Atour Lifestyle Holdings Limited

Ladies and gentlemen, thank you for standing by and welcome to Attour Lifestyle Holdings' fourth quarter and full year 2025 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be question and answer 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 fourth quarter and full year 2025 earnings conference call. Today, you 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 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-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.yadu.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. Thank you for joining Atour's fourth quarter and a full year 2025 earnings call today.

Please open up our business documents. Looking back on 2025, the wave of global business normalization, division of consumer structure, and technological change have jointly built the market sovereignty of this year. Under the backdrop of the rebound, China's travel and consumer market have become more mature, rational, and full of willpower. We are also deeply aware that Please turn to our results presentation.

Looking back at 2025, sustained global competition, structural shifts in consumption and accelerating technological transformation collectively shaped the overarching theme of the year. Amid a volatile recovery, China's travel and consumer markets have become increasingly mature, rational and resilient. In this environment, we are more convinced than ever that only by staying true to our user-first philosophy, relentlessly enhancing user experience and building enduring brand value can we navigate industry cycles in an increasingly competitive, maturing market.

2025 is the year of the end of Asia's target of 2,000 good stores in China. In terms of accommodation, we have not only successfully reached the target of 2,000 good stores, but also through the differentiated product layout and in-depth experience advantages, the reputation of the users has become the most profound brand asset. At the same time, the retail business has continued to grow rapidly, nearly 40% of the total total income of the group. 2025 marked the successful completion of our Chinese Experience 2000 Premier Hotels strategic initiative.

In terms of the hotel business, We achieved our scale target of 2,000 premier hotels and further strengthened our brand through differentiated product positioning and customer experiences that resonate. Meanwhile, our retail business sustained strong growth momentum, accounting for nearly 40% of the group's total revenue. A tour planet further reinforced its leading position in China's sleep market. establishing itself as the preferred choice for consumers. We continue to see growing synergy between our hotel and retail businesses, with each strengthening the other to further enrich the value proposition of our Chinese experience.

Standing at the beginning of 2026, the market is still facing uncertainties, but our direction is always clear. While actively embracing changes, we maintain a long-term strategic position, In high-quality products and services Continue to create a warm value experience With this in mind The company has also officially released a new three-year strategy China Experience Brand Leading The experience is the foundation of the foundation of development and the engine We will continue to build a differentiated experience barrier Stabilize the leading advantage Break through the experience line Stabilize the benchmark position in the industry Brand is the hair of development Is the driving force and guidance As we enter 2026, we continue to see considerable market uncertainty.

However, our strategic direction has never been clearer.

We will.

Ladies and gentlemen, please remain on the line. Your conference will resume shortly. Ladies and gentlemen, please remain on the line. Your conference will resume shortly. Presenters, please continue.

Yes, thank you. As we enter 2026, we continue to see considerable market uncertainty. However, our strategic direction has never been clearer. We will embrace change while maintaining a long-term focus. We consistently create value-added experiences with a personal touch through high quality products and services. Building on this foundation, We have officially launched a new three-year strategic plan, Chinese Experience, Brand-Led Excellence. Experience remains the cornerstone of our development and a core driver of growth. We will further reinforce our differentiated experience mode, amplify our strengths, pioneer new frontiers, and strengthening our leadership within the industry. Brand serves as the anchor of our long-term development and the guiding force behind our strategy. We will firmly follow the course of a lifestyle group, actively exploring and expanding growth paths. By using scenarios as a bridge, we will deepen the synergy between our hotel and retail businesses, leveraging our brand to connect across scenarios and deepening our emotional connection and resonance with users.

Next, I will introduce the specific situation of the fourth quarter of 2025 and the entire year of hotel and retail business.

Now I would like to provide more details on our hotel and retail performance for the fourth quarter and the full year of 2025.

首先是住宿业务。 四季度集团大盘RAWRPA为335.7元, 为24年同期的99.6%。 恢复度延续逐季改善的趋势。 其中OCC为24年同期的98.8%, ADR为24年同期的101.5%。

Let's begin with our hotel business. In the fourth quarter, our RevPar was RMB 335.7, representing 99.6% of the level in the same period of 2024, with the recovery showing sequential improvement trend. Specifically, OCC reached 98.8% and ADR stood at 101.5% of their levels in the same period of 2024.

