Q2 2023 Atour Lifestyle Holdings Ltd Earnings Call
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Speaker 2: Ladies and gentlemen, thank you for standing by and welcome to Auteur Lifestyle Holding's second quarter, 2023, earnings conference call.
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Speaker 2: At this time, all participants are in listen-only mode. For the speaker's presentation, there will be question and answer session.
Speaker 2: Today's conference is being recorded. At this time, I'd like to turn the conference over to Ms. Alison Zhang, Director of Investor Relations. Please go ahead, ma'am. Thank you, operator. Good morning and good evening, everyone. Welcome to our second quarter 2023 earnings call. Joining us today are our founder, chairman, and CEO , Mr. Wang Haijin, and our co-chief financial officers, Mr. Wang Shodong and Mr. Wu Jianfeng. Before we continue, please be aware that today's discussion will include four main topics that
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The demand in summer this year was very strong. The summer traffic started earlier when compared to previous years. Also, the increase in traffic this year was clearly visible even in the first week of July , while in previous years those were more of a trend of gradual growth.
In July , our ADR had exceeded RMB 500,000 and our OCC exceeded 84%, both of which were monthly all-time highs.
Speaker 2: our comments today solely for comparison purposes. For a clear understanding of these measures and a reconciliation of gaps in non- GAAP financial results, please refer to the earnings release issued earlier today.
And the red part rebounded 122% compared to the same period of 2019. This overall increase in both our ADR and OCC demonstrates our capability to maintain long-term, sustainable and high-quality growth.
Speaker 2: Furthermore, a webcast replay of this conference call will be available on our website at ir.yageu.com.
Speaker 2: Now I will turn the call over to Mr. Wang, our CEO .
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Speaker 4: Thank you, Allison. Hello, everyone, and thank you for joining Atwar's second quarter 2023 earnings call today.
Speaker 3: We hope you will enjoy this video. We hope you will enjoy it. Please subscribe to our channel.
Speaker 3: Thank you for your attention.
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Speaker 3: Thank you for your attention.
Thank you. Let's have our next question, please.
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Thank you. Our next question comes from the line of Ronald Leung from Bank of America. Please ask your question, Ronald.
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Speaker 4: We have thrilled to report another strong quarter, benefiting from the robust ongoing recovery trend since the beginning of this year.
Speaker 4: During the second quarter, we achieved the remarkable growth and breakthroughs in both our hotel and retail businesses.
I will ask my question in English. Management just mentioned that the RAPA guidance for fiscal year-transfer has been uplifted to 100 years.
Speaker 4: Our passion for progress and dedication to providing customers with exceptional experiences continued to differentiate a torque and magnify our competitive advantages. Further enhancing our brand awareness and influence.
13 to 117 percent may ask what is the latest expectation for the full year revenue and profit. Thank you very much
Speaker 4: As we look ahead to 2023, we are confident that our core value proposition and commitment to establishing the Chinese experience as the industry benchmark will continue to drive our sustainable growth.
Thank you, Charlie.
Thank you very much for all of you. Just now we set that our full year-of recovery is expected to reach 113% to 117%.
Speaker 4: Additionally, we are steadily executing a plan to grow our portfolio to 2000 premium hotels nationwide by 2025, which will propel further prosperity across our business.
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Speaker 4: Now I would like to discuss our performance in detail across our business lines.
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And in terms of revenue, we expect a YOY growth, year-over-year growth of 72% to 76%, of which retail revenues are expected to be able to reach RMB 6.5 million yen.
of revenue, we expect a Y-O-Y growth year over year growth of 72% to 76% of which retail revenues are expected to be able to reach RMB 6.500 million to 700 million.
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With our continued expansion of the hotel network, the gradual release of our scale effects, and the continuous development of our retail business, we expect profitability to continue to improve.
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Thank you very much, Ronald.
Thank you. Let's have next question, please.
Certainly.
Our next question comes from the line of leader Lynn from CT.
