Atour Lifestyle Holdings Limited Q1 FY2026 earnings call

• Market & Strategic Positioning

  • China's service consumption is transitioning from scale expansion to value upgrade centered on quality and experience, with supportive policies and rationalizing competition creating a healthier industry environment. The hotel market is experiencing moderate recovery with structural growth, shifting to precision and differentiated development.
  • The company maintains a user-first philosophy centered on experience and anchored by brand, which it views as the core strategy to navigate industry cycles.

• Hotel Operations & Brand Development

  • The company adheres to a quality-first expansion principle, maintaining strict quality control for all new signings and openings. It has implemented a long-term efficiency mechanism for mature older hotels, offering customized renovation support, fee waivers and financial assistance to improve competitiveness.
  • Upper mid-scale core brand Atour continues to lead the segment, with the latest Atour 3.6 product earning sustained positive market feedback. Atour Origin, the upper mid-scale extension brand, is undergoing long-term refinement, with plans to roll out a full deep sleep system system and integrate Yunnan cultural elements.
  • Upscale brand Sa He continues to build brand equity, drawing a more diverse customer base including more international and family travelers, and earning growing organic positive reviews for its Chinese cultural positioning. The company will maintain disciplined expansion and continue product refinement for Sa He.
  • Mid-scale brand Attourlite (QingJu) aligns with growing demand for differentiated experiences, with the latest 3.3 version demonstrating stronger pricing power and earning strong recognition from users and franchisees. The company will focus expansion on second-tier and above cities in 2026.

• Retail Business Development

  • Retail business maintains strong growth momentum, centered on the deep sleep core scenario. The company iterates products based on in-depth understanding of latent user needs, translating vague user experience into definable, measurable, replicable technical standards across product iterations.
  • The portfolio has expanded to include pillows, comforters, deep sleep loungewear and fitted sheets, with growing product mindshare and brand trust among consumers.

• Membership & ESG

  • Total registered individual members reached 116 million by the end of 1Q2026, a 20% YoY increase. The company will deepen synergy between hotel and retail businesses to enhance member value, and explore partnerships with like-minded brands to expand lifestyle experiences.
  • The company released its 2025 ESG report, and established the Atour Foundation at the end of 2025 to advance systematic public welfare. It recently launched a public welfare program for frontline housekeeping staff open to the entire service industry.

1. Hotel Business: Total net revenue from monetized hotels grew 51.9% YoY to RMB 1,568 million, contributing 55.8% of total net revenues. Revenue from leased hotels decreased 8.0% YoY to RMB 118 million, contributing 4.2% of total net revenues. Group-wide RevPAR was RMB 311.6, reaching 102.4% of the 1Q2025 level (OCC at 100.6% of 1Q2025, ADR at 102.1% of 1Q2025). Mature hotel (over 18 months operation) RevPAR reached 98.3% of 1Q2025. Gross profit for the overall hotel business grew 29.5% YoY to RMB 550 million. By the end of 1Q2026, the company operated 2,088 hotels, with 751 hotels in the development pipeline. The CRS channel accounted for 63.7% of total room nights sold, and corporate members contributed 19.3% of room nights sold. Key brand performance: Atour Origin in-operation RevPAR exceeded RMB 400; Sa He Hotel in-operation RevPAR exceeded RMB 910, with ADR over RMB 1,000; Attourlite 3.3 in-operation RevPAR was over 10% higher than the 3.0 version.
2. Retail Business: Retail revenue grew 54.4% YoY to RMB 1,071 million, contributing 38.1% of total net revenues. Gross profit grew 58.3% YoY to RMB 564 million, with expanding gross margin driven by higher contributions from high-margin products. The DeepSleep Thermal Regulating Comforter series has exceeded 3 million units in cumulative sales; its new 3.0 Summer Season launch generated over RMB 100 million in GMV within 45 days of launch. AttourPlanet holds the top rank in pillow category sales on major third-party platforms.

• Full-year 2026 total net revenue growth is expected to be 24% to 28% YoY, maintained from prior guidance.
• Full-year 2026 hotel opening and closing targets are maintained unchanged: 80 hotel closures for the full year, with new opening targets unchanged, supported by a healthy pipeline of 751 high-quality projects.
• Full-year retail revenue guidance has been upwardly revised to 30% to 35% YoY growth, from prior lower targets, driven by stronger-than-expected first quarter performance and solid new product momentum.
• The company maintains its existing comprehensive shareholder return policy that combines dividends and share repurchases, targeting an approximately 30% payout ratio of the prior fiscal year's GAAP net profit for annual dividends, with a 100% total shareholder payout ratio including repurchases.

• Short-term external market volatility may create fluctuations in travel demand and RevPAR performance in the near term.
• Industry competition still requires continued focus on quality control and differentiation to maintain market position.

Q: The company saw a faster pace of hotel closures in Q1. Will this change full-year closure or new opening targets, and is there any shift in opening strategy? / A: The concentrated closures in Q1 came from carryover of projects approved for closure last year, so the full-year closure target of 80 hotels remains unchanged. The company’s new opening pace and target also stay unchanged, as the 751-project pipeline ensures ample high-quality reserve. All new openings continue to adhere to quality requirements that align with the company’s brand positioning. Proactive structural adjustments have improved overall hotel portfolio quality, and the company has established long-term mechanisms to upgrade older hotels. (312 characters)

Q: What is the outlook for Q2 RevPAR trend, and is there any change to the full-year RevPAR outlook? / A: Entering Q2, leisure travel demand remains strong, with spring break in April further boosting demand and creating more balanced passenger flow. Management maintains a cautiously optimistic outlook for Q2 RevPAR. While short-term market volatility remains possible, long-term supportive policies are unlocking service consumption potential and the overall accommodation industry is in a stage of fluctuating recovery. The company will not pursue short-term performance, instead focusing on expanding reach to both business and leisure travelers and refining service quality. (421 characters)

Q: What is current franchise sentiment for new signings, and has the company adjusted its signing strategy? / A: The market has returned to rationality, and franchisees now have a more mature mindset, not overreacting to short-term fluctuations. The company’s signing strategy prioritizes quality: it continues to strengthen布局 in core cities and prime commercial areas to capture business travel and urban tourism demand, while selectively pursuing opportunities in leisure markets such as strong third-tier cities and 5A scenic areas with stable traffic. The company defines quality as experience-centered, combining leading product strength, core location access, and continuous experience refinement, which builds sustainable pricing power rather than relying on cost-cutting. (438 characters)

Q: What drove the strong outperformance of Q1 retail revenue, and is there an update to full-year retail guidance? / A: Sustained strong retail growth comes from the company’s systematic product iteration methodology: each round of product development deepens understanding of real user needs, turning vague user sensations into definable, measurable, replicable technical standards, as demonstrated by three iterations of the DeepSleep Thermal Regulating Comforter. Driven by the strong Q1 momentum and solid new product performance, management is raising full-year retail revenue guidance to 30%-35% YoY growth from the prior target. (337 characters)

Q: Are there any changes to the company’s shareholder return policy after the announced dividend? / A: The company remains committed to its existing shareholder return framework that combines dividends and share repurchases. The recently announced $72 million dividend represents ~31% of last year’s net profit, aligned with policy. As of Q1, total share repurchases since launch last year have exceeded $100 million. The policy maintains a target of 30% dividend payout and 100% total shareholder payout (including repurchases) relative to the prior year’s GAAP net profit, with no changes. (301 characters)