Asmallworld AG (ASWN) Earnings Call Transcript & Summary

Good day. And welcome to ASMALLWORLD 2022 H1 earnings call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Mr. Luescher. Please go ahead.

Thank you, Jennifer. I would like to welcome everyone to this earnings call for ASMALLWORLD's 2022 H1 results. My name is Jan Luescher, I'm the Chief Executive Officer, and I will lead you through today's call. As always, I will touch on the operational and financial highlights for the first 6 months of this year. and I will provide additional information to put those results into context, so you can better understand the line numbers. And at the end, we will also open up for a Q&A session, and I will answer any open questions that you may have at that point. I also want to point out that I just got in from the West Coast from the U.S. last night, I'm a bit more tired than usual. So if I'm a bit slow, or not as quick as usual, I hope you can forgive me today. But let's jump into the presentation that I'm using to illustrate our performance is called 2022 H1 Results presentation. And it is available for download on our corporate website. So if you have not yet downloaded this presentation, I recommend that you do so now. It will make it easier for you to follow my explanations. You can find the link to the presentation in this morning's press release or you can go straight to our corporate website. The URL is www.asmallworldag.com. And once you're on the site, you will have to navigate to the section called Investors and to the sub-menu Investor Documents. At the top of the list, you find the document called 2022 H1 results presentation. which is the document I will use for this call. Great. So let's get started with the presentation. On Page 2, you will find our mission statement as usual. ASMALLWORLD is the world's leading travel lifestyle community. We're focusing on experiences, the modern-day definition of luxury. And we inspire our members to travel better, experience more and make new connections. Also as a recap on Page 3, a brief overview of all our businesses of our group. So in essence, these -- all our travel and lifestyle ecosystem consists of 7 businesses. At the center is ASMALLWORLD our social network, which attracts an affluent customer segment with a high willingness to spend on travel and experiences and this audience then creates demand for our other businesses like ASMALLWORLD Events, travel arrangements from ASMALLWORLD Private or hotel bookings from ASMALLWORLD Collection. In short, with the ASMALLWORLD social network, we attract our customers and then we aim to increase our share of wallet with those customers with our other businesses. So much for a quick introduction, so let's jump now into our latest financial results on Page #5. In short, year-on-year, our revenue was down compared to the first half of 2021, but our profitability went up during the same period or comparing those 2 periods. As I said, sales declined exactly by 23% from CHF 9.5 million during the first 6 months of 2021 to CHF 7.4 million during the first 6 months of this year. However, this is not a complete shock and not something that we are worried about because much of this decline was anticipated due to a combination of factors. First of all, the sales period, so the Prestige membership are pretty much best-selling product shifted to later in the year. So in 2021, we had 2 out of our 3 special offers during the first half of the year and in 2022. So this year, the second sale was happening a bit later, so it was split between June and July. So it was a more even split between the half years than it was last year where everything happened during the first 6 months. Then second, in 2021, First Class & More our subsidiary sold a record amount of flights and upgrade options for customers traveling to Dubai, which was extremely popular during the pandemic. This year, as other destinations were opening up again the demand for Dubai travel went down and First Class & More experienced lower demand for their services for people traveling into Dubai, so which was also expected. And lastly, our reporting currency is the Swiss franc, which has appreciated against most other currencies and especially against the euro, which sort of led to a lower contribution from other currencies to demand by about 5% to 7%. So all these factors combined resulted in lower sales during the first 6 months compared to the first 6 months of last year. However, as I said, we are not worried about that at this stage. And as you will see later, we're still maintaining our guidance for the full year. In terms of bottom line, we have very positive news to share. So EBITDA increased by 6% to CHF 1.4 million compared to 1.3% during the first 6 months of 2021. So this was a record year for ASMALLWORLD as the first 6 months of 2021, where there were a previous record in terms of EBITDA this is the highest EBITDA ever recorded for a 6-month period for our company, which is great. And net income even increased by 29%, so to CHF 1.0 million compared to CHF 0.7 million during the first 6 months of 2021. So the business in terms of bottom line looks very healthy. Earnings per share came in at CHF 