 and 2024, our corporate members and individual members booked approximately 75.2%, 72.0% and 72.0%, respectively, of room nights in our hotel network.
The gross floor area of our leased properties ranges from approximately 20 square meters to 46,176 square meters.
The gross floor area of our leased properties ranges from approximately 20 square meters to 66,000 square meters.
Unless otherwise indicated, equity interests depicted in this diagram are held as to 100%. ​ Subsidiaries of GreenTree Hospitality Group Ltd. An exhibit containing a list of our significant subsidiaries has been filed with this annual report. 88 Table of Contents D. Property, Plants and Equipment Please refer to “B.
Unless otherwise indicated, equity interests depicted in this diagram are held as to 100%. Subsidiaries of GreenTree Hospitality Group Ltd. An exhibit containing a list of our significant subsidiaries has been filed with this annual report. 82 D. Property, Plants and Equipment Please refer to “B. Business Overview—Facilities” for a discussion of our property, plants and equipment. ITEM 4A.
Risk Factors — Risks Related to Our Business — We have limited insurance coverage.” Properties and Facilities Our headquarters are located in Shanghai, China, where we lease approximately 6,752 square meters of office space. Owned Properties As of December 31, 2023, we owned 11 hotel properties having an aggregate gross floor area of 95,635 square meters.
Risk Factors — Risks Related to Our Business — We have limited insurance coverage.” Properties and Facilities Our headquarters are located in Shanghai, China, where we lease approximately 4,027 square meters of office space. Owned Properties As of December 31, 2024, we owned 15 hotel properties having an aggregate gross floor area of 68,499 square meters.
All of the foregoing regulations on hotel operation apply to our company both as the operator of our leased-and-operated hotels, and as the franchisor of our franchised-and-managed hotels. 70 Table of Contents Regulations on Leasing Under the Law on Urban Real Estate Administration promulgated by the SCNPC, which took effect as of January 1995 with the latest amendment in August 2019, lessors and lessees are required to enter into a written lease contract, containing such provisions as the term of the lease, the use of the premises, liability for rent and repair, and other rights and obligations of both parties.
Regulations on Leasing Under the Law on Urban Real Estate Administration promulgated by the SCNPC, which took effect as of January 1995 with the latest amendment in August 2019, lessors and lessees are required to enter into a written lease contract, containing such provisions as the term of the lease, the use of the premises, liability for rent and repair, and other rights and obligations of both parties.
As of December 31, 2023, we had 65 leased-and-operated hotels, accounting for 1.5% of all of our hotels then in operation.
As of December 31, 2024, we had 55 leased-and-operated hotels, accounting for 1.2% of all of our hotels then in operation.
As of December 31, 2023 approximately 96.3 % of our guests were intra-Asia travelers.
As of December 31, 2024, approximately 96.1 % of our guests were intra-Asia travelers.
For more detailed information about the locations of our hotels, see “— Our Hotel Network.” 63 Table of Contents Leased Properties As of December 31, 2023, we had leased a total of 70 properties, with 64 properties for hotel operations and six properties for other uses, such as headquarters and office premises.
For more detailed information about the locations of our hotels, see “— Our Hotel Network.” 59 Leased Properties As of December 31, 2024, we had leased a total of 52 properties, with 49 properties for hotel operations and three properties for other uses, such as headquarters and office premises.
We operate one of the fastest growing hotel networks in China – from 2012 to 2023, we grew from 792 to 4,238 hotels at a CAGR of 16.5%.
We operate one of the fastest growing hotel networks in China – from 2012 to 2024, we grew from 792 to 4,425 hotels at a CAGR of 14.2%.
We conduct comprehensive food safety, quality and hygiene inspections. We devote significant staff resources to food quality and control, with over 7 designated staff directly responsible for food quality and safety. ​ 64 Table of Contents Employees Our restaurant business had 1534, 1167 and 738 employees as of December 31, 2021, 2022 and 2023, respectively.
We conduct comprehensive food safety, quality and hygiene inspections. We devote significant staff resources to food quality and control, with over 5 designated staff directly responsible for food quality and safety. 60 Employees Our restaurant business had 1,167, 738 and 518 employees as of December 31, 2022, 2023 and 2024, respectively.
As of December 31, 2023, 396 of our 4,238 hotels were located in Tier 1 cities (9.4%), 883 in Tier 2 cities (20.8%) and 2,959 in other cities (69.8%). Furthermore, we will accelerate our expansion into the mid-scale to business and mid-to-up-scale markets in central China, southeast China and southwest China.
As of December 31, 2024, 409 of our 4,425 hotels were located in Tier 1 cities (9.2%), 933 in Tier 2 cities (21.1%) and 2,083 in other cities (69.7%). Furthermore, we will accelerate our expansion into the mid-scale to business and mid-to-up-scale markets in central China, southeast China and southwest China.
Each year when China’s college entrance examinations are held, we call on our hotel brands to be the “preferential leisure room for college entrance examinations” to provide places of respite for students to relax and recharge in between examinations.
To support and give back to society, we have preferential procurement arrangements with amenity producers that employ persons with disabilities. Each year when China’s college entrance examinations are held, we call on our hotel brands to be the “preferential leisure room for college entrance examinations” to provide places of respite for students to relax and recharge in between examinations.
As of December 31, 2023, we had a total of 724 trademarks, 74 software registration certificates and two copyright registered in China.
As of December 31, 2024, we had a total of 732 trademarks, 63 software registration certificates and 3 copyright registered in China.
As of December 31, 2023, out of our 2,523 employees, 697 were leased-and-operated hotel-based staff, 1,185 were franchised-and-managed hotel-based staff, 265 were investment and development staff, 98 were regional manager/operations staff, two was quality control staff, 20 were central reservation center staff, 34 were GreenTree Academy training staff and 222 were working at our headquarters offices.
As of December 31, 2024, out of our 2,339 employees, 550 were leased-and-operated hotel-based staff, 1,182 were franchised-and-managed hotel-based staff, 246 were investment and development staff, 77 were regional manager/operations staff, three was quality control staff, 19 were central reservation center staff, 28 were GreenTree Academy training staff and 234 were working at our headquarters offices.
We will put additional effort and build up flagship hotels in Tier 1 and Tier 2 cities with strategic positions around transportation hubs, central business districts, or government centers.
We will put additional effort and build up flagship hotels in Tier 1 and Tier 2 cities with strategic positions around transportation hubs, central business districts, or government centers. The following table sets forth a breakdown by geographic locations of our hotels as of December 31, 2024.
As of December 31, 2022 the Regulations (Draft for Comment) are for public comment only and have not been formally adopted. Final terms and the timeline for their adoption are subject to change and uncertainty.
As of December 31, 2022 the Regulations (Draft for Comment) are for public comment only and have not been formally adopted. Final terms and the timeline for their adoption are subject to change and uncertainty. On September 24, 2024, the State Council of the PRC promulgated the Regulations on Network Data Security Management, which took effect on January 1, 2025.
If the land is not used in accordance with the approved land use purpose, the rural collective economic organization may take back the land use rights upon approval by the People’s Government which has approved the land use previously. 71 Table of Contents Regulations on Consumer Protection In October 1993, the SCNPC promulgated the Law on the Protection of the Rights and Interests of Consumers which has been amended on October 25, 2013 , or the Consumer Protection Law .
If the land is not used in accordance with the approved land use purpose, the rural collective economic organization may take back the land use rights upon approval by the People’s Government which has approved the land use previously.
We have developed an industry-leading, proprietary technology infrastructure that optimizes franchisee operations, enhances customer experience, increases our management efficiency, and supports our fast growth.
We have developed an industry-leading, proprietary technology infrastructure that optimizes franchisee operations, enhances customer experience, increases our management efficiency, and supports our fast growth. We have developed a series of tools/technologies to improve the efficiency of our internal operations, to support franchisee/hotel level operations, and to improve guest satisfaction from booking until check-out.

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Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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The amount was further adjusted by changes in itemized balances of operating assets and liabilities that have a negative effect on cashflow, including primarily (i)a decrease in operating lease liabilities of RMB233.9 million, (ii)an increase in deferred taxes of RMB127.0 million, (iii) a decrease in deferred revenue of RMB77.8 million mainly attributable to a decrease in our membership fees received and initial franchisee fees received, (iv)an increase in our accounts receivable of RMB53.6 million mainly attributable to an increase of receivables from franchisees and hotel guests, as well as certain changes in itemized balances of operating assets and liabilities that have a positive effect on cashflow, including primarily (i) an increase in accrued expenses and other current liabilities of RMB69.0 million, (ii) a decrease in other current assets of RMB63.9 million, (iii) an increase in unrecognized tax benefits of RMB21.1 million, (iv) a decrease in inventories of RMB10.6 million.
The amount was further adjusted by changes in itemized balances of operating assets and liabilities that have a negative effect on cashflow, including primarily (i) a decrease in operating lease liabilities of RMB233.9 million, (ii) an increase in deferred taxes of RMB127.0 million, (iii) a decrease in deferred revenue of RMB77.8 million mainly attributable to a decrease in our membership fees received and initial franchisee fees received, (iv) an increase in our accounts receivable of RMB53.6 million mainly attributable to an increase of receivables from franchisees and hotel guests, as well as certain changes in itemized balances of operating assets and liabilities that have a positive effect on cashflow, including primarily (i) an increase in accrued expenses and other current liabilities of RMB69.0 million, (ii) a decrease in other current assets of RMB63.9 million, (iii) an increase in unrecognized tax benefits of RMB21.1 million, and (iv) a decrease in inventories of RMB10.6 million.
Our general and administrative expenses consist primarily of compensation and benefits, including share-based compensation, for our corporate and regional office employees and other employees who are not sales and marketing or hotel-based or store-based employees, costs of third-party professional services, travel and accommodation expenses, bad debt provision and other expenses which include bank charges and stamp duty. ● Impairment loss of goodwill.
Our general and administrative expenses consist primarily of compensation and benefits, including costs for our corporate and regional office employees and other employees who are not sales and marketing or hotel-based or store-based employees, costs of third-party professional services, travel and accommodation expenses, bad debt provision and other expenses which include bank charges and stamp duty. ● Impairment loss of goodwill.
We achieved more than 95.0% of franchised-and-managed hotels in our hotel network as early as 2013, and currently operated 98.5% of franchised-and-managed hotels in our network. Our pure play franchised model allows us to expand rapidly in an asset-light manner and have brought us substantial financial performance in terms of profitability, return on investments and success to its franchisees.
We achieved more than 95.0% of franchised-and-managed hotels in our hotel network as early as 2013, and currently operated 98.8% of franchised-and-managed hotels in our network. Our pure play franchised model allows us to expand rapidly in an asset-light manner and have brought us substantial financial performance in terms of profitability, return on investments and success to its franchisees.
In addition, certain special events, such as large-scale exhibitions, concerts or sports events, may increase the demand for our hotels significantly as such special events may attract travelers into and within the regions in China where we operate hotels. ​ 90 Table of Contents Factors Affecting Our Results of Restaurant Operations Our restaurant business may be affected by factors including the following (i) total number of restaurants in operations, by which our revenues are affected in the sales growth; (ii) profitability of restaurants in operations, including the dependence on ingredient quality, the control of the rental costs and other uncertain factors, for example, the customer taste or the popularity of location could be changed which results in the revenue decrease with the unchanged costs as the profit will decrease; (iii) seasonality and special events, which is entitled in “Risk Related to Our Business-Our results of operations may fluctuate significantly due to seasonality and other factors”.
In addition, certain special events, such as large-scale exhibitions, concerts or sports events, may increase the demand for our hotels significantly as such special events may attract travelers into and within the regions in China where we operate hotels. 84 Factors Affecting Our Results of Restaurant Operations Our restaurant business may be affected by factors including the following (i) total number of restaurants in operations, by which our revenues are affected in the sales growth; (ii) profitability of restaurants in operations, including the dependence on ingredient quality, the control of the rental costs and other uncertain factors, for example, the customer taste or the popularity of location could be changed which results in the revenue decrease with the unchanged costs as the profit will decrease; (iii) seasonality and special events, which is entitled in “Risk Related to Our Business-Our results of operations may fluctuate significantly due to seasonality and other factors”.
In general, we charge franchisees who open multiple hotels under our franchised-and-managed model a lower fee to reward their loyalty. On average, we charged our franchisees a monthly franchise management fee of 4.4%, 4.7% and 4.5% of the total revenues generated by each franchised-and-managed hotel in 2021, 2022 and 2023.
In general, we charge franchisees who open multiple hotels under our franchised-and-managed model a lower fee to reward their loyalty. On average, we charged our franchisees a monthly franchise management fee of 4.4% 4.7% and 4.5% of the total revenues generated by each franchised-and-managed hotel in 2022, 2023 and 2024.
The amount was further adjusted by changes in itemized balances of operating assets and liabilities that have a negative effect on cashflow, including primarily (i) a decrease in operating lease liabilities, current portion, of RMB256.0 million, (ii) a decrease in accounts payable of RMB50.5 million, (iii) an increase in other current assets of RMB47.9 million, (iv) a decrease in deferred revenue of RMB33.5 million,, as well as certain changes in itemized balances of operating assets and liabilities that have a positive effect on cashflow, including primarily(i) a decrease in income tax payable of RMB32.9 million, (ii) a decrease in unrecognized tax benefits of RMB28.6 million, (iii) a decrease in accrued expenses and other current liabilities of RMB26.2 million, (iv) a decrease in other assets of RMB17.3 million, (v) an increase in amounts due from related parties of RMB8.4 million. 104 Table of Contents Net cash provided by operating activities in 2022 was RMB294.5 million, which was primarily attributable to our net income of RMB-461.7 million, adjusted to deduct (i)foreign exchange gains of RMB17.8 million, (ii) interest income of RMB1.4 million, and to add back (i) bad debt expense of RMB431.2 million, (ii) noncash lease expense of RMB310.8 million, (iii) depreciation and amortization of RMB125.3 million, (iv) impairment of goodwill of RMB91.2 million, and (v) losses and impairment (Gains) on equity securities held of RMB62.2 million,(vi) impairment of long lived assets of RMB53.2 million.