In the fourth quarter, respire for our mature hotels in operation for more than 18 months was 96% of the level in the same period of 2024,

while OCC and ADR stood at 97% and 99.6% of 2024's levels for the same period, respectively.

In 2025, we will have a total of 488 new hotels. By the end of the fourth quarter, the number of new hotels will reach 2,015, and the growth rate will be 24.5%. At the same time, the number of projects in the pipeline will be 779, which will establish a solid foundation for the continuous expansion of the hotel network.

In 2025, we opened 488 new hotels. By the end of the fourth quarter, the number of hotels in operation reached 2015, representing a 24.5% year-over-year increase. As of the same date, our pipeline of hotels under development stood at 779, providing a solid foundation for the continued expansion of our hotel network.

On the hotel channel front, our core CRS channel remained stable, accounting for 62.9% of total room nights sold in the fourth quarter.

The contribution of room nights sold to corporate members was 20.8% during the quarter. 下面我将介绍一下集团住宿品牌的最新进展。 Next, I would like to share the latest developments across our hotel brands.

中高端市场是亚朵长期深耕的核心赛道,着眼于更长远的布局。 今年年初,我们将亚朵4.0产品正式升级为独立品牌亚朵建业。 On the basis of the business function that continues to be efficient and convenient, Yaduo Jianye is integrated into a immersive holiday atmosphere. It is aimed at creating a place for users to return to in the city. The difference in brand positioning has been fully verified by the market. In the whole year of 2025, Yaduo Jianye's Zaiying Hotel Roll-up is more than 430 yuan. As of now, Yaduo Jianye has 55 Zaiying hotels and more than 50 pipe storage projects.

The upper mid-scale segment has long been our core focus, where we have built a deep presence. For the longer-term view, at the beginning of this year, we officially upgraded Attour 4.0 to an independent brand, Attour Origin. While retaining efficient business travel functionality, Attour Origin introduces an immersive vacation ambience, creating a serene urban retreat where customers can find peace of body and mind. Its differentiated brand positioning has been validated by the market. For full year 2025, Revpar for Attour Origin Hotels in operation exceeded RMB 430. To date, 55 Attour Origin Hotels are in operation with over 50 projects in the pipeline.

亚朵酒店与亚朵建业共同构建起我们在中高端赛道更具竞争力的品牌矩阵。 The overall style of Yaduo Hotel is more in line with the mainstream shopping scene, providing users with reliable choices based on functions and emotions. The latest product, Yaduo 3.6, from hardware configuration to service details, continues to gain market recognition. In the fourth quarter, the hotel's round-up is more than 380 yuan. Yaduo is also able to extend the user's experience boundary and spiritual space with its unique atmosphere. The joint development of the two brands has created more flexible investment choices for the investors, Together, Attour Hotel and Attour Origin form a more competitive brand portfolio in the upper-mid-scale market.

Attour Hotel's style is tailored to mainstream business travel. offering customers dependable options that balance functionality with emotional appeal. The latest product, Attour 3.6, continues to gain market recognition for its meticulous hardware configuration and outstanding service details. In the fourth quarter, the rev par of Attour 3.6 hotels in operation surpassed the RMB 380. A tour origin expands customers' experience and enriches their sense of well-being through its unique atmosphere. The synergistic development of the two brands has created more flexible investment opportunities for our franchisees while better addressing the diverse needs of our customers across various travel scenarios. The advantages have further strengthened our competitive edge through innovative scenario designs and enhanced customer experiences, helping us maintain our absolute leading position in the upper-mid-scale market.

In terms of high-end market, SAHE is an important step towards our brand's growth. With its efficient investment model, innovative experience design, and deep-level cultural expression, SAHE has taken a completely different path in the existing market pattern and become a breakthrough in the high-end market. At present, Sa He has completed the layout of 3x3 hotels in Shanghai, Shenzhen, and Guangzhou. Through a unique aesthetic system, scene creation, and extreme experience, Sa He has gradually become the cultural entrance to the city and redefined the value border of high-end hotels. In the fourth quarter, Sa He's business performance at Zanying Hotel was very bright. The roll-up broke 950 yuan.

Sa He Hotel marks a substantial breakthrough in advancing our brand portfolio in the upscale market. Leveraging an efficient investment model, innovative experience design, and a profound cultural expression, Sa He Hotel has forged a distinct path within the existing market framework and become a game changer in the upscale segment. Currently, Sa He has established its presence with three hotels in Shanghai, Shenzhen, and Guangzhou. With its unique aesthetic system, carefully crafted ambience, and exceptional experiences, Sa He is gradually becoming a cultural gateway in each city it enters, redefining the value of upscale hotels. In the fourth quarter, Sa He delivered exceptional operating results, with RevPAR exceeding RMB 950.