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Speaker 4: Let's begin with our hotel business.
Speaker 4: In the second quarter, to continue to recovery in both business and the leisure travels stimulated a rapid increase in accommodation demand.
Speaker 4: leveraging our optimized customer channel and strong operational capabilities. We achieve the robust growth in our hotel business during the quarter.
Speaker 4: Our rough part recovered to 115% of 2019's level with April , May, and June reaching 120%, 48% and 117% respectively. Both ADR and OCC fully recovered.
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Speaker 4: and continued to surpass 2019's level this quarter. Furthermore, our Motorola hotels in operation for more than 18 months continued to outperform with same hotel ref part recovering to 114% of 2019's level in the second quarter.
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Speaker 4: This was largely in line with the overall performance of our hotel business illustrating our products enduring competitiveness over a longer life cycle compared with that of the broader industry.
Thank you very much, Lydia, for your question. Our new hotel openings in the first quarter this year was affected by last year's epidemic and the Spring Festival holiday.
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We opened 70 new hotels in the second quarter, showing clear acceleration when compared with the first quarter. In the second half of the year, we will continue to maintain the rhythm of active new hotel openings, maintaining the annual opening target of 280.
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and these are the total of four issues that we are going to discuss now and on as lesson for you today. If you enjoyed the presentation and the resource And I residence lecture, please take a Natural History lecture just like a video. This interview We will introduce the first one, Ison Start, that meets Richard Please Lady Yeon Nunes, Chairman of Temperature, Ladies and Gentlemen for the real talk.
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In first quarter this year we signed 94 projects and in our second quarter we signed a record high of more than 180 projects.
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The rapid growth in signings reflected the restoration of the franchisees' confidence in us and also their recognition of the tour's three high strategies, namely high quality, high value, and high efficiency as well as our operational model.
Speaker 4: Thanks to our signature experience combining warmth, comfort and ease, we garnered wide recognition from business travelers who have always been highly engaged to with the tour.
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Speaker 4: Meanwhile, we were pleased to see that our exceptional experience continues to attract the attention and the price of more leisure travelers.
Speaker 4: In July , our ADR exceeded RMB 500, and OCC surpassed the 84%. I'm switching a monthly all-time record high and together driving revs are up to 122% of its level in the same period of 2019.
We expect the signings to continue to perform well in the second half of the year, while we would strive for better quality on the basis of the first half year's growing trend. This year, our pipeline can provide a solid foundation for our goal of having 2,000 premium hotels by 2025. Thanks, Lydia.
Speaker 4: The company has recovered in room rate and occupancy further underpins our ability to drive high quality, sustainable growth over the long run. And we are confident of delivering strong results in the upcoming third quarter.
Thank you. Let's invite our next question.
Thank you, let's invite our next question. Thank you.
Our next question comes from Ji-Wei Liu from Citix. Please ask your question Ji-Wei.
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Speaker 4: We also made solid progress with respect to network expansion during the second quarter as market demand trended positively, enhancing franchisees confidence and encouraging them to engage more deeply with us.
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I repeat my question. Could you tell us more about a tour line three point award such as the Brampton Visioning and the one page in the main school hotel industry? Besides, can you share the performance of those stores after opening? Thanks. Okay, I see you read it. China is a very large business. RUR has a very large business. We have a very large business. We have a very large business. This event is called beam LIKE interests. The. Official community of China and China,
Speaker 4: During the quarter, we celebrated 17 new openings and signed a quarterly record high of over 180 new hotels.
Speaker 4: As of June 30th, we had 523 hotels in our pipeline representing a year-over-year increase of over 50% and forming a solid foundation to support our midterm goal of having 2,000 premium hotels by 2025.
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February 22nd and is our group's mid-scale brand uniquely catering to young urban business travelers.
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We launched the Tour Light 3.0 at this time mainly due to two great opportunities we saw. One was that the significant mismatch between the existing hotel products in the mid-scale market and the customer demand.