The amount was further adjusted by changes in itemized balances of operating assets and liabilities that have a negative effect on cashflow, including primarily (i) a decrease in operating lease liabilities, current portion, of RMB256.0 million, (ii) a decrease in accounts payable of RMB50.5 million, (iii) an increase in other current assets of RMB47.9 million, (iv) a decrease in deferred revenue of RMB33.5 million, as well as certain changes in itemized balances of operating assets and liabilities that have a positive effect on cashflow, including primarily (i) a decrease in income tax payable of RMB32.9 million, (ii) a decrease in unrecognized tax benefits of RMB28.6 million, (iii) a decrease in accrued expenses and other current liabilities of RMB26.2 million, (iv) a decrease in other assets of RMB17.3 million, and (v) an increase in amounts due from related parties of RMB8.4 million. 99 Net cash provided by operating activities in 2022 was RMB294.5 million, which was primarily attributable to our net income of RMB-461.7 million, adjusted to deduct (i) foreign exchange gains of RMB17.8 million, (ii) interest income of RMB1.4 million, and to add back (i) bad debt expense of RMB431.2 million, (ii) non-cash lease expense of RMB310.8 million, (iii) depreciation and amortization of RMB125.3 million, (iv) impairment of goodwill of RMB91.2 million, (v) losses and impairment (gains) on equity securities held of RMB62.2 million, and (vi) impairment of long lived assets of RMB53.2 million.
The increase was primarily due to the increased revenues of hotel business. Hotel revenues increased by 27.2% from RMB936.8 million in 2022 to RMB1,191.9 million (US$167.9 million) in 2023. The increase was primarily due to the recovery in RevPAR and the increase in the number of hotels. For the full year 2023, we opened 420 hotels and closed 241 hotels.
The increase was primarily due to the increased revenues of hotel business. Hotel revenues increased by 27.2% from RMB936.8 million in 2022 to RMB1,191.9 million in 2023. The increase was primarily due to the recovery in RevPAR and the increase in the number of hotels. For the full year 2023, we opened 420 hotels and closed 241 hotels.
Business Overview—Intellectual Property.” D. Trend Information Please refer to “—A. Results of Operations” for a discussion of the most recent trends in our services, sales and marketing by the end of 2023.
Business Overview—Intellectual Property.” D. Trend Information Please refer to “—A. Results of Operations” for a discussion of the most recent trends in our services, sales and marketing by the end of 2024.
Our net interest income decreased by 14.0% from RMB48.1 million in 2022 to RMB41.4 million (US$5.8 million) in 2023 , due to a decrease in interest income from franchisee loans as franchisees' repayment increases, as well as a deduction in deposit rates, impacted by the deduction of benchmark rates of the people's bank of China in 2023.
Our net interest income decreased by 14.0% from RMB48.1 million in 2022 to RMB41.4 million in 2023, due to a decrease in interest income from franchisee loans as franchisees’ repayment increases, as well as a deduction in deposit rates, impacted by the deduction of benchmark rates of the people’s bank of China in 2023.
Our ability to expand our hotel network depends on whether we can provide consistent quality services to our guests and franchisees and whether we can enhance our brand recognition in the market and win the competition for suitable property sites and quality franchisee candidates. 89 Table of Contents ● The proportion of mature hotels in our hotel portfolio.
Our ability to expand our hotel network depends on whether we can provide consistent quality services to our guests and franchisees and whether we can enhance our brand recognition in the market and win the competition for suitable property sites and quality franchisee candidates. ● The proportion of mature hotels in our hotel portfolio.
Income tax expense. Our income tax expense increased from RMB-44.1 million in 2022 to RMB118.5 million (US$16.7 million) in 2023, primarily due to the increase of income from operations. Share of (losses) gains in equity investees, net of tax. We recognized losses of RMB1.6 million in 2022, mainly attributable to gains from Yueyuanbaili and losses from Zhilong.
Our income tax expense increased from RMB-44.1 million in 2022 to RMB118.5 million in 2023, primarily due to the increase of income from operations. Share of (losses) gains in equity investees, net of tax. We recognized losses of RMB1.6 million in 2022, mainly attributable to gains from Yueyuanbaili and losses from Zhilong.
The hotel manager fee is recognized as revenue on a monthly basis. 108 Table of Contents We invite our customers to participate in a membership program with four tiers of membership – E-membership, R-membership, gold membership and platinum membership. A one-time membership fee is charged for new members except for the E-membership.
The hotel manager fee is recognized as revenue on a monthly basis. We invite our customers to participate in a membership program with four tiers of membership – E-membership, R-membership, gold membership and platinum membership. A one-time membership fee is charged for new members except for the E-membership.
Sometimes, there may be a certain degree of reduction in initial franchise fees due to sales strategies in different regions, 92 Table of Contents Our revenues from franchised-and-managed hotels are primarily affected by the number of hotels and the revenues generated by the franchised-and-managed hotels. Our franchise agreements typically run for an initial term of 10 to 20 years.
Sometimes, there may be a certain degree of reduction in initial franchise fees due to sales strategies in different regions, 86 Our revenues from franchised-and-managed hotels are primarily affected by the number of hotels and the revenues generated by the franchised-and-managed hotels. Our franchise agreements typically run for an initial term of 10 to 20 years.
Our hotel operating costs increased by 0.8% from RMB594.0 million in 2022 to RMB598.8 million (US$84.4 million) in 2023. The increase was mainly attributable to higher consumables and higher related franchise costs as business rebounded, partially offset by the deconsolidation of Argyle Hotel Management Group (Australia) Pty Ltd., and the disposal of our interest in Urban Hotel Group .
Our hotel operating costs increased by 0.8% from RMB594.0 million in 2022 to RMB598.8 million in 2023. The increase was mainly attributable to higher consumables and higher related franchise costs as business rebounded, partially offset by the deconsolidation of Argyle Hotel Management Group (Australia) Pty Ltd., or Argyle, and the disposal of our interest in Urban Hotel Group.
The allowance for uncollectible accounts is estimated based on an assessment of the payment history, the existence of collateral, current information and events, and the facts and circumstances around the credit risk of the debtors. 109 Table of Contents Business combinations The Group accounts for business combinations, except for acquisitions of entities under common control, under the purchase method in accordance with ASC 805, Business Combinations.
The allowance for uncollectible accounts is estimated based on an assessment of the payment history, the existence of collateral, current information and events, and the facts and circumstances around the credit risk of the debtors. 104 Business combinations The Group accounts for business combinations, except for acquisitions of entities under common control, under the purchase method in accordance with ASC 805, Business Combinations.
As a result of the foregoing, our income from operations significantly increased from RMB-486.5 million in 2022 to RMB335.6 million (US$47.3 million) in 2023. As a percentage of our revenues, our income from operations increased from -33.1% in 2022 to 20.6% in 2023.
As a result of the foregoing, our income from operations significantly increased from RMB-486.5 million in 2022 to RMB335.6 million in 2023. As a percentage of our revenues, our income from operations increased from -33.1% in 2022 to 20.6% in 2023.
As a result of the foregoing, our net income attributable to our ordinary shareholders significantly increased by from RMB-425.2 million in 2022 to RMB269.3 million (US$37.9 million) in 2023. Our net margin, defined as our net income attributable to our ordinary shareholders as a percentage of our revenues, increased from -28.9% in 2022 to 16.6% in 2023.
As a result of the foregoing, our net income attributable to our ordinary shareholders significantly increased from RMB-425.2 million in 2022 to RMB269.3 million in 2023. Our net margin, defined as our net income attributable to our ordinary shareholders as a percentage of our revenues, increased from -28.9% in 2022 to 16.6% in 2023. B.
The reserve fund can only be used to increase the registered capital and eliminate further losses of the respective companies under PRC regulations. As of December 31, 2021, 2022 and 2023, total statutory reserves of our PRC subsidiaries were RMB149.4 million, RMB150.2 million and RMB152.4 million (US$21.5 million). These reserves are not distributable as cash dividends, loans or advances.
The reserve fund can only be used to increase the registered capital and eliminate further losses of the respective companies under PRC regulations. As of December 31, 2022, 2023 and 2024, total statutory reserves of our PRC subsidiaries were RMB150.2 million, RMB152.4 million and RMB155.3 million (US$21.3 million). These reserves are not distributable as cash dividends, loans or advances.
The growth of revenues generated from our leased-and-operated hotels depends significantly upon our ability to expand our hotel network into new locations in China and maintain competitive rates. 93 Table of Contents Restaurant business.
The growth of revenues generated from our leased-and-operated hotels depends significantly upon our ability to expand our hotel network into new locations in China and maintain competitive rates. 87 Restaurant business.
We recognized losses of RMB1.4 million (US$0.2 million) in 2023, mainly attributable to losses from Yueyuanbaili.Net loss attributable to non-controlling interests. The loss in 2023 mainly consisted of RMB8.8 million(US$1.2 million) attributable to the non-controlling shareholders of GHG subsidiaries. Net income attributable to our ordinary shareholders .
We recognized losses of RMB1.4 million in 2023, mainly attributable to losses from Yueyuanbaili. Net loss attributable to non-controlling interests. The loss in 2023 mainly consisted of RMB8.8 million attributable to the non-controlling shareholders of GHG subsidiaries. Net income attributable to our ordinary shareholders .
Revenues from our franchised-and-managed business increased by 19. 9 % from RMB588.5 million in 2022 to RMB705.2 million (US$99.3 million) in 2023. For hotel business, revenues from our franchised-and-managed hotels increased by 19.6% from RMB582.4 million in 2022 to RMB696.3 million (US$98.1 million) in 2023.
Revenues from our franchised-and-managed business increased by 19.9% from RMB588.5 million in 2022 to RMB705.2 million in 2023. For hotel business, revenues from our franchised-and-managed hotels increased by 19.6% from RMB582.4 million in 2022 to RMB696.3 million in 2023.
As of December 31, 2023, our restaurant network consisted of 194 stores in China, which focus on offering healthy and affordable fast food and casual dining services to mass consumers.
As of December 31, 2024, our restaurant network consisted of 182 stores in China, which focus on offering healthy and affordable fast food and casual dining services to mass consumers.
Gains (losses) from investments in equity securities. Our losses from investments in equity securities significantly narrowed by 91.4% from RMB62.2 million in 2022 to RMB5.4 million (US$0.8 million) in 2023. . Any realized or unrealized gains or losses resulting from the fluctuations of the market value of these securities will be recognized in earnings in the period which they occur.
Gains (losses) from investments in equity securities. Our losses from investments in equity securities significantly narrowed by 91.4% from RMB62.2 million in 2022 to RMB5.4 million in 2023. Any realized or unrealized gains or losses resulting from the fluctuations of the market value of these securities will be recognized in earnings in the period which they occur. Income tax expense.
For restaurant business, our selling and marketing expenses decreased by 19.2% from RMB30.0 million in 2022 to RMB24.2 million (US$3.4 million) in 2023 , mainly due to lower staff related expenses resulted from the closure of L&O stores . General and administrative expenses.
For restaurant business, our selling and marketing expenses decreased by 19.2% from RMB30.0 million in 2022 to RMB24.2 million in 2023, mainly due to lower staff related expenses resulted from the closure of L&O stores. General and administrative expenses. Our general and administrative expenses decreased by 19.7% from RMB259.5 million in 2022 to RMB208.4 million in 2023.
The increase was mainly attributable to higher sales-channel commissions. Our selling and marketing expenses decreased as a percentage of our revenues from 4.7% in 2022 to 4.4% in 2023. For hotel business, our selling and marketing expenses increased by 23.1% from RMB38.5 million in 2022 to RMB47.4 million (US$6.7 million) in 2023, mainly due to higher sales-channel commissions.
Our selling and marketing expenses decreased as a percentage of our revenues from 4.7% in 2022 to 4.4% in 2023. For hotel business, our selling and marketing expenses increased by 23.1% from RMB38.5 million in 2022 to RMB47.4 million in 2023, mainly due to higher sales-channel commissions.
Revenue is recognized when rooms are occupied, and food and beverages are sold. Sublease rental revenues as the respective performance obligations are derived from the subleasing of partial space of leased-and-operated hotels and is recorded in leased-and-operated hotel revenue in the consolidated statements of comprehensive income on a straight-line basis over the contractual lease term satisfied.
Sublease rental revenues as the respective performance obligations are derived from the subleasing of partial space of leased-and-operated hotels and is recorded in leased-and-operated hotel revenue in the consolidated statements of comprehensive income on a straight-line basis over the contractual lease term satisfied.
In 2021, 2022 and 2023, we generated revenues of RMB774.4 million, RMB582.4 million and RMB696.3 million (US$98.1 million) from our franchised-and-managed hotels, which accounted for 64.2%, 62.2% and 58.4% of our revenues for the respective years, which include revenues from membership fees of franchised-and-managed hotels. We select franchisees who are property owners, existing hotel operators or hotel investors.
In 2022, 2023 and 2024, we generated revenues of RMB582.4 million, RMB696.3 million and RMB625.1 million (US$85.6 million) from our franchised-and-managed hotels, which accounted for 62.2%, 58.4% and 58.6% of our revenues for the respective years, which include revenues from membership fees of franchised-and-managed hotels. We select franchisees who are property owners, existing hotel operators or hotel investors.
Net cash provided by operating activities in 2023 was RMB455.0 million (US$64.1 million), which was primarily attributable to our net income of RMB260.5 million, adjusted to deduct (i) interest income of RMB6.0 million, (ii) foreign exchange loss of RMB0.4 million, and to add back (i) noncash lease expense to reduce operating lease right-of-use assets of RMB271.2 million, (ii) depreciation and amortization of RMB116.9 million, (iii) impairment of long lived assets RMB40.6 million, and (iv) bad debt expense of RMB38.9 million.
Net cash provided by operating activities in 2023 was RMB455.0 million, which was primarily attributable to our net income of RMB260.5 million, adjusted to deduct (i) interest income of RMB6.0 million, (ii) foreign exchange loss of RMB0.4 million, and to add back (i) non-cash lease expense to reduce operating lease right-of-use assets of RMB271.2 million, (ii) depreciation and amortization of RMB116.9 million, (iii) impairment of intangible assets with indefinite life and long lived assets of RMB56.6 million, and (iv) bad debt expense of RMB38.9 million.
Mark-to-market losses from these equity securities we recorded amounted to RMB8.7 million, RMB13.9 million and RMB15.3 million (US$2.2 million) in 2021, 2022 and 2023, respectively. In January 2019, we declared a cash dividend of US$30.6 million, US$0.30 per ordinary share, or US$0.30 per ADS.
