Atour Lifestyle Q4 2024 Earnings Report

Atour Lifestyle EPS Results

• Actual EPS: $0.33
• Consensus EPS: $0.30
• Beat/Miss: Beat by +$0.03
• One Year Ago EPS: N/A

Atour Lifestyle Revenue Results

• Actual Revenue: $285.58 million
• Expected Revenue: $275.49 million
• Beat/Miss: Beat by +$10.09 million
• YoY Revenue Growth: N/A

Atour Lifestyle Announcement Details

• Quarter: Q4 2024
• Date: 3/25/2025
• Time: Before Market Opens
• Conference Call Date: Tuesday, March 25, 2025
• Conference Call Time: 7:00AM ET

Atour Lifestyle (NASDAQ:ATAT) Holdings Co., Ltd. operates as a hospitality and lifestyle company offering a range of lodging and accommodation services in China. The company’s core business includes the development, operation and management of boutique hotels and serviced apartments under its Atour Hotel and Ankora brands. These properties cater primarily to the mid- to upscale segment, delivering a blend of comfort, design-focused interiors and localized services tailored to both business and leisure travelers.

In addition to room offerings, Atour Lifestyle provides a suite of ancillary services designed to enhance guest experiences. Many Atour Hotel properties feature on-site dining outlets, coffee bars and curated retail concepts, while Ankora serviced apartments offer extended-stay amenities such as in-unit kitchens and communal workspaces. The company leverages mobile technology and a proprietary loyalty program to streamline reservations, contactless check-in and customized guest interactions across its portfolio.

Founded in 2012 and headquartered in Shanghai, Atour Lifestyle has expanded rapidly across China’s major cities and regional hubs. Its footprint encompasses more than 250 properties in over 80 cities, positioning it to capitalize on growing domestic travel and urbanization trends. The company remains focused on disciplined site selection, strategic partnerships with local operators and ongoing upgrades to its digital platform. Leadership comprises seasoned executives with backgrounds in hospitality management, real estate development and technology integration, driving the company’s vision of creating a modern, design-led lodging network for today’s traveler.

Atour Lifestyle Q4 2024 Earnings Call Transcript

Key Takeaways

• Net revenues in Q4 rose 38.5% year-over-year to RMB2.084 billion, and full-year revenues grew 55.3% to RMB7.248 billion, driven by both hotel and retail businesses.
• The hotel network expanded rapidly with 471 new openings in 2024 (63% YoY increase), bringing the total to 1,619 hotels and positioning the company to reach its 2,000-hotel target by 2025.
• Retail GMV surged to RMB2.59 billion in 2024, a 127.7% year-over-year increase, with retail revenue contribution reaching 30% of group total and expected to grow by at least 35% in 2025.
• RevPAR in Q4 was 94.1% of 2023 levels and same-hotel RevPAR reached 96%, with Q1 2025 RevPAR expected to decline by mid-to-high single digits due to base effects and seasonality.
• The company reaffirmed a three-year dividend plan targeting an annual payout of at least 50% of prior-year net income, with USD 62 million paid in 2024 and continued shareholder returns planned.

Presentation

[Operator]

Ladies and gentlemen.

[Operator]

Thank you.

[Operator]

Thank you for standing by, and welcome to Atour Lifestyle Holdings' Fourth Quarter and Full Year 2024 Earnings Conference Call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question-and-answer session. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Luke Hu, Senior IR Manager. Please go ahead, sir.

[Luke Hu, Senior IR Manager at Atour Lifestyle Holdings]

Thank you, Operator. Good morning and good evening, everyone. Welcome to our Fourth Quarter and Full Year 2024 Earnings Conference Call. Today, you will hear from our Founder, Chairman, and CEO, Mr. Haijun Wang, and our EVP and Co-CFO, Mr. Jianfeng Wu. Before we continue, please be aware that this discussion will include forward-looking statements and federal securities laws. These statements are subject to various risks and uncertainties, and the actual results may differ significantly from what is stated or implied in our comments today. The company is not obligated to update any forward-looking statements except as required by applicable laws. Additionally, during this call, our management will discuss certain non-GAAP financial measures solely for comparison purposes. For a clear understanding of these measures and a reconciliation of GAAP to non-GAAP financial results, please refer to the earnings release issued earlier today.

[Luke Hu, Senior IR Manager at Atour Lifestyle Holdings]

Furthermore, a webcast replay of this conference call will be accessible on our website at ir.yaduo.com, where a copy of the results presentation is also available. Now, I will turn the call over to Mr. Wang, our CEO.

[Haijun Wang, Founder, Chairman and CEO at Atour Lifestyle Holdings]

[Foreign language]

[Haijun Wang, Founder, Chairman and CEO at Atour Lifestyle Holdings]

Thank you, Luke. Hello, everyone, and thank you for joining Atour's fourth quarter and full year 2024 earnings call today.

