Q3 2024 Atour Lifestyle Holdings Ltd Earnings Call

November 19, 2024

Okay.

Speaker Change: Ladies and gentlemen, thank you for standing by now come to the aid backstop.

Speaker Change: Uh huh.

Okay.

Speaker Change: If and when we met.

Speaker Change: After the speaker's presentation, there will be a question and answer question. Today's conference is being recorded at this time I would like to turn the conference over to <unk>.

Speaker Change: Yep.

Speaker Change: Senior IR manager. Thank you. Please go ahead Sir.

Speaker Change: Thank you operator good morning.

Speaker Change: Uh huh.

Welcome to our cultural transformation.

Speaker Change: This conference call today.

Speaker Change: From our founder Chairman and CEO Mr Ma.

Speaker Change: Our co CFO Mr Wood.

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

Speaker Change: These statements are subject to various risks and uncertainties and actual results may differ significantly from what you state.

Speaker Change: In our comments today.

Speaker Change: Company is not obligated to update any forward looking statements, except as required by applicable laws. Additionally.

Speaker Change: Additionally, during this call.

Speaker Change: Management will discuss certain non-GAAP financial measures for comparison purposes.

Speaker Change: 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.

Speaker Change: Furthermore, a webcast replay of this conference call will be accessible on our website at IR <unk> com, where a copy of the results presentation is also available now I would tend to call over to Mr. Walsh our CEO.

Speaker Change: Hi, Dan.

Speaker Change: Gotcha.

Speaker Change: Yes.

Speaker Change: So essentially though he didn't properly.

Luc: Thank you Luc Hello, everyone and thank you for joining a towards the third quarter 2024 earnings call today.

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Speaker Change: In the third quarter of 2020 for domestic travel demand has demonstrated steady growth leisure tourism remained highly active highlighting the strong resilience of our service consumption market. Following last year search and pent up travel demand consumer behavior returned to a more.

Speaker Change: Russia will pace this summer with a more diverse array of tourism hotspots in margin.

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Speaker Change: <unk>, Hungary or tie you're watching there'll be less.

Speaker Change: In response to a fluctuating market environment and evolving consumer demands as a leading lifestyle brand. We will continue to innovate and elevate our hotel offerings, while strengthening our service advantages to deliver a superior customer experience.

Speaker Change: Ali we will drive high quality growth in our retail business centered around our deep sleep products to reinforce it towards distinctive competitive edge.

John: Sure John.

Oh, they are essentially the two.

Speaker Change: Now I would like to provide more details on our performance for the third quarter of 2024.

John: So it's actually the total year.

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John: So you don't OCC.

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John: Yes.

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John: Yes.

Speaker Change: Let's begin with our hotel business. Please turn to slide part of hours 30, Q4 results presentation.

Speaker Change: Revpar reached to RMB 380 that in the third quarter of 2024, representing 89, 5% of its level for the same period of 2023.

Speaker Change: With OCC and ADR, achieving 97, 5% and a 92% up their levels for the same period in 2023, respectively.

Due to the high comparison base in fact 80.

Speaker Change: <unk> faced a certain pressure this summer while OCC also experienced a year over year decline amid the shift to outbound tourism.

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Speaker Change: OCC.

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Speaker Change: Core 500 Joseph.

Speaker Change: Please turn to slide five.

Speaker Change: In the third quarter, our mature hotels in operation for more than 18 months continued to deliver solid operational performance, excluding structural impacts such as the ramp up of new hotels same hotel revpar in the third quarter of 2024 reached at 91, 6% of 2002.

Speaker Change: <unk> level for the same period.

Speaker Change: Outperforming our groups blended performance by two one percentage points, specifically OCC and ADR stood at 98, 3% and a 93, 4% up their levels for the same period in 2023, respectively.

Speaker Change: Yes.

Speaker Change: Unfortunately, John TTM, well Macau now towards your hotels or CTO John.

Speaker Change: So you don't know OCC, but Jim.

Speaker Change: We already are in Sanya concho watching John SEDAR, you bought it.

Speaker Change: Oh.

Speaker Change: ADR, reaching intelligent cedar sorry of individuals already.

Our hobby, our son Nguyen hung Cheetah <unk>.

Speaker Change: Please turn to slide six.

Speaker Change: Travel and accommodation demand surged during the National day holidays, this year driving steady growth in OCC, which achieved 105% asset level during the 2023 mid autumn festival and the National day holiday.

Speaker Change: ADR was 92, 1% opex level in the same period of 2023, while Revpar reached a 96, 1% of its level in the same period of 2023.

Speaker Change: <unk> here.

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Speaker Change: But you know Jade Sunday, the more detail answer until they sort out each hub whereby our centers.

Tobey, it's under vendor of Central <unk> Daniel.

Speaker Change: Please turn to slide seven.