In 2026, we will continue to deepen the Eastern health and health experience, and build a SAHE-style treatment and experience system, in order to better operate and build a more complete system, and promote the promotion and breakthrough of the brand. Based on a longer-term plan, SAHE will cooperate with EHL Hotel Management Business School in the fourth quarter, and jointly create a high-end accommodation service system with global expression and Eastern values, In 2026, we will further develop our Eastern wellness experience and build a holistic Saha healing experience system.

Through more refined operations and a more comprehensive framework, we will drive further brand upgrades and breakthroughs. Based on a longer-term vision, Sa He partnered with EHL Hospitality Business School in the fourth quarter to jointly develop an upscale accommodation service system that combines global expression with Eastern values, supporting the brand's long-term development. We aim to establish Sa He as a showcase of global vision and Eastern stories, translate its core experiential philosophy into new value benchmark for the global upscale hotel industry, and bring Chinese experiences to the world stage.

中端市场,空间广阔, 但产品与服务的同质化问题始终是行业痛点。 我们认为破局的关键在于形成一套平衡体验与效率, based on the long-term sustainable operation model, and thus form a unique and differentiated competitive advantage. By the end of 2025, the number of Zanying hotels in the third quarter has exceeded 160. We focus on the expansion of high-end cities, continuous polishing of products, deepening brand construction, and improving operating efficiency. The quality of brand assets will not be improved. Qingju also shows excellent business resilience. In the fourth quarter, the recovery rate of Zanying hotels in the third quarter

The mid-scale hotel market has significant potential, yet product and service homogenization has long been a major pain point for the industry. We believe the key to breaking through is to develop an operating model that balances experience and efficiency while also incorporates sustainability. thereby creating a unique and differentiated competitive advantage. By the end of 2025, over 160 Attour Lite Series 3 hotels were in operation. We have focused on higher tier cities, continuously refined our products, deepened brand building and improved operational efficiency, thereby steadily elevating brand asset quality. Attour Lite has also demonstrated strong operational resilience, In the fourth quarter, the REVPAR of the Tourlite Series 3 hotels in operation recovered by more than 110% year-over-year, and the full-year REVPAR recovered by over 100% year-on-year.

In 2026, we will fully promote the establishment of a clean and refined cost model, deepen the operation and management of specialties, systematically improve the efficiency and competitiveness of products, and continue to focus on the core needs of users, In 2026, we will fully roll out a tour lights refined cost model

deepen its distinctive operations and management, and systematically improve operational efficiency and product competitiveness. At the same time, we will continue to focus on core customer needs, enhance brand recognition and influence, and build unique Atour Lite mindshare. At the organizational level, we are working to establish Atour Lite's distinctive talent development system to comprehensively enhance the team's overall capabilities. Atour Light's goal has always been clear. Driven by product and brand strength, we will reshape the mid-scale market landscape and establish a new benchmark among mid-scale hotel brands. 接下来是我们的零售业务。 Moving on to our retail business.

这几年,传统消费市场深陷同质化竞争与增长乏力的困境。 and can really define new needs and create new value brands, we have the opportunity to break down the structural limitations of the industry, and open up a differentiated growth new path. The Asian planet is on such a path. We are not on the same path as the traditional brand on the track, but actively choose and firmly stand on a new track. Over the past few years, the traditional consumer market has been mired in homogeneous competition and sluggish growth.

Only brands that truly define new demand and create new value have a chance to break through the industry's structural constraints and chart a differentiated growth path. This is precisely the path Ator Planet has taken. Rather than engaging in involution with brands taking a traditional path, we have proactively chosen and firmly committed to an entirely new trajectory. Guided by user needs, we have forged this path of differentiated growth through deep insights into users' sleep pain points and a continuous product innovation. This has not only reshaped the market landscape, but also helped to drive progress and upgrade across the industry.

In 2025, the retail business continued a strong growth trend. The annual income reached 36.7 billion yuan, which is 67% of the total growth. In the mainstream third-party platform bed product category ranking, Asia Star has settled into the top tier. This year, we continue to promote product innovation and product expansion. The deep sleep environment is getting more and more mature.