[Haijun Wang, Founder, Chairman and CEO at Atour Lifestyle Holdings]

[Foreign language]

[Haijun Wang, Founder, Chairman and CEO at Atour Lifestyle Holdings]

Please turn to slide three of our fourth quarter and financial year 2024 results presentation. The year 2024 marked a chapter of innovation and breakthroughs in Atour's three-year strategic roadmap. Guided by our vision of Chinese experience, 2,000 premier hotels, we continued to expand our brand influence, driving sustained growth in both business scale and operational excellence. As we elevated our experiential offerings, we further deepened the essence of the Chinese experience through a dual-engine business model that seamlessly integrates hotel and retail. In terms of network development, we have successfully curated a diversified hotel brand portfolio, reinforcing our leadership in the upper-midscale hotel market. In 2024, we opened 471 new hotels and signed 670 new projects, not only exceeding our initial targets but also solidifying the foundation for achieving our 2,000 premier hotels target.

[Haijun Wang, Founder, Chairman and CEO at Atour Lifestyle Holdings]

[Foreign language]

[Haijun Wang, Founder, Chairman and CEO at Atour Lifestyle Holdings]

Now, I would like to provide more details on our performance for the fourth quarter and the full year of 2024.

[Haijun Wang, Founder, Chairman and CEO at Atour Lifestyle Holdings]

[Foreign language]

[Haijun Wang, Founder, Chairman and CEO at Atour Lifestyle Holdings]

Let's begin with our hotel business. Please turn to slide five. Our RevPAR reached RMB 337 during the fourth quarter, representing 94.1% of 2023's level for the quarter. Specifically, OCC stood at 98.2% of its level for the same period in 2023. ADR endured ongoing pressure due to the high comparison base effect, reaching 96% of its level for the same period in 2023.

[Haijun Wang, Founder, Chairman and CEO at Atour Lifestyle Holdings]

[Foreign language]

[Haijun Wang, Founder, Chairman and CEO at Atour Lifestyle Holdings]

Please turn to slide six. Our mature hotels in operation for more than 18 months continued to outperform the group's hotels' overall performance during the fourth quarter. Same hotel RevPAR for the fourth quarter reached 96% of 2023's level for the same period. Notably, OCC steadily recovered to 99% of 2023's level for the fourth quarter, while ADR reached 97.4% of its level for the same period of 2023.

[Haijun Wang, Founder, Chairman and CEO at Atour Lifestyle Holdings]

[Foreign language]

[Haijun Wang, Founder, Chairman and CEO at Atour Lifestyle Holdings]

Please turn to slide seven. In 2024, as the group's brand awareness continued to strengthen, the efficiency of our development team became increasingly evident. For the full year, both new hotel openings and signings reached record highs, accelerating the rapid expansion of our hotel network. In the fourth quarter alone, we opened 111 new hotels, bringing the total number of openings for the year to 471, representing a 63% year-over-year increase. By the end of the fourth quarter, the number of hotels in operation had risen to 1,619, representing a 33.8% year-over-year growth. Meanwhile, the number of hotels under development expanded by 20% year-over-year, reaching 741 as of the end of the quarter, further solidifying the foundation toward achieving our goal of 2,000 premier hotels in operation by 2025.

[Haijun Wang, Founder, Chairman and CEO at Atour Lifestyle Holdings]

[Foreign language]

[Haijun Wang, Founder, Chairman and CEO at Atour Lifestyle Holdings]

Next, I would like to share the latest developments for Atour's hotel brands.

[Haijun Wang, Founder, Chairman and CEO at Atour Lifestyle Holdings]

[Foreign language]

[Haijun Wang, Founder, Chairman and CEO at Atour Lifestyle Holdings]

Please turn to slide eight. As our comprehensively upgraded hotel product, Atour 4.0 has consistently reinforced our leadership in the upper-mid-scale segment since its launch, enhancing both our brand strength and product offerings. Currently, there are 16 Atour 4.0 hotels in operation and 67 projects in the pipeline. These hotels in operation have swiftly emerged as top performers in both operating performance and customer experience across key business districts in several higher-tier cities nationwide, further highlighting Atour's dominance in the upper mid-scale segment. As more of the Atour 4.0 hotels commence operations, we will be well-positioned to deliver an exceptional accommodation experience to an even broader customer base.

[Haijun Wang, Founder, Chairman and CEO at Atour Lifestyle Holdings]

[Foreign language]

[Haijun Wang, Founder, Chairman and CEO at Atour Lifestyle Holdings]

Please turn to slide nine. We are delighted to share that during the fourth quarter, Atour Light 3.0 achieved the significant milestone of 100 hotels in operation. These hotels are strategically located in key business districts across second-tier cities and above. As our next brand poised for expansion to 1,000 hotels, Atour Light continues to gain robust market traction, driven by its distinct product positioning and substantial growth potential.

[Haijun Wang, Founder, Chairman and CEO at Atour Lifestyle Holdings]

[Foreign language]

[Haijun Wang, Founder, Chairman and CEO at Atour Lifestyle Holdings]

We have always been deeply committed to strengthening strong brand awareness for Atour Light. Since the debut of Atour Light 3.0, we have closely focused on customer needs, thoughtfully crafted unique touchpoints, and successfully launched a series of brand collaborations that have not only showcased Atour Light's unique identity as an innovative youth-centric hotel brand, but also redefined the personalized accommodation experience through a range of immersive social interactions. With well-defined market positioning and a targeted communication strategy tailored to the younger generation, we have significantly enhanced Atour Light's brand recognition and market penetration. These efforts have laid a solid foundation for Atour Light's expansion in the mid-upscale hotel market.

