Atour Lifestyle Holdings Limited Stock

Ladies and gentlemen, thank you for standing by and welcome to the Atour Lifestyle Holdings Second Quarter 2026 Earnings Conference Call. [Operator Inructions] Today's conference is being recorded.

I would now like to turn the conference over to Mr. Luke Hu, IR Director. Please go ahead, sir.

Thank you, operator. Good morning, and good evening, everyone. Welcome to our second quarter 2026 earnings conference call. Today, you will hear from our Founder, Chairman and CEO, Mr. Wang Haijun; and our EVP, CFO, 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 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 purpose. 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 acceptable 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.

[Interpreted]

Thank you Luke. Hello, everyone. Thank you for joining Atour's Second Quarter 2026 earnings call today. Please turn to our results presentation. In the first half of 2026, China's consumer market continued to show divergent performance in both the Hotel and Retail sectors, we saw a clear split, homogeneous products and services remained under pressure, while companies that deliver differentiated experiences and have strong brand equity showed greater resilience.

More specifically, the hotel industry is shifting from scale-driven expansion to high-quality growth. Competition is increasingly centered on product innovation, service capabilities and operational efficiency rather than supply growth. In Retail, consumers are not only pursuing product quality, but are also placing increasing importance on whether products aligned with their lifestyles and the demand for personalization is also growing. This means that under these new consumer trends, brands that consistently invest in quality and differentiated experiences are better positioned to earn consumer recognition.

In the first half, we firmly advanced our new 3-year strategy, Chinese experience, brand-led excellence, making continuous breakthroughs across Hotel and Retail businesses. We also consolidated our experience advantage and enhanced brand momentum driving long-term healthy and sustainable growth.

Now I would like to provide more details on our business performance for the second quarter of 2026. Let's begin with our Hotel business. In the second quarter, our RevPAR was [ RMB 345.4 ] representing 100.7% of the level in the same period of 2025. ABR maintained steady growth reaching 101.2% of this level in the same period of 2025, while OCC stood at 99.7%. RevPAR for our mature hotels in operation for more than 18 months was RMB 336.8, representing 97% of the level in the same period of 2025. ADR and OCC were 98.3% and 99% of their respective levels in the same period of 2025.

As for our Hotel network, we continued to follow a quality-first principle and maintain strict standards for project selection and new hotel openings. In the second quarter, we opened 101 new hotels. Product strengths and prime locations together enhanced the quality of our hotel presence in core markets. By the end of the second quarter, our total number of hotels in operation reached 2,175 and our pipeline of hotels under development remained at a healthy level of 811.

On the hotel channel front, our CRS channel continued its steady performance in the second quarter, accounting for 61.5% of total room nights sold. The contribution of room nights sold to corporate members was 20.4%. Next, I would like to share the latest developments across our Hotel brands. The upper midscale segment has long been a towards core focus. Over the years, we have established a clear leadership position. Looking back at our development Atour Hotel was initially perceived by users as a lifestyle brand catering to the needs of upper mid-scale business travelers. As consumer trends and user needs evolved, we continued to upgrade our products. With disciplined investments, the latest Atour 3.6 strikes a balance between the experience it delivers and investment returns. It preserves its strength in business travel, while introducing a greater sense of ease. Atour 3.6 again delivered outstanding performance in the second quarter, with RevPAR of hotels in operation exceeding RMB 370, further validating market recognition of the product upgrade.

Within our upper midscale brand portfolio, Atour Origin and Atour Hotel are developing in parallel, further expanding our growth potential in the segment. To date, more than 60 Atour Origin hotels are in operation, with over 90 projects in the pipeline. Atour Origin offers a more distinctive experience and command stronger pricing power. In the second quarter, RevPAR of Atour Origin hotels in operation exceeded RMB 450, highlighting its strong differentiated competitive edge.

Atour Origin is designed to reflect the Yaduo Village as it truly is, natural, tranquil, warm and authentic. In April, we rolled out a series of distinctive experience touch points across Atour Origin hotels nationwide. Upon arrival, guests are welcomed by a wilderness-inspired signature scent. In the afternoon, they can enjoy the tea break in a chatting room, at night, they enjoy our deep sleep experience. And in the morning, they are served breakfast featuring local renown flavors. Through this more complete experience, we want guests to feel closer to nature, feel like their own vacation and to rediscover their inner peace.

In the mid-scale market, differentiation ultimately rests on a stay experience that customers can truly feel. This has long been Atour Light's focus, after continued refinement the Atour Light 3.3 cost model has entered a new phase of systematic optimization and scale rollout. We are concentrating resources more precisely on the core experience areas that customers care about, including sleep and breakfast, Atour Light 3.3 not only provides customers with a more comfortable and relaxing state, but also improves franchisees operating efficiencies through a more disciplined investment model.

In the second quarter, RevPAR of Atour Light 3.3 hotels in operation exceeded RMB 340, demonstrating strong operational resilience. Atour Light has established more flagship projects in higher Tier cities, which have received positive feedback from franchisees while the brand foundation continues to strengthen. At this stage, the Atour Light will continue to take a quality-first approach as we strengthen our operating capabilities we will steadily expand Atour light city coverage and continue to drive product and experience innovation in the mid-scale hotel market.

Meanwhile, we are deepening Atour Light's connection with younger customers. In the second quarter, we introduced exclusive benefits for students and launched the distinctive brand collaborations over the summer, further raising brand awareness among younger consumers.

Drawing from the vital essence of breath, SAVHE is devoted to creating serine spaces in the city where guests can breathe freely and feel truly at peace. SAVHE has played a role in driving the upward breakthrough of Atour's brand portfolio since its launch. It has advanced our brand philosophy and continues to broaden the value it delivers, setting a new standard for upscale lifestyle.

In the second quarter, SAVHE's operating performance reached a new high with RevPAR of hotels in operation exceeding RMB 1,000. On the operations side, we continue to enhance SAVHE's refined management capabilities gradually developing a replicable experience methodology with a global perspective that covers brand standards, service systems and talent training. In the second quarter, we also expanded SAVHE's wellness offerings with a broader selection of classes and dining options. Our goal is to provide guests with an even more exceptional experience throughout their stay.

Moving on to our Retail business. In the second quarter, Atour plan has sustained its strong growth momentum with retail revenue reaching RMB 1.575 billion, up 63% year-over-year. In terms of category mix, we are gradually shifting from a single blockbuster product model to a broader product portfolio. By product category, Atour Planet further consolidated its dominant position in the Pillow category with cumulative sales of the Deep Sleep Memory Foam Pillow Pro Series, surpassing 12 million units since launch. The Deep Sleep Thermo-Regulating Comforter Pro 3.0 summer season continued to see strong sales, driving rapid growth in the Comfortable category. GMV of the Comfort of category increased by more than 80% year-over-year. Fitted sheets and Loungewear with two strategic categories we introduced the last year maintained outstanding sales momentum and contributed a larger share of revenue.

Over the long term, the continued breakthroughs in our Retail businesses are backed by systematic capabilities built across our brand, product, supply chain and content creation. Together, they form a strong competitive moat. First, in brand building, Atour Planet has firmly established a natural deep sleep in users' minds over the years, while users' trust in our sleep products continues to grow.

Second, in product development, we have always innovated to address users' genuine sleep needs through continuous iteration we have built R&D capabilities that deliver breakthroughs in individual products and support expansion into new categories. This has enabled us to steadily broaden our sleep product portfolio. Third, in supply chain capabilities, we have reshaped the industry's supply chain system and set new industry standards for position across multiple manufacturing processes. We have also established end-to-end quality control from raw materials to finish the products with industry-leading product consistency and delivery reliability.

Fourth, we have strong capabilities in content creation and user engagement. Our strategy has always been to communicate product value with clarity and position. By creating content around real sleep scenarios and experiences, we make deep sleep more tangible and deepen the emotional connection between our brands and our users.

Building on these capabilities, we recently launched upgraded products in our core categories, including the Deep Sleep Memory Foam Pillow Pro 4.0 and the Deep Sleep Thermo-Regulating Comforter Pro 3.0, all season. Both new products are built on the Atour Planet Deep Sleep standard we introduced last year. Through this standard, we aim to translate users' experience of sleeping well into product standards that are more scientific, verifiable and continuously refinable. Guided by this approach, the Deep Sleep Memory Foam Pillow Pro 4.0 addresses a real pain point of frequent position changes during sleep. With an upgraded dynamic support system it provides better support across every sleeping position.

The Deep Sleep Thermo-Regulating Comforter Pro 3.0 all season also addresses the need for sleep comfort under changing temperature and humidity conditions. Its temperature and humidity balancing system improves temperature regulation and moisture management. allowing it to flexibly adapt to seasonal temperature swings and changes in how warm or cool users feel throughout the night.

Looking ahead, we will continue developing our Retail business with a long-term mindset guided by user needs, we will continue to innovate and evolve our product portfolio, further increase our market share in core categories and consolidate our leadership. We will also continue strengthening Atour Planet brand value by translating our strength in product development and technology into a lasting competitive moat for the brand, we will consolidate Atour Planet's position at the Sleep brand that users choose first and consistently trust.