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As we saw, the young business travelers had got increasing demand for high quality accommodation experiences. And the other was the opportunity to upgrade those properties in the core business districts.
There will be more properties in that kind of hot areas suitable for a tour light in the future.
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Speaker 4: With respect to our hotel product offerings, we initiated an upgrade plan for our mid-scale brand and launched the A tour, like 3.0 version, in February this year.
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Speaker 4: A tour light 3.0 is uniquely positioned to cater to young urban business travelers who seek quality services and exceptional experiences.
Our Tour Light 3.0 product, with its fashionable, stylish and trendy design and the quality service experience up to a Tour standard, has won a good user reputation upon its launch. Up to now, we have had four Tour Light 3.0 hotels open, in which three hotels had reached a full occupancy within a week.
Speaker 4: with the stylish, fashionable and trendy design, as well as its differentiated market positioning and competitive investment return. A tour, light 3.0 attracted French IZ recognition shortly after its launch.
Speaker 4: We signed 30 at 12 light 3.0 projects in the second quarter, accounting for over 15% of the quarter's total signings.
Speaker 4: Following the gradual openings of our first batch of a tour light 3.0 hotels since late June .
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Speaker 4: The hotel brands made a comprehensive breakthrough across the mid-scale market as they quickly gained popularity among young customers.
Thank you for watching.
Speaker 4: and realize the rapid operational growth.
Speaker 4: A tour line 3.0 precisely captures young customers' aesthetic preferences and caters to their demand for high quality experiences.
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Meanwhile, the leading Red Par performance among others in the same business district greatly enhanced the investment confidence of those franchisees and had been proven to be a very competitive product in the current mid-scale hotel market. As of June 30, we have signed a total of 46 AtorLite 3.0 products.
Speaker 4: creating a brand new experience for the Gen Z plus demographic in the mid-scale hotel market, while enhancing its brand recognition and value proposition.
Speaker 4: We believe that Toralite has great potential to become our second brand to reach the 1000 hotel milestone, given its strong product competitiveness and widespread market recognition.
Thank you.
Thank you. Please invite next question.
Please invite next question. Thank you.
Following a tour of light 3.0's successful debut, we are proactively developing the next generation product for our flagship tour brand in Shanghai. We expect to introduce this product to the market by the end of this year.
Our next question comes from Zhiyi Wang from Hightong International. Please ask your question, Judy.
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myself, we noticed the retail segment book's rapid growth. Could you please kindly share with us some advantages of the business and what's the driver behind the growth and also what's the current profitability of the retail segment and do you have any expectation on the scale of the retail segments in the next few years?
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I hope it was interesting to have you here.
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In this video, he discusses their target individual issues and his approach fortrak He decides to accept members Given Thank you for listening.
Before I move on from hotels, I would like to touch on our A-plus offerings for A-Card loyalty members.
At a tour, customer experience has always been the core competitive advantage that sets us apart from our competitors.
We have some serious problems and often do not have education to solve.
We continue to redefine the ultimate in customer experiences through our A-plus offerings, which in turn promotes healthy and sustainable growth in our member base.
Relying on our hotel scenes and the real user experiences, the sleep products we developed have been loved by a large number of customers and have gradually expanded from seat users who stayed in our hotels to a wider group of consumers, gradually winning consumers' minds when it comes to the concept of deep sleep.
For example, if a customer chooses the pillow selection service from the 8 plus manual at the time of booking.
They will receive a cozy, superior sleep experience with our self-developed deep sleep pillow.
To date, we have carefully selected and designed over 20 A-plus services for our ACARD members, and we are witnessing an increasing adoption rate.
And our products have achieved a very good sale results on multiple e-commerce platforms.
Going forward, we will advance our A-PLA's product to development with practical, warm, and congenial experiences in mind as we identify customers' real demands and provide them with innovative offerings, which are standardized yet personalized.
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to ensure an exceptional experience during their stay at a tour properties and beyond.
