Atour Lifestyle Holdings Limited

Hello, ladies and gentlemen. Thank you for standing by. Welcome to A-Tour Lifestyle Holdings second quarter 2025 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a Q&A session. Today's conference is being recorded. I would now like to turn the conference over to Mr. Luke Hu, Senior IR Manager. Please go ahead, sir.

Thank you, Operator. Good morning and good evening, everyone. Welcome to our second quarter 2025 earnings conference call. Today, we will hear from our founder, chairman, and CEO, Mr. Wang Haijun, and our EVP co-CFO, Mr. Wu Jianfeng. Before we continue, please be aware that today's 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 other 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-GAAP financial measures solely for comparison purposes. For a clear understanding of these measures and a reconciliation of GAAP to non-GAAP 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 ir.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 Atour's second quarter 2025 earnings call today.

上半年,国内出行市场处于震荡调整阶段, 虽然需求端整体呈现稳健复苏的态势, 但行业在高速发展的周期中仍面临诸多挑战。 在这样的背景下,我们认为, 真正的行业引领者不仅要用规模验证商业模式的可行性, more importantly, the user's reputation and brand value. Therefore, Adore has always been dedicated to creating new products, returning to the user, and using the real needs of the user as the starting point, and upholding the core ideas of the business community, continuously promoting the innovation and development of accommodation and retail products, and building competitive barriers with the advantage of experiential experience, maintaining stability in the wave of the industry cycle, and pursuing sustainable long-term development.

In the first half of the year, China's travel market went through a period of volatility and adjustment. While overall demand steadily recovered, the industry still faced numerous challenges amidst this high growth cycle. Against this backdrop, we believe that a true industry leader must not only validate its business model through scale, but also build a strong brand moat grounded in customer reputation. Therefore, a tool will stay true to our founding aspiration, refocus on customers placing their needs at the forefront and adhering to our business philosophy of serving people. We continue to drive product innovation and iteration across both our hotel and retail businesses, leveraging differentiated experiential strengths to build defensible competitive advantages. This allows us to stay resilient through industry cycles and pursue sustainable long-term growth. 下面我将展开介绍二五年第二季度各项业务的具体情况。 Now, I would like to provide more details on our business performance for the second quarter of 2025.

首先是住宿业务,请大家翻到PPT的第四页。 Let's begin with our hotel business.

Please turn to slide four of our second quarter 2025 results presentation. Our rev par was RMB 343 in the second quarter, representing 95.7% of its level in the same period of 2024. Specifically, OCC reached 97.4%, and ADR stood at 98.2% of their levels in the same period in 2024.

请大家翻到PPT的第五页。 Please turn to slide 5.

In the second quarter, RAVPAR for our mature hotels in operation for more than 18 months was 94.4% of the level in the same period of 2024, while OCC and ADR stood at 96.5% and 97.8% of 2024's levels for the same period, respectively.

Please turn to the sixth page. In the process of expanding the scale, we insist on the long-term idea that hotel quality will always be the first priority. Please turn to slide six.

In the process of expanding our scale, we have always adhered to a long-term growth principle, with hotel quality as our top priority. This ensures each new hotel carries forward our brand DNA and delivers consistent experiences, thereby supporting sustainable growth through quality. In the second quarter, we maintained a steady pace of expansion with 118 hotels opened By the end of the second quarter, we had a total of 1,824 hotels in operation, representing a 29.2% year-over-year increase.

与此同时,依托坚实的品牌势能以及持续提升的产品力, 我们逐步构建起差异化的竞争壁垒。 Meanwhile, leveraging our solid brand momentum and continuously enhanced product strength

we have been gradually building differentiated competitive edges. With multiple brands and the product lines that precisely target various market segments, we offer franchisees a rich and a diverse range of investment options. By the end of the second quarter, the number of hotels under development reached 816. The growth of high-quality pipeline projects is fueling strong momentum toward our strategic goal of 2,000 premier hotels. 下面我将介绍一下亚朵集团住宿品牌的最新进展。 Next, I would like to share the latest developments for Ator Hotel Brands.

请大家翻到第七页。 在中高端的市场方面是亚朵三系和四系并行的产品矩阵。 by digging deeper into the needs of the scene, we have promoted the expansion of our high-altitude track. Among them, the Azov-3 series mainly consolidates our core brand position in the mainstream commercial travel scene. The latest Azov-3.6 version is based on the concept of classic human text, focusing on the user's need for spatial functions and atmosphere, and optimizing the convenience and comfort of the accommodation experience. Please turn to slide 7.

