Earnings call transcript Q1 2023

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Operator

Ladies and gentleman, thank you for standing by and welcome to the Atour Lifestyle Holdings Limited First Quarter 2023 Earnings Conference Call. At this time all participants are in listen-only mode. After the speakers' presentation there will be a Q&A session. Today's conference is being recorded.

At this time, I would like to turn the conference over to Ms. [ph]. Chen Queenie Investor of Senior Relations. Manager Please go ma'am. ahead,

Unidentified Company Representative

you, to our Good and call. morning, Welcome everyone. evening, good first Thank operator. quarter earnings XXXX

Joining Rui Chairman and Founder, us Mr. today Haijun Wang and our Mr. and CEO, Mr. Wang Shoudong. CO-CFOs, are

company discussion Actual note, made Security materially not or any those results does are may start, that include numerous to implied Federal will comments stated the laws. differ we as obligations forward-looking today by today. any Before risks to Laws statements subject forward-looking please statements required under and The applicable our undertake by uncertainties. from update except

During management, call financial certain non-GAAP measures for today's also purpose only. will comparison discuss

the of the today. measures and earlier non-GAAP to reconciliation definition non-GAAP financial release please earnings issued GAAP For see of financial results,

webcast conference be addition, call ir.yaduo.com. website replay our In this will at of on available a

the Mr. Now over I our call will CEO. turn to Wang,

Haijun Wang

for earnings Thank thank Hello first you and Atour's XXXX you everyone today. joining quarter Queenie. call

share businesses. Atour results in you to solid hotel scenario and I'm that our achieving year retail based commenced XXXX a note, both pleased with on strong the

Our steps core deliver and every we to value our exceptional products polish as lifestyle services hotel and refine Atour to guide experiences people experience to with continues proposition to our customer. serve

efforts, in uncompromising drove both with businesses excellence, combined the recovery These quarter. first our the robust retail a to dedication during hotel and

our the execute development in X,XXX solidify benchmark, plan hotel upper position year industry to will three as Chinese we experience post-pandemic. the establishing continue the hotels, leading We our to believe while which open premier midscale industry

across details Now lines. our let me performance through business go our

development. hotel our business First,

quickly driven surge high growth three mantra, seeing accommodation travel parallel market into a in responded high enter to the quality, we demand. we post-pandemic the first Embodying OCC. rapid rising market achieve opportunities and high quarter's Atour ADR are and recovery in by efficiency, As and our value pronged and era,

same the level ADR occupancy to rebounded demonstrating period, rates XXX% and of level, Our exceeded capability. for the significantly quarter first recovery for XXXX's while RevPAR XXXX's both exceptional our

first was for detail, the February mature Furthermore, at XXX% recovered than first quarter, and in hotel rate level. the at greater showcasing our for level respectively. and of XXXX's same of operation XXXX's XXX% months in March more RevPAR for our business RevPAR recovery January, to level in operational XX hotels quarter XXX% vigorous Looking XXX%, a of rebound the

XXX% in the Notably, XXXX's in five improvement Day of Fujian For various explosive Labor XXX% RevPAR rates hotels among demand day RevPAR's such travel stimulated level. for provinces as Hubei, level holiday of to XXXX to over Shandong, recovery and soared further others. and

Year progress overall the of in The first combined in with with XXXX, of Chinese beginning New pandemic quarter. during new slightly XXXX, second the respect holiday the impeded to half the openings our

number franchisees engagement reached market The quarter improve. the a However, have recovery, new alongside continued representing for XX, high hotels in quarter trends signings. of we single signed record to first the new

that more our our Furthermore, the our and version has February brand mentioning X.X product also It's XX%, on new among repurchase premium. from its competitiveness than total Atour XX performance, a newly hotels, rate acceptance, existing signed was franchisees this quickly highlighting projects worth the a signed remarkable of the since released of Light gained achieving year. with market QX end of by XX our

continues network rapidly. to hotel Our grow

of the hotels, year, our era. our this operation year-over-year the our As of XXX hotel XX%. end the X,XXX and continued a its remained Excitingly, we pipeline X,XXX premier we coverage merged representing to to hotel commenced marking today quarter Lanzhou of expand. increase of extended in had portfolio's first officially Meanwhile, healthy inception

we quarter, under of the XXX development. end hotels first the As had

a as we total the to of of consolidate for continue hotels opening the the XXX analyze alongside prospects our market and will market ever-evolving by We to hotel this opportunities course end peruse year. met

