GreenTree Hospitality Group Ltd. Reports First Quarter of 2019 Financial Results

A total of 2,829hotels with 225,757hotel rooms were in operation as of March 31,2019,compared to 2,757hotels and 221,529hotel rooms as ofDecember31,2018.

Total revenues increased 20.1% from the first quarter of 2018 to RMB235.3 million (US$35.1 million)[1] for the first quarter of 2019.

Adjusted EBITDA (non-GAAP) increased 20.0% from the first quarter of 2018 to RMB133.9 million (US$19.9 million)[1]for the first quarter of 2019.

Net income increased 58.8% from the first quarter of 2018 to RMB134.0 million (US$20.0 million)[1] for the first quarter of 2019.

Core net income (non-GAAP) increased 18.0% from the first quarter of 2018 to RMB92.3 million (US$13.7 million)[1] for the first quarter of 2019.

Basic and diluted net income per ADS were RMB1.33 (US$0.20)[1] for the firstquarter of 2019.

Basic and diluted core net income per ADS (non-GAAP) were RMB0.91 (US$0.14)[1] for the first quarter of 2019.

As of March 31,the Company had a strong pipeline with a total of 481 hotels contracted for or under development. During the first quarter of 2019,the Company opened 101 F&M hotels and one L&O hotel,compared to 80 F&M hotels for the first quarter of 2018.

As of March 31,the Company had approximately 33 million individual loyal members (of which approximately 23 million are paid members) and over 1,320,000 corporate members,compared to approximately 29 million (of which approximately 21 million are paid members) and over 1,270,000 corporate members respectively,as of December 31,2018.

The Company sold approximately 94.2% of its room nights through its direct sales channels,including its individual loyal members and corporate members.

The Company reaffirms guidance for growth in full year 2019 total revenues of 20-25% from 2018.

SHANGHAI,May 24,2019 -- GreenTree Hospitality Group Ltd. (NYSE: GHG) ("GreenTree",the "Company","we","us" and "our"),a leading franchised hotel operator in China,today announced its unaudited financial results for the first quarter ended March31,2019.

FirstQuarter of 2019 Operational Highlights

As of March31,GreenTree had 30 leased-and-operated ("L&O") hotels and 2,799 franchised-and-managed ("F&M") hotels in operation in 292 cities across China,compared to 29 L&O hotels and 2,728F&M hotels in operation in 290 cities as of December31,2018. The geographical coverage of cities grew by 26 year-over-year,representing an increase of 9.8%.

The Company opened 101 F&M hotels and one L&O hotel,44in the mid-scale segment,14in the business to mid-to-up-scale segment,44in the economy segment. Of the hotels opened,6hotels were in Tier 1 cities[2],20 in Tier 2 cities[3] and the remaining 76hotels in other cities in China,while the Company closed a total of 30F&M hotels in the quarter.

As of March31,the Company had a strong pipeline with a total of 481 hotels contracted for or under development.

The average daily room rate,or ADR,for all hotels in operation,was RMB162in the first quarter of 2019,an increase of 3.9% year-over-year.

The occupancy rate for all hotels in operation was 78.1% in the firstquarter of 2019,a decrease of 1.1% year-over-year.

The revenue per available room,or RevPAR,which is calculated by multiplying our hotels' ADR by its occupancy rate,was RMB127in the firstquarter of 2019,representing a 2.5% year-over-year increase.

[1] The conversion of Renminbi ("RMB") into United States dollars ("US$") is based on the exchange rate of US$1.00=RMB6.7112 on March 29,2019 as set forth in H.10 statistical release of the U.S. Federal Reserve Board and available at https://www.federalreserve.gov/releases/h10/20190401/.

[2] "Tier 1 cities" refers to the term used by the National Bureau of Statistics of China and refer to Beijing,Shanghai,Shenzhen and Guangzhou.

[3] "Tier 2 cities" refers to the 32 major cities,other than Tier 1 cities,as categorized by the National Bureau of Statistics of China,including provincial capitals,administrative capitals of autonomous regions,direct-controlled municipalities and other major cities designated as "municipalities with independent planning" by the State Council.

"Thanks to our team's efforts,we delivered a strong first quarter with improved operating and financial performances,and strong execution on our expansion and strategic growth objectives. As of March 31,we were operating in 292 cities,further increasing of our geographical coverage across China. During the quarter we opened 102 new hotels,continued to grow our pipeline,and remained on track to open more new hotels in the remaining part of this year," commented Mr. Alex Xu,Chairman and Chief Executive Officer of GreenTree. "We took a number of strategic steps to strengthen our solid foundation for further growth in 2019 and beyond with a number of investments and strategic partnerships that complement our existing business. Beyond these,we remain engaged in exploring appropriate value-enhancing acquisition opportunities to help strengthen our hotel platform and increase long-term shareholder value."