Mark-to-market losses from these equity securities we recorded amounted to RMB13.9 million, RMB15.3 million and RMB2.5 million (US$0.4 million) in 2022, 2023 and 2024, respectively. In January 2019, we declared a cash dividend of US$30.6 million, US$0.30 per ordinary share, or US$0.30 per ADS.
Our restaurant operating costs decreased by 24.0% from RMB472.3 million in 2022 to RMB359.0 million (US$50.6 million) in 2023. The decrease was mainly attributable to the closing of L&O stores. Selling and marketing expenses. Our selling and marketing expenses increased by 4.6% from RMB68.5 million in 2022 to RMB71.6 million (US$10.1 million) in 2023.
Our restaurant operating costs decreased by 24.0% from RMB472.3 million in 2022 to RMB359.0 million in 2023. The decrease was mainly attributable to the closing of L&O stores. Selling and marketing expenses. Our selling and marketing expenses increased by 4.6% from RMB68.5 million in 2022 to RMB71.6 million in 2023. The increase was mainly attributable to higher sales-channel commissions.
The table below illustrates the net increases of our hotels during 2021, 2022 and 2023. ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2021 2022 ​ 2023 Hotels opened ​ 722 ​ 295 ​ 420 Hotels closed ​ 403 ​ 95 ​ 241 Net increase in total hotels ​ 319 ​ 200 ​ 179 ​ We track the performance of our hotels by comparing hotel revenue of our hotels during ramp up stage and mature hotels, calculated on a monthly rolling basis, taking into account the total number of hotels during ramp up stage and mature hotels in any particular period of time.
Year Ended December 31, 2022 2023 2024 Hotels opened 295 420 405 Hotels closed 95 241 218 Net increase in total hotels 200 179 187 We track the performance of our hotels by comparing hotel revenue of our hotels during ramp up stage and mature hotels, calculated on a monthly rolling basis, taking into account the total number of hotels during ramp up stage and mature hotels in any particular period of time.
Our other operating income increased by 13.2% from RMB24.0 million in 2022 to RMB27.2 million (US$3.8 million) in 2023, mainly attributable to the financial subsidies for hotel business and offset by tax rebates for restaurant business. Income from operations.
For restaurant business, our other general expenses were RMB5.0 million in 2022 and nil in 2023 . Other operating income. Our other operating income increased by 13.2% from RMB24.0 million in 2022 to RMB27.2 million in 2023, mainly attributable to the financial subsidies for hotel business and offset by tax rebates for restaurant business. Income from operations.
The revenue per available room, or RevPAR, was RMB13 7 in the full year 2023, representing a 35.6 % year-over-year increase. Restaurant revenues decreased by 17.3% from RMB533.8 million in 2022 to RMB441.6 million(US$62.2 million) in 2023. The decrease was primarily attributable to the closure of lease-and-operated restaurants, and partially offset by an increase in ADS. Franchised-and-managed business.
The RevPAR was RMB137 in the full year 2023, representing a 35.6% year-over-year increase. Restaurant revenues decreased by 17.3% from RMB533.8 million in 2022 to RMB441.6 in 2023. The decrease was primarily attributable to the closure of lease-and-operated restaurants, and partially offset by an increase in ADS. Franchised-and-managed business.
In 2021, 2022 and 2023, we generated revenues of RMB392.0 million, RMB338.5 million and RMB490.9 million (US$69.1 million) (including RMB74.7 million, RMB61.6 million and RMB102.2 million (US$14.4 million) sublease rental revenue for 2021, 2022 and 2023, respectively) from our leased-and-operated hotels, which accounted for 32.5%, 36.1% and 41.2% of our revenues for the respective years.
In 2022, 2023 and 2024, we generated revenues of RMB338.5 million, RMB490.9 million and RMB437.2 million (US$59.9 million) (including RMB61.6 million, RMB102.2 million and RMB90.7 million (US$12.4 million) sublease rental revenue for 2022, 2023 and 2024, respectively) from our leased-and-operated hotels, which accounted for 36.1%, 41.2% and 41.0% of our revenues for the respective years.
Amounts of net assets restricted include paid up capital and statutory reserve funds of our PRC subsidiaries amounted to RMB936.8 million, RMB898.6 million and RMB901.5 million (US$127.0 million) as of December 31, 2021, 2022 and 2023, respectively.
Amounts of net assets restricted include paid up capital and statutory reserve funds of our PRC subsidiaries amounted to RMB898.6 million, RMB901.5 million and RMB834.7 million (US$117.6 million) as of December 31, 2022, 2023 and 2024, respectively.
Net cash used in investing activities in 2023 was RMB93.7 million (US$13.2 million), primarily attributable to (i) purchases of short-term investments of RMB262.7 million, (ii) purchases of property, plant and equipment of RMB87.8 million, (iii)increase of long-term time deposits of RMB63.3 million, partially offset by (i) proceeds from maturities of short-term investments of RMB167.0 million, (ii) repayment from franchisees net of RMB98.5million.
Net cash used in investing activities in 2023 was RMB93.7 million, primarily attributable to (i) purchases of short-term investments of RMB262.7 million, (ii) purchases of property, plant and equipment of RMB87.8 million, (iii) increase of long-term time deposits of RMB63.3 million, partially offset by (i) proceeds from maturities of short-term investments of RMB167.0 million, (ii) repayment from franchisees net of RMB98.5 million, (iii) proceeds from disposal of subsidiaries of RMB37.8 million, and (iv) repayment of loan from third parties of RMB14.6 million.
For restaurant business, revenues from our franchised-and-managed restaurants increased by 48. 3 % from RMB6 .0 million in 2022 to RMB8.9 million (US$1.3 million) in 2023, mainly due to the increased number of F&M stores as well as the incre a se in ADS. Leased-and-operated business.
For restaurant business, revenues from our franchised-and-managed restaurants increased by 48.3% from RMB6.0 million in 2022 to RMB8.9 million in 2023, mainly due to the increased number of F&M stores as well as the increase in ADS. Leased-and-operated business. Revenues from our leased-and-operated business increased by 12.5% from RMB700.0 million in 2022 to RMB787.8 million in 2023.
As of December 31, 2023, our nationwide hotel network consisted of 4,238 hotels with 309,495 rooms in China, covering all four centrally-administrated municipalities and 360 cities throughout all 31 provinces and autonomous regions in China, as well as an additional 963 hotels that were contracted for or under development.
As of December 31, 2024, our nationwide hotel network consisted of 4,425 hotels with 321,282 rooms in China, covering all four centrally-administrated municipalities and 352 cities throughout all 31 provinces and autonomous regions in China, as well as an additional 1,214 hotels that were contracted for or under development.
We were the fourth largest hotel group in China in terms of number of hotels and rooms, according to China Hotel Association. We operate a rapidly-growing hotel networks in China – from 2012 to 2023, we grew from 792 to 4,238 hotels at a CAGR of 16.5% and from 70,934 to 309,495 rooms at a CAGR of 14.3%.
We were the fourth largest hotel group in China in terms of number of hotels and rooms, according to China Hotel Association. We operate a rapidly-growing hotel networks in China – from 2012 to 2024, we grew from 792 to 4,425 hotels at a CAGR of 14.2% and from 70,934 to 321,282 rooms at a CAGR of 12.3%.
Some of our accounting policies require a higher degree of judgment than others in their application. 107 Table of Contents The selection of critical accounting policies and estimates, the judgments and other uncertainties affecting application of those policies and the sensitivity of reported results to changes in conditions and assumptions are factors that should be considered when reviewing our financial statements.
The selection of critical accounting policies and estimates, the judgments and other uncertainties affecting application of those policies and the sensitivity of reported results to changes in conditions and assumptions are factors that should be considered when reviewing our financial statements.
For the year ended December 31, 2022, our company received RMB241.3 million (US$34.0 million) from our operating subsidiaries in China. For the year ended December 31, 2023, our company received payments of RMB492.5 million (USD69.4 million) from, and made payments of RMB162.5 million (USD22.9 million) to our operating subsidiaries in China.
For the year ended December 31, 2023, our company received payments of RMB492.5 million (US$69.4 million) from, and made payments of RMB162.5 million (USD22.9 million) to our operating subsidiaries in China. For the year ended December 31, 2024, our company received RMB102.1 million (US$14.0 million) , the dividends from our operating subsidiaries in China.
The operation of each leased-and-operated hotel goes through three stages: development, ramp up and mature operations. During the ramp up stage, when the occupancy rate is relatively low, revenues generated by these new leased-and-operated hotels may be insufficient to cover their operating costs.
During the ramp up stage, when the occupancy rate is relatively low, revenues generated by these new leased-and-operated hotels may be insufficient to cover their operating costs.
We define mature hotels as those that have been in operation for more than six months. It typically takes six months for our newly opened franchised-and-managed hotels to ramp up before such hotels can generate normal and stable franchise management fees and for our new leased-and-operated hotels’ income to exceed the hotel operating costs which are generally fixed in nature.
It typically takes six months for our newly opened franchised-and-managed hotels to ramp up before such hotels can generate normal and stable franchise management fees and for our new leased-and-operated hotels’ income to exceed the hotel operating costs which are generally fixed in nature. 83 The operation of each leased-and-operated hotel goes through three stages: development, ramp up and mature operations.
Our other general expenses significantly decreased by 83.6 % from RMB 485.4 million in 2022 to RMB 79.6 million (US$ 11.2 million) in 2023. These expenses include provisions for trademarks especially due to the acquisition of the restaurant business, loan receivables related to long-lived loans, and impairment of assets.
These expenses include provisions for trademarks especially due to the acquisition of the restaurant business, loan receivables related to long-lived loans, and impairment of assets. For hotel business, our other general expenses decreased by 86.2% from RMB461.6 million in 2022 to RMB63.6 million in 2023 due to lower provisions for loans receivable related to franchisee loans.
From disposals of the short-term investments and investments in equity securities, we recorded losses of nil and RMB0.5 million, respectively, in 2021, gains of nil and RMB11.3 million, respectively, in 2022, and we have not disposed of the short-term investments and investments in equity securities in 2023.
From disposals of the short-term investments and investments in equity securities, we recorded gains of nil and RMB11.3 million, respectively, in 2022, and we have not disposed of the short-term investments and investments in equity securities in 2023 , and recorded loss of nil and RMB1.25 million (US$0.17 million) respectively, in 2024.
The de crease was primarily due to the closure of L&O restaurants and partially offset by an increase in ADS. Operating costs. Our total operating costs decreased by 11.2 % from RMB1,066.5 million in 2022 to RMB947.4 million (US$133.4 million) in 2023.
For restaurant business, revenues from our leased-and-operated restaurants decreased by 18.2% from RMB362.8 million in 2022 to RMB296.9 million in 2023. The decrease was primarily due to the closure of L&O restaurants and partially offset by an increase in ADS. Operating costs. Our total operating costs decreased by 11.2% from RMB1,066.5 million in 2022 to RMB947.4 million in 2023.
Members enjoy discounts on room rates, priority in hotel reservation, and accumulate membership points for their paid stays, which can be redeemed for membership upgrades, room night awards and other gifts within two years after the points are earned.
Members enjoy discounts on room rates, priority in hotel reservation, and accumulate membership points for their paid stays, which can be redeemed for membership upgrades, room night awards and other gifts within two years after the points are earned. 103 Membership fees from our membership program are earned and recognized on a straight-line basis over the expected membership duration of the different membership levels.
(iii)proceeds from disposal of subsidiaries of RMB37.8 million,(iv) repayment of loan from third parties of RMB14.6 million. Net cash provided by investing activities in 2022 was RMB420.4 million, primarily attributable to (i) proceeds from maturities of short-term investments of RMB550.7 million, (ii) proceeds from disposal of equity securities of RMB116.6 million, (iii) proceeds from disposal of subsidiaries of RMB79.7 million.
Net cash provided by investing activities in 2022 was RMB420.4 million, primarily attributable to (i) proceeds from maturities of short-term investments of RMB550.7 million, (ii) proceeds from disposal of equity securities of RMB116.6 million, (iii) proceeds from disposal of subsidiaries of RMB79.7 million, and (iv) repayment of loan from franchisees net of RMB48.1 million, partially offset by (i) purchase of short-term investments of RMB161.8 million, (ii) loan to related parties net of RMB125.1 million, (iii) purchases of property, plant and equipment of RMB83.7 million, and (iv) loan to third parties net of RMB13.0 million.
Our other operating expenses increased by 39.1% from RMB8.4 million in 2022 to RMB11.7 million (US$1.6 million) in 2023, primarily due to the loss incurred from the disposal of assets and equipment for hotel business. 101 Table of Contents Other general expenses.
The decrease was primarily attributable to lower staff related expenses and lower bad debts for both hotel business and restaurant business. Other operating expenses. Our other operating expenses increased by 39.1% from RMB8.4 million in 2022 to RMB11.7 million in 2023, primarily due to the loss incurred from the disposal of assets and equipment for hotel business.
Cash Flows through our Organization GreenTree Hospitality Group Ltd., or our company, is a holding company that relies principally on its operating subsidiaries in China for its cash requirements. For the year ended December 31, 2021, our company made a cash payment in the amount of RMB100.0 million (US$14.1 million) on behalf of our operating subsidiaries in China.
Cash Flows through our Organization GreenTree Hospitality Group Ltd., or our company, is a holding company that relies principally on its operating subsidiaries in China for its cash requirements. For the year ended December 31, 2022, our company received RMB241.3 million from our operating subsidiaries in China.
Our operating costs and expenses consist of hotel and restaurant operating costs, selling and marketing expense, general and administrative expenses, other operating expenses, and other general expense.
Our operating costs and expenses consist of hotel and restaurant operating costs, selling and marketing expense, general and administrative expenses, other operating expenses, impairment loss of goodwill, impairment of intangible assets with indefinite life and other general expenses.
Our cash and cash equivalents consist of cash on hand and liquid investments and short term investment which have maturities of three months or less when acquired.
Our cash and cash equivalents consist of cash on hand and liquid investments and short term investment which have maturities of three months or less when acquired. Furthermore, we continue to evaluate and pursue investment opportunities in both domestic and international markets.
We have been able to meet our working capital and capital expenditure needs, and we believe that we will be able to meet our working capital needs in at least the next twelve months with our operating cash flow and existing cash and cash equivalents.
