Atour Lifestyle Holdings Limited

and gentlemen, thank you for standing by and welcome to the AtoA Lifestyle Holdings First Quarter 2025 earnings conference call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. Today's conference is being recorded. I would now like to turn the call over to Mr Luke Hu, Senior IR Manager. Please go ahead, sir.

Thank you, operator. Good morning and good evening, everyone. Welcome to our first quarter 2025 earnings conference call. Today, you will hear from our founder, chairman, and CEO, Mr Wang Haijun, and our EVP co-CFO, Mr Wu Dianfeng. Before we continue, please be aware that this discussion will include forward-looking statements under federal securities laws. These statements are subject to various risks and uncertainties, and the actual results may differ significantly from what is stated or implied in our comments today. The company is not obligated to update any forward-looking statements except as required by applicable laws. Additionally, during this call, our management will discuss certain non-GAF financial measures solely for comparison purposes. For a clear understanding of these measures and a reconciliation of GAF to non-GAF financial results, please refer to the earnings release issued earlier today. Furthermore, a webcast replay of this conference call will be accessible on our website at .YADUO.com, where a copy of the results presentation is also available. Now, I will turn the call over to Mr Wang, our CEO.

Thank you, Luke. Hello, everyone, and thank you for joining a Tours First Quarter 2025 earnings call today.

In the first quarter of 2025, the domestic travel market has been relatively unstable due to the complex environment of Hongguan. The overall market situation is uncertain, but the desire to challenge and survive as the leading lifestyle brand, YADUO has always kept the concept of managing the crowd and calmly responded to the new market changes, accurately meeting the current In

the first quarter of 2025, China's domestic travel market experienced fluctuations amid a complex and volatile macro environment, with numerous uncertainties presenting both challenges and opportunities. As a leading lifestyle group, we have always adhered to our business philosophy of serving people and are confidently navigating these evolving market dynamics. We continue to respond proactively to shifting consumer preferences for superior quality, personalized service, and experience-driven consumption. Meanwhile, we remain firmly committed to advancing the strategic initiative of Chinese experience 2000 Premier Hotels, which not only strengthens our brand awareness and product offerings, but also drives the transformation and elevation of the industry's value chain. Next, I would like to provide more details on our business performance for the first quarter of 2025. Let's begin with our hotel business. Please turn to slide four of our Q25 results presentation. Our rough part reached the RMB 304.4 in the first quarter of 2025, representing .8% of its level in the same period of 2024. Specifically, OCC reached a .8% and ADR at 97.2%, both compared to the same period in 2024. Please turn to slide five. Rathpart for our mature hotels in operation for more than 18 months in first quarter of 2025 was .8% of the level for the same period in 2024, in line with the group's overall performance, while OCC and ADR for these mature hotels reached a .6% and a .4% of 2024's levels for the same period respectively.

Please turn to slide six. Please turn to

slide six. Benefiting from our strengthening brand influence and a robust organizational efficiency, our hotel network continued to expand, demonstrating the resilience of our business. In the first quarter, we opened 121 new hotels, representing a .7% -over-year increase. By the end of the first quarter, we had a total of 1,727 hotels in operation, representing a .6% -over-year increase. This quarter, franchisees remain positive about our brand development. This has led to a continuous expansion of our pipeline projects. By the end of the first quarter, the number of hotels under development reached 755. While pursuing scale expansion, we always adhere to the quality standards. We carefully screen and evaluate both new hotel signings and openings to ensure sustainable, high-quality growth. Next, I would like to share the latest developments for Atul's hotel brand. In the first quarter, guided by our long-term growth philosophy and deep insights into current business travel trends, we implemented upgrades to our mid-scale and upper mid-scale hotel products.

Please turn to

slide seven. In the upper mid-scale segment, we launched Atul 3.6 in the first quarter. This product embodies an in-harmony with nature design philosophy, seamlessly integrating business functionality and a relaxed ambience. Furthermore, Atul 3.6 prioritizes enhanced convenience and comfort through optimized space utilization and upgraded functional design. This innovation enables us to deliver a comprehensive, full-scenario, ultimate business travel experience, setting a new benchmark for premium business travel in the upper mid-scale market.

Since its

launch, Atul 3.6 has received a widespread market recognition and a positive feedback from franchisees through its strong product vitality, holistically upgraded our customer experience features and efficient investment returns. We believe this product will further solidify our core competitiveness in the upper mid-scale segment.