[Haijun Wang, Founder, Chairman and CEO at Atour Lifestyle Holdings]

[Foreign language]

[Haijun Wang, Founder, Chairman and CEO at Atour Lifestyle Holdings]

Moving now to our retail business, please turn to slide 10. In 2024, Atour's retail business maintained its strong growth momentum, with full-year GMV reaching RMB 2.59 billion, representing an impressive 127.7% year-over-year increase. Online channels remained the primary driver, consistently contributing to over 90% of total GMV, fueled by strong sales performance across multiple e-commerce platforms.

[Haijun Wang, Founder, Chairman and CEO at Atour Lifestyle Holdings]

[Foreign language]

[Haijun Wang, Founder, Chairman and CEO at Atour Lifestyle Holdings]

With our astute market insights, we remain highly attuned to evolving consumer trends. For the 2024 Double Eleven Shopping Festival, our retail GMV exceeded RMB 420 million, reflecting an 80% year-over-year increase and 36% growth compared to the 2024 June 18th Shopping Festival. During the recent Spring Festival, we once again delivered outstanding results by seizing key marketing opportunities, creatively fostering emotional connections with customers by seamlessly integrating the festive atmosphere with our fresh brand messaging. The ongoing success of Atour Planet's Deep Sleep series further validates our brand market appeal and the strong growth momentum we continue to generate.

[Haijun Wang, Founder, Chairman and CEO at Atour Lifestyle Holdings]

[Foreign language]

[Haijun Wang, Founder, Chairman and CEO at Atour Lifestyle Holdings]

Serving as an innovative interpretation and a tangible extension of Atour's signature Chinese Experience, our retail business plays a vital role in supporting our strategy. Let me elaborate on our perspectives and key initiatives within the deep sleep sector.

[Haijun Wang, Founder, Chairman and CEO at Atour Lifestyle Holdings]

[Foreign language]

[Haijun Wang, Founder, Chairman and CEO at Atour Lifestyle Holdings]

Please turn to slide 11. In recent years, the market potential of the sleep economy has gradually been unlocked. However, the industry faces challenges such as limited brand differentiation, widespread category homogenization, and stagnating product innovation. Against this backdrop, Atour Planet has leveraged a deep understanding of consumer needs to continually elevate to refine its Natural Deep Sleep brand concept and enhance product competitiveness. These efforts have positioned Atour Planet as a pioneer at the forefront of emerging trends within the sleep economy.

[Haijun Wang, Founder, Chairman and CEO at Atour Lifestyle Holdings]

[Foreign language]

[Haijun Wang, Founder, Chairman and CEO at Atour Lifestyle Holdings]

To fuel our product development, we rigorously analyze customers' diverse sleep needs and pain points. These insights, coupled with our innovation in technology, craftsmanship, and materials, have led to the creation of an extensive range of premium Deep Sleep products. We continuously refine and iterate these products based on customer feedback. Throughout the brand development, Atour Planet has cultivated a distinctive product philosophy that drives market success. A prime example of this is the Deep Sleep Memory Foam Pillow PRO series, which has achieved outstanding performance. Through exceptional product quality and a well-executed marketing strategy, we have established a blockbuster product model that aligns perfectly with consumers' pursuit of superior sleep, as evidenced by the Deep Sleep Memory Foam Pillow PRO series annual sales exceeding 3.8 million units.

[Haijun Wang, Founder, Chairman and CEO at Atour Lifestyle Holdings]

In the pillow segment, Atour Planet has consistently maintained its industry-leading position, further cementing our reputation as the go-to choice for the deep sleep in consumers' minds.

[Haijun Wang, Founder, Chairman and CEO at Atour Lifestyle Holdings]

[Foreign language]

[Haijun Wang, Founder, Chairman and CEO at Atour Lifestyle Holdings]

Furthermore, through our dedicated efforts in the sleep market and continuous breakthroughs in product innovation, we have developed a sophisticated product development mechanism that has evolved from creating individual blockbusters to offering a comprehensive product category series, further expanding our Deep Sleep product portfolio. Take our comforter product series, which represents a significant milestone in our category expansion as an example. In 2024, the Deep Sleep Lightweight Comforter and the Deep Sleep Thermo-Regulating Comforter PRO series garnered exceptional market recognition, with annual sales surpassing 770,000 units. As the comforter product line continued to perform strongly, it contributed to over 20% of total retail GMV for 2024, reflecting year-over-year growth of more than 300%. Its success not only serves as an emergent driver of Atour Planet's ongoing growth, but also stands as a testament to our ability to replicate our blockbuster product model across different product categories.