0.08, and our cash position stood at CHF 3 million as per end of June. So overall, although it doesn't look great as a headline number to have lower sales compared to last year, we are quite happy with these results, especially the bottom line, and we also believe we can still deliver the guidance figures that we have set out for the full year. Moving on to Page 6, where we can -- where we put the KPIs in context of the last 3 half-year results. So as you can see for the first 6 months -- the first 6 months of 2021 were a bit of an anomaly like in the left-hand chart, they were really high compared to the other half years. And so I'm going down to CHF 7.4 million appears a bit more even. Can also see during the last -- during 2021, it was extremely skewed, the sales towards the first half of the year with CHF 9.5 million during the first half and only CHF 6.1 million during the second half. So we expect this year to be a lot more balanced. In terms of members, we increased our member base by 2% compared to the first half of 2021. This is a bit slower than what we would like it to be, but we are working on initiatives to accelerate this growth again, which we will cover at a later stage. And in terms of EBITDA the first 6 months of 2022 were, as I mentioned, a record 6 months even higher than previous record of CHF 1.3 million during the first half of 2021. So we're happy about that. Now let's move on to Page 7 and have a look at the operational highlights, which led to these results and other important events than the first 6 months. For me, the most important event was actually that we have made the final payment for the acquisition of First Class & More, which was spread over 3 years with its earn-out payment structure. This was a payment of CHF 3.5 million, and it marks the milestone for the company as ASMALLWORLD is now completely self-funding for the first time, so it no longer requires any external financing for its operations. So obviously, this was a big worry also during the pandemic that we have enough money to keep going. And now with this big payment out of the way, we can be sure that we do have enough money to go forward. Even if we don't get any other external financing, we can fund our operations from now on. And this, of course, will give us a bit more flexibility to make strategic investments where we see fit and sort of which we will do over the next 12 months. At the same time, we will continue to invest -- or we have continued to invest in the long-term revenue potential of the group, and there are actually a few things that I want to mention here specifically. The ASMALLWORLD Collection grew sales by about of 400% compared to the first half of 2021. So this new business is starting to contribute positively to the bottom line, which is great to see. Then we had the acquisition of a 10% stake in Global Hotel Alliance, which we had announced at the end of 2021. This was completed in May and the payments have been made so we have now fully closed that transaction. And the partnership is now fully operational. So that means Global Hotel Alliance discovery Elite members can now join ASMALLWORLD for free. We started that in July. And at the same time, ASW can now onboard hotels for GHA. So we are basically the vehicle for independent hotels to join Global Hotel Alliance. And in addition, we have signed a new partnership, which we announced in July with Emirates Skywards the miles program or loyalty program of Emirates. And that was -- has been in the making for almost a year. So with this partnership in place, we will start to offer our Prestige and Signature memberships with Skywards -- Emirates Skywards miles starting September, and we expect actually quite a bit a boost in sales coming from these new products. In addition, we continue to focus on our cost position. So even coming out of the pandemic, we haven't -- we have kept an eye on our cost. And as a result, direct expenses were down 42%, and we also managed to keep needed increases to our, for example, personnel expenses at a reasonable 8%. So we maintain that cost focus and make sure that our cost base is not going up too quickly as we're coming out of the pandemic. So these are the highlights. And after those, again, I move on to the reporting of the 2 business segments, Subscriptions and Services. At this stage, [indiscernible] to have just joined the call. You can download the presentation I'm using here from our investor website. You will find the link in today's press release or you can go straight to our corporate website. The URL is www.asmallworldag.com and once you're on the site, please navigate to Investors and Investor Documents from the menu and at the top of the list, you will find a document called 2022 H1 results presentation, and that's the one we're going through right now. So now moving on to Page #9 and the highlights for the Subscription segment. As mentioned earlier, we had to cancel lower sales from the Prestige membership. As a result, overall sales for the segment were down by 17%. However, EBITDA improved by 20% to CHF 0.8 million. This corresponds to the margin increase of 5 percentage points to 16%. I also want to mention here that this is also