Our first high benefiting growth the momentum loyalty also in customer CRS their or experiences. steady our Reservation Central quality from System, services quarter, maintained and program and premier

As million, an the X.X members quarter. over end of of XX base the of with the our new million surpassed membership increase end of previous since QX,

quarter members Our members were of engaged, most stayed quarter, promising energetic in and young its XX% us through of with growth and are XX. China. than trend. XX% healthy our our the consumer sold in were XXXX, XX, of about Among representing younger XX% nights group and to first those in CRS the them who percentage the sustaining Meanwhile, exceeded aged the XX first

scenario-based our to retail moving business. Now

retail accommodation Soccer, to the years, serve focusing lifestyle of lines, three few value aroma sleep, Planet, [ph] hospitality, lifestyles. brand complement proposition our extension on our natural As aesthetics, To and diverse Go people expertise we leading have in a past who developed harmoniously product successfully and business is have In a Atour respectively. Z beyond namely lodging-centric the reaching travel to

offline and continuously based scenario when experience of customers as improving role our are awareness, our home signature high and well further brand premium and our innovative underpinned These distribution these products, our retail during business solidifying lifestyle online our its diversified growth on Atour's second growth go. the of first with relaxation Through channels, along ease the robust driver. quarter, as we offerings, comfort, they the as quality at deliver to

first reached distribution in quarter by milestone, momentum. growth the powerful XXX% reflecting quarter rapid the year-over-year almost growth million propelled from online its business for our Revenues of retail RMBXXX channels. scenario-based in both our by and XXXX increased the RMBXXX GMV million to offline

first of March, In Planet cornerstone user Currently, construction Atour we on RXX balance a study. category, retail the GMV. pillow pillow's our functionality. Planet, deep launched sleep following we comfort design nearly products sleep the purposefully upgraded with our XX% are businesses feedback of creatively focused between Atour X.X the comprehensive our the contributed total Atour to Planet quarter, We as optimal refined the version our strike and in and

pillow user with garnered sales its version Planet, X.X exceeding became significantly these version for of performance to the period. X.X a product release the comparable has luxurious its Thanks after RXX, popular recognition enormous Atour the level quickly features and the

philosophy. lifestyle to customers' comfortable strive goal Hotel from we deep rooted brands deliver to exploring retail sleep we bringing relaxing our a sleep every Our homes, our original business to Atour Adhering deeply into as angle remain the experience and committed is lodging-centric our in experience. of

are We China's and the in very optimistic massive development potential opportunities about sleep market.

China's premier our operational our product establish diverse player we forward, strengthen will of sleep-related products that capabilities, ongoing products. through holistic of continue and Moving We Atour sleep and experiences brand market. users to across efficiency, awareness an the a growing product sleep will boundaries important suite in needs development believe and providing our evolving into improvements push insight with as development, our users'

inviting, cultural, expand explore interesting Since step experiences demand scenarios, refined journeys, to quality new connect. we Meanwhile, establishment in and those every creating provide can catering high intimate ambience, lifestyle. an throughout XXXX, possibilities our of we consistently our customers endeavored a their to warmly our where the who continuously have and with of people consumption expectations

the originated retail have performance only behind we value Atour's experience across force customers exceptional stay proposition both hotel with who and further businesses, with has elevated our us, an lifestyles, serve to differentiator. a provide people become not and our driving which to core goal diverse strong Our has to elevated also our competitiveness it their during key

customers, sustainable proposition value drive long shareholders. employees our further growth and to this empower forward value As will greater create for we term and franchisees move us

turn I'll Mr. to Now Shoudong our financial over the discuss results. Co-CFO, our to Wang call