While these investments are intended to support long-term growth, they may cause fluctuation in our available cash flows. 98 We have been able to meet our working capital and capital expenditure needs, and we believe that we will be able to meet our working capital needs in at least the next twelve months with our operating cash flow and existing cash and cash equivalents.
The table below sets forth the revenues from initial franchise fee and recurring franchise management fee and others, both in absolute amount and as a percentage of our revenues generated from franchised-and-managed hotels for the years indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2021 2022 2023 ​ RMB % RMB % RMB US$ % Initial franchise fee ​ 76,263 9.8 ​ 42,424 7.3 ​ 46,847 6,598 6.7 Recurring franchise management fee ​ 698,096 90.2 ​ 540,017 92.7 ​ 649,474 91,477 93.3 Revenues from franchised-and- managed hotels ​ 774,359 100.0 ​ 582,441 100.0 ​ 696,321 98,075 100.0 ​ Revenues from recurring franchise management fee and others as a percentage of our revenues from franchised-and-managed hotels were 90.2% in 2021, 92.7% in 2022 and 93.3% in 2023. ● Leased-and-operated Hotels.
The table below sets forth the revenues from initial franchise fee and recurring franchise management fee and others, both in absolute amount and as a percentage of our revenues generated from franchised-and-managed hotels for the years indicated: 2022 2023 2024 RMB % RMB % RMB US$ % Initial franchise fee 42,424 7.3 46,847 6.7 34,905 4,782 5.6 Recurring franchise management fee 540,017 92.7 649,474 93.3 590,168 80,853 94.4 Revenues from franchised-and- managed hotels 582,441 100.0 696,321 100.0 625,073 85,635 100.0 Revenues from recurring franchise management fee and others as a percentage of our revenues from franchised-and-managed hotels were 92.7% in 2022, 93.3% in 2023 and 94.4% in 2024. ● Leased-and-operated Hotels.
The following table sets forth our revenues generated by our franchised-and-managed hotels and leased-and-operated hotels, both in absolute amount and as a percentage of total revenues for the year indicated. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2021 ​ 2022 ​ 2023 ​ RMB % RMB % RMB US$ % ​ ​ (in thousands, except for percentage) Revenues: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Leased-and-operated hotels(1) ​ 391,960 ​ 32.5 338,506 ​ 36.1 490,924 ​ 69,145 41.2 Franchised-and-managed hotels ​ 774,359 ​ 64.2 582,441 ​ 62.2 696,321 ​ 98,075 58.4 Wholesales and others ​ 39,827 ​ 3.3 15,854 ​ 1.7 4,661 ​ 656 0.4 Total revenues ​ 1,206,146 ​ 100.0 936,801 ​ 100.0 1,191,906 ​ 167,876 100.0 ● Franchised-and-managed Hotels.
The following table sets forth our revenues generated by our franchised-and-managed hotels and leased-and-operated hotels, both in absolute amount and as a percentage of total revenues for the years indicated. 2022 2023 2024 RMB % RMB % RMB US$ % (in thousands, except for percentage) Revenues: Leased-and-operated hotels(1) 338,506 36.1 490,924 41.2 437,522 59,940 41.0 Franchised-and-managed hotels 582,441 62.2 696,321 58.4 625,073 85,635 58.6 Wholesales and others 15,854 1.7 4,661 0.4 3,908 535 0.4 Total revenues 936,801 100.0 1,191,906 100.0 1,066,503 146,110 100.0 ● Franchised-and-managed Hotels.
The following table sets forth our revenues generated by our franchised-and-managed stores and leased-and-operated stores, both in absolute amount and as a percentage of total revenues for the year indicated. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2021 ​ 2022 ​ 2023 ​ ​ RMB ​ % ​ RMB ​ % ​ RMB ​ US$ ​ % ​ ​ (in thousands, except for percentage) Revenues: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Leased-and-operated restaurants 575,063 75.2 362,807 68.0 296,890 41,816 67.2 Franchised-and-managed restaurants 8,213 1.1 6,022 1.1 8,924 1,257 2.0 Wholesales and others 181,910 23.7 164,958 30.9 135,822 19,130 30.8 Total revenues 765,186 100.0 533,787 100.0 441,636 62,203 100.0 ​ Operating Costs and Expenses.
The following table sets forth our revenues generated by our franchised-and-managed stores and leased-and-operated stores, both in absolute amount and as a percentage of total revenues for the years indicated. 2022 2023 2024 RMB % RMB % RMB US$ % (in thousands, except for percentage) Revenues: Leased-and-operated restaurants 362,807 68.0 296,890 67.2 159,326 21,828 57.2 Franchised-and-managed restaurants 6,022 1.1 8,924 2.0 10,287 1,409 3.7 Wholesales and others 164,958 30.9 135,822 30.8 109,032 14,937 39.1 Total revenues 533,787 100.0 441,636 100.0 278,645 38,174 100.0 Operating Costs and Expenses.
The following table sets forth the components of our operations and expenses, both in absolute amount and as a percentage of total revenues for the year indicated Consolidated results ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, 2021 ​ ​ RMB ​ RMB ​ RMB ​ RMB ​ % ​ Hotel Restaurant Elimination Total Total ​ ​ (in thousands, except for percentage) Operating costs and expenses: ​ ​ ​ ​ ​ Operating costs: Rental 235,568 138,359 — 373,927 19.0 Utilities 25,783 23,314 — 49,097 2.5 Personnel costs 82,114 132,447 — 214,561 10.9 Depreciation and amortization 80,576 18,442 — 99,018 5.0 Consumables, food and beverage 69,496 14,892 — 84,388 4.3 Costs of managers of franchised-and-managed business 114,779 — — 114,779 5.8 Material cost — 299,679 — 299,679 15.2 Other costs of franchised-and-managed business 26,124 — — 26,124 1.3 Others 16,937 35,035 (1,029) 50,943 2.7 Total operating costs 651,377 662,168 (1,029) 1,312,516 66.7 Selling and marketing expenses 66,922 36,835 — 103,757 5.3 General and administrative expenses 256,160 62,811 — 318,971 16.2 Other operating expenses 4,938 8,251 — 13,189 0.7 Other general expenses 99,886 20,294 — 120,180 6.1 Total operating costs and expenses 1,079,283 790,359 (1,029) 1,868,613 95.0 ​ 94 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, 2022 ​ ​ RMB ​ RMB ​ RMB ​ RMB ​ % ​ Hotel Restaurant Elimination Total Total ​ ​ (in thousands, except for percentage) Operating costs and expenses: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating costs: ​ Rental 224,536 93,026 — 317,562 21.6 Utilities 27,877 16,987 — 44,864 3.1 Personnel costs 74,281 93,519 — 167,800 11.4 Depreciation and amortization 92,798 11,784 — 104,582 7.1 Consumables, food and beverage 28,610 9,908 — 38,518 2.6 Costs of managers of franchised-and-managed business 107,852 — — 107,852 7.3 Material cost — 220,272 — 220,272 15.0 Other costs of franchised-and-managed business 14,340 — — 14,340 1.0 Others 23,725 26,793 204 50,722 3.5 Total operating costs 594,019 472,289 204 1,066,513 72.6 Selling and marketing expenses 38,534 29,976 (20) 68,490 4.7 General and administrative expenses 210,760 48,754 — 259,514 17.7 Other operating expenses 3,245 5,172 — 8,416 0.6 Impairment loss of goodwill 91,236 — — 91,236 6.2 Other general expenses 461,597 23,830 — 485,427 33.0 Total operating costs and expenses 1,399,392 580,021 184 1,979,597 134.8 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, 2023 ​ ​ RMB ​ RMB ​ RMB ​ RMB ​ US$ ​ % ​ Hotel Restaurant Elimination Total Total Total ​ ​ (in thousands, except for percentage) Operating costs and expenses: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating costs: Rental 211,952 65,701 — 277,653 39,107 17.1 Utilities 31,270 11,595 — 42,865 6,037 2.6 Personnel costs 71,916 73,646 — 145,562 20,502 8.9 Depreciation and amortization 84,538 8,450 — 92,988 13,097 5.7 Consumables, food and beverage 49,910 7,356 — 57,266 8,066 3.5 Costs of managers of franchised-and-managed business 114,328 — — 114,328 16,103 7.0 Material cost — 179,349 — 179,349 25,261 11.0 Other costs of franchised-and-managed business 17,519 — — 17,519 2,467 1.1 Others 17,409 12,922 (10,422) 19,909 2,804 1.3 Total operating costs 598,842 359,019 (10,422) 947,439 133,444 58.2 Selling and marketing expenses 47,435 24,233 (50) 71,618 10,087 4.4 General and administrative expenses 166,861 41,572 — 208,434 29,357 12.8 Other operating expenses 4,453 7,251 — 11,705 1,649 0.7 Other general expenses 63,557 16,027 — 79,584 11,209 4.9 Total operating costs and expenses 881,148 448,102 (10,472) 1,318,779 185,746 81.0 ​ ​ 95 Table of Contents ● Operating costs.
The following table sets forth the components of our operations and expenses, both in absolute amount and as a percentage of total revenues for the year indicated Consolidated results Year Ended December 31, 2022 RMB RMB RMB RMB % Hotel Restaurant Elimination Total Total (in thousands, except for percentage) Operating costs and expenses: Operating costs: Rental 224,536 93,026 — 317,562 21.6 Utilities 27,877 16,987 — 44,864 3.1 Personnel costs 74,281 93,519 — 167,800 11.4 Depreciation and amortization 92,798 11,784 — 104,582 7.1 Consumables, food and beverage 28,610 9,908 — 38,518 2.6 Costs of managers of franchised-and-managed business 107,852 — — 107,852 7.3 Material cost — 220,272 — 220,272 15.0 Other costs of franchised-and-managed business 14,340 — — 14,340 1.0 Others 23,725 26,793 204 50,722 3.5 Total operating costs 594,019 472,289 204 1,066,513 72.6 Selling and marketing expenses 38,534 29,976 (20 ) 68,490 4.7 General and administrative expenses 210,760 48,754 — 259,514 17.7 Other operating expenses 3,245 5,172 — 8,416 0.6 Impairment loss of goodwill 91,236 — — 91,236 6.2 Impairment of Intangible asset with indefinite life — 18,892 — 18,892 1.3 Other general expenses 461,597 4,938 — 466,535 31.8 Total operating costs and expenses 1,399,392 580,021 184 1,979,597 134.8 88 Year Ended December 31, 2023 RMB RMB RMB RMB % Hotel Restaurant Elimination Total Total (in thousands, except for percentage) Operating costs and expenses: Operating costs: Rental 211,952 65,701 — 277,653 17.1 Utilities 31,270 11,595 — 42,865 2.6 Personnel costs 71,916 73,646 — 145,562 8.9 Depreciation and amortization 84,538 8,450 — 92,988 5.7 Consumables, food and beverage 49,910 7,356 — 57,266 3.5 Costs of managers of franchised-and-managed business 114,328 — — 114,328 7.0 Material cost — 179,349 — 179,349 11.0 Other costs of franchised-and-managed business 17,519 — — 17,519 1.1 Others 17,409 12,922 (10,422 ) 19,909 1.3 Total operating costs 598,842 359,019 (10,422 ) 947,439 58.2 Selling and marketing expenses 47,435 24,233 (50 ) 71,618 4.4 General and administrative expenses 166,861 41,572 — 208,434 12.8 Other operating expenses 4,453 7,251 — 11,705 0.7 Impairment loss of goodwill Impairment of Intangible asset with indefinite life — 16,027 — 16,027 1.0 Other general expenses 63,557 — — 63,557 3.9 Total operating costs and expenses 881,148 448,102 (10,472 ) 1,318,779 81.0 Year Ended December 31, 2024 RMB RMB RMB RMB US$ % Hotel Restaurant Elimination Total Total Total (in thousands, except for percentage) Operating costs and expenses: Operating costs: Rental 218,020 40,234 (207 ) 258,046 35,352 19.2 Utilities 36,835 9,420 — 46,255 6,337 3.4 Personnel costs 98,351 55,328 — 153,679 21,054 11.4 Depreciation and amortization 93,491 9,047 — 102,538 14,048 7.6 Consumables, food and beverage 36,073 4,315 — 40,388 5,533 3.0 Costs of managers of franchised-and-managed business 95,368 — — 95,368 13,065 7.1 Material cost — 105,122 (1,500 ) 103,622 14,196 7.7 Other costs of franchised-and-managed business 9,086 — — 9,086 1,245 0.7 Others 6,575 7,030 13,605 1,864 1.0 Total operating costs 593,799 230,496 (1,708 ) 822,587 112,695 61.2 Selling and marketing expenses 55,028 12,557 — 67,585 9,259 5.0 General and administrative expenses 156,402 26,149 — 182,551 25,009 13.6 Other operating expenses 4,937 2,153 — 7,090 971 0.5 Impairment loss of goodwill — 81,008 81,008 11,098 6.0 Impairment of Intangible asset with indefinite life — 39,072 — 39,072 5,353 2.9 Other general expenses 41,769 — — 41,769 5,722 3.1 Total operating costs and expenses 851,935 391,435 (1708 ) 1,241,662 170,107 92.2 89 ● Operating costs.
The following table sets forth a summary of our cash flows for the years indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2021 2022 2023 ​ ​ RMB ​ RMB ​ RMB US$ ​ ​ (in thousands) Net cash provided by operating activities 379,249 294,541 455,050 64,092 Net cash (used in) provided by investing activities (978,048) 420,446 (93,708) (13,199) Net cash (used in) provided by financing activities 240,328 (335,396) (303,734) (42,780) Effect of exchange rate changes on cash and cash equivalents and restricted cash (1,412) 1,248 32 5 Net increase (decrease) in cash and cash equivalents and restricted cash (359,884) 380,839 57,639 8,118 Cash and cash equivalents and restricted cash at the beginning of the year 713,007 353,123 733,962 103,376 Cash and cash equivalents and restricted cash at the end of the year 353,123 733,962 791,601 111,495 ​ Operating Activities Net cash provided by operating activities was RMB455.0 million (US$64.1 million) in 2023, compared to RMB294.5 million in 2022, and compared to RMB379.2 million in 2021.