partly due -- this increase in EBITDA margins is also partly due to accounting rules so which require us to capture the revenue from our membership over a 12-month period. So basically, all the big Prestige sales we did in the first half of 2021, continuing to have a positive effect on the 11 months following after it. So you could almost say there is a bit of margin overstating -- overstated for the months following that because we didn't have the cost for the new membership sales. So just to be very transparent here. And then we also continue to invest in our app and our back-end services for the app, which obviously is the backbone of what we're doing. So we pushed that. We also increased the tech team a little bit strategically where we needed support. And one big thing is along Apple Pay, which I'm going to mention in a second. And also for completeness here, the member base grew, as mentioned earlier by 2% to about 63,837 members at the end of June 2022. All right. So Page #10 gives you an overview of where we stand with the ASMALLWORLD Events. And this slide, I think I've shown in one of the last few reports, I wanted to go back to it. In-person events are very important for us. They are a key driver for sign-ups for us -- to ASMALLWORLD. So they are an important indicator to see how well we are doing with attracting new members. Unfortunately, due to the restrictions from the pandemic, Events were drastically reduced during 2020 and 2021, as you can see on the slide as well. To compensate for the lack of in-person events, online events were introduced in 2020. And while we had some success with those events, especially during the pre-pandemic it has become clear that now we're coming out of the pandemic and out of those restrictions that members prefer in-person events, and our focus is now fully on ramping up those in-person events again. In 2022, we will see a substantial increase in those in-person events. However, expected number of events for the year will probably only reach about 65% of 2019 levels. So we are still behind the prepandemic levels. However, we will continue to drive these events further and the goal is to get closer to 2019 levels for 2023. As mentioned, our continued investment in the apps and Page 11 shows one important new feature, which we'd added during the first 6 months of 2022. We had finally added enough purchases, which means members can now purchase their membership directly from within the app. This new feature simplifies purchases of the annual membership and also encourages impulse buying, which is so much easier. Now just have to hit your -- the button on the phone. I guess most of you will be familiar within that purchases. It's a very simple process. We've seen that user adoption so far is fairly promising. I mean it hasn't been available for too long. I think it's becoming close to 2 months. And we are expecting that in-net payments will constantly increase over the next month in terms of share of how people pay for their membership. And one positive effect of this new feature in addition to incremental sales is that renewals are now managed through the Apple subscription system which should lead to a situation where we will have fewer disputes coming from auto renewal and fewer negative comments about people who had their membership renewed because we believe that people using the Apple subscription system will be familiar with how it works. And they will be familiar with how to unsubscribe or that they are in a subscription state where they will be automatically renewed. So we'll continue to monitor this. But in short, we believe more incremental sales and fewer negative comments about renewals coming from this. On Page 12, I would like to talk about the new partnership that we have entered with Skywards Emirates -- Emirates Skywards, the other way around, the loyalty arm of Emirates Airlines. After almost a year of negotiation we have finally signed a deal with Emirates, which allow us to offer Emirates Skywards miles with our popular Prestige and Signature memberships. This means that Emirates will be now the third option customers can choose from next to Miles & More and Etihad. Starting September, we will offer our Prestige membership 250,000 Emirates Skywards miles for EUR 5,200 to the same price as we're offering for Miles & More and Etihad. And the Signature membership will be reconfigured to offer 500,000 miles from either Emirates or at Etihad for a price of EUR 9,990. Previously, the signature membership was only offered with Etihad miles, and it was 1 million miles but we have now decided that we move to 500,000, which is the max that Emirates wanted to do, and we offer Emirates and Etihad at that price. So given the reach of Emirates, we hope that these new memberships will have the potential to drive sales quite significantly for the second half of the year, and we expect quite a bit of a boost from these new products. Speaking of partnerships, Page 13 provides a quick overview of where we stand with our partnership with Global Hotel Alliance or GHA. As a recap, GHA is the world's largest alliance of independent hotel brands and it has strong brands in its portfolio like [indiscernible] Anantara, Mikki