Q4 2023 Atour Lifestyle Holdings Limited Earnings Call

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Operator: Ladies and gentlemen, thank you for standing by, and welcome to the Atour Lifestyle Holdings fourth quarter and full year 2023 earnings conference call. At this time, all participants are in a listen only mode.

None: Ladies and gentlemen, thank you for standing by and welcome to the two lifestyle holdings fourth quarter and full year 2023 earnings conference call. At this time, all participants are in a listen only mode.

Operator: After the speaker's presentation, there will be a question and answer session. Today's conference is being recorded. At this time, I would like to turn the conference over to Miss Alison Zhang, Director of Investor Relations. Please go ahead, ma'am.

None: After the speaker's presentation, there will be a question and answer session.

None: Today's conference is being recorded.

None: This time I would like to turn the conference over to MS. Alison Zhang Director of Investor Relations. Please go ahead maam.

Alison Zhang: Thank you, operator. Good morning and good evening, everyone. Welcome to our fourth quarter and full year 2023 earnings call. Today you will hear from our Founder, Chairman, and CEO, Mr. Wang Haijun, and our Co-Chief Financial Officers, Mr. Wang Shoudong and 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 some non-GAAP financial measures solely for comparison purposes.

Alison Zhang: Thank you operator, good morning, and good evening everyone.

Alison Zhang: Come to our fourth quarter and full year 2023 earnings call.

Today, you will hear from our founder Chairman and CEO, Mr. Huang hygiene, and our co chief financial officers, Mr. Wang Xiaodong and Mr. Fong.

Alison Zhang: Before we continue please be aware that today's discussion will include forward looking statements under federal Securities laws.

Alison Zhang: These statements are subject to various risks and uncertainties.

Alison Zhang: Actual results may differ significantly from what is stated or implied in our comments today.

Alison Zhang: The company is not obligated to update any forward looking statements, except as required by applicable laws.

Alison Zhang: Additionally, during this call our management will discuss non-GAAP financial measures solely for comparison purposes.

Alison Zhang: 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 available on our website at ir.yaguo.com. Now, I will turn the call over to Mr. Wang, our CEO. Thank you for your time. Goodbye.

Alison Zhang: 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.

Alison Zhang: A webcast replay of this conference call will be available on our website at IR Dot why a G U O dot com.

Alison Zhang: Now I will turn the call over to Mr. Wang our CEO.

Alison Zhang: Yes.

Mr. Wang Haijun: Thank you for taking part in the 4th quarter of 2023 Asia Group's annual performance telephone conference. Thank you, Allison. Hello, everyone, and thank you for joining Atour's fourth quarter and full year 2023 earnings call today. 2023 is the year of Asia's three-year strategic exploration. This is the first time we have put forward the vision and goal for China's experience in 2,000 good stores. Throughout the year, ADOA has advanced its experience strategy in three areas: digitization, organizational culture, and management operations. , ,, Our 2,000 good stores' scale strategy has also achieved significant stage results. In 2023, we will build 289 stores.

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Josh: Thank you Allison.

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Mr. Wang Haijun: 576, [inaudible] 2023 was an exceptional year for Atour, wherein we unveiled our strategic vision for expanding our portfolio to 2,000 premier hotels nationwide by 2025 and establishing the Chinese experience as the industry benchmark. Throughout the year, we worked diligently to enhance digitalization, organization, and corporate culture, as well as our management and operations capabilities, which have become the pillars of our sustainable growth as an experience-driven business Today, our signature Chinese experience is resonating deeply with people, evoking a profound collective response.

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None: Establishing the Chinese experience Klatsky industry benchmark.

None: Throughout the year, we worked diligently to enhance digitalization organization and corporate culture, as well as our management and operations capabilities.

None: Which has become the pillars of our sustainable growth.

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None: Today, our signature Chinese experience is resonating deeply with people.

Looking a profound collective response.

Mr. Wang Haijun: Moreover, we have achieved significant milestones in our hotel network expansion. In 2023, we opened a total of 289 new hotels and assigned an additional 576 projects, surpassing the targets we set at the beginning of the year and laying a solid foundation for our goal of 2,000 premier hotels by 2025. 2024 will be a year of innovation and breakthroughs.

None: Moreover, we have achieved a significant milestone in our hotel network expansion.

None: In 'twenty two 'twenty three we opened a total of 289, new hotels and assigned additional 576 project, surpassing that targets, we set at the beginning of the year.

None: Laying a solid foundation for our goal of 2000 Premier hotels by 2025.

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Mr. Wang Haijun: In our experience strategy, we will strive to provide users with diversified services and excellent experiences that are not limited to accommodation. First of all, we will continue to strengthen the cultural, warm, and interesting value perception., Second, we will focus on the connection between residents and retail members to achieve user interaction in both scenarios., Finally, we will continue to promote digitalization.

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Mr. Wang Haijun: To raise Chinese enterprise to a whole new level. We will continue to consolidate Asia's strong leadership position in the mid-to-high-end hotel market. We will continue to expand the brand influence of Qingju in the mid-range market, establish sustainable development and win-win cooperation between partners, and help the group scale up steadily. 2024 is poised to be a year of innovation and breakthroughs as we build on this success. To advance our Chinese experience strategy, we will remain dedicated to providing our customers with multifaceted services and exceptional experiences that go beyond accommodation. First, we will promote greater awareness of our cultural, inviting, and interesting experiences. Cultivating lasting bonds with our discerning customers.

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None: 'twenty 'twenty four is poised to be a year of innovation and breakthroughs as we build on this success.

None: To advance our Chinese experience strategy, we will remain dedicated to providing our customers with multi faceted services had exceptional experiences that go beyond accommodation.

None: First we will promote greater awareness of our cultural inviting and interesting experiences cultivating lasting bonds with our discerning customers.

Mr. Wang Haijun: Second, we aim to establish a virtual cycle fostering seamless customer crossover between retail and accommodation to bring our unique deep sleep experience to all of our members. Finally, we will continue to advance digitalization, empowering experiential upgrades and elevating the Chinese experience to new heights. In terms of our network expansion strategy, we will continue to solidify Atour's leading position in the upper mid-scale market while expanding Atour's brand awareness in the mid-scale market and establish a sustainable, mutually beneficial franchisee ecosystem to help drive our hotel network's steady growth. 2023 Now, I would like to provide more details on our performance for the fourth quarter and the full year of 2023. First of all, the accommodation business. In the fourth quarter, compared to the same period in 2019, our Roll Park recovery rate reached 109%. ADR and OCC have been at the same level for more than 19 years in 4 consecutive quarters.

None: We aim to establish a virtual cycle fostering seamless customer crossover between retail and accommodation to bring our unique deep sleep experience to all of our members.

None: Finally, we will continue to adjust digitalization empowering experiential upgrades and elevating the Chinese experience to new Heights.

None: In terms of our network expansion strategy, we will continue to solidify a tourist leading position in the upper mid scale market, while expanding of tourists brand awareness in didn't let it scale market.

None: And establish a sustainable mutually beneficial franchisee ecosystem to help drive our hotel networks steady growth.

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None: Now I would like to provide more details on our performance for the fourth quarter and the full year of 2023.

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Mr. Wang Haijun: In October, November, and December, ROHR's recovery rate reached 109%, 107%, and 110%., In a hotel that has been in operation for more than 18 months, the hotel is still in good condition. The ROHRPA recovery rate, which is the same as the same electricity in the fourth quarter, reached 110% in the same period of 2019, which is consistent with the overall performance of the group. Let's begin with our hotel business. In the fourth quarter, our REV PAR recovered to 109% of 2019's level, with both ADR and OCC exceeding 2019's level for the fourth consecutive quarter. Specifically, RAFPAR's recovery rate for October, November, and December was 109 percent, 107 percent, and 110 percent, respectively, compared with the same period in 2019.

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None: Let's begin with our hotel business.

None: In the fourth quarter, our Revpar recovered to 109% of 2019 level with both ADR and OCC exceeding 2019 level for the fourth consecutive quarter.

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None: Revpar recovery rate for October November and December was 109%, 107% and 110% respectively compared with the same periods in 2019.

Mr. Wang Haijun: These results underscore the resilience of our hotel business, which is primarily fueled by business travel demands. Additionally, our mature hotels in operation for more than 18 months performed well during the quarter. Their same hotel REVPAR recovery rate reached 110% of 2019's level in the fourth quarter, aligning with the overall performance of our hotel business. In addition, we have created a very combative development team.

None: These results underscore the resilience of our hotel business, which is primarily fueled by business travel demand. Additionally.

None: Additionally, our mature hotels in operation for more than 18 months performed well during the quarter.