The following table sets forth a summary of our cash flows for the years indicated: Year Ended December 31, 2022 2023 2024 RMB RMB RMB US$ (in thousands) Net cash provided by operating activities 294,541 455,050 373,378 51,153 Net cash provided by (used in) investing activities 420,446 (93,708 ) 345,392 47,318 Net cash (used in) provided by financing activities (335,396 ) (303,734 ) 10,532 1,443 Effect of exchange rate changes on cash and cash equivalents and restricted cash 1,248 32 4,299 589 Net increase in cash and cash equivalents and restricted cash 380,839 57,639 733,601 100,503 Cash and cash equivalents and restricted cash at the beginning of the year 353,123 733,962 791,601 108,449 Cash and cash equivalents and restricted cash at the end of the year 733,962 791,601 1,525,202 208,952 Operating Activities Net cash provided by operating activities was RMB373.4 million (US$51.2 million) in 2024, compared to RMB455.0 million in 2023, and compared to RMB294.5 million in 2022.
The amount was further adjusted by changes in itemized balances of operating assets and liabilities that have a negative effect on cashflow, including primarily (i) a decrease in our deferred revenue of RMB55.6 million mainly attributable to a decrease in our membership fees received and initial franchisee fees received,(ii) an increase in other assets of RMB48.4 million, (iii) an increase in other current assets of RMB46.7 million ,(iv) an increase in our accounts receivable of RMB24.4 million, (v) a decrease in income tax payable of RMB15.5 million , as well as certain changes in itemized balances of operating assets and liabilities that have a positive effect on cashflow, including primarily (i) an increase in our accrued expenses and other current liabilities of RMB59.2 million, (ii) an increase in deferred rent of RMB44.2 million, (iii) a decrease in deferred taxes of RMB40.5 million,(iv) an increase in unrecognized tax benefits of RMB38.6 million.
The amount was further adjusted by changes in itemized balances of operating assets and liabilities that have a negative effect on cashflow, including primarily (i) a decrease in operating lease liabilities of RMB247.7 million, (ii) an increase in accounts payable of RMB3.0 million, (iii) an increase in other current assets of RMB3.1 million, (iv) a decrease in deferred revenue of RMB42.8 million, (v) an increase in income tax payable of RMB23.2 million, as well as certain changes in itemized balances of operating assets and liabilities that have a positive effect on cashflow, including primarily (i) an increase in unrecognized tax benefits of RMB57.9 million, (ii) an increase in accrued expenses and other current liabilities of RMB3.2 million, (iii) a decrease in other assets of RMB3.7 million, and (iv) a decrease in inventories of RMB14.6 million.
We believe that the year-to-year comparison of operating results should not be relied upon as being indicative of future performance. ​ Consolidated results ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, 2021 ​ RMB ​ RMB ​ RMB ​ RMB ​ % ​ Hotel Restaurant Elimination Total Total ​ (in thousands, except for percentage) Consolidated Statement of Comprehensive Income Data: ​ Revenues: ​ Leased-and-operated business ​ 391,960 575,063 (3,296) 963,727 49.0 Franchised-and-managed business ​ 774,359 8,213 — 782,572 39.8 Wholesales and others ​ 39,827 181,910 (221) 221,516 11.2 Total revenues ​ 1,206,146 765,186 (3,517) 1,967,815 100.0 Operating costs and expenses: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating costs ​ (651,377) (662,168) 1,029 (1,312,516) (66.7) Selling and marketing expenses ​ (66,922) (36,835) — (103,756) (5.3) General and administrative expenses ​ (256,160) (62,811) — (318,971) (16.2) Other operating expense ​ (4,938) (8,251) — (13,189) (0.7) Impairment loss of goodwill ​ — ​ — ​ — ​ — ​ — Other general expenses ​ (99,886) (20,294) — (120,180) (6.0) Total operating costs and expenses ​ (1,079,283) (790,359) 1,029 (1,868,613) (95.0) Other operating income ​ 27,060 2,938 — 29,998 1.5 Income from operations ​ 153,923 (22,235) (2,488) 129,200 6.5 Interest income and other, net ​ 59,974 685 — 60,659 3.1 Interest expenses ​ (12,671) (2,632) — (15,303) (0.8) Gains (losses) from investments in equity securities ​ 9,138 33 — 9,171 0.5 Other income/expense, net ​ 11,819 (68) — 11,750 0.6 Income before income taxes ​ 222,183 (24,218) (2,488) 195,476 9.9 Income tax expense ​ (108,889) (4,020) 622 (112,287) (5.7) Income before share of losses in equity investees ​ 113,294 (28,239) (1,866) 83,189 4.2 Share of losses (gains) in equity investees, net of tax ​ 383 — — 383 — Net income ​ 113,677 (28,239) (1,866) 83,572 4.2 Net loss attributable to noncontrolling interests ​ 3,761 1,373 — 5,135 0.3 Net income attributable to ordinary shareholders ​ 117,438 (26,865) (1,866) 88,707 4.5 ​ ​ 97 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, 2022 ​ ​ RMB ​ RMB ​ RMB ​ RMB ​ % ​ Hotel Restaurant Elimination Total Total ​ ​ (in thousands, except for percentage) Consolidated Statement of Comprehensive Income Data: Revenues: Leased-and-operated business 338,506 362,807 (1,290) 700,023 47.7 Franchised-and-managed business 582,441 6,022 — 588,463 40.1 Wholesales and others 15,854 164,958 (224) 180,588 12.2 Total revenues 936,801 533,787 (1,514) 1,469,074 100.0 Operating costs and expenses: ​ ​ ​ ​ ​ Operating costs (594,019) (472,289) (204) (1,066,513) (72.6) Selling and marketing expenses (38,534) (29,976) 20 (68,490) (4.7) General and administrative expenses (210,760) (48,754) — (259,514) (17.7) Other operating expense (3,245) (5,172) — (8,416) (0.6) Impairment loss of goodwill (91,236) — — (91,236) (6.2) Other general expenses (461,597) (23,830) — (485,427) (33.0) Total operating costs and expenses (1,399,392) (580,021) (184) (1,979,597) (134.8) Other operating income 19,449 4,544 — 23,993 1.6 Income from operations (443,142) (41,689) (1,699) (486,530) (33.1) Interest income and other, net 47,384 721 — 48,105 3.3 Interest expenses (25,376) (2,612) — (27,988) (1.9) Gains (losses) from investments in equity securities (62,156) — — (62,156) (4.2) Other income/expense, net 24,230 175 — 24,405 1.7 Income before income taxes (459,061) (43,405) (1,699) (504,164) (34.3) Income tax expense 45,592 (1,944) 425 44,073 3.0 Income before share of losses in equity investees (413,468) (45,349) (1,274) (460,091) (31.3) Share of losses (gains) in equity investees, net of tax (1,598) — — (1,598) (0.1) Net income (415,067) (45,349) (1,274) (461,689) (31.4) Net loss attributable to noncontrolling interests 32,850 3,687 — 36,536 2.5 Net income attributable to ordinary shareholders (382,217) (41,662) (1,274) (425,153) (28.9) ​ ​ 98 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, 2023 ​ RMB RMB RMB RMB US$ % ​ ​ Hotel ​ Restaurant ​ Elimination ​ Total ​ Total Total ​ ​ (in thousands, except for percentage) Consolidated Statement of Comprehensive Income Data: ​ ​ ​ ​ ​ Revenues: ​ ​ ​ ​ ​ Leased-and-operated business ​ 490,924 ​ 296,890 ​ — ​ 787,814 ​ 110,961 48.4 Franchised-and-managed business ​ 696,321 ​ 8,924 ​ — ​ 705,245 ​ 99,332 ​ 43.3 Wholesales and others ​ 4,661 ​ 135,822 ​ (6,284) ​ 134,198 ​ 18,901 8.3 Total revenues ​ 1,191,906 ​ 441,636 ​ (6,284) ​ 1,627,258 ​ 229,194 100.0 Operating costs and expenses: ​ ​ ​ ​ ​ Operating costs ​ (598,842) ​ (359,019) ​ 10,422 ​ (947,439) ​ (133,444) (58.2) Selling and marketing expenses ​ (47,435) ​ (24,233) ​ 50 ​ (71,618) ​ (10,087) (4.4) General and administrative expenses ​ (166,861) ​ (41,572) ​ — ​ (208,434) ​ (29,357) ​ (12.8) Other operating expense ​ (4,453) ​ (7,251) ​ — ​ (11,705) ​ (1,649) (0.7) Impairment loss of goodwill ​ — ​ — ​ — ​ — ​ — — Other general expenses ​ (63,557) ​ (16,027) ​ — ​ (79,584) ​ (11,209) (4.9) Total operating costs and expenses ​ (881,148) ​ (448,102) ​ 10,472 ​ (1,318,779) ​ (185,746) (81.0) Other operating income ​ 24,525 ​ 2,645 ​ — ​ 27,170 ​ 3,827 1.7 Income from operations ​ 335,283 ​ (3,822) ​ 4,187 ​ 335,649 ​ 47,275 20.6 Interest income and other, net ​ 41,241 ​ 131 ​ — ​ 41,371 ​ 5,827 2.5 Interest expenses ​ (13,706) ​ (348) ​ — ​ (14,054) ​ (1,979) ​ (0.9) Gains (losses) from investments in equity securities ​ (5,378) ​ — ​ — ​ (5,378) ​ (757) (0.3) Other income/expense, net ​ 22,676 ​ 108 ​ — ​ 22,784 ​ 3,209 ​ 1.4 Income before income taxes ​ 380,116 ​ (3,931) ​ 4,187 ​ 380,372 ​ 53,574 23.4 Income tax expense ​ (113,126) ​ (4,280) ​ (1,047) ​ (118,452) ​ (16,684) ​ (7.3) Income before share of losses in equity investees ​ 266,990 ​ (8,211) ​ 3,140 ​ 261,920 ​ 36,891 16.1 Share of losses (gains) in equity investees, net of tax ​ (1,392) ​ — ​ — ​ (1,392) ​ (196) ​ (0.1) Net income ​ 265,598 ​ (8,211) ​ 3,140 ​ 260,528 ​ 36,695 16.0 Net loss attributable to noncontrolling interests ​ 9,554 ​ (765) ​ — ​ 8,789 ​ 1,238 ​ 0.5 Net income attributable to ordinary shareholders ​ 275,152 ​ (8,976) ​ 3,140 ​ 269,316 ​ 37,932 ​ 16.6 ​ ​ 99 Table of Contents The following tables present certain unaudited financial data and selected operating data as of and for the years ended December 31, 2021, 2022 and 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, ​ 2021 2022 2023 Selected Operating Data: ​ Total hotels in operation ​ 4,659 4,059 4,238 Franchised-and-managed hotels ​ 4,593 3,998 4,173 Leased-and-operated hotels ​ 66 61 65 Total hotel rooms in operation ​ 337,153 302,497 309,495 Franchised-and-managed hotels ​ 330,089 295,932 302,177 Leased-and-operated hotels ​ 7,064 6,565 7,318 Number of cities ​ 367 355 360 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2021 2022 2023 Occupancy rate (as a percentage) ​ ​ Total hotels in operation ​ 71.1 % 63.7 % 75.8 % Franchised-and-managed hotels ​ 71.3 % 63.8 % 75.9 % Leased-and-operated hotels ​ 63.4 % 58.4 % 70.9 % Average daily rate (in RMB) ​ ​ ​ ​ ​ Total hotels in operation ​ 164 159 180 ​ Franchised-and-managed hotels ​ 163 157 178 ​ Leased-and-operated hotels ​ 213 219 250 ​ RevPAR (in RMB) ​ ​ ​ ​ ​ Total hotels in operation ​ 116 101 137 ​ Franchised-and-managed hotels ​ 116 100 135 ​ Leased-and-operated hotels ​ 135 128 177 ​ (1) Based on the number of available rooms.