Shoudong Wang

Mr. Wang. Thank you

Now I would like for financial to quarter of performance company's XXXX. the present the first

growth to XX.X% quarter the for scenario-based business. XXXX first revenues first year-over-year both in business the in retail increase by driven hotel of net by and RMBXXX was grew the The strong Our million. the quarter

for up driven XX.X% of This by first of our the ongoing was network the primarily of quarter increase Revenues were RevPAR. from our RMBXXX manachised hotels million, hotel and year-over-year. the recovery by XXXX expansion

our As total to this of by for hotels to XXXX. year-over-year, of the hotels increasing first pre-pandemic our up XXXX, the of XXX, of level RevPAR the manachised quarter March in XX.X% year, RMBXXX while of increased manachised the end surpassed number

XX.X% of by an quarter The increase of our to by consumption million, increase driven the the Revenues surpassed RevPAR, quarter hotels contributed XXXX, XXXX. representing hotels traffic and were first beginning leased leased customer increased the RevPAR pre-pandemic to increasing for recovery in XXXX. stronger RMBXXX was sentiment XXXX due level of of of of first the the since for primarily year-over-year. RMBXXX our

the for others and retail growing revenue product increase attributable retail XXXX The increased of and retail year-over-year recognition to year-over-year first brand was from quarter million. XXX.X% capabilities. by our to with million the XXX.X% to RMBXXX Revenues enhanced of growing scenario-based RMBXXX by

net to for accounted for ongoing XX.X% same of network our Hotel for for costs revenues XXXX quarter hotel first of RMBXXX and first compared to associated of net Our the to the costs of year-over-year, the the XXXX due costs quarter million XX.X% RevPAR. hotel by increased of period expansion operating increase operating variable recovery in last mainly with year. of revenues the XX.X% of

Other costs primarily business the year-over-year, increase costs an quarter first of scenario-based RMBXX revenues. for of million, costs and year of of our this for consist operating driven representing retail costs Other X.X% the business. operating line same accounted X.X% of Other with other XXX.X% by was increased of compared scenario-based of quarter the our revenues for for in the net growth costs period XXXX. of costs, XXXX, first revenues of operating the for retail rapid to net

for expenses to driven retail and of XXXX XXX.X% of by the to Selling increased net marketing investment period business. first increased initiatives million distribution in scenario-based X.X% Selling and of first marketing of for the and associated X.X% of accounted XXXX the channel growing for quarter RMBXX primarily the branding XXXX. revenues quarter same for expenses compared net revenues our with development by

first and quarter General the for million. were administrative XXXX of RMBXXX expenses

increased and expenses adjusted of impact for first for same compared to net revenues to of quarter compensation XXXX. from quarter share-based expenses, the year-over-year XX.X% first administrative of accounted for X.X% general Administrative of the RMBXXX by XXXX, compensation period and of of the XXXX. for share-based net expenses General expenses Excluding XX.X% RMBXX excluding revenues million million, the

for of the the XXX.X% net first by the first was million, RMBXXX technology income of in increased EBITDA RMBXX first X,XXX.X% million. Adjusted up which XXXX for same year-over-year. for of XXXX were period year-over-year RMBXXX by were Adjusted quarter million, quarter Our quarter development XXXX. and the to generally line with expenses

net an in equivalents. have cash them, ending cash we QX and with of cash was billion billion, healthy cash Among quarter-over-quarter. RMBX.X increase XX.X% a RMB representing Notably, maintained X.X position

financial for head our now session. concludes our XXXX. With the to it Q&A highlights over of first that, let's quarter That

Operator

We'll standby, now [Operator you. ahead. you. line from go Please the of Lin first CICC. Thank question. Please Thank take Instructions]. our from Sijie is

Sijie Lin

you Thank strong congrats results. management, the and on

I question one RevPAR. about So have

RevPAR reached QX XXX%. Our recovery

and our guidance? RevPAR adjust recovery we full the how's the recovery for QX, Thanks. will So in high of year

Haijun Wang

And factors. we Sijie you not that Thank were some QX, long much be very sure for question. whether due were to In going rebound term. there the to was that partially trend retaliatory

why growth to is we So guidance call needed observe. cautiously whole year. single-digit we That's for the quarterly earnings positive which gave on optimistic a last

position ourselves We are in factors benefiting Atour no the segment upper always there in midscale structural our recovery. which

