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

A total of 3,102 hotels with 245,705 hotel rooms in operation as of September 30,2019,compared to 2,955 hotels and 236,557 hotel rooms as of June 30,2019.

Total revenues increased 20.1% to RMB292.1 million (US$40.9 million)[1] for the third quarter of 2019. Total revenues increased 20.6% to RMB802.4 million (US$112.3 million)[1] for the first nine months of 2019.

Adjusted EBITDA (non-GAAP) increased 11.6% to RMB177.1 million (US$24.8 million)[1] for the third quarter of 2019. Adjusted EBITDA (non-GAAP) increased 16.5% to RMB484.0 million (US$67.7 million)[1] for the first nine months of 2019.

Net income decreased 28.4% to RMB102.2 million (US$14.3 million)[1] for the third quarter of 2019. Net income increased 13.1% to RMB363.2 million (US$50.8 million)[1] for the first nine months of 2019.

Core net income (non-GAAP) increased 16.5% to RMB134.8 million (US$18.9 million)[1] for the third quarter of 2019. Core net income (non-GAAP) increased 17.0% to RMB352.9 million (US$49.4 million)[1] for the first nine months of 2019.

Net income per ADS (basic and diluted) totaled RMB1.01 (US$0.14)[1] for the third quarter of 2019. Net income per ADS (basic and diluted) totaled RMB3.60 (US$0.50)[1] for the first nine months of 2019.

Core net income per ADS (basic and diluted) (non-GAAP) of the Company totaled RMB1.32 (US$0.18)[1] for the third quarter of 2019. Core net income per ADS (basic and diluted) (non-GAAP) totaled RMB3.46 (US$0.48)[1] for the first nine months of 2019.

The Company expects total revenue for the full year 2019 to grow 20%-25% from 2018.

SHANGHAI,Nov. 22,2019 -- GreenTree Hospitality Group Ltd. (NYSE: GHG) ("GreenTree",the "Company","we","us" and "our"),a leading hospitality management group in China,today announced its unaudited financial results for the third quarter ended September 30,2019.

Third Quarter of 2019 Operational Highlights

As of September 30,the Company had 30 leased-and-operated ("L&O") hotels and 3,072 franchised-and-managed ("F&M") hotels in operation in 309 cities across China,compared to 30 L&O hotels and 2,528 F&M hotels in operation in 278 cities as of September 30,2018. The geographic coverage increased by 11.2% year over year.

During the third quarter of 2019,the Company opened 181 hotels,an increase of 35 comparing to 146 newly opened hotels in the third quarter of 2018. Among the hotels opened,3 were in the luxury hotel segment,20 in the mid-to-up-scale segment,92 in the mid-scale segment,and 66 in the economy segment. Geographically speaking,16 hotels were in Tier 1 cities[2],38 were in Tier 2 cities[3] and the remaining 127 were in select Tier 3 and other cities in China.

During this quarter,the Company closed 34 hotels,15 due to brand upgrade,and 13 due to their non-compliance with the Company's brand and operating standards. The remaining 6 were closed for property related issues. The Company added a net opening of 147 hotels to the portfolio.

As of September 30,the Company had a pipeline with a total of 652 hotels contracted for or under development,among which 47 hotels were in the luxury hotel segment,128 in the mid-to-up-scale segment,258 in the mid-scale segment,and 219 in the economy segment.

The average daily room rate,or ADR,for all hotels in operation,was RMB174 in the third quarter of 2019,an increase of 4.2% year-over-year.

The occupancy rate,or OCC for all hotels in operation was 85.9% in the third quarter of 2019,compared with 87.2% in the third quarter of 2018.

The revenue per available room,or RevPAR,which is calculated by multiplying our hotels' ADR by its occupancy rate,was RMB149in the third quarter of 2019,representing a 2.7% year-over-year increase.

As of September 30,the Company's loyalty program had more than 39 million individual loyal members and over 1,450,000 corporate members,compared to approximately 36 million and over 1,380,000 corporate members as of June 30,2019. The Company had approximately 93.1% of room nights sold directly.

[1] The conversion of Renminbi ("RMB") into United States dollars ("US$") is based on the exchange rate of US$1.00=RMB7.1477on September 30,2019 as set forth in H.10 statistical release of the U.S. Federal Reserve Board and available at https://www.federalreserve.gov/releases/H10/hist/dat00_ch.htm.