First Quarter of 2019 Financial Results

Quarter Ended

March 31,2018

March 31,2019

March 31,2019

RMB

RMB

USD

Revenues

Leased-and-operated hotels

45,615,096

51,833,041

7,723,364

Franchised-and-managed hotels

150,343,349

183,460,067

27,336,403

Total revenues

195,958,445

235,293,108

35,059,767

Total revenuesfor the first quarter of 2019 were RMB235.3 million (US$35.1 million)[1],representing a 20.1% increase over the first quarter of 2018.The increase in the first quarter of 2019 was primarily attributable to the 101 F&M hotels new addition to our network,the addition of a new L&O hotel and the conversion of three F&M hotels to L&O during the third quarter of 2018,improved RevPAR for both F&M and L&O hotels as well as contribution from membership growth; and was partially offset by the renovation of seven L&O hotels during this quarter and the conversion of one L&O hotel to F&M during the fourth quarter of 2018.

Total revenues from leased-and-operated hotels for the first quarter of 2019 were RMB51.8 million (US$7.7 million)[1],representing a 13.6% year-over-year increase. The year-over-year increase in the first quarter of 2019 was primarily attributable to RevPAR growth of 2.1%,moderate sublease revenue growth,the addition of a new L&O hotel during this quarter and the conversion of three F&M hotels to L&O since the Third quarter of 2018; and was partially offset by the renovation of seven L&O hotels during this quarter and the conversion of one L&O hotel to F&M in the fourth quarter of 2018.

Total revenues from franchised-and-managed hotels for the first quarter of 2019 were RMB183.5 million (US$27.3 million)[1],representing a 22.0% year-over-year increase. Initial franchise fees increased 44.2% year-over-year in the first quarter of 2019,primarily due to the gross opening of 101 hotels in the first quarter of 2019 as compared to 80 hotels opened in the first quarter of 2018. The 20.6% increase from the first quarter of 2018 in recurring franchisee management fees and others was primarily due to RevPAR growth of 2.5% as well as growth in central reservation system ("CRS") usage fees,annual IT and marketing fees and hotel manager fees,which in turn resulted from the increased number of hotels and hotel rooms in operation.

Quarter Ended

March 31,2019

RMB

RMB

USD

Initial franchise fee

8,843,441

12,752,949

1,900,249

Recurring franchise management fee and

others

141,499,908

170,707,118

25,436,154

Revenues from franchised-and-managed

hotels

150,349

183,067

27,403

Total operating costs and expenses

Quarter Ended

March 31,2019

RMB

RMB

USD

Operating costs and expenses

Hotel operating costs

63,745,544

79,999,844

11,920,349

Selling and marketing expenses

10,468,855

24,676,102

3,854

General and administrative expenses

20,400,857

25,732,486

3,834,260

Other operating expenses

143,262

42,624

6,351

Total operating costs and expenses

94,758,518

130,451,056

19,437,814

Hotel operating costsfor the first quarter of 2019 were RMB80.0 million (US$11.9 million)[1],representing a 25.5% increase from the same quarter of 2018. The increase in the first quarter of 2019 was mainly attributable to costs associated with the expansion of our F&M hotels; one time cost related to the renovation of seven L&O hotels; higher rental costs,consumables,personnel costs,depreciation and amortization associated with the four new L&O hotels added to our portfolio since the third quarter of 2018 and one new L&O hotel opened in this quarter.

Quarter Ended

March 31,2019

RMB

RMB

USD

Rental

17,632,067

20,608,265

3,070,727

Utilities

5,111,000

6,154,563

917,058

Personnel cost

7,231,850

8,794,274

1,310,388

Depreciation and amortization

4,820,413

6,524,205

972,137

Consumable,food and beverage

4,637

6,837,151

1,018,767

Costs of general managers of franchised-and-

managed hotels

15,585,608

22,444,643

3,344,356

Other costs of franchised-and-operated hotels

5,384,508

5,686,583

847,327

Others

3,543,461

2,950,160

439,589

Hotel Operating Costs

63,544

79,844

11,349

Selling and marketing expenses for the first quarter of 2019 were RMB24.7 million (US$3.7 million)[1],compared to RMB10.5 million in the first quarter of 2018. The increase of 135.7% in the first quarter of 2019 was mainly attributable to one-timeexpenses for the Annual Conference for Celebrating the First Anniversary of our Listing on NYSE; and other minor expenses such asincreased advertising and promotion expenses to improve our brands' market recognition including celebrity endorsement;andincreased personnel,compensation and other costs (i.e. travel expenses) of business development personnel,as a result of the increased hotel openings.