In the upper mid-scale market, the parallel development of Ator Series 3 and Series 4 enables us to gain deeper insights into demand across segmented scenarios. driving our further penetration in the upper mid-scale segment. Among them, Attour Series 3 consolidates our core brand position in mainstream business travel scenarios. The latest Attour 3.6 version is built on the product philosophy of timeless and humane and focuses on customer needs for both functional space and ambience, further enhancing the convenience and the comfort of the stay experience. The first batch of Attour 3.6 hotels have gradually opened and received strong market recognition for their outstanding product strength, which is driving robust signing momentum.

请大家翻到第八页。 亚洲四系作为布局中高端市场的新一代标杆产品, 聚焦高线城市核心商圈的区位, to accurately match the needs of business trips and city vacations. On June 28, the first store of Yaduo 4.0 opened for the first anniversary. Through the deep fusion of space aesthetics and local culture, we built an experiential barrier, realizing the key crossroads from product innovation to quality verification. As of now, Yaduo 4.0 has opened more than 30 hotels, Please turn to slide eight.

As a next generation benchmark product for the upper mid-scale market, a tour series four focuses on prime locations in higher tier cities, precisely catering to the blended needs of business trips and urban vacations. On June the 28th, we celebrated the one-year anniversary of our first ATOR 4.0 hotel. By seamlessly integrating spatial aesthetics with local culture, it has established a moat of differentiated experiences, marking a critical transition from product innovation to quality validation. To date, more than 30 ATOR 4.0 hotels have opened, with over 60 hotels under development in our pipeline.

请大家翻到第九页。 当下消费者普遍注重内心满足的体验式的消费, 而传统的高端酒店在硬件设施和服务体验上, 与用户的需求存在了显著的脱节。 萨河酒店的推出是重塑高端酒店体验标准的一次成功的探索。 Please turn to slide nine.

Today, consumers increasingly prioritize experiential consumption that fulfills their inner needs. However, traditional upscale hotels have struggled to keep pace, as their facilities and service offerings exhibit a significant mismatch of evolving guest expectations. The introduction of Sa He Hotel represents a successful effort to redefine the standards of upscale hotel experiences. Guided by the brand ethos of Oriental serenity, Sa He creates deeply immersive experiences across sleep, healing, and wellness, revolutionizing the traditional hotel's approach to guest care. On May 28, our first Sa He flagship hotel officially opened in Shenzhen and has received widespread acclaim for its distinctive Oriental lifestyle experience.

As a new high-end brand, Sa He Hotel not only reflects the current demand, but also faces the future consumer trend. Looking forward to the next stage, Sa He will focus on the core of the first line and the new first line city. Based on user feedback and real-time operation, we continue to optimize the product. We hope that the carefully built Sa He Hotel can become a standard production in the way of living in the city.

As a newly developed upscale brand, Sa He Hotel addresses present needs while anticipating emerging consumption trends. Looking ahead, Sa He will focus on rigorous site selection in core business districts of first-tier and new first-tier cities. while continuously optimizing its product model based on customer feedback and operating performance. We expect each thoughtfully crafted Zahe Hotel to become a lifestyle landmark in every city it enters, demonstrating to both customers and franchisees an innovative model in China's new generation of upscale hotels.

QingJu 3.3, through the design style, functional model and business model system optimization, accurately satisfies the needs of young business people and partners, and further consolidates our product competitiveness in the mid-end hotel market. In terms of business, we continue to optimize operation efficiency, improve user experience, and drive the bright performance of QingJu brand as a whole and city benchmark store business data. Please turn to slide 10.

Ator Lite 3.3, as an extension and upgrade of Ator Lite 3.0, has comprehensively improved its design style, functional modules, and operational model to precisely cater to the needs of young business travelers and franchisees, further enhancing our product competitiveness in the mid-scale hotel segment. From an operational standpoint, we continued to improve efficiency and enhance the customer experience. These efforts have produced a strong operating performance in the brand metrics and flagship hotels in key cities, while offering franchisees a sustainable return on investment.

We believe that the current market environment We will continue to invest in core resources for the development of the QingJu brand and provide a good opportunity for the development of the QingJu brand. We will continue to invest in core resources for the development of the QingJu brand and provide a good opportunity for the development of the QingJu brand

We believe the current market environment presents a great opportunity for Atour Light's growth. As a strategic priority for the group, we will continue to allocate core resources to it. In terms of scale, we are taking a long-term, quality-first approach, making steady progress through a rigorous selection process. In brand building, we maintain a youth-focused positioning and continue to strengthen its presence and influence, further widening our differentiated advantage in the mid-scale hotel segment. 接下来是我们的零售业务,请大家翻到第十一页。 Moving now to our retail business, please turn to slide 11.