None: Their same hotel Revpar recovery rates reached 110% of 2019 level in the fourth quarter aligning with the overall performance of our hotel business.

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Mr. Wang Haijun: , to lead our hotel network to achieve rapid expansion. 289 As of the end of 2023, the number of hotels in the group will have reached 1,210. This year's contract will continue to grow rapidly, and the pipeline project will continue to expand. 1231,617,70% Meanwhile, we have assembled a highly competitive development team with an efficient organizational structure and a unified development strategy in core business districts to empower the rapid expansion of our hotel network. In the fourth quarter, we opened another 100 hotels, a record high on a quarterly basis, resulting in a total of 289 new openings for the full year.

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None: Meanwhile, we have assembled a highly competitive development team with an efficient organizational structure and unify the development strategy and core business districts to empower their rapid expansion of our hotel network.

None: In the fourth quarter, we opened another 100 hotels a record high on a quarterly basis.

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Mr. Wang Haijun: As of the end of 2023, we will have a total of 1,210 hotels in operation. Furthermore, our new signings remained robust in the fourth quarter, with our pipeline continuing to expand. As of December 31st, the number of hotels under development reached 617, representing a 70% year-over-year increase. Our mid-range products are 3.0kg lightweight and continue to gain market support.

None: As of the end of 'twenty to 'twenty three we had a total of 1210 hotels in operation.

None: Are there more our new signings remained robust in the fourth quarter.

None: With our pipeline continuing to expand.

None: As of December 31st the number of hotels under development reached at seven 617.

None: Representing a 70% year over year increase.

Mr. Wang Haijun: 27, The contract is more than 15% As of the end of 2023, there will be 25 hotels that have opened. [inaudible], Especially in the high-end city center, it forms a two-way guide for business and experience. 3.0 Atour Lite 3.0, our mid-scale offering, continued to garner market recognition as evidenced by 27 new signings during the fourth quarter, accounting for over 15% of our total new signings for the period. As of the end of 2023, we had a total of 25 Atour Light 3.0 hotels in operation, which progressed swiftly through the ramp-up phase and began demonstrating robust operational performance upon entering the mature stage. Particularly in the core business districts of higher-tier cities, these hotels have emerged as leaders in both operating performance and customer experience, highlighting Atour Lite 3.0's strength across products, services, and brand influence in the mid-scale market. ,, Users can also learn about local tourism, culture, and food characteristics in Qingju. We hope to create a simple, pure, relaxed, and comfortable living experience for every person living alone.

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A tour like 3.0, our mid scale offerings continued to garner market recognition as evidenced by 27, new signings during the fourth quarter accounting for over 15% of our total new signings for the period.

None: As of the end of 2023, we had a total of 25, a tour like 3.0 hotels in operation, which.

None: Which progress to swiftly through their ramp up space and began demonstrating robust operational performance upon entering the mature stage.

None: Particularly in our core business district of higher tier cities. These hotels have emerged as leaders in both operating performance and customer experiences highlighting a toward light 3.0 strength across products services and brand influence and.

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Mr. Wang Haijun: In addition, in order to better understand the preferences of young users, we innovatively launched the exclusive JinNan service product of QingJu. QingJu 3.0 is based on the concept of a carefree life. It meets the needs of young businessmen who want to experience fashion, personalization, and high-quality accommodation and has gained the recognition of more and more consumers., 3.0, Furthermore, we officially established an independent branding department for Atour Light in the fourth quarter, with a primary focus on crafting a differentiated accommodation brand image preferred by young customers. We introduced a series of distinctive services represented by blueprints, allowing customers to deeply explore local tourism, cultural, and culinary specialties. These initiatives and efforts are dedicated to providing each of our Atour Light customers with a simple, pure, and relaxing accommodation experience.

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None: With a primary focus on crafting a differentiated accommodation brand image preferred by young customers.

None: We introduced a series of distinctive services represented by Blue friends.

None: Allowing customers to deeply explored all co tourism cultural and culinary specialties.

None: These initiatives and efforts are dedicated to providing each of our eye toward a light customers with a simple pure and relaxing accommodation experience.

Mr. Wang Haijun: In addition, to better cater to young business travelers' preferences, we introduced our innovative, exclusive Atour Light Privileged services. Embracing the concept of life at ease, Atour Light 3.0 fulfills young business travelers' demand for a stylish, personalized, and high-quality accommodation experience and is earning increasing recognition among customers. As the next flagship brand we are propelling toward the 1,000-hotel mark, we are confident in Atour Light 3.0's tremendous potential and firmly believe that it will lead the comprehensive upgrade of China's mid-scale hotel market. In the mid-to-high-end market, in November last year, Zhongbang launched Yardo 4.0.

None: In addition to better cater to young business travelers preferences, we introduced our innovative exclusive a tour like privileged services.

None: Embracing the concept of life at ease a tour like 3.0 foothills young business travelers demand for a stylish personalized and high quality accommodation experience and is Ernie increasing recognition among customers.

None: Has the next flagship brand or we are propelling toward the 1000 hotel Mark we are confident in a tour like 3.0 has tremendous potential and firmly believe that it will lead the comprehensive upgrade of China's mid scale hotel market.

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Mr. Wang Haijun: After the product was released, it gained widespread attention and appreciation in the market. At the same time, we also have higher requirements for Asia's 4.0 products in the business sector and the industry. As of now, we have confirmed a batch of benchmark projects in the core business circle of key cities. The first Adore 4.0 store will be opened soon.

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Mr. Wang Haijun: After the first batch of stores enters the market, they will once again bring Adore's mid-high-end products to the market. In the upper mid-scale market, we launched Atour 4.0 in November last year, capturing widespread attention and acclaim from the market upon its release. Guided by even more stringent criteria, we have successfully identified a batch of projects within carefully chosen properties across target cities.

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None: In the upper mid scale market, we launched a tour a 4.0 in November last year, capturing widespread attention and a claim from the market upon its release.

Guided by even more stringent criteria, we have successfully identified a batch of projects within carefully chosen properties across target cities.

Mr. Wang Haijun: The very first Atour 4.0 hotel is progressing smoothly and is scheduled to open soon. We are confident that as we gradually unveil Atour 4.0 hotels, they will take our entire upper mid-scale portfolio to the next level. Next is our membership business.?? Our membership size has grown significantly in the fourth quarter.

None: The very first tour 4.0 hotel is progressing smoothly and is scheduled to open soon we.

None: We are confident that as we gradually unveil a tour of 4.0 hotels, they will take our entire upper mid scale portfolio to the next level.

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Mr. Wang Haijun: 1231,6300 78% In addition, the key digitalization work of the group this year is to fully integrate the retail scene into the rights and wills of Asian members to achieve the interaction of the two major scene member growth systems. [inaudible] In the future, we will continue to explore and build a unique Asian membership ecosystem by increasing the integration of the rights, enterprises, and individual member ecosystems and enriching brand cross Moving now to our Prime Membership.

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Mr. Wang Haijun: Bolstered by Atour's escalating brand recognition, our membership base grew substantially in the fourth quarter of 2023. As of December 31st, our registered members surged by 78 percent year over year, exceeding 63 million. Furthermore, a key digitalization initiative this year is to seamlessly integrate retail scenarios into our membership benefits and establish a unified OneID Atour membership, which will ultimately encourage mutual access and growth between these two major business segments. Moving forward, we will augment premium benefits across all scenarios, unlock value through the smooth integration of our corporate and individual membership ecosystems, and foster deeper brand collaborations across diverse industries. Although holiday travel needs declined in the fourth quarter, business travel is still stable.

None: Bolstered by a tourist escalating brand recognition our membership base grew substantially in the fourth quarter of 2023 as of December 31st hour.

None: Our registered members surged by 78% year over year exceeding $63 million.

None: Are there more Ah Kee Digitalization initiative. This year is to seamlessly integrate retail scenarios into our membership benefits and establish a unified one IP a tour of membership, which will ultimately encourage mutual access and growth.

None: When these two major business segments.

None: Moving forward, we will augment premium benefits across all scenarios unlock value through a smooth integration of our corporate and individual membership ecosystems and foster deeper brand collaborations across diverse industries.

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Mr. Wang Haijun: As the first residential brand to go on a business trip, our CRS channel sales-share ratio has risen to 65.1% this quarter and has reached 63.4% all year round. With the rapid growth of corporate customers, the sales-share ratio of corporate agreements in the fourth quarter has risen to 20.8%. Despite the softening of leisure travel demand during the fourth quarter, business travel activity remains solid.

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None: Despite the softening of leisure travel demand during the fourth quarter business travel activity remains solid.

