Atour Lifestyle Holdings Limited

Ladies and gentlemen, thank you for standing by and welcome to A2 Lifestyle Holdings first quarter 2026 earnings conference call. At this time, all participants are in the 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 call over to Mr. Luke Hu, IR Director. Thank you. Please go ahead, sir.

Thank you, operator. Good morning and good evening, everyone. Welcome to our first quarter 2026 earnings conference call. Today, you will hear from our founder, chairman, and CEO, Mr. Wang Haijun, and our EVP co-CEFO, Mr. Wu Jianfeng. Before we continue, please be aware that today's discussion will include forward-looking statements and the federal securities laws. These statements are subject to various risks and uncertainties. and 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 purpose. For a clear understanding of these measures and the reconciliation of GAAP to non-GAAP financial results, please refer to the earnings release issued earlier today. First of all, 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. Thank you for joining Attour's first quarter 2026 earnings call today.

请大家打开我们的文件。 迈入2026年,我们看到中国服务消费正加速从规模扩张 转向以品质和体验为核心的价值升级。 一系列政策的西化落地与行业竞争的理性回归 为消费市场营造了更加良性的生长环境。 In this context, the hotel market continues to grow structurally under mild recovery. The focus of development is on the deepening of precision and differentiation. The consumer market is also driven from traditional manufacturing to experience. Consumption needs from focusing on functions and cost-effectiveness to pursuing deep experience and emotional value. Standing at such an era, we will firmly grasp the innovative opportunities in the transformation, Please turn to our slides.

Entering 2026, China's service consumption is accelerating its transition from scale-driven expansion to value-driven upgrades centered on quality and experience. Supportive policies are being refined and implemented, while industry competition is becoming more rational. Together, these factors are shaping a healthier environment for the consumer market. Against this backdrop, the hotel market has continued its moderate recovery alongside structural upgrades. with development focus shifting toward deeper cultivation of refinement and differentiation. Meanwhile, the retail market is also evolving from traditional manufacturing-driven models to an experience-driven approach. Consumers are increasingly prioritizing holistic experiences and emotional value over functionality and value for money. At this pivotal moment, we will firmly seize the innovation opportunities arising from these transformations by embedding innovation across every dimension of our products, operations, and organization, and converting these opportunities into a long-term, sustainable growth engine. We are also more convinced than ever that our user-first philosophy with experience as our cornerstone and a brand as our anchor is the fundamental path for a tour to navigate industry cycles. 下面我将展开介绍2026年第一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 first quarter of 2026.

首先是住宿业务。 一季度集团大盘及成熟酒店的经营表现均延续了逐季度改善的趋势。 the recovery rate of the large-scale RRPA has turned positive. Among them, ADR's stable improvement is the main driving force. Behind this is the return of value in a more positive competitive environment. It is also the continuous sinking and release of our brand power. In the first quarter, the large-scale RRPA of the Group is 311.6 yuan, which is 102.4% in the same period in 2025. Among them, OCC is 100.6% in the same period in 2025, Let's begin with our hotel business.

In the first quarter, performance across our overall hotel portfolio and our mature hotels continued to improve sequentially. We achieved positive year-over-year RevPar growth, primarily driven by a steady increase in ADR. This reflects a return to value-based competition in a healthier industry environment, alongside the steady compounding of our brand equity. In the first quarter, our RevPar was RMB 311.6, representing 102.4% of the level in the same period of 2025. Specifically, OCC reached 100.6% and ADR stood at 102.1% of their levels in the same period of 2025. RevPAR for our mature hotels in operation for more than 18 months was 98.3% of the level in the same period of 2025, with OCC and ADR at 99.2% and 99.4%. respectively of their levels in the same period of 2025.

In terms of hotel network, we adhere to the principle of quality priority. We strictly monitor every newly opened hotel for every newly signed project, so that growth can be established on a solid quality basis. In the first quarter, the Group has a total of 110 newly opened hotels. By the end of the first quarter, the Group's number of new hotels has reached 2,088.

As for our hotel network, we adhered to a quality first principle and maintain strict quality control for every new signing and new hotel opening, ensuring growth is built on a solid quality foundation. In the first quarter, we opened 110 new hotels. By the end of the first quarter, our total number of hotels in operation reached 2,088. As of the same date, our pipeline of hotels under development remained at a healthy level of 751.