In 2025, our retail business sustained strong growth momentum with full-year revenue reaching RMB 3.67 billion, representing 67% year-over-year growth. A tour planet has also consistently ranked among the top brands in the bedding category on major third-party platforms throughout the year we continued to drive product innovation and expand categories and our deep sleep ecosystem grew increasingly mature the release of the ator planet deep sleep standard set a benchmark for the high quality and consistency of our products building on our solid product performance Atura Planet's brand influence continued to strengthen, laying a solid foundation for the long-term development of our retail business.

In 2025, the top-of-the-line product line will continue to rise. In the main third-party platform, the product line will continue to rise. The new products will continue to rise. Since the launch of the Shenzhen Pro series, the total sales have exceeded 10 million. It has reached a stage-level milestone. In 2025, our pillow category further strengthened its leadership, consistently topping category rankings on major third-party platforms,

and gaining product mindshare among users. Cumulative sales volume of the Deep Sleep Memory Foam Pillow Pro Series has exceeded 10 million units since launch, marking a significant sales milestone. Our comforter cavalry also delivered robust growth momentum, with full-year GMV increasing by over 90% year-over-year and market share continuing to rise. Our new categories, fitted sheets and loungewear, received positive market feedback in 2025, collectively driving the continuous evolution of our deep sleep ecosystem.

In the face of the future, the industry will move into a new cycle of innovation. The core of competition is to continue to move towards improving product value and user experience. In 2026, we will more systematically promote the construction of core capabilities. In this process, we will use deep user insight and product innovation

Ladies and gentlemen, please remain on the line. Your conference will resume shortly. Please remain on the line. Your conference will resume shortly. Presenter, please continue.

In the face of the future, the industry will step into a new cycle of innovation and drive development. The core of the competition is to continue to improve the value of products and the direction of user experience. In 2026, we will further systematically promote the construction of core capabilities and further expand the difference in product position. The difference in experience advantage makes the deep-sea experience of the Asia-Pacific planet an indelible barrier. The supply chain is deep into each link to clarify management and ensure consistency and reliable interaction of products. At the brand level, we insist on long-term value creation and deeper emotional connection with users. In this process, we will use deep user insight and product innovation as the foundation, continue to consolidate and expand the leading advantage. With this, we will open up a new pattern of self-development and join hands with the industry to move towards a new stage of higher quality innovation and development.

Looking ahead, the industry is entering a new cycle driven by innovation, with competition increasingly centered on product value and user experience. In 2026, we will systematically enhance our core capabilities on product excellence. We will further expand our differentiated experience advantage, making a tour planet's deep sleep experience a competitive mode that is difficult to replicate. On the supply chain front, We will deepen rigorous management at every stage to ensure product consistency and reliable delivery. At the brand level, we remain committed to creating long-term value, building deeper emotional connections with our users. Built on deep user insights and product innovation, we are positioned to consolidate and strengthen our competitive lead. We will open a new chapter for our development while collaborating with industry partners to elevate quality and innovation across the sector.

我们始终秉持经营人群的理念,持续深化体验价值。 这也深刻反映在我们的会员运营中。 与行业中普遍存在的权益同质化,品牌认知度低的会员体系不同。 我们持续挖掘新场景,为用户创造真正可感知的差异化体验。 At the beginning of 2026, we launched the joint membership plan with Starbucks China. This cooperation is not only about interacting with the membership system and the whole family, but also to build a life service industry that covers travel, dining, leisure, and other scenarios, and to achieve value extension in different scenarios. By the end of 2025, our registered membership will reach 1.12 billion, which is more than 25% of the total growth.

We have always upheld our core value of serving people, continuously deepening our experiential value. This is also clearly reflected in our membership operation. Unlike the membership systems prevalent in the industry, which offer from homogenized benefits and a low brand recognition, we continue to explore new scenarios to deliver truly tangible, differentiated experiences for our users. In early 2026, We partnered with Starbucks China to launch a joint membership program. Beyond linking membership systems and offering reciprocal benefits, this collaboration aims to build a multi-scenario lifestyle ecosystem, spanning travel, dining, and leisure, creating a bridge to extend value across different scenarios. By the end of 2025, our registered individual members reached 112 million, representing a year-over-year growth of over 25%.