Mr. Wang Haijun: Atour, as the preferred brand for business travelers, experienced an increase in room nights sold through our CRS to 65.1% for the fourth quarter and 63.4% for the full year. Coupled with the rapid expansion of our corporate membership, the contribution of room nights sold to corporate members rose to 20.8% in the fourth quarter. Last but not least, our retail business. In 2023, the Asian retail market achieved explosive growth. The annual retail GMV reached 1.4 billion. 300% 80% The content of the video has made a major breakthrough.

None: Sure as the preferred brand for business travelers experienced an increase in room nights sold through our C. R. S 265, 1% for the fourth quarter and 63, 4% for the full year.

None: Coupled with the rapid expansion of our corporate membership the contribution as room nights sold to corporate members rose to 28% in the fourth quarter.

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Mr. Wang Haijun: Last but not least, our retail business experienced a dramatic surge in 2023, with full-year GMV reaching RMB 1.14 billion, approximately three times higher than last year. Online sales accounted for over 80% of the total GMB, with significant breakthroughs on content e-commerce platforms. For instance, GMV contributed by Douyin soared to RMB 400 million in 2023, a remarkable 16-fold increase compared with the previous year. , In 2023, Adore retail will focus on sleeping and observe users' various sleep needs. Deep sleep will be the core to help users solve their sleep problems.

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None: Last but not least our retail business experienced a dramatic surge in 2023 with full year G. M D, reaching RMB 1.14 billion approximately three times higher than last year.

None: Online sales accounted for over 80% of that total G. M D with significant breakthroughs on content e-commerce platforms.

None: For instance, GMB contributed by Joey soared to RMB $400 million in 2023, a remarkable 16 fold increase compared with the previous year.

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Mr. Wang Haijun: , In 2013, we launched a series of new heavyweights. Pro 120, During the period of Tmall, Douyin, and JD Double 11, the pillow category ranked first in sales. ,,,,, As our new product development continues to break through, the deep sleep product line will be further broken through. Meanwhile, our deep sleep products emerged as a market powerhouse in 2023. Throughout the year, our retail business concentrated on sleep scenarios to gain a deep understanding of customers' sleep-related needs and address their sleep difficulties. With a goal of offering customers a relaxing and comfortable sleep experience, Atour Planet's product capabilities continued to strengthen in 2023, with several blockbuster launches in our Deep Sleep Series. Among them, our Deep Sleep Pillow Pro sold over 1.2 million units across the year, topping sales charts in pillow segments on Tmall, Douyin, and JD.com during the Double Eleven Shopping Festival.

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Antonio: Meanwhile, our deep sleep products emerged as a market powerhouse in 2020 three.

Antonio: Throughout the year, our retail business concentrated on sleep scenarios to gain a deep understanding of customers' sleep related needs and address their sleep difficulties.

Antonio: With a goal of offering customers, a relaxing and comfortable sleep experience.

Antonio: Tour planets product capabilities continued to strengthen in 2023 with several blockbuster launches and our deep sleep theories.

Antonio: Among them, our deep sleep pillow Pearl sowed over 1.2 million units across the year topping sales charts and pillow segment on T Mall L. E N J D dot com during the double 11 shopping festival.

Mr. Wang Haijun: We also maintain our top position as the most mentioned pillow product on Xiaohongshu. Also, our Deep Sleep Temperature Control Quilt, a key addition to Atour Planet's ever-expanding product portfolio, surpassed 100,000 units in sales in 2023. Fueled by our relentless pursuit of innovation and product development, Atour Planet's Deep Sleep portfolio is poised for further expansion.

Antonio: We also maintained our top position as the most mentioned pillow product on shelf onshore.

Antonio: Also our deep sleep temperature control quote a key addition to a tour planets ever expanding product portfolio surpassed 100000 unit sales in 2023.

Antonio: Fueled by our relentless pursuit of innovation and product development a tour planets deep sleep portfolio is poised for further expansion.

Mr. Wang Haijun: ,, Under the strategic guidance of the China Experience Group, in 2023, the annual user experience of Adore retail on Tmall, Douyin, and Jingdong will achieve excellence in the industry.,, Pro, 40 We made significant strides in our retail business over the past year as we focused on deep sleep scenarios and curated exceptional experiences. Following our Chinese experience strategy, we achieved an industry-leading shopping experience across leading third-party platforms. Moreover, by merging retail and accommodation scenarios, we offered our customers the opportunity to experience and enjoy the comfort provided by the Atour Deep Sleep Pillow Pro through our A-plus services during their stay with us, which has attracted a vast pool of customers and recorded more than 400,000 orders to date.

Antonio: Of course, yeah, jaudon until two <unk>.

Antonio: Sundar just yet.

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None: Yeah Jim.

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None: So a woman who more being sold to food home Julian.

None: Well you won't hold Eagle situated in Peru, Yamauchi downtime here, maybe to fool towboat Superman.

None: We made significant strides in our retail business over the past year as we focused on deep sleep scenarios and cure that exceptional experiences.

None: Following our Chinese experience strategy, we achieved an industry, leading shopping experience across leading third party platforms.

None: Moreover, by emerging retail and accommodation scenarios, we offered our customers the opportunity to experience and enjoy the comfort provided by the tour deep sleep pillow pro through our eight plus services during their stay with US which has attracted a vast pool of customers.

None: <unk> and a recorded more than 400000 orders to date.

Mr. Wang Haijun: In 2023, the Asian retail industry will continue to launch products that meet the needs of the times and achieve rapid business development. At the same time, based on the large number of members and real data on sleep, we will continue to innovate our deep sleep formula and continue to improve our brand and product strength.

None: Yes. Good morning, So can you do to other centers.

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None: With our powerful product.

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Mr. Wang Haijun: In 2024, we will focus on brand growth and build a complete brand value cognitive ladder through efficient new product development mechanisms to improve product power, expand product lines, and bring more and better sleep products to users. At the same time, the retail business will also develop in conjunction with the accommodation business. In the near future, deep sleepers will be landed, forming an online and offline experience loop, allowing users to enjoy deep sleep in an immersive way in Asia.

None: Yeah, well I mean, John <unk>, John P. M patois them got G&A, you're bundling up here John.

None: Hong Kong show the <unk> teacher. She has shown time can be called hometown Neogen.

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None: So you don't product capable with John sensors, Lodi, Sundar Shan Shan Shan Shan outlets ENB why don't.

None: Oh, sorry, Jago at Chengdu Changsha centered.

Mr. Wang Haijun: Leveraging our invaluable deep sleep insights, we maintain our product growth trajectory in 2023, consistently launching premier products finally attuned to the evolving demands of this era. This strategic approach has contributed substantially to the rapid expansion of our retail business. At the same time, we boosted our efforts across brand building and upgrades, as well as product development. Drawing upon extensive feedback from our members' real sleep experiences, we continually optimize our deep sleep offerings, thereby amplifying our brand and product strength.

None: Leveraging our valuable deep sleep insights, we maintain our product a growth trajectory in 2023 consistently launching premier products finally, attuned to the evolving demands of this era.

None: This strategic approach contributed substantially to the rapid expansion of our retail business at.

None: At the same time, we boosted our efforts across brand building and upgrades as well as product development.

None: Drawing upon extensive feedback from our members Rio sleep experiences, we continually optimize our D SNP offerings, thereby amplifying our brand and product strength.

Mr. Wang Haijun: As we move into 2024, our focus will remain on brand-driven growth and establishing a comprehensive brand value continuum. We will continue to enhance our product's competitive edge and expand product categories, utilizing our efficient product development mechanism, providing our customers with diverse and superior Sous Vide products. Furthermore, we intend to propel synergetic development between our retail and hotel business, leveraging our hotels to create a closed-loop experiential ecosystem that will allow our customers to engage in a truly immersive sleep experience during their stay.

None: As we move into 2024, our focus will remain on brand driven growth and establishing a comprehensive brand value continuum.

None: We will continue to enhance our products competitive edge and expanded product categories utilizing our efficient product development mechanism, providing our customers with diverse and superior to meat products.

None: The more we intend to propel synergetic development between our retail and hotel businesses.

None: Bridging our hotels to create a closed loop experiential ecosystem, that's really allow our customers to engage in a truly immersive sleep experience during their states.

Mr. Wang Haijun: In the past year, we have experienced a gradual recovery in domestic commodity demand and witnessed the rise of leisure tourism demand. In 2024, we expect that business travel will continue to grow steadily.?? As the leading mid-to-high-end hotel brand in Asia, ADOR will continue to provide users with the ultimate accommodation experience with unique zero-cost services and innovative sleeping scenarios.

None: Well to the Union will materially local named Sony as usual you should have.

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None: And the other two are empty my junk strictly due to the nearly four hotels in the central you're telling you that you don't want people to know who's with yet.