In terms of channels, our central planned channel continues to perform stably. In the first quarter, the sales and industry ratio of CIS channels is 63.7%. and 19.3% of the sales of the enterprise agreement. At the same time, we are also passing a series of policies, including the reduction of price and return, buying and selling, and other policies, to ensure the experience of the official channel pre-ordered guests, especially during the Spring Festival. We have gained a wide range of user praise for the efficient execution of these mechanisms, which reflects our long-term deepening membership operations and continuing to strengthen membership year-on-year determination.

On the hotel channel front, our CRS channel continued its steady performance, accounting for 63.7% of total room nights sold in the first quarter. The contribution of room nights sold to corporate members was 19.3% during the quarter. At the same time, we are safeguarding the experience of guests who booked through our official channels with our price assurance policies, including the price drop refund and the best price guarantee, as well as various other practical measures. During the Chinese New Year holiday in particular, the seamless execution of these safeguards earned widespread positive feedback from users. This reflects our long-term commitment to deepening our membership operations and strengthening member loyalty. while also representing our consistent commitment to providing users with a more reassuring experience.

随着酒店规模的持续扩大以及品牌力的不断增强, 与之同步的是我们供应链能力的系统性提升。 越来越多的优质供应商加入到我们的供应链的体系, 平台可选品类更加丰富, 加盟商通过平台集中采购的意愿也在不断提高。 We hope that the supply chain business can continue to bring long-term value. On the one hand, we can provide high-quality products to non-capable suppliers, improve the purchasing efficiency, and enhance their overall price experience. On the other hand, we can ensure that users get a consistent accommodation experience, allowing customers to feel convenient and at ease when using products. We will continue to implement the eight promises of supply chain procurement, and form reliable mechanisms in terms of price, after-sales service, and so on. As our hotel network expands and our brand strength steadily grows, our supply chain capabilities are advancing in parallel.

More high-quality suppliers are joining our supply chain network. The platform's offerings are becoming more diverse and franchisees are increasingly willing to consolidate their procurement with us. We want our supply chain business to consistently deliver long-term value in two aspects. First, by empowering our franchisees and suppliers with high-quality products at attractive value, helping them improve procurement efficiency, and enhancing the overall franchisee experience. Second, by ensuring a consistent stay experience for users, giving them greater convenience and a peace of mind when using our products. We adhere to our eight commitments to supply chain procurement, establishing reliable mechanisms across pricing, after sales service, and customer care. At the same time, we are deepening collaborative R&D with upstream suppliers, to improve the practical functionality of existing products and develop new ones that deliver greater value. We will take innovation as our driving force to continuously enhance the core capabilities of our supply chain, jointly elevating the value of the Attour brand. Next, I would like to share the latest developments across our hotel brands.

In a fully competitive hotel market, Yaduo was the first to launch and continue to lead the mid- and high-end market. For more than a decade, we have gradually established a clear and solid brand mentality among the users. Our long-term commitment allows us to build up a difficult-to-recognize difference in a constantly changing market environment. Yaduo Hotel's latest product, Yaduo 3.6, through the in-depth disassembly of the user's real accommodation experience, In a highly competitive hotel market, Ator pioneered and continues to lead the upper mid-scale segment.

Over the past decade, we have earned strong customer word of mouth and steadily built clear, resilient brand mind-share. This long-term commitment has enabled us to build differentiated competitive advantages that are difficult to replicate, supporting our resilience and sustainable growth through ever-changing market conditions. Atour 3.6, our latest Atour hotel product, was built around a systematic redesign of the key moments in the guest journey, grounded in an in-depth deconstruction of real guest experiences. This has allowed us to create a verifiable and scalable operational standard and a product model. Since its launch over a year ago, Ator 3.6 has continued to receive positive market feedback, validating our product competitiveness in the upper mid-scale markets.

As for Yaduo Swamp, it is a step forward for us to explore and extend the border of this track. In the future, we will continue to polish and plan Yaduo Swamp in a longer term, and we will promote refined management and quality improvement. We will promote the configuration of the whole-electric deep sleep system, and we will further integrate the cultural elements and service details of Yunnan. We hope that Yaduo Swamp can bring the power of Yaduo Village's quietness A tour origin represents our continued effort to explore and expand the possibilities of the upper mid-scale segment and marks a concrete step forward in our brand-led excellence strategy.

