Selina Yang: Thank you, Alex. Also, before I answer the question, what’s the EBITDA margin for the next 2 years? I would like to share what effects to actually impact our EBITDA margin. Actually before the COVID-19, our EBITDA margin was as high as about 50%. And for the past 3 years, our EBITDA margin ever reached the lowest point at about 25% for a series of quarters. So there are 3 material factors that reduced the lower margin. The first one is the consolidation of the joint ventures. And the second reason is due to the COVID-19, the lower revenues and the higher cost, stable cost and especially the rent cost and our human resource costs. And the third reason is that we opened more leased operating hotels, especially in the mid — of the middle term scale segment in the Tier 1 and the Tier 2 cities.
For the first reason, the consolidation of joint ventures affected about 10% of our EBITDA margin. And for the leased, operated hotels newly opened in the past 2, 3 years, another 10% EBITDA margin was reduced, and the remaining delivery amount of the margin decrease was about due to the COVID-19. So we’ll be looking forward through the year of 2023 and the next year. First, we have to consolidate our joint venture, and we return to normal business when the COVID-19 passed their way. And also, for the newly opened hotels will be past the ramp-up period and gradually return back to the normal operation. So we expect the EBITDA margin to recover about 10% to 15% in the year of 2030. So that means from the 25% plus, another 10% to 15%. So for the year of 2024, it’s a bit hard for us to go and to becoming the sector members right now.
But we believe the operation and the industry will recover more — better and better. So following this, we may gradually return to the normal level of EBITDA margin. That is above 50% in the next 2 or 3 years.
Operator: The next question comes from of Oriental Value.
Unidentified Analyst: Just two quick questions. So the first question is that can you share about current profitability of the restaurant business and the second question is that what’s the current business outlook for the upcoming years?
Selina Yang: We cannot hear you very clearly. Would you repeat your question again?
Unidentified Analyst: Is it better now?
Alex Xu: Yes, it’s better.
Selina Yang: It’s better.
Unidentified Analyst: Yes. So yes, sorry, I repeat my questions. So my first question is that can you share about the current profitability of your restaurant business? That’s the first question. And the second question is that what’s the current dividend outlook for the upcoming years?
Alex Xu: So Don, we’re trying to understand, your first question is that, what’s the profitability level for the restaurants, am I correct?
Unidentified Analyst: Yes.
Alex Xu: Okay. What’s the second question?
Unidentified Analyst: The second question is the dividend outlook of the company, the dividend.
Alex Xu: Got it. Thanks, Don. The — we don’t have the fully audited numbers of the restaurant for the 2022, but I do believe that we have maintained a healthy, I think, cash flow for the restaurants. So we will get to the — we’ll publish the number as soon as we have them, okay? So with regard to the dividend as soon as possible and our current focus is still growing the business and that with a little bit uncertain transition period that we are a little bit uncertain about impact. But as soon as I think the picture is clear and more stable that we’ll plan to resume our previous dividend.
Unidentified Analyst: Okay. Understood. Yes. So for the restaurant margin, right, so I understand that the audited number for last year is not final last year. But then how about for this year for 2023, what’s your projection?
Alex Xu: So we have a — when we have — when we made the acquisition, and we have full valuation by the, I think, most reputable valuation firm and that there is a number of assumptions and projections for the restaurant business. Do you have the numbers? With you on the — and I think that we projected them the 2023, I think that 20% to 30% gross profit margin. And we’ve — not with too high of the revenue because at that time, we were not very clear with where the pandemic is going to be. And so we will, Don, report you the numbers, I think, separate fund cost once I have those on hand.
Operator: The next question is a follow-up from Dan Xu of Morgan Stanley.
Dan Xu: Alex, regarding the F&B business, can I have one follow-up question? Can you elaborate a little bit more on the synergies between the F&B business and the hotel business? For example, are you — because you — I think you explained to us very clearly about organically, each business, how would they perform, grow organically? But is there any synergy between the business? For example, by having Da Niang Jiangsu and Bellagio, you can channel the customers to your hotel or by branding your Da Niang Jiangsu GreenTree brand. It will help to bring more clients to Da Niang Jiangsu — or maybe you can have a Da Niang Jiangsu, a GreenTree hotel lobby, for example. So just trying to understand is there any synergy or maybe it’s because of the membership sharing. For example, you can combine the members and you can have more target customers for your hotel or your SMB business. Just trying to understand if there’s any, okay, Alex.