[Haijun Wang, Founder, Chairman and CEO at Atour Lifestyle Holdings]

[Foreign language]

[Haijun Wang, Founder, Chairman and CEO at Atour Lifestyle Holdings]

In 2025, we will remain focused on the deep sleep ecosystem, efficiently driving progress in both brand development and product innovation. At the same time, we will further strengthen the fundamentals of our retail business, offering customers a broader array of superior sleep products and enriched experiences to propel the long-term growth of the Atour Planet brand. We are confident that as the sleep economy continues to expand rapidly and the industry undergoes accelerating consolidation, our ongoing exploration of scientific sleep solutions will catalyze continuous advancement in industry craftsmanship and quality standards, with Atour Planet leading and shaping the evolution of the customer sleep experience.

[Haijun Wang, Founder, Chairman and CEO at Atour Lifestyle Holdings]

[Foreign language]

[Haijun Wang, Founder, Chairman and CEO at Atour Lifestyle Holdings]

Please turn to slide 12. Last but not least, I would like to share our progress across channel development and our membership business.

[Haijun Wang, Founder, Chairman and CEO at Atour Lifestyle Holdings]

[Foreign language]

[Haijun Wang, Founder, Chairman and CEO at Atour Lifestyle Holdings]

In terms of channel development, our CRS channel accounted for 63.5% of total room nights sold for the fourth quarter and 63% for the full year, respectively. Notably, the contribution of room nights sold to our corporate members rose to 21.1% in the fourth quarter, driven by the ongoing growth of our corporate members.

[Haijun Wang, Founder, Chairman and CEO at Atour Lifestyle Holdings]

[Foreign language]

[Haijun Wang, Founder, Chairman and CEO at Atour Lifestyle Holdings]

The steady growth of our CRS channel can be attributed to our continuous enhancement of Atour's membership ecosystem and the ongoing expansion of member benefits. By the end of 2024, our registered individual members surpassed 89 million, representing year-over-year growth of more than 40%. In 2024, we also completed a comprehensive upgrade of the ACARD membership ecosystem, seamlessly integrating membership identities and benefits across our two primary service areas. This upgrade reinforced the synergy between accommodation and retail experiences. Additionally, we expanded our APLUS service categories to better cater to the evolving demand for solutions, consistently delivering unique and tailored accommodation experiences to our customers.

[Haijun Wang, Founder, Chairman and CEO at Atour Lifestyle Holdings]

[Foreign language]

[Haijun Wang, Founder, Chairman and CEO at Atour Lifestyle Holdings]

Please turn to slide 13. In 2025, we will continue refining and strengthening the ACARD membership ecosystem by expanding value-added benefits across all touchpoints, ensuring that our hotel and retail customers enjoy seamless, high-quality services across various scenarios. Meanwhile, we will consistently upgrade and iterate the tiered benefit system for both corporate and individual members. Additionally, we will strengthen our closed-loop service experience, unlocking the cross-consumption potential between accommodation and retail. Looking ahead, we will continue to widen our membership experience moat and roll out more diverse scenario-based promotional activities, further deepening and expanding Atour's signature Chinese Experience to enrich its meaning and broaden its scope.

[Haijun Wang, Founder, Chairman and CEO at Atour Lifestyle Holdings]

[Foreign language]

[Haijun Wang, Founder, Chairman and CEO at Atour Lifestyle Holdings]

Please turn to slide 14. As the final year of our three-year strategic roadmap, 2025 represents a pivotal moment in laying the foundation for our next phase of growth. As the market landscape becomes increasingly fragmented, Atour will remain focused on strengthening its core competencies. Our priorities will remain on amplifying brand momentum, boosting organizational vitality, and advancing digital capabilities. By strategically seizing on development opportunities, we will drive continuous breakthroughs in both scale expansion and quality enhancement across the hotel and retail businesses. Moving forward, with steadfast dedication to achieving our expansion goals, we will continue to establish the benchmark for customer experience, strategically driving sustained high-quality growth for the long term.

[Haijun Wang, Founder, Chairman and CEO at Atour Lifestyle Holdings]

[Foreign language]

[Haijun Wang, Founder, Chairman and CEO at Atour Lifestyle Holdings]

Now, I'll turn the call over to our Co-CFO, Mr. Jianfeng Wu, to discuss our financial results.

[Jianfeng Wu, EVP and Co-CFO at Atour Lifestyle Holdings]

Thank you, Haijun. Now, I would like to present the company's financial performance for the fourth quarter of the full year 2024. Please turn to slide 16 for the result presentation. Our net revenues for the fourth quarter of 2024 grew by 38.5% year-over-year and 9.8% quarter-over-quarter to RMB 2,084 million. Net revenues for full year 2024 increased by 55.3% year-over-year to RMB 7,248 million. The increases were driven by growth in the managed hotels and retail businesses. Revenues from our managed hotels for the fourth quarter of 2024 were RMB 1,106 million, up by 30% year-over-year and down by 6.2% quarter-over-quarter. For full year 2024, revenues from our managed hotels increased by 53.3% year-over-year to RMB 4,149 million.