General and administrative expensesfor the first quarter of 2019 were RMB25.7 million (US$3.8 million)[1],compared to RMB20.4 million in the first quarter of 2018.The increase of 26.1% in the first quarter of 2019 was primarily attributable to increased share-based compensation expenses,and increased R&D costs.

Gross profitfor the first quarter of 2019 was RMB155.3 million (US$23.1 million)[1],representing an increase of 17.5% from the same quarter of 2018. Gross margin in the first quarter was 66.0%,compared to 67.5% a year ago. The decrease was primarily due to increased operating costs mainly caused by rising staff numbers,and one-time cost related to the renovation of seven L&O hotels.

Income from operationsfor the first quarter of 2019 was RMB111.7 million (US$16.7 million)[1],representing a decrease of 2.8%. Operating margin in the first quarter declined to 47.5%,compared to 58.7% a year ago. The decreases were mainly attributable to one-time expenses for the Annual Conference for Celebrating the First Anniversary of our Listing on NYSE.

Adjusted EBITDA (non-GAAP) for the first quarter of 2019 was RMB133.9 million (US$19.9 million)[1],an increase of 20.0% from the same quarter of 2018. The adjusted EBITDA margin,defined as adjusted EBITDA (non-GAAP) as a percentage of total revenues,was 56.9% in the first quarter of 2019,compared to 57.0% in the first quarter of 2018. The margin decrease was mainly attributable to one-time expenses for the Annual Conference for Celebrating the First Anniversary of our Listing on NYSE.

Net income for the first quarter of 2019 was RMB134.0 million (US$20.0 million)[1],representing an increase of 58.8% from the same quarter of 2018. Net margin in the first quarter was 56.9%,compared to 43.1% a year ago.

Core net income (non-GAAP)for the first quarter of 2019 was RMB92.3 million (US$13.7 million)[1],representing a 18.0% increase from the same quarter of 2018. The core net margin,defined as core net income (non-GAAP) as a percentage of total revenues,was 39.2% in the first quarter of 2019,compared to 39.9% in the first quarter of 2018.

Basic and diluted earnings per ADS for the first quarter of 2019 was RMB1.33 (US$0.20)[1],representing a 44.6% increase from the same quarter of 2018. Basic and diluted core net income per ADS (non-GAAP)was RMB0.91 (US$0.14)[1] for the first quarter of 2019,representing a 7.1% increase from the same quarter of 2018.

Cash flow. Operating cash inflow for the first quarter of 2019 was RMB122.2 million (US$18.2 million)[1],primarily due to improved operating performance across our hotel portfolio. Investing cash outflow for the first quarter of 2019 was RMB106.5 million (US$15.9 million)[1],which was attributable primarily to changes in short-term investments,and partially offset by purchase of property and equipment and other investments,mainly including short-term investments and long-term deposits.Financing cash outflow for the first quarter of 2019 was RMB197.6 million (US$29.4 million)[1],which was attributable primarily to RMB208.0 million distributed to shareholders.

Cash and cash equivalents,restricted cash,short-term investments,investments in equity securities[4] and time deposit[5].As of March 31,the Company had a total balance of cash and cash equivalents,short term investments,investments in equity securities and time deposit of RMB2,180.8 million (US$325.0million)[1],as compared to RMB2,260.5 million as of December 31,2018,primary due to net operating cash flow and investments in equity securities,offset by dividend paid.

[4] Investments in equity securities include securities and investment in Gingko and New Century which is recorded in Long-term investments account.

[5] Time deposits are the time deposit certificates last over three months,which is recorded in Long-term time deposits.

Recent Developments

In 2019,we intend to develop more hotels under the Wumian and GreenTree Apartment brands to meet the taste of young business travelers. During the first quarter,one Wumian hotel was under construction. GreenTree Apartment aims to provide long-term apartment rental services to urban white collars,especially newcomers to cities. Different from a standard mid-scale hotel,our apartments provide a more family-friendly living space and more community space. As of March 31,we opened 2 apartment hotels,of which one is L&O. For the first quarter of 2019,we added 8 more apartment hotels in our pipeline,and we plan to add total 30 apartment hotels into our pipeline during the rest of this year.