Atul 3.6 is a key brand in the current business travel market. The 4G product is a long-term life-long product, leading the development direction of the mid- and upper mid-range markets. The 3G and 4G products are compatible, not only can we meet the diversified aesthetic preferences and needs of our customers, but also provide a more rich investment choice to the large-scale partners. In addition, we have also launched the Atul 3.5 SE exchange plan to keep the market competitive.

Atul 3.6 offers an extended life cycle and shapes the future of the upper mid-scale market. Together, Series 3 and Series 4 product lines address diverse customer aesthetic preferences and accommodation needs, while also providing franchisees with a broader range of investment options. In addition, for existing hotels with renovation needs, we have introduced the Atul 3.5 SE renovation program to help them maintain market competitiveness.

Please

turn to slide 9. In the mid-scale segment, we remain committed to product innovation and experiential upgrades that cater to the diverse needs of younger consumers. In 2023, we introduced Atul Lite 3.0, which effectively addressed the critical market challenges such as outdated aesthetics and inadequate service experiences by incorporating useful, fashionable design and innovative service touch points. This product has received widespread acclaim from both franchisees and consumers. Meanwhile, during the operation, we have gained valuable insights into the preferences of younger consumers. Building on this foundation, we launched Atul Lite 3.3 in the first quarter, inspired by the Blue Knights of Genoa, Atul Lite 3.3 provides customers with a relaxing and restorative resting experience through immersive atmospheric design. Atul Lite 3.3 features comprehensive upgrades in visual design, spatial perception, and facilities, while offering tailored functionality for business meetings and work-related needs. These enhancements further elevate the overall customer experience. With its improved quality, expanded versatility, and adhere to our Atul Signature Experience Standards, we believe Atul Lite 3.3 will serve as a key driver in achieving our goal of 1,000 Atul Lite hotels and will establish itself as a flagship product in the mid-scale segment.

In

an increasingly competitive market, we remain focused on creating products with extended life cycles. By continuously enhancing our product competitiveness with reinforced experience differentiations, we effectively meet the needs of the customers. The diverse needs of broader demographics further solidify our leadership across market segments. Now moving to our retail business, please turn to slide 10.

The growth of

our retail business is a natural extension of our positioning as a lifestyle group and our business philosophy of serving people. In the first quarter, our retail business maintained strong growth momentum, with GMV reaching RMB 845 million, up .9% -over-year, driven by rising brand strength and growing customer loyalty. Online channels continued to contribute over 90% of total GMV.

Please turn to

slide 11. Since its inception, Atul Planet has remained committed to studying and integrating customers' sleep needs across both hotel and home environments. This anchors the deep sleep experience firmly in the minds of customers. Across different scenarios, Atul Planet's products not only fulfill customers' functional needs, but also deeply resonate with their emotional needs.

In

the pillow category, our Deep Sleep Memory Foam Pillow Pro Series maintained robust sales performance in the first quarter, consistently ranking as the top seller in its category on major third-party e-commerce platforms. Since its launch, the accumulated sales of the Deep Sleep Memory Foam Pillow Pro Series have exceeded 6 million units, further solidifying Atul Planet's leading position in the pillow category.

As the -last-level version of Deep Sleep, the new product further optimizes the air-intensive cooling system, which will provide users with a natural and comfortable refreshing experience, rather than the extremely cold touch. The new product has been released and has gained high recognition from users. It has released the first month, and has achieved the highest sales performance. It has been listed for 48 days, and GMV has broken through the 1-month mark, becoming another premium product

in the Deep Sleep series. We launched the Deep Sleep Thermal Regulating Comforter Pro 2.0 Summer Season. Serving as the upgraded version of the Deep Sleep Lightweight Comforter introduced last year, this new product further optimizes the breathable cooling system, aiming to provide the customers with a natural and cozy coolness instead of an ultimate cold touch. Upon launch, the product received widespread consumer praise, ranking first in sales in its category on Tmall and Douyin in its first month. Within just the 48 days, the product exceeded RMB 100 million GMV, making it another blockbuster product in the Deep Sleep series.

On the other hand, by building a complete production process standard, we have achieved a comprehensive quality control in the production process, ensuring the stability and consistency of the product quality. In addition, the Asian planet continues to start from the user's needs, optimizing the product details, and improving the user experience. By continuously improving the product performance and quality, the Asian planet accurately satisfies the user's pursuit of high-quality life, defining new industry standards in terms of product quality and user experience.

