Release Date: November 19, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Atour Lifestyle Holdings Ltd (ATAT, Financial) reported a 46.7% year-over-year increase in net revenues for the third quarter of 2024, driven by strong growth in both the Manachised hotel and retail businesses.
- The company achieved a record pace in hotel network expansion with 140 new hotel openings in the third quarter, marking a 72.8% year-over-year increase.
- Atour's retail business demonstrated robust growth with a 107.7% year-over-year increase in GMV, reaching RMB566 million, with online channels accounting for around 90% of total GMV.
- The membership base expanded rapidly, with registered individual members exceeding 83 million, marking a 53.7% increase year-over-year.
- The launch of the upscale lifestyle brand SAVHE Hotel is expected to inject new vitality into the upscale hotel market in China, with a focus on quality and brand value.
Negative Points
- RevPAR for the third quarter of 2024 was under pressure, reaching only 89.5% of its level for the same period in 2023, due to high comparison base effects and a shift to outbound tourism.
- The gross margin of the hotel business decreased to 36.0% from 39.5% in the same period of 2023, attributed to a decline in RevPAR and increased revenue from lower-margin supply chain business.
- Revenues from leased hotels declined by 20.4% year-over-year, primarily due to a decrease in the number of these hotels and a decrease in RevPAR.
- The company faced increased selling and marketing expenses, which accounted for 11.5% of net revenues, up from 8.7% in the same period of 2023, due to enhanced investments in brand recognition.
- The adjusted net profit margin for the third quarter of 2024 decreased by 0.8 percentage points year-over-year, impacted by a decline in RevPAR and increased selling and marketing expenses.
Q & A Highlights
Q: Could you provide more color on the third quarter 2024 and October performance, and advise on RevPAR guidance for 2024? Will there be any changes to the full-year revenue growth guidance?
A: (Haijun Wang, CEO) The third quarter RevPAR was influenced by a high base from last summer, typhoons, new hotel openings, and public holiday rearrangements. However, the high base effect eased in October, with increased occupancy during the National Day holiday. Despite price pressures, the decline in RevPAR is narrowing. For the full year, we expect RevPAR to decline by a mid to high single digit year-on-year. Despite volatility, we maintain our revenue growth guidance of 48% to 52% due to our expanding hotel network and strong retail growth.
Q: Will you maintain the 400 hotel opening guidance or adjust it? How will the RevPAR decline affect new signing momentum?
A: (Haijun Wang, CEO) We have maintained strong momentum in new openings and signings, with 140 new openings in Q3, breaking our quarterly record. We have opened 360 hotels this year and are raising our full-year guidance from 400 to 450 new openings. Despite RevPAR fluctuations, franchisee demand remains strong, with a repurchase rate exceeding 50%. We will focus on quality control for new signings and aim for 2000 premier hotels by next year.
Q: Can you share more details on the unit economics of the new upscale brand SAVHE Hotel?
A: (Haijun Wang, CEO) SAVHE Hotel is positioned as a premium brand with selected services, aiming to benchmark international five-star brands with a Chinese experience. The first batch will focus on core business districts in 11 major cities in China, prioritizing quality over quantity. We expect mature hotels to have a RevPAR target between RMB550 to RMB650, with a cost per room around RMB200,000. The return on investment period is expected to be 4.1 years, leading the upscale hotel market.
Q: Could you share the latest signing momentum and opening plans for Atour 4.0 and Atour Light 3.0?
A: (Haijun Wang, CEO) Atour 4.0 has six hotels in operation and over 60 projects in the pipeline, with plans to exceed 10 hotels this year. Atour Light 3.0 signed 38 new projects in Q3, accounting for over 20% of total new signings, with 76 hotels in operation. We expect Atour Light 3.0 to exceed 100 hotels by year-end. Despite structural factors affecting RevPAR, we will continue product upgrades to drive healthy growth.
Q: We have seen an increase in hotel closures this year. What is your closure plan for next year?
A: (Haijun Wang, CEO) We closed 37 hotels in the first three quarters and expect around 50 closures for the full year. This is based on evaluations of property quality and performance. We aim to maintain high-quality services and will terminate contracts for underperforming hotels. We plan a similar pace of closures next year to achieve our strategic goal of 2000 premier hotels. For leased hotels, we will negotiate renewals based on brand display and location factors.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