Going forward, we will continue to refine Attour Origin with a long-term mindset while advancing more refined operations and quality upgrades. We will roll out the deep sleep system hotel-wide and further integrate cultural elements and service details from Yunnan. We hope Attour Origin will bring the tranquil strength rooted in Yaduo Village to more corners of urban life. further enriching what the Chinese experience represents. In the first quarter, Revpar of Attour Origin Hotels in operation exceeded RMB 400. The two upper-mid-scale brands developed in parallel, forming a differentiated and complementary price tier.

In terms of high-end brands, Sa He Hotel continues to accumulate brand volume, constantly broadening its own development boundaries, In the first quarter, Sa He rented a hotel for more than 910 yuan, with an average price of more than 1,000 yuan. At the same time, Sa He successfully attracted a wider audience, with more foreign guests and family visitors. In the evaluation of foreign channels and social media, we also received more and more users' self-promotion and praise. This makes us see the unique attraction of the Chinese culture that Sa He carries, and also opens up a broader imagination for us.

For the upscale brand, Sa He Hotel continues to build brand visibility and recognition while expanding its development potential. In the first quarter, a rough part of Sa He Hotel's in-operation exceeded RMB 910, with ADR surpassing RMB 1,000. Meanwhile, Sa He has attracted a more diverse customer base with a higher proportion of international customers and family travelers. On overseas review platforms and social media, Sa He has also received a growing number of organic recommendations and positive reviews from international users. This demonstrates the unique appeal of Sa He's deep Chinese cultural roots and opens up broader possibilities for its future development.

我们对萨河的规划着眼于长远,持续推动品牌升级。 We are taking a long-term view on SaHe.

We will continue to drive brand upgrades, bringing China's homegrown philosophy and expression of upscale living to a broader global audience. Zahe's development calls for patience. We will remain disciplined in scale, pursue continuous refinement in product and service, and translate our long-term vision into every tangible experience.

中端品牌方面,用户对差异化体验的需求日益强烈, 这正和轻居的定位相契合。 轻居品牌沿着既定的长期节奏稳步发展, In the user side, it also covers more and more customers and is recognized by more and more young users. The scope of commercial customers is also gradually widening. The difference in brand capacity continues to accumulate. QingJu 3.3 has continuously opened more than 20 hotels. With better product experience and more efficient management models, this generation of products are highly recognized in terms of user reputation and customer feedback. At the management level, QingJu 3.3 products are more capable of one price.

For our mid-scale brand, demand for more differentiated stay experiences continues to grow, an opportunity that aligns closely with Attourlite's positioning. Attourlite continued its steady long-term trajectory in the first quarter. On the customer side, Attourlite has been attracting a more diverse customer base. gaining increasing recognition among younger users while steadily broadening its business traveler base. This has further built the brand's differentiated momentum. A Tourlite 3.3 has now opened in more than 20 hotels. It enhanced the product experience and more efficient operating model have earned strong recognition from both customers and franchisees. Operationally, Attour Light 3.3 has demonstrated stronger pricing power. In the first quarter, rep power of Attour Light 3.3 hotels in operation was more than 10% higher than that of the 3.0 version.

We know that the development of the brand is not an easy task. In the early stage, focusing on product polishing and operating system construction to form a positive brand asset is a necessary way to support healthy and sustainable development. We fully recognize that brand development is not built overnight.

It requires us to first focus on product refinement and operating system development. so that we can build strong brand equity and support healthy, sustainable growth. In 2026, we will continue to comprehensively and systematically enhance Attour Light's operational efficiency and product competitiveness, and continue to focus our expansion on second tier and above cities, pursuing quality-led expansion and laying a more solid foundation for the next stage of Attour Light's development.

Moving on to our retail business.

Entering 2026, Atul's retail business sustained its strong growth momentum, with core categories continuing to deliver outstanding performance. Retail revenue reached RMB 1 billion and 71 million in the first quarter, representing 54.4% year-over-year growth. Atul Planet also ranked among the top brands in the betting category on major third-party platforms. with our product and brand strength continuously being validated by the market.