[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.

"We are pleased with our solid operating and financial performance in the third quarter,especially in the light of the weak service sector numbers observed recently. During the quarter,we further increased market share by exploring new regions and improving the quality of our hotels across all brands. We remain optimistic about the rest of 2019 despite the slowed-down growth momentum of the industry,aswe have already shownthat GreenTree's business model is able to deliver substantial growth through the variety of options for our franchisees and customers,while generating strong and sustainable cash flow for any future development." said Mr. Alex Xu,Chairman and Chief Executive Officer of GreenTree.

Third Quarter of 2019 Financial Results

Quarter Ended

September 30,

2018

September 30,

2019

September 30,

2019

RMB

RMB

US$

Revenues

Leased-and-operated hotels

59,029,825

72,530,518

10,147,393

Franchised-and-managed hotels

184,218,350

219,606,332

30,724,055

Total revenues

243,248,175

292,136,850

40,871,448

Nine Months

Ended

September 30,

2019

RMB

RMB

US$

Revenues

Leased-and-operated hotels

155,949,957

184,867,320

25,863,889

Franchised-and-managed hotels

509,286,550

617,493,389

86,390,502

Total revenues

665,236,507

802,360,709

112,254,391

Total revenues for the third quarter of 2019 were RMB292.1 million (US$40.9 million)[1],representing a 20.1% year-over-year increase. The increase was primarily attributable to the addition of 181 hotels to our current network,improved RevPAR and contribution from membership growth. Growth was partially offset by the renovation of 6 L&O hotels during this quarter. Total revenues for the first nine months of 2019 were RMB802.4 million (US$112.3 million)[1],representing a 20.6% increase.

Total revenues from leased-and-operated hotels for the third quarter of 2019 were RMB72.5 million (US$10.1 million)[1],representing a 22.9% year-over-year increase. The increase was primarily attributable to increasing RevPAR,moderate sublease revenue growth; and was partially offset by the renovation of 6 L&O hotels during the quarter. Total revenues from L&O hotels for the first nine months of 2019 were RMB184.9 million (US$25.9 million)[1],representing a 18.5% increase.

Total revenues from franchised-and-managed hotels for the third quarter of 2019 were RMB219.6 million (US$30.7 million)[1],representing a 19.2% year-over-year increase. Initial franchise fees increased by 81.3% year-over-year in the third quarter of 2019,primarily due to more economy hotels opened in the third quarter of 2019. The 16.2% increase from the third quarter of 2018 in recurring franchisee management fees and others was primarily due to the new openings,RevPAR growth of 2.7% as well as growth in central reservation system ("CRS") usage fees,annual IT and hotel manager fees,which in turn resulted from the increased number of hotels and hotel rooms in operation. Total revenues from F&M hotels for the first nine months of 2019 were RMB617.5 million (US$86.4 million)[1],representing a 21.2% increase.

Quarter Ended

September 30,

2019

RMB

RMB

US$

Initial franchise fee

8,425,643

15,277,606

2,137,416

Recurring franchise management fee

and others

175,792,707

204,328,726

28,586,640

Revenues from franchised-and-

managed hotels

184,350

219,332

30,056

Nine Months Ended

September 30,

2019

RMB

RMB

US$

Initial franchise fee

29,295

41,274,393

5,774,500

Recurring franchise management fee

and others

479,756,255

576,996

80,616,002

Revenues from franchised-and-

managed hotels

509,550

617,389

86,502

Total operating costs and expenses

Quarter Ended

September 30,

2019

RMB

RMB

US$

Operating costs and expenses

Hotel operating costs

74,507,927

87,200

12,210,529

Selling and marketing expenses

12,352

20,785,447

2,907,991

General and administrative expenses

24,229,964

39,891,061

5,580,965

Other operating expenses

99,935

53,736

7,518

Total operating costs and expenses

110,974,178

148,007,444

20,707,003

Nine Months Ended

September 30,

2019

RMB

RMB

US$

Operating costs and expenses

Hotel operating costs

202,460,194

246,216,861

34,447,005

Selling and marketing expenses

33,524,476

61,815,183

8,648,262

General and administrative expenses

69,781,751

105,391,932

14,744,873

Other operating expenses

278,527

161,710

22,624

Total operating costs and expenses

306,044,948

413,585,686

57,862,764

Hotel operating costs for the third quarter of 2019 were RMB87.3 million (US$12.2 million)[1],representing a 17.1% increase from the third quarter of 2018. The increase was mainly attributable to costs associated with the expansion of our F&M hotels including staff costs; higher consumables,higher depreciation and amortization,higher one-time renovation costs related to the renovation of 6 L&O hotels,as well as the operation costs of Argyle. For the first nine months of 2019,hotel operating costs were RMB246.2 million (US$34.4 million)[1],representing a 21.6% increase.