Mr. Wang Haijun: While assisting in increasing Asian brand value, let the Chinese experience reach people's hearts. Over the past year, we have witnessed a gradual recovery in domestic business travel demand, coupled with explosive growth in leisure travel. Looking into 2024, we expect a sustained upward momentum in business travel and the popularity of experience-driven leisure tourism to persist. As a leading upper-mid-scale hotel chain in China, Atour's unique neighborhood-style services and innovative deep sleep experience will continue to provide customers with unparalleled accommodation experiences, further enriching Atour's brand value and expanding the mindshare of the Chinese experience.

None: <unk> told you summed up the option.

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None: Over the past year, we have witnessed a gradual recovery in domestic business travel demand coupled with explosive growth in leisure travel.

None: Looking into 2020 four we expect a sustained upward momentum in business travel and the popularity of experience driven leisure tourism to persist.

None: As a leading upper mid scale hotel chain in China.

None: Tourists unique neighborhood style services and innovative deep sleep experience will continue to provide customers with unparalleled accommodation experiences further enriching at tourists brand value and expanding the mind share of the Chinese experience.

Mr. Wu Jianfeng: Next, let's welcome CFO Wu Jianfeng from Lianxi to tell us about the company's financial situation. Now, I'll turn the call over to our co-CFO, Mr. Wu Jianfeng, to discuss our financial results. Thank you, Haijun.

None: Oh yeah.

None: How can we stood up housing, but now I'll turn the call over to our co CFO, Mr, which Enzo to discuss our financial results.

Mr. Wu Jianfeng: Now I would like to present the company's financial performance for the fourth quarter and the full year. Our Net Revenues for the Fourth Quarter of 2020 grew by 140.4% year-over-year and 16.3% quarter-over-quarter to RMB 1,505 billion. Net revenues for the full year 2023 increased by 106.2% year-over-year to RMB 4,600. The strong increase was driven by robust growth in both hotel and retail. Revenue from our monetized hotels for the fourth quarter will be RMB $851 million, up by 133.3% year-over-year and 9.0% quarter-over-quarter.

Enzo: Thank you now I would like to present, the company's financial performance.

Enzo: Third quarter and the full year of 2023.

Enzo: Our net revenue for the fourth quarter of 2023 grew by 140.

Enzo: 4% year over year, and 15, 3% over quarter to RMB one 1000.

Enzo: 105 million.

Enzo: Net revenues for the full year 2023 increased by 106, 2% year over year to RMB.

Enzo: <unk> 4000 666 million.

Enzo: The strong increase this was driven by the robust growth in both the hotel and retail business.

Enzo: Revenue from our monetize the hotel for the fourth quarter were RMB $851 million up by 133, 3% year over year.

Enzo: Nine point of view and quarter over quarter.

Mr. Wu Jianfeng: For full year 2023, revenue from our monetized hotels increased by 98.8% year-over-year to RMB 2,706 million. The increases were primarily fueled by the ongoing expansion of our hotel network and the increase in resort parks. The total number of monetized hotels increased to 1,178 as of December 31, 2023, up by 31.0% year-over-year and 9.1% quarter-over-quarter, while Red Power recovered to RMB353 and RMB371 for the first quarter and the full year of 2023, respectively. Revenues contributed by our Leased Hotel for the first quarter were RMB 195 million, representing an increase of 40.4% year-over-year and a decrease of 18.1% quarter-over-quarter.

Enzo: Full year 2033 revenue from our <unk> hotel increased by 98, 8% year over year to RMB 2600 706 million.

Enzo: The increases were primarily fueled by the ongoing expansion of our hotel network and the increase in Revpar.

Enzo: The total number of <unk> hotel increased to 1178 as of December 31, 2023.

Enzo: 51% year over year, and nine 1% quarter over quarter.

Enzo: While revpar recover the two RMB 353, and RMB 371 for the fourth quarter and the full year of 23, respectively.

Enzo: Revenues contributed by Audi The hotel for the fourth quarter were RMB 195 million, representing an increase of 44% year over year, and a decrease of 18, 1% quarter over quarter.

Mr. Wu Jianfeng: For full year 2023, revenues from our leased hotels increased by 51.9% year-over-year to RMB 880 million. The increases were primarily due to the increase in red power, which recovered to RMB495 and RMB517 for the fourth quarter and the full year of 2023, respectively. The quarter-over-quarter decrease was mainly due to seasonality and the closure of one-bed hotels in September.

Enzo: For full year 2023 revenues from Audi The hotel increased by 51, 9% year over year to RMB $880 million.

Enzo: The increases were primarily due to the increase in Revpar, which recovered to RMB 495, and RMB 517.

Enzo: For the fourth quarter and the full year up 23, respectively.

Enzo: The quarter over quarter decrease was mainly due to the seasonality and the closure of one the hotel in September.

Mr. Wu Jianfeng: Revenue from the retail business for the first quarter increased by 315.6% year-over-year and 75.3% quarter-over-quarter to RMB 412 million. For full year 2023, revenues from our retail business are expected to increase by 283.2% year-over-year to RMB 972 million. The increases were attributable to the widespread recommendation of our retail brands and compelling product offerings, as well as improved product development and distribution capability. Now, let's move to cost and expenses. Our hotel operating costs for the fourth quarter increased by 106.0% year-over-year and 18.9% quarter-over-quarter to RMB 733 million.

Enzo: Revenue for on the retail business for the fourth quarter increased by 315, 6% year over year.

Enzo: And 75.

Enzo: 3% quarter over quarter to RMB $412 million.

Enzo: For full year 2023 revenues for all of our retail business increased by 283, 2% year over year to RMB $972 million.

Enzo: The increase was attributable to white graduate recommendation of our retail brands and compelling product offerings as well as improve the product development and distribution capability.

Enzo: Now, let's move to costs and expenses.

Enzo: Our hotel operating costs for the fourth quarter increased by 106.0% year over year, and 18 nightstand quarter over quarter to RMB.

Enzo: <unk> and $33 million.

Mr. Wu Jianfeng: The year-over-year increase was mainly due to the increase in variable costs, such as supply chain costs associated with the ongoing expansion of our hotel network. The quarter-over-quarter increase was mainly due to an impairment loss of RMB$47 million from our lease hotel booked in the fourth quarter of 2023, compared with RMB$13 million booked in the previous quarter. Hotel operating costs for the full year 2023 will be RMB 2,241 million, an increase of 60.8% year-over-year. Growth margin for our hotel business was 29.9% and 36.8% for the first quarter and the full year of 2023, respectively, compared with 29.3% and 27.2% for the same period of 2022. Retail costs for the fourth quarter increased by 295.4% year-over-year to RMB232 million.

Enzo: The year over year increase was mainly due to the increase in variable parts supply.

Enzo: Supply chain costs associated with the ongoing pension of our hotel network.

Enzo: The quarter over quarter over quarter increase was mainly due to an impairment of RMB $47 million from Audi hotel booked in the fourth quarter of 2023.

Enzo: <unk> the way RMB 13 million booked in the previous quarter.

Enzo: Hotel operating cost for full year, 2023, well RMB 2240, $1 million, an increase of two 8% year over year.

Enzo: Gross margin for our hotel business it well.

Enzo: Nine, 9% and 36, 8% for the fourth quarter and the full year of 2023, respectively, compared with 29, 3% and 27, 2% for the same periods of 2022.

Enzo: Retail comp for the fourth quarter increased by 295, 4% year over year to RMB $232 million.

Mr. Wu Jianfeng: For full year 2023, retail costs increased by 238.1% year-over-year to RMB 513 million. The increase was associated with the rapid growth of our retail business. Growth margin of our retail business was 43.7% and 47.2% for the first quarter and the full year of 2023, respectively, compared with 40.8% and 40.1% for the same period of 2022. The increases were attributable to increasing contributions from high-margin online sales. Selling and marketing expenses for the first quarter of 2023 increased by 283.2% year-over-year to RMB207 million. Selling and marketing expenses for the full year 2023 increased by 235.6% year-over-year to RMB 417 million.

Enzo: For full year 2023 retail costs increased by 208.

Enzo: Eight 1% year over year to RMB $513 million.

Enzo: The increase was associated with the rapid growth of our retail or all of our retail business.

Enzo: Gross margin of all retail business was 43, 7% and 47, 2% for the fourth quarter and the full year of 2023, respectively.

Enzo: Compared with 48% and 41% for the same period of 2022.

Enzo: The increase was attributable to increasing contribution from high margin online sales.

Enzo: Yes.

Enzo: Selling and marketing expenses for the first quarter of 2023 increased by 283, 2% year over year to RMB $207 million.

Enzo: Marketing expenses for full year 2023 increased by 235, 6% year over year to RMB $470 million.