Turning to membership. By the end of the second quarter, Atour had 120 million registered individual members as our membership base has gone the strategic growth of our membership ecosystem has become clearer. It is not only a solid foundation for our Hotel and Retail businesses, but also a platform for retaining long-term users and calculating user value. At the same time, we are building a more refined system for engaging different user groups. By focusing on their core needs, we deliver more relevant benefits and experiences through segmented engagement and targeted outreach. We aim to deepen our connection with users and build longer-lasting relationships with them throughout the user life cycle.

Finally, I would like to share a few thoughts. Recently, we introduced Atour's six commitments to Peace of Mind, which further clarify our service standards and safeguards across key touch points of our guest's journey. We believe peace of mind is not just a slogan. It should be an experience that guests can clearly feel and consistently enjoy during every state. By delivering these experiences more reliably, we aim to make peace of mind an integral part of how people perceive the Atour brand. We also hope to set a new benchmark for service standard across the industry.

Behind every experience that gives guests peace of mind is the dedication of our service staff. We continue to pay close attention to their development and enhance their experience at works including launching a public welcome plan program for hotel housekeeping professionals nationwide, improving the work environment for frontline service staff and expressing respect and gratitude to them through initiatives such as Service Staff Appreciation Day. We firmly believe that when service staff are seen respected and treated with care, their kindness and warmth will reach guests naturally. This creates lasting trust between our brand and our users. With that in mind, we hope to continue advocating for service excellence and leading the industry towards a higher standard of experience.

These actions are grounded Atour's long-term commitment across both our Hotel and the Retail businesses, we have always believed that quality is the foundation of sustainable long-term growth. By improving product quality, refining the user experience and strengthening organizational capabilities, we can keep creating value for users and build competitive strength that endures through the industry cycles.

Looking ahead, we will continue to do the right things with world. With user experience at the center and organizational capabilities as the foundation, we will carry that warmth through every experience we deliver. This enduring warmth will define Atour as we navigate industry cycles and build for the long term.

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 second quarter of 2026. Our net revenues for the second quarter grew by 41.4% year-over-year to RMB 3,490 million. Revenues from our monetized hotels for the second quarter of 2026 grew by 32.8% year-over-year to RMB 1,725 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 second quarter of 2026 decreased by 11.8% year-over-year to RMB 132 million. The decline was primarily due to a decrease in the number of these hotels. The total number of our leased hotels decreased from 24 as of June 30, 2025, to 19 as of June 30, 2026. Revenues for our Retail business for the second quarter of 2026 increased by 63.2% year-over-year to RMB 1,575 million. The growth was driven by increasing brand recognition, successful product innovation and a broadened range of product offerings.

Gross profit of our Hotel business for the second quarter of 2026, increased by 18.7% year-over-year to RMB 659 million. The decline in the gross margin primarily reflected a shift in the revenue mix as our lower-margin supply chain business grew faster and accounted for a larger share of Hotel revenue. Gross profit of our Retail business for the second quarter of 2026 increased by 57.4% year-over-year to RMB 809 million. The decrease in gross margin primarily reflected shift in the product mix. Selling and marketing expenses accounted for 17.4% of net revenues for the second quarter of 2026, compared with 15.9% for the same period of 2025. The increase was mainly due to the investment in brand recognition and the effective development of online channels, in line with the growth of our Retail business.

G&A expenses, excluding share-based compensation expenses, accounted for 3.5% of net revenue for the second quarter of 2026, compared with 3.6% for the same period of 2025. Technology and Development expenses accounted for 1.6% of net revenues for the second quarter of 2026, compared with 1.7% for the same period of 2025. Adjusted net profit margin for the second quarter of 2026 was 16.0%, representing a decrease of 1.3 percentage points year-over-year. Adjusted EBITDA margin for the second quarter of 2026 was 23.5%, decreased by 1.2 percentage points year-over-year.

We maintained a healthy cash position as of June 30, 2026. Cash and cash equivalents totaled [ RMB 3.9 billion ] with net cash of RMB 3.7 billion. That concludes our financial highlights for the second quarter of 2026. And for the full year of 2026, we currently expect total net revenues to increase by 30% compared with the full year of.

Now let's open the floor for Q&A.

[Operator Inructions] First question comes from Dan Chee from Morgan Stanley.

[Interpreted]

Please allow me to translate my question. This is Dan from Morgan Stanley. My question is about hotel opening and signing. So since the beginning of this year, the overall industry supply was seen deceleration. So will this affect the company's upcoming signing interest? And additionally, we would like to ask if the company is keeping or any adjustment to the guidance of full year Hotel growth opening and closure?

[Interpreted]

Thank you, Dan. There are multiple factors behind the supply dynamics in the Hotel industry, including macroeconomic environment, supply-demand relationship and property availability they all lead to cyclical fluctuations. So this is a natural adjustment process as the industry matures rather than focusing solely on overall supply volume we place greater emphasis on truly competitive, the high-quality supply that meets consumers' quality expectations.

In the current market environment, franchisees are more focused on a brand's ability to sustain growth and its long-term resilience through market cycles. The leading brands with superior customer experiences strong brand equity and proven product models and stable investment returns remain as their top choice for those franchisees when making their investment decisions. We believe that the industry adjustment period is precisely a critical phase for leading brands to further consolidate their strength and increasing their market share.

We are not pursuing scale expansion alone. Our core goal is to build sustainable brands and strong brand equity across augers. And on the foundation of steadily enhancing brand strength, we are expanding our brand presence. Currently, our brand portfolio already cover a broader range of price points and consumption scenarios capable of accommodating diverse property conditions and meeting more varied market demands.

In terms of project distribution, we center around user needs and long-term brand value. With higher tier city core business districts still remaining as our primary focus. At the same time, we are actively expanding into strong third-tier cities, areas surrounding the 5A rated cynic spots and distinctive product opportunities arising from urban renewal projects as a supplement.

In the first half of the year, our signing momentum remain a steady trend and the pipeline achieved solid increase quarter-over-quarter, providing a high-quality reserve for future hotel openings. Thus, we maintain our full year opening target unchanged. In addition, the overall pace of closures has slowed significantly on a sequential basis since the second quarter. Therefore, we are also keeping our full year guidance of approximately hotel closures unchanged.

Next, I have Ronald Leung from Bank of America.

[Interpreted]

Let me translate my question into English. So we have observed a relatively volatile RevPAR trend since Q2. Could management share your view on RevPAR performance in the second half of the year?

[Interpreted]

Thank you, Ronald. And let me address this question. We believe that the long-term demand in the quality accommodation market continues to rise, whether for business travel or leisure tourism, this fundamental logic has not changed.

In the short term, due to weather factors such as typhoons and heavy rainfall in some regions during early July, the travel pace during this summer season was slightly delayed compared to previous years. But since the end of July, with the arrival of peak season, summer travel demand has shown signs of stabilizing and picking up.

Over the longer term, demand resilience remains intact, and the industry's trend towards higher quality development is clear. In this process, companies with strong brand equity and a solid customer base will continue to capture structural opportunities. We, therefore, hope the market can look beyond short-term data points focus more on the positive adjustment trends within the industry and the ability of leading brands to withstand cycles.

Next question comes from [indiscernible] from Citi.

[Interpreted]

I try to take my question. [indiscernible] . I would like to ask management how you will the current demand structure? Are there any new changes or opportunities in business and leisure travel respectively?

[Interpreted]

Thank you, Trey. First, with business demand, the customer base is becoming more diversified before larger KA enterprise clients were a major source of demand However, as the market landscape evolves, we're now also seeing new opportunities emerge from local core enterprises, universities and research institutions. Therefore, while we continue to serve our core corporate clients well, we are also enhancing our business travel system to tap into new resources of business travelers. Thereby strengthening both our demand coverage and the stability of our customer structure.

In addition, on the leisure travel demand side, more and more consumers are paying greater attention to the experiential value of their stay beyond simply fulfilling functional accommodation needs. This aligns well with Atour's direction of pursuing high-quality and multi-brand development. Through differentiated positioning, our brand portfolio is able to more precisely match the needs of different customer segments and the consumption scenarios.

At the same time, inbound tourism is also a key growth market that we have been focusing on over the long term. With the gradual recovery of the inbound tourism market, we are actively advancing cooperation with overseas distribution channels and brand communications and capture the long-term opportunities brought by the growth of international guests in the future.

Next, we have Lydia Ling from Citi.

[Interpreted]

This is Lydia from Citi. I have questions on the Retail business, and we continue to see very solid momentum for the Retail business in the second quarter. And what would be the core reason behind the distress? And given the strong growth in the first half, what's your latest guidance for your Retail business for the full year?

[Interpreted]

Thank you, Lydia. Let me answer the first part of your question. In the first half of this year, Atour Planet has continued to maintain relatively fast growth. However, for us, growth itself is merely an external reflection of the building of our capabilities. What matters more is the continuous accumulation and improvement of our systematic capabilities across brand, product, supply chain, content and other areas.

Atour Planet has never chased the short-term trends or around discount promotions. Instead, we focus on product innovation and brand building around users' real sleep needs. We believe that products that truly create user value and deliver consistent quality will ultimately earn long-term recognition from the users.

On the product side, as the business developed, we have gradually built a more comprehensive sleep product portfolio. While our Pillow category continues to maintain its leading edge, our Comforters also achieved rapid growth. New categories, extending from the sleep scenario such as Fitted Sheet and Loungewear are also becoming important growth drivers.