Quarter Ended

September 30,

September 30,

2018

2019

2019

RMB

RMB

US$

Rental

19,958,416

17,679,757

2,473,489

Utilities

5,376,412

4,231,308

591,982

Personnel cost

10,221,598

10,918,296

1,527,526

Depreciation and amortization

5,752,902

5,627,887

787,370

Consumable,food and beverage

5,039,899

7,760,883

1,085,787

Costs of general managers of

franchised-and-operated hotels

19,132,342

27,095

3,634

Other costs of franchised-and-

operated hotels

6,096,382

8,400,931

1,175,333

Others

2,929,976

5,042,043

705,408

Hotel Operating Costs

74,927

87,200

12,529

Nine Months Ended

September 30,

2018

2019

2019

RMB

RMB

US$

Rental

55,250,840

57,327,190

8,020,369

Utilities

15,591,749

15,291

2,372

Personnel cost

25,187

28,207,871

3,946,426

Depreciation and amortization

14,287,708

19,326,123

2,703,824

Consumable,food and beverage

14,079,286

21,529,959

3,012,152

Costs of general managers of

franchised-and-operated hotels

50,624

73,106,207

10,227,934

Other costs of franchised-and-

operated hotels

17,471,828

21,393,731

2,993,093

Others

9,939,972

10,048,489

1,405,835

Hotel Operating Costs

202,194

246,861

34,005

Selling and marketing expenses for the third quarter of 2019 were RMB20.8 million (US$2.9 million)[1],representing a 71.3% year-over-year increase. The increase was mainly attributable to the operation of the newly-added hotel brands including increased advertising and promotion expenses to improve our brand recognition and increased personnel,compensation and other costs. Selling and marketing expenses for the first nine months of 2019 were RMB61.8 million (US$8.6 million)[1],representing a 84.4% increase.

General and administrative expenses for the third quarter of 2019 were RMB39.9 million (US$5.6 million)[1],representing a 64.6% year-over-year increase. The increase was primarily attributable to increased IT Research and development expense,headquarter staff costs,legal,due diligence,M&A and other consulting fee,increase of share-based payment,as well as the G&A expense of Argyle. General and administrative expenses for the first nine months of 2019 were RMB105.4 million (US$14.7 million)[1],representing a 51.0% year-over-year increase.

Gross profit for the third quarter of 2019 was RMB204.9 million (US$28.7 million)[1],representing an increase of 21.4% from the third quarter of 2018. Gross margin in this quarter was 70.1%,compared to 69.4% a year ago. Gross profit for the first nine months of 2019 was RMB556.1 million (US$77.8 million)[1],representing a 20.2% year-over-year decrease.

Income from operations for the third quarter of 2019 totaled RMB152.6 million (US$21.3 million)[1],representing a year-over-year increase of 13.7%. The operating margin,defined as income from operations as percentage of total revenues,for the third quarter of 2019 was 52.2%,compared to 55.1% a year ago. Income from operations for the first nine months of 2019 totaled RMB405.8 million (US$56.8 million)[1],representing a year-over-year increase of 4.8%.

Adjusted EBITDA (non-GAAP) for the third quarter of 2019 was RMB177.1 million (US$24.8 million)[1],representing a year-over-year increase of 11.6%. The adjusted EBITDA margin,defined as adjusted EBITDA (non-GAAP) as a percentage of total revenues,was 60.6% in the third quarter of 2019,compared to 65.2% in the third quarter of 2018. Adjusted EBITDA (non-GAAP) for the first nine months of 2019 was RMB484.0 million (US$67.7 million)[1],representing a year-over-year increase of 16.5%.