RevPAR first a a our As our all report our those I of at said as recovery the and XX hotels in as were high operational our year, for rate showcasing of quarter well than growth. for for that in more mature XXX%, in vigorous this rebound quality the was business hotels, months level operation both of

in now in holidays trend quite the As both were and good. April Day May see we Labor recovery for QX, RevPAR that the

reach confident for to are XXX% rate the recovery we you. year. whole So Thank

Unidentified Company Representative

please. question next Operator,

Operator

is next our of from from take question. go Please now We'll the ahead. This line Please Leung Bank of standby. you. America. Ronald Thank

Ronald Leung

ask Okay, English. me the in let question

guidance can management XXXX? to improve in you improvement also and to a expectations? can Do you So be continue that openings is is than Thank the think if And very hotels franchisees any do better and overall this opening, than the chance think number even do there you XXX of be there about think much. think RevPAR the good how you the year? better XXX now, the

Haijun Wang

us quarter signings that XX% Thank much reaching the signings, which found of first over XX you those level progress quarter, made our is of for of repurchases and that very we from them in gave of signings, we signings, existing encouragement. a history. some actually that new Among lot franchisees, rapid in highest terms really In a question, are single Ronald.

going considering support have XXX We to the quarter. reserves, together with And do pipeline will pipeline believe opportunities be the consolidation XXX first together on, in the chain recovery hotel brought that the new and with market, we of year. opening already we in by industry of target hotel the this our able

that you long of for hotels a We, was that our operation in speed just over hotel higher hotels and always while this to have of We the and with development. Atour Lanzhou, of landing and new we more now officially quality ensuring era marks quality robust maintain Also try prerequisite prioritize heard have that believe term marks will that those quality develop in X,XXX the quantity. quality. and healthy products hotels X,XXX we and entered is our expansion be today that

Unidentified Company Representative

question Next please?

Operator

now We'll Lydia question. next from our the ahead is Ling Okay. take line go standby, Please of Please from Citi.

Lydia Ling

from landscape a in regarding Lydia I have competitive Citi. And management. upscale Hi mid question to the hotel.

your competition as competitiveness the and And you. do the hotel recovers, how hotel do intense to segment, industry and purpose mid upscale you mid many invest in So to their that segment. upscale shift with to [ph] more Thank segment. companies you gradually in supply hotel enhance more this more model face further into

Haijun Wang

two on experience has good paths, strategy focusing customers satisfaction on establishment, has our industry our Since their our or cost-oriented and Atour either reputation experience-driven. accumulated repurchase. that experience. has We enhanced exceptional focus hotel of among The

mantra terms namely According share rooms high market gradually our the has upper China high three the helped also And three of chains had [indiscernible] franchisee have long among ensure still efficiency first in market our is expanding. Our to quality, franchisees. midscale of that hotel and term largest Atour us in for partners. the the to number -- maintaining and share Research, Industry value, leading recognition been returns the in position we and of our to enabled stable mantras, accumulate high us high

are competitions. there Sure,

as the is trend While hotel chain increasing zero not hotel game. industry penetration, develop the industry this does a general sum with

innovations, high whoever's quality can experiences players capabilities, For got sustainable model industry, they better as operational and this in those branding, strong as achieve development. customer well better

when a they healthy extreme form every when in to Only to competition industry and more the also pattern diversification experiences, take shall they with and do time will start that's products player then develop our this want industry, differentiated place. what the and

Unidentified Company Representative

operator. Okay,

please? Next question

Operator

Thank you.

go Now next Fu take is from Please line Andy from question. ahead. standby. Please of This our Lotus. the Blue

Andy Fu

the channel, my management Can second full Also for first quarter Thank in we the earnings the behind XXXX? consumption, an management and for earnings? breakdown on update the on Thanks. do consider performance quick the outperforming the question. taking at have quarter. net the year the recovery reasons the good travel income Congrats expectation on earnings in

Shoudong Wang

be this Thank taking you for that question. I'll question.