Consolidated results Year Ended December 31, 2022 RMB RMB RMB RMB % Hotel Restaurant Elimination Total Total (in thousands, except for percentage) Consolidated Statement of Comprehensive Income Data: Revenues: Leased-and-operated business 338,506 362,807 (1,290 ) 700,023 47.7 Franchised-and-managed business 582,441 6,022 — 588,463 40.1 Wholesales and others 15,854 164,958 (224 ) 180,588 12.2 Total revenues 936,801 533,787 (1,514 ) 1,469,074 100.0 Operating costs and expenses: Operating costs (594,019 ) (472,289 ) (204 ) (1,066,513 ) (72.6 ) Selling and marketing expenses (38,534 ) (29,976 ) 20 (68,490 ) (4.7 ) General and administrative expenses (210,760 ) (48,754 ) — (259,514 ) (17.7 ) Other operating expense (3,245 ) (5,172 ) — (8,416 ) (0.6 ) Impairment loss of goodwill (91,236 ) — — (91,236 ) (6.2 ) Impairment of Intangible asset with indefinite life — (18,892 ) — (18,892 ) (1.3 ) Other general expenses (461,597 ) (4,938 ) — (466,535 ) (31.8 ) Total operating costs and expenses (1,399,392 ) (580,021 ) (184 ) (1,979,597 ) (134.8 ) Other operating income 19,449 4,544 — 23,993 1.6 Income from operations (443,142 ) (41,689 ) (1,699 ) (486,530 ) (33.1 ) Interest income and other, net 47,384 721 — 48,105 3.3 Interest expenses (25,376 ) (2,612 ) — (27,988 ) (1.9 ) Gains (losses) from investments in equity securities (62,156 ) — — (62,156 ) (4.2 ) Other income/expense, net 24,230 175 — 24,405 1.7 Income before income taxes (459,061 ) (43,405 ) (1,699 ) (504,164 ) (34.3 ) Income tax expense 45,592 (1,944 ) 425 44,073 3.0 Income before share of losses in equity investees (413,468 ) (45,349 ) (1,274 ) (460,091 ) (31.3 ) Share of losses (gains) in equity investees, net of tax (1,598 ) — — (1,598 ) (0.1 ) Net income (415,067 ) (45,349 ) (1,274 ) (461,689 ) (31.4 ) Net loss attributable to noncontrolling interests 32,850 3,687 — 36,536 2.5 Net income attributable to ordinary shareholders (382,217 ) (41,662 ) (1,274 ) (425,153 ) (28.9 ) 91 Year Ended December 31, 2023 RMB RMB RMB RMB % Hotel Restaurant Elimination Total Total (in thousands, except for percentage) Consolidated Statement of Comprehensive Income Data: Revenues: Leased-and-operated business 490,924 296,890 — 787,814 48.4 Franchised-and-managed business 696,321 8,924 — 705,245 43.3 Wholesales and others 4,661 135,822 (6,284 ) 134,198 8.3 Total revenues 1,191,906 441,636 (6,284 ) 1,627,258 100.0 Operating costs and expenses: Operating costs (598,842 ) (359,019 ) 10,422 (947,439 ) (58.2 ) Selling and marketing expenses (47,435 ) (24,233 ) 50 (71,618 ) (4.4 ) General and administrative expenses (166,861 ) (41,572 ) — (208,434 ) (12.8 ) Other operating expense (4,453 ) (7,251 ) — (11,705 ) (0.7 ) Impairment loss of goodwill — — — — — Impairment of Intangible asset with indefinite life — (16,027 ) — (16,027 ) (1.0 ) Other general expenses (63,557 ) — — (63,557 ) (3.9 ) Total operating costs and expenses (881,148 ) (448,102 ) 10,472 (1,318,779 ) (81.0 ) Other operating income 24,525 2,645 — 27,170 1.7 Income from operations 335,283 (3,822 ) 4,187 335,649 20.6 Interest income and other, net 41,241 131 — 41,371 2.5 Interest expenses (13,706 ) (348 ) — (14,054 ) (0.9 ) Gains (losses) from investments in equity securities (5,378 ) — — (5,378 ) (0.3 ) Other income/expense, net 22,676 108 — 22,784 1.4 Income before income taxes 380,116 (3,931 ) 4,187 380,372 23.4 Income tax expense (113,126 ) (4,280 ) (1,047 ) (118,452 ) (7.3 ) Income before share of losses in equity investees 266,990 (8,211 ) 3,140 261,920 16.1 Share of losses (gains) in equity investees, net of tax (1,392 ) — — (1,392 ) (0.1 ) Net income 265,598 (8,211 ) 3,140 260,528 16.0 Net loss attributable to noncontrolling interests 9,554 (765 ) — 8,789 0.5 Net income attributable to ordinary shareholders 275,152 (8,976 ) 3,140 269,316 16.6 92 Year Ended December 31, 2024 RMB RMB RMB RMB US$ % Hotel Restaurant Elimination Total Total Total (in thousands, except for percentage) Consolidated Statement of Comprehensive Income Data: Revenues: Leased-and-operated business 437,522 159,326 (207 ) 596,641 81,739 44.4 Franchised-and-managed business 625,073 10,287 — 635,360 87,044 47.3 Wholesales and others 3,908 109,032 (1,500 ) 111,439 15,267 8.3 Total revenues 1,066,503 278,645 (1,708 ) 1,343,440 184,051 100.0 Operating costs and expenses: Operating costs (593,799 ) (230,496 ) 10,422 (822,587 ) (112,694 ) (61.2 ) Selling and marketing expenses (55,028 ) (12,557 ) 50 (67,585 ) (9,259 ) (5.0 ) General and administrative expenses (156,402 ) (26,149 ) — (182,551 ) (25,009 ) (13.6 ) Other operating expense (4,937 ) (2,153 ) — (7,090 ) (971 ) (0.5 ) Impairment loss of goodwill — (81,008 ) — (81,008 ) (11,098 ) (6.0 ) Impairment of Intangible asset with indefinite life — (39,072 ) — (39,072 ) (5,353 ) (2.9 ) Other general expenses (41,769 ) — — (41,769 ) (5,722 ) (3.1 ) Total operating costs and expenses (851,935 ) (391,436 ) 1,708 (1,241,663 ) (17,011 ) (92.4 ) Other operating income 56,818 3,329 — 60,148 8,240 4.5 Income from operations 271,386 (109,461 ) 4,187 161,924 22,184 12.1 Interest income and other, net 39,982 90 — 40,072 5,490 3.0 Interest expenses (6,310 ) — — (6,310 ) (864 ) (0.5 ) Gains (losses) from investments in equity securities (10,314 ) — (4,640 ) (14,954 ) (2,049 ) (1.1 ) Other income/expense, net 16,384 (19 ) 109 16,474 2,257 1.2 Income before income taxes 311,127 (109,390 ) (4,531 ) 197,207 27,017 14.7 Income tax expense (107,223 ) 18,496 — (88,727 ) (12,156 ) (6.6 ) Income before share of losses in equity investees 203,904 (90,894 ) (4,531 ) 108,480 14,862 8.1 Share of losses (gains) in equity investees, net of tax (1,165 ) — — (1,165 ) (160 ) (0.1 ) Net income 202,738 (90,894 ) (4,531 ) 107,314 14,702 8.0 Net loss attributable to noncontrolling interests 4,600 (1,912 ) — 2,688 368 0.2 Net income attributable to ordinary shareholders 207,339 (92,806 ) (4,531 ) 110,002 15,070 8.2 93 The following tables present certain unaudited financial data and selected operating data as of and for the years ended December 31, 2022, 2023 and 2024: As of December 31, 2022 2023 2024 Selected Operating Data: Total hotels in operation 4,059 4,238 4,425 Franchised-and-managed hotels 3,998 4,173 4,370 Leased-and-operated hotels 61 65 55 Total hotel rooms in operation 302,497 309,495 321,282 Franchised-and-managed hotels 295,932 302,177 315,018 Leased-and-operated hotels 6,565 7,318 6,264 Number of cities 355 360 352 Year Ended December 31, 2022 2023 2024 Occupancy rate (as a percentage) Total hotels in operation 63.7 % 75.8 % 71.6 % Franchised-and-managed hotels 63.8 % 75.9 % 71.6 % Leased-and-operated hotels 58.4 % 70.9 % 70.1 % Average daily rate (in RMB) Total hotels in operation 159 180 174 Franchised-and-managed hotels 157 178 172 Leased-and-operated hotels 219 250 251 RevPAR (in RMB) Total hotels in operation 101 137 125 Franchised-and-managed hotels 100 135 123 Leased-and-operated hotels 128 177 176 (1) Based on the number of available rooms. 94 Year Ended December 31, 2024 Compared to Year Ended December 31, 2023 Revenues.
Since the use of estimates is an integral component of the financial reporting process, our actual results could differ from those estimates.
Since the use of estimates is an integral component of the financial reporting process, our actual results could differ from those estimates. Some of our accounting policies require a higher degree of judgment than others in their application.
A 3 8.3 % year-over-year increase in L&O hotel's R evpar and a net increase of 4 L&O hotels over the same period. For restaurant business, revenues from our leased-and-operated restaurants decreased by 18.2% from RMB362.8 million in 2022 to RMB296.9 million (US$41.8 million) in 2023.
For hotel business, revenues from our leased-and-operated hotels increased by 45.0% from RMB338.5 million in 2022 to RMB490.9 million in 2023. A 38.3% year-over-year increase in L&O hotel’s RevPAR and a net increase of 4 L&O hotels over the same period.
The loss in 2022 mainly consisted of RMB91.2 million attributable to Argyle and Urban. Other general expenses.
Impairment loss of goodwill. The loss in 2022 mainly consisted of RMB91.2 million attributable to Argyle and Urban. 97 Impairment of Intangible asset with indefinite life .
We recognize revenue net of reimbursement paid to franchisees as our performance obligation is to facilitate the transaction between the member and the franchised and managed hotels.
We estimate breakage based on our historical experience and expectations of future member behavior and will true up the estimated breakage at the end of each period. We recognize revenue net of reimbursement paid to franchisees as our performance obligation is to facilitate the transaction between the member and the franchised and managed hotels.
Revenue recognition Our revenues from leased-and-operated hotels are primarily derived from hotel operations, including the rental of rooms and food and beverage sales. Each of these products and services represents an individual performance obligation and, in exchange for these services, we receive fixed amounts based on fixed rates or fixed standalone selling price.
Each of these products and services represents an individual performance obligation and, in exchange for these services, we receive fixed amounts based on fixed rates or fixed standalone selling price. Revenue is recognized when rooms are occupied, and food and beverages are sold.
For the years ended December 31, 2021, 2022 and 2023, no assets other than cash were transferred between our company and our operating subsidiaries in China, and no other dividends or any other distributions were paid by our operating subsidiaries in China to our Company.
For the year ended December 31, 2023, our company did not make any payments to, or receive any payments from, our operating subsidiaries in China.For the year ended December 31, 2024, our company received RMB74.1 million (US$10.2 million) from our operating subsidiaries in China. 101 For the years ended December 31, 2022, 2023 and 2024, no assets other than cash were transferred between our company and our operating subsidiaries in China.
The table below illustrates the comparison of performance between mature hotels and hotels during ramp up stage. ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2021 2022 2023 Mature franchised-and-managed hotels(1) ​ 4,222 ​ 3,865 ​ 3,939 RevPAR (in RMB) ​ 116 ​ 100 ​ 136 Franchised-and-managed hotels during ramp up stage ​ 371 ​ 133 ​ 234 RevPAR (in RMB) ​ 84 ​ 69 ​ 92 (1) As of end of the year. ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2021 2022 2023 Mature leased-and-operated hotels(1) ​ 58 ​ 58 ​ 64 RevPAR (in RMB) ​ 136 ​ 128 ​ 177 Revenue (in RMB thousands) ​ 391,960 ​ 338,506 ​ 485,656 (1) As of end of the year. ● The fixed nature of our hotel operating costs.
The table below illustrates the comparison of performance between mature hotels and hotels during ramp up stage. Year Ended December 31, 2022 2023 2024 Mature franchised-and-managed hotels(1) 3,865 3,939 3,970 RevPAR (in RMB) 100 136 124 Franchised-and-managed hotels during ramp up stage 133 234 249 RevPAR (in RMB) 69 92 93 (1) As of end of the year.
We recognized gains of RMB0.4 million in 2021, mainly attributable to the gains from Zhilong and losses from Yueyuanbaili. We recognized losses of RMB1.6 million in 2022, mainly attributable to gains from Yueyuanbaili and losses from Zhilong. Net loss attributable to non-controlling interests. The loss in 2022 mainly consisted of RMB36.5 million attributable to the non-controlling shareholders of GHG subsidiaries.
We recognized losses of RMB1.4 million in 2023, We recognized losses of RMB1.2 million (US$0.2 million) in 2024, mainly attributable to losses from Yueyuanbaili. Net loss attributable to non-controlling interests. The loss in 2024 mainly consisted of RMB2.7 million(US$0.4 million) attributable to the non-controlling shareholders of GHG subsidiaries. Net income attributable to our ordinary shareholders .
Investing Activities Net cash used in investing activities was RMB93.7 million (US$13.2 million) in 2023, compared to net cash provided by investing activities of RMB420.4 million in 2022, and net cash used in investing activities of RMB978.0 million in 2021.
Financing Activities Net cash provided by financing activities was RMB10.5 million (US$1.4 million) in 2024, compared to net cash used in financing activities of RMB303.7 million in 2023, and net cash used in financing activities of RMB335.4 million in 2022.
Revenues Consolidated results ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, 2021 ​ ​ RMB ​ RMB ​ RMB ​ RMB ​ % ​ Hotel Restaurant Elimination Total Total ​ ​ (in thousands, except for percentage) Revenues: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Leased-and-operated business 391,960 575,063 (3,296) 963,727 49.0 Franchised-and-managed business 774,359 8,213 — ​ 782,572 39.8 Wholesales and others 39,827 181,910 (221) 221,516 11.2 Total revenues 1,206,146 765,186 (3,517) 1,967,815 100.0 ​ 91 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, 2022 ​ ​ RMB ​ RMB ​ RMB ​ RMB ​ % ​ Hotel Restaurant Elimination Total Total ​ ​ (in thousands, except for percentage) Revenues: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Leased-and-operated business 338,506 362,807 (1,290) 700,023 47.7 Franchised-and-managed business 582,441 6,022 — ​ 588,463 40.1 Wholesales and others 15,854 164,958 (224) 180,588 12.2 Total revenues 936,801 533,787 (1,514) 1,469,074 100.0 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, 2023 ​ ​ RMB ​ RMB ​ RMB ​ RMB ​ US$ ​ % ​ Hotel Restaurant Elimination Total Total Total ​ ​ (in thousands, except for percentage) Revenues: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Leased-and-operated business 490,924 296,890 — ​ 787,814 110,961 48.4 Franchised-and-managed business 696,321 8,924 — 705,245 ​ 99,332 43.3 Wholesales and others 4,661 135,822 (6,284) 134,199 18,901 8.3 Total revenues 1,191,906 441,636 (6,284) 1,627,258 229,194 100.0 ​ Hotel business.
Revenues Consolidated results Year Ended December 31, 2022 RMB RMB RMB RMB % Hotel Restaurant Elimination Total Total (in thousands, except for percentage) Revenues: Leased-and-operated business 338,506 362,807 (1,290 ) 700,023 47.7 Franchised-and-managed business 582,441 6,022 — 588,463 40.1 Wholesales and others 15,854 164,958 (224 ) 180,588 12.2 Total revenues 936,801 533,787 (1,514 ) 1,469,074 100.0 85 Year Ended December 31, 2023 RMB RMB RMB RMB % Hotel Restaurant Elimination Total Total (in thousands, except for percentage) Revenues: Leased-and-operated business 490,924 296,890 — 787,814 48.4 Franchised-and-managed business 696,321 8,924 — 705,245 43.3 Wholesales and others 4,661 135,822 (6,284 ) 134,199 8.3 Total revenues 1,191,906 441,636 (6,284 ) 1,627,258 100.0 Year Ended December 31, 2024 RMB RMB RMB RMB US$ % Hotel Restaurant Elimination Total Total Total (in thousands, except for percentage) Revenues: Leased-and-operated business 437,522 159,326 (207 ) 596,641 81,739 44.4 Franchised-and-managed business 625,073 10,287 — 635,360 87,044 47.3 Wholesales and others 3,908 109,032 (1,500 ) 113,439 15,267 8.3 Total revenues 1,066,503 278,645 (1,708 ) 1,343,440 184,051 100.0 Hotel business.
Holders of our ordinary shares and ADSs as of the close of trading on December 31, 2021 were entitled to such cash dividend, and we paid such dividend in full in January 2022. 106 Table of Contents In addition, we plan to implement a more prudent treasury policy that involves board level discussion, approval and oversight, as well as third party professional securities trading advice.
In addition, we plan to implement a more prudent treasury policy that involves board level discussion, approval and oversight, as well as third party professional securities trading advice.
Membership fees from our membership program are earned and recognized on a straight-line basis over the expected membership duration of the different membership levels. Such duration is estimated based on our experience and is adjusted on a periodic basis to reflect changes in membership retention. The membership duration is estimated to be three to five years depending on membership level.