Regarding the full year revenue guidance for the Retail business, based on the strong performance in the first half of the year and the solid sales momentum following new product launches, we are raising our full year Retail revenue growth guidance to 40% year-over-year.

Last question comes from Xin Chen from UBS.

[Interpreted]

Let me translate to English. This is Xin Chen, from UBS. I'd like to ask questions about financial. Previously, the company indicated the full year [indiscernible] Ratio would increase -- could you please elaborate on whether there has been any change to the full year profit margin guidance at this stage? Second question is about shareholder return. Has there been additions to the company's shareholder return policy?

[Interpreted]

Thank you Xin Chen. Let me address this question. Currently, we still maintain our initial judgment from the beginning of the year that the full year net profit margin will see a slight year-on-year decline. However, we observed some shifts in the factors affecting our profit margin.

At the beginning of the year, we anticipated that increased investments in talent expansion and the technology R&D aimed at supporting long-term capability building would drive up our G&A and R&D expense ratios and exert some pressure on net margin. But based on our actual first half performance, a positive development has emerged. Revenue growth exceeded our initial expectations. So while we continue to invest in capability building, the expense growth has remained broadly aligned with revenue growth. As a result, we now expect the G&A and R&D expense ratios to stay relatively stable.

As the full year revenue growth for both our Hotel Supply Chain business, and the Retail business is expected to exceed our initial estimates, driving a shift in the group's revenue mix. In addition, as we continue to execute our shareholder return program, the group's effective tax rate is also expected to rise compared to last year, which will have a certain impact on net margin. Considering both the revenue mix shift and the higher tax rate, we anticipate a modest year-over-year decline in the group's full year net profit margin.

And as in terms of shareholder returns, we have consistently executed in accordance with our established strategy and pace. Since the initiation of the share repurchase program up to the end of the second quarter, the cumulative repurchase amount has exceeded USD 150 million. In terms of dividends, we are also continuing to steadily implement our existing dividend policy. Thank you.

Thank you. That concludes today's Q&A session. I would now like to turn the conference back 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.

[Portions of this transcript that are marked

[Interpreted] were spoken by an interpreter present on the live call.]

Ladies and gentlemen, thank you for standing by, and welcome to Atour Lifestyle Holdings First Quarter 2026 Earnings Conference Call. [Operator Instructions] 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-CFO, Mr. Wu Jianfeng.

Before we continue, please be aware that this discussion will include forward-looking statements under federal securities laws, and 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.

[Interpreted] Thank you, Luke. Hello, everyone. Thank you for joining Atour's First Quarter 2026 Earnings Call today. 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 brand as our anchor is the fundamental path for Atour to navigate industry cycles.

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

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.

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 the 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. 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 2 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 8 commitments to supply chain procurement, establishing reliable mechanisms across pricing, aftersales 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.

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

Atour Origin represents our continued efforts 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 [indiscernible]. 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 2 upper mid-scale brands developed in parallel, forming a differentiated and complementary price tier.

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.

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 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.

For our mid-scale brand, demand for more differentiated stay experiences continues to grow, an opportunity that aligns closely with Atour Light's 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. 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 development.

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.

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 demand into tangible product strength. 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.

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.

For our comforter category, market share is steadily increasing, with very strong growth continuing into the first quarter. The Deep Sleep Thermo-Regulating Comforter series has consistently achieved the 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 Deep Sleep Thermo-Regulating Comforter Pro 3.0 summer season. This new generation delivers systematic improvement in dynamic temperature and humidity control featuring a fully upgraded 2-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 season exceeded RMB 100 million.

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 mind share among users is becoming stronger and the trust between the brand and users is reinforced through each experience.

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.

Finally, I would like to share Atour's progress on ESG. We recently released the Atour's Group 2025 ESG report. Atour started from Yaduo Village in [indiscernible], 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 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 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, opened 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 presence 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 Atour, 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 manachised 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 31, 2025, to 19 as of March 31, 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 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 USD 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.

[Operator Instructions] Your first question comes from the line of Sijie Lin of CICC.

[Foreign Language] 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 target? And additionally, is there any change regarding the guidance on new openings?

[Interpreted] 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 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.

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 full year hotel opening targets unchanged.

Our next question comes from the line of Dan Chee of Morgan Stanley.

[Foreign Language] This is Dan from Morgan Stanley. My question is about RevPAR 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 RevPAR outlook?

[Interpreted] 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 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.

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 a tour the most reassuring and reliable choice for travelers when stay.

Our next question comes from the line of Lydia Lin of Citi.

[Foreign Language] This is Lydia from Citi. So could you share with some -- like how is franchisee sentiment on the opening recently? And also whether your company make any changes to your signing strategy?

[Interpreted] 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 overoptimistic 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 5 A-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, 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 Atour'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 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 gives us the ability to continuously push 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 imaginative horizon.

Our next question comes from the line of Xin Chen of UBS.

[Foreign Language] Let me translate to English. This is Xin Chen from UBS. And my question is about the 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 [indiscernible] provided any update to the full year retail revenue guidance?

[Interpreted] 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 Thermo-Regulating Comforter Pro summer season series as an example. When we launched its first generation 3 years ago, we changed the traditional Duvet cover design and created a one-piece design with a quote 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 coldness is not about extreme coldness but a naturally comfortable refreshing feel. So 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. So the third generation further improves dynamic temperature control and humidity control. This is what I think has deepened scenario-driven innovation.

After these 3 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 3 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. 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.

We will now take the last question coming from the line of [indiscernible].

[Foreign Language] I'll translate my question in English. I'm [indiscernible]. 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?

[Interpreted] Regarding shareholder returns, we have always placed great importance on this. Today, we also announced our first dividend distribution plan for this year with a total amount of approximately USD 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 USD 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 like to now turn the conference back over 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 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.

Ladies and gentlemen, thank you for standing by, and welcome to Atour Lifestyle Holdings Fourth Quarter and Full Year 2025 Earnings Conference Call. [Operator Instructions] 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 actual results may differ significantly from 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 a reconciliation of GAAP to non-GAAP financial results, please refer to the earnings release issued earlier today. Furthermore, a webcast replay of this conference call will be accessible on our website at ir.yaduo.com, where a copy of the results presentation is also available.

Now I will turn the call over to Mr. Wang, our CEO.

[Interpreted] Thank you, Luke. Hello, everyone. Thank you for joining Atour's Fourth Quarter and Full Year 2025 Earnings Call today. 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 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. Atour 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. As we enter 2026, we continue to see considerable market uncertainty. However, our strategic direction has never been clearer. We will [Technical Difficulty]

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

[Interpreted] 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 3-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 strength, 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 path.

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. Now I would like to provide more details on our hotel and retail performance for the fourth quarter and full year of 2025. 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, RevPAR for our mature hotels and 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 levels for the same period, respectively. In 2025, we opened 488 new hotels. By the end of the fourth quarter, the number of hotels in operation reached 2,015, 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.

Next, I would like to share the latest developments across our hotel brands. The upper mid-scale segment has long been our core focus where we have built a deep presence. For a longer-term view, at the beginning of this year, we officially upgraded Atour 4.0 to an independent brand, Atour Origin. While retaining efficient business travel functionality, Atour Origin introduces an immersive vacation ambience, creating a sene 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 Atour Origin hotels in operation exceeded RMB 430. To date, 55 Atour Origin hotels are in operation with over 50 projects in the pipeline. Together, Atour Hotel and Atour Origin form a more competitive brand portfolio in the upper mid-scale market. Atour Hotels style is tailored to mainstream business travel, offering customers dependable options that balance functionality with emotional appeal.

The latest product, Atour 3.6, continues to gain market recognition for its meticulous hardware configuration and outstanding service details. In the fourth quarter, the RevPAR of Atour 3.6 hotels in operation surpassed RMB 380. Atour Origin expands customers' experience and enriches their sense of well-being through its unique atmosphere. The synergistic development of the 2 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. SAVHE 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, SAVHE Hotel has forged a distinct path within the existing market framework and become a game changer in the upscale segment.

Currently, SAVHE has established its presence with 3 hotels in Shanghai, Shenzhen and Guangzhou. With its unique aesthetic system, carefully crafted ambience and exceptional experiences, SAVHE is gradually becoming a cultural gateway in each city it enters, redefining the value of upscale hotels. In the fourth quarter, SAVHE delivered exceptional operating results with RevPAR exceeding RMB 950. In 2026, we will further develop our Eastern wellness experience and build a holistic so 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, SAVHE 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 SAVHE 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.

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 incorporate sustainability, thereby creating a unique and differentiated competitive advantage. By the end of 2025, over 160 Atour Light 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. Atour Light has also demonstrated strong operational resilience. In the fourth quarter, the RevPAR of the Atour Light Series 3 hotels in operation recovered by more than 110% year-over-year and full year RevPAR recovered by over 100% year-on-year.

In 2026, we will fully roll out Atour Light's 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 Light mind share. At the organizational level, we are working to establish Atour Light'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.

Moving on to our retail business. 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 a Atour Planet has taken. Rather than engaging in evolution 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 continuous product innovation. This has not only reshaped the market landscape, but also helped drive progress and upgrade across the industry. In 2025, our retail business sustained strong growth momentum with full year revenue reaching RMB 3.67 billion, representing 67% year-over-year growth. Atour 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 Atour Planet Deep Sleep standard set a benchmark for the high quality and consistency of our products. Building on our solid product performance, Atour Planet's brand influence continued to strength, laying a solid foundation for the long-term development of our retail business.