Net income for the third quarter of 2019 was RMB102.2 million (US$14.3 million)[1],representing a year-over-year decrease of 28.4%. Net margin in the third quarter was 35.0%,compared to 58.7% a year ago. The year-over-year decrease was primarily due to losses on investments in equity securities and increase in total operating cost and expenses. Net income for the first nine months of 2019 was RMB363.2 million (US$50.8 million)[1],representing a year-over-year increase of 13.1%.

Core net income (non-GAAP) for the third quarter of 2019 was RMB134.8 million (US$18.9 million)[1],representing a year-over-year increase of 16.5%. The core net margin,defined as core net income (non-GAAP) as a percentage of total revenues,was 46.2% in the third quarter of 2019,compared to 47.6% one year ago. Core net income (non-GAAP) for the first nine months of 2019 was RMB352.9 million (US$49.4 million)[1],representing a year-over-year increase of 17.0%.

Earnings per ADS (basic and diluted) for the third quarter of 2019 was RMB1.01 (US$0.14)[1],representing a year-over-year decrease of 28.4%. Core net income per ADS (basic and diluted) (non-GAAP) was RMB1.32 (US$0.18)[1] for the third quarter of 2019,representing a year-over-year increase of 15.8%. Earnings per ADS (basic and diluted) for the first nine months of 2019 was RMB3.60 (US$0.50)[1],representing a year-over-year increase of 9.9%. Core net income per ADS (basic and diluted) (non-GAAP) was RMB3.46 (US$0.48)[1] for the first nine months of 2019,representing a year-over-year increase of 12.7%.

Cash flow. Operating cash inflow for the third quarter of 2019 was RMB188.3 million (US$26.3 million)[1],due primarily to improved operating performance across our hotel portfolio. Operating cash inflow for the first nine months of 2019 was RMB395.5 million (US$55.3 million)[1]. Investing cash outflow for the third quarter of 2019 was RMB615.0 million (US$86.0 million)[1],which was primarily attributable to purchases of short-term investments,purchases of property and equipment,loans to third parties and partially offset by proceeds from Proceeds from short-term investments. Investing cash outflow for the first nine months of 2019 was RMB1,016.5 million (US$142.2 million)[1]. Financing cash inflow for the third quarter of 2019 was RMB2.4 million (US$331.6k)[1],financing cash outflow for the first nine months of 2019 was RMB195.3 million (US$27.3 million)[1].

Cash and cash equivalents,restricted cash,short-term investments,investments in equity securities[4] and time deposit[5]. As of September 30,the Company had a total balance of cash and cash equivalents,short term investments,investments in equity securities and time deposit of RMB2,060.5 million (US$288.3 million)[1],as compared to RMB2,053.7 million as of June 30,primarily due to cash outflow due to acquisitions,and loan to third parties and franchisees.

[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.

Guidance

For the full year 2019,the Company expects growth in total revenues of 20%-25% compared to 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 future interim periods and 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 November 20,2019 (9:00 PM Beijing/Hong Kong Time on November 20,2019).

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

International

1-412-902-4272

Mainland China

4001-201-203

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 November 27,2019.

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:

10136236

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 hospitality management group in China. As of September 30,GreenTree had a total number of 3,102 hotels. In 2018,GreenTree ranked among the Top 12 worldwide in terms of number of hotels in "World's Largest Hotel Companies: HOTELS' 325",published by HOTELS magazine,and was as well the fourth largest hospitality company in China in 2018 based on the statistics issued by the China Hospitality Association.

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. The Company has further expanded its brand portfolio into the mid-to-upscale and luxury segments through a series of strategic investments. By offering diverse brands,through its strong membership base,expansive booking network,superior system management with moderate charges,and fully supported by its operating departments including Decoration,Engineering,Purchasing,Operation,IT and Finance,GreenTree aims to keep closer relationships with all our clients and partners by providing a brand portfolio featuring comfort,style and value.