In the future, we will continue to deepen our membership operations with the thinking of running a brand, and create membership-based brands that can warmly accompany users throughout their lifetime. We will base our accommodation and retail businesses on deep-sleeping scenarios and continue to create new power, while actively developing more diversified scenarios, connecting a wider audience, and deepening the emotional resonance between users. In addition, we will further enhance the ability of digitalization and build a refined human-to-person operating system, which will provide a strong support for the long-term development of membership business.

Moving forward, we will continue to deepen our membership operations with a brand building mindset, focusing on a full user lifecycle to create a membership ecosystem that stays closely connected with the users. Building on our hotel and retail business, we will continue to introduce new benefits tailored to the deep sleep scenario. At the same time, we will actively explore more diverse scenarios and expand our reach to a wider audience, further deepening emotional connections with users. In addition, we will further enhance our digital capabilities and build a more granular operational framework for user segmentation, providing strong support for the long-term development of our membership business.

Finally, standing on the starting point of the new three-year strategy, we are also more determined to uphold the concept that everyone deserves to be treated well. We will always focus on the user, so that every user can feel sincere and caring. Under the long-term vision of a hundred-year-old Asia, we will continue to break through the upper limit of experience while maintaining the quality bottom line. Last but not least, as we embark on our new three-year strategy, we are more resolute than ever.

Guided by the belief that everyone deserves kindness, we will remain user-centric and ensure that every user feels our sincerity and care. Guided by our long-term vision of a timeless tour, warmth along every journey, we will uphold our quality standards while striving to break through the ceiling of experience. At the same time, we will further strengthen our organizational capabilities and refine our digital framework laying a solid foundation to support the group's long-term development. We are committed to accompanying our users on this long-term journey, moving forward together every step of the way. Dedicated to providing lasting companionship, we aim to curate experiences where body and mind return to inner peace through every genuine connection, fulfilling our warm and steadfast commitment to every user. 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 and full year of 2025. Revenues from our monetized hotels for the first quarter and full year of 2005 grew by 28.1% and 28.0% year-over-year to RMB 1.4 billion and RMB 5.3 billion respectively. The increases were primarily fueled by the ongoing expansion of our hotel network. Revenues contributed by our leased hotels for the first quarter and full year of 2025 decreased by 9.8% and 15.9% year-over-year to RMB 148 million and RMB 590 million, respectively. The declines were primarily due to a decrease in the number of these hotels as a result of our product mix optimization. Revenues from our retail businesses for the first for the fourth quarter and full year of 2025 increased by 52.4% and 67.0% year-over-year to RMB 1.2 billion and RMB 3.7 billion respectively. The increases were driven by growing brand recognition, successful product innovation, and a broadened range of product offerings. The growth margin of our hotel business was 35.8% for the first quarter quarter and 37.0% for the full year of 2025. The growth margin of our retail business improved year-over-year to 52.6% for both the first quarter and the full year of 2025, reflecting the growing contribution from higher margin products. Setting and marketing expenses accounted for 16.5% and 15.2% for of revenues for the fourth quarter and full year of 2025, respectively. The year-over-year increase for the full year was mainly due to investment in brand recognition and the effective development of online channels in line with the growth of our retail business. General and administrative expenses, excluding share-based compensation expenses, accounted for 5.5% and 4.2% of net revenues for the first quarter and full year of 2025, respectively. The year-over-year decrease for the full year was primarily driven by improved management efficiency and economics of scale. Adjusted net profit margin for the first quarter and full year of 2025 was 17.7% and 17.9%, representing an increase of 1.7 percentage points and a decrease of 0.1 percentage points year-over-year Adjusted EBITDA margin for the first quarter and the full year of 2025 was 25.5% and 25.3% respectively, up 4.3 and 0.9 percentage points year over year. We maintained a healthy cash position as of December 31st, 2025, cash and cash equivalents totaled RMB 3.3 billion with net cash of RMB 3.1 billion In line with our commitment to enhancing shareholders' value, we declared aggregate cash dividends of approximately US$108 million for the full year of 2025. And as of December 31, 2025, we have made on-market repurchase of US$46 million since the implementation began in the third quarter. Through these comprehensive shareholder return initiatives, we are taking concrete actions to reward shareholders' trust and support, ensuring that all shareholders benefit from the company's growth. For the full year of 2026, we currently expect total net revenues to increase by 20% to 24% compared with the full year of 2025. That concludes our financial highlights for the first quarter and full year of 2025. Now let's open the floor for Q&A.