亚朵零售的差异化优势源于对用户需求的深刻理解。 and the commitment to the concept of natural deep sleep. We are not blindly accelerating the speed of promotion of products, but focusing on the core needs of users, accurately capturing the experience details of users in different scenarios, and by carefully polishing, we will transform the survey into a product function that can be landed. As a result, we are gradually building a solid and hard-to-repair core performance.

Atura Retail's differentiated advantages stem from a profound understanding of customer needs and steadfast commitment to our natural deep sleep concept. Rather than accelerating product launches, we prioritize excellence in addressing core customer needs and carefully capturing the experiential nuances of different scenarios. Through meticulous refinement, We translate these insights into implementable product functionality, gradually enhancing core competitiveness in a way that cannot be replicated.

隔離於新品的持續熱銷以及重要營銷節點的市場釋放, 本季度,零售業務延續了強勁的增長的趨勢。 GMV達到11.44億元,同比增長84.6%。

Filled by ongoing strong sales of new products and the momentum from promotional campaigns, our retail business maintained robust growth this quarter, with GMV rising 84.6% year-over-year to RMB 1,144 million. Online channels continued to account for over 90% of total GMV.

六一八购物节期间亚朵零售GMV达到5.78亿元 同比二四年六一八增长了超过86% 再次创下大促销售新高 本次大促在主流第三方平台 亚朵星球也首次实现了床上用品行业排名第一的成绩

Our retail GMB set a new sales record during the June 18th shopping festival, reaching RMB 578 million, up more than 86% from the same period last year. During this promotional campaign, Attor Planet ranked first in terms of sales in the betting category for the first time on major third-party platforms. This breakthrough signifies that Attor Planet's Deep Sleep Solutions brand positioning has further consolidated consumer mindshare.

请大家翻到第十二页。 在枕头品类方面,亚洲星球本季度在主流第三方平台延续领先地位。 Based on the user feedback research, after many rounds of selection, adjustment of the support structure, and repeated polishing of the real sleep test, we also officially launched a replacement product of the deep sleep pillow series in this month, Deep Sleep Pro 3.0. Deep Sleep Pro 3.0 has achieved multiple breakthrough upgrades, using innovative curve-matching design and split support structure. Please turn to slide 12.

In the pillow category, Ator Planet has maintained its leading position on major third-party platforms this quarter. further cementing our leadership position. Based on customer feedback and after several rounds of fine-tuning in material selection, support structure adjustments, and real sleep tests, we officially launched an upgraded version of the Deep Sleep Memory Foam Pillow Series this month, the Deep Sleep Memory Foam Pillow Pro 3.0. This product delivers multiple breakthrough upgrades, including an innovative curved fitting design and a partition support structure that better cradles the head and naturally fits the curvature of the neck and shoulders. The accompanying pillowcase uses a new weaving technique, which enhances breathability and moisture wicking while keeping the pillow surface at a stable temperature.

请大家翻到第十三页。 Please turn to slide 13.

After multiple quarters of dedicated research and functional refinement, the momentum of our comforter category has gradually gained market recognition for its product strength. The DeepSleep Thermal Regulating Comforter Pro 2.0 summer season continued its strong sales momentum during the second quarter, driving significant growth in category sales. Attour Planet has also surged to the top of the Comforto category rankings on Douyin platform in May.

请大家翻到第14页。 本季度,针对用户日常使用的痛点,我们还推出了全新品类深睡床立。 亚洲星球持续拓宽的深睡产品矩阵,全面覆盖了用户居家睡眠微环境的多元化的需求, 也体现了我们在睡眠领域提供系统性解决方案的能力。

Please turn to slide 14. This quarter, to address common daily use pain points, we also launched a new product category, the Deep Sleep Fitted Sheet. Atour Planet's continuously expanding deep sleep product portfolio comprehensively covers the diverse needs of customer home sleep microenvironment and demonstrates our capabilities to provide systematic solutions in the sleep segment.