We clearly understand that to maintain long-term competitiveness, we must continue to innovate, respond faster, and accurately meet the needs and expectations of users who are constantly changing. As the user's understanding of sleep needs continues to deepen, we are also continuing to transform these hidden needs into more solid product power. As the product power of the Asian planet increases,

We recognize that maintaining long-term competitiveness requires continuous innovation, responding faster and more precisely to meeting the evolving needs and expectations of our users. As our understanding of users' sleep needs deepens, we are steadily turning latent demands into tangible product strengths. we approach each product iteration as a systematic solution, grounded in scientific testing and validation. As AtorPlanet's product capabilities continue to grow, we are proud to enter a new stage defined by the technological innovation and the standard setting.

In terms of pillow products, in the first quarter, AtorPlanet continues to take the lead. In the mainstream third-party platform, AtorPlanet holds first place in product sales, We have always been guided by the real need for sleep, and have accumulated a good reputation by upgrading it to each product in the pillow category. During the Spring Festival this year, we launched the Deep Sleep Pro 3.0 new spring model around the holiday scene, cooperating with brand dissemination activities to convert a sleeping product into an emotional collection, helping users to get a deep rest during the holiday, and naturally fall asleep without knowing it.

In the Pillow category, Attura Planet maintained its strong and clear leadership in the first quarter, consistently ranking first in category sales on major third-party platforms. We have remained guided by genuine sleep needs, integrating this principle into every product upgrade within the Pillow category, consistently building a strong word of mouth. During the Chinese New Year, we launched a special edition of the DeepSleep Memory Foam Pillow Pro 3.0. Paired with a supporting brand campaign, we sought to turn a sleeping product into a meaningful expression of emotion, helping users rest fully in body and mind during the holiday and fall naturally into deep sleep.

In terms of quilt products, we have steadily increased our market share. The consistency has continued to grow very well. The Shenshui air-conditioning back series continues to be hot-selling and is deeply loved by users. Since its release, the total sales have exceeded 3 million. At the end of March, we launched a series of upgraded products, the Shenshui air-conditioning back summer Pro 3.0. The new generation of products has achieved a systematic improvement in the performance of dynamic air-conditioning and air-conditioning, and adopted a fully upgraded dual-way air-conditioning technology to make the temperature-sensitive vibration more stable. For our comforter category, market share is steadily increasing.

with very strong growth continuing into the first quarter. The DeepSleep Thermal Regulating Comforter series has consistently achieved strong sales and garnered significant user preference, with cumulative sales exceeding 3 million units since its launch. At the end of March, we launched the latest upgrade in the series, the DeepSleep Thermal Regulating Comforter Pro 3.0 Summer Season, This new generation delivers systematic improvement in dynamic temperature and the humidity control, featuring a fully upgraded two-way temperature regulation technology that helps smooth out temperature fluctuations. Its moisture absorption and permeability have also been enhanced with each innovation cycle in the comforter category. Our product strength continues to improve. enabling us to more precisely capture users' pain points and translate them into practical applications through enhanced R&D capabilities. Within just 45 days of launch, the GMB of Deep Sleep Thermal Regulating Comforter Pro 3.0 Summer Season exceeded R&B 100 million.

In terms of new products, the sales trend is also very good. Recently, we have introduced the next generation of deep sleep pajamas. For new categories, sales momentum also has been very positive.

Recently, we launched the summer edition of the deep sleep loungewear in line with the season and introduced the new color options for the deep sleep fitted sheet. As our sleep ecosystem continues to evolve, Atul Planet's product mindshare among users is becoming stronger, and the trust between the brand and users is reinforced through each experience.

At the member level, as of the end of the first quarter, the number of Ado registered members reached 1.16 billion, which is a 20% increase. In 2026, we will continue to surround the core scene of deep sleep, and promote the deep integration of accommodation and retail business. Turning to membership.

By the end of the first quarter, our registered individual members reached 116 million, representing a 20% year-over-year increase. In 2026, we will continue to focus on deep sleep as a core scenario, deepening the synergy between our hotel and retail businesses to enhance members' sense of membership value and benefits. At the same time, We are actively exploring partnerships with like-minded brands, jointly creating expanded quality lifestyle experiences. We hope Ator membership will continue to evolve as a lifestyle membership brand that accompanies users with warmth, helping every member find experiences where body and mind return to inner peace.