Thank you. We will now begin the question and answer session. To ask a question, please press star 11 on your telephone keypad. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. For the benefit of all participants on today's call, if you raise your questions in Chinese, please immediately repeat your questions in English. Please limit your questions to one at a time. If you wish to have follow-up questions, please rejoin the queue. A moment for our first question. We will now take our first question from the line of Si Jie Lin from CICC. Please ask your question. Sijie, your line is open.

Thank you, Mr. Yeh, Mr. Jianfeng, and Mr. Luke. My question is, we have six ways to track the overall supply of this industry. So, how is the situation in the management level in the last 7,000 months? In addition, can you provide an instruction for the opening of the store in 2026? Let me translate it into English. Thank you, management. So, we've noticed that the overall industry supply growth has slowed slightly. Therefore, we'd like to ask about the recent sentiments among franchisees regarding new signings. And additionally, could you please also provide some guidance on new openings in 2026? Thank you.

Okay, let me answer this question. Thank you, Sijie. We are also concerned about the overall wave of supply and increase in the entire industry. Okay, let me answer your question.

Thank you, Sijie. We have also observed fluctuations in the overall industry supply growth rate. However, if we look deeper, what's behind this is that after years of rapid expansion, The industry is now undergoing a profound structural upgrade and gradually moving towards a new stage of high-quality development.

We have also observed that they have become more rational and prudent. But I think this rational change is a good sign for the long-term health development of the entire industry. As for franchisees, we have also observed that they are now becoming more rational and discerning.

However, I believe this shift towards rationality for them is actually positive for the long-term healthy development of our industry. Because when franchisees exercise greater caution in negotiating rents, choosing locations, and selecting hotel brands, they are essentially facilitating a market screening process of survival of the fittest. The mutual selection between mature brands and quality franchisees will lead to a more solid foundation for cooperation.

Back to our own strategic rhythm in Asia, the supply of high-quality products in the market is still in short supply. We have never advocated a pure scale drive, but we believe that high-quality products should be of high quality. This is the direction we want to stick to for a long time. We are actively optimistic about the contractual attitude of the 26 years, and will ensure that every new project has good market competitiveness.

As regard to ATOR's own strategic pace, high quality supply in the market remains scarce. We have never advocated for purely scale-driven growth. However, high quality distinctive growth is actually the direction of our long-term pursuit. We remain positive and optimistic about the signing momentum for 2026, and we'll ensure that every newly signed project is more competitive in the market.

In terms of new openings,

Well, thanks to the continued implementation of our premier hotel strategy, new hotels opened in 2025 have shown significant improvement in both of their location selection and property quality. In 2026, we will continue to uphold strict quality requirements, focusing on the core cities and key commercial areas. On the basis of ensuring higher quality, we aim to achieve a similar scale of openings as last year. Thank you. Thank you.

Thank you, Sujie. Next question, please.

Thank you. Our next question comes from the line of Simon Chung from Goldman Sachs. Please ask your question, Simon. Your line is now open.

Thank you, Director Wang, Director Wu, and Luke for sharing. I would like to ask, in the year of 2026, what do you think about the growth of the entire hotel market? And then you see the trend of Rappaport in the first quarter. And then I would also like to hear what you think about the trend of Rappaport in the year of 2026. Let me translate it in English. Maybe can management share with us what do you think is going to be the outlook for the hotel industry in 2026? And also perhaps can comment about the first quarter Rappaport performance so far, quarter to date, as well as your view on the Rappaport trend for the rest of the year. Thank you.

Thank you, Simon. Let me answer your question. In 2025, the entire hotel industry will resume its business. The supply and demand relationship is also continuing to improve. We see that in 2025, the recovery rate of Wrappa will show a trend of improvement in the season. In 2025, the overall supply and demand of the industry may slow down further. The demand for leisure is still relatively abundant. For example, during the holiday season this year, we also saw that the housing price and rental rates have performed well, exceeding the level of the same period last year. Thanks, Simon.

And let me take your question. In 2025, the hotel industry experienced a moderate recovery with a continued restoration of supply and demand dynamics. The 2025 full-year REVPAR recovery showed a trend of sequential improvement throughout the whole year. In 2026, the overall industry supply growth may slow down furthermore. Leisure demand remains strong. For example, during the spring festival holiday this year, both the ADR and occupancy performed well, exceeding levels from the same period of last year. Based upon this, we expect the REVPAR in Q1 to continue the trend of improvement with a positive momentum.