Looking ahead to the second half,

We will further deepen our presence in the sleep market by driving more product iterations and category innovations based upon our customer needs. We will enhance our R&D capabilities, strictly adhere to production standards, and optimize supply chain management to advance the upgrading of industry craftsmanship and quality standards. We will remain at the forefront of innovations in consumers' sleep experience and drive high-quality growth in the retail business. 请大家翻到第十五页,最后我向大家介绍一下会员以及渠道方面的进展。 Please turn to slide 15. Last but not least, I would like to share the progress across our membership business and channel development.

随着ACAD会员体系的持续完善,以及权益的不断丰富, 截止二期度末,亚朵注册会员人数超过1.02亿, With the ongoing refinement of the ACARD membership system and the steady expansion of member benefits,

Our registered individual members surpassed 102 million by the end of the second quarter, representing a 34.7% year-over-year increase. This marks a new phase for our membership program. In terms of channel development, our CRS channel remained at a healthy level, accounting for 61.5% of total room nights sold in the second quarter. The contribution of room night sold to corporate members was 20%.

Please turn to page 16. We believe that the essence of membership business is not traffic operation, but an important way to build emotional connection with users. Returning to users, responding to the real needs of users is the core value of the membership system of Ado A-Card. In June this year, in order to enhance the sense and satisfaction of the members of the group, Please turn to slide 16.

We believe the core value of our membership business is not on traffic operations, but on building an emotional connection with our customers. Refocusing on customers and responding to their genuine needs is the core value of the continuous evolution of the ACARD system. In June this year, we launched the new Gold Member Growth System to improve Gold Member perception and satisfaction with membership benefits. This system adopts a tier-based benefits release mechanism and extends certain platinum member benefits to them, better aligning with the pace of members' progression and their usage needs, while allowing more high-frequency active customers to enjoy premium benefits earlier.

展望下半年,我們將繼續堅持中國體驗的戰略方向,持續夯實基本功,強化執行標準。 Looking ahead to the second half of the year, we remain committed to our Chinese experience strategy and will continuously strengthen our fundamental capabilities and reinforce execution standards.

Amid a complex and volatile external environment, we will uphold our core values of humanistic care and customer focus. Through refined service and high-quality products, we aim to set the benchmark for experiences in the industry and, as always, deliver our warmth and attentiveness to every customer.

Next, let's have our CFO, Wu Jianfeng, introduce the company's financial situation.

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 second quarter of 2025. Please turn to slide 18 of the result presentation. Our net revenues for the second quarter of 2025 grew by 37.4% year-over-year and 29.5% quarter-over-quarter to RMB 2,469 million. Revenues from our monetized hotels for the second quarter of 2025 were RMB 1,299 million up 26.5% year-over-year and 25.9% quarter-over-quarter. The year-over-year increase was primarily fueled by our ongoing hotel network expansion. The total number of our monetized hotels increased from 1,382 as of June 30, 2024 to 1,800 as of June 30, 2025. The quarter-over-quarter increase was mainly due to an increase in rep half. Rep half for our monetized hotels was RMB 340 for the second quarter of 2025, compared with RMB 302 for the previous quarter. Revenues contributed by our leased hotels for the second quarter of 2025 were IMB $150 million, a decrease of 17% year-over-year and an increase of 16.4% quarter-over-quarter. The year-over-year decline was primarily due to a decrease in the number of leased hotels as a result of our product mix optimization. The quarter-over-quarter increase was mainly due to an increase in REPA. REPA for our leased hotels was RMB 513 for the second quarter of 2025, compared with RMB 453 for the previous quarter. Revenues from our retail business for the second quarter of 2025 were RMB 965 million, up 79.8% year-over-year and 39.1% quarter-over-quarter. These increases were 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 19. Hotel operating costs for the second quarter of 2025 increased by 15.1% year-over-year and 21.3% quarter-over-quarter to RMB 893 million. These increases were primarily due to the increases in variable cost, such as the supply chain cost and hotel manager cost associated with our ongoing hotel network expansion. The gross margin of our hotel businesses extended to 38.3% in the second quarter of 2035 from 35.7% during the same period of 2024, primarily attributable to a lower proportion of these hotels as a result of our product mix optimization. Retail cost for the second quarter of 2025 rose by 70.0% year-over-year, and 33.5% quarter-over-quarter to RMB 451 million. These increases were associated with the rapid growth of our retail business. Growth margin of our retail business expanded to 53.3% in the second quarter of 2025, from 50.6% during the same period of 2024, primarily attributable to the increasing contribution from higher margin products. Now please turn to slide 20. Setting and market expenses for the second quarter of 2025 were RMB 393 million, compared with RMB 225 million for the same period of 2024. Setting and market expenses accounted for 15.9% of net revenues for the second quarter of 2025, compared with 12.5% for the same period of 2024. The increase was mainly due to the investment in brand recognition and effective development of online channels in line with the growth of our retail business. General and administrative expenses for the second quarter of 2025 were RMB 90 million, including RMB 2 million share-based compensation expenses. compared with RMB 91 million for the same period of 2024, which included RMB 15 million in share-based compensation expenses. General and administrative expenses, excluding share-based compensation expenses, accounted for 3.6% of net revenues for the second quarter of 2025, compared with 4.2% for the same period of 2024. Decrease was primarily due to improved management efficiency and economics of scale. Technology and development expenses for the second quarter of 2025 were RMB 43 million, compared with RMB 33 million for the same period of 2024. Technology and development expenses accounted for 1.7% of net revenues for the second quarter of 2025. compared with 1.8% for the same period of 2024. Now please turn to slide 21. Adjusted net income for the second quarter of 2025 was RMB $427 million, representing a 30.2% increase year over year. Adjusted EBITDA for the second quarter of 2025 was RMB $610 million, up by 37.7% year over year. And adjusted net profit margin for the second quarter of 2025 was 17.3%, representing a decrease of 0.9 percentage points year over year. The decrease was due to a rise in the overall effective tax rate resulting from withholding tax. Adjusted EBITDA margin for the second quarter of 2025 was 24.7%, remaining stable compared to the same period of 2024. Now, please turn to slide 22. We also maintained a healthy cash position. As of June 30, 2025, our cash and cash equivalents totaled RMB 2,716 million. with net cash of RMB 2,649 million. Please turn to slide 23. For full year 2025, given ongoing network expansion and rapid growth of our retail business, we currently expect total net revenues to increase by 30% compared with full year 2024. That concludes our financial highlights for the second quarter of 2025. Now let's open for Q&A.