Mr. Wu Jianfeng: The increases were mainly due to our increased investment in brand awareness and online channel development associated with our retail business. General and administrative expenses for the first quarter of 2023 were RMB105 million, including RMB2 million share-based compensation expenses, compared with RMB$217 million, including RMB$116 million share-based compensation expenses for the same period of 2022. For full year 2023, general and administrative expenses were RMB 451 million, including RMB 162 million in share-based compensation expenses, compared with RMB 350 million, including RMB 160 million in share-based compensation expenses, for full year 2022. The increases, excluding the impacts of share-based compensation, were primarily due to the increased costs related to management personnel and professional services expenses.

Enzo: The increases were mainly due to our increased investments in brand awareness and <unk> developed a tunnel development associated with our retail business.

Enzo: General and administrative expenses for the first quarter of 2023 were RMB $105 million, including RMB 2 million share based compensation expenses.

Enzo: Compared with RMB $217 million, including RMB 160 minutes share based compensation expenses for the same period up $10 82.

Enzo: For full year, 2023 general and administrative expenses were RMB $451 million, including RMB 152 million share based compensation expenses, compared with RMB $350 million, including RMB 160 million of share based compensation.

Enzo: Commendation expenses for full year 2022.

Enzo: The increase excluding the impact from share based compensation was primarily due to the increased cost related to management personnel personnel.

Enzo: And professional services expenses.

Mr. Wu Jianfeng: Technology and development expenses for the first quarter of 2023 increased by 39.7% year-over-year to RMB 22 million. Technology and development expenses for the full year 2023 increased by 16.8% year-over-year to RMB77 million. Adjusted EBITDA for the first quarter of 2023 was RMB251 million, up by 116.1% year-over-year. Adjusted net income for the first quarter increased by 175.8% year-

Enzo: Technology and development expenses for the first quarter of 2023 increased by 39, 7% year over year to RMB $22 million.

Enzo: Technology and development expenses for full year 2023 increased by 16, 8% year over year to RMB 17 7 million.

Enzo: Adjusted EBITDA for the first quarter.

Enzo: Of course, we're up 10 phase III was RMB $251 million up by 116, 1% year over year adjusted net income for first quarter increased by 175, 8% year over year to RMB 222 million.

Mr. Wu Jianfeng: The adjusted net profit margin for full year 2023 was 19.4%, up by 8 percentage points year over year. The significant increase in gross profit margin in both our hotel and retail businesses, along with our optimizing operating leverage, led to an improvement in the group's overall net profit margin. Normally, we have maintained a healthy cash position with stable growth momentum. As of December 31, 2023, our cash and cash equivalents totaled RMB2.8 billion. Among them, their net cash was approximately RMB2.8 billion.

Enzo: Adjusted net profit margin for full year 2023 was 19, 4% up by eight percentage point year over year.

Enzo: The significant increase in gross profit margin in both our hotel and retail businesses, along with our optimizing operating leverage that to an improvement in the group's overall net net pulp market.

Enzo: Nobody we have maintained a healthy cash position with a stable growth momentum as of December 31st two.

Enzo: And three our cash and cash equivalents totaled RMB, two 8 billion ammonia and net cash was up or a process, maybe RMB two 8 billion.

Mr. Wu Jianfeng: That concludes our financial highlights for the first quarter and the full year 2023, with that left open for Q&A. Thank you. If you wish to ask a question, please press star 1 and 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 and 1 again.

None: That concludes our financial highlights for the first quarter and the full year 2023 with that let's open for Q&A.

None: Thank you if you wish to ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one and one again.

Operator: For the benefit of all participants on today's call, if you raise your question in Chinese, please immediately repeat your question in English. Please limit your questions to one at a time. If you wish to have follow-up questions, please rejoin the queue. We will take our first question. Your first question comes from the line of Lydia Ling from City. Please go ahead; your line is open. Hi, I'm Lydia from Huaqi.

None: For the benefit of all participants on today's call. If you raise your question in Chinese. Please immediately repeat your question in English. Please limit your questions to one at a time if you wish to have follow up questions. Please rejoin the queue.

None: We will take our first question.

None: Your first question comes from the line of Lithia Link from Citi. Please go ahead. Your line is open.

Lydia Ling: Thank you for the opportunity to ask questions. First of all, congratulations on the results of the company's fourth quarter. What I'm mainly concerned about is our outlook for 2024. It can be divided into several small parts.

None: Oh, Glenn you can highlight Johan <unk> yeah.

Lithia Link: Thank you Gwen.

None: Yeah, I know it had been at.

Lithia Link: As usual I'm only asking me I know you got a chatbot now more kind of always do you think Apple thing you cannot do it yourself quite each union. There you go take aim at $10 city deal with the pipeline that D. G said really nothing.

Lydia Ling: One is about the opening of the year because we can see that our Peplum in the fourth quarter is also improving. So can you share with us a plan for the opening of the year? And then, for example, how many new houses will be opened? How many new houses will be opened in Yadu? This is the first part. The second part is also a RAPPA trend that everyone is more concerned about. And last year, we had a good improvement in RAPPA.

None: Thank you gentlemen.

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Lydia Ling: So, may I ask about our latest RAPPA guidance for this year and our revenue guidance? Because the first quarter is coming to an end, so if you can share some of the latest first quarter operations, that would be very helpful. And then the next clearing and, including the May 1 holiday. Because, in fact, especially May 1, was relatively high last year.

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Lydia Ling: How did the management level look at the hotel performance during these two holidays? The last part is about margin. I would also like to hear management's opinion on this year's margin trend. Because we can see that the cost of the fourth quarter has increased relatively, how do we look at this year's margin trend?

None: Yes, yes, yes, I think I told you, it's apples and here's why we think a margin pick up both at night, you've got meantime, Glenn junior debt.

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None: Well, thank you taking that Oh, Hi management.

Lydia Ling: So, congratulations on the results. And so, my question is mainly focused on the growth outlook for 2024. And so, basically, first on the hotel opening plan. And we saw actually further growth in the pipeline in the fourth quarter. So, what would be your sports opening plan for this year?

None: <unk> from Citi. So congratulations on that result, and as Al. My My question is mainly focused on the growth outlook for 2024, and it's all basically for US. It's all about like the hotel opening plan and then we saw a tree a light of where the growth in that pipeline in fourth quarter. So what would be your spa opening.

Lydia Ling: And the second part is on the RAPPA trend, which actually rebounded well last year. So, what's your latest expectation for the RAPPA trend for this year and also your revenue guidance? And if you have any color on the first quarter trend, that would be very helpful. And as the chimney and the Labor Day holiday are approaching, what would be your expectation for the RAPPA performance for these two holidays?

Citi: Plan for this year and the second part is on the Revpar trend, which actually like a bond you were last year. So what's your latest expectations for Revpar trend for this year and also your revenue guidance and Oh, if any color on the first quarter trends there would be very helpful and <unk> and Liberty.

Citi: As approaches or why they won't be our expectation on the Revpar performance for these two holidays and lastly is on the margin trend and if so what would be our latest guidance and looking into 2000 plentiful and we see some actual increase inc. Into a lighter expense ratio in the fourth quarter. So what was your expectation for that.

Lydia Ling: And so, lastly, it's on the margin trend. And so, what would be your latest guidance and looking into 2024? And we saw some actually increase in the light expense ratio in the fourth quarter. So, what would be your expectation for the light business in 2024? Thank you. Thank you, Lydia.

None: I'd like to thank you.

None: Hello, guys. Good evening I was I didn't.

Mr. Wang Haijun: In 2023, the company will have 289 power stations. At the end of the year, the number of power stations will be about 1210. This is a 30% increase. In 2024, we expect to continue to maintain a 30% increase in power generation. The goal for power generation throughout the year is about 360. The number of hotels in Asia is about 200-220. The average number is about 60-80.

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None: For each of our <unk>, so it won't be something that all of them in December.

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Mr. Wang Haijun: This goal will also help us to reach our strategic goal of 2,000 power stations in 2025. Thanks, Lydia. Let me answer your question on the new openings. In 2023, we opened 289 new hotels, and the total number of hotels in operation by the end of the year was 1210, and that was a 30 percent increase, and we aim to keep that growth rate as well this year. So this year our target for new openings would reach 360. And among those 360, about 200 to 220 will be our hotels, while 60 to 80 will be our light hotels.

None: Devin Linda tweaking the evil.

None: Thanks, Lee Let me answer your question on the new openings in 2023, we opened 289 in your hotels and the total number of hotels in operation by the end of the year was 1210 and that was a 30%.

Devin Linda: Increase and we aim to keep that growth rate.

Linda: Well in this year. So this year, our target for new openings would reach 360.