Speaker Change: Driven by our growing brand influence our hotel network expansion continued to gain traction in the third quarter, we accelerated our hotel network expansion with 140, New hotel openings up 72.8% year over year once again setting a record.

Speaker Change: Quarterly pace and new openings.

Speaker Change: As of the end of the third quarter, we had a total of 1533 hotels in operation, representing a 37, 9% year over year increase.

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Speaker Change: Sure.

Speaker Change: So you don't want to answer that Tricia.

Speaker Change: Please turn to slide eight.

Speaker Change: Franchisees confidence remained rather than in the third quarter further our farming, our strong competitive edge and the brand recognition the number of hotels under development reached at 732 as of the end of the third quarter underpinned by our significant portfolio of high quality.

Speaker Change: Projects generating sustained momentum to support a towards driving brand fatality.

Speaker Change: Well I don't see it at all.

Speaker Change: I'm not being paid out in July.

Speaker Change: Yes.

Speaker Change: Next I would like to share the latest developments for the tour and tour life brands.

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Speaker Change: Yes.

Challenges single user.

Speaker Change: Please turn to slide nine.

Speaker Change: As our elevated upper Midscale offering a 12 4.0 continues to gain favor among both consumers and our franchisees driven.

Speaker Change: Driven by its exceptional experience and outstanding operational model to date a tour a 4.0 has over 60 projects and pipeline with six hotels in operation.

Speaker Change: That's innovation embodied in a tour or 4.0 continued to set the standard for an experience upgrades in the upper mid scale hotel market driving rapid growth and occupancy rate for a tour of 4.0 hotels in operation and highlighting the brand's robust the competitive advantages.

Speaker Change: So I'm not sure yet.

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Speaker Change: Please turn to slide 10.

Speaker Change: <unk> 3.0 also continued to perform strongly this quarter further solidifying its competitive edge in the midscale market during the third quarter.

Speaker Change: <unk> 3.0 signed 38, new projects continuing to account for more than 20% of our total new signings.

Speaker Change: By the end of September the number of a tour like 3.0 of hotels in operation reached 76, primarily located in key business districts of second tier cities and above <unk>.

Speaker Change: <unk> believes that women, who has used anja.

Speaker Change: John do you achieve it of children Boardwalk.

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Speaker Change: Paul Horne Inching, Sony engine later corner I O T will conduct toyama conjunction tailor to Jim here.

Speaker Change: <unk> 3.0 success stems from our kin ability to capitalize on strategic property upgrade opportunities in core business districts, along with our continued focus on and Swift response to the evolving business travel market.

Speaker Change: Since the launch of a tour like 3.0, we have consistently achieved a brand signature innovations and breakthroughs across various dimensions, including operations management and the customer experience moving forward.

Speaker Change: <unk> 3.0 will continue to uphold our S. Three shelf life is delivering a more diverse elevator travel experience for a wide range of customers, including younger business travelers.

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Speaker Change: Please turn to slide 11, now I'd like to introduce our recently launched the upscale lifestyle brand soccer Saturday Hotel.

So that means brief in a lease through language symbolizing the power of flight.

Speaker Change: Inspired by this concept, we have meticulously crafted a hotel product route it came eastern aesthetics.

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Speaker Change: The survey in June she will conclude on Chinese sure tuna and Sienna.

Speaker Change: The launch of soccer hotel, not only presents a powerful product model that seamlessly integrate eastern is statics high end experiences and a superior operational efficiency, but also pioneers a new form of upscale hospitality transforming the industry's structural.

Speaker Change: Challenges into opportunities looking ahead, we will continue to employ a long term approach to the upscale market, providing a new generation of consumers with a try and creole retreat that prioritizes emotional connection and immersive experiences.

Speaker Change: You didn't ask a woman known until you will see the Sarnia.

Speaker Change: Yes.

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Speaker Change: Do you innovate.

Speaker Change: B can be summed up by vendor EBIT incident cheat sheet.

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Speaker Change: Moving now to our retail business, please turn to slide 12.

Speaker Change: Our retail business sustained its strong momentum in the third quarter with robust the GMB growth of 107, 7% year over year, reaching RMB $566 million and sales from online channels accounting for more than 90% of that total.

Speaker Change: G M D.

Notably we delivered another remarkable performance during this years double 11 shopping festival as we topped the pillow and comfort ourselves chart across various third party e-commerce platforms.

This impressive performance clearly reflects a tour planets continuously strengthening brand awareness.

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Speaker Change: Please turn to slide 13.

Speaker Change: I am proud to share that we revisit that bring on progress thus far in October and successfully held our first deep sleep conference centered around the concept of natural deep sleep.

Speaker Change: At the conference we address is it a widespread issue of sleep disorders in today's society and it presented a detailed overview of our tour planet effective and systematic deep sleep idea.