The Asian planet has continued to develop high-quality products, providing -to-end quality control, and ensured consistent and reliable product quality. Moreover, Ator Planet remains focused on refining product details based on customer needs, aiming to enhance the overall usage experience. With the continuous improvement of both product performance and quality, Ator Planet is well positioned to meet consumers' growing expectations for high-quality living, redefining new standards for both product quality and customer experience. Please turn to slide 13, moving to our membership business and channel development progress.

Thanks

to the continued enhancement of our membership ecosystem and an expanding range of membership benefits, our registered individual members surpassed the 96 million by the end of the first quarter, representing a .4% -over-year increase. Our core CRS channel continued to maintain stable performance, accounting for .1% of total room night sold during the first quarter. The contribution of room night sold to corporate members was .8% during the first quarter.

Please move to slide 14, we continue to improve the A-card membership system by analyzing and researching the behavior of different liquid users, promoting the integration of accommodation and retail business, and further promoting the intersection of consumption. During the first quarter, we launched a joint sales from retail to hotel membership, which has been a key part of our business since the beginning of the first quarter.

Please turn to slide 14, we continue to enhance our A-card membership ecosystem by gaining deeper insights into user behavior and preferences across different business formats. This enables us to further integrate hotel and retail businesses, thereby driving cross-consumption between them. In the first quarter, alongside the launch of new retail products, we introduced cross-promotional campaigns that allow retail customers to access our hotel membership benefits. These initiatives have attracted more retail customers to our hotels, driving further conversions across our business segments.

In terms of membership operations, we actively grasp the needs of leisure travel and commercial travel, and continue to create a high-sensitivity experience and rights. During the Spring Festival, we have launched a reverse trip to open the hotel's blind box, and provide local play to users through the form of a destination recommender. In addition, we have also opened a joint cooperation with the tourism companies in the region, which further enhances the age of

the members. In terms of member engagement, we actively leverage emerging trends in leisure and business travel to continuously deliver experiences and benefits that highly resonate with customers. For example, during the Spring Festival, we launched our counter-trend travel blind hotel booking campaign, catering to the younger travelers' growing preference for exploring niche, crowd-free destinations. We also introduced the destination ambassadors to share local travel inspiration. Additionally, we partnered with a vertical travel platform to establish integrated memberships, further embedding our value proposition throughout customers' journey and enhancing member loyalty.

Finally,

I am pleased to announce the recent release of our 2024 ESG report. Please turn to slide 15. Throughout 2024, we continued to strengthen our ESG governance by embedding sustainability principles across both hotel and retail businesses. At the same time, we are actively fulfilling our social responsibilities through industrial support and social assistance programs in Yaduwa Village. And by leveraging our brand influence, we also built bridges for biodiversity conservation.

Looking

ahead, we remain committed to upholding our product philosophy of being humane, warm, and inspiring, scaling the expansion and driving quality enhancements to both the hotel and retail businesses. Guided by our long-term growth principle, we remain committed to making tangible contributions to sustainable development and the betterment of society. I will now turn the call over to our co-CFO, Mr. Wu Jianfeng, who will discuss our financial results.