Yibon contributed one million paid members after the launch of our membership integration with them during March 2019. This year,we will continue to launch our membership integration with Argyle.

M&A and strategic investments are key growth strategies for GreenTree and the Company completed a number of strategic initiatives during the first quarter of 2019. First,on January 18,the Company invested in China Gingko Education Group Company Limited,or Gingko,a public company listed on the Hong Kong Stock Exchange ("HKSE") that had approximately 10,000 students enrolled in its university studying accredited 4 years full time BA/BS degrees all related to hospitality during the 2017/2018 school year. Gingko is currently ranked as China's No.1 hospitality university by the "Gaosan Web Association",a website with introductions to and rankings of universities in China. We will work together to cultivate professional talent for us and the hospitality industry in China.

Second,on January 28,the Company announced a strategic investment to become a major shareholder in Argyle. The Argyle hotel network consists of eight mid-scale and upscale brands,with footprints mainly in South West China,South East China,and Southeast Asia. Argyle's highly distinguished brand portfolio and geographic coverage are highly complementary to GreenTree's business.

Third,on March 11th,the Company acquired 4.95% in Zhejiang New Century Hotel Management Co.,Ltd.,or New Century,a company also listed on the HKSE. New Century operates and manages 150 hotels,ranging from mid-scale to upscale brands,with over 34,000 hotel rooms in 22 provinces. The two companies will explore opportunities for future strategic cooperation.

Fourth,on May 1,the Company announced an acquisition agreement to acquire a 70% equity stake in Urban Hotel Group. The Urban Hotel Group is a leading franchised hotel operator in China with strong brand portfolio and geographic coverage in China. It has more than 600 hotels in economy to mid-scale segment in Eastern and Northern China. The company plans to complete the transaction subject to customary closing conditions.

Adoption of New Revenue Recognition Accounting Standards

The Company adopted Accounting Standards Update 2014-09,Revenue from Contracts with Customers (Topic 606) on January 1,2019 on a full retrospective basis in the condensed consolidated financial statements. As such,prior period results have been adjusted to reflect the adoption of ASU 2014-09.

The most meaningful impacts of the adoption of ASU 2014-09 are as follows:

Under previous guidance,initial one-time franchise fee was recognized when the hotels opened for business and the Company had fulfilled its commitments and obligations. Upon adoption of new revenue standards the one-time franchise fee will be recognized over the term of the franchise contract.

Under previous guidance,the Company adopted the incremental cost model to account for membership program. The estimated incremental costs,net of the reimbursement received from the franchisees,are accrued and recorded as accruals for membership program as members accumulate points and are recognized as cost and expense in the accompanying consolidated statements of comprehensive income. Under new revenue standards,membership program is considered a separate performance obligation and the consideration allocated to the membership program will be recognized as revenue upon point redemption,net of any cost paid to the franchisees and other third parties.

Guidance

For the full year 2019,the Company expects growth in total revenues of 20-25% from 2018.

The guidance set forth above reflects the Company's current and preliminary view based on our estimates,may not be indicative of our financial results for the full year ended December 31,2019 and is subject to change.

Conference Call

GreenTree's management will hold an earnings conference call at 8:00 AM U.S. Eastern Time on May 24,2019 (8:00 PM Beijing/Hong Kong Time on May 24,2019).

Dial-in numbers for the live conference call are as follows:

International

+1-412-902-4272

China

+4001-201203

US

+1-888-346-8982

Hong Kong

+800-905-945 or 852-3018-4992

Singapore

+800-120-6157

Participants should ask to join the GreenTree call,please dial in approximately 10 minutes before the scheduled time of the call.

A telephone replay of the call will be available after the conclusion of the conference call until May 31,2019.

Dial-in numbers for the replay are as follows:

International Dial-in

+1-412-317-0088

U.S. Toll Free

+1-877-344-7529

Canada Toll Free

+855-669-9658

Passcode:

+10131559

Additionally,a live and archived webcast of this conference call will be available at http://ir.998.com.

Use of Non-GAAP Financial Measures

We believe that Adjusted EBITDA and core net income,as we present it,is a useful financial metric to assess our operating and financial performance before the impact of investing and financing transactions,income taxes and certain non-core and non-recurring items in our financial statements.

The presentation of Adjusted EBITDA and core net income should not be construed as an indication that our future results will be unaffected by other charges and gains we consider to be outside the ordinary course of our business.