Speaker Change: So probably not well known launches all our Tau imaging Department I'm here.

Speaker Change: Yeah, Ashish centrally adhesion polo harder in the towns in India that put the entire system geocentric TM Gaucher T General women Townsville goes other similarly about either.

Speaker Change: Too hard to Hunter, Tayo, and Samsung put home, even though she duda Jaime initially tango two trial on the Orange Infantry Diego easy for her to the people who share the shadow sure sure.

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Speaker Change: Although as soon Joseph Zhijun for ordering food.

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Speaker Change: We spotlighted several blockbuster product at the conference, including the innovative a tour planet deep sleep memory foam pillow Pro 2.0.

Speaker Change: The launch of this product not only enhances the tour's signature deep sleep experience, but also showcases our advanced and efficient new product development mechanism.

Speaker Change: Updated pillow feature is that patented spring memory foam material and a three layer design with thumb himself Varian firmness in the car Richard its unique or shape, the partition structure and ergonomic NGO design significantly enhanced its rebound and support promoting greater rely.

Speaker Change: <unk> of the shoulders and neck to help users naturally achieved deep sleep.

Speaker Change: As a result, they have tour planet deep sleep memory foam pillow Pro 2.0 hasn't received a widespread acclaim since its release in July of this year with total sales exceeding 800000 units.

Speaker Change: Sure being sure sort of essentially the council.

Speaker Change: Phase three of the top up Jean Louis Charlotte, Central, Italy, Colombia, Peru, Sugihara, well Mckenzie County, UGG juncture, Tutuola, sensory Colombia, Peru, Don Zimmer.

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Speaker Change: Sure Felicia Gundam hygiene, which isn't a huge solar in Italy.

Speaker Change: Hello, not only for the Kochi Sergio ball Windows centric shovel.

Speaker Change: So as soon as you're all sitting here at home they approached it sounds as Rajeev, you sort who aren't renter.

Speaker Change: Meanwhile, in tune with the changing seasons and our ongoing exploration of natural deep sleep, we officially launched the deep sleep thermo regulating comfort of pro winter season.

Speaker Change: Other breakthrough in our comfort or product line following our best selling deep sleep lightweight comforter and deep sleep thermal regulating comforter pro all season.

Speaker Change: The winter comforter adopt element of the deep sleep thermal regulating comfort of pros highly praised the design such as duo layer temperature control system colorless design and machine washable try a friendly materials.

Speaker Change: We are offering and they has the heat storage layer, providing improved breathability and extended heat preservation for a more comfortable and a cozier deep sleep experience during the cold winter.

Speaker Change: Notably the tour planet deep sleep thermal regulating comfort of pro series has accumulated sales of 200000 units since its launch.

Speaker Change: So essentially if I would put <unk> on time in the tangible there competition.

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Tom what we'll do on the phone GM photo book will likely only ocean chip, Yes, Joe Jones tissue that essentially you linked Hello Benjamin.

Speaker Change: Sure sure centrally tier.

Speaker Change: Our deep sleep conference transcended mere product showcase embodying, our deep understanding of sleep science and customer needs.

Speaker Change: We are confident that through relentless innovation and groundbreaking advancements a tour planet will continue to set benchmarks and the deep sleep segment, providing a natural and comfort about deep sleep experience to everyone.

Speaker Change: The issue for you.

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Speaker Change: Tell me, if I'm wrong, but I wonder what does energy uses holger dealer in Philadelphia, Yoshito geologically usual wyman, the Hershey until he or she thought each of our churches goes or the Serbian Sanjay <unk> shows a Virginia chumby vapor under the REIT. So you don't she is equal <unk> 500 <unk>.

Speaker Change: Yes.

Speaker Change: Please turn to slide 14 moving.

Moving to our membership business and channel development progress.

Speaker Change: Bolstered by our ongoing enhancement of our tourist membership program and overall member experience our membership base has expanded rapidly.

Speaker Change: As of the end of the third quarter, our registered individual members exceeded 83 million, marking a 53, 7% increase year over year.

Speaker Change: Meanwhile, despite the structural impacts of holiday travel demand our core C. R. S channel remained healthy and efficient accounting for 61% of total room nights sold during the third quarter.

Speaker Change: The contribution of our room nights sold to corporate members was 18.6% during the third quarter.

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Todd: So as you just heard you too. So you do use all year with a strong chance you don't bother you do for you on tissue the wrong call, Todd who you're in Shanghai.

Todd: Some people are getting harder you won't hold towards 100, each other so yes, Tricia you don't call you and talking to Hudson yards imagine Nuomi.

Speaker Change: Please turn to slide 15 next I'm pleased to share the progress we have made in developing our <unk> card membership ecosystem.

Speaker Change: We recently unified the membership systems and the points benefits of our hotels and our tour planet across