Beach and has over 800 hotels and over 21 million customers. ASMALLWORLD acquired a 10% stake in GHA in December, and the transaction was completed in May with a final payment of $3.5 million in cash and a 3% stake in ASMALLWORLD . So GHA is also a shareholder in ASMALLWORLD now and also Chris Hartley, the CEO of Global Hotel Alliance, has joined the Board of ASMALLWORLD in August -- in June actually already. Okay? In July, we started to offer a complimentary ASMALLWORLD membership to all GHA Discovery elite members. Those are GHA Discovery customers who have platinum or titanium status. The communication is still ongoing after a first email in July. And so far, we had a low 4-digit number of members joining ASMALLWORLD, but we are sure we can drive that number up. We also have to engage NH the Spanish hotel chain that joined GHA for the communication. They currently control their own e-mails and their own communication. So we still have to get to that stage where they are also sending out e-mails about this partnership to their customers, which we expect to happen later this year. In addition, ASMALLWORLD Hotels & Resorts, a newly created soft brand within the GHA portfolio, is ready to recruit independent hotels for the alliance. So we set up a sales structure here and a structure to onboard these hotels, and we expect first sign-ups before the end of the year. So there are many conversations happening right now, and we will obviously do press releases as soon [Audio Gap] sales, but we expect them to happen closer to the end of the year. But in short, transaction completed and partnership is finally up and running with GHA. Good. We're now moving on to the highlights for the Services segment on Page 15. Here, sales for the segment have declined by 31%. So this is primarily driven by slower sales, First Class & More's flight and upgrade services to Dubai, which I had mentioned earlier, which have been very popular during the pandemic because Dubai was pretty much one of the only destination that was open. And so there was a huge demand. Now with travel patterns reversing and Europe travel becoming more popular and moving away from Dubai, we saw the demand for those products decline compared to the first half of last year. So that was probably anticipated. And at the same time, EBITDA from the segment decreased by 7% so the -- while the margin for the segment actually increased by 6 percentage points from 18% to 24%. On the positive side, from the Services segment, the ASMALLWORLD Collection started to contribute positively to the bottom line, and we'll talk about that on the next few pages. So Page 16, you will know that we had started the ASMALLWORLD Collection right at the start of the pandemic. So in -- I think it was June or July 2020. And 2020 and 2021 were, of course, difficult years for travel. So we pretty much didn't have that [indiscernible] sales coming from our new hotel booking engine. However, we used the downtime to make a lot of improvements to usability and increased the hotel portfolio from around 500 hotels to over 1,500 today. And we also continue to market the ASMALLWORLD Collection as we go to hotel booking engine for our members within our social network. And one new feature that I have mentioned previously on these calls and that we're starting to leverage now to [ spec ] the world about the collection, our influencer partnerships and the flexibility with how we integrate influencers into the collection to customize the platform for them. And I wanted to present to you what that looks like over the next 3 pages. So on Page 16, you can see a landing page for an influencer of the ASMALLWORLD Collection. So where you would usually see the video for the collection is now a photo and an introcopy from the influencers. So they have a special link to link to the collection. And instead of bringing up the regular page, this page will show. Given this example, you see the example with Voyagefox, which was our first influencer we worked with but we by now have like other pages that look similar, but that are for other influencers. So you see the copy, the photo and so on. So it gives you that extra personalization when they send their followers to the ASMALLWORLD Collection. On Page 18, you can also see the favorites of Voyagefox. So if you basically pick those hotels as our favorite hotels. And she also added her own images from these hotels as the cover images to give it this extra level of personalization. If an influencer doesn't provide an image, it will just default back to the regular image that this is all optional. But in this case here, you can see how it really feels like she is working closely with us, and this is very personalized, which followers like. And on Page 16 (sic) [Page 19], you see the hotel detail page on a personalized level, with batch or a logo from the influencer to show that this is a logo that they like. Influencers can also add a quote for the hotel, which is there in the middle in gold and with signature. So to provide followers with their take on the hotel and also at the bottom, you can see there are additional photos that the influencer has provided. So really to adding at that extra