[Jianfeng Wu, EVP and Co-CFO at Atour Lifestyle Holdings]

The year-over-year increases were primarily fueled by our ongoing hotel network expansion and the growth of our supply chain business. The quarter-over-quarter decrease was mainly due to a decrease in RevPAR. Revenues contributed by our leased hotels for the first quarter of 2024 were RMB 164 million, reflecting 15.9% year-over-year and 13.4% quarter-over-quarter decline. For the full year 2024, revenues from our leased hotels decreased by 16.4% year-over-year to RMB 702 million. The declines were primarily due to a decrease in the number of leased hotels as a result of our product mix optimization. Revenues from our retail business for the first quarter of 2024 were RMB 765 million, reflecting 85.6% year-over-year and 59.5% quarter-over-quarter increases. For full year 2024, revenues from our retail business increased by 126.2% year-over-year to RMB 2,198 million.

[Jianfeng Wu, EVP and Co-CFO at Atour Lifestyle Holdings]

The increases were driven by widespread recognition of our retail brand and effective product innovation and development as we successfully broadened our range of product offerings. Now, let's move to costs and expenses. Please turn to slide 17. Hotel operating costs for the fourth quarter of 2024 increased by 8.3% year-over-year and decreased by 9.4% quarter-over-quarter to RMB 794 million. Hotel operating costs for the full year 2024 increased by 38.7% year-over-year to RMB 3,108 million. The year-over-year increases were primarily due to the increases in variable costs such as supply chain costs associated with our ongoing hotel network expansion. The quarter-over-quarter decrease was due to a decrease in our number of leased hotels as a result of our product mix optimization.

[Jianfeng Wu, EVP and Co-CFO at Atour Lifestyle Holdings]

Gross margin of our hotel business was 37.5% and 35.9% for the first quarter and full year 2024, compared with 29.9% and 36.8% for the same period of 2023. Retail costs for the first quarter of 2024 rose by 66.2% year-over-year and 69.8% quarter-over-quarter to RMB 386 million. For full year 2024, retail costs increased by 111.1% year-over-year to RMB 1,084 million. The increases were associated with the rapid growth of our retail business. The gross margin of our retail business was 49.6% and 50.7% for the first quarter and the full year of 2024, compared with 43.7% and 47.2% for the same period of 2023. The increases were attributable to the increasing contribution from higher margin products. Now, please turn to slide 18.

[Jianfeng Wu, EVP and Co-CFO at Atour Lifestyle Holdings]

Selling and marketing expenses accounted for 17% and 13.4% of net revenues for the first quarter and the full year of 2024, compared with 13.7% and 10.1% for the same period of 2023, respectively. The increases were mainly due to our enhanced investment in brand recognition and the effective development of online channels, in line with the growth of our retail business. General and administrative expenses, including share-based compensation expenses, accounted for 4.8% and 4.5% of net revenues for the first quarter and full year of 2024, compared with 6.8% and 6.2% for the same period of 2023, respectively. The decreases were primarily due to improved management efficiency and economies of scale. Technology and development expenses accounted for 2.2% and 1.8% of net revenues for the first quarter and full year of 2024, compared with 1.5% and 1.7% for the same period of 2023, respectively.

[Jianfeng Wu, EVP and Co-CFO at Atour Lifestyle Holdings]

The increases were mainly due to increased investment in technology systems and infrastructure to support our expanding hotel network and retail business and improved customer experience. Please turn to slide 19. Adjusted net income for the first quarter of 2024 was RMB 333 million, representing a 49.9% increase year-over-year. Adjusted EBITDA for the first quarter of 2024 was RMB 443 million, up by 76.5% year-over-year. Adjusted net profit margin for the full year 2024 was 18%, representing a decrease of 1.4 percentage points year-over-year. Adjusted EBITDA margin for the full year 2024 was 24.4%, a decrease of 1.5 percentage points year-over-year. The decreases in both margins were primarily due to a decline in RevPAR, along with the organic growth in selling and marketing expenses amid our retail business expansion. Please turn to slide 20 We also maintained a healthy cash position with stable growth momentum.

[Jianfeng Wu, EVP and Co-CFO at Atour Lifestyle Holdings]

As of December thirty-first, 2024, our cash and cash equivalent totaled RMB 3,618 million, with net cash of RMB 3,556 million. Please turn to slide 21. For full year 2025, the company currently expects total net revenues to increase by 25%, compared with full year 2024. That concludes our financial highlights for the fourth quarter and the full year 2024. Now, let's open for Q&A.

[Operator]

Thank you. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. For the benefit of all participants on today's call, if you raise your question in Chinese, please immediately repeat your question in English. Please limit your question to one at a time. If you wish to have a follow-up question, please rejoin the queue. Stand by while we compile the Q&A roster. Our first question comes from Dan Chee from Morgan Stanley. Your line is now open.

[Dan Chee, Vice President of Equity Research at Morgan Stanley]

[Foreign language] Please allow me to translate my question. This is Dan from Morgan Stanley. First of all, congratulations on the new hotel opening and signings record highs in 2024. My question is about the hotel business. Can you share some colors about the hotel's performance on RevPAR in first quarter 2025? We also noticed about the full year revenue guidance of 25%. We're wondering what is the contribution from the hotel business and the company's RevPAR assumption for the full year 2025. Thank you. [Foreign language]

[Jianfeng Wu, EVP and Co-CFO at Atour Lifestyle Holdings]

[Foreign language]

[Jianfeng Wu, EVP and Co-CFO at Atour Lifestyle Holdings]

Thank you, Dan. Let me answer your question.