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,

2018

2019

2019

RMB

RMB

US$

ASSETS

Current assets:

Cash and cash equivalents

1,264,025,785

428,700,947

59,977,468

Short-term investment

685,512,063

556,921,410

77,916,170

Investments in equity securities

307,693,782

219,089,283

30,651,718

Accounts receivable,net of allowance

for doubtful accounts

64,864,184

90,541,096

12,667,165

Amounts due from related parties

228,600

2,461,505

344,378

Prepaid rent

4,478,413

5,837,170

816,650

Inventories

2,547,729

1,501,785

210,107

Other current assets

53,969,039

61,394,719

8,589,437

Loans receivable,net

67,196,568

60,955,706

8,528,017

Total current assets

2,516,163

1,427,403,621

199,701,110

Non-current assets:

Restricted cash

3,300,000

22,285,620

3,117,873

Long-term time deposits

-

560,000,000

78,346,881

Loan receivable,net

39,352,863

89,090,553

12,464,227

Property and equipment,net

222,389,573

565,715,389

79,146,493

Intangible assets,net

27,213,391

261,856,305

36,635,044

Goodwill

5,787,068

48,540,659

6,791,088

Long-term investments

112,219,460

407,024,641

56,944,841

Other assets

85,523

88,055,910

12,319,474

Deferred tax assets

133,966

124,879,426

17,274

TOTAL ASSETS

3,007

3,594,852,124

502,938,305

LIABILITIES AND EQUITY

Current liabilities:

Short-term bank loans

60,000

60,000

8,309

Accounts payable

9,182,058

13,347,487

1,382

Advance from customers

36,370,325

37,547

5,206

Amounts due to related parties

285,578

1,041,109

145,657

Salary and welfare payable

42,767,219

38,770,181

5,424,148

Deferred rent

4,421,427

3,204,304

448,299

Deferred revenue

210,604

225,121,443

31,495,648

Accrued expenses and other current

liabilities

241,407,979

278,469,913

38,959,372

Income tax payable

104,988,638

89,275,446

12,490,094

Total current liabilities

710,008,828

746,449,430

104,432,115

Deferred rent

20,519,682

19,066

2,686,748

Deferred revenue

380,173,585

393,140,375

55,002,361

Other long-term liabilities

96,573,810

108,623,349

15,965

Deferred tax liabilities

43,538,624

127,972,289

17,903,982

Unrecognized tax benefits

169,619,409

206,531

28,847,955

TOTAL LIABILITIES

1,420,433,938

1,601,040

224,070,126

Shareholders' equity:

Class A ordinary shares

217,867

219,526,699

30,712,915

Class B ordinary shares

115,534,210

115,210

16,163,830

Additional paid-in capital

1,003,026,803

1,080,887

151,180,784

Retained earnings

252,617,450

411,095,935

57,514,436

Accumulated other comprehensive

(loss) income

62,367,692

78,192,101

10,477

Total GreenTree Hospitality Group

Ltd. shareholders' equity

1,650,968,022

1,904,943,832

266,511,442

Non-controlling interests

8,379,047

88,322,252

12,356,737

Total shareholders' equity

1,659,069

1,266,084

278,868,179

TOTAL LIABILITIES AND

SHAREHOLDERS' EQUITY

3,305

GreenTree Hospitality Group Ltd.

Unaudited Condensed Consolidated Statements of Comprehensive Income

Quarter Ended

Nine Months Ended

September

30,2018

September

30,2019

September

30,2019

RMB

RMB

US$

RMB

RMB

US$

Revenues

Leased-and-operated hotels

59,393

155,889

Franchised-and-managed hotels

184,055

509,502

Total revenues

243,448

665,391

Operating costs and expenses

Hotel operating costs

(74,927)

(87,200)

(12,529)

(202,194)

(246,861)

(34,005)

Selling and marketing expenses

(12,352)

(20,447)

(2,991)

(33,476)

(61,183)

(8,262)

General and administrative

expenses

(24,964)

(39,061)

(5,965)

(69,751)

(105,932)

(14,873)

Other operating expenses

(99,935)

(53,736)

(7,518)

(278,527)

(161,710)

(22,625)

Total operating costs and

expenses

(110,178)

(148,444)

(20,003)

(306,948)

(413,686)

(57,765)

Other operating income

1,865,788

8,390

1,113

27,933,277

16,995,685

2,377,783

Income from operations

134,139,785

152,578,796

21,558

387,124,836

405,708

56,769,409

Interest income and other,net

14,991,069

18,095

2,001

31,114,962

52,283,638

7,314,750

Interest expense

-

(735,927)

(102,960)

-

(2,402)

(296,795)

Gains (losses) from investment

in equity securities

3,091,278

(21,796,444)