In 2025, our pillow category further strengthened its leadership, consistently topping category rankings on major third-party platforms and gaining product mind share 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 category 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.

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 Atour Planet's Deep Sleep experience a competitive moat 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. We have always upheld our core value of serving people, continuously deepening our experiential value. This is also clearly reflected in our membership operations.

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%.

Moving forward, we will continue to deepen our membership operations with a brand-building mindset, focusing on the full user life cycle 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.

Last but not least, as we embark on our new 3-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 Atour warmth along every journey, we will uphold our quality standards while striving to break through the ceiling of the 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 managed hotels for the first quarter and full year of 2025 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 leased hotels as a result of our product mix optimization. Revenues from our retail businesses 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 gross margin of our hotel business was 35.8% for the fourth quarter and 37.0% for the full year of 2025. The gross margin of our retail business improved year-over-year to 52.6% for both the fourth quarter and the full year of 2025, reflecting the growing contribution from higher-margin products. Selling and marketing expenses accounted for 16.5% and 15.2% 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 fourth quarter and full year of 2025, respectively. The year-over-year decrease for the full year was primarily driven by improved management efficiency and economies of scale.

Adjusted net profit margin for the fourth 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 fourth 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 31, 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 USD 108 million for the full year of 2025. And as of December 31, 2025, we have made on market repurchase of USD 46 million since the implementation began in the third quarter.

Through the comprehensive shareholder return initiatives, we are taking concrete actions to reverse 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 fourth quarter and full year of 2025.

Now let's open the floor for Q&A.

[Operator Instructions] We will now take up this question from the line of [indiscernible] from CICC.

[Foreign Language] So we've noticed that the overall industry supply growth has slowed slightly. Therefore, we'd like to ask about the recent sentiment among franchisees regarding new signings. And additionally, could you please also provide some guidance on new openings in 2026?

[Interpreted] Okay. Let me answer your question. Thank you, [indiscernible]. 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.

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. As regard to Atour'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 will 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 the key commercial areas. On the basis of ensuring higher quality, we aim to achieve a similar scale of openings as last year.

Our next question comes from the line of Simon Cheung from Goldman Sachs.

[Foreign Language] 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 RevPAR performance so far quarter-to-date as well as your view on the RevPAR trend for the rest of the year.

[Interpreted] Thank you, 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 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 amidst market volatility. Therefore, we will persist with and deepen the differentiated experience advantages of Atour, 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.

We will now take our next question from Lydia Ling from Citi.

[Foreign Language] 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?

[Interpreted] Okay. Thank you, Lydia. Let me first share the overall direction and product plans for our retail business. Over the past few years, it is fair to say that Atour 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, Atour Planet will enter a phase of deepening core capabilities, consolidating our competitive advantages from all dimensions. We aim to avoid homogenized competition with those emulators and followers and forge a unique development path for Atour Planet. In terms of category planning, Atour Planet 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 comfortable category to achieve an even faster growth than pillows, further increasing market share.

Secondly, new categories such as fitted sheets and loungewear will accelerate breakthroughs, achieving scale growth through blockbuster product iterations and category matrix expansion. Besides, mattresses and other sleep accessories will also be as extended categories, collectively completing our Deep Sleep ecosystem layout of Atour Planet.

Next, I would like to share our outlook for the retail revenue. In 2025, both scale and the 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.

Next question comes from Ronald Leung of Bank of America.

[Foreign Language] 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 Q2 set?

[Interpreted] 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 4, eventually, our 2025 net profit margin roughly leveled with that of 2024. Looking ahead to 2026, as our business continues to evolve, the revenue mix of our manachised business, supply chain business and retail business will continue to change.

At the same time, based on the new 3-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 G&A and R&D expense ratios will increase this year. Therefore, at this starting point of the year, we preliminarily expect the group's net profit margin for 2026 to decline slightly year-on-year.

We will now take our next question from Dan Chee of Morgan Stanley.

[Foreign Language] 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 7 leased and owned hotel -- leased 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 gross opening in 2026 is flat year-on-year?

[Interpreted] 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 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 tours experiential standards in order to continuously consolidate our brand value in the long term. Nonetheless, based on the optimization and adjustments 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 would 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 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.

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]

Hello, ladies and gentlemen. Thank you for standing by, and welcome to Atour Lifestyle Holdings Third Quarter 2025 Earnings Conference Call. [Operator Instructions]. 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 third quarter 2025 earnings conference call. Today, you will hear from our Founder, Chairman and CEO, Mr. Wang Haijun; and our EVP, Co-CFO, Mr. Wu 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 a reconciliation of GAAP to non-GAAP financial results, please refer to the earnings release issued earlier today. Furthermore, a webcast replay of this conference call will be accessible on our website at ir.yaduo.com, where a copy of the results presentation is also available.

Now I will turn the call over to Mr. Wang, our CEO.

[Interpreted] Thank you, Luke. Hello, everyone. Thank you for joining Atour's Third Quarter 2025 Earnings Call today.

Amid the ongoing volatility in the macro environment, consumers have shown a clear shift toward prioritizing value and making more rational purchasing decisions. Innovative experiences emerging from new scenarios and business models have become a key force driving the release of consumption potential. For the hotel sector, the overall market has shown a moderate recovery since the third quarter. While travel and leisure demand continues to be robust, the industry is also characterized by rapidly shifting hotspots and uneven recovery across regions.

In the retail market, consumption is increasingly centered around experiential offerings and quality of life upgrades. Evolving consumer habits, coupled with technological advancements are jointly fueling development across various segments. As a leading lifestyle group, Atour keenly observes the evolution of user needs and captures consumption trends with precision. Through continuous innovation and enhanced experience in both our hotel and retail businesses, we consistently respond to and lead contemporary consumers' pursuit of quality living.

Now I would like to provide more details on our performance for the third quarter of 2025. Let's begin with our hotel business. Please turn to Slide 4 of our third quarter '25 results presentation. In the third quarter, our RevPAR was RMB 371.3, representing 97.8% of its level in the same period of 2024. Specifically, OCC nearly recovered to the prior year level at 99.9% of the same period in 2024, and ADR reached 98.1% of its level in the same period of 2024.

Please turn to Slide 5. In the third quarter, RevPAR for our mature hotels in operation for more than 18 months was 95% of the level in the same period of 2024, while OCC and ADR stood at 98.5% and 96.6% of their levels in the same period of 2024, respectively.

Please turn to Slide 6. Driven by our brand power and product excellence, Atour's hotel network steadily expanded, with the successful launch of various high-quality projects. In the third quarter, we opened 152 new hotels, a record high for a single quarter. By the end of the third quarter, we had a total of 1,948 hotels in operation, representing a 27.1% year-over-year increase. We have full confidence in achieving our strategic target of the 2,000 premier hotels by year-end, laying a solid foundation for the next phase of our journey.

As of the end of the third quarter, our pipeline of hotels under development remained steady at 754. Amid our rapid expansion, we remain steadfast in our quality-first principle. By applying rigorous project selection criteria and stricter quality standards, we are driving healthy and sustainable high-quality growth.

Next, I would like to share the latest developments for our hotel brands. Please turn to Slide 7. Within our upper mid-scale product portfolio, Atour 3.6 represents a new benchmark for Atour Series 3 hotels. To date, we have opened 19 Atour 3.6 hotels, which continue to gain market recognition and acclaim. Through meticulous attention to detail and optimize the scenario design, Atour 3.6 seamlessly integrates functional amenities, premium service and humane ambience. It effectively addresses the core needs of guests for efficiency and comfort, offering a new, more refined choice for travel experiences.

Please turn to Slide 8. Grounded in a forward-looking understanding of consumers' long-term needs, Atour Series 4 has received a strong market recognition, reaffirming its precise product positioning. In the third quarter, the RevPAR of Atour 4.0 hotels in operation for more than 3 months surpassed RMB 500. While delivering both functional utility and emotional value, Atour 4.0 hotels placed greater emphasis on fostering a deep resonance with guests, creating a healing experience that promotes holistic well-being.

The upper midscale segment has long been our core focus and strategic foundation. By leveraging the synergistic deployment of Atour Series 3 and Series 4, we effectively serve the diverse needs of different customer groups. As Atour products continue to penetrate core business districts across cities, we will further solidify our competitive moat and leading position in the upper midscale market.

Please turn to Slide 9. SAVHE Hotel represents a significant breakthrough for us in the upper scale lifestyle segment. In the third quarter, the 2 operating hotels demonstrated robust performance with RevPAR exceeding RMB 900. On November 18, our third SAVHE Hotel began its soft opening in Guangzhou and has already received positive market feedback. With its unique design style and exceptional accommodation experience, SAVHE Hotel continues to attract a diverse clientele, demonstrating its substantial growth potential.

SAVHE Hotel is dedicated to creating rejuvenating journeys for the discerning clientele, massively fusing Eastern cultural heritage with modern aesthetics. We are now collaborating with a professional institution to integrate scientific wellness concepts across the guest experience from customized healthy diet to carefully curated in-room amenities, building a comprehensive deep experience for guests and showcase our thoughts and practice of the Chinese experience concept in the upscale segment. For our expansion strategy, we will continue to adhere to precise site selection, striving to make every SAVHE Hotel a model of local upscale lifestyle.