Finally, I would like to share with you the progress of Ator in ESG practice. We have recently officially released the ESG report of Yaduo Group in 2025. Starting from Yaduo Village in Yunnan, we have a good intention to turn this idea of Yaduo Village's universal kindness into the spirit of Yaduo Group's growth. We will integrate the concept of ESG into the mission and core values of the enterprise, and continue to improve the management level of ESG. Finally, I would like to share Atul's progress on ESG.

We recently released the Atul Group 2025 ESG report. Atul started from Yaduo Village in Yunnan. and we have always been dedicated to a founding aspiration of doing good. Over time, this simple goodwill has become the spiritual foundation of Ator's growth. We have embedded ESG principles into our corporate mission and core values, continuously enhancing our ESG governance and advancing environmental responsibility across our hotel and retail operations. Through industry support and social assistance, programs, we continue to give back to Yaduo Village and the surrounding communities, fostering goodwill and extending warmth.

At the end of 2025, we officially established the Yaduo Industrial Foundation. We hope to promote the industrial industry in a more systematic way and spread people's concern. Recently, we have focused on the first-tier customer service community. We have launched a dedicated industrial project that not only faces Yaduo's own partners, At the end of 2025, we officially established the Atour Foundation with the goal of advancing public welfare in a more systematic way, extending care to people.

Recently, we launched a dedicated public welfare program focused on frontline housekeeping staff, open not only to our own employees, but also to housekeeping professionals across China's service industry, guided by our belief that everyone deserves kindness, aimed to extend a tour's warmth to the broader industry and enable these connections of goodwill to generate a more far-reaching impact.

Grounded in the present and looking to the long term, we will continue to uphold our mission

of creating an intimate ambience where people can warmly connect, stay true to our founding aspiration, and fulfill our corporate responsibilities. We will remain committed to doing the right things with warmth, steadily move toward our long-term vision of a timeless tour, warmth along every journey, and continue to contribute steadfast and warm strength to the industry and society. I will now turn the call over to our co-CFO, Mr. Wu Jianfeng, who will discuss our financial results.

Thank you, Haijun. Hello, everyone. I would like to present the company's financial performance for the first quarter of 2026. Our net revenues for the first quarter of 2026 grew by 47.5% year-over-year to RMB 2,811 million. Revenues from our monetized hotels for the first quarter of 2026 grew by 51.9% year-over-year to RMB 1,568 million. The increase was primarily viewed by the ongoing expansion of our hotel network, as well as supply chain business development. Revenues contributed by our leased hotels for the first quarter of 2026 decreased by 8.0% year-over-year to RMB 118 million. The decline was primarily due to a decrease in the number of leased hotels as a result of our product mix optimization. The total number of our leased hotels decreased from 25 as of March 31st, 2025 to 19 as of March 31st, 2026. Revenues from our retail business for the first quarter of 2026 increased by 54.4% year-over-year to RMB 1,071 million. The growth was driven by increasing brand recognition, successful product innovation, and a broadened range of product offerings. Growth profit of our hotel business for the first quarter of 2026 increased by 29.5% year-over-year to RMB 550 million. The decline in the gross margin was primarily due to the changes in the revenue structure. Gross profit of our retail business for the first quarter of 2026 increased by 58.3% year-over-year to RMB 564 million. the increase in the gross margin was attributable to the increasing contribution from higher margin products. Selling and marketing expenses accounted for 14.3% of net revenues for the first quarter of 2026, compared with 14.8% of the same period of 2025. The decrease was primarily due to improved efficiency of investment in our retail business General and administrative expenses, excluding share-based compensation expenses, accounted for 4.2% of net revenues for the first quarter of 2026, compared with 4.1% for the same period of 2025. Technology and development expenses accounted for 1.8% of net revenues for the first quarter of 2026, compared with 2.1% for the same period of 2025. Adjusted net profit margin for the first quarter of 2026 was 17.4%, representing a decrease of 0.7 percentage points year over year. Adjusted EBITDA margin for the first quarter of 2026 was 25.5%, increased by 0.6 percentage points year over year. We maintained a healthy cash position as of March 31, 2026. Cash and cash equivalents totaled RMB 3.7 billion, with net cash of RMB 3.4 billion. Today, in accordance with our annual dividend policy, we declared the first cash dividend of 2026, totaling around US dollar 72 million, as a reward for our shareholders' trust and support. That concludes our financial highlights for the first quarter of 2026. And for the full year of 2026, we currently expect total net revenues to increase by 24% to 28% compared with the 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 1 and 1 on your telephone 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 questions in English. Please limit your questions to one at a time. If you wish to have a follow-up question, please rejoin the queue. One moment for the first question. Your first question comes from the line of Sujie Lin of CICC. Please go ahead.