quarter did a So indeed our good company performance. in first achieve

and adjusted net adjusted the million Our was was profit profit XX%. net margin RMBXXX

of gross which of all First QX in our higher terms of XX% with were was margin, gross XX%, QX margin two Mainly there compared XXXX. reasons. was

expensive with The of network. effect of rapid benefited mode, by and first RevPAR the we is of from recovery that scale the our light expansion hotel brought economy our asset

drove margin continued two overall gross higher. our was revenue our gross reason itself by margin have our And The continuous its those to has business margin also second The due business. of retail the relatively also contribution higher development from reasons have increase retail increased. and to gross

increase R&D of our efficiency. on year, increasing X% -- revenue expenses, and the expenses this R&D by of by X% we developing management by branding scenario-based much improved X% growth year, marketing our for of which were X% expenses, channels the quarter expenses we accounted of of of revenue. was The distribution smaller our for year-on-year X% first That revenue. up rest than retail business. terms last our initiatives expenses in increased XX% the in since investment three accounted revenue than management administrative in down because the for speed the of and and down The In were

our economy our scale continuous Thank of the of stable a the plus kicking gradual development In that in the business, expect in future with continuous of the will along term. hotel growth network, we overall effects, of the our you. our retail expansion with profitability longer maintain

Unidentified Company Representative

Next question, please?

Operator

ahead. We'll is you. Xin take the Please standby, this from now and Please of our go question. Thank next on UBS. line Chen

Xin Chen

Atour's Thanks. regarding the and question How to scenario What of potential this the management we business? from I'd does can will expect divestment, like your this impact the revenue financials? ask this with growth future [indiscernible]. perceive

Haijun Wang

lodging-centric a is extension lifestyle people business value for to business to retail in of Mr. Chen. very we'd brand, So you business and diverse then ask about reaching Wang expertise of our hospitality, as question, Shoudong thank beyond on the supplement like I'll the harmoniously natural condition serve accommodation retail dome We complement side. financial our a our to our talk who have to proposition that Mr. Xin lifestyles.

scenes perception this our natural Retail more our back help to as a the space help on to hotels synergy. of that Atour bring can their in also homes, our Atour provide which bring Retail a to in back the lot future. traffic offline form experience also Business businesses. and to customers' natural some nice Our to other of see a space, with retail business improve can can also experience hand, way very of hotels you hotel and for loop kind brings

focus taking wise, contributed sets very all our product. quarter, our currently to of retail Atour Product a and In category, Planet first as we pillows, GMV well. pan-sleep the sales, piece overall on Atour nearly sold XX% mattresses, Planet four quilts our core

market optimistic with of opportunities. very are sleep are development believe lot and quite We massive a we there potential China's about product

the Atour We will place we also a also in believe future. in stand sleep China's economy

first more customers people class that strengthen so the product continue can sleep customer development sleep so better. to Channelize channels quality and more make apart also customer and create the we been online product that third network from experiences and very offline our driven we our have offer from online In sources leveraging developing been to channels investments hotel and we'll two these as traffic expanding have both our on themes growing both both for insight future, to consumption fast. sleep party high

Now Mr. to over let Shoudong me talk hand retails about it Wang scenario-based to financials.

Shoudong Wang

year RMBXXX scenario-based reach XXX line. XX% profitability achieved will positive bottom on a of have in we this million our and milestone And also already have than And business year reached will already million accordingly. an expect retail for $XXX above reached a year, and revenue of scenario-based million. year revenue with revenue and year Our increase a retail more first of of RMBX whole already quarter our last increase a a the

will branding retail's Meanwhile, scenario-based to our on in expansions increase on group's we also investment that and overall make and contribution basis of to ROI increase the distribution the sure profit stringent profit, channel requirements the year-by-year. reasonable will initiatives

Unidentified Company Representative

question Okay. Operator, maybe. next

Operator

That you. Thank does any to conference comments. the back the additional or Chen Queenie conclude would like session. closing I question-and-answer for over turn to

Unidentified Company Representative

Operator. again us today. Thank everyone joining Thank you you, for once

If you us. feel have Goodbye. free please Have day. any great further contact questions, a to

Operator

Thank you. for you This disconnect. now does conclude may today. participating Thank the and you for conference

Atour Lifestyle Holdings Limited (ATAT) 18 May 232023 Q1 Earnings call transcript