Please turn to Slide 10. For our midscale brand, we consolidated our differentiated advantages by continuously refining our products, improving operational efficiency and enhancing brand building. Atour Light continued its strong performance in the third quarter, with the RevPAR of Atour Light Series 3 hotels in operation surpassing year ago levels. As the latest upgraded version, Atour Light 3.3 has seen its first batch of hotels successively opened. Atour Light 3.3 features a more mature model with that incorporates targeted optimizations in practicality and spatial aesthetics, earning strong acclaim from both users and franchisees.

At the current stage, Atour Light will continue to concentrate its presence in higher-tier cities, advancing steadily while building brand recognition through benchmark projects. Simultaneously, we are systematically enhancing our operational framework by refining service touch points, optimizing operational standards and strengthening talent development. These efforts ensure premium experiences while consistently driving operational efficiency, solidifying our competitive edge in the midscale segment and laying a solid foundation for long-term development of Atour Light brand.

Moving now to our retail business. Please turn to Slide 11. During the third quarter, our retail business sustained strong growth with GMV reaching RMB 994 million, representing a 75.5% year-over-year increase. Online channels continue to contribute over 90% of total GMV. During the recently concluded Double Eleven Shopping Festival, Atour Planet has not only delivered its excellent sales momentum, but has also further strengthened the deep sleep brand image in the mind of users. Meanwhile, across both the third quarter and the Double Eleven period, Atour Planet also ranked among the top brands in the bedding category on major third-party platforms.

Please turn to Slide 12. The outstanding performance of Atour Planet keeps validating our ability to provide comprehensive sleep solutions in the market. In our core categories, we pursue breakthrough innovation through initiatives like collaborative R&D with academic institutions, consolidating our competitive advantages while gradually expanding market reach. Meanwhile, based on in-depth insights into user needs, we are also developing new categories such as Deep Sleep Fitted Sheet and Deep Sleep Loungewear, refining and enriching the sleep ecosystem of Atour Planet.

Next, I will now walk you through the latest updates on Atour Planet's core categories. Please turn to Slide 13. In the third quarter, Atour Planet continued to lead the market in the pillow category across major third-party platforms. Deep Sleep Memory Foam Pillow Pro 3.0 has received glowing reviews for its excellent support and comfort. Since its launch, it has shown strong sales performance, exceeding RMB 100 million GMV in just 25 days, reducing -- 19 days compared to the previous generation. Up till now, the cumulative sales volume of the Deep Sleep Pillow series has exceeded 8 million units since its release.

In addition, we've expanded the pillow portfolio with products like Deep Sleep Travel Pillow and Deep Sleep Pillow for Children, gradually building a product portfolio that covers different scenarios and serves various user groups. This expansion demonstrates our execution capabilities in enhancing sleep experiences while reinforcing our category leadership position.

Please turn to Slide 14. Atour Planet is leading the transformation of the comforter category driven by the exceptional performance of our Deep Sleep Thermo-Regulating Comforter series. As the seasons changed, we launched 2 upgraded products in the third quarter, Deep Sleep Thermo-Regulating Comforter Pro 2.0, all-season and winter season, both feature an upgraded dual-layer temperature control system that dynamically adjusts the sleep micro environment for more stable rest. To date, the cumulative sales volume of the Deep Sleep Thermo-Regulating Comforter series has exceeded 2 million units since its launch.

Please turn to Slide 15. With the launch of new products targeting users' core sensory needs during sleep, we officially released the Atour Planet Deep Sleep Standard, covering the dynamic pressure stabilization factor for the pillow category and the dynamic temperature management factor for the comforter category. In the future, this standard will serve as the core criteria for product iteration, ensuring high quality and consistency of products.

The establishment of this standard has also driven us to continuously enhance our supply chain capabilities, further strengthening our competitive advantages and the technical barriers in the sleep field. Our goal with this is to elevate industry standards and make natural deep sleep and experience that every user can truly perceive and achieve.

In the current market where imitators and followers are emerging, Atour Planet remains committed to its founding aspiration dedicated to listen to users' genuine needs and refining product details. Our deep understanding and agile responsiveness to user needs have become a solid moat supporting long-term brand development. In the meantime, we'll keep strengthening our foundational capabilities. We will pursue excellence in product development, supply chain management and quality control to solidify a strong foundation for healthy growth.

Looking to the future, we are ready to work with our industry partners to move forward together and guide China's sleep industry to a new stage of higher quality development.

Please turn to Slide 16. Last but not least, I would like to share our progress across our membership business and the channel development. With our growing brand influence and the continuous enrichment of our membership benefit system, our membership base maintained robust growth. By the end of the third quarter, the number of registered individual members exceeded 108 million, representing a year-over-year growth of over 30%. In terms of channel development, our core CRS channel remained stable, accounting for 62.4% of the total room nights sold in the third quarter. The contribution of room nights sold to corporate members was 20% during the quarter.

Please turn to Slide 17. The evolution of the A-Card system and the upgrade of membership benefits stem from our deep understanding of members' genuine needs. By integrating online and offline resources, we've created multi-scenario end-to-end service experiences that continuously explore innovative possibilities in quality living. Looking ahead, we will sharpen A-Card's brand positioning. With a focus on a complete customer life cycle, we will analyze consumption patterns across accommodation and retail scenarios among different user groups, expanding lifestyle experiences and introducing compelling benefits and activities to deepen emotional connection with our members.

Please turn to Slide 18. Moving forward, we will continue to deepen our focus across 3 key areas of user, employee and fundamental capabilities. As for our users, we will always adhere to the user-first philosophy, embedding it across all touch points of our hotel and retail business. We will continuously enhance users' experiences and deepen our emotional connection with them. For our employees, we pay close attention to their growth trajectories and accumulated experience. Through diversified mechanisms, we redefine traditional industry promotion and development path, driving continuous organizational evolution. To strengthen our foundational capabilities, we have been leveraging digital solutions alongside granular operations management, thus driving a comprehensive upgrade in both efficiency and the customer experience, providing a solid foundation of the group's long-term sustainable high-quality growth.

I will now turn the call over to our Co-CFO, Mr. Wu Jianfeng, who will discuss our financial results.

Thank you, Haijun. I would like to present the company's financial performance for the third quarter of 2025. Please turn to Slide 20 of the results presentation. Our net revenues for the third quarter of 2025 grew by 38.4% year-over-year and 6.5% quarter-over-quarter, to RMB 2,628 million. Revenues from our manachised hotels for the third quarter of 2025 were RMB 1,560 million, up 32.3% year-over-year and 20.1% quarter-over-quarter. The year-over-year increase was primarily fueled by the ongoing expansion of our hotel network. The total number of our manachised hotels increased from 1,504 as of September 30, 2024, to 1,924 as of September 30, 2025. The quarter-over-quarter increase was mainly due to the growth in RevPAR and our supply chain business.

Revenues contributed by our leased hotels for the third quarter of 2025 were RMB 164 million, representing a decrease of 13.4% year-over-year and an increase of 9.7% quarter-over-quarter. The year-over-year decline was primarily driven by a decrease in the number of leased hotels as a result of our product mix optimization. The quarter-over-quarter increase was mainly due to an increase in RevPAR.

Revenues from our retail business for the third quarter of 2025 were RMB 846 million, reflecting a 76.4% year-over-year increase but a 12.3% quarter-over-quarter decline. The year-over-year growth was driven by increasing brand recognition, successful product innovation and a broadened range of product offerings. The quarter-over-quarter decline was primarily due to the seasonality of our retail business.

Now let's move to costs and expenses. Please turn to Slide 21. Hotel operating costs for the third quarter of 2025 increased by 23.5% year-over-year and 21.1% quarter-over-quarter, to RMB 1,082 million. These increases were primarily due to higher variable costs, such as supply chain costs and hotel manager costs, associated with our ongoing hotel network expansion. Gross margin of our hotel businesses expanded to 37.3% in the third quarter of 2025 from 36.0% during the same period of 2024, primarily due to a lower proportion of leased hotel as a result of our product mix optimization.

Retail cost for the third quarter of 2025 went up by 36.3% (sic) [76.3%] year-over-year and down by 11.2% quarter-over-quarter, to RMB 400 million. The year-over-year increase was associated with the rapid growth of our retail business. Gross margin of our retail business remained stable compared to the same period of 2024.

Now please turn to Slide 22. Selling and marketing expenses for the third quarter of 2025 were RMB 355 million compared with RMB 218 million for the same period of 2024. Selling and marketing expenses accounted for 13.5% of net revenues for the third quarter of 2025, compared with 11.5% for the same period of 2024. The increase was mainly due to investment in brand recognition and the effective development of online channels, in line with the growth of our retail business.

General and administrative expenses for the third quarter of 2025 were RMB 100 million and included RMB 10 million in share-based compensation expenses, compared with RMB 82 million for the same period of 2024, which also included RMB 3 million in share-based compensation expenses. General and administrative expenses, excluding share-based compensation expenses, accounted for 3.4% of net revenues for the third quarter of 2025, compared with 4.2% for the same period of 2024. The decrease was primarily due to improved management efficiency and economies of scale.

Technology and development expenses for the third quarter of 2025 were RMB 44 million, compared with RMB 30 million for the same period of 2024. Technology and development expenses accounted for 1.7% of net revenues for the third quarter of 2025, compared with 1.6% for the same period of 2024.