Thank you, Mr. Yeh Lv, Mr. Jianfeng, and Mr. Luke. After that, we achieved a rapid growth in the first quarter. The performance in consumption was very outstanding. What I want to ask is that we saw that the flow of electricity in the first quarter was relatively fast. So, will it affect the whole year's electricity flow plan? In addition, is there any change in the direction of opening electricity? Let me translate into English. Thank you, management. Congrats on another strong quarter. So we noticed a faster pace of hotel closures in Q1. So I want to know whether that will affect the full-year closure targets. And additionally, is there any change regarding the guidance on new openings? Thank you.

谢谢,思杰。 我来回答你这个问题。 先谈一下关店。 我们一季度的关店的节奏相对会集中一些, 共关了37家店。 The main reason is that the part of the project that we were determined to close last year was postponed to the end of this year, so there is a certain delay in the number. We still maintain 80 plus unchanged for this year's year-round goal. In addition, based on such structural adjustments that were actively launched last year, the quality of our hotel has also been significantly improved. In the whole process, we have gradually sorted out and established a set of long-term efficiency mechanisms, Thank you, Sijie. Let me answer your question.

In Q1, we had a relatively more concentrated pace of closures with a total of 37 hotels being closed. The main reason was that some projects we had confirmed last year to be closed were carried over to this year for finalization and resulting in that lag in the numbers. For our full year target for hotel closures this year remains unchanged at 80 hotels. And moreover, thanks to the proactive structural adjustments we initiated last year, the quality of our operating hotels now has clearly improved And in this process, we have also gradually sorted out and established a set of long-term mechanisms for older hotels that have been in operation for many years. We will provide targeted support and customize the renovation plans to lower the barrier to upgrading, along with partial fee waivers and financial support policies to effectively help these older hotels enhance their market competitiveness.

In terms of opening up, we are still following our rhythm in interesting promotion to adhere to such a logic of our good electricity. Our new one must be in line with our positioning, which can provide high-quality experience for the guests. So until the end of the first quarter, we have 751 units in the pipeline, which also guarantees sufficient and high-quality storage. Therefore, we still maintain the goal of opening up all year round.

And as for new openings, we are proceeding steadily according to our planned pace and adhering to the premier hotel logic. Newly opened hotels must be the ones that have met our positioning and can provide high quality experience for guests. As of the end of Q1, we had 751 projects in the pipeline, ensuring an ample and high quality reserve. Therefore, we are maintaining our four-year hotel opening target unchanged. Thank you.

Thank you, Sijie. Next question, please.

Questions? One moment for the next question. Our next question comes from the line of Dan Chi of Morgan Stanley. Please go ahead.

Good evening, everyone. I'm Dan Chi, an analyst at Damo. This is Dan from Morgan Stanley. My question is about REFPA trend for Q2. Can the management share some color with us? and whether there's any change in the management's visibility on the full-year REFPA outlook. 谢谢,Thank you.

好,谢谢Dan。 进入二十季度,我们是观察到休闲的旅游依然是强劲的, 尤其是四月份部分地区的春假也进一步释放了出行的需求, 出行的节奏的分散也让节假日的客流分布更加均衡, 但是往前看,我们觉得市场仍然存在一定的波动, Therefore, we have maintained a cautious and optimistic attitude towards the second quarter. Thank you, Dan.

Entering Q2, we had observed that leisure travel remained strong. In particular, spring break in some regions during April further boosted travel demand. And the more dispersed the travel schedule has led to a more balanced distribution of holiday passenger flows. However, when we look ahead, market volatility still exists. Therefore, we maintain a cautiously optimistic attitude about REVPAR performance in Q2.