(3,049,434)

(27,945,284)

54,040,607

7,560,559

Other income,net

36,723,048

-

-

36,048

2,690,742

376,449

Income before income taxes

188,180

148,101,520

20,720,165

427,017,562

512,664,293

71,372

Income tax expense

(46,288,024)

(46,994,932)

(6,574,833)

(104,913,469)

(150,211,254)

(21,015,327)

Income before share of loss in

equity method investments

142,657,156

101,588

14,145,332

322,104,093

362,453,039

50,709,045

Share of losses in equity

investees,net of tax

141,666

1,067,166

149,302

(948,358)

779,369

109,037

Net income

142,798,822

102,754

14,294,634

321,155,735

363,232,408

50,818,082

Net loss attributable to non-

controlling interests

358,464

939,576

131,451

384,831

3,271,890

457,755

Net income attributable to

ordinary shareholders

143,157,286

103,113,330

14,426,085

321,566

366,504,298

51,837

Net earnings per share

Class A ordinary share-basic

and diluted

1.41

1.01

0.14

3.27

3.60

0.50

Class B ordinary share-basic

and diluted

1.41

1.01

0.14

3.27

3.60

0.50

Net earnings per ADS

Class A ordinary share-basic

and diluted

1.41

1.01

0.14

3.27

3.60

0.50

Class B ordinary share-basic

and diluted

1.41

1.01

0.14

3.27

3.60

0.50

Weighted average shares

outstanding

Class A ordinary share-basic

and diluted

66,789,300

67,416,046

67,046

61,536,613

67,183,025

67,025

Class B ordinary share-basic

and diluted

34,762,909

34,909

36,802,409

34,909

Other comprehensive income,

net of tax

Foreign currency translation

adjustments

(2,685,649)

19,912

2,743,108

(1,641,908)

15,824,409

2,916

Comprehensive income,net of

tax

140,173

121,780,666

17,037,742

319,513,827

379,056,817

53,031,999

Comprehensive (gain)/loss

attributable to non-controlling

interests

358,452

384,754

Comprehensive income

attributable to ordinary

shareholders

140,637

122,242

17,169,193

319,898,658

382,707

53,489,753

GreenTree Hospitality Group Ltd.

Unaudited Condensed Consolidated Statements of Cash Flows

Quarter Ended

Nine Months Ended

September

30,2019

RMB

RMB

US$

RMB

RMB

US$

Operating activities:

Net income

142,822

102,754

14,634

321,735

363,408

50,082

Adjustments to

reconcile net income to

net cash provided by

operating activities:

Depreciation and amortization

7,263

11,069,474

1,548,676

17,012

26,890,288

3,090

Share of loss in equity

method investments

(141,666)

(757,717)

(106,009)

948,358

(469,920)

(65,744)

Gains from disposal of a

long-term investment

(36,048)

(309,449)

(43,294)

(36,294)

Interest income

(14,069)

(4,415)

(594,375)

(19,928,935)

(14,662,224)

(2,051,321)

Bad debt expense

623,470

10,663,023

1,491,812

1,173

5,910

792,410

(Gains) loss from

investments in equity

securities

(3,278)

21,444

3,435

27,284

(54,607)

(7,559)

Foreign exchange losses

(gains)

(3,559,864)

614,390

85,956

(4,174,717)

85,951

12,025

Share-based compensation

3,821,789

7,522,984

1,052,504

7,568,558

18,632,776

2,821

Income tax expenses related

to dividend distribution or

retained profits

-

4,689

579,304

-

11,940,633

1,670,556

(Gains) from the acquisition

of long-term investment

(1,344,212)

-

-

(1,212)

-

-

Changes in operating

assets and liabilities:

Accounts receivable

7,038,795

(6,451)

(922,178)

(12,429,842)

(30,379)

(4,261,564)

Prepaid rent

19,552

(2,338)

(289,651)

150,856

(1,358,757)

(190,097)

Inventories

265,681

(55,490)

(7,763)

1,103

1,304

155,757

Amounts due from related

parties

148,694

(1,899)

(276,299)

1,817

(1,996,450)

(279,314)

Other current assets

(693,699)

4,784,543

669,382

(27,059,650)

4,970,725

695,430

Other assets

-

4,267,763

597,082

-

(7,875,091)