[Jianfeng Wu, EVP and Co-CFO at Atour Lifestyle Holdings]

[Foreign language]

[Jianfeng Wu, EVP and Co-CFO at Atour Lifestyle Holdings]

Due to our high base effect, our full year RevPAR for 2024 decreased by 6.8% compared to 2023, and that was in line with the guidance we provided previously. In this year, quarter one, especially the first half of March, due to some seasonal factors and the weather conditions, our overall RevPAR performance was relatively volatile, and we expect a year-on-year decline in Q1 RevPAR of mid to high single digits.

[Jianfeng Wu, EVP and Co-CFO at Atour Lifestyle Holdings]

[Foreign language]

[Jianfeng Wu, EVP and Co-CFO at Atour Lifestyle Holdings]

As of now, we believe 2025 still presents some uncertainties and challenges. The market is changing very rapidly, making it difficult for us to provide specific forecasts on the RevPAR. Nonetheless, against the backdrop of policy benefits and continued recovery in business travels, we will continue to implement our balanced and refined revenue management strategy, and we are confident to enhance the recovery of RevPAR performance, thereby boosting our long-term revenue of our hotels and solidify our brand value.

[Jianfeng Wu, EVP and Co-CFO at Atour Lifestyle Holdings]

[Foreign language]

[Jianfeng Wu, EVP and Co-CFO at Atour Lifestyle Holdings]

Although that the RevPAR still is going to remain not so sure, unknown, but our continuously expanding hotel network and the high-quality growth of the retail business, we expect the group's revenue to increase by 25% year-on-year in 2025. Thank you.

[Luke Hu, Senior IR Manager at Atour Lifestyle Holdings]

Thank you, Dan. Next question, please.

[Operator]

Thank you. Just a moment for our next question, please. Next, we have Simon Cheung from Goldman Sachs. Your line is now open.

[Simon Cheung, Managing Director at Goldman Sachs]

[Foreign language] And then let me translate that into English. Last year, the company achieved record high in both the hotel opening as well as new signing. Perhaps can you share with us what is your guidance on both measures in 2025? Thank you.

[Haijun Wang, Founder, Chairman and CEO at Atour Lifestyle Holdings]

[Foreign language]

[Haijun Wang, Founder, Chairman and CEO at Atour Lifestyle Holdings]

Thank you, Simon. Let me try to answer this question. In terms of new openings, we had opened 471 new hotels throughout 2024, bringing our total number of operating hotels to 1,619 by the year end, a year-on-year increase of over 33.8%. In 2025, this positive trend will continue. We expect to maintain a similar hotel opening growth rate with a full year target of 500 new hotels so that we can steadily advance toward our strategic goal of achieving 2,000 premier hotels by 2025.

[Haijun Wang, Founder, Chairman and CEO at Atour Lifestyle Holdings]

[Foreign language]

[Haijun Wang, Founder, Chairman and CEO at Atour Lifestyle Holdings]

Regarding new signings, we can see that the demand in the franchise market remains very active during Q1 of 2025. We observed that franchisees generally believe that the hotel industry still holds significant, also quite stable investment potential when compared with other investment opportunities. In their decision-making processes, those mature franchisees pay particular attention to the long-term value of brands and the competitive advantages of hotel products. We believe that based upon Atour's leading brand power and product strength, we expect our group's signings performance in 2025 to remain strong.

[Haijun Wang, Founder, Chairman and CEO at Atour Lifestyle Holdings]

[Foreign language]

[Haijun Wang, Founder, Chairman and CEO at Atour Lifestyle Holdings]

Meanwhile, we believe that the high-quality supply in the market still remains scarce. Therefore, we will keep strict signing quality control, especially when represented by our new products such as Atour 4.0 and Atour Light 3.0. From the perspective of long-term brand development, we will set high standards and requirements for the site selection and property conditions of those initial projects to better showcase our long-term brand value and market competitiveness. We know that we have the strategy of 2,000 premier hotels. While we achieved the 2,000 hotels scale target this year, we will continue to solidify our foundation of premier hotels, supporting the group's long-term high-quality development. Thank you.

[Luke Hu, Senior IR Manager at Atour Lifestyle Holdings]

Thank you, Simon. Next question, please.

[Haijun Wang, Founder, Chairman and CEO at Atour Lifestyle Holdings]

[Foreign language]

[Operator]

Thank you. Our next question comes from Sijie Lin from CICC. Your line is now open.

[Sijie Lin, Analyst at CICC]

[Foreign language] So in 2024, our retail business continued very strong growth momentum. What's our plan for the retail business in 2025? Are there any plans for new product or revenue targets? Thank you.