We will not give specific guidance to RAPPA in 2026, but from the whole year's perspective, we believe that the change in the environment is still relatively rapid. However, the good policy and the continuous recovery of business leaders have also provided positive factors for the market. For us, the goal is also very clear, which is to maintain our strategic position in the fluctuating market. Therefore, we will insist on deepening the experience advantage of Asia-Pacific integration, and continue to develop a more balanced

We will not provide specific guidance for RevPar in 2026, but for the full year, the market environment is still changing relatively quickly. However, favorable policies and the continued recovery of business travel also provide positive factors. Our goal, however, still remains clear, that is, to adhere to our strategic focus amid market volatility. Therefore, we will persist with and deepen the differentiated experience advantages of Ator, maintaining our more balanced and refined revenue management strategy for both ADR and OCC to consolidate and enhance the performance of REVPAR recovery and solidify our long-term value of the brand.

Thank you, Donna. Next question, please.

Thank you. We will now take our next question from Lydia Ling from CT. Please ask your question, Lydia. Your line is open.

Hello, I'm Lydia. Thank you for the opportunity to ask my question. 我的问题是关于我们的零售业务,其实去年看到公司有非常快速的一个发展,那也想请公司分享一下咱们对于就是零售业务今年的一个规划是否有新的产品会推出和包括一些新的品类,以及您对那个2026年的零售收入目标是怎样的? Thanks management, Lydia from Citi. And so my question is on the retail business, which actually had very strong growth last year. So could you share your plans for the retail business for this year and also any new product plans and also new category launch? What will be your retail revenue target for 2026? Thank you.

Okay, thank you, Lydia. Let me first share the overall business direction and product planning of retail. In the past few years, Ado Planet is committed to innovation and product drive. We not only published the industry's first deep sleep standard, promoted retail business and cross-border growth, but also truly led to the progress and growth of the Chinese sleeping industry. Next, we will enter the deepening period of core capabilities of Ado Planet, which is to compete for advantages from all dimensions, Okay, thank you, Lydia.

Let me first share the overall direction and product of plans for our retail business. Over the past few years, it is fair to say that Attour Planet has adhered to the development philosophy of innovation-driven and product-driven. We not only released the industry's first deep sleep standard, but also propelled the leapfrog growth in the retail business, truly leading the progress and upgrade of China's sleep industry. Moving forward, Alhua Planet will enter a phase of deepening core capabilities, consolidating our competitive advantages from all dimensions. We aim to avoid marginalized competition with those imitators and followers, and forge a unique development path for a tour planet.

Under the category plan, the Asian planet will continue to focus on deep diving. First of all, we will continue to exert force on our core category, which is our pillow category. The purpose of the pillow category is to maintain the absolute leading position and form the advantage of diving. We expect that the quilt product will grow faster than the pillow and further improve the market share. Next, the new products such as bedding and pajamas will also accelerate the breakthrough. We will achieve a large-scale growth through the extension of the quality of the products and the extension of the quality of the products. In terms of category planning, AtorPlanet will continue our focus on the deep sleep track.

Firstly, we will continue to strengthen our core categories, and that will be the pillow category, to name one of them. Our goal for the pillow category is to maintain our absolute leading position, establishing a decisive advantage. While we expect the comfort of category to achieve an even faster growth than pillows, further increasing market share. Secondly, new categories such as fitted sheets and launch wear will accelerate breakthroughs, achieving scale growth through blockbuster product iterations and a category matrix expansion. Besides, mattresses and other sleep accessories will also be as extended categories, collectively completing our deep sleep ecosystem layout of Attour Planet.

Next, I would like to talk about the outlook on retail revenue. In 2025, retail business size and brand reputation will be on a new level. In 2025, we expect retail revenue Next, I would like to share our outlook for the retail revenue.

In 2025, both scale and brand reputation of our retail business reached new heights. Looking at 2026, we expect retail revenue to grow by 25 to 30% year on year. While maintaining the healthy scale growth, we are more focused on the continued consolidation of our core competitiveness. By continuously enhancing product strength and brand power, we aim to achieve a longer term sustainable development for retail business.

Thank you, Lidia. Next question, please.

Thank you. Our next question comes from Ronald Leung of Bank of America. Please ask your question, Ronald. Your line is open.