Thank you. We will now begin the question and answer session. If you'd like to ask questions, please press star 11 and wait for a name to be announced. For the benefit of all participants on today's call, if you raise your questions in Chinese, please immediately repeat your question in English. Please repeat your questions to one at a time. If you wish to have a follow-up questions, please rejoin the queue. One moment for the first question. Our first question comes from the line of Lydia Lin from Citi.

Please go ahead. Hello, Manager. Thank you for the opportunity to ask me a question. And I also congratulate the company that in the second quarter, it still achieved a very good performance. I would like to ask a question about RAPPER. Can you share with us the situation of RAPPER in the past three quarters, especially during the summer, and can you share with us your thoughts on RAPPER this year? on sex management. And so congratulations on the thorough results in the second quarter. And so I want to ask some questions on the RAPA trend. So could you share the latest RAPA trend performance in the quarter to date, and especially during the summer holidays? And what's your latest view on the full-year RAPA trend?

Thank you. In the summer, we see that although the market still presents a hot spot for tourism, and the characteristics of regional diversification, the overall demand has not yet recovered to the level of the same period last year. But we also see that the leisure tourism in the summer still has a certain resilience. Therefore, we expect that the pressure of the whole third quarter, called the second quarter, will be relieved. The recovery of the repartee will be further shortened. Thank you, Lydia.

Well, entering the summer season, the market continues to exhibit some characteristics, such as the rotating travel hotspots or the divergent regional performances. So overall demand has not yet recovered to the same period last year. However, we do have observed that the summer leisure travel still demonstrated some resilience. Therefore, we expect that the rev par pressure in Q3 will somewhat ease compared to that of Q2, while further narrowing the declining in year-on-year rev par recovery. Nonetheless, full-year rev par recovery rate is also showing a gradual improving trend.

If we look at the future, with the continued increase in market supply, the entire industry is still facing certain challenges. But for Ado, we will insist on playing our own advantage in the experience of X1, returning to the users, and continuing to strengthen our product and brand power. In terms of revenue management, we will also focus on OCC and ADR, a more balanced strategy to improve our overall revenue. We believe this is the key to our Ado transition period, and it is also a test of our brand resilience.

Looking ahead, we believe the industry will continue to face challenges as market supply increases overall. However, Attua will consistently leverage our differentiated experiential advantages by refocusing on users while continuously strengthening our product excellence and brand premium capabilities. In terms of revenue management, we shall maintain a more balanced strategy between OCC and ADR to enhance overall profitability. We are confident that this approach is the key to navigating market cycles and it will serve as a touchstone for our brand's resilience.

