Atour Lifestyle Holdings Limited (ATAT.US) recently held its FY2025 earnings conference call. Regarding revenue outlook, the company stated that for 2025, both the scale of its retail business and brand reputation reached new highs. FY2025 retail revenue was RMB 3.67 billion, representing a 67% year-over-year increase, maintaining a leading position in the bedding category across major third-party platforms. Cumulative sales of the Deep Sleep Memory Pillow Pro series surpassed 10 million units. For 2026, the company anticipates retail revenue will grow by 25% to 30% compared to 2025.

In 2025, Atour achieved its strategic goal of becoming a "2000-strong selected hotel brand with Chinese experience" and officially launched its new three-year strategy, "Chinese Experience · Brand Leadership Excellence." The retail business now contributes nearly 40% to the group's total revenue, with the synergistic effects between the hotel and retail segments continuing to strengthen. The company opened 488 new hotels in 2025, bringing the total number of operating hotels to 2,015, a 24.5% year-over-year increase. The pipeline of reserved projects stands at 779 hotels. Registered individual members reached 112 million.

**Q&A Session**

**Q:** The overall growth rate of industry supply has slowed somewhat. What is the willingness of franchisees to sign contracts, and what is the store opening guidance for 2026? **A:** We have also observed fluctuations in the overall supply growth rate of the industry. Looking deeper, this reflects a significant structural upgrade following years of rapid expansion, as the industry gradually moves towards a new phase of high-quality development. Franchisees have indeed become more rational and cautious, but we believe this shift is positive for the industry's long-term health. When franchisees are more prudent in rent negotiations, site selection, and brand choice, they are essentially promoting a market selection process where the fittest survive. The mutual selection between mature brands and high-quality franchisees will lay a more solid foundation for cooperation. For Atour specifically, high-quality supply in the market remains scarce. We have never advocated for pure scale-driven growth; high-quality, differentiated growth is our long-term pursuit. We remain optimistic about the signing momentum for 2026 and will ensure each new project is highly competitive. Regarding new openings, thanks to the continued advancement of our selected hotel strategy, hotels opened in 2025 showed significant improvements in location and property quality. For 2026, we will continue to adhere to strict quality requirements, focusing on core cities and key business districts, aiming for an opening scale similar to last year while ensuring even higher quality.

**Q:** What is the outlook for the hotel industry in 2026? Can you share RevPAR performance from Q1 so far and your view on the full-year RevPAR trend? **A:** The hotel industry experienced a moderate recovery in 2025, with supply-demand dynamics continuously improving, and the RevPAR recovery trend showed quarter-by-quarter improvement. In 2026, the overall industry supply growth rate may slow further, while leisure demand remains strong. For instance, during the recent Spring Festival holiday, both ADR and occupancy rates performed well, exceeding levels from the same period last year. Based on this, we expect Q1 RevPAR to continue its improving trend, maintaining positive momentum. We will not provide specific RevPAR guidance for the full year 2026, as market conditions can change rapidly. However, supportive policies and the ongoing recovery of business travel also provide positive factors. Our goal remains clear: to maintain strategic focus amidst market fluctuations, continuously deepen Atour's differentiated experiential advantages, uphold a more balanced and refined revenue management strategy for ADR and OCC, consolidate and enhance RevPAR recovery performance, and solidify the brand's long-term value.

**Q:** Retail business growth was very strong last year. Can you share this year's retail business plans, new product initiatives, and revenue targets? **A:** Over the past few years, the Atour Planet retail brand has consistently adhered to a development philosophy driven by innovation and products. We not only released the industry's first deep sleep standard but also drove leapfrog growth in the retail business, genuinely leading the progress and upgrade of China's sleep industry. Looking ahead, Atour Planet will enter a phase of deepening core competencies and comprehensively consolidating competitive advantages. We aim to carve out a unique development path, avoiding homogenized competition with followers. In terms of category planning, Atour Planet will continue to focus on the deep sleep segment. Firstly, we will persistently strengthen core categories: the goal for the pillow category is to maintain an absolute leading position and establish a decisive advantage; the duvet category is expected to grow faster than pillows, further increasing market share. Secondly, new categories like bed sheets and loungewear will see accelerated breakthroughs, achieving scale growth through hit product iterations and category matrix expansion. Additionally, mattresses and other sleep accessories, as extended categories, will collectively complete Atour Planet's deep sleep ecosystem layout. Regarding the revenue outlook, the scale and brand reputation of the retail business reached new highs in 2025. For 2026, we project retail revenue growth of 25% to 30% year-over-year. While maintaining healthy scale growth, we will place greater emphasis on continuously consolidating core competitiveness, achieving more sustainable long-term development for the retail business through enhanced product strength and brand power.

**Q:** The full-year 2025 actual net profit margin was better than initial expectations. Can you discuss the expected trend for the net profit margin in 2026? **A:** Indeed, the group's full-year 2025 Adjusted net profit margin was approximately 17.9%. At the beginning of the year, we anticipated that changes in the revenue mix and a higher effective tax rate would exert some drag on the margin. However, through refined operational management, the profitability of each business segment continued to improve, coupled with the concentrated recognition of policy subsidies in Q4, resulting in a full-year 2025 net profit margin that was largely flat compared to 2024. Looking ahead to 2026, as business continues to develop, the revenue structure from franchised hotels, the supply chain, and the retail business will continue to evolve. Simultaneously, based on the new three-year strategy "Chinese Experience · Brand Leadership Excellence," we will allocate resources with a longer-term perspective. For example, we will strengthen key positions through talent expansion and enhance digital operational capabilities to support the group's long-term development. Consequently, we expect both G&A and R&D expense ratios to increase this year. Starting from this baseline, we preliminarily anticipate a slight year-over-year decrease in the group's net profit margin for 2026.

**Q:** A total of 92 hotels were closed in 2025, slightly higher than initial expectations. Can you share the store closure plan for 2026? **A:** Regarding hotel closures, as we have consistently communicated to the market, the core consideration for closure decisions is experience consistency, with the goal of continuously strengthening the operational quality and experience standards of our operating hotels. In 2025, we strictly controlled the quality of the hotel network, closing 92 hotels in total. For 2026, to ensure the quality level of the overall hotel network, we will maintain a certain proactive elimination rate, terminating cooperation with hotels that do not meet Atour's experience standards to continuously consolidate the brand's long-term value. However, based on the optimization adjustments already completed in 2025, the foundation of the existing hotel portfolio is more solid. Therefore, we expect the number of closures in 2026 to decrease, with a current target of closing approximately 80 hotels during the year.