GreenTree Navigates Headwinds, Boosts Core Profit Amid Revenue Slump

SHANGHAI – April 29, 2026 – GreenTree Hospitality Group Ltd. (NYSE: GHG) today presented a complex picture of its financial health, revealing a significant downturn in revenue that was paradoxically met with improved core profitability. In its fourth-quarter and full-year 2025 results, the leading Chinese hospitality group reported a steep 24.9% year-over-year decline in quarterly revenues, yet managed to narrow its net loss and deliver a 9.2% increase in its core net income, showcasing a rigorous campaign of cost control and strategic repositioning in a challenging market.

A Tale of Two Ledgers

GreenTree’s top-line figures paint a stark picture of the pressures facing its operations. Total revenues for the fourth quarter of 2025 fell to RMB 228.7 million (US$32.7 million), a sharp drop from the previous year. The decline was widespread across its business segments. Hotel revenues, the company's mainstay, decreased by 20.9% year-over-year, driven by a 9.5% fall in Revenue per Available Room (RevPAR) to RMB 105. This key industry metric suffered from both a lower occupancy rate, which dipped to 64.7% from 68.6%, and a 4.0% decrease in the average daily room rate.

The company’s restaurant segment fared even worse, with revenues plummeting 39.9%, primarily due to a 21.8% collapse in average daily sales per store. The performance of its franchised-and-managed (F&M) properties also weakened, with revenues from F&M hotels falling 29.7%. This was exacerbated by a strategic decision to provide a temporary waiver of RMB 21.0 million in management fees to support franchisees facing business difficulties.

Despite the revenue headwinds, GreenTree demonstrated notable resilience on its bottom line. The company's net loss for the quarter narrowed to RMB 55.7 million (US$8.0 million) from a loss of RMB 72.8 million in the same period of 2024. More significantly, its core net income—a non-GAAP measure the company uses to show underlying performance—rose 9.2% to RMB 63.2 million (US$9.0 million). This improvement was largely achieved through aggressive cost management, including reduced impairment losses on goodwill and trademarks related to its restaurant business, and lower operating, selling, and administrative expenses.

China's Chilling Hospitality Climate

GreenTree's mixed results do not exist in a vacuum; they reflect a broader and challenging economic reality across China's hospitality and restaurant sectors. The latter half of 2025 was marked by weak consumer sentiment and constrained corporate spending, creating a difficult operating environment. Industry data shows a nationwide cooling, with hotel occupancy and average daily rates under pressure from weak business travel and a highly competitive market.

In some major hubs, the situation has been particularly severe. In Beijing, for instance, the hotel industry saw profits plummet by over 90% in the first half of 2025 due to stagnant weekday demand and rising costs. GreenTree's declining RevPAR and occupancy figures are consistent with these wider trends, suggesting its performance is as much a symptom of the market as it is a company-specific issue.

The restaurant industry has been similarly battered. With Chinese consumers tightening their belts, discretionary spending on dining out has been one of the first casualties. The sector has seen a wave of closures, with the average lifespan of a restaurant outlet in China falling to just 15 months. GreenTree's 39.9% drop in restaurant revenue and 21.8% decline in average daily sales underscore the brutal conditions facing food and beverage operators.

Strategic Pruning for a New Reality

Faced with this harsh environment, GreenTree's results indicate a clear strategy of deliberate and sometimes painful adaptation. The closure of 15 leased-and-operated (L&O) hotels and several L&O restaurants since the start of 2025, cited as a reason for declining revenues, appears to be a strategic pruning of the portfolio. By shedding underperforming or less profitable assets, particularly those with expiring leases, the company is actively working to improve the overall health and profitability of its holdings.

Furthermore, the decision to waive RMB 21.0 million in management fees for struggling franchisees highlights a crucial long-term strategic choice. While this move directly impacted short-term revenue, it serves to stabilize its vast franchise network, which forms the backbone of its hotel business. Supporting franchisees through a difficult period is essential for maintaining brand integrity and ensuring the network remains intact for an eventual market recovery.

Despite the current challenges, GreenTree is not standing still. The company reported a robust pipeline of 1,260 hotels contracted for or under development as of the end of 2025. This continued focus on expansion, likely concentrated on its less capital-intensive franchise model, signals confidence in the long-term prospects of the Chinese travel market, even as it navigates the immediate turbulence.

A Cautious Path Forward

The market's initial reaction to the earnings report was cautiously optimistic, with GreenTree's stock (NYSE: GHG) rising on the day of the announcement. Investors appeared to look past the headline revenue decline, focusing instead on the improved core profitability, disciplined cost controls, and the company's substantial cash reserves, which stood at RMB 1.96 billion (US$280.8 million) at year-end. This financial cushion provides a significant buffer and the flexibility to continue making strategic investments.

Looking ahead, the company has set modest expectations. Its guidance for the full year of 2026 projects that total revenues for its organic hotel business will be flat compared to 2025 levels. This conservative forecast acknowledges that a swift market rebound is unlikely and that the path to recovery will be a gradual one. By managing expectations and focusing on operational efficiency, GreenTree is positioning itself to withstand the ongoing market pressures while preparing for future growth.