Atour(ATAT.US)FY2025 Conference Call: Estimated retail revenue growth of 25%-30% year-over-year in 2026

Atour (ATAT.US) held its FY2025 earnings call on recent financial results. Atour said that for its revenue outlook, in 2025, both the scale of its retail business and brand reputation hit record highs. FY2025 retail revenue was RMB 3.67 billion (+67% YoY), and the company continued to lead the bedding category on major third-party platforms. The Deep Sleep Memory Pillow Pro series surpassed 10 million units in cumulative sales. In 2026, the company expects retail revenue to grow 25%-30% year over year.

In 2025, Atour completed the strategic target of “2,000 selected hotels in China experience” and officially launched the new three-year strategy “China Experience · Brand Leadership for Excellence.” The retail business represents nearly 40% of the Group’s total revenue, and the synergy between the hotel and retail businesses has continued to strengthen. In 2025, the company opened 488 new hotels, and the number of operating hotels reached 2,015 (+24.5% YoY); 779 projects were under reserve. Registered individual members reached 112 million.

Q&A Questions and Answers

Q: With the overall industry supply growth rate slowing somewhat, what is the franchisees’ signing intention? What are the store-opening guidance for 2026?

A: We also observe some fluctuations in the overall industry supply growth rate. But more deeply, behind this is that after years of rapid expansion, the industry is undergoing a profound structural upgrade, gradually moving into a new stage of high-quality development. Franchisees are indeed becoming more rational and cautious, but I believe this rationalization is actually positive for the industry’s long-term healthy development. Because when franchisees become more cautious in rent negotiations, site selection, and brand choice, they are effectively driving the market-selection process that eliminates the less competitive. The two-way selection between mature brands and high-quality franchisees will lay a firmer foundation for the partnership.

As for Atour itself, high-quality supply in the market is still scarce. We have never advocated growth driven purely by scale; it is growth that is high-quality and distinctive that we pursue in the long term. We remain positive and optimistic about the signing momentum for 2026, and we will ensure that every newly signed project is more competitive in the market.

Regarding newly opened locations, thanks to the continued advancement of the selected hotel strategy, in 2025 new hotels saw significant improvements in both site selection and property quality. In 2026, we will continue to maintain strict quality requirements, focusing on core cities and key commercial districts; while ensuring a higher quality baseline, we aim to achieve a new-opening scale similar to last year.

Q: What is your outlook for the hotel industry in 2026? Could you share the RevPAR performance from the first quarter to date and your thoughts on the full-year RevPAR trend?

A: In 2025, the hotel industry experienced a mild recovery. Supply and demand dynamics have continued to restore, and the full-year RevPAR recovery trend improved quarter by quarter. In 2026, the industry’s overall supply growth rate may slow further, while leisure demand remains strong. For example, during this year’s Spring Festival holiday period, both ADR and occupancy rates performed well, exceeding the levels of the same period last year. Based on this, we expect Q1 RevPAR to continue the improving trend and maintain a positive momentum.

We will not provide specific guidance for full-year 2026 RevPAR, because market conditions for the full year may change relatively quickly. However, favorable policies and the continued recovery of business travel also provide positive factors. Our goal remains clear: to stay steadfast in strategic execution amid market volatility, continue to deepen Atour’s differentiated experience advantages, maintain a more balanced and fine-tuned ADR and OCC revenue management strategy, consolidate and enhance the RevPAR recovery performance, and strengthen and build the brand’s long-term value.

Q: Last year, the retail business grew very strongly. Could you share this year’s retail business plan, new product plans, and revenue targets?

A: Over the past few years, Atour Planet has consistently adhered to an innovation-driven, product-driven development philosophy. We not only launched the industry’s first deep-sleep standard, but also drove a leap in retail business growth, truly leading progress and upgrades in China’s sleep industry. Looking ahead, Atour Planet will enter a stage of deepening core capabilities and strengthening competitive advantages in all dimensions. We need to take a unique development path and avoid getting pulled into homogeneous competition with followers.

For category planning, Atour Planet will continue to focus on the deep-sleep segment. First, it will continue to strengthen core categories. The pillow category aims to maintain an absolute leading position and establish a decisive advantage; the bedding-insert category is expected to achieve faster growth than pillows, further increasing market share. Second, new categories such as fitted sheets and home apparel will accelerate breakthroughs; by achieving scale growth through best-seller iteration and expanding the category matrix. In addition, mattresses and other sleep accessories as extension categories will jointly round out Atour Planet’s deep-sleep ecosystem layout.

In terms of revenue outlook, in 2025, both the scale of the retail business and brand reputation reached new highs. In 2026, we expect retail revenue to grow 25%-30% year over year. While maintaining healthy scale growth, we place even more emphasis on continuously strengthening core competitiveness by continually enhancing product strength and brand strength, achieving a more long-term sustainable development for the retail business.

Q: The full-year 2025 actual net profit margin was better than the initial expectation at the beginning of the year. Could you discuss the expected trend for 2026 net profit margin?

A: Indeed, the Group’s Adjusted net profit margin for full-year 2025 was approximately 17.9%. At the beginning of the year, we had expected that changes in revenue mix and a higher effective tax rate would weigh on the profit margin to some extent. However, through refined operational management, the profit margins in each business segment continued to improve. Together with the concentrated expression of Q4 policy subsidies, the end result is that the 2025 net profit margin is roughly in line with 2024.

Looking ahead to 2026, as the business continues to develop, the revenue mix of franchised hotels, the supply chain, and the retail business will continue to change. Meanwhile, based on the new three-year strategy “China Experience · Brand Leadership for Excellence,” we will allocate resources from a longer-term perspective. For example, by expanding talent to strengthen key positions and improving digital operational capabilities to support the Group’s long-term development. Therefore, we expect both G&A and R&D expense ratios to increase to some extent this year. On this starting point, we preliminarily expect the Group’s net profit margin in 2026 to decline slightly year over year.

Q: In 2025, the company closed 92 hotels for the full year, slightly above the initial expectation. Could you share the 2026 store-closure plan?

A: Regarding closures, as we have been communicating with the market, the core consideration behind closure decisions is consistency in the guest experience. The goal is to continuously strengthen the operating quality and experience standards of operating hotels. In 2025, we strictly controlled the quality of operating hotels and closed a total of 92 hotels.

In 2026, to ensure the overall hotel network quality level, we will still maintain a certain level of proactive elimination rate and terminate cooperation with hotels that have not met Atour’s experience standards, so as to continue to consolidate the brand’s long-term value. However, based on the optimization and adjustments completed in 2025, the foundation of the existing hotel portfolio is more solid. Therefore, we expect the number of hotel closures in 2026 to decrease somewhat. Our current target is to close approximately 80 hotels during the year.