Why did GHG's Q3 2024 earnings decline compared to forecasts?

GreenTree Hospitality Group (GHG) experienced a decline in Q3 2024 earnings compared to forecasts due to several key factors: 1. **Revenue Decrease**: The company's total revenues decreased by 22.5% year-over-year to RMB357.0 million (US$50.9 million). This reduction in revenue was driven by lower average daily room rates and occupancy rates at its hotels. 2. **Average Daily Room Rate (ADR) and Occupancy Rate**: The average daily room rate was RMB181, a decrease of 6.0% from RMB192 in the third quarter of 2023. The occupancy rate was 74.6%, decreased from 81.2% in the third quarter of 2023. This decline in ADR and occupancy rate directly impacted the company's revenue and profitability. 3. **Restaurant Performance**: At its restaurants, the company faced challenges with a decrease in average check (AC) to RMB46, a 15.9% year-over-year decrease. The average daily tickets (ADT) was 106, down from 120 in the third quarter of 2023. The average daily sales per store (ADS) was RMB4,891, a decrease of 25.6% from RMB6,570 in the third quarter of 2023. These declines in restaurant performance contributed to the overall earnings decline. 4. **Strategic Decisions**: The company closed certain leased-and-operated (L&O) hotels due to lease expirations and strategic decisions, which impacted revenue guidance for the hotel business. These closures likely led to a loss of revenue and profitability. 5. **Market Conditions**: The overall travel industry is experiencing a slowdown, with Americans reining in their travel spending. This industry-wide trend likely contributed to GHG's earnings decline, as it faced softer demand and competitive pressures. In summary, GHG's Q3 2024 earnings decline was primarily due to a combination of revenue reductions from lower ADR, occupancy rates, and restaurant performance, along with strategic decisions and market conditions. |code|Ticker|Name|Date|Net Income (FY)|market_code| |---|---|---|---|---|---| |GHG|GHG.N|Greentree Hospitality|2019|6.288232378707069E7|169| |GHG|GHG.N|Greentree Hospitality|2020|3.75023338003312E7|169| |GHG|GHG.N|Greentree Hospitality|2021|1.311425245195252E7|169| |GHG|GHG.N|Greentree Hospitality|2022|-6.693867785775561E7|169| |GHG|GHG.N|Greentree Hospitality|2023|3.669454404442705E7|169|