level of customization for their favorite hotels. And in terms of the business sort of deal with these influencers, we provide them or we give them 25% of all the commissions generated from their followers. So that's basically us paying them for spreading the words and bringing new customers to ASMALLWORLD Collection. So far, we have 4 influences we're working with, and we will probably ramp number up further over the next few months as we enter new partnerships with other influencers. So that's a quick overview of where we stand with that tool. And in terms of what that means in terms of bookings. On Page 20, you can see the booking volume generated in an indexed level by quarter since the beginning of 2021. As you can see that we saw a real boost in bookings for the first quarter, we see in the second quarter. So it's slowly starting to pick up, even though it's from a low base. So compared to the first half of 2021, we have 4x more booking volume. And what's nice to see is that the stickiness is actually quite good. Of all our customers, 41% of customers have already booked the second time, which we see as fairly promising. So that means they must have had a good experience the first time around that they're coming back, which is great. And obviously, as we said, we continuously will promote the collection within the ASMALLWORLD community and the influencers will promote it beyond the community. And we're, at the same time, adding more hotels and improve the user experience as we go. So we expect more to come from Collection, still small base, but the important thing is it's growing. And for the first time, there is now a positive contribution to the bottom line of our business here from -- coming from this new business. Now after looking at the Subscriptions and Services segment in a bit more detail, we move on to the consolidated financials on Page 22. So let's start with the income statement. I think most of it we've actually covered here already. So net sales down by 23%, direct expenses also down by 42%, so a lot more than sales, which is great. R&D spend has gone up quite a bit as we're investing more into the platform and so to some increase in the tech team again. Other operating expenses is probably worth touching on for a second. This went up primarily to due to higher legal and consulting costs related to the acquisition of a 10% stake in Global Hotel Alliance, so that explains most of the difference there. And further down, the financial result improved due to the exchange rate impact on the outstanding payment for First Class & More. So that's why there is a positive contribution there, all leading to a net result increase of 29%. On 23, we have the first part of our balance sheet. Starting at the very top, we see the cash position of CHF 3 million. It decreased by CHF 2.2 million. The decrease was primarily due to that large payment we made -- last payment of CHF 3.5 million related to the acquisition of First Class & More. So that probably contributed to the majority or that's the biggest reason why this number is down. What's probably also worth mentioning is receivables from Services temporarily increased to open invoices for ASMALLWORLD Hospitality. Hopefully, they will all be paid in Q3 that year. And in terms of financial assets, you see that one growing quite significantly. This is due to the 10% stake in GHA that we now have on the balance sheet, which is under financial assets. So this is that position that has now gone into the balance sheet. Moving on to the other side of the balance sheet on Page 24. So here, looking at the movements, short-term provisions. So the fourth line, we see that we had CHF 3.7 million in -- during last year so that basically was the payment that we expected to make for First Class & More, which has now been made. So this position is now gone, basically. Long-term financial liabilities have now gone up because we took out a bank loan to the amount of CHF 4 million to pay for the GHA acquisition as we pay for the GHA stake so that increased by CHF 4 million. And equity in the end sort of which is negative because of our accounting practices as sort of depreciated goodwill right away. So it's getting sort of it's being less negative, right? So as we get more profitable and increasing. So it's basically our assets. But that's the short overview over the balance sheet. And as for a cash flow statement on Page 25, operating cash flow decreased. It's actually quite a substantial decrease from CHF 4 million to CHF 1 million. However, the CHF 4 million was never a realistic number that we had during the first half of 2021. There were a few reasons why this was so high. For example, we had outstanding invoices for First Class & More, which is probably the biggest factor. And then we had another few working capital changes. So the realistic number or the number was probably never CHF 4 million, but actually like closer to sort of CHF 2 million, CHF 2.5 million. So in that sense that change is actually quite less drastic, and it evens out if you look at the full year numbers. Page 26. The second part of our cash flows are here, you can see the effect of the acquisition of the GHA stake. On the outflow