Atour Lifestyle Holdings Ltd. Q3 FY2026 earnings call

• Strategic Positioning: Management emphasized that Chinese consumers are shifting towards valuing real experiences, brand reputation, and emotional connection. The company’s strategy remains 'Chinese experience, brand-led excellence,' focusing on experiential value and trust.
• Hotel Network Expansion: Opened 128 new hotels in Q3, bringing the total to 2,288 operated hotels with a pipeline of 778 projects. The company maintains a quality-first approach, targeting high-quality locations and long-term development potential.
• Brand Portfolio Performance:
  • Atour 3.6: Over 200 hotels in operation; RevPAR exceeded RMB 410, validating its position in the upper mid-scale segment.
  • Atour Origin: Independent brand showing strong potential with RevPAR exceeding RMB 520; partnered with an outdoor lifestyle brand to extend user experience.
  • Atour Lite 3.3: Reached 200 hotels in operation milestone; RevPAR exceeded RMB 360; focused on 'Stay Chill' proposition and investment efficiency.
  • Sa He (Upscale): Delivered outstanding performance; management announced plans to unveil a new upscale hotel brand to capture local demand previously dominated by international brands.
• Retail Business Growth: Atour Planet sustained strong momentum with RMB 1.36 billion in retail revenue. Key products include Deep Sleep Memory Foam Pillow Pro 4.0 (over RMB 100 million sales in 17 days) and Comforter series (revenue up >70% YoY).
• Membership & Ecosystem: Registered members exceeded 124 million. Launched a joint membership program with a retail ecosystem to extend benefits into daily life (e.g., local shopping), enhancing member stickiness beyond accommodation.
• Organizational Focus: Emphasized long-term responsibility to users and employees. Commitment to reshaping organizational management to foster vitality, belonging, and long-term competitiveness.

• Hotel Business: Net revenues from monetized hotels grew 20.4% year-over-year to RMB 1.9 billion, driven by network expansion and supply chain growth. Revenues from leased hotels decreased 18.6% year-over-year to RMB 134 million due to a reduction in leased properties (from 24 to 17). The hotel business gross margin was 37.9%, up 0.6 percentage points year-over-year. In terms of revenue contribution, the hotel segment accounted for approximately 55.9% of total net revenues (RMB 1.9B out of RMB 3.4B).
• Retail Business: Retail revenues increased 51% year-over-year to RMB 1.4 billion, reflecting strong brand building, product portfolio expansion, and supply chain strengthening. The retail gross margin was 52.1%, slightly down 0.6 percentage points year-over-year but up 0.7 percentage points quarter-over-quarter. The retail segment accounted for approximately 41.2% of total net revenues (RMB 1.4B out of RMB 3.4B). Note: Other segments/uncategorized items account for the remaining ~2.9%.

• Full Year 2026 Total Net Revenue: Expect total net revenues to increase by 33% to 35% compared to full year 2025.
• Full Year 2026 Retail Revenue: Raised guidance for retail business revenue growth to 50% to 55% year-over-year (previously implied around 40%).
• Hotel Opening Target: Maintained the full-year target of approximately 480 new hotel openings, despite accelerated pace in Q3 (128 opened).
• No Specific Q4 or 2027 RevPAR Guidance: Management declined to provide specific RevPAR guidance for Q4 or 2027, citing diversified market trends, but expressed confidence in solid fundamentals and resilient domestic demand.

• Consumer Market Divergence: Structural diverging trends in China's consumer market where budget allocation and value judgment are changing, requiring careful navigation of reason vs. emotion in consumer choices.
• Competitive Landscape: Intense competition in the hotel sector, particularly for high-quality projects ('good projects are definitely in short supply'). International brands still hold dominance in the upscale segment, though local brands are gaining ground.
• Operational Execution Risks: Past issues with stock-outs in retail have been improved but remain a risk if supply chain capabilities do not keep pace with rapid product innovation and sales volume.
• Investment Caution: Franchisees are becoming more cautious and rigorous in project selection (location, property conditions, ROI), which could slow expansion if not matched by superior brand appeal and operational resilience.

Q: Lydia Ling (Citi) asked about the long-term strategy for shareholder returns following the announcement of the second dividend.

A: CFO Wu stated that cumulative shareholder returns this year (dividends + repurchases) exceed $260 million, representing over 110% of 2025 net income. The company targets returning approximately 100% of prior year's net income through a dynamic mix of dividends and buybacks, confident in its cash flow generation ability.

Q: Simon Cheung (Goldman Sachs) requested visibility on Q4 RevPAR trends and the outlook for 2027.

A: Management noted steady Q3 performance and diverse demand drivers in Q4, including holidays and MICE recovery. However, they declined to provide specific RevPAR guidance for Q4 or 2027, instead emphasizing confidence in the solid foundation of domestic demand and slowing industry supply growth.

Q: Jiwei Liu (Citix) asked if the hotel opening target would be adjusted given the accelerated Q3 pace and what the outlook is for 2027+.

A: CEO Wang confirmed maintaining the full-year target of ~480 new openings, supported by a robust pipeline. For 2027+, he expressed confidence in steady network expansion due to ample reserves, differentiated product portfolios, and enhanced ability to secure prime locations.

Q: Ronald Leung (Bank of America) inquired about signing trends and how the company maintains its ability to secure premier hotels in a cautious market.

A: Management acknowledged investor caution but highlighted that hotel investments offer strong counter-cyclical attributes. They attribute their competitive advantage in securing projects to matured brand matrices (Atour Lite, Origin, Sa He) and products designed for longevity and pricing power, allowing them to accommodate diverse property types.

Q: Dan Chee (Morgan Stanley) sought updates on the 2026 retail revenue growth target and long-term growth drivers.

A: Management raised the 2026 retail revenue growth guidance to 50-55%. Long-term drivers include amplifying product strength via deep sleep insights, avoiding price wars in favor of content-driven brand trust, and continuously upgrading supply chain capabilities to support R&D and product innovation.