Linda: And among those 360.

Linda: About 200 to 220 will be a tour hotels wireless 60 to 80 will be a tour like hotels and all of this would help us to March towards the.

Mr. Wang Haijun: And all of this would help us to march towards 2,000 premier hotels by the year of 2025. And that is our goal. Thank you. Let me answer your second and third questions. First, let's talk about Reptile.

Linda: 2000 Premier hotels by the year of 2025 and that is our goal.

Linda: Oh yeah.

Mr. Wang Haijun: [inaudible] In terms of the current RAPTAR structure, we have a 30% increase in power consumption this year, so the value of new electricity is still relatively high. At the same time, we have a relatively strong development of clean energy in the mid-range area. So we take the current situation of QE as a reference and also consider some uncertainties in the external environment. We are still cautious and optimistic about the growth of this year's rap part. We will strive to reach last year's rap part. Okay, now Lydia, let me try to answer your second and third question.

Linda: December one.

Linda: So essentially why revpar on the future number of women's issues at our Heartland announced Eagle Revpar ego.

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None: Okay now let me try to answer your second and the third question first regarding the development trend of Revpar.

Mr. Wang Haijun: First, regarding the development trend of Ravpart. Well, from the perspective of its structure, this year we will maintain a 30% growth rate of new hotel openings, as those new hotels will account for a relatively higher proportion than those of our peers. Meanwhile, the expansion momentum of our mid-scale offering, Atour Lite, was strong, and that means with more Atour Lite hotels to open, they may have a certain impact on our overall rev bar. And considering what we already have from Q1's data and taking some uncertainties in the external environment into account, overall, we hold a cautiously optimistic attitude for this year's rev bar growth. We aim to match last year's rev bar levels.

None: From the perspective of Revpar structure. This year, we will maintain a 30% growth rate of new hotel openings as those new hotels will account for a relatively higher proportion than those of our peers. Meanwhile, the expansion momentum of our Midscale offering a tour.

None: It was strong and that means with more a tour of light hotels to open they may have a certain impact on our overall revpar and considering what we already have from Q1, Stella and taking some uncertainties in the external environment into account.

None: Overall, we hold a cautiously optimistic attitude for this year's Revpar growth, we aim to match last year's Revpar levels.

Mr. Wang Haijun: 251, We are confident that we can make a good profit on these two holidays. And as for the Qingming and May the 1st holidays, looking from the reservation data we have, we've seen some very active traffic. And obviously, they're going to turn out to be pretty nice results for those two holidays.

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None: And as for the Qingming and made it first holidays looking from the reservation data. We have we've seen some very active traffics and obviously they are going to turn out to be pretty.

None: Nice result for those two holidays.

Mr. Wang Haijun: In addition, you also mentioned the income area. We will also update our guidance to everyone. So, with the rapid development of our entire group, accommodation and retail business, we expect annual income in 2024 to reach around 30%, maintaining an industry-leading increase. And also, let me try to update our revenue guidance a little bit as well, as in revenue, with the rapid development of both our accommodation and our retail business, we expect the 2024 full year revenue to grow by around 30%. In terms of profit margin, we are confident that we can gradually improve our operating efficiency with the optimization of the cost structure. However, the overall profit margin will also be affected by the heavy income and structural changes.

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None: So let me try to update our revenue guidance, a little bit as well as in revenue with the rapid development of both our accommodation in the retail business. We expect 2020 force full year revenue to grow by around 30%.

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Mr. Wang Haijun: We expect that the overall net profit margin of the group will maintain a relatively stable and mild growth trend. One more note on revenue, that 30% growth will be a leading growth across the industry. And as for profit, we have the confidence to improve it in each of our business segments along with our cost of structural optimizations and the increase in management and operation efficiency. However, our overall profit margin may be subjected to changes in the contribution of each revenue stream. We do expect our profit margin to continue with the trend of relatively stable and moderate growth. Thank you, Lydia.

None: Hudson John's distribution.

None: One more note on revenue that 30% growth will be our leading growth across the industry and as for profit we have the confidence to improve hitting each of our business segments, along with our cost structural optimizations and the increase of management and all.

None: <unk> efficiency. However, our overall profit margin may be subjected to changes in the contribution of each revenue streams. We do expect our profit margin to continue with the trend of relatively stable and moderate growth.

None: Thank you.

Operator: Let's have the next question. Thank you. Please stand by.

None: Hi.

None: Thank you Lydia let's hope next question.

None: Thank you.

None: Please standby.

CJ Lin: Your next question comes from the line of CJ Lin from CICC. Please go ahead, your line is open. Thank you, Management. We just talked about the opening of the store. I would like to ask about the contract. What is the goal of this year's contract? And what is the degree of completion of the QE?

Speaker Change: Your next question comes from the line of C. J Lynn from CIC. Please go ahead. Your line is open.

Speaker Change: Uh huh.

Speaker Change: With all the idea now without that enjoys that Terry I joke, what I, just said a damaging it.

Speaker Change: That's the logic would say that it won't be all should wash out Alex you don't kill me, though why shouldn't do them now.

CJ Lin: Also, have there been any significant changes in the confidence and emotions of the partners we have observed this year? Thank you, Management. We have talked about the new opening. I have a follow-up question on the new signing.

Speaker Change: Oh sure.

Speaker Change: Hi, Jonathan.

None: Anastasia Hudson Sheila.

None: Yeah.

Jonathan: So how should I say my pet's French anguish. Thank you management will have to talk about that new Albany, and I have a follow up.

Mr. Wang Haijun: So what's the target for new signings this year? And what was the progress in Q1? And do we see updates changing the franchise's confidence and interest since this year? Thank you. Thank you, Sijia. We signed 576 contracts in 2023. We did a good job.

Jonathan: Question on the in your filings so what's the target of the new funding this year and what the progress in Q1 and two with you all get changing the franchisees confident that interests us.

None: Yeah. Thank you.

None: Yeah.

None: So 10 years on that women are hernia in Kenya.

None: As you slow down.

Mr. Wang Haijun: We are now in the first quarter of 2024, and our overall contract continues to maintain a good market., In the next 24 years, we believe that with the increasing brand influence and the competitiveness of our new products in Asia, we will definitely let more suppliers enter the Asian market. Thank you, Sijie, for your question. As for new signings, we signed 576 projects in the full year of 2023, which was an outstanding performance.

None: Yes.

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None: Thank you Sergio for your question is for new signings, we signed 576 projects in a full year of 2023, which was an outstanding performance and now entering Q1 2024, we have maintained that strong momentum on signings overall.

Mr. Wang Haijun: And now entering Q1 2024, we have maintained that strong momentum on signings overall. And as we see it, the franchise market is still active. In 2024, we are confident that by leveraging Atour's growing brand influence and with our newly launched product competitiveness, more franchisees are to be attracted to Atour's system for certain. Thank you, Zijie.

None: And as we see it the franchise market is still active.

None: In 2024, we are confident that by leveraging a tourist growing brand influence and with our newly launched the product competitiveness more franchisees ought to be attracted into a tour system for searches.

Operator: Let's have the next question. Thank you. We will take our next question. Your next question comes from the line of Danchi from Morgan Stanley. Please go ahead, your line is open.

None: Thank you so let's have next question.

None: Thank you.

None: We will take our next question.

None: Your next question comes from the line of Chi from Morgan Stanley. Please go ahead. Your line is open.

Operator: Thank you for giving me the opportunity to ask this question. I'm Dan, a hotel analyst at DEMO. My question is mainly about scene retail.

Chi: Ccs is like when anytime you go through with you and that's the way our system type model.

Chi: And he said well the one teacher actually glad you took the time frame that you show that you won't joint venture on a hot dog counting until treating end up you'll see our fleet how much would you say.

Danchi: Mr. Wang just shared a lot. Scene retail performed very well last year. I'd like to ask Mr. Guan to talk about our product plan for the whole of 2024. As Mr. Wang just mentioned, there may be a lot of things to look forward to in terms of deep sleep, experience, and products. Another question is about the retail scene. What is our goal for this year? Mr. Wu said that this year's annual income increase is 30%.

Chi: Cause I certainly think when he said the entitlement you felt your system soon.

Chi: And well take our time be Greylock onsite long don't eat out going away very soon to say, it's actually again highlight that tell me if I may how hot dog broke them down at that.

Chi: Wow.

Chi: Glen you take our autonomy so well that's a good thing that the U T J.

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Danchi: I'd like to know what the contribution of the entire Longjing Lingshou is to my question about a scenario-based retail business. It reported a very exceptional performance last year. I would like to ask about the management's 2024 strategic plan for this segment, especially your product plans and also any rough revenue guidance that contributes to the total revenue 30% year-over-year growth revenue guidance. Thank you. Thank you, Dennis. As the second growth curve for retail sales, we achieved a relatively good performance in 2023. Our annual revenue reached 9.7 billion yuan, which accounted for 20.8% of our total gross income.