The use of Adjusted EBITDA and core net income has certain limitations because it does not reflect all items of income and expenses that affect our operations. Items excluded from Adjusted EBITDA and core net income are significant components in understanding and assessing our operating and financial performance. Depreciation and amortization expense for various long-term assets,income tax and share-based compensation have been and will be incurred and are not reflected in the presentation of Adjusted EBITDA. Each of these items should also be considered in the overall evaluation of our results. Additionally,Adjusted EBITDA and core net income does not consider capital expenditures and other investing activities and should not be considered as a measure of our liquidity. We compensate for these limitations by providing the relevant disclosure of our depreciation and amortization,interest expense/income,gains/losses from investments in equity securities,income tax expenses,share-based compensation,share of loss in equity investees,government subsidies and other relevant items both in our reconciliations to the corresponding U.S. GAAP financial measures and in our consolidated financial statements,all of which should be considered when evaluating our performance.

The term Adjusted EBITDA and core net income is not defined under U.S. GAAP,and Adjusted EBITDA and core net income is not a measure of net income,operating income,operating performance or liquidity presented in accordance with U.S. GAAP. When assessing our operating and financial performance,you should not consider this data in isolation or as a substitute for our net income,operating income or any other operating performance measure that is calculated in accordance with U.S. GAAP. In addition,our Adjusted EBITDA and core net income may not be comparable to Adjusted EBITDA and core net income or similarly titled measures utilized by other companies since such other companies may not calculate Adjusted EBITDA and core net income in the same manner as we do.

Reconciliations of the Company's non-GAAP financial measures,including Adjusted EBITDA and core net income,to the consolidated statement of operations information are included at the end of this press release.

About GreenTree Hospitality Group Ltd.

GreenTree Hospitality Group Ltd. ("GreenTree" or the "Company") (NYSE: GHG) is a leading franchised hotel operator in China. As of March 31,GreenTree had 2,829 hotels,among which 2,799 are franchised and managed hotels. The Company had the highest proportion of franchised-and-managed hotels among the top four economy to mid-scale hotel networks in China. In 2018,GreenTree was the fourth largest economy to mid-scale hotel group in China in terms of the number of hotels according to a report from Shanghai Inntie Enterprise Management Consulting Co.,Ltd. The Company has built a strong suite of brands including its flagship "GreenTree Inns" brand as a result of its long-standing dedication to the hospitality industry in China and consistent quality of its services,signature hotel designs,broad geographic coverage and convenient locations. GreenTree has positioned its brands to appeal to value-and-quality-conscious business travelers and leisure travelers.

For more information on GreenTree,please visit http://ir.998.com

Safe Harbor Statements

This press release contains forward-looking statements made under the "safe harbor" provisions of Section 21E of the Securities Exchange Act of 1934,as amended,and the U.S. Private Securities Litigation Reform Act of 1995. In some cases,these forward-looking statements can be identified by words or phrases such as "may," "will," "expect," "anticipate," "aim," "estimate," "intend," "plan," "believe," "potential," "continue," "is/are likely to," "confident," "future," or other similar expressions. GreenTree may also make written or oral forward-looking statements in its reports filed with or furnished to the U.S. Securities and Exchange Commission,in its annual report to shareholders,in press releases and other written materials and in oral statements made by its officers,directors or employees to third parties. Any statements that are not historical facts,including statements about or based on GreenTree's current beliefs,expectations,assumptions,estimates and projections about us and our industry,are forward-looking statements that involve known and unknown factors,risks and uncertainties that may cause our actual results,performance or achievements to be materially different from those expressed or implied by the forward-looking statements. Such factors and risks include,but not limited to the following: GreenTree's goals and growth strategies; its future business development,financial condition and results of operations; trends in the hospitality industry in China and globally; competition in our industry; fluctuations in general economic and business conditions in China and other regions where we operate; the regulatory environment in which we and our franchisees operate; and assumptions underlying or related to any of the foregoing. You should not place undue reliance on these forward-looking statements. Further information regarding these and other risks,uncertainties or factors is included in the Company's filings with the U.S. Securities and Exchange Commission. All information provided,including the forward-looking statements made,in this press release are current as of the date of the press release. Except as required by law,GreenTree undertakes no obligation to update any such information or forward-looking statements to reflect events or circumstances after the date on which the information is provided or statements are made,or to reflect the occurrence of unanticipated events.

-- Financial Tables and Operational Data Follow --

GreenTree Hospitality Group Ltd.