From the long-term trend, we also see the positive drive of all kinds of policies to continue to stimulate the potential of service consumption and to introduce a relatively strong consumer activity for the entire industry. Despite the changes in the external environment, in the short term, it may disturb the market. As for long-term trends,

We also see various proactive policies continuously to unlock the potential of service consumption and injecting strong vitality of consumption into the industry. Although changes in the external environment may cause short-term fluctuations in the travel market, the accommodation industry as a whole remains in a stage of fluctuating recovery. Against this backdrop, we will not deliberately pursue short-term performance. Instead, we will strategically expand our reach to a broader range of business travelers and leisure travelers, continuously refine our service details that guests can truly feel, and make a tour the most reassuring and reliable choice for travelers Wednesday.

Thank you, Dan. Next question, please.

moment for the next question.

Our next question comes from the line of Lydia Ling of Citi. Please go ahead. Hi, management. This is Lydia from Citi. So, Could you share with them like the whole venture sentiment on the opening recently and also whether your company make any changes to your signing strategy? Thank you.

Okay, thank you, Lydia. In March this year, we also mentioned that the market is gradually returning to normal. The mindset of the entrepreneurs is also more mature. They will not be too optimistic and anxious because of short-term fluctuations. On the whole contract, First of all, we will continue to strengthen the layout of our core cities and core business circles in China to catch up with the basic standards of high-end commercial travel and city culture. On the other hand, we are also choosing to capture the part of leisure demand to increase red power, such as the key potential market of Qiangshan County, as well as some cities in the 5A-level scenic areas with stable traffic. Thank you, Lydia.

In March, we mentioned that the market was gradually returning to rationality, and the franchisees are adopting a more mature mindset, so they are not over-optimistic nor anxious about short-term fluctuations. And regarding our signing strategy, first, we will continue to strengthen our presence in the core cities and prime commercial areas across China, capturing the fundamental demand from high-frequency business travel and urban cultural tourism. On the other hand, we are selectively capturing the growth opportunities from leisure demand, for instance, in key potential markets such as strong third-tier cities and cities with 5A rated scenic spots that generate stable visitor flows. In these promising areas with solid market foundations and long-term growth potential, we are carefully selecting projects with strong development prospects.

Thirdly, long-term view, contract quality is the most important. However, the understanding of quality in the market may not be consistent. We also take this opportunity to share with you the quality of ADO. The quality of ADO is not only reserved for engineering hardware and structural upgrade, but is to experience as the core to create a comprehensive quality combination. The leading product power is the foundation, the core area is the foundation, the core area is the foundation, the core area is the foundation, the core area is the foundation, the core area is the foundation, the core area is the foundation, the core area is the foundation, Thank you.

Thirdly, in the long run, the quality of signed projects is of critical importance. However, there is no consensus in the market on what quality truly means. Let me take this chance to introduce to you the Ator's concept of quality. Our concept of quality goes beyond mere hardware upgrades and structural improvements. It is rather rooted in experience and aims to build a comprehensive quality composite. Leading product strength is the foundation. The ability to open hotels in the core areas is a key capability. And the continuous refinement of experience is our competitive mode. Such a quality philosophy leads to one important outcome. Our pricing power is not achieved through cost of cutting, but It is earned through guest perception. This gives us the ability to continuously push in pricing boundaries upward. New brands like Sa He and Attour Origin have emerged upon this logic. They are not replacements for existing products of ours, but rather the expansions of the Attour brand's imaginative horizon. Thank you.

Thank you, Lydia. Next question, please.

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

Let me translate to English. This is Chen Xin from UBS. And my question is about the retail business. Q1 retail revenue outperformed the market practitioners. What factors have contributed to the sustained popularity of your new products? Given the positive trend, has Medibint provided any updates to the full-year retail revenue guidance?

Thank you. Thank you, Chen Xin. I think the growth of our retail business is not only in terms of numbers. I would also like to share with you the theory behind the growth of our products. Let me give you an example. Let's take our newly launched Shinsui Kouenbei Pro summer series as an example. When we launched this first generation product three years ago, we should have removed the traditional back cover design and formed a double-sided beam. I think this is an innovation in the structure of the product. In the second generation, We also realized that the real demand of users for cold is not the extreme cold, but the natural comfort of the cold. So we re-emphasized the ventilation system and fabric structure, and upgraded the passive coldness to the active temperature control and dehumidification. I think the second generation is the innovation of the need for improvement. By the time we launch the third generation of products this year, we will also focus on the indoor temperature in the summer, Thank you, Chen Xin.