Thank you, Haijun. Now I would like to present the company's financial performance for the first quarter of 2025. Please turn to slide 17 of the result presentation. Our net revenues for the first quarter of 2025 grew by .8% -over-year and fell by .6% -over-quarter to RMB 1,906 million. Revenues from our managed hotels for the first quarter of 2025 were RMB 1,032 million, up by .5% -over-year and down .7% -over-quarter. The -over-year increase was primarily fueled by our ongoing hotel network expansion. Revenues contributed by our leased hotels for the first quarter of 2025 were RMB 129 million, a decrease of .5% -over-year and .6% -over-quarter. The declines were primarily due to a decrease in the number of leased hotels as a result of our product mix optimization. Revenues from our retail business for the first quarter of 2025 were RMB 694 million, up by .5% -over-year and down .3% -over-quarter. The -over-year increase was driven by growing recognition of our retail brands and effective product innovation and development as we successfully broadened our range of product offerings. Now let's move to cost and expenses. Please turn to slide 18. Hotel operating costs for the first quarter of 2025 increased by .2% -over-year and decreased by .3% -over-quarter to RMB 736 million. The -over-year increase was primarily due to the increases in variable costs, such as hotel manager costs associated with our ongoing hotel network expansion. Growth margin of our hotel business expanded to .6% in the first quarter of 2025 from .1% during the same period of 2024. Retail costs for the first quarter of 2025 rose by .7% -over-year and decreased by .5% -over-quarter to RMB 337 million. The -over-year increase was associated with the rapid growth of our retail business. Growth margin of our retail business expanded to .4% in the first quarter of 2025 from .5% during the same period of 2024. Primarily attributable to the increase in contribution from higher margin products. Now please turn to slide 19. Selling and marketing expenses accounted for .8% of net revenues for the first quarter of 2025, compared with .9% for the same period of 2024. The increase was mainly due to investment in brand recognition and the effective development of online channels in line with the growth of our retail business. Journal and administrative expenses, excluding share-based compensation expenses, accounted for .1% of net revenues for the first quarter of 2025, compared with .0% for the same period of 2024. The decrease was primarily due to improved management efficiency and economic soft-scale. Technology and development expenses accounted for .1% of net revenues for the first quarter of 2025, compared with .6% for the same period of 2024. The increase was mainly due to increased investment in technology systems and infrastructure to support our expanding hotel network and retail business and improve the customer experience. Now please turn to slide 20. Adjusted net income for the first quarter of 2025 was RMB 345 million, representing a .3% increase -over-year. Adjusted EBITDA for the first quarter of 2025 was RMB 474 million, up by .8% -over-year. Adjusted net profit margin for the first quarter of 2025 was 18.1%, representing an increase of .3% -over-year. Adjusted EBITDA margin for the first quarter of 2025 was 24.9%, an increase of .8% -over-year. Please turn to slide 21. We also maintained a healthy cash position as of March 31, 2021. Our cash and cash equivalents totaled RMB 3146 million, with net cash of RMB 3074 million. Please turn to slide 22. As part of our commitment to enhancing shareholders' value, in accordance with the annual dividend policy adopted in August 2024, today we declared our first cash dividend in 2025 of 0.14 USD per ordinary share, or 0.42 USD per ADS. For an aggregate amount of approximately USD $58 million. Concurrently, we announced a three-year share repurchase program, under which we may repurchase an aggregate value of up to USD $400 million. Through a comprehensive shareholder return initiative in composing dividends and share repurchase, we are taking concrete actions to reward shareholders' trust and support, enabling all shareholders to share in the company's growth achievement. Now please turn to slide 23. For full year 2025, we currently expect total net revenue to increase by 25% to 30% compared with full year 2024. That concludes our financial highlights for the first quarter of 2025. Now let's open for Q&A.

Thank you. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. For the benefit of all participants on today's call, if you raise your question in Chinese, please immediately repeat your question in English. Please submit your question to one at a time. If you wish to have more questions, please rejoin the queue. Stand by while we

compile the Q&A roster. Just a moment for our first question. Our first question

comes from C.G. Lin from CICC. Your line is now open.

Could you please share with us your thoughts on the performance of the Q2 and the ?V?P? since the second quarter? Thank you, management. Could you please share the performance of ?V.P. since Q2 and provide us with ?V.P. for the full year? Thank you.

Thank you, C.G. Thank you, C.G.

In Q1, the overall market experienced a sum of volatility. There were multiple factors to be considered, including weather conditions, macroeconomic impact, and the impact of the pandemic. They all affected travel demand. Our refs are decreased by .2% -over-year, and also OCC and ADR were showing varying degrees of decline -over-year as well.

In the second quarter, the price and the rate of export were both good, and they exceeded the same level as last year. In the second quarter, the overall ?V.P. pressure will be relieved compared to the first quarter.

Entering Q2, we observed a continued divergence in market demand. While there were the recovery of business travel, but it remained quite uncertain to some extent. Leisure travel demand has demonstrated some notable resilience. During the Labor Day holiday, both pricing and occupancy performed quite strongly, exceeding prior year levels. Overall, we anticipate there might be some easing of ?V.P. pressure in Q2 when compared to Q1. As for our view on the full year ?V.P. performance, it is still remaining consistent with the beginning of the year. And ?V.P. still faces considerable uncertainty given the ongoing market volatility. However, in terms of our operations, we will not just blindly engage in price competitions with the homogenized products in the market. What we will do is to continue to adhere to ATT&R's differentiated experience advantages to seize the core revenue opportunities, and we are going to adopt a more balanced and refined revenue management strategy in terms of both ADR and OCC so that we can continuously build the long-term brand value of ATT&R.