Chi: But the so the transocean essentially to help kind of chatter was just a good housekeeping sort of confidential data.

Chi:

Chi: My question is about our scenario based retail business.

Chi: You called out a very exceptional performance last year.

Chi: I'd like to ask about the management 2024 strategic plan on this segment, especially on your product plans and also any rough revenue guidance contribute to the total revenue 30%.

Chi: Yeah.

Chi: Our revenue guidance. Thank you.

None: Oh, Yeah, that's right.

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Mr. Wang Haijun: In 2024, we will continue to promote healthy growth in our retail business. We will continue to build the foundation of our retail business and focus on brand and product development. Well, thank you, Dan, for your question.

None: Well. Thank you Dan for your question.

Mr. Wang Haijun: The retail business, as our second growth driver, achieved an outstanding result in 2023 with a full year revenue of RMB 970 million, accounting for 20.8% of our total revenue. In 2024, we will continue to drive the healthy growth of the retail business and keep on strengthening the building of our basic capacity to further focus on the brand and our product. In terms of the brand, we will focus on the Asian planet, focusing on our deep sleep products. We will continue to improve the ability of our retail product development and continue to expand our deep sleep products. In 2023, we will have 300 million pillows.

Retail business as our second growth driver has achieved an outstanding results in 2023 with our full year revenue of RMB $917 million accounting for 28% of our total revenue.

None: And 2024, we will continue to drive the healthy growth of retail business and to keep on strengthening.

None: Building of our basic capacity to further focus on the brand and our products.

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Mr. Wang Haijun: On top of this, we have successfully launched deep sleep pillows and deep sleep mattresses. We have gained user love and good sales. On March 21st of this year, on World Sleep Day, March 21st, 2024, we will launch our new product, the Asian Planet Deep Sleep Pillow.

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Mr. Wang Haijun: So you can see that our product line is continuously expanding. And in terms of branding, we do have the plan to focus on Atour Planet and our Deep Sleep product. We will consistently improve our R&D capability for retail products to further tap into the deep sleep category.

None: So I don't think so exactly kind of woman champion accumulation that should of course called home.

None: And in terms of branding we do have the plan to focus on a tour planet and our deep sleep products, we will consistently improve our R&D capability for retail products to further tap into the deep sleep categories.

Mr. Wang Haijun: In 2023, we availed of the momentum from three pillow products with 100 million sales each and successfully launched our Deep Sleep Temperature Control Quilt, which won the consumer's favor and very decent sales. On this year's March 21st, I mean 2024's March 21st, on World Sleep Day, we launched yet another new product, the Atour Planet Deep Sleep Summer Cool Quilt, as a continuous expansion of our product portfolio. On the other hand, we will continue to strengthen the combination of retail and accommodation. This year, we will let more of our deep sleep products enter the rooms of Atour hotels, creating an immersive deep sleep experience for users, constantly strengthening users' sense of the value of our Atour deep sleep experience.

None: In 2023, we availed of the momentum from three pillow products with hundreds of millions of cells. Each successfully launched our deep sleep temperature control Crouch, which had won the consumers' favor and very decent sales.

None: And this year is March 21st I mean, 2024 is March 21st.

None: On the World Sleep day, we launched it yet another new product the tour planet deep sleep summer cool tilt is a continuous expansion of our product portfolio.

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Mr. Wang Haijun: At the same time, we will also continue to strengthen the combination of the retail business and our accommodation scenarios to place more deep sleep products into our Atour hotels this year, to create an immersive deep sleep experience scenario for our consumers, and to keep on strengthening the mindshare of Atour's deep sleep experience. As you may have noticed, starting from this financial report, we will disclose our retail business as a separate business unit. We will also strengthen our retail basic capacity, including organizational ability, development ability, data infrastructure ability, channel ability, etc., to build a solid foundation for the long-term growth of retail business documents. Since this year, retail has maintained a very good trend of growth overall.

None: At the same time, we will also continue to strengthen the combination of retail business and our accommodation scenarios to place more deep sleep products into our tour of hotels. This year to create an immersive deep sleep experience scenario for our consumers.

None: And to keep on strengthening the mind share of mature deep sleep experience.

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Mr. Wang Haijun: We expect that in 2024, the growth of retail revenue will exceed 50% and reach 1.4 billion yuan. And you probably have noticed that, beginning with this latest financial report, we started to disclose information about the retail business as an independent business unit. We also plan to enhance the fundamental capabilities in retail, including capabilities in organization, R&D, data infrastructure, channels, et cetera. We try to build a solid foundation for our longer-term growth. Since the beginning of 2024, our retail business continued its positive momentum, and we expect 2024's full-year retail revenue to grow more than 50%, reaching RMB 1.45 billion. Xièxiè.

None: I'll just sit down with them.

None: And you probably have noticed that beginning with this latest financial report, we started to disclose information of their retail business as an independent business unit.

None: We also plan to enhance the fundamental capabilities in retail, including capabilities and organization R&D data infrastructure channels et cetera, we tried to build a solid foundation for our longer term steady growth.

None: Since the beginning of 2020 for our retail business continued its positive momentum and we do expect 2024th full year retail revenue to grow more than 50%, reaching RMB 1.45 billion.

Operator: Thank you. Thank you, Dan. Let's have the next question. Thank you. We will take our next question. Your next question comes from the line of Xin Shen from UBS. Please go ahead, your line is open.

None: Thank you.

None: Thank you Dan let's have next question.

None: Thank you.

None: We will take our next question.

None: Your next question comes from the line of Sunshine from UBS. Please go ahead. Your line is open.

Xin Shen: Hello everyone, thank you for giving me this opportunity to ask questions. I am Chen Xin from UBS. I have two questions I would like to ask Guan Licheng. The first question is that I see that the tax rate in the fourth quarter has dropped significantly. I would like to ask what are the main reasons for the decline.

Sunshine: A quick one for Paul.

Sunshine: Yes.

Sunshine: We were not going to use.

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Sunshine: Can you go with tissue will come with you.

Sunshine: Sure.

Sunshine: Yeah essentially jobs.

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Xin Shen: The second is that we have seen that our account cash has been very sufficient. I would like to ask if there will be future funds, such as dividends, repurchase arrangements, etc. I would like to ask Guan Licheng to share with us. This is Xingchen from UBS. I have two questions. The first is that I have noticed that the executive tax rate has decreased significantly in the fourth quarter. May I know the main reason?

Sunshine: Okay.

Sunshine: Neutral okay.

None: Oh I'm sorry.

None: Yes.

None: G box.

None: Hey, John.

None: Yep.

None: This is Vincent Chen from UBS.

None: Two questions.

None: Lets say from that yet.

None: I have noticed that that dates back to you protect suite has decreased significantly.

None: Quarter.

Xin Shen: The second question is that about the company's plan on the use of cash. Is the company considering raising the dividend payout or share buyback to increase shareholder returns? Thank you, Mr. Chen. Regarding the first tax issue, we believe that the main body in China enjoyed a tax discount policy in 2023. In the fourth quarter, there was a one-off tax exemption.

None: Dan.

None: Jason.

Second the question Scott up other companies those yourself cash.

None: Because you're doing about it.

None: Oh <expletive> buyback to create some shareholder returns.

None: Oh sure.

None: Why did you go through the O N T R well not sure if it's the name of duty.

None: South, Florida official you'll keep it simple.

None: So I absolutely do the show you, where you thought you pushing the negotiation or that you're on mute.

Mr. Wu Jianfeng: Well, Mr. Chen. As for the taxation question, we do have an entity that enjoyed preferential tax policies in 2023, and there was a one-off tax exemption in the fourth quarter. The second question is about the use of cash.

None: Well. Thank you Mr. Chen as for the taxation question, we do have an entity, which enjoyed preferential tax policies in 2023, and there was an one off tax exemption and the fourth quarter.

None: What do you see are the Finjan. She only lithia, yes, if those of you will know what agenda with him to our.

Mr. Wu Jianfeng: It is also due to the steady growth of our business and the new asset model. Our cash flow has maintained a relatively healthy growth. As of the end of last year, our net cash plus short-term investment reached RMB3.5 billion. As for your second question on cash utilization, well, thanks to our robust business growth and our asset-light mode, the group's cash flow maintained healthy growth. On December 31st last year, our group's net cash and short-term investment at banks reached a total of RMB 3.5 billion. This year, we will also consider all possible ways to increase shareholding returns, including the funds you just mentioned and the purchase of shares, in order to continue to improve the efficiency of our cash flow. And this year, we will thoroughly consider various means and different ways of rewarding the shareholders, such as dividend payouts, share buybacks, et cetera, to continuously enhance the efficiency of our cash utilization.