Such duration is estimated based on our experience and is adjusted on a periodic basis to reflect changes in membership retention. The membership duration is estimated to be three to five years depending on membership level. Membership points earned by members represent a material right to free or discounted goods or services in the future.
Financing Activities Net cash used in financing activities in 2023 was RMB303.7 million (US$42.8 million), primarily attributable to (i) repayment of bank loans net of RMB284.3 million, (ii) repurchase of ordinary shares of RMB19.7 million. 105 Table of Contents Net cash used in financing activities in 2022 was RMB335.4 million, primarily attributable to (i) repayment of bank loans net of RMB299.9 million, (ii) distribution to the shareholders of RMB41.0 million, partially offset by loan from non-controlling interest of RMB5.1 million.
Net cash used in financing activities in 2022 was RMB335.4 million, primarily attributable to (i) repayment of bank loans net of RMB299.9 million, and (ii) distribution to the shareholders of RMB41.0 million, partially offset by loan from non-controlling interest of RMB5.1 million. 100 Statutory Reserves As a holding company, we rely upon dividends paid to us by our subsidiaries in the PRC to pay dividends and to finance any debt we may incur.
Our general and administrative expenses decreased by 1 9 .7% from RMB259.5 million in 2022 to RMB208.4 million (US$29.4 million) in 2023. The decrease was primarily attributable to lower staff related expenses and lower bad debts for both hotel business and restaurant business. Other operating expenses.
Our general and administrative expenses decreased by 12.4% from RMB208.4 million in 2023 to RMB182.6 million (US$25.0 million) in 2024. The decrease was primarily attributable to the reduction in staff related cost. Other operating expenses.
Net income attributable to our ordinary shareholders. As a result of the foregoing, our net income attributable to our ordinary shareholders significantly decreased from RMB88.7 million in 2021 to RMB-425.2 million in 2022.
As a result of the foregoing, our net income attributable to our ordinary shareholders significantly increased from RMB269.3 million in 2023 to RMB110.0 million (US$15.1 million) in 2024.
Any realized or unrealized gains or losses resulting from the fluctuations of the market value of these securities will be recognized in earnings in the period which they occur. Income tax expense. Our income tax expense decreased from RMB112.3 million in 2021 to RMB-44.1 million in 2022, primarily due to the decrease of income from operations.
Gains (losses) from investments in equity securities. Our losses from investments in equity securities significantly increased by 178.0% from RMB5.4 million in 2023 to RMB15.0 million (US$2.0 million) in 2024. Any realized or unrealized gains or losses resulting from the fluctuations of the market value of these securities will be recognized in earnings in the period which they occur.
Results of Operations The following table sets forth a summary of our consolidated results of operations, both in absolute amount and as a percentage of total revenues for the year indicated. This information should be read together with our consolidated financial statements and related notes included elsewhere in this annual report.
Our other general expenses includ provisions for loan receivables related to franchisee loans, and impairment of assets. 90 A. Results of Operations The following table sets forth a summary of our consolidated results of operations, both in absolute amount and as a percentage of total revenues for the year indicated.
Our cash and cash equivalents,restricted cash and short term investment balance as of December 31, 2023 was RMB791.6 million (US$111.5 million), compared to RMB734.0 million in 2022, and compared to RMB353.1 million in 2021.
Liquidity and Capital Resources Our principal sources of liquidity have been cash generated from operating activities. Our cash and cash equivalents, restricted cash and short term investment balance as of December 31, 2024 was RMB920.0 million (US$209.0 million), compared to RMB1,209.3 million in 2023, and compared to RMB920.0 million in 2022.
Year Ended December 31, 2022 Compared to Year Ended December 31, 2021 Revenues. Our total revenues decreased by 25.3% from RMB1,967.8 million in 2021 to RMB1,469.1 million in 2022.
Our net margin, defined as our net income attributable to our ordinary shareholders as a percentage of our revenues, decreased from 16.6% in 2023 to 8.2% in 2024. 96 Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 Revenues. Our total revenues increased by 10.8% from RMB1,469.1 million in 2022 to RMB1,627.3 million in 2023.
For restaurant business, revenues from our leased-and-operated restaurants decreased by 36.9% from RMB575.1 million in 2021 to RMB362.8 million in 2022 due to the closure of L&O stores and a deduction of ADS. Operating costs. Our total operating costs decreased by 18.7% from RMB1,312.5 million in 2021 to RMB1,066.5 million in 2022.
For restaurant business, revenues from our leased-and-operated restaurants decreased by 46.3% from RMB296.9 million in 2023 to RMB159.3 million (US$21.8 million) in 2024. The decrease was primarily due to the closure of L&O restaurants and partially offset by an increase in ADS. Operating costs.

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Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

27 edited+1 added−3 removed61 unchanged
Our audit committee is responsible for, among other things: ● selecting, and evaluating the qualifications, performance and independence of, the independent auditor; ● pre-approving or, as permitted, approving auditing and non-auditing services permitted to be performed by the independent auditor; ● considering the adequacy of our internal accounting controls and audit procedures; ● reviewing with the independent auditor any audit problems or difficulties and management’s response; ● reviewing and approving related party transactions between us and our directors, senior management and other persons specified in Item 6B of Form 20-F; ● reviewing and discussing the quarterly financial statements and annual audited financial statements with management and the independent auditor; ● establishing procedures for the receipt, retention and treatment of complaints received from our employees regarding accounting, internal accounting controls or auditing matters and the confidential, anonymous submission by our employees of concerns regarding questionable accounting or auditing matters; ● meeting separately, periodically, with management, internal auditors and the independent auditor; and ● reporting regularly to the full board of directors. 114 Table of Contents Compensation Committee Our compensation committee consists of Gregory James Karns, Alex S.
Our audit committee is responsible for, among other things: ● selecting, and evaluating the qualifications, performance and independence of, the independent auditor; ● pre-approving or, as permitted, approving auditing and non-auditing services permitted to be performed by the independent auditor; ● considering the adequacy of our internal accounting controls and audit procedures; ● reviewing with the independent auditor any audit problems or difficulties and management’s response; ● reviewing and approving related party transactions between us and our directors, senior management and other persons specified in Item 6B of Form 20-F; ● reviewing and discussing the quarterly financial statements and annual audited financial statements with management and the independent auditor; ● establishing procedures for the receipt, retention and treatment of complaints received from our employees regarding accounting, internal accounting controls or auditing matters and the confidential, anonymous submission by our employees of concerns regarding questionable accounting or auditing matters; ● meeting separately, periodically, with management, internal auditors and the independent auditor; and ● reporting regularly to the full board of directors. 109 Compensation Committee Our compensation committee consists of Gregory James Karns, Alex S.
She received a doctoral degree in financial engineering from the Chinese University of Hong Kong in 2010. B. Compensation For the year ended December 31, 2023, we paid an aggregate of approximately US$0.5 million in cash to our executive officers and directors. Employment Agreements We have entered into employment agreements with all of our executive officers.
She received a doctoral degree in financial engineering from the Chinese University of Hong Kong in 2010. B. Compensation For the year ended December 31, 2024, we paid an aggregate of approximately US$0.5 million in cash to our executive officers and directors. Employment Agreements We have entered into employment agreements with all of our executive officers.
Business Overview—Employees.” E. Share Ownership The following table sets forth information with respect to beneficial ownership of our ordinary shares as of December 31, 2023 by: ● each of our directors and executive officers; ● our directors and executive officers as a group; and ● each person known to us to own beneficially 5.0% or more of our ordinary shares.
Business Overview—Employees.” E. Share Ownership The following table sets forth information with respect to beneficial ownership of our ordinary shares as of December 31, 2024 by: ● each of our directors and executive officers; ● our directors and executive officers as a group; and ● each person known to us to own beneficially 5.0% or more of our ordinary shares.
The compensation committee or the chairman of the board of directors, as appropriate, will determine the participants to receive awards, the type and number of awards to be granted and the terms and conditions of each award grant. 112 Table of Contents Award Agreements Awards granted under our 2018 share incentive plan are evidenced by an award agreement that sets forth the terms, conditions and limitations for each grant, which may include the term of the award, the provisions applicable in the event of the grantee’s employment or service terminates, and our authority to unilaterally or bilaterally amend, modify, suspend, cancel or rescind the award.
The compensation committee or the chairman of the board of directors, as appropriate, will determine the participants to receive awards, the type and number of awards to be granted and the terms and conditions of each award grant. 107 Award Agreements Awards granted under our 2018 share incentive plan are evidenced by an award agreement that sets forth the terms, conditions and limitations for each grant, which may include the term of the award, the provisions applicable in the event of the grantee’s employment or service terminates, and our authority to unilaterally or bilaterally amend, modify, suspend, cancel or rescind the award.
Xu (1) 56,589,300 84.7 ​ 34,762,909 100 94.0 ​ Gregory James Karns — — ​ — — — ​ Bingwu Xie — — ​ — — — ​ Dong Li — — ​ — — — ​ Yanjie (Catherine) Zhu — — ​ — — — ​ Yiping Yang — — ​ — — — ​ All directors and executive officers as a group 56,589,300 84.7 ​ 34,762,909 100 94.0 ​ Principal Shareholders: ​ ​ ​ ​ ​ ​ ​ GreenTree Inns Hotel Management Group, Inc.
Xu (1) 56,589,300 84.8 34,762,909 100 94.1 Gregory James Karns — — — — — Bingwu Xie — — — — — Dong Li — — — — — Yanjie (Catherine) Zhu — — — — — Yiping Yang — — — — — All directors and executive officers as a group 56,589,300 84.8 34,762,909 100 94.1 Principal Shareholders: GreenTree Inns Hotel Management Group, Inc.
You should refer to “Description of Share Capital — Differences in Corporate Law” for additional information on our standard of corporate governance under Cayman Islands law. 115 Table of Contents A director who is in any way, whether directly or indirectly, interested in a contract or proposed contract or arrangement with our company is required to declare the nature of his interest at a meeting of our directors.
You should refer to “Description of Share Capital — Differences in Corporate Law” for additional information on our standard of corporate governance under Cayman Islands law. 110 A director who is in any way, whether directly or indirectly, interested in a contract or proposed contract or arrangement with our company is required to declare the nature of his interest at a meeting of our directors.
(1) Equals to the public offering price. For services as directors of our Company. 113 Table of Contents C Board Practices Board of Directors A company of which more than 50% of the voting power is held by a single person or entity is considered a “controlled company” under the NYSE Listed Company Manual.
(1) Equals to the public offering price. For services as directors of our Company. 108 C Board Practices Board of Directors A company of which more than 50% of the voting power is held by a single person or entity is considered a “controlled company” under the NYSE Listed Company Manual.
(2)(3) 56,589,300 84.7 ​ 34,762,909 100 94.0 ​ Allspring Global Investments Holdings, LLC (4) 5,488,211 8.2 % — ​ — 3.2 % Notes: (1) Represents (i) 56,589,300 Class A ordinary shares and (ii) 34,762,909 Class B ordinary shares held by GTI. Mr. Alex S.
(2)(3) 56,589,300 84.8 34,762,909 100 94.1 Allspring Global Investments Holdings, LLC (4) 5,155,443 7.7 — — 3.0 Notes: (1) Represents (i) 56,589,300 Class A ordinary shares and (ii) 34,762,909 Class B ordinary shares held by GTI. Mr. Alex S.
Xu is considered to beneficially own all the shares held by GTI by virtue of (i) his director position on GTI’s three-member board of directors; and (ii) his 83.9% voting power in GTI. As a result, Mr. Alex S.
Xu is considered to beneficially own all the shares held by GTI by virtue of (i) his director position on GTI’s three-member board of directors; and (ii) his 84.5% voting power in GTI. As a result, Mr. Alex S.
Karns began his legal career in 1983 as an associate with the law firm of Kindel & Anderson. Mr. Karns received a bachelor’s degree in political science from the University of California in 1980, and his juris doctor degree from Loyola Law School in 1983. 110 Table of Contents Mr.
Karns began his legal career in 1983 as an associate with the law firm of Kindel & Anderson. Mr. Karns received a bachelor’s degree in political science from the University of California in 1980, and his juris doctor degree from Loyola Law School in 1983. 105 Mr.
We are not aware of any arrangement that may at a subsequent date, result in a change of control of our company. 117 Table of Contents F. Disclosure of a Registrant’s Action to Recover Erroneously Awarded Compensation None. ​
We are not aware of any arrangement that may at a subsequent date, result in a change of control of our company. 112 F. Disclosure of a Registrant’s Action to Recover Erroneously Awarded Compensation None.
Kent Chien Te Wu directly or indirectly through entities controlled by him, holds 10,266,667 Class A ordinary shares of GTI, including (a) 9,666,667 Class A ordinary shares of GTI through Wu Green Tree Limited Partnership, a California limited partnership (“Wu Green Tree”), and (b) 600,000 Class A ordinary shares of GTI individually. The business office of Mr.
Kent Chien Te Wu directly or indirectly through entities controlled by him, holds 9,900,000 Class A ordinary shares of GTI, including (a) 9,300,000 Class A ordinary shares of GTI through Wu Green Tree Limited Partnership, a California limited partnership (“Wu Green Tree”), and (b) 600,000 Class A ordinary shares of GTI individually. The business office of Mr.
Li also served as an independent director of Boqii Holding Ltd (China’s leading pet-focused platform listed on the NYSE, ticker symbol: BQ) since September 2020, as an independent non-executive director of Helens International Holdings Company Limited (China’s largest bar chain network listed on the Hong Kong Stock Exchange, ticker symbol: 09869) since August 2021, as an independent non-executive director of Logory Logistics Technology Co., Ltd (a leading end-to-end digital freight transportation services provider in China listed on the Hong Kong Stock Exchange, ticker symbol: 02482) since March 2023 and as an independent non-executive director of ZJLD Group Inc (a leading baijiu company in China devoted to offering premium baijiu products featuring sauce aroma profile and listed on the Hong Kong Stock Exchange, ticker symbol: 06979) since April 2023.