Thank you, Sujie. Next question, please.

Thank you. Just a moment for our next question. Next we have Roland Leung from Bank of America. Your line is now open.

Thank you. Good evening, management. I have a question. Can you share with us the current situation and the expectations for the company's opening of the company in 2025?

Thank you. I will answer this question. In the first quarter, our contract was extended in a more positive manner. Under the background of the company's general pressure to attack the homogenized products, we have successfully established our own unique market position through the differentiated brand strategy and experience advantages. This has also continued to attract a lot of attention from the added advantages.

Thank you, Roland. Let me answer your question. In the first quarter, we remained positive, finding momentum. Amid industry-wide pressure from homogeneous supply, ATT&R, we solidified our unique market positioning through our differentiated brand strategy and distinctive experiential strengths. This has continuously drawn the attention of high-quality franchisees.

In addition, with the uncertainty of the Hongguan, we can see that the hotel industry is relatively stable compared to other investment methods. The business model is also relatively stable. Although there are some fluctuations in the Rolpa, the cost of the high-quality property is still in a relatively low range. In addition, the profitability is also greatly improved. In this way, the overall profit has long-term attractiveness. It is also because of this that our mature hotel add-ons are still full of confidence and willing to seize the opportunity to grasp the potential of long-term development of high-quality brands in the future market.

In addition, the hotel industry is still relatively stable compared to other investment channels. The hotel industry offers still a relatively stable cash flow returns and a more robust business model. Despite some Respar volatility, the premium property rental costs still remain in a relatively low range with improved availability. And that makes the overall returns attractive in the long term. As a result to that, mature hotel franchisees are still remaining confident and are willing to seize opportunities to capture that long-term growth potential of premium brands in the future market.

As

for new openings, in the first quarter of this year, we opened 121 hotels, continuing that high-quality expansion trend since we had last year. Based upon that, we maintain our four-year opening guidance of 500 new openings and have full confidence in achieving this goal, steadily advancing toward our strategic objective of reaching 2,000 premier hotels by the year end.

Also,

based on our strategic goal of 2,000 premier hotels, we will impose stricter requirements on quality from a multiple demand point of view.

Thank you, Ronald. Next question, please.

Thank you. Just a moment. Next, we have Dan Chi from Morgan Stanley. Your line is now open.

Thank you, Mr. Director. My question is about the retail sales. We can see that the sales performance in the first quarter of the year is very bright. The retail revenue has increased by 67 percent, the same as last year. In the previous year's performance, we mentioned that the growth rate of the full-year guidance was not lower than 35 percent. I would like to ask the management team if they have any new ideas about the new revenue for retail sales and the plan for the whole year. Please allow me to translate my question. My question is related to the company's retail business. We saw retail business revenue growth in the first quarter was outstanding at 67 percent -on-year. Previously, the company guided full-year retail revenue of no less than 35 percent growth. I would like to ask the management about any update to the full-year revenue guidance on this business and any strategic plan for retail in the coming period. Thank you.

Thank you, Dan. In the first quarter, we saw the key marketing opportunities. We saw the growth rate of the retail sales of the GND, which is a very good result. We also saw the growth rate of the new GND, which is a very good result.

Thank you, Dan. In the first quarter, we saw the key marketing opportunities of the Spring Festival. Also, we gained advantage from that continuous popularity of the Deep Sleep series products. Our retail business achieved a -on-year growth of over 70 percent in GND. Meanwhile, we can see that the sales trend of the new products we launched in March, namely the Deep Sleep Thermal Regulating Comforter Pro 2.0 Summer Season, is also very strong.

In the second quarter, we saw the same growth rate of retail sales of the GND, which is a very good result. At the same time, although the Rampart is not certain, but it is also a good result for our retail business. We also mentioned that the same growth rate of retail sales of the GND, which is a very good result, is also a good result.

Looking at the full year, though the market competition is still remaining intense, however, because of our continuous enhancement of our TourPlanet product offerings, as well as the brand awareness, we are quite confident in the performance of our upcoming product launches, also the major promotional campaigns we have in our plans. Based upon this outlook, we are now raising our full year retail revenue growth forecast to 50 percent -over-year. Meanwhile, despite there are still some Rampart uncertainties, the strong performance of our retail business led us to increase our group's full year revenue growth guidance to the range of in between 25 percent to 30 percent -over-year.