Unaudited Condensed Consolidated Balance Sheets

December 31,2019

RMB

RMB

USD

ASSETS

Current assets:

Cash and cash equivalents

1,264,025,785

1,062,188,750

158,271,062

Short-term investments

685,512,063

159,646,908

23,788,131

Investments in equity securities

307,693,782

253,822,369

37,713

Accounts receivable,net of allowance for

doubtful accounts

64,864,184

81,990,976

12,217,037

Amounts due from related parties

228,600

10,225,000

1,523,573

Prepaid rent

4,478,413

3,766,832

561,275

Inventories

2,547,729

1,098,846

163,733

Other current assets

53,969,039

46,472,250

6,924,581

Loans receivable,net

67,196,568

98,198,518

14,036

Total current assets

2,450,516,163

1,717,410,449

255,902,141

Non-current assets:

Restricted cash

3,300,000

11,457,077

1,158

Long-term time deposits

60,000,000

500,000

74,502,324

Loan receivable,net

39,352,863

37,127,516

5,532,172

Property and equipment,net

222,389,573

222,430,063

33,143,113

Intangible assets,net

27,213,391

26,520,809

3,951,724

Goodwill

5,787,068

5,068

862,300

Long-term investments

112,219,460

365,780,509

54,996

Other assets

25,701,523

57,391,152

8,551,549

Deferred tax assets

133,966

132,873,516

19,798,772

TOTAL ASSETS

3,079,781,007

3,076,778,159

458,454,249

LIABILITIES AND EQUITY

Current liabilities:

Short-term bank loans

60,000

60,000

8,940,279

Accounts payable

9,182,058

13,380,723

1,993,790

Advance from customers

36,370,325

34,699,543

5,170,393

Amounts due to related parties

285,578

218,814

32,604

Salary and welfare payable

42,767,219

35,403,626

5,275,305

Deferred rent

4,421,427

4,626,821

689,418

Deferred revenue

217,668,659

206,866,473

30,824,066

Accrued expenses and other current

liabilities

241,407,979

254,959,378

37,132

Income tax payable

104,988,638

128,871,701

19,202,483

Total current liabilities

717,091,883

739,027,079

110,118,470

Deferred rent

20,519,682

20,021,717

2,983,329

Deferred revenue

373,090,530

379,640

56,211

Other long-term liabilities

96,573,810

97,621,536

14,546,062

Deferred tax liabilities

43,538,624

52,820

7,890

Unrecognized tax benefits

169,619,409

175,666,160

26,175,075

Total liabilities

1,420,433,938

1,464,061,952

218,152,037

Shareholders' equity:

Class A ordinary shares

217,867

218,686

32,554,340

Class B ordinary shares

115,534,210

115,210

17,215,134

Additional paid-in capital

1,003,026,803

1,033,819,435

154,043,902

Retained earnings

252,617,450

179,505,188

26,747,108

Accumulated other comprehensive income

62,367,692

47,565,174

7,087,432

Total GreenTree Hospitality Group Ltd.

shareholders' equity

1,650,968,022

1,594,693

237,647,916

Non-controlling interests

8,379,047

17,813,514

2,654,296

Total shareholders' equity

1,659,347,069

1,612,716,207

240,302,212

TOTAL LIABILITIES AND

SHAREHOLDERS' EQUITY

3,249

GreenTree Hospitality Group Ltd.

Unaudited Condensed Consolidated Statements of Comprehensive Income

Quarter Ended

March 31,767

Operating costs and expenses

Hotel operating costs

(63,544)

(79,844)

(11,349)

Selling and marketing expenses

(10,855)

(24,102)

(3,854)

General and administrative expenses

(20,857)

(25,486)

(3,260)

Other operating expenses

(143,262)

(42,624)

(6,351)

Total operating costs and expenses

(94,518)

(130,056)

(19,814)

Other operating income

13,825,401

6,906,453

1,029,094

Income from operations

115,328

111,748,505

16,651,047

Interest income and other,net

4,703,862

16,469,011

2,453,959

Interest expense

-

(685,125)

(102,087)

(Losses) gains on investments in equity securities

(5,173,627)

59,934,470

8,930,515

Other income,net

-

829,781

123,641

Income before income taxes and share of loss of equity method investments

114,555,563

188,296,642

28,057,075

Income tax expense

(29,286,411)

(54,165,392)

(8,895)

Income before share of loss in equity method investments

85,269,152

134,131,250

19,986,180

Share of losses in equity investees,net of tax

(907,036)

(173,231)