The growth of our retail business is not just about the numbers. So right now, what I really want to share is our product methodology behind this growth. Let me give you one example. Let's take the Deep Sleep Thermal Regulating Comforter Pro Summer Season Series as an example. When we launched its first generation three years ago, we changed the traditional duvet cover design and created a one-piece design with a cool-to-the-touch feel on both sides. That was a product structural innovation, as I think. With the second generation, we realized that users' real need for coolness is not about extreme coldness, but a naturally comfortable, refreshing feel. So we re-engineered the ventilation system and the fabric structure, upgrading from passive cooling to active temperature control plus moisture wicking. This second generation is demand-driven innovation. When we launched the third generation this year, we targeted the pain point of fluctuating indoor temperatures in summer, aiming to create a dynamic system that actively responds to environmental changes. So the third generation further improves dynamic temperature control and humidity control. This is what I think has deepened scenario-driven innovation.

In this way, three times in a row, our product definition has actually changed. From a bed to a bed to a bed to a bed to a bed to a bed to a bed to a bed to a bed to a bed to a bed to a bed to a bed to a bed to a bed to a bed to a bed to a bed to a bed to a bed to a bed to a bed to a bed to a bed to a bed to a bed to a bed to a bed to a bed to a bed to a bed to a bed to a bed to a bed to a bed to a bed to a bed to a bed to a bed to a bed to a bed to a bed to a bed to a bed to a bed to a bed to a bed to a bed to a bed to a bed to a bed to a bed to a bed to a bed to a bed to a bed to a bed to a bed to a bed to a bed to a bed to a bed to a bed to a bed to a bed to a bed to a bed to a bed to a bed It is that every time the stack is transformed into a technical standard that can be defined, measured, and copied. After three stackings, we found that the most difficult to make a container is not just a certain material or a certain patent, but the ability to continuously be able to approach users and continuously translate the feeling into standard system capabilities.

After these three iterations, the definition of our product has fundamentally changed from a cool comforter to an air permeable comforter and then to a comforter that breathes. What drives this change are the repeatedly validated needs that emerge from real user scenarios. This example of comforter is also the methodology of our retail business. Each iteration transforms previously vague user sensations into a definable, measurable, and a replicable technical standard. So after these three iterations, we've now come to realize that the most insurmountable mode is not a specific material or patent, but rather the systematic capability to continuously stay close to users and constantly translate their feelings into standards.

Thank you, Chen Xin. Next question, please.

Also, let me add to the retail revenue guidance you asked about. Thanks to the solid groundwork laid in the first quarter and the strong sales momentum of our new products, we are confident that we will surpass our previously announced full-year revenue target. Therefore, we are raising our full-year retail revenue guidance to grow 30% to 35% year-on-year. Thank you.

Thank you, Chen Xin. Next question, please.

Thank you for the questions. We will now take the last question coming from the line of Jiwei Liu of Citix. Please go ahead.

I translate my question in English. I'm Jiwei from Thetix. We noticed that you had also announced dividend plan for the first half year. Could you share whether there have been any changes or developments in the shareholder return policy? Thank you.

谢谢纪委。 股东回报方面的话,我们一直都非常重视。 我们今天是公告了我们1200万美元的首次的派息, 那差不多是前一年净利润的30亿。 另外我们从去年启动 Thank you, Qiwei.

Regarding shareholder returns, we have always placed a great importance on this. Today, we also announced our first dividend distribution plan for this year, with a total amount of approximately $72 million, representing about 31% of the previous year's net profit. In addition, since we began repurchases last year and as of Q1 this year, the total repurchase amount has exceeded $100 million. Going forward, we will continue to follow our comprehensive shareholder return plan that combines dividends and share repurchases still targeting approximately a 100% payout ratio based on the previous fiscal year's GAAP net profit as our shareholder return policy. Thank you.

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

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

Thank you and goodbye.