In

the future, TourPlanet will continue to focus on the deep sleep domain, enhance product R&D, improve our product quality, also consolidate our moat and supply chain to achieve higher quality and sustainable development of both the product and our brand. Thank you.

Thank you, Dan. Next question,

please. Thank you. Our next question comes from Junwei

Lu from Citix. Your line is now open. Hello, Director.

We

have

just seen the company's announcement of the plan to split the revenue and to buy back. Could you please give us some general information about the overall consideration of the return of the shares? We noticed that you had just announced the dividend and share buyback program. Could you share some sort of the overall considerations behind these initiatives? Thanks, Management.

Thank you, Junwei.

Thank you, Junwei. As we have been communicating with you, we have always been committed to creating long-term value and to return the trust and support of our shareholders with practical actions. So this time, in addition to the dividend, we have also officially announced our three-year stock buyback plan. So we expect that the return of the accumulated amount in the next three years will not exceed $4 billion.

Thank you, Junwei. Well, like we said before, we remain committed to creating long-term value and rewarding our shareholders' trust and support through concrete actions. So in addition to the dividend, we have also officially announced today a three-year share repurchase program with a total amount not exceeding $400 million.

So today we announce that the first share repurchase is $58 million. So that's about 33% of our previous year's profit.

That's why this year, as we announced, our first dividend distribution totals approximately $58 million, representing about one-third, 33% of the prior fiscal year's net income.

And

moving forward into the future, we will implement a comprehensive shareholder return program by combining dividend payout and share buyback together. While ensuring the company's stable and normal capital operations, we will actively consider various shareholder return methods in line with actual business conditions to enhance shareholder yield and enable all shareholders to share in the company's growth achievements.

Thank you, Junwei. Thank you, Junwei. Next question, please.

Thank you. Our next question comes from Lydia Ling from Citi. Your line is now open.

Hi, management. Could you provide an update on the progression of your upscale of brands? And also we noticed the launch of some new products across both the -mid-scale and also mid-scale brands. So could you elaborate more on the strategies for them? Thank you.

Thank you, Lydia. In terms of our upscale brands, I'd like to talk about our new brand, Sa He Hotel. We consistently adhere to a quality-first principle, and our goal is to develop a batch of flagship projects. We are pleased to take this opportunity to announce that within this month, our Sa He flagship hotel at Binhe of Shenzhen will officially commence operations on the 28th of May. So since the trial operations of two Sa He hotels, which started this year, their product positioning, design, aesthetics, and service experiences have received widespread acclaim from the consumers. And we have the confidence that Sa He Hotel's core concept of Chinese experience and its brand ethos of Oriental serenity will establish new benchmarks in the upper-scale hotel market in China.

As mentioned earlier, Sa He Hotel will be able to combine three and four Sa He hotels in Asia. They will be able to create a product model for the entire Sa He hotel. I think this will not only enrich the choices of our home-seller, but also meet the needs of the consumers' diversity, and further expand the scope of our market coverage, thus strengthening the long-term leadership position of Sa He Hotel in the Chinese high-end market. And in

the -mid-scale hotel segment, as I mentioned earlier, our Ator III and Ator IV series will coexist, and they will jointly shape our next generation -mid-scale hotel portfolio, so that it not only reaches the choices of franchisees, but also meets the diverse accommodation needs of consumers, also to further expand the market coverage, so as to consolidating Ator's leading position in the -mid-scale market.

And through more modular applications, it can be used to match more diverse businesses, and further expand our hotel area.

And as for the mid-scale hotel segment, as we announced earlier, we are going to upgrade our Ator Lite 3.0 to the Ator Lite 3.3 version, and then we will be able to use the Ator Lite 3.5 version to upgrade our hotel. And that has undergone comprehensive upgrades in multiple dimensions, including experience, product to texture, and business functions. And we are adopting more modular design applications in order to adapt to more diverse properties, as well as enlarging the room areas. We are going to continue to be committed to creating a higher premium and cost-controllable investment model by offering those lasting profitability and excellent returns, so that we can provide with the franchisees with more investment options. Thank you.

Thank

you,

Lydia.

Thank you. This concludes today's question and answer session. I would like to turn the conference back over to Mr. Luuk for any additional or closing remarks.

Thank you for joining us today. If you have any further questions, please feel free to contact our IRT. We look forward to speaking with you next quarter, and thank you and goodbye.

And that concludes the question and answer session. And thank you very much for joining our call today. You may now disconnect.