(1,766)

Accounts payable

(68,022)

1,332,798

186,465

269,186

3,302,907

462,094

Amounts due to related

parties

148,655

(76,817)

(10,747)

629,357

755,531

105,703

Salary and welfare payable

(3,410)

(471,404)

(65,952)

(5,030,701)

(5,521,054)

(772,424)

Deferred revenue

28,497

5,676,928

794,231

78,150,381

10,502,629

1,372

Advance from customers

3,111,537

3,127,446

437,546

2,640,498

849,222

118,811

Accrued expenses and other

current liabilities

22,265,074

3,050,771

426,819

(3,341,591)

31,312,003

4,710

Income tax payable

31,644,131

11,452,280

1,602,233

(4,895,783)

(15,880,832)

(2,810)

Unrecognized tax benefits

(2,933)

7,789

1,072,064

44,414,222

36,577,122

5,328

Deferred rent

6,878,075

(681,471)

(95,341)

4,834,928

(2,532,739)

(354,343)

Other long-term liabilities

8,384,456,070

1,048

17,858,980

12,539

1,793

Deferred taxes

3,613,270

(2,297,390)

(321,417)

(10,956,896)

2,045

377,750

Net cash provided by

operating activities

199,967,104

188,257,305

26,338,165

402,306,073

395,491

55,496

Investing activities:

Purchases of property and

equipment

(1,609)

(33,518)

(4,855)

(114,555,864)

(47,828)

(6,157)

Purchases of intangible assets

(2,345,490)

-

-

(3,245,490)

-

-

Proceeds from disposal of

property and equipment

-

-

-

-

1,000

181,877

Acquisitions,net of cash received

(13,894)

(4,318,317)

(604,155)

(13,894)

(248,978,924)

(34,833,432)

Proceeds from disposal of a

long-term investment

89,803

-

-

89,803

-

-

Advances for acquisitions of

equity investees

(6,000)

(11,244,749)

(1,198)

(6,000)

(59,449)

(8,269,996)

Purchases of short-term

investments

(92,808)

(405,305,933)

(56,704,385)

(884,449)

(617,825,906)

(86,437,023)

Proceeds from short-term

investments

39,741,997

4,415

594,375

784,976,001

761,078,783

106,837

Increase in long-term

investments

-

(40,000)

(5,596,206)

-

(40,206)

Purchases of equity securities

(40,879)

(65,086,928)

(9,105,996)

(4,836,717)

(89,123,279)

(12,468,805)

Purchases of long term

investments

-

-

-

-

(247,740)

(34,620,471)

Proceeds from disposal of

equity securities

6,829

76,361,856

10,683,416

24,887,802

221,583,600

31,686

Increase of long-term time

deposits

-

-

-

-

(460,000)

(64,366)

Repayment from a related

party

-

220,000

30,103

-

337,279,750

47,187,172

Loan to related parties

-

(220,455)

(30,854,185)

(4,000)

(337,205)

(47,220,253)

Loan to third parties

(156,819,164)

(104,000)

(14,550,133)

(166,164)

(255,775,219)

(35,269)

Repayment of loan from third

parties

-

-

-

-

121,280,219

16,727

Loan to franchisees

(17,960,267)

(34,861,152)

(4,877,255)

(45,267)

(66,451,152)

(9,296,858)

Repayment from a franchisee

700,000

3,806

445,990

9,120,000

10,455,159

1,462,731

Net cash (used in) provided

by investing activities

(155,482)

(614,962,975)

(86,036,484)

(335,214,239)

(1,016,480,191)

(142,806)

Financing activities:

Distribution to the

shareholders

-

-

-

(200,021)

(208,814)

(29,103,882)

Income tax paid related to the

above distribution

-

-

-

(3,000)

-

-

Proceeds from NCI

-

2,000

331,575

-

12,000

1,190

Proceeds from IPO,net of

capitalized expenses

-

-

-

837,505,007

-

-

Payment for initial public

offering costs

-

-

-

(29,408)

-

-

Net cash provided by (used

in) financing activities

-

2,000

331,575

604,582,578

(195,814)

(27,692)

Effect of exchange rate

changes on cash and cash

equivalents and restricted

cash*

4,076

8,375,549

1,171,782

5,518,929

(64,704)

(9,052)