各位管理層,晚上好。 我有一個問題是財務問題的。 我想請教一下管理層, 我們看到這個2025年最後的實際的净利潤率 比原本的估計要好一點點的。 那么可不可以讲一讲2026年管理厂对这个净利润率的变化的走势有一个什么的预期? Let me ask my question in English. So I have a financial question. So we noticed that the company's actual net profit margin in 2025 was better than initially expected at the beginning of the year. Could you talk about your expected trend for the net profit margin in 2026? Thank you.

Thank you, Ronald. Indeed, in 2025, the net profit rate after our company's annual adjustment was about 17.9%. In the beginning of the year, we also predicted that the change in the income structure and the improvement of the effective tax rate would cause a certain delay in the profit rate. But through our sophisticated operation management, the profit rate level of our various business blocks has continued to improve and increase. Thank you, Ronald.

Well, indeed, for the full year of 2025, our group's adjusted net profit margin was approximately 17.9%. At the beginning of the year, we had estimated that there's going to be changes in revenue structure and a higher effective tax rate, and they would exert some drag on our profit margin. However, through refined operational management, our profit margins of all business units continued to improve, and coupled with the policy subsidies being embodied intensively during quarter four, Eventually, our 2025 Net Profit Margin roughly leveled with that of 2024.

With the development of our business, our joint business, supply chain business, and retail revenue ratio will continue to change. At the same time, based on our new three-year record, which is China Experience Brand Leading, we will also plan our resource configuration with a longer-term perspective. For example, we will strengthen the expansion of our key positions Looking ahead to 2026, as our business continues to evolve, the revenue mix of our monetized business, supply chain business, and retail business

will continue to change. At the same time, based on the new three-year strategy of Chinese experience, brand-led excellence, we will allocate resources with a longer-term perspective. For instance, to strengthen key positions through workforce expansion and to enhance digital operational capabilities to support the group's long-term development. Therefore, we anticipate that both our GMA and RMD expense ratios will increase this year. Therefore, at this starting point of the year, we preliminary expect the group's net profit margin for 2026 to decline slightly year on year. Thank you.

Thank you, Romo. Next question, please.

Thank you. We will now take our next question from Dan Chee Of Morgan Stanley, please ask your question. Dan, your line is now open.

各位管理層,晚上好。 我的問題是跟公司的關店相關的, 就是我們看到公司25年的總關店達到了92家, 那這裡面包括有7家直營店, 可能跟去年, Please allow me to translate my question. My question is relating to the hotel closures. We saw that company closed 92 hotels in 2025 full year, including seven lease and operated hotels. This was slightly higher than the initial estimate at the beginning of last year. Could you share the company's plan on hotel closure for the full year of 2026, providing that a gross opening in 2026 flat year-on-year? Thank you.

Thank you, Dan. We have been communicating with everyone about the key considerations for the power-off decision. The goal is to continue to strengthen the quality and experience of our Zainin hotels. In 2025, we will continue to strictly regulate the quality of Zainin hotels, so we will have a total of 92 hotels closed throughout the year.

Thank you, Dan. Regarding closures, just like what we have been consistently communicating with the market, our core consideration for closure decisions is the consistency of experience. The goal is to continuously strengthen the operational quality and experience standards of our hotels in operation. In 2025, we rigorously maintained quality control over our operating hotels and thereby closing a total of 92 hotels.

In order to ensure the quality of our overall hotel network in 2026, we will still maintain a certain initiative to eliminate the proportion of hotels. Therefore, we will not stop cooperating with hotels that are not able to meet the standard experience of Ado. We will continue to consolidate our long-term brand value. But based on the optimization and adjustment in 2025, our hotel stock is also more solid.

In 2026, to ensure the quality level of our overall hotel network, we will still maintain a certain proactive elimination rate, terminating cooperation with hotels that fail to meet a tour's experiential standards. in order to continuously consolidate our brand value in the long term. Nonetheless, based on the optimization and adjustment already made in 2025, now the foundation of our existing hotel portfolio is more solid. Therefore, we expect the number of closures in 2026 to decrease. Our current planned target is to close around 80 hotels within the year. Thank you.

Thank you. That concludes today's question and answer session. I'd like to now turn the conference back to Mr. Luke Hu for any additional or closing comments.

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 again next quarter. Thank you and goodbye.

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