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None: As for your second question on cash utilization well, thanks to our robust business growth and our asset light mode.

None: The group's cash flow maintained healthy growth on December 31st last year, our group's net cash and short term investment at banks reached a total of RMB three 5 billion.

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None: Bob can you keep hold up the whole legal to hit for sure.

Bob: Thank you gentlemen, Tien tsin as you don't sell it.

None: And in this year, we will thoroughly consider various means and different ways of rewarding the shareholders such as dividends pay out share buybacks et cetera to continuously enhance the efficiency of our cash utilization.

Operator: Thank you, and we can take one more question. Thank you. We will take our final question. Your final question comes from the line of Candice Sang from Bank of America. Please go ahead; your line is open.

None: Thank you.

None: Thank you.

None: One more question.

None: Thank you.

None: Yeah.

None: We will take our final question.

Harpreet Singh: Your final question comes from the line of <unk> Singh from Bank of America. Please go ahead. Your line is open.

Candice Sang: Thank you, Management Team, for giving me the opportunity to ask questions. I'm Candace Zhang from Meilin. I'd like to ask you about Qingju 3.0. You just shared with us your goals for the next 24 years, from 60 to 80. I'd like to know if you have a contract for Qingju 3.0 this year.

Harpreet Singh: Thank you Keisha glad it's I'm going to let you raised your way, what's your name attendance, John which actually out here.

Harpreet Singh: Great.

Harpreet Singh: Yes.

Harpreet Singh: When he comes on guys. Thank God.

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Candice Sang: I'd also like to know how Qingju 3.0, which is now open, is doing in the hotel industry. Lastly, I'd like to know what you think of the competition between the hotel market and the mid-range hotel market. Thank you, Management Team. I'll first translate my question. Thanks a lot for the opportunity to raise my questions. This is Candace Zhang from Bank of America. My questions are specifically on Atour Life 3.0. Management has just shared the hotel opening target for 2024. Would you have any goals for new signings of Atour Life 3.0 this year?

None: Yeah.

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Glenn: This is Glenn.

Glenn: Okay.

Glenn: And so along with the opportunity to taking my question. This is Kim Jong from Bank of America. My question, specifically equalize workplace management has just shared hotel opening target for 'twenty. One before did you have any goals by signing a tour of 93.0 in this year and how they perform.

Candice Sang: And how is the performance and current operation status of those open hotels? Lastly, can management share their views on the competitive landscape of the mid-scale hotel segment overall? Thank you.

Kim Jong: And kind of operators that ends up goes open hotels lastly can management share your views on the competitive landscape of the Midscale hotels Nachman open Oh. Thank you.

Mr. Wang Haijun: Thank you, Candice, for your question. So, QingJu 3.0 is a mid-end hotel product that we are positioning among young business travelers. We launched it in February last year, and since then, we have received a lot of welcome from investors. By 2023, we have signed a total of more than 90 QingJu 3.0 projects. Well, thank you, Candice. Atour Life 3.0 is our mid-scale offering targeting young business travelers, and it has been quite popular with the franchisees since its launch in February last year, as evidenced by more than 90 new signings in 2023. We are still focusing on the core business circle of the second-tier cities.

Kim Jong: I'm sure they're going to stay with you now, but can you send me an email shoreline thing with our Nanjing, Shanghai cushion, but sometimes you'll Kentucky.

Nachman: Mr. Chin your are you open to Chihuahua.

Nachman: So without talking about finding a sudden and are you going to change out a tortuous should go to the changes that they need to sell it.

Well, thank you Candice.

Nachman: <unk> 3.0 is our midscale offering targeting young business travelers and it has been quite popular with the franchisees since its launch in February last year, evidenced by more than 90, new signings in 2023.

Nachman: Can you send in the summer, we'll have all of them and see that how should we choose outside Shanghai.

Mr. Wang Haijun: We want to create a high-end hotel quality. We have opened branches in 21 cities, including Beijing, Shanghai, and Shenzhen. The business performance is good. For example, we have opened branches in Guangzhou, Pazhou, Guangzhou Tower, subway station, and Qingju hotel. Since the opening in November last year, the average value of Redpot has been more than 600 yuan. This is a performance that is far beyond the

Nachman: Those are the hugging chunks of the Hudson Schonfeld somewhat although you've got a whole bunch of Guinea, the Belk underpinning shop someone tell me inside our sheet latasha almost around Beijing, Shanghai, Shenzhen Doyle, the entire Latina doesn't keep up with.

Nachman: It was all will take a while.

Nachman: Well, it's all part of the quarter with happy here that can usually get the.

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Nachman: So again, it's always always thinking about it.

Mr. Wang Haijun: Atour Life 3.0 focuses on core business districts in higher-tier cities, aiming to set a benchmark for quality in the mid-scale hotel sector. And by now, we have Atour Life 3.0 hotels opened in 21 cities, including Shanghai, Guangzhou, and Shenzhen, all with quite decent operational performance. For instance, the average rev bar for our exemplary hotel, the Atour Life Hotel at Guangzhou Pazhou Exhibition Canton Tower Subway Station, since its opening in November last year, it has exceeded 600 RMB in its rev bar, far exceeding the performance of the surrounding competitors.

A tour like 3.0 focuses on core business districts in higher tier cities aiming to set a benchmark for quality and mid scale Hotel segment and by now we had a tour like 3.0 hotels opened in 21 cities, including Shanghai Guangzhou <unk>.

Nachman: Jed always quite decent operational performance for instance, the average revpar for our exemplary Hotel tour life Hotel at Guangzhou partial exhibition Cantos with tower subway station.

Nachman: Since its opening in November last year it has exceeded.

Nachman: 600, RMB its revpar far exceeding the performance of the surrounding competitors.

None: Yeah. The appointment you can go to.

Mr. Wang Haijun: Qingju 3.0 is a service experience that is in line with the aesthetic design of young people and the same service experience of Yaduo. We believe that it has successfully met the needs of young businesswomen and customers for a high-quality accommodation experience and has been recognized by consumers. And regarding your second question on the competition in the mid-scale market, we believe that the scale of this market has been verified already. Because with Atour Life 3.0's design catering to the aesthetic view of young people and the consistent service experience we offer, it can well match the young business travelers' need for high quality accommodation experiences, and it has been successfully recognized by the. As mentioned earlier, QINGJU 3.0's business performance is very competitive in the investment circle The advantages of the investment return cycle are very obvious.

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None: And regarding your second question on the competition in the Midscale market. We believe that the scale of this market has been verified already because with a tour like 3.0 design catering to the aesthetic appeal of the young people and the consistent service experience we offer.

None: It can well matched the young business travelers need for high quality accommodation experience and it has been successfully recognized by the consumers.

None: I'm glad you told them it seems youre signing and the team does that push off industrial tea tree in Geneva, close literally about geology, the ocean shipping coming together, well means something and tell them about the timing on the hope on fund actually both Chicago and Cook down to really one the teams you tell me when the other do you think she shops yoga champion the impact.

Mr. Wang Haijun: We also believe that strong product competitiveness and wide market recognition will help QINGJU to become the second leading brand under our Asian Group. And as I previously said, the operation performance of Atour Light 3.0 hotels is very competitive in their business districts, and the advantage in the cycle of return on investment is quite obvious.

And as I previously said the operation performance of a tour like 3.0 hotels are very competitive in their business trip districts and the advantage and the cycle of return on investment is quite obvious we believe that with its powerful competitiveness and the extensive <unk>.

Mr. Wang Haijun: We believe that with its powerful competitiveness and extensive market recognition, Atour Light is poised to become our second brand within the Atour Group to hit the scale of 1,000 hotels. Thank you. And that concludes the question and answer session. I would like to turn the conference back over to Alison Zhang 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 reconnecting with you next quarter. Thank you, and goodbye. This concludes today's conference call. Thank you for participating. You may now disconnect.

None: Recognition of tour line is poised to become our second brand within actual group to hit a scale of 1000 hotels.

None: Thank you.

None: And that concludes the question and answer session I would like to turn the conference back over to Alison Zhang for any additional or closing comments.

Alison Zhang: Thank you for joining us today, if you have any further questions. Please feel free to contact our IR team. We look forward to reconnecting with you next quarter, Thank you and goodbye.

None: This concludes today's conference call. Thank you for participating you may now disconnect.

Alison Zhang: This is a video of me playing the guitar on my new guitar. It's been a long time since I played the guitar. It's been a long time since I played the guitar. [inaudible]

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