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Achieving New Heights: Atour's Spectacular Revival in China's Post-Pandemic Hospitality Market

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Michael Chen

April 3, 2024 - 07:43 am

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Soaring High: Atour's Emergence as the Beacon of China's Post-Pandemic Hospitality Revival

In a recent press release from SHANGHAI, dated April 3, 2024, Atour Lifestyle Holdings Limited (NASDAQ: ATAT), a pioneering force in the hospitality and lifestyle domain of China, unveiled its financial crescendo of 2023, anchored by a surge in domestic travel enthusiasm and its signature approach of immersive experience offerings.

The company, in its unaudited financial statement released on March 28, 2024, detailed its financial performance for the concluding quarter and the entirety of the year ending on December 31, 2023.

Atour's Hotel 4.0

The year-over-year growth narrates an impressive tale of recovery and success for Atour, as it tallies a remarkable 106.2% increase in net revenues, from RMB 4,666 million (US$ 657 million) in 2023 up from RMB 2,263 million the prior year. In consonance, the sustained fiscal momentum is further showcased in the adjusted net income (non-GAAP), which soared to RMB 903 million (US$ 127 million)—a substantial 248.3% leap as opposed to the RMB 259 million reported for 2022.

Embarking on the concept of "lifestyle hotels," Atour has carved its niche by assuring customized, superior experiences suited to the eclectic demands of its consumers and partners across diverse contexts. The company's unwavering dedication in this realm has firmly entrenched its position as a trusted and favored brand in the industry.

"We are elated with the robust annual results showcased for 2023 and the significant strides we've taken towards realizing our vision of orchestrating a network of 2,000 premier hotels nationwide by 2025. This will set a new standard—the 'Chinese Experience'—within the industry," expressed Mr. Haijun Wang, the revered Founder, Chairman, and CEO of Atour.

Beyond the sheer financial achievements, the operational metrics of Atour have equally mirrored rapid progression. For the year 2023, the firm's average revenue per available room (RevPAR) and average daily rate (ADR) surpassed the figures of the same period in 2019. The recorded statistics of RMB 377 and RMB 464 for RevPAR and ADR respectively, are a testimony to a growth of 44% and 19% on a year-over-year basis. Even more notable is the occupancy rate (OCC), which reached 77.8%, poignantly rallying to 106.0% relative to 2019's pre-pandemic times.

Parallel to these developments, Atour commemorated the initiation of 576 new hotel agreements within 2023, fortifying its eminent "Chinese Experience, 2,000 Premier Hotels" strategy. By the close of the same year, Atour had triumphantly elevated its operational hotel tally to 1,210, up by 29.8% from the previous year, alongside 617 manachised hotels in process in its pipeline.

Subsequent to a phase of downturn, the domestic tourism market in China has rebounded with pronounced vigor. The Ministry of Culture and Tourism's statistics indicate that domestic voyagers undertook around 4.89 billion journeys during the year, marking a 93.3% uplift from the year before. Concurrently, the expenditure attached to these travels attained a monumental RMB 4.91 trillion, eclipsing the prior year's spending by a whopping 140.3%.

With the industry scaling back to pre-pandemic magnitude, a heightened craving for personalized experiences and a qualitative upgrade within the hospitality sector bear witness. Atour, leading the helm of this transformative wave, has capitalized on its product innovation, operational excellence, and digital integration to scale new heights.

Adhering to its unique differentiation strategy, Atour unveiled 'Atour Light' 3.0 in February 2023. This midscale venture aligns elegantly with the emerging demand for both quality accommodations and distinctive experiences, thereby solidifying its value proposition in contrast to analogous contenders in the industry.

Since its introduction, 'Atour Light' 3.0 has vigorously attracted 27 new hotel signings in the last quarter of 2023, with 25 properties already in full swing. All strategically sited within the heart of central business districts across second-tier cities and higher, these establishments amplify Atour's reach to cater to the enterprising young business travelers and vacationers across China.

Furthermore, Atour 4.0 "With Nature," an elite upper midscale hotel brand, has been unveiled to entice both business and leisure travelers, offering a synthesis of leisure and business amenities. Post its inauguration in November 2023, the spearheading group of hotels under this branding has been signed across principal urban areas and business districts, with plans to inaugurate the pioneer establishment in the first half of 2024.

In an effort to bolster and captivate its membership base, Atour has enriched its A-CARD membership platform with an expanded palette of high-value privileges, tailored especially for the younger clientele. These enhancements encompass an eclectic mix of retail, gastronomy, culture, arts, and sports, thus adding a dynamic layer to the prevailing loyalty schemes. As of the conclusion of the year, the membership ranks burgeoned to surpass 63 million registrants, representing an impressive 78% increase year-over-year.

Extended beyond the confines of hotels, Atour's vision integrates new avenues in retail. Harnessing consumer insights, it has rolled out an exclusive line of deep-sleep-inspired amenities.

Riding on this scenario-based retail strategy, Atour realized a remarkable RMB 1.14 billion in GMV for the full year 2023, marking a 298.3% year-over-year escalation. The merchandise, including Atour's flagship Deep Sleep Pillow PRO and the sought-after Deep Sleep Temperature Control Quilts, has witnessed cumulative sales of 1.2 million units and over 100,000 units respectively.

This remarkable uptick in sales corroborates Atour's acumen in fathoming genuine consumer necessities, thereby reinforcing its position in the mid- to high-end market spectrum. Through innovative strides across product categories, Atour adds a distinct flavor to the recipe for hospitality success.

Atour's robust digital capabilities serve as the foundation for an uninterrupted online-to-offline shopping experience that caters to user contentment and paves the way for significant business escalation. This synergistic model holds great promise for fostering the company's sustained growth, as both the hotel and retail ventures feed into each other's strengths.

As Atour steps into its 11th year, the company reaffirms its dedication to the "Chinese Experience, 2,000 Premier Hotels" vision and continues to unleash further lifestyle innovations for its clientele. Additionally, Atour anticipates collaborative ventures that will push the frontiers of the Chinese hospitality sector, nurturing collective triumphs.

About Atour Lifestyle Holdings Limited

Atour Lifestyle Holdings Limited (NASDAQ: ATAT) stands as an industry leader within China's hospitality and lifestyle sphere. As an innovator in China's upper midscale hotel chain landscape, Atour has also spearheaded the development of a scenario-based retail business, intertwined with its hotel operations. The company's unwavering commitment extends to invigorating China's hospitality scene and fostering novel lifestyle brands that are intertwined with its hotel services.

SOURCE: Atour Lifestyle Holdings Limited

With this, Atour is positioned to enter a new era where experience reigns supreme, setting benchmarks and aspirations for hospitality peers to emulate this exemplary transformation journey in one of the world's most vibrant tourism markets.