for investment of financial assets, you will -- I just want to make sure I'm saying the right thing. So yes, you can see 2 things. You can see the payment to First Class & More, and you can see the payment for the GHA stake. So overall, that led to an outflow of CHF 7 million from actually investing activities. So there's those 2 factors combined. And on the financing side, you can see the CHF 4 million that we have received from bank loan, which then led to CHF 3.9 million of cash inflow from financing activities. And so if you look at the net effect of all of that net cash has actually decreased by CHF 2.2 million, which we had seen earlier leading to a cash balance of CHF 3 million by the end of June. So in short, also maybe here as a voiceover our cash position is actually comfortable. I said we're self-funding now. So there's actually money coming into our bank accounts every month and the terms of the bank loan are quite favorable. So we're paying low interest, and we paid back over a 5-year period. So we're pretty sure we're not going to have any problems with paying back that bank loan. So we feel very comfortable with where we are, and we don't foresee that we need any financing over the next few years except for if we were to make another acquisition of a substantial size, but this is currently not planned. So we're happy with the financing that we currently have in the business. To conclude, I'd like to give you a brief outlook for the business on Page 28. So we believe that we continue to see a gradual improvement of the market environment post COVID, and this will also gradually increase the demand for events for social network, and we expect a slow but steady increase in sales for those -- that part of the business. We also expect a boost for our Prestige and Signature sales from the new memberships with Emirates Skywards' miles which will go on sale in September. So we have quite high hopes that this will be a significant contributor to our H2 numbers. And in addition, we continue to position the ASMALLWORLD Collection as our go-to hotel booking engine for our members, driving bookings from within the membership and externally with the influencer partnerships, as I mentioned earlier. And we will also further develop the partnership with GHA and expect to sign up first set of hotels with the ASMALLWORLD Hotels and Resorts soft brand before the year-end. So this is basically the same focusing on right now. And with that, moving to Page 29, we've also decided to maintain the guidance for the year. We were probably slightly behind in terms of sales right now. However, with the boost from the Emirates products, we believe that we can catch up. And we believe that we will reach the sales target. And we also believe that we can reach the EBITDA target. For the membership base, we slightly reduced our target. We've seen that the impact from GHA is a bit slower than what we had anticipated. We have to ramp that up, but there's quite a bit of lead time to get everybody aligned on the GHA side, especially with the complexity of the separate mailing list of NH. So we have to make sure that we line that up, that's a bit of lead time to get the full effect of that. So that might move a bit further into the future than what we've originally anticipated. So but this is where we are, a quick overview of where we stand and what we think will happen in the second half of the year. And with that, we can now move on to the Q&A section. So Jennifer, I would hand it over to you and to any questions.

[Operator Instructions] And we'll go first to Marie-Therese Gruebner with HAIB.

Yes. Good afternoon, Jan. I would like to understand better where you see the potential for the Collections business. I mean, it's picking up nicely and traction is already contributing. Can you give us a sense of your midterm outlook, if I may call it pay for this business in terms of revenues and margins?

Yes, it's -- so in words, probably much more than we have today. Because I think we could probably have another 4x for like let's say, in 2 years' time, it hopefully doubled for next year. And in terms of what that means for the business and the contribution it will never be a strong top line driver because the way we account for that business is we basically only account for the 10% -- 10% to 15% commission that we get from the hotels. So it's somebody like books hotel for EUR 1,000, we get somewhere between EUR 100 and EUR 150 commission on that booking. And so we account for that commission. So that means they're not going to be massive amounts quickly. However, the contribution that we're getting from that business is fairly high or the margin. So the impact will probably be felt much more on the bottom line than it will be felt on the top line. And so that's conceptually how we think about it and how you probably have to think about it. Is it -- is it how significant can it be? Well, I mean, I would hope that in a year from now, have something like probably like 500,000 coming from this business with sort of 300,000 going to the bottom line, something like that, would be sort of numbers that I have on top of my head on an annual basis as sort of the goal for next year.

