Atour (Trans): Focus on leisure; retail is customer-first

Below is Dolphin Research's transcript summary of Atour's FY26 Q1 earnings call. For our earnings take, see 'Atour: Hotels Rebound, Retail Surges — Has the 'indie' hotel darling broken out?'.$Atour(ATAT.US)

I. Key financial highlights

1. Shareholder returns: Announced the first cash dividend for 2026 of approx. $72 mn, about 31% of last fiscal year's net income. Since the buyback began last year, cumulative repurchases have topped $100 mn. The combined payout framework (dividend + buyback) targets a payout of approx. 100% of prior-year GAAP net income.

2. Outlook: FY2026 total revenue is guided to grow 24%-28% YoY. Retail revenue guidance for the full year is raised to +30%-35% YoY.

3. Liquidity: As of Mar 31, 2026, cash and equivalents were RMB 3.7 bn. Net cash stood at RMB 3.4 bn.

II. Earnings call details

2.1 Management commentary

1. Hotel operations

a. The overall portfolio and mature hotels continued to improve QoQ, with RevPAR returning to YoY growth, mainly driven by steady ADR gains. Q1 RevPAR was RMB 311.6 (102.4% of last year), with OCC at 100.6% and ADR at 102.1% of last year.

b. For mature hotels (in operation >18 months), RevPAR recovered to 98.3% of last year. OCC was 99.2% and ADR was 99.4%.

c. 110 hotels opened in Q1. As of quarter-end, 2,088 hotels were in operation, with 751 projects in the pipeline.

d. CRS contributed 63.7% of room nights. Corporate member nights accounted for 19.3%.

e. The price-protection policy (price-match and best-rate guarantee) was further strengthened. It received broad positive feedback during the Chinese New Year.

2. Brand portfolio

a. Atour Hotels: Since launch, Atour 3.6 has continued to receive positive market feedback for over a year. It validates the product competitiveness in the upper mid-scale segment.

b. Atour Origin: Further explores niches within upper mid-scale. In Q1, operating hotels delivered RevPAR above RMB 400, creating a differentiated price ladder vs. Atour Hotels. The team will pursue long-term product refinement, roll out the deep-sleep system, and further embed cultural elements and service touches.

c. SAVHE (upscale): Q1 operating hotels posted RevPAR above RMB 910 and ADR above RMB 1,000. It is attracting more international guests and families, with increasing organic recommendations and high ratings on overseas platforms, showcasing a distinctive appeal grounded in Chinese culture.

d. Atour Light: The customer base is more diversified, with steady traction among younger users and business travelers. Version 3.3 has opened in 20+ hotels, with RevPAR more than 10% above Version 3.0, and both product experience and operating efficiency recognized by customers and franchisees. In 2026, expansion will focus on Tier-2 and above cities with a quality-first approach.

3. Supply chain

a. As the hotel network expands and brand strength grows, more high-quality suppliers are joining the network. The platform offers a more diversified product set, and franchisees show greater willingness to centralize procurement.

b. The company adheres to eight procurement commitments, establishing reliable mechanisms in pricing, after-sales service, and customer care. This is intended to ensure consistency and trust.

c. Deeper co-development with upstream suppliers is enhancing functionality of existing products and accelerating new product development. Collaboration aims to raise performance standards.

4. Retail

a. Retail revenue grew strongly YoY in Q1, with core categories performing well. 'Atour Planet' ranks among the top bedding brands on major third-party platforms.

b. Pillows: Maintained No. 1 category sales on major platforms in Q1. The Memory Foam Pillow Pro 3.0, supported by brand campaigns, received strong market feedback.

c. Comforters: Share continued to rise, with cumulative sales of Deep-Sleep Thermo-Control Comforter series topping 3 mn units. The Deep-Sleep Thermo-Control Comforter Pro 3.0 Summer launched for 45 days generated GMV over RMB 100 mn, achieving a systematic upgrade in dynamic temperature-humidity management (upgraded bi-directional temp control and improved moisture-wicking breathability).

d. New categories: The summer Deep-Sleep loungewear and new-color Deep-Sleep fitted sheets posted solid sales momentum. Early results show healthy adoption.

e. Full-year retail revenue guidance is raised to +30%-35% YoY. Management sees strong visibility backed by Q1 traction.

5. Membership

a. Registered individual members reached 116 mn by Q1-end, +20% YoY. Membership growth remains healthy.

b. In 2026, the company will center on deep sleep as the core scenario, strengthening hotel-retail synergies to enhance perceived value for members. It will also explore cross-brand partnerships with like-minded companies.