Our continuously improving branding awareness together with the product power growth based on our understanding of the consumers and our R&D innovations. Plus, they synchronize the drive of online and offline channels.
Thank you for your attention.
We hope you will enjoy this talk. We hope you will enjoy this talk.
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Our commitment to continuous innovation and consistent delivery of elevated experiences resulted in healthy growth across our membership base.
By the end of the second quarter, over 44 million individual members had joined the ACARD membership program. Our ongoing efforts to optimize customer channels, alongside a rising number of both individual and corporate members, propelled an increase in the percentage of room nights sold.
through our CRS, which reached a 63% in the second quarter.
Thank you for your attention.
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Thank you. Please have next question. Thank you. The next question comes from Xin Chen from UBS. Please ask your question, Xin. Hello, everyone. I'm Xin Chen from UBS. I'm a senior at UBS. I'm a senior at UBS. I'm a senior at UBS. I'm a senior at UBS. I'm a senior at UBS.
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Moving to our scenario based retail business.
We achieved another strong quarter with GMV, increasing almost three times year over year to RMB 267 million. Our sleep brand, a tour planet in particular, demonstrated extraordinary performance, contributing nearly 90% of our total GMV in the second.
Thank you for your question. This is the first dividend that we've had in our history in the past 10 years.
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and the amount of this dividend accounts for approximately 6% of our cash position. And we also take into consideration of our accumulated profits in the previous years and the overall business duration and our future demand in capital. So we hope to express our gratitude to the shareholders for their long-term support. So going forward in terms of our future dividend plan, we also consider various factors including our cash position, our future capital needs. We will also make reference to the market practice or the industry practice.
Thank you for your attention.
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and also can study the main market condition to determine our future dividend. Thank you. Thank you. And that concludes the question and answer session. I would like to turn the conference back to Alison Zhang for any additional or closing comments.
Thank you for watching.
Today, we have more than 1,000 hotels in Composite 120,000 rooms within our hotel network.
Each hotel represents an exhibition hall for our retail products, while each room functions as an immersive shopping destination for our hotel customers.
This concludes today's conference call. Thank you for participating. You may now disconnect. Please return to your seats. Thank you.
Their feedback enables us to continuously and organically explore customers ever evolving demands and expand our retail product categories accordingly.
This, in turn, empowers us to extend our exceptional lifestyle experience beyond accommodation to serve more people. Our commitment to continuous product refinement in pursuit of a truly superior sleep experience has made the a tour planet deep sleep pillow a blockbuster product.
of 220,000 units across multiple mainstream e-commerce platforms.
Furthermore, in March 2023, we launched a tour plan as new product, the Summer Quilt, which has already demonstrated promising growth momentum.
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Going forward, we will invest a further and expand our penetration in the field of deep sleep as we continue to leverage big data and customer feedback to advance product development and broaden our offering categories.
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2023 is a special year for a tour, as it not only marks the commencement of the post-apendemic era, but also the 10th anniversary of our company. Thank you.
When we first set foot in Yadl village 10 years ago, we were instantly captivated by its natural beauty, peace, warmth and purity, which subsequently inspired us to choose the name a tour.
Over the past 10 years, our focus has been on providing more than just a comfortable place to stay. We generally care about each and every one of our customers.
and we strive to ensure that every aspect of their stay with us is exceptional.
We are committed to incorporating the essence of a Chinese experience into all of our services.
From the moment customers check in through the moment they depart. In each of our 1000 plus hotels.
Our faith in the vision of Yadu village has guided us throughout our journey as we extended our footprint across 176 cities nationwide.
While we provide customers with premium offerings and exceptional experiences, we also share Yado village's fragrance specialty, as well as its warmth and peace with travelers, creating an intimate ambience where people can warmly connect. is
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Before I wrap up, I would like to take this opportunity to welcome our new Co-CFO, Mr. Wu Jianfeng. He will mainly be responsible for overseeing the company's capital market matters, including investor relations and financing management.
as well as providing administrative and other support to the board and a distinct and daily operations.