Please turn to Slide 23. Adjusted net income for the third quarter of 2025 was RMB 488 million, representing a 27.0% increase year-over-year. Adjusted net profit margin for the third quarter of 2025 was 18.6%. Adjusted EBITDA for the third quarter of 2025 was RMB 685 million, up by 28.7% year-over-year. Adjusted EBITDA margin for the third quarter of 2025 was 26.1%.

Now please turn to Slide 24. We also maintained a healthy cash position. As of September 30, 2025, our cash and cash equivalents totaled RMB 2,670 million with net cash of RMB 2,603 million.

Please turn to Slide 25. In line with our commitment to enhancing shareholder value and our annual dividend policy adopted in August 2024, today, we declared our second cash dividend for 2025, totaling approximately USD 50 million. Through a comprehensive shareholder return initiative encompassing dividends and share repurchase, we are taking concrete actions to reward shareholders' trust and support, enabling all shareholders to share in the company's growth achievements.

Please turn to Slide 26. For full year 2025, given ongoing network expansion and rapid growth of our retail business, we currently expect total net revenues to increase by 35% compared with full year 2024.

That concludes our financial highlights for the third quarter of 2025. Now let's open for Q&A.

Thank you, management. [Operator Instructions] Our first question comes from the line of Dan Chee from Morgan Stanley.

[Foreign Language]. Could the management share the RevPAR trend since October? And also, if it's possible, can you provide your outlook for RevPAR in the fourth quarter and also potentially next year?

[Interpreted] Thank you, Dan. Let me address your question. Since the beginning of this year, with the continued recovery in industry supply and demand dynamics, we sticked to a high-quality development and leveraged a refined strategy of revenue management, demonstrating strong operational resilience. Throughout the first 3 quarters of this year, our RevPAR has shown a trend of progressive improvement on a year-over-year basis.

During the National Day holiday, leisure travel demand remained robust, but the market exhibited some significant structural divergence. Driven by stronger ADR, our RevPAR achieved year-on-year growth. After the holiday, the market returned to a business-dominated environment, but benefiting from active exhibitions and business travel activities, the demand in core cities demonstrated strong resilience. Therefore, we expect the pressure from the year-on-year decline in RevPAR to further ease in the fourth quarter.

Looking ahead, the market will continue to show divergence. With still some challenges and uncertainties remaining, we will continue to deeply understand user needs, strengthen our foundational capabilities, attract users with high-quality hotel products and differentiated experiences. By forging deeper emotional ties with them, we will secure long-term advantages in a volatile market environment and demonstrate our resilience for development.

Next question comes from Sijie Lin of CICC.

[Foreign Language]. Could you please share more about the recent new hotel signing trends and whether there are any changes to the full year hotel opening and closure targets?

[Interpreted] Thank you, Sijie. Let me answer your question. In recent years, we found that during our scale expansion, Atour has consistently maintained our strategic focus on premier hotels, concentrating on core locations for expansion, and we strictly controlled quality. At the same time, we have launched several new hotel products that align with market needs. With the successful launch of many high-quality projects, our brand strength and the differentiated competitive advantages have been further solidified. So we do not endorse a growth strategy driven purely by scale. We firmly believe that only by advancing scale growth on the foundation of quality can we achieve sustainable value.

Regarding signings, as we mentioned earlier, we maintain a strict selection mechanism, focusing on expansion in core business districts of key cities. With high quality being a prerequisite, the total number of new hotel signings this year is generally in line with last year, maintaining a steady development pace. At the same time, we are also clearing stock projects in the pipeline in an orderly fashion to promote the healthy development of our pipeline.

In terms of openings and closures, we opened 152 hotels in the third quarter. We have full confidence in achieving the full year guidance of 500 new openings and reaching our strategic target of 2,000 premier hotels by the end of this year. Meanwhile, for the operating hotels of ours, we place great emphasis on operational quality and user experience. By strengthening standard implementation and refined management, we can ensure that every hotel can deliver consistently high-quality service. To this end, we maintain a certain proactive replacement rate to continuously enhance the quality of our overall hotel network. In the third quarter, we closed 28 hotels and expect approximately 80 closures entirely for this year.

Next question comes from Chen Xin of UBS.

[Foreign Language]. This is Chen Xin from UBS. And my question is about the retail business. Could the management share your perspective on the competition in the retail business? In addition, given the consistent overperformance of the retail business, would you consider any adjustments to your full year retail revenue guidance?

[Interpreted] Thank you, Chen Xin. Let me start by sharing the development strategy of ours and the competitive landscape of our retail business. Since Atour Planet entered the sleep industry, our brand and product power have gradually gained market recognition. This has been followed by a rise in imitators and industry participants, leading to an increasingly fierce competition. However, we always believe that the real competition is not about the peers, but is about the ever-evolving user needs.

To address this, we did not simply follow the existing industry path. Instead, we progressively built our products and supply chain system with our distinctive characteristics. For example, we officially launched the Atour Planet Deep Sleep Standard recently. This standard differs from traditional industry metrics like fabric weights or thread counts, but it is based on sensory science and the natural rhythms of human sleep, focusing on 2 core sensory indicators of sleeping users, the fluctuation of pressure and the change of temperature. This standard also places higher demand on our product development and production. We aim to continuously strengthen our product barriers through this forward-looking standard while collaborating with the upstream supplier partners to jointly lead the industry progresses.

As a relatively new player in the industry, we always plan our layout with a longer-term mindset. While developing quite rapidly, we have been constantly building and consolidating our foundational capabilities. I believe our underlying philosophy is consistent between the retail and hotel businesses, which is to always prioritize quality over scale. Moving forward, Atour Planet will continue to strengthen our product power, remain user-centric, focus on the systematic development of our long-term capabilities and practice towards group's long-termism development path.

Well, let me address your question about our retail revenue. During the Double Eleven period, Atour Planet delivered outstanding performance and continuously strengthened our brand presence in the minds of users. Based upon our strong performance in Q3 and the Double Eleven, we are now raising our full year retail revenue growth outlook to at least 65% year-on-year and accordingly, adjust the group's full year revenue guidance to a growth of 35% year-on-year.

Next question comes from Ronald Leung of Bank of America.

[Foreign Language]. Let me translate my question into English. So we noticed Atour has announced the second dividend distribution plan this year. Could management provide an update on the planning and progress regarding shareholder returns?

[Interpreted] Thank you, Ronald. Regarding dividends, as we announced today, our second dividend distribution this year amounts to approximately USD 50 million, representing about 29% of last year's net income. Consequently, the cumulative dividend total for this year reaches about USD 108 million, accounting for approximately 62% of the prior fiscal year's net income, exceeding our commitment of no less than 50% of that. Additionally, we formally commenced our share repurchase program in September, and we'll continue to execute them in accordance with our established 3-year plan.

Looking ahead, we will continue to implement our comprehensive shareholder return program, combining dividends and repurchases, targeting a payout ratio of 100% based upon the previous fiscal year's GAAP net income, with the specific implementation pace to be dynamically arranged in line with our business development and capital planning. Through these tangible actions, we are committed to creating long-term value and sharing the success of the company with our shareholders in appreciation of your ongoing support and trust.

The next question comes from Lydia Ling of Citi.

[Foreign Language]. I'm Lydia from Citi. We noticed the strong operational performance for the Atour Light in the third quarter. So could you share your plan for the Atour Light in the next steps? And any plan for accelerating the store expansion?

[Interpreted] Thank you, Lydia. Well, yes, indeed, in the third quarter, the RevPAR of operating Atour Light Series 3 hotels surpassed the level from the same period last year, performing pretty decently. And in fact, since the beginning of this year, Atour Light has achieved notable results in brand building, operational efficiency, user experience with both operational performance and scale growth meeting our expectations.

We always believe that the core of a brand lies in its products. The Atour Light Hotel product accurately aligns with the needs and aesthetic preferences of today's young users. The newly launched Atour Light 3.3 with its constantly optimized investment model achieved a better balance between service experience and operational efficiency. Through the implementation of the first batch of our Atour Light 3.3 project, we are constantly gathering feedback from various sites, refining product details and strengthening our differentiated competitive advantage in the midscale market. We expect the scale of Atour Light Series 3 hotels in operation will be reaching 170 to 180 by the end of this year.

We are firmly optimistic about the long-term development of Atour Light. At this current early stage of the brand development, we are particularly focused on solidifying the operational foundation and our systematic capabilities. As for our next step, we will systematically build a dedicated operational system for Atour Light, strengthening its differentiated positioning in all aspects, including from brand concept to service delivery. This will not only distinguish it from our main Atour hotel brand, but also highlight the unique value in the midscale hotel market. On this basis, we will steadily advance towards a longer-term development goal of hitting 1,000 hotels milestone for Atour Light brand. Thank you.

That concludes today's question-and-answer session. I would like to turn the conference back to Mr. Luke for any additional comments 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.

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]

Hello, ladies and gentlemen. Thank you for standing by, and welcome to Atour Lifestyle Holdings Second Quarter 2025 Earnings Conference Call. [Operator Instructions] Today's conference is being recorded.

I would now like to turn the conference over to Mr. Luke Hu, Senior IR Manager. Please go ahead, sir.