Thank you. Thank you, Lydia. Next question, please.

One moment for the next question. The next question comes from the line of Chen Xin from UBS. Please go ahead.

Hello, Mr. Wang. Hello, Mr. Wu. I am Chen Xin from UBS. I have a question about our opening and our competition. I would like to ask you to share with us whether our opening and closing targets have changed in 2025. In addition, what is the state of the contract with Jiamu? Let me translate to English. I may have the management to share whether there are any changes to the 2025 guidance on hotel openings and closure. Additionally, what is the recent trend in franchise signings? With the increasing competition in the market, will this impact the company's future development plans? Thank you.

Thank you, Chen Xin.

Let me try to answer your question and allow me to share Ator's long-term development plans from multiple perspectives, including store openings, closures, and signings.

Firstly, regard to new openings.

In the first half of this year, we opened a total of 239 new hotels. By the end of the second quarter, pipeline hotel numbers reached 816. Based upon this, we are fully confident in achieving our full year guidance of 500 new hotel openings and finally reaching the scale target of 2,000 premier hotels by the end of this year.

Secondly, let's take a look at this point of view. For the next hotel, we will continue to carry out dynamic assessments from the management experience of different dimensions. This is not qualified and does not meet our experience consistent standard of hotel termination cooperation. In the first half of the year, we closed 34 stores. It is expected that the number of closed stores this year will reach 70 to 80 stores.

Secondly, on closures, as for our hotels in operation, we would conduct ongoing evaluations from operational to experiential perspectives and determinate partnerships with those that do not meet our experience consistency standards. So in the first half of the year, we closed 34 hotels, and we expect the full year number of closures to be in between 70 to 80. And moving forward, we will maintain a certain active replacement rate to ensure every operating hotel is a differentiated, high-quality property.

Third, I will talk about our future contract orientation. First, we will have a more precise layout in the area. We rely on the white paper of our department to play the advantage of network management. Next, in the current fluctuating market environment, we will still adhere to high-quality contract standards to ensure large-scale growth. Through the above strategies, we hope to provide users with better products and experiences. Thirdly, the next point on our future approach to signings.

Firstly, we will position precisely in terms of location, leveraging the network management advantages outlined in our site selection tool. Secondly, despite the current market environment with turbulences going on, we shall continue with the high standards on signings to ensure our high-quality growth in scale. These strategies will allow us to not only offer better products and experiences, but also create a win-win, sustainable growth for our brand and the franchisees.

最后我想表达的是纵观整个中国连锁酒店的发展历程。 大部分企业都是规模为先的发展路径, But our industry will eventually turn from scale competition to quality competition. For Yago, we have always adhered to our strategy of quality good electricity. In the future, we will continue to strictly control the quality of the project from signing, opening, to operating the hotel's entire life cycle.

Last but not least, well, in fact, when we look back at the development history of China's chain hotel industry, most players have inevitably followed a path of prioritizing scale first. But the industry would sooner or later eventually shift from competition on scale towards competition on quality. Meanwhile, we at Ator consistently kept to our strategic focus of quality premier hotels throughout the whole time. In the future, we will continue to enforce strict quality control throughout the entire lifecycle of hotels, from signing and opening to operations, and build a brand moat with our high standards. and consistently practicing and promoting our development philosophy of long-termism. Thank you.

Thank you, Chen Xin. Next question, please.

The next question comes from the line of Sujie Lin from CICC. Please go ahead.

Thank you, Mr. Guan. Congratulations on another successful quarter. My question is about retail. Because we saw that the second quarter, including the 618 period, the retail continued to perform brilliantly. We have also updated the whole company's annual income guidance. I would like to ask what the income guidance for retail business is like. In addition, can you talk about some thoughts on the future development of retail business, including the rhythm of the new sleeping series, So thank you, management. Congrats for another strong quarter. So my question is on the retail business, because we noticed that A-Tours retail business continued its outstanding performance during Q2, which spans across the 618 online shopping festival period, and that you have raised full-year revenue guidance. So could you share with us What's the full-year revenue guidance for the retail business? And additionally, could you please discuss more about the future development of the retail business, maybe including the rollout pace of new sleep products, and is there any bottlenecks or challenges among development? Thank you.