Net increase (decrease) in

cash and cash equivalents

and restricted cash*

49,801,698

(415,121)

(58,194,960)

677,193,341

(816,339,218)

(114,056)

Cash and cash equivalents

and restricted cash* at the

beginning of the period

792,355,308

866,688

121,290,301

164,963,665

1,325,785

177,397

Cash and cash equivalents

and restricted cash* at the

end of the period

842,006

450,986,567

63,341

842,341

* 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 and nine months period ended September 30,2019 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

Nine Months Ended

September

30,2019

RMB

RMB

US$

RMB

RMB

US$

Net income

142,082

Deduct:

Other operating income

1,783

Gains on investments in equity securities

3,278

-

-

-

54,559

Share of gain in equity investees,302

-

779,037

Other income,449

Add:

Other operating expenses

99,518

278,625

Income tax expense

46,024

46,932

6,833

104,469

150,254

21,327

Share of loss in equity investees,net of tax

-

-

-

948,358

-

-

Interest expense

-

735,927

102,960

-

2,402

296,795

Share-based compensation

3,643,465

1,360

7,558

19,047

2,772,787

Depreciation and amortization

7,263

7,172,700

1,497

17,012

22,514

3,911

Losses on investments in equity securities

-

21,434

27,284

-

-

Adjusted EBITDA (Non-GAAP)

158,053

177,054,402

24,821

415,558,618

484,032,932

67,718,699

Quarter Ended

Nine Months Ended

September

30,082

Deduct:

Government subsidies (net of 25% tax)

1,804

-

-

11,362,580

5,981

706,379

Gains on investments in equity securities

(net of 25% tax)

2,459

-

-

-

40,455

5,419

Reimbursement related to the ADS program

-

-

-

9,648

-

-

Other income (net of 25% tax)

27,542,286

-

-

27,286

2,018,057

282,337

Add:

Share-based compensation

3,787

Losses on investments in equity securities

(net of 25% tax)

-

16,333

2,076

20,963

-

-

one-offsellingexpense

-

4,969

602,567

-

4,567

one-time consulting fees for M&A (net of

25% tax)

-

210,000

29,380

-

1,153,650

161,402

Income tax expenses related to dividend

distribution

-

4,556

Core net income (Non-GAAP)

115,710,062

134,822,210

18,321

301,506,742

352,855,214

49,366,259

Core net income per ADS (Non-GAAP)

Class A ordinary share-basic and diluted

1.14

1.32

0.18

3.07

3.46

0.48

Class B ordinary share-basic and diluted

1.14

1.32

0.18

3.07

3.46

0.48

Operational Data

As of September

30,2018

As of September

30,2019

Total hotels in operation:

2,558

3,102

Leased-and-owned hotels

30

30

Franchised hotels

2,528

3,072

Total hotel rooms in

operation

209,463

245,705

Leased-and-owned hotels

3,857

3,724

Franchised hotels

205,606

241,981

Number of cities

278

309

Quarter Ended

As of September

30,2019

Occupancy rate (as a

percentage)

Leased-and-owned hotels

72.60%

73.10%

Franchised hotels

87.50%

86.10%

Blended

87.20%

85.90%

Average daily rate (in

RMB)

Leased-and-owned hotels

210

224

Franchised hotels

166

173

Blended

167

174

RevPAR (in RMB)

Leased-and-owned hotels

152

164

Franchised hotels

145

149

Blended

146

149

Number of Hotels in Operation

Number of Hotel Rooms in

Operation

As of September

30,2019

As of September

30,2019

Luxury

/

21

/

4,739

Argyle

/

21

/

4,739

Mid-to-up-scale

82

171

8,930

17,147

GreenTree Eastern

74

100

8,270

10,691

Deepsleep Hotel

1

2

61

161

Gem

2

22

170

2,002

Gya

1

18

70

1,566

Vx

4

19

359

1,544

Ausotel

/

10

/

1,183

Mid-scale

2,118

2,290

181,373

193,213

GreenTree Inn

1,824

1,986

158,174

169,889

GT Alliance

294

297

23,199

22,951

GreenTree Apartment

/

7

/

373

Economy hotels

358

620

19,160

30,606

Vatica

117

122

8,698

9,022

Shell

241

498

10,462

21,584

Total

2,102

209,705

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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