(25,812)

Net income

84,362,116

133,019

19,960,368

Net loss attributable to non-controlling interests

29,519

955,533

142,378

Net income attributable to ordinary shareholders

84,635

134,913,552

20,102,746

Net earnings per share

Class A ordinary share-basic and diluted

0.92

1.33

0.20

Class B ordinary share-basic and diluted

0.92

1.33

0.20

Net earnings per ADS

Class A ordinary share-basic and diluted

0.92

1.33

0.20

Class B ordinary share-basic and diluted

0.92

1.33

0.20

Weighted average shares outstanding

Class A ordinary share-basic and diluted

50,856,151

67,015,625

67,625

Class B ordinary share-basic and diluted

40,949,391

34,762,909

34,909

Other comprehensive income,net of tax

-Foreign currency translation adjustments

(169,882)

(14,802,518)

(2,205,644)

Comprehensive income,net of tax

84,192,234

119,155,501

17,754,724

Comprehensive loss attributable to non-controlling interests

29,378

Comprehensive income attributable to ordinary shareholders

84,221,753

120,034

17,897,102

GreenTree Hospitality Group Ltd.

Unaudited Condensed Consolidated Statements of Comprehensive Income

Quarter Ended

March 31,2018

March 31,2019

March 31,2019

RMB

RMB

USD

Operation activities:

Net (loss) income

84,116

133,019

19,368

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

5,394,502

7,670,772

1,142,981

Share of loss in equity method investments

907,036

173,231

25,812

Interest income

(4,862)

(7,961,638)

(1,186,321)

Bad debt expense

319,258

891,369

132,818

Loss (Gain) from investments in equity securities

5,627

(59,470)

(8,515)

Foreign exchange losses (gains)

725,206

(204,117)

(30,414)

Share-based compensation

159,839

4,849,451

722,591

Income tax expenses related to dividend distribution

-

3,844,492

572,847

Changes in operating assets and liabilities:

Accounts receivable

(11,222,590)

(18,161)

(2,684,790)

Prepaid rent

1,586,377

711,581

106,029

Inventories

775,180

1,448,883

215,890

Amounts due from related parties

(416,358)

3,600

536

Other current assets

(6,803,749)

7,789

1,072,355

Other assets

-

(4,689,629)

(698,777)

Accounts payable

4,696,940

4,665

625,621

Amounts due to related parties

326,696

(66,764)

(9,948)

Salary and welfare payable

(1,679,085)

(7,363,593)

(1,097,210)

Deferred revenue

22,243,661

(4,393,076)

(654,589)

Advance from customers

(8,488,483)

(1,782)

(248,954)

Accrued expenses and other current liabilities

3,487,779

25,592,668

3,428

Income tax payable

19,733,840

23,883,063

3,558,687

Unrecognized tax benefits

3,751,152

6,046,751

900,994

Deferred rent

(1,014,448)

(292,571)

(43,594)

Other long-term liabilities

1,773,389

1,047,726

156,116

Deferred taxes

(5,994)

5,154

785,277

Net cash provided by operating activities

116,041,029

122,413

18,207,238

Investing activities:

Purchases of property and equipment

(58,332,109)

(9,949)

(1,349,975)

Proceeds from disposal of property and equipment

-

300,000

44,701

Acquisitions,net of cash received

-

(10,000)

(1,490,046)

Purchases of short-term investments

(516,561,589)

(182,229,182)

(27,995)

Proceeds from short-term investments

745,000

716,055,975

106,695,669

Increase of long-term time deposits

-

(440,000)

(65,562,046)

Purchases of investments in equity securities

(4,795,838)

(1,976,351)

(294,485)

Purchases of long term investments in equity securities

-

(249,401)

(37,171,355)

Proceeds from disposal of investments in equity securities

11,267,910

108,603,914

16,488

Loan to related parties

-

(10,046)

Loan to third parties

(5,000)

(15,000)

(2,375,134)

Loan to franchisees

(15,000)

(18,130,454)

Repayment from franchisees

3,500,000

5,397

788,740

Net cash (used in) provided by investing activities

160,078,374

(106,597)

(15,875,938)

Financing activities:

Distribution to the shareholders

(39,691,103)

(208,814)

(30,996,813)

Income tax paid related to the above distribution

(3,000)

-

-

Contribution from noncontrolling interest holders

-

10,390,548,158

Proceeds from issuance of Class A ordinary shares

837,007

-

-

Payment for initial public offering costs

(4,762)