Thank you, Sijie. I will first answer the question about our revenue guidance. In the second quarter, we have achieved a very bright performance in the retail business. For the whole year, we will continue to promote our new products according to the plan to continue to improve our product evidence. This month, we have updated our deep sleep pillow Pro 3.0 and our deep sleep air-conditioned quilt Pro 2.0 4G quilt products. The market feedback is also very, very positive. Next, we will continue to launch the upgraded version of the air-conditioned quilt series to further enrich the product line of our deep sleep series. So based on the positive development of current retail business, we are full of confidence in achieving the goal of the whole year. Thank you, Sijie.

Let me answer your question regarding revenue guidance. In the second quarter, Ator's retail business achieved outstanding performance, and looking at the full year, we will continue to launch new products as planned and further refine our product matrix. This month, we launched the DeepSleep Memory Phone Pillow Pro 3.0, and the DeepSleep Thermal Regulating Comforter Pro 2.0 all season. Both have received very positive market feedback. Upgraded versions of the DeepSleep Thermal Regulating Comforter series will also be rolled out in the near future to further enrich our DeepSleep product line. Considering that positive development momentum of the retail business, we are confident in achieving our full-year targets and have Therefore, raised our four-year guidance of retail business growth to 60% year-over-year.

接下来我来谈谈零售业务未来的规划。 经过长期的探索,我们也认识到就是我们亚洲星球睡眠产品的持续的热销是基于我们对用户需求的深刻的洞察, 包括我们体验驱动商业模式的成功的实践。 But at the same time, we also see that the competition in the industry is very fierce. There are also a lot of competitors and imitators. As an industry, we think we are still a new member of the industry. What we need most is to sink in and continue to use our basic capabilities. This basic capability includes two aspects. The first aspect is that we will continue to improve our supply chain level and create a long-term development base for enterprises. Now, let me discuss the future plans for the retail business of ours.

Through long-term exploration, we have already recognized that The sustained popularity of our Atul Planet sleep products is rooted in our deep understanding of user needs and the successful implementation of an experience-driven business model. However, we do see intensifying competitions going on with new entrants and imitators joining the fray. As a relatively new player, we see ourselves coming into this industry we need to stay focused, solidify our fundamental capabilities in two folds. On one hand, we shall continuously optimize our supply chain as a strong foundation for our long-term development, while on the other hand, we will strengthen R&D innovation and quality control to drive the overall improvement of industry standards with higher benchmarks. This is precisely a continuation and practice of the long-term philosophy of high-quality growth that our hotel business upholds. Thank you. Thank you, Sijie.

Next question, please.

Thank you. Next question comes from Dan Chi of Morgan Stanley. Please go ahead.

Good evening, everyone. I have a question about finance. We see that the company's income structure is changing. At the same time, the tax rate is relatively high in the second quarter as well as in the first quarter. I have talked about the net profit rate of the whole year. Try to maintain this level of 18% last year, which is the net profit rate of the gold adjustment. Now that there are these structural income structural changes, can you please share with the management floor the situation of the net profit rate after the gold adjustment of the whole year? Let me translate it. We observed the growth rate of the retail segment business. Revenue is a lot faster than the hotel segment. So there has been some structural change on the growth rate of the company's revenue outlook. The tax rate was also high this quarter, similar to first quarter. So I would like to understand the company's latest view on the full year adjusted net income margin. And can it still stay stable at 18% like last year as previously guided? Thank you.

Thank you, Dan. In 2024, the net profit rate of our group was 18% after the adjustment. This year, due to the rapid growth of our retail business, our entire revenue structure has also changed. In the first half of the year, the overall ratio of our retail revenue to the group's overall revenue rose from 29% in the same period last year to 38%. As the ratio of retail business revenue increases, the overall profit rate will have a certain structural impact. Thank you, Dan.

In 2024, our group's adjusted net profit margin was approximately 18%. This year, due to the rapid growth of our retail business, our revenue structure shifted, and in the first half of the year, retail revenue accounted for around 38%. of the total, up from around 29% in last year. And the contribution from retail revenue continues to increase. It is exerting a structural impact on our overall net profit margin, but as we have maintained a relatively stable pre-tax profit margin through improved management efficiency.

But at the same time, we have officially launched our shareholding and repurchase plan this year. Because of the capital source of our capital, the tax return of this company will increase the overall tax rate of the group this year. The overall tax rate we adjusted this year is expected to rise from 25% last year to 30%. This will affect the annual net profit rate. Therefore, we are affected by this tax rate. Our overall net profit rate this year will be reduced compared to last year. Thank you.

