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Ladies and gentlemen, thank you for standing by, and welcome to Atour Lifestyle Holdings first quarter 2026 earnings conference call. At this time, all participants are in 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 Wu, 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-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 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.

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.

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Thank you, Luke. Hello, everyone. Thank you for joining Atour's first quarter 2026 earnings call today.

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Please turn to our slides. Entering 2026, China's service consumption is accelerating its transition from scale driven expansion to value driven upgrade 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 the 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 brand as our anchor, is the fundamental path for Atour to navigate industry cycles.

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Now, I would like to provide more details on our business performance for the first quarter of 2026.

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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.

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As for our hotel network, we adhered to a quality-first principle and maintained 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.

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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 book through our official channels with our price assurance policies, including a price drop refund and a 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.'

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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.

By empowering our franchisees and suppliers with high-quality products at attractive value, helping them improve procurement efficiency and enhancing the overall franchisee experience. 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 Atour brand.

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I would like to share the latest developments across our hotel brands.

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In a highly competitive hotel market, Atour 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 mindshare. 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, Atour 3.6 has continued to receive positive market feedback, validating our product competitiveness in the upper mid-scale markets.

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Atour 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 Atour 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 Atour 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 Atour Origin hotels in operation exceeded RMB 400. The two upper mid scale brands developed in parallel, forming a differentiated and complementary price tier.

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

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We are taking a long term view on SAVHE. We will continue to drive brand upgrades, bringing China's homegrown philosophy and expression of upscale living to a broader global audience. SAVHE'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.

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For our midscale brand, demand for more differentiated stay experiences continues to grow, an opportunity that aligns closely with Atour Light positioning. Atour Light continued its steady long-term trajectory in the first quarter. On the customer side, Atour Light 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. Atour Light 3.3 has now opened in more than 20 hotels. Its enhanced product experience and more efficient operating model have earned strong recognition from both customers and franchisees. Operationally, Atour Light 3.3 has demonstrated stronger pricing power. In the first quarter, RevPAR of Atour Light 3.3 hotels in operation was more than 10% higher than that of the 3.0 version.

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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 Atour 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 Atour Light's development.

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Moving on to our retail business. Entering 2026, Atour's retail business sustained its strong growth momentum, with core categories continuing to deliver outstanding performance. Retail revenue reached RMB 1,071 million in the first quarter, representing 54.4% year-over-year growth. Atour Planet also ranked among the top brands in the bedding category on major third-party platforms, with our product and brand strength continuously being validated by the market.

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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 Atour Planet's product capabilities continue to grow, we are proud to enter a new stage defined by the technological innovation and standard setting.

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In the pillow category, Atour 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 Deep Sleep 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.

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For our comforter category, market share is steadily increasing, with very strong growth continuing into Deep Sleep Thermo-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 Deep Sleep Thermo-Regulating Comforter Pro 3.0 summer Season. This new generation delivers systematic improvements in dynamic temperature and 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 GMV of Deep Sleep Thermo-Regulating Comforter Pro 3.0 summer exceeded RMB 100 million.

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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, Atour Planet's product mindshare among users is becoming stronger, and the trust between the brand and users is reinforced through each experience.

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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 Atour 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.

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Finally, I would like to share Atour's progress on ESG. We recently released the Atour Group 2025 ESG report. Atour 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 Atour'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 the retail operations. Through industry support and the 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 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, aim to extend Atour's warmth to the broader industry, and enable these connections of goodwill to generate a more far-reaching impact. Grounded in the present and are 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 Atour warmth along every journey, and continue to contribute steadfast and warm strength to the industry and society.

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I will now turn the call over to our Co-CFO, Mr. Jianfeng Wu, 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 managed hotels for the first quarter of 2026 grew by 51.9% year-over-year to RMB 1,568 million. The increase was primarily fueled 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. Gross profits of our hotel businesses 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 31st, 2026, cash and cash equivalents totaled RMB 3.7 billion, with net cash of RMB 3.4 billion. Today, in accordance with our with our annual dividend policy, we declared the first cash dividend of 2026, totaling around $72 million as a reward for our shareholders' trust and support. That concludes our financial highlights for the first quarter of 2026. For the full year of 2026, we currently expect total net revenues to increase by 24%-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-and1answer session. To ask a question, please press star one and one 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 Sijie Lin of CICC. Please go ahead.

[Non-English content]. Thank you, Management, congrats on another strong quarter. We noticed a faster pace of hotel closures in Q1. Want to know whether that will affect the full year closure targets. Additionally, is there any change regarding the guidance on new openings? Thank you.

[Non-English content] 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. Moreover, thanks to the proactive structural adjustments we initiated last year, the quality of our operating hotels now has clearly improved. 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 customized 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. [Non-English content] 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 full 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 Chee of Morgan Stanley. Please go ahead.

[Non-English content] This is Dan from Morgan Stanley. My question is about RevPAR trend for Q2. Can the management share some color with us? Whether there's any change in the management's visibility on the full year RevPAR outlook. [Non-English content]. Thank you.

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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. The more dispersed 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.

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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, and 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 it toward the most reassuring and reliable choice for travelers when stay.

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.

[Non-English content] Hi, management. This is Lydia from Citi. Could you share with some like the whole franchise sentiment on the opening recently and also whether your company make any changes to your signing strategy. Thank you.

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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. 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.

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Thirdly, in the long run, the quality of signed projects is of critical importance. There is no consensus in the market on what quality truly means. Let me take this chance to introduce to you the Atour's concepts 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 moat. Such a quality philosophy leads to one important outcome. Our pricing power is not achieved through cost cutting, but it is earned through guest perception. This give us the ability to continuously pushing pricing boundaries upward. New brands like SAVHE and Atour Origin have emerged upon this logic.

They are not replacements for existing products of ours, but rather the expansions of the Atour 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 Xing Chen of UBS. Please go ahead.

[Non-English content]. Let me translate to English. This is Xing Chen from UBS. My question is about retail business. Q1 retail revenue outperformed the market expectations. What factors have contributed to the sustained popularity of your new products? Given the positive trend, has management provided any update to the full year retail revenue guidance? [Non-English content].

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Thank you, Xing Chen. The growth of our retail business is not just about the numbers. Right now, what I really want to share is our product methodology behind this growth. Let me give you one example. Let's take Deep Sleep Thermo-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. We reengineered 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. The third generation further improves dynamic temperature control and humidity control. This is what I think as deepened scenario-driven innovation.

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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 replicable technical standard. After these three iterations, we've now come to realize that the most insurmountable moat 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, Xing Chen. Next question, please.

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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. We are raising our full-year retail revenue guidance to grow 30%-35% year-on-year. Thank you.

Thank you, Xing Chen. Next question please.

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

[Non-English content]. I translate my question o English. I'm Jiwei from CITIC Securities. We noticed that you had also announced a 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.

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Thank you, Jiwei. 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. 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.

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Thank you. That concludes today's question-and-answer session. I will now 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.

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