I believe his distinguished leadership skills and extensive experience in the capital markets will play an essential role in the company's long-term sustainable growth as we progress towards our next phase of influence.
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Now I'll turn the call over to our co-CFO, Mr. Lui-Hian Feng, to discuss our financial results. Thank you, Hai Jun. Good evening and good morning, everyone. Now I would like to present the company's financial performance for the second quarter of 2023.
2023, our net revenue for the second quarter of 2023 grew by 112.3% year-over-year and 41.2% quarter-over-quarter to RMB 1,093 billion.
The strong increase in the second quarter was driven by the rubber growth in both our hotel and scenario-based retail business. Revenue from our MannerSize hotel for the second quarter of 2023 will R&B 600 and 26 million.
Up by 100 and 12.3% year over year and 40.2% quarter of quarter.
This increase was primarily driven by the ongoing expansion of our hotel network and the increase in rep power.
The total number of managed hotels increased to 1,011 as of June 30, 2023, up by 25.0% year-over-year and 7.1% quarter-over-quarter.
While Repo recovered to RMB 377 for the second quarter.
RMB 377 for the second quarter.
Revenues contributed by R&D hotels for the second quarter of 2023 were RMB 220 million, representing an increase of 53.6% year-over-year and 17.2% quarter-over-quarter.
The increase was primarily due to the rebound in RAPAR, driven by recovering customer traffic and stronger customer sentiment since the beginning of 2023.
Rest part of Audi's hotels recovered to RMB 537 for the second quarter.
Revenements from retail and others for the second quarter of 2023 increased by 222.2% year-over-year and 76.4% quarter-over-quarter to R&B 247.
With scenario-based retail revenues growing by 297.8% year-over-year to R&B 200 and 12 minutes.
These increases were attributable to our ongoing efforts to tap into ever-changing customer needs as well as data-driven product development.
which enables us to consider the large steep products favored by users.
In addition, we continue to leverage both online and offline channels, expanding our customer base and enhancing our brand recognition.
Now let's move to costs and expenses.
Our hotel operating costs for the second quarter of 2023 increased by 56.7% year-over-year to our 510-minute. Many due to the increase in variable costs, such as supply chain costs associated with the ongoing extension of our hotel network.
Hotel operating costs accounted for 60.2% of total hotel revenues for the second quarter of 2023, compared with 74.2% for the same period of 2022.
The decrease was due to the rubber recovery of rap rock and the economics of scale brought by our rap in network expansion, which set to a significant increase in the growth-prope margin of the hotel business.
due to the robust recovery of RAPOC and the economics of scale brought by our rapid network expansion, which set to a significant increase in the growth-proper margin of the hotel business. Other ovating caused.
For the second quarter of 2023 for RMB 121 million, representing an increase of 189.9% year-over-year, driven by increase the cost in line with the rapid growth of our scenario-based retail business.
Are the operating costs accounted for 49.0% of retail revenues and others for the second quarter of 2023, compared with 54.4% for the same period of 2022?
That decrease was a spiritual to the improving profitability of our retail business.
Setting and marketing expenses for the second quarter of 2023 increased by 197.3% year over year to have an RMB 94 minutes.
Setting and marketing expenses accounted for 8.6% of net revenues for the second quarter of 2023, compelled with 6.2% for the same period of 2022. Primarily, driven by the increased investment in branding initiatives and rapid growth of the scenario-based retail business.
through all my channels. General and administrative expenses for the second quarter of 2023 will RMB 73 Minin. Excruiting shell-based compensation expenses of RMB 9 Minin, adjusted general and administrative expenses increased by
54% year over year to RMB 64 minutes for the second quarter. Dural and administrative expenses, excluding the impact from Shabby's compensation expenses, accounted here. Adjusted net income for the second quarter increased by 300, 12 and 12.9% year over year to RMB 245 million.