Thank you, operator. Good morning, and good evening, everyone. Welcome to our second quarter 2025 earnings conference call. Today, we will hear from our Founder, Chairman and CEO, Mr. Wang Haijun; and our EVP, Co-CFO, Mr. Wu Jianfeng.

Before we continue, please be aware that today's discussion will include forward-looking statements under federal securities laws. These statements are subject to various risks and uncertainties, and the actual results may differ significantly from what states or implied in over 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 understand these measures and the representation 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 iw.waduol.com. We are a copy of the results presentation is also available.

Now I will turn the call over to Mr. Wang, our CEO.

Thank you, Luke. Hello, everyone, and thank you for joining Atour's Second Quarter 2025 earnings call today. In the first half of the year, China's travel market went through a period of volatility and adjustments. While overall demand steadily recovered, the industry still faces numerous challenges amidst this high-growth cycle. Against this backdrop, we believe that a true industry leader must not only validate its business model through scale, but also build a strong brand moat grounded in customer reputation. Therefore, Atour will stay true to our funding aspiration, refocus customers placing their needs at the forefront and adhering to our business philosophy of serving people.

We continue to drive product innovation and iteration across both our hotel and retail businesses, leveraging differentiated experiential strengths to build defensible competitive advantages. This allows us to stay resilient through industry cycles and pursue sustainable long-term growth.

Now I would like to provide more details on our business performance for the second quarter of 2025. Let's begin with our hotel business. Please turn to Slide 4 of our second quarter 2025 results presentation. Our RevPAR was RMB 343 in the second quarter, representing 95.7% of its level in the same period of 2024. Specifically, OCC reached 97.4% and ADR stood at 98.2% of their levels in the same period in 2024.

Please turn to Slide 5. In the second quarter, RevPAR for our mature hotels in operation for more than 18 months was 94.4% of the level in the same period of 2024, and while OCC and ADR stood at 96.5% and 97.8% of 2024 levels for the same period, respectively.

Please turn to Slide 6. In the process of expanding our scale, we have always adhered to a long-term growth principle with hotel quality as our top priority. This ensures each new hotel carries forward our brand DNA and delivers consistent experiences, thereby supporting sustainable growth through quality. In the second quarter, we maintained a steady pace of expansion with 118 hotels opened. By the end of the second quarter, we had a total of 1,824 hotels in operation representing a 29.2% year-over-year increase.

Meanwhile, leveraging our solid brand momentum and continuously enhanced product strength, we have been gradually building differentiated competitive edges with multiple brands and the product lines that precisely target various market segments, we offer franchisees a rich and diverse range of investment options. By the end of the second quarter, the number of hotels under development reached 816. The growth of high-quality pipeline projects is fueling strong momentum toward our strategic goal of 2,000 premier hotels.

Next, I would like to share the latest developments for Atour hotel brands. Please turn to Slide 7. In the mid-scale market, the parallel development of Atour Series 3 and Series 4 enables us to gain deeper insight to demand across segmented scenarios driving our further penetration in the upper midscale segment. Among them, Atour Series 3 consolidates our core brand position in mainstream business travel scenarios. The latest Atour 3.6 version is built on the product philosophy of timeless and human and focuses on customer needs for both functional space and engine further enhancing the convenience and comfort of the state experience. The first batch of Atour 3.6 hotels have gradually opened and received strong market recognition for their outstanding product strength, which is driving robust designing momentum.

Please turn to Slide 8. As a next-generation benchmark product for the upper mid-scale market, Atour Series 4 focuses on prime locations in higher-tier cities, precisely catering to the blended needs of business trips and urban vacations. On June 28, we celebrated the 1-year anniversary of our first Atour 4.0 hotel. By seamlessly integrating spatial aesthetics with local culture, it has established a moat of differentiated experiences, marking a critical transition from product innovation to quality validation. To date, more than 30 or 40 hotels have opened with over 60 hotels under development in our pipeline.

Please turn to Slide 9. Today, consumers increasingly prioritize experiential consumption that fulfills their [indiscernible] needs. However, traditional upscale hotels have struggled to keep pace as their facilities and the service offerings exhibit a significant mismatch of evolving guest expectations. The introduction of Sakura hotel represents a successful effort to redefine the standards of upscale hotel experiences guided by the brand ethos of Oriental sterility. Sakura creates deeply immersive experiences across sleep, healing and wellness, revolutionizing the traditional hotels approach to [indiscernible]. On May 28, our first Sakura flagship hotel officially opened in Shenzhen and has received widespread acclaim for its distinctive oriental lifestyle experience.

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

Please turn to Slide 10. Atour Light 3.3 as an extension and upgrade of Atour Light 3.0 has comprehensively improved its design style functional modules and operational model to precisely cater to the needs of young business travelers and franchisees, further enhancing our product competitiveness in the midscale hotel segment. From an operational standpoint, we continued to improve efficiency and enhance the customer experience. These efforts have produced a strong operating performance in the brand metrics and flagship hotels in key cities while offering franchisees a sustainable return on investment.

We believe the current market environment presents a great opportunity for Atour Light growth. As a strategic priority for the group, we will continue to allocate core resources to it. In terms of scale, we are taking long-term quality-first approach making steady progress through a rigorous selection process in brand building we maintain a huge focused positioning and continue to strengthen its presence and influence further widening our differentiated advantage in the midscale hotel segment.

Moving now to our retail business. Please turn to Slide 11. Atour Retail's differentiated advantages stem from a profound understanding customer needs and steadfast commitment to our natural deep sleep concept rather than accelerating product launches, we prioritized excellence in addressing core customer needs and carefully capturing the experiential nuances of different scenarios through meticulous refinement, we translate [indiscernible] into implementable product functionality, gradually enhancing core competitiveness in a way that cannot be replicated.

Fueled by ongoing strong sales of new products and the momentum from promotional campaigns, our retail business maintained robust growth this quarter with GMV rising 84.6% year-over-year to RMB 1,144 million. Online channels continued to account for over 90% of total GMV. [indiscernible] GMV set a new sales record during the June 18 shopping festival reaching RMB 578 million, up more than 86% from the same period last year. During this promotional campaign, aTOUR PLANET ranked the first in terms of sales in the bedding category for the first time on major third-party platforms. This breakthrough signifies that aTOUR PLANET deep sleep solutions brand is further consolidated consumer mind share.

Please turn to Slide 12. In the pillow category, aTOUR PLANET has maintained its leading position on major third-party platforms quarter, further cementing our leadership position. Based on customer feedback and after several rounds of fine-tuning in material selection, support structure adjustments and real sleep tests. We officially launched an upgraded version of the Deep Sleep Memory Foam Pillow Series this month. The Deep Sleep Memory Foam Pillow Pro 3.0. This product delivers multiple breakthrough upgrades, including an innovative curve fitting design and a partition support structure that better credos the head and naturally fits the coverage of the net and shoulders. The accompanying pillowcase uses a new leaving technique which enhances breathability and moisture working while keeping the pillow surface at a stable temperature.

Please turn to Slide 13. Meanwhile, after multiple quarters of dedicated research and functional refinement, the momentum of our comfortable category has gradually gained market recognition for its product strength. The Deep Sleep Thermal Regulated Comforter Pro 2.0 summer season continued its strong sales momentum during the second quarter, driving significant growth in category sales. aTOUR PLANET has also surged to the top of the comfort category rankings on the [indiscernible] platform in May.

Please turn to Slide 14. This quarter, to address common daily use pain points, we also launched a new product category, the deep sleep fitted sheet. aTOUR PLANET is continuously expanding deep sleep product portfolio comprehensively covers diverse needs of customer, home sleep microenvironment and demonstrates our capabilities to provide systematic solutions in the sleep segment.

Looking ahead to the second half, we will further deepen our presence in a sleep market by driving more product iterations and category innovations based upon our customer needs. We will enhance our R&D capabilities strictly adhere to production standards and optimize supply chain management to advance the upgrading of the industry craftsmanship and quality standards. We will remain at the forefront of innovations in consumers' sleep experience and drive high-quality growth in the retail business.

Please turn to Slide 15. Last but not least, I would like to share the progress across our membership business and the channel development. With the ongoing refinement of the card membership system and the steady expansion of member benefit, our registered individual members surpassed RMB 102 million by the end of the second quarter, representing a 34.7% year-over-year increase. This marks a new phase for our membership program. In terms of channel development, our CR channel remained at a healthy level accounting were 61.5% of total room nights sold in the second quarter. The contribution of room nights sold to corporate members was 20%.

Please turn to Slide 16. We believe the core value of our membership business is on traffic operations, but on building an emotional connection with our customers. Refocusing on customers and responding to their January needs is the core value of the continued evolution of the ACARD system. In June this year, we launched the new gold member growth system to improve gold member perception and satisfaction with membership benefits. This system adopts a tier-based benefits release mechanism and extend certain platinum member fits to them, better aligning with the pace of members' progression and their usage needs while allowing more high-frequency active customers enjoy premium benefits earlier.

Looking ahead to the second half of the year, we remain committed to our Chinese experience strategy and will continuously strengthen our fundamental capabilities and reinforce execution standards. Amid a complex and volatile external environment, we will uphold our core values of humanistic care and customer focus through refined service and high-quality products, we aim to set the benchmark for experiences in the industry and, as always, deliver our wanted attentiveness to every customer.