Okay. Great. That's pretty helpful. And then secondly, I had another question regarding, well, of course, potential for the Global Alliance partnership. You're saying you already think there was 4,000 members, right? If I understood correctly, that has now signed up. I mean, what do you expect realistically in terms of P&L impact within the next 5 years from this partnership. I think it's going to probably be an impact on your Services business because the membership is for free, but mean how -- can you give us like some guidelines on what would be your blue sky scenario, let's put it this way.

Yes. It's unfortunately a bit hard to predict. So as you mentioned in your question, they're not paying for the membership, right? So then there is no fee from the membership as they come across. However, they are very active travelers because they have to have a platinum or titanium status with GHA, which you will only get if you travel a lot, right? So like there's a confirmed spend behind those customers. So when they come across, we hope that we can actually sell them services, as you rightly pointed out, maybe they will book hotels with us. I mean other hotels than GHA, right? They need to book them somewhere. So hopefully, they can book them with us. So that would mean revenue for the collection or they purchase one of our Prestige or Signature membership right, which if they're interested in the miles or the benefits they come with that. Or they attend events and we basically sell them event. So however, how -- what the split exactly is extremely hard to anticipate. And we just have to assume that there is a positive impact, but it's extremely hard to model. In terms of bringing members across from GHA to ASMALLWORLD, it's like I mentioned earlier, I had hoped that this will happen quicker than it did. So what we see now is that GHA's customer base is split into GHA and NH. So you almost need to address them separately because the mailing list haven't been combined. There's a lot of unsubscribes. So the people that you can actually not reach any more, send e-mails to and people will need multiple sort of touch points to see that they can come across. So, so far, for the people that we have been able to reach on the GHA side, we had sort of a conversion of about 2% at this stage, which isn't bad, but it's like sort of far off from the 10% that we would like to get to in the end. And as I said, this is only a subset because we haven't been able to address the NH side of the GHA members. This is why I've gotten a bit more cautious on how many of them we can actually get across. And so I know this is not directly answering your question, but it's sort of just providing a bit more color on like how it kind of works. So what I'm saying is we will get people across. It will be in the thousands, hopefully, soon the ten thousands, but it's like it will be slowly over time. And they will be -- have very -- they will be very diverse in the sense of what services they will consume on our side, some will book hotels to us, some will maybe book -- buy Prestige membership. Some will go to events, some will buy other things that we even haven't offered yet but the exact split is a bit too complicated for us to forecast right now. We don't have exact numbers behind that. We just believe by having them people have a positive impact in the end.

Okay. No, great. No, that's -- I mean, that's more or less what I was thinking. And maybe one final question. What's going on with the Dubai real estate sort of marketing project. Is there anything happening? Or is this now on ice?

Yes. I mean we continue to work with them throughout the first half of the year, and we have received our service fee for the consulting service that we provide there. It's gone on sale. However, sales have been more difficult than anticipated. So there were fewer sales than I guess we collectively had hoped and they're right now in a bit of a reconfiguration mode of like whether they need to adjust their sales strategy, whether they need to like adjust a product. So that's why I hadn't really put much of that into today's presentation because there is no full clarity on how it will continue. However, we have been continuing -- we have continued to work with them during the second half of the year, and there has been revenue coming from that partnership. But as soon as we know more, I would provide an update, but there currently is a bit of a -- it's a bit of a holding/reconfiguration pattern going on there at the moment.

And it's costing you nothing, right? Or is there any costs, but it's costing you nothing, right? I mean are there any -- is there any way -- is it any way in any way weighing on your operations cost wise, people spending...

No. I mean, actually, we've -- I mean, we're making a profit on every month we're there, right, because the service [ team ] charging pays for more than our costs, like our internal cost, which is labor. But so in that sense, it's still contributing positively. However, the big upside was the real estate sales, and those have been sort of slow. And so there hasn't been sort of -- there hasn't been sort of the massive upside yet, it could be there, but it's not costing us anything and definitely not losing money on it, so to answer that question.