Meanwhile, as we have officially launched a comprehensive shareholder return program combining dividend and the share repurchases this year, of which the funding source comes from our net income profit distribution of our domestic subsidiaries. Accordingly, the associated withholding tax will increase our overall effective tax rate this year. The adjusted comprehensive tax rate is expected to rise to 30% this year, compared to last year's 25%. That will, to some extent, affect our full-year net profit margin. So as a result, we anticipate our year-on-year decline in full-year net profit margin. Thank you. Thank you, Dan. Next question, please.

One moment for the next question. Our next question comes from the line of Simon Cheung of Goldman Sachs. Please go ahead.

Thank you, Mr. Wang and Mr. Wu for sharing. I have two questions. The first question is about the brand. Actually, both questions are about the brand. The first one is that I saw your feedback since the opening of Shaha in Shenzhen. It's very good. I would like to know about your future plans. For example, in the area, do you have any specific goals? How many stores do you want to open? This is in Zaha. And the other one is in Yadu, Qingzhu. In the past few weeks, I have seen that the number has gradually increased. I saw that there were about 180 stores last quarter. I also heard that Mr. Wang shared the 3.3 version just now. I would like to ask, what is the feedback on the market recently? So let me translate that into English. So regarding the hotel brands, I have questions on the two hotel brands that they have maybe more strategic focus or newly launched recently. One is Zaha, whereby they launched a new hotel and their market receptions have been excellent. Wondering whether they have any targets in terms of the number of hotels as well as the district or regions where they're going to be focusing on. Secondly, also on a tour-like, I think the number of hotel comes almost reaching 180 for this quarter. Wondering if there's any update on the feedback, and specifically, you know, the version 3.3 has been quite well received. So wondering if there's going to be any feedback that management can share. Thank you.

Okay, thank you, Simon. Let me first talk about the Sa He Hotel. Sa He Hotel has been operating It should be said that we have received high reviews from users and the industry in terms of design style and experience. The performance of today's performance is also quite outstanding, especially our Shenzhen SaHe flagship store is officially open. We are opening on May 28th, the first month of the official opening. The comprehensive roll part is more than 800 yuan. Currently, we have many high-quality projects in Guangzhou, Shanghai and Shenzhen, which are the core cities. Thank you, Simon.

First, regarding the question of Sa He, well, Since its opening, Sa He has been highly praised by our users because of the design style and service quality and the particularly standout operational performance. The flagship store of Sa He Hotel in Shenzhen achieved a comprehensive rev par exceeding RMB 800 in its first four-month operation that started from May 28th. Currently, several high-quality projects in key cities such as Guangzhou, Shanghai, and Shenzhen are poised to open successively. For SaHe, we will adhere to a quality-first approach because we need to control the scale of expansion while deepening the brand's presence and aiming to set a benchmark in experience and supporting its growth with a long-termism mindset.

Let me answer the question about clean housing. In the second quarter, the overall business performance of our 3.0 Saiyin hotel is very, very outstanding. Our overall Repa's comparison recovery is ahead of the group's big plate, which reflects the high-performance and efficient layout of the brand's excellent products. The 3.3 version upgraded to 3.0 has also received a high level of admiration from the customers. The contract is in good condition. 我们首家的轻居3.3的酒店是在上周开业了,那首批其他的门店也会陆续的开业。 I'll talk about Attour Light.

In second quarter, overall operational performance of Attour Light 3.0 was outstanding, with the RevPower recovery rate outperforming our group's average, demonstrating a strong product potential and very efficient location of the Attour Light brand. Attourlite 3.3 version upgraded from the basis of Attourlite 3.0 has also been highly favored by franchisees since its launch and picked up a very strong signing momentum. Our first Attourlite 3.3 hotel has opened in last week and the first batch of more locations will open soon.

展望未來,新居作為我們集團的戰略重點,我們將會一如既往地持續投入核心的資源, And looking forward, we do believe in Tourlite to be a strategic priority for our group, and we'll continue to invest into this brand with our core resources.

meticulously refine the product quality, enhance operational efficiency, and also focus on core urban areas and key business districts. With a long-term vision and steady, deliberate efforts, we aim to lay a solid foundation for achieving the goal of 1,000 tour-light hotels. Thank you. Thank you, Simon. Next question, please.

There are no further questions at this time. That concludes today's questions and answer session. I'd like to turn the call back to Mr. Luke for any additional or closing remarks.

Thank you for joining us today. If you have any further questions, please feel free to contact our IR team and we look forward to speaking with you again next quarter. Thank you and goodbye.

That concludes today's conference call. Thank you for participating. You may now disconnect.