6. ESG

a. Released Atour Group's 2025 ESG Report. The report outlines key progress and goals.

b. The Atour Foundation was established at end-2025, and recently launched a public-interest program for frontline housekeeping staff, open to the entire industry. The initiative targets industry-wide impact.

2.2 Q&A

Q: The pace of hotel closures accelerated in Q1. Will this affect the full-year closure and opening targets?

A: We closed 37 hotels in Q1, with closures clustered due to projects decided last year but only completed this year, creating a reporting lag. The full-year closure target remains 80, unchanged. Benefiting from last year's proactive structural adjustments, the quality of operating hotels has improved markedly.

During this process, we established a long-term mechanism to support older properties. For long-standing hotels, we offer targeted assistance and customized renovation plans to lower upgrade hurdles, alongside partial fee waivers and financial support. This is designed to enhance competitiveness of older locations.

On openings, we are progressing steadily on plan, adhering to a 'boutique-first' logic — new hotels must fit our positioning and deliver high-quality guest experiences. As of Q1-end, the pipeline stood at 751 projects, providing ample and high-quality reserves. Therefore, the full-year opening target is unchanged.

Q: How is the RevPAR trend in Q2? Has management's full-year RevPAR outlook changed?

A: Entering Q2, we continue to see robust leisure demand. In Apr, spring breaks in some regions further boosted travel, and more dispersed trip timing helped smooth holiday traffic. That said, we remain cautiously optimistic on Q2 RevPAR given lingering market volatility.

Longer term, supportive policies continue to unlock service consumption and fuel the sector. While external shifts may drive short-term swings and the lodging industry remains in a choppy recovery, we will not chase short-term results; rather, we will strategically broaden both business and leisure segments. We will keep refining service details that guests can truly feel, aiming to make Atour the most reassuring and reliable choice for travelers.

Q: How are franchisee sentiments? Has the company adjusted its signing strategy?

A: The market is normalizing and franchisees are more mature, neither overly optimistic nor anxious about short-term fluctuations. Sentiment is balanced and pragmatic.

On signing strategy: First, we will further strengthen our presence in core cities and prime trade areas, capturing baseline demand from high-frequency business travel and urban leisure. Second, we will selectively seize leisure-driven growth opportunities in key potential markets such as strong Tier-3 cities and cities with 5A scenic spots, focusing on projects with solid market foundations and long-term potential.

Third, over the long run, project quality is paramount, yet there is no industry consensus on its definition. Our quality philosophy goes beyond hardware upgrades and structural tweaks; it is rooted in the end-to-end experience to build a holistic quality construct. Leading product strength is the foundation, site selection in core locations is critical, and continuous experience improvement is the moat.

This philosophy yields a crucial result: our pricing power is earned through perceived guest value, not through cost compression, enabling us to keep pushing the price boundary upward. New brands such as Atour Origin were born from this logic — not as replacements for existing products, but as extensions of Atour's brand imagination.

Q: Q1 retail revenue beat market expectations. What drove the popularity of new products, and is there any update to the full-year retail revenue guidance?

A: Retail growth is not just about numbers; it is underpinned by a product methodology. Take the Deep-Sleep Thermo-Control Comforter Pro Summer series as an example: three years ago with Gen 1, we moved away from traditional duvet covers to a one-piece structure with cooling on both sides — a structural innovation.

With Gen 2, we realized users sought natural and comfortable coolness rather than peak coolness, so we redesigned the ventilation system and fabric structure, shifting from passive cooling to active temp control plus moisture wicking — a demand-driven innovation. This year with Gen 3, we addressed fluctuating indoor summer temperatures by creating a dynamic system that responds to environmental changes, further improving dynamic temperature and humidity control — a deeper, scenario-driven innovation.

After three iterations, the product definition has fundamentally shifted — from a 'cooling blanket' to a 'breathable comforter' and then to a 'comforter that breathes'. What drives this evolution is demand repeatedly validated in real user scenarios. Each iteration translates previously vague user perceptions into defined, quantifiable, and reproducible technical standards.

Through these three iterations, we found the hardest moat is not any single material or patent, but the systematic ability to stay close to users and keep turning user sensations into standards.

On guidance, aided by a solid Q1 foundation and strong momentum from new products, we are confident in exceeding the prior full-year target. Therefore, we are raising full-year retail revenue guidance to +30%-35% YoY.

Q: The company announced a 1H dividend plan. Any change or new development in the shareholder return policy?

A: We place high importance on shareholder returns. Today we also announced the first dividend of the year totaling approx. $72 mn, about 31% of last fiscal year's net income.

In addition, since the buyback began last year, cumulative repurchases exceeded $100 mn by Q1 this year. Looking ahead, we will continue a combined dividend-and-buyback framework, targeting an aggregate payout of approx. 100% of prior-year GAAP net income.

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