[Haijun Wang, Founder, Chairman and CEO at Atour Lifestyle Holdings]

[Foreign language]

[Haijun Wang, Founder, Chairman and CEO at Atour Lifestyle Holdings]

Thank you, Sijie. Let me first bring up our overall retail business and product plans. Then I'll ask Jianfeng to add some financial details related to retail later. As we have announced in our financial reports, Atour Planet's development is the natural outcome of Atour's long-term commitment to our brand group positioning and serving people business model.

[Haijun Wang, Founder, Chairman and CEO at Atour Lifestyle Holdings]

[Foreign language]

[Haijun Wang, Founder, Chairman and CEO at Atour Lifestyle Holdings]

Atour Planet has indeed achieved impressive results in terms of its scale growth and brand momentum. However, we have to say that there's still substantial room for improvement across the whole industry.

[Haijun Wang, Founder, Chairman and CEO at Atour Lifestyle Holdings]

[Foreign language]

[Haijun Wang, Founder, Chairman and CEO at Atour Lifestyle Holdings]

In 2025, we have set higher goals for ourselves and will strengthen the core competencies of Atour's retail across all dimensions. First, we will continue to enhance product R&D and innovation, consolidate our leading position in existing categories, and build product barriers. We will also actively develop and expand new products in the sleep and pan-sleep categories, enriching our deep sleep product matrix and continuously unleashing our ability to create blockbuster.

[Haijun Wang, Founder, Chairman and CEO at Atour Lifestyle Holdings]

[Foreign language]

[Haijun Wang, Founder, Chairman and CEO at Atour Lifestyle Holdings]

Secondly, we will remain user experience oriented and strive to create Atour Planet's retail product by referencing a higher standard from the apparel industry so as to drive the home textile industry to achieve overall improvement and innovation in its processes and technology. Thereby, we have the target of establishing leading industry standards in the deep sleep domain and promoting high quality and sustainable growth in our retail business.

[Jianfeng Wu, EVP and Co-CFO at Atour Lifestyle Holdings]

[Foreign language]

[Jianfeng Wu, EVP and Co-CFO at Atour Lifestyle Holdings]

In terms of the revenue of retail business, it contributed 30% to our group's revenue in 2024, becoming a significant engine for the group's business growth. Looking into the full year 2025, with the continued scaling of dominant categories and the growth momentum from our new product matrix, we believe the retail business is expected to again outpace our hotel businesses in year-on-year revenue growth. We expect retail revenue to grow by no less than 35% year-on-year in 2025.

[Haijun Wang, Founder, Chairman and CEO at Atour Lifestyle Holdings]

[Foreign language]

[Haijun Wang, Founder, Chairman and CEO at Atour Lifestyle Holdings]

Thank you.

[Luke Hu, Senior IR Manager at Atour Lifestyle Holdings]

Thank you, Sijie. Next question, please.

[Operator]

Thank you. Our next question comes from Lydia Ling from Citi. Your line is now open.

[Lydia Ling, Director of Equity Research for Consumer Sector at Citi]

[Foreign language] [audio distortion]

[Jianfeng Wu, EVP and Co-CFO at Atour Lifestyle Holdings]

Okay, thank you, Lydia. [Foreign language]

[Jianfeng Wu, EVP and Co-CFO at Atour Lifestyle Holdings]

In 2024, we achieved an adjusted net profit margin of approximately 18% for the full year, a decrease of 1.4 percentage points compared to 2023. This was mainly due to the fluctuations in RevPAR throughout the year and structural factors such as the increased proportion of our retail business. For 2025, although we know that the changes in company's revenue structure will continue, we will also optimize our cost structure, improve our management efficiency to offset the impact on structural profit margins. We anticipate that the adjusted net profit margin will remain relatively stable.

[Jianfeng Wu, EVP and Co-CFO at Atour Lifestyle Holdings]

[Foreign language]

[Jianfeng Wu, EVP and Co-CFO at Atour Lifestyle Holdings]

In 2024, the operating profit margin of our retail business increased to low double digits, and moving forward, as our retail scale continues to expand, we will maintain a certain level of marketing expenditure. We expect the operating profit margin of the retail business to remain at a similar level in 2025. In terms of the marketing strategy, we will continuously improve the efficiency of channel distribution to strengthen our brand building and, more importantly, solidify our brand equity of Atour Planet. Thank you.

[Luke Hu, Senior IR Manager at Atour Lifestyle Holdings]

Thank you, Lydia. Next question, please.

[Operator]

Thank you. Our next question comes from Xing Chen from UBS. Your line is now open.

[Xing Chen, Investment Banking Analyst at UBS]

[Foreign language] Let me translate it to English. This is Xing from UBS, and we noticed the first SAVHE store has already opened. Could the management share the main strategy for the high-end brand this year? Additionally, how is Atour Light 3.0 recent performance, and does it meet management expectations? Thank you.

[Haijun Wang, Founder, Chairman and CEO at Atour Lifestyle Holdings]

[Foreign language]

[Haijun Wang, Founder, Chairman and CEO at Atour Lifestyle Holdings]

Thanks, Xing Chen. Let me first address your question regarding upper scale markets.