-

-

Net cash provided by (used in) financing activities

790,511,142

(197,635,814)

(29,655)

Effect of exchange rate changes on cash and cash equivalents,and restricted cash*

(895,088)

(11,960)

(1,741,859)

Net increase (decrease) in cash and cash equivalents and restricted cash

1,065,735,457

(193,958)

(28,859,214)

Cash,cash equivalents and restricted cash at the beginning of the period

164,963,665

1,325,785

188,434

Cash,cash equivalents and restricted cash at the end of the period

1,230,122

1,073,645,827

159,978,220

* Upon the adoption of ASU No. 2016-18,Statement of Cash Flows (Topic 230): Restricted Cash,restricted cash was included within cash and cash

equivalents in the consolidated statement of cash flows for the three months period ended March 31,2019 and the comparative disclosure had been

restated to conform to the current period presentation.

GreenTree Hospitality Group Ltd.

Unaudited Reconciliation of GAAP and Non-GAAP Results

Quarter Ended

March 31,2019

RMB

RMB

USD

Net income

84,368

Deduct:

Other operating income

13,094

Gains on investments in equity securities

-

59,641

Add:

Other operating expenses

143,351

Income tax expense

29,411

54,392

8,895

Share of loss in equity investees,net of tax

907,812

Interest expense

-

685,125

102,087

Share-based compensation

159,591

Depreciation and amortization

5,981

Losses on investments in equity securities

5,627

-

-

Adjusted EBITDA (Non-GAAP)

111,601,392

133,910

19,947,835

Quarter Ended

March 31,2019

RMB

RMB

USD

Net income

84,368

Deduct:

Government subsidies (net of 25% tax)

10,236,002

4,815,000

717,457

Gains on investments in equity securities (net of 25% tax)

-

44,853

6,697,886

Other income (net of 25% tax)

-

622,336

92,731

Add:

Share-based compensation

159,591

Losses on investments in equity securities (net of 25% tax)

3,880,220

-

-

Income tax expenses related to dividend distribution

-

3,847

Losses from joint venture closure

Core net income (Non-GAAP)

78,166,173

92,263,773

13,732

Core net income per ADS (Non-GAAP)

Class A ordinary share-basic and diluted

0.85

0.91

0.14

Class B ordinary share-basic and diluted

0.85

0.91

0.14

Operational Data

As of March 31,2018

As of March 31,2019

Total hotels in operation:

2,354

2,829

Leased and owned hotels

26

30

Franchised hotels

2,328

2,799

Total hotel rooms in operation

195,552

225,757

Leased and owned hotels

3,301

3,790

Franchised hotels

192,251

221,967

Number of cities

266

292

Quarter Ended

As of March 31,2019

Occupancy rate (as a percentage)

Leased-and-owned hotels

60.5%

59.6%

Franchised hotels

79.6%

78.4%

Blended

79.2%

78.1%

Average daily rate (in RMB)

Leased-and-owned hotels

193

200

Franchised hotels

155

162

Blended

156

162

RevPAR (in RMB)

Leased-and-owned hotels

117

119

Franchised hotels

124

127

Blended

124

127

Number of Hotels in Operation

Number of Hotel Rooms in Operation

As of March 31,2019

As of March 31,2019

Economy hotels

287

508

15,810

25,639

Vatica

111

121

8,280

8,923

Shell

176

387

7,530

16,716

Mid-scale

2,012

2,198

173,456

187,462

GreenTree Inn

1,755

1,901

152,821

164,181

GT Alliance

257

294

20,635

23,090

Wumian Hotel

-

1

-

62

GreenTree Apartment

-

2

-

129

Business to Mid-to-up-scale

55

123

6,286

12,656

GreenTree Eastern

55

91

6,286

9,732

GMe

-

14

-

1,337

Geya

-

5

-

445

VX

-

13

-

1,142

Total

2,829

195,757

For more information,please contact:

GreenTree

Ms. Selina Yang

Phone: +86-21-3617-4886 ext. 7999

E-mail: ir@998.com

Mr. Nicky Zheng

Phone: +86-21-3617-4886 ext. 6708

E-mail: ir@998.com

Christensen

In Shanghai

Ms. Constance Zhang

Phone: +86-138-1645-1798

E-mail:czhang@christensenIR.com

InHong Kong

Ms.Karen Hui

Phone: +852-9266-4140

E-mail:khui@christensenIR.com

In US

Ms.Linda Bergkamp

Phone: +1-480-614-3004

Email:lbergkamp@ChristensenIR.com

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