I will now turn the call over to our Co-CFO, Mr. Wu Jianfeng, who will discuss our financial results.

Thank you, Haijun. Now I would like to present the company's financial performance for the second quarter of 2025. Please turn to Slide 18 of the result presentation. Our net revenues for the second quarter of 2095 grew by 37.4% year-over-year and 29.5% quarter-over-quarter to RMB 2,469 million. Revenues from our miniaturized hotels for the second quarter of 2025, RMB 1,299 million, up 26.5% year-over-year, and 25.9% quarter-over-quarter. The year-over-year increase was primarily fueled by our ongoing hotel network expansion. The total number of [indiscernible] hotels increased from 1,382 as August June 30, 2024, to 1,800 as of June 30, 2025.

The quarter-over-quarter increase was mainly due to an increase in RevPAR. RevPAR for our manetrized hotels was RMB 340 for the second quarter of 2025 compelled with RMB 302 for the previous quarter. Revenues contributed by our leased hotels for the second quarter of 2025 were RMB 150 million, a decrease of 17% year-over-year, an increase of 16.4% quarter-over-quarter. The year-over-year decline was primarily due to a decrease in the number of leased hotels as a result of our product mix optimization. The quarter-over-quarter increase was mainly due to an increase in RevPAR. RevPAR for our leased hotels was RMB 513 for the second quarter of 2025 compared with RMB 453 for the previous quarter.

Revenues from our retail business for the same quarter of 2025 were RMB 965 million, up 79.8% year-over-year and 39.1% quarter-over-quarter. These increases were driven by growing recognition of our retail brands and effective product innovation and development as we successfully broadened our range of product offerings.

Now let's move to cost and expenses. Please turn to Slide 19. Hotel operating costs for the quarter of 2025 increased by 15.1% year-over-year and 21.3% quarter-over-quarter to RMB 893 million. These increases were primarily due to the increases in variable costs, such as supply chain cost and retail manager costs associated with our ongoing hotel network tension. Gross margin of our hotel businesses extended to 38.3% in the second quarter of 2025 from 35.7% during the same period of 2024, primarily attributable to a lower proportion of these hotels as a result of our product mix optimization.

Retail cost for the share quarter of 2025 rose by 70.0% year-over-year and 33.5% quarter-over-quarter to RMB 451 million. These increases were associated with the rapid growth of our retail business. Gross margin of our retail business expanded to 53.3% in the second quarter of 2025 from 50.6% during the same period of 2024, primarily attributable to the increase in contribution from higher-margin products.

Now please turn to Slide 20. Selling and marketing expenses for the second quarter of 2025 were RMB 393 million compared with RMB 225 million for the period of 2024. Selling and marketing expenses accounted for 15.9% of net revenue for the second quarter of 2025 compared with about [ 0.5% ] for the same period of 2024. The increase was mainly due to the investment in our brand recognition and effective development of online channels in line with the growth of our retail business. General and administrative expenses for the same period -- for the second quarter of 2025 were RMB 9 billion, including RMB 2 million share-based compensation expenses compared with RMB 91 million for the same period of 2024, which include RMB 15 million in share-based compensation expenses.

General and administrative expenses, excluding share-based compensation expenses accounted for 3.6% of net revenues for the second quarter of 2025 compared with 4.2% for the same period of 2024. Decrease was primarily due to improved management efficiency and economics of scale. Technology and development expenses for the second quarter of 2025 were RMB 43 million compared with RMB 33 million for the same period of 2024. Technology and development expenses accounted for 1.7% of net revenues for the second quarter of 2025 compared with 1.8% for the same period of 2024.

Now please turn to Slide 21. Adjusted net income for the second quarter of 2025 was RMB 427 million, representing a 3.2% increase year-over-year. Adjusted EBITDA for the second quarter of 2025 was RMB 610 million, up by 37.7% year-over-year. And adjusted net profit margin for the second quarter of 2025 was 17.3%, representing a decrease of 0.9 percentage points year-over-year. Increase was due to a rise in the overall effective tax rate, resulting from withholding tax. Adjusted EBITDA margin for the second quarter of 2025 was 24.7%, remaining stable compared to the same period of 2024.

Now please turn to Slide 22. We also maintained a healthy cash position as of June 30, 2025, our cash and cash equivalents totaled RMB 2,716 million, with net cash of RMB 2,649 million. Please turn to Slide 23. For full year 2025, given ongoing network expansion and growth of our retail business, we count total net revenues to increase by 30% compared with full year 2024.

That concludes our financial highlights for the second quarter of 2025. Now let's open for Q&A.

[Operator Instructions] Our first question is come from the line of Lydia Ling from Citi.

So congratulations on the SAAR results in second quarter. And so I want to ask some questions on the RevPAR trend. So could you share the dilutes RevPAR trend performance since the quarter third quarter to-date and especially during the summer holidays. And what's your latest view on the full year RevPAR trend?

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

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

The next question comes from the line of Chen Xin from UBS.

I may have the management to share whether there are any changes to the '25 guidance on hotel openings and closure. Additionally, what is the recent trend in franchise signings with the increasing competition in the market, this impact the company's future development plans?

Thank you, Chen Xin. Let me try to answer your question and allow me to share a long-term development plans from multiple perspectives, including store openings, closures and findings. Firstly, in regard to new openings. In the first half of this year, we opened a total of 239 new hotels. By the end of the second quarter, pipeline hotel numbers reached 816. Based upon this, we are confident in achieving our full year guidance of 500 new hotel openings and finally reaching the scale target of 2,000 premier hotels by the end of this year.

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

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

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

The next question comes from the line of Sijie Lin from CICC.

So management, congrats for another strong quarter. So my question is on the retail business. Because we noticed that Atour's retail business continued its outstanding performance during Q2 which spans across the 618 online showing festival period and that you have raised full year revenue guidance. So could you share with us what's the full year revenue guidance for the retail business? And additionally, could you please discuss more about the future development of the retail business maybe including the rollout pace of new sleep products? And is there any boltnecks or challenges among development?

Thank you, Sijie. Let me answer your question regarding revenue guidance. In the second quarter towards retail business achieved outstanding performance and looking at the full year, we will continue to launch new products as planned and further refine our product metrics. This month, we launched the Deep Sleep Memory Foam Pillow Pro 3.0 and the Deep Sleep Thermal Regulated Comforter Pro 2.0 all season. Both have received very positive market feedback upgraded versions of the deep sleep thermal regulated comforts series will also be rolled out in the near future to further enrich our deep sleep product line. Considering that positive development momentum of the retail business, we are confident in achieving our full year and have therefore, raised our full year guidance retail business growth to 60% year-over-year.

Now let me discuss the future plans for the retail business of ours. Through long-term exploration, we have already recognized that the sustained popularity of our aTOUR PLANET sleep products is rooted in our deep understanding of user needs and the successful implementation of an experience-driven business model. However, we do see intensifying competitions going on with new entrants and imitators joining the freight. As a relatively new player, we see ourselves coming into this industry, we need to stay focused, solidify our fundamental capabilities in twofolds. On one hand, we shall continuously optimize our supply chain as a strong foundation for our long-term development.

While on the other hand, we will strengthen R&D innovation and quality control to drive the overall improvement of industry standards with higher benchmarks. This is precisely a continuation and practice of the long-term philosophy of high-quality growth that our hotel business [indiscernible]

Next question comes from Dan Chee of Morgan Stanley.

We observed the growth rate of the retail segment business revenue is a lot faster than the hotel segment. So there has been some structural change on the growth rate of the company's revenue outlook. The tax rate was also high this quarter similar to first quarter. So I would like to understand the company's latest view on the full year adjusted net income margin. And can it still stay stable at 18% like last year as previously guided?

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

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

Our next question comes from the line of Simon Cheung of Goldman Sachs.

So regarding the hotel brands, I have questions on the 2 hotel brand that they have maybe a more strategic focus or newly launched recently. One is [indiscernible] whereby they launched [indiscernible] new hotel and the market receptions have been excellent. Wondering whether they have any targets in terms of the number of hotels as well as the district of regions where they're going to be focusing on. Secondly, also on Atour Light, I think the number of hotel come almost reaching 180 for this quarter. Wondering there's any update on the feedback and specifically, the version 3.3 has been quite well. So wondering if there's going to be any feedback that management can share.

Thank you, Simon. First, regarding the question of Sakura. Well, since its opening, Sakura has been highly praised by our users, because of the [indiscernible] style and service quality and particularly standout operational performance. Flagship store of Sakura Hotel in Shenzhen achieved a comprehensive RevPAR exceeding RMB 800 in its first full month operation that started from May 28. Currently, several high-quality projects in key cities, such as Guangzhou, Shanghai, Shenzhen are poised to open successively. For Sakura, we will adhere to quality-first approach because we need to control the scale of expansion while deep the brand's presence and aiming to set a benchmark in experience and supporting its growth with a long-termism mindset.

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

And looking forward, we do believe in Atour Light to be a strategic priority for our group, and we'll continue to invest into this brand with our core resources, meticulously refined product quality, enhanced operational efficiency and a focus on core urban areas and key business districts with a long-term vision and a steady efforts, we aim to lay a solid foundation for achieving a goal of 1,000 Atour Light hotels.

There are no further questions at this time. That concludes today's question-and-answer session. I would like to turn the call back to Mr. Luke for any additional or close agreements.

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

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