[Haijun Wang, Founder, Chairman and CEO at Atour Lifestyle Holdings]

[Foreign language]

[Haijun Wang, Founder, Chairman and CEO at Atour Lifestyle Holdings]

Thanks, Xing Chen. Currently, our two upscale hotel brands, Atour S and SAVHE Hotel, are developing in parallel. Among them, Atour S has won the favor of high-end business travelers by adapting to the contemporary needs, leveraging its precise market positioning and exceptional service quality. Of course, we will also promote the iterative upgrade of Atour S, and we are actively preparing a new version to maintain its competitiveness and brand vitality in the market.

[Haijun Wang, Founder, Chairman and CEO at Atour Lifestyle Holdings]

[Foreign language]

[Haijun Wang, Founder, Chairman and CEO at Atour Lifestyle Holdings]

As for SAVHE, we continued to adopt a long-term mindset in our strategy, aiming to lead the development direction of China's upscale hotel market. We will meticulously craft each SAVHE hotel, establish a flagship for quality and experience. In February this year, our first SAVHE hotel opened in Shanghai's North Bund. Since its trial operation, its advanced experiential services such as SAVHE butlers and room diffuser selection before checking in have received high praise from consumers, and its pricing and positioning have also been well received by the market and customers.

[Haijun Wang, Founder, Chairman and CEO at Atour Lifestyle Holdings]

[Foreign language]

[Luke Hu, Senior IR Manager at Atour Lifestyle Holdings]

Let me add something on Atour Light 3.0. The development trajectory of Atour Light consistently aligned with our expectations. As of the end of 2024, we have expanded to over 100 Atour Light 3.0 hotels in 46 cities across the country, with strong operational performance that has significantly boosted the confidence of investment from the franchisees. As a new brand, Atour Light 3.0 requires accumulation and continuous refinement while rapidly expanding. We are now consistently incorporating feedback from consumers and franchisees, enhancing our brand strength through product iterations and refined operations. Currently, we have over 100 Atour Light hotels in our pipeline, primarily located in core business districts of second-tier and above cities. Thank you.

[Luke Hu, Senior IR Manager at Atour Lifestyle Holdings]

Thank you, Xing Chen. Next question.

[Haijun Wang, Founder, Chairman and CEO at Atour Lifestyle Holdings]

[Foreign language]

[Operator]

Thank you. Our last question comes from the line of Ronald Leung from Bank of America. Your line is now open.

[Ronald Leung, Vice President at Bank of America]

[Foreign language] Let me translate my question into English. Could you share the plans for hotel closures planned throughout 2025? Additionally, are there any new plans for shareholder return this year? Thank you very much.

[Jianfeng Wu, EVP and Co-CFO at Atour Lifestyle Holdings]

[Foreign language]

[Jianfeng Wu, EVP and Co-CFO at Atour Lifestyle Holdings]

Thank you, Ronald, for your question. A key consideration in our decisions of hotel closures is the consistency of experiences. We aim at achieving the strategic goal of Chinese experience 2,000 premier hotels by the end of 2025. Therefore, we will maintain a similar pace of closures in 2025, continuing to strengthen decentralized evaluation of the property quality and operational performance of our hotels in operation. For hotels that still fail to meet operational performance expectations after rectification in areas such as services and customer experiences, we will proactively terminate contracts with them in accordance with the agreements.

[Jianfeng Wu, EVP and Co-CFO at Atour Lifestyle Holdings]

[Foreign language]

[Luke Hu, Senior IR Manager at Atour Lifestyle Holdings]

Regarding shareholder returns, we have always placed great emphasis on and actively fulfilled our commitment to sustained returns for shareholders. In August of last year, we officially announced a three-year annual dividend plan, clearly committing to distribute an annual dividend of no less than 50% of the previous financial year's net income over these three years. Last year, our dividend payout amount is around $62 million. In 2025, we will continue to comprehensively consider our company's overall operations, cash reserves, and future business developments comprehensively to make integrated decisions on the timing and proportion of dividends, ensuring that our shareholders continue to share in the company's growth. Thank you.

[Luke Hu, Senior IR Manager at Atour Lifestyle Holdings]

Thank you, Ronald.

[Operator]

Thank you. That concludes today's question and answer session. I would now like to turn the conference back to Mr. Luke Hu for any additional or closing comments. Thank you.

[Luke Hu, Senior IR Manager at Atour Lifestyle Holdings]

Thank you for joining us today. If you have any further questions, please feel free to contact our IR team. We look forward to speaking with you again next quarter. Thank you and goodbye.

[Operator]

This concludes today's conference call. Thank you for participating. You may now disconnect.

Participants

Executives

• Luke Hu, Senior IR Manager
• Haijun Wang, Founder, Chairman and CEO
• Jianfeng Wu, EVP and Co-CFO

Analysts

• Simon Cheung, Managing Director at Goldman Sachs
• Sijie Lin, Analyst at CICC
• Xing Chen, Investment Banking Analyst at UBS
• Ronald Leung, Vice President at Bank of America
• Dan Chee, Vice President of Equity Research at Morgan Stanley
• Lydia Ling, Director of Equity Research for Consumer Sector at Citi
• Translator