Li also served, as an independent non-executive director of Helens International Holdings Company Limited (China’s largest bar chain network listed on the Hong Kong Stock Exchange, ticker symbol: 09869 and on the Singapore Exchange, ticker symbol: HLS) since August 2021, as an independent non-executive director of Logory Logistics Technology Co., Ltd (a leading end-to-end digital freight transportation services provider in China listed on the Hong Kong Stock Exchange, ticker symbol: 02482) since March 2023 and as an independent non-executive director of ZJLD Group Inc (a leading baijiu company in China devoted to offering premium baijiu products featuring sauce aroma profile and listed on the Hong Kong Stock Exchange, ticker symbol: 06979) since April 2023.
Holders of Class A ordinary shares are entitled to one vote per share, while holders of Class B ordinary shares are entitled to three (3) votes per share. Currently, GTI has 33,414,026 Class A ordinary shares and 57,938,182 Class B ordinary shares issued and outstanding . (3) Mr. Alex S.
Holders of Class A ordinary shares are entitled to one vote per share, while holders of Class B ordinary shares are entitled to three (3) votes per share. Currently, GTI has 31,782,381 Class A ordinary shares and 57,938,182 Class B ordinary shares issued and outstanding. (3) Mr. Alex S.
Xu exercises voting and dispositive control, which in the aggregate result in Mr. Xu’s 83.9% voting power in GTI. Mr.
Xu exercises voting and dispositive control, which in the aggregate result in Mr. Xu’s 84.5% voting power in GTI. Mr.
Karns is a partner with the U.S. law firm of Cox, Castle & Nicholson LLP, where he has worked since 1989. From 1985 to 1989, Mr. Karns worked as an associate with the law firm of Jones, Day, Reavis & Pogue, and Mr.
Gregory James Karns has served as a director and general counsel of our company since 2005. Mr. Karns is a partner with the U.S. law firm of Cox, Castle & Nicholson LLP, where he has worked since 1989. From 1985 to 1989, Mr. Karns worked as an associate with the law firm of Jones, Day, Reavis & Pogue, and Mr.
Li has served as the chief financial officer of T H International Limited (Nasdaq, ticker symbol: THCH), the parent company of the exclusive master franchisees of T im Hortons coffee shops and Popeyes restaurants in China since September 2021. Mr.
Li has served as the chief financial officer of TH International Limited (Nasdaq, ticker symbol: THCH), the parent company of the exclusive master franchisees of Tim Hortons coffee shops in China since September 2021. Mr.
In computing the number of shares beneficially owned by a person and the percentage ownership of that person, we have included shares that the person has the right to acquire within 60 days, including through the exercise of any option or other right or the conversion of any other security. 116 Table of Contents The calculations in the table below are based on (i) 66,780,612 Class A ordinary shares and (ii) 34,762,909 Class B ordinary shares outstanding as of December 31, 2023. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Beneficially Owned ​ Beneficially Owned Percentage of ​ ​ ​ Class A Ordinary Shares ​ Class B Ordinary Shares ​ Votes Held ​ ​ Number % ​ Number % % ​ Directors and Executive Officers: ​ ​ ​ ​ ​ ​ Alex S.
In computing the number of shares beneficially owned by a person and the percentage ownership of that person, we have included shares that the person has the right to acquire within 60 days, including through the exercise of any option or other right or the conversion of any other security. 111 The calculations in the table below are based on (i) 66,761,582 Class A ordinary shares and (ii) 34,762,909 Class B ordinary shares outstanding as of December 31, 2024.
Xu is the founder of American Pacific Homes, Inc., a leading home builder in California and transformed now to a hotel franchisor and operator in the Western US, and has served as its chairman since 1997. He also has served as a managing director of Foothill Medical Centers since 1997. Prior to founding our company, Mr.
Xu ( ) is our founder and has served as our chairman of the board of directors and chief executive officer since 2004. Mr. Xu is the founder of American Pacific Homes, Inc., a leading home builder in California and transformed now to a hotel franchisor and operator in the Western US, and has served as its chairman since 1997.
As of the date of the annual report, there were (i) 1,022,000 Class A ordinary shares issuable upon the exercise of outstanding options and (ii) 7,978,000 Class A ordinary shares reserved for future issuance.
As of 31st December, 2024, excluding the opitons expired, there were (i) 80,000 Class A ordinary shares issuable upon the exercise of outstanding options and (ii) 7,978,000 Class A ordinary shares reserved for future issuance.
Xu ( ) ​ 60 ​ Chairman and chief executive officer ​ Gregory James Karns ​ 68 ​ Director, general counsel ​ Bingwu Xie ( ) ​ 54 ​ Independent director ​ Dong Li ( ) ​ 48 ​ Independent director ​ Yanjie Zhu ​ 41 ​ Independent director ​ Yiping Yang ( ) ​ 41 ​ Chief financial officer ​ ​ Mr.
Xu ( ) 61 Chairman and chief executive officer Gregory James Karns 69 Director, general counsel Bingwu Xie ( ) 55 Independent director Dong Li ( ) 49 Independent director Yanjie Zhu 42 Independent director Yiping Yang ( ) 42 Chief financial officer Mr. Alex S.
The principal business office of AGIH is 1415 Vantage Park Drive, 3rd Floor, Charlotte, NC 28203. To our knowledge, as of December 31, 2023, 10,191,312 Class A ordinary shares or 10.0% of our outstanding ordinary shares were held by record holders in the United States, including Deutsche Bank Trust Company Americas, the depositary bank for our ADR program.
To our knowledge, as of December 31, 2024, 10,172,282 Class A ordinary shares or 10.0% of our outstanding ordinary shares were held by record holders in the United States, including Deutsche Bank Trust Company Americas, the depositary bank for our ADR program.
Xu served as the chief operating officer of U.S. Uni-President Investment and Development from 1995 to 1997. From 1994 to 1996, Mr. Xu served as the director of finance with Santa Anita Realty Enterprises, Inc. From 1990 to 1994, Mr. Xu worked as the accounting and corporate data service manager for Broadway Stores Inc. Mr.
He also has served as a managing director of Foothill Medical Centers since 1997. Prior to founding our company, Mr. Xu served as the chief operating officer of U.S. Uni-President Investment and Development from 1995 to 1997. From 1994 to 1996, Mr. Xu served as the director of finance with Santa Anita Realty Enterprises, Inc. From 1990 to 1994, Mr.
Xu received a bachelor’s degree in engineering from Beijing Institute of Technology in 1984 and two master’s degrees in computer engineering and in applied mathematics from the University of Southern California in 1990. Mr. Gregory James Karns has served as a director and general counsel of our company since 2005. Mr.
Xu worked as the accounting and corporate data service manager for Broadway Stores Inc. Mr. Xu received a bachelor’s degree in engineering from Beijing Institute of Technology in 1984 and two master’s degrees in computer engineering and in applied mathematics from the University of Southern California in 1990. Mr.
(4) The number of ordinary shares beneficially owned is as of December 31, 2023, as reported in Amendment No. 2 to Schedule 13G filed on January 12, 2024 by Allspring Global Investments Holdings, LLC, a Delaware limited liability company (“AGIH”), and consists of 5,488,211 Class A ordinary shares.
(4) The number of ordinary shares beneficially owned is as of December 31, 2024, as reported in Form 13F filed on January 29, 2025 by Allspring Global Investments Holdings, LLC, a Delaware limited liability company (“AGIH”), and consists of 5,155,433 Class A ordinary shares. The principal business office of AGIH is 1415 Vantage Park Drive, 3rd Floor, Charlotte, NC 28203.
Zhu received a bachelor’s degree in business administration from Shanghai International Studies University in July 2005. Ms. Zhu is a member of the Chinese Institute of Certified Public Accountants and the Institute of Internal Auditors. 111 Table of Contents Dr.
Zhu worked as an audit manager with KPMG in its Shanghai office from August 2005 to February 2013. Ms. Zhu holds a bachelor ’ s degree in Business Administration from Shanghai International Studies University and is certified by the Chinese Institute of Certified Public Accountants (CICPA) and holds a Certified Internal Auditor (CIA) certificate. 106 Dr.
Between March 2013 and September 2016, she worked as a finance manager first with Lend Lease Project Management & Construction (Shanghai) Co., Ltd., and then with Porsche Centre Shanghai Waigaoqiao Limited. Prior to that, Ms. Zhu worked as an audit manager with KPMG in its Shanghai office from August 2005 to February 2013. Ms.
Before joining Baozun, Catherine held key roles in various organizations from 2013 to 2020, including IBR Ltd., Cue & Co., Xperience Communications (Shanghai) Co., Ltd., Porsche Centre Shanghai Waigaoqiao Limited and Lend Lease Project Management & Construction (Shanghai) Co., Ltd. Prior to that, Ms.
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Alex S. Xu ( ) is our founder and has served as our chairman of the board of directors and chief executive officer since 2004. Mr.
Added
Beneficially Owned Beneficially Owned Percentage of Class A Ordinary Shares Class B Ordinary Shares Votes Held Number % Number % % Directors and Executive Officers: Alex S.
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Prior to joining T H International Limited , Mr.
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Prior to joining Baozun, she served as the finance director for Cue & Co., Group Ltd. and then IBR between April 2018 and October 2020. From September 2016 to February 2018, Ms. Zhu worked as a finance controller with Xperience Communications (Shanghai) Co., Ltd.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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In 2023, we generated franchise revenue from Yibon of RMB0.8 million (US$0.1 million). Transactions with Beifu Hong Kong Industrial Co., Beifu Hong Kong Industrial Co., or Beifu HK, is a catering management holding company controlled by GTI.
In 2023, we generated franchise revenue from Yibon of RMB0.8 million (US$0.1 million).In 2024, we generated franchise revenue from Yibon of RMB0.4 million (US$0.05 million) Transactions with Beifu Hong Kong Industrial Co., Beifu Hong Kong Industrial Co., or Beifu HK, is a catering management holding company controlled by GTI.
In 2022, we purchased wine from Napa in the aggregate amount of RMB3.7 million. In 2023, we purchased wine from Napa in the aggregate amount of RMB1.3 million (US$0.2 million). Transactions with Yibon In 2021, we generated franchise revenue from Yibon of RMB1.3 million. In 2022, we generated franchise revenue from Yibon of RMB1.3 million.
In 2023, we purchased wine from Napa in the aggregate amount of RMB1.3 million (US$0.2 million).In 2024, we purchased wine from Napa in the aggregate amount of RMB0.8 million (US$0.1 million). Transactions with Yibon In 2021, we generated franchise revenue from Yibon of RMB1.3 million. In 2022, we generated franchise revenue from Yibon of RMB1.3 million.
In 2022, we made a bridge loan, with an interest rate of 4.35% per annum, to GTI for repayment of an Euro denominated loan from Pudong Development Bank, which was initially used for the acquisition of Da Niang Dumplings from a third party.
Compensation—Share Incentive Plan.” Other Transactions with Related Parties Transactions with GTI In 2022, we made a bridge loan, with an interest rate of 4.35% per annum, to GTI for repayment of an Euro denominated loan from Pudong Development Bank, which was initially used for the acquisition of Da Niang Dumplings from a third party.
Transactions with Shanghai JYHM Restaurant Management Co., Ltd. (“JYHM”) Shanghai JYHM Restaurant Management Co., Ltd., or JYHM, is a catering management company controlled by GTI. In 2021, sublease revenue generated from JYHM was RMB261 thousand. We also purchased service from JYHM of RMB668 thousand in 2021. In 2022, sublease revenue generated from JYHM was RMB48 thousand.
(“JYHM”) Shanghai JYHM Restaurant Management Co., Ltd., or JYHM, is a catering management company controlled by GTI. In 2022, sublease revenue generated from JYHM was RMB48 thousand. We also purchased service from JYHM of RMB832 thousand in 2022. Transactions with Napa Infinity Winery (Shanghai) Inc.
We also purchased service from JYHM of RMB832 thousand in 2022. Transactions with Napa Infinity Winery (Shanghai) Inc. Napa Infinity Winery (Shanghai) Inc., or Napa, is a wine distributor controlled by the brother of Mr. Alex S. Xu. In 2021, we purchased wine from Napa in the aggregate amount of RMB2.5 million.
Napa Infinity Winery (Shanghai) Inc., or Napa, is a wine distributor controlled by the brother of Mr. Alex S. Xu. In 2021, we purchased wine from Napa in the aggregate amount of RMB2.5 million. In 2022, we purchased wine from Napa in the aggregate amount of RMB3.7 million.
Transactions with Aotao and its subsidiaries Shanghai Aotao Industrial Co., Ltd., or Aotao, is a catering management holding company controlled by GTI. In 2021, we made a bridge loan of RMB186 million to Aotao, for the renewal of a loan in the catering sector with an interest rate of 4.35% per annum.
In 2024, except for dividends to GTI, there was no other transaction with GTI. Transactions with Aotao and its subsidiaries Shanghai Aotao Industrial Co., Ltd., or Aotao, is a catering management holding company controlled by GTI. As of December 31, 2022, the outstanding amount of the loan was still RMB65.1 million.
Transactions with Da Niang Group Da Niang Dumpling Catering Group Co., Ltd., together with its subsidiaries, or Da Niang Group, is a catering management company that was formerly controlled by GTI. In 2021, we made a bridge loan of RMB39.8 million to Da Niang Group, for the renewal of a loan with an interest rate of 4.35% per annum.
Transactions with Da Niang Group Da Niang Dumpling Catering Group Co., Ltd., together with its subsidiaries, or Da Niang Group, is a catering management company that was formerly controlled by GTI. 113 In March, 2023, we acquired Da Niang Group, and therefore Da Niang Group ceased to be our related party. Transactions with Shanghai JYHM Restaurant Management Co., Ltd.
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Compensation—Share Incentive Plan.” Other Transactions with Related Parties Transactions with GTI In 2021, we made a bridge loan to GTI together with Aotao and Da Niang Group for the renewal of a merger and acquisition loan in 2016 at the request of the lending banks.
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The outstanding amount of the loan as of December 31, 2021 was RMB206.3 million with an interest rate of 4.35% per annum.
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The outstanding amount of the loan as of December 31, 2021 was RMB65.1 million. In 2021, Aotao provided advertising promotion services to us in the aggregate amount of RMB6.5 million. As of December 31, 2022, the outstanding amount of the loan was still RMB65.1 million.
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The outstanding loan was settled in December 2021. In 2021, sublease revenue generated from Da Niang Group was RMB27 thousand. We also purchased services from Da Niang Group in the amount of RMB221 thousand in 2021. 118 Table of Contents In March, 2023, we acquired Da Niang Group, and therefore Da Niang Group ceased to be our related party.

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