This is an English adaptation of a FoodBud historical article originally published on June 14, 2022.
Beijing Business Today reported on GreenTree Hospitality’s restructuring of Da Niang Dumplings and Bellagio Cafe, based on an exclusive interview with GreenTree chairman and CEO Xu Shuguang. The article framed the move as part of a broader response to pandemic pressure: supporting franchisees with cash while using a “hotel + dining + entertainment” model to broaden revenue and serve local communities.
GreenTree said it planned to reorganize all of Da Niang Dumplings’ equity and 83.9% of Bellagio Cafe from its controlling shareholder, GreenTree Inns Hotel Management Group. The total consideration was RMB 399.8 million, with the two acquisitions expected to take place in the second half of 2022.
Xu said the restructuring was designed to offset pandemic-related cash-flow losses at the listed company, expand the hotel business mix, serve communities, and support employment. He also said more than 90% of the parent company’s and listed company’s businesses overlapped, so combining hotel and restaurant cooperation into one company would allow shared resources and easier mutual support.
GreenTree had noticed from the second half of the previous year that hotels needed to face the community more directly to improve management and revenue. Xu said demand was growing quickly for hotels with nearby consumption-oriented services, including dining and entertainment.
For operators, the strategic point was clear: GreenTree was trying to make its hotel assets more useful to local demand, not only transient lodging demand.
Xu also argued that restaurant franchising could help GreenTree expand its franchise base because the entry cost was lower than hotels.
Using Da Niang Dumplings as an example, he said the stores were small-format outlets. With an investment of RMB 150,000 to RMB 200,000, the investment could be recovered in 8 to 9 months. Xu said this could create an opportunity for younger entrepreneurs, and GreenTree needed to get closer to younger consumers as the market became younger.
The article noted that reduced business travel had put pressure on hotel operators. GreenTree’s 2020 full-year revenue was RMB 930 million, compared with RMB 1.092 billion in 2019. Net profit was RMB 245 million, compared with RMB 438 million a year earlier.
In 2021, GreenTree reported net profit of RMB 117 million, down 55.06% year on year, while revenue was RMB 1.206 billion, up 29.69% year on year.
Xu said that since 2020, pandemic changes had heavily affected franchisees. GreenTree mobilized available funds to provide loans to franchisees, with total support amounting to several hundred million yuan. He said the company provided everything it could to help franchisees get through the hardest period.
He also said GreenTree was still adding about 30 to 40 hotels per month, and that it had 4,626 hotels at the time of the interview.
GreenTree’s US-listed shares had been weak amid the pandemic and global economic softness. As of the US market close on May 27, 2022, GreenTree’s share price was USD 4.04, with a market capitalization of USD 416 million. At its March 2018 NYSE listing, the issue price was USD 14 per share and the market capitalization was about USD 1.442 billion.
The article also noted that GreenTree had been placed by the US SEC on a provisional delisting list on May 20, 2022.
In mid-April 2022, market rumors suggested GreenTree management was considering working with an M&A firm to privatize and delist from the US market, and that CICC Capital was discussing a potential privatization plan with management. The rumored transaction would have acquired GreenTree shares at a 30% premium to the then-current share price.
Xu denied the rumor, saying the claim that the company planned to privatize was untrue. He added that GreenTree would hire relevant advisers and consultants to discuss possible operations in other capital markets, with the aim of giving shareholders and investors better returns.
Xu said GreenTree still intended to develop across three hotel segments: ultra-economy, midscale, and upper-midscale.
He said older hotel brands still retained consumer appeal, and some franchisees were continuing to operate them. GreenTree wanted to balance brand profitability by renovating profitable older hotels so they could generate higher returns.
For business travelers, Xu said rooms around RMB 200 to RMB 250 remained the preferred choice for most, so GreenTree would continue strengthening midscale hotels.
In upper-midscale, GreenTree had 518 hotels open at the time, with about 912 including projects under construction. In lower-tier cities below fourth tier, GreenTree had also placed ultra-economy brands such as Bei Ke and Vatica.
Outside China, Xu said GreenTree had a presence in more than a dozen countries. He cited Southeast Asia, the Middle East, and Japan as regions where GreenTree operated five-star seaside resorts.
Xu’s broader view was that hotels were shifting from single-product businesses toward more diversified operations, while consumers’ quality expectations were rising. GreenTree would continue exploring how hotels should evolve and how to provide consumers with a more authentic and comfortable experience.
Note: IPO, market-capitalization, acquisition, delisting, and forward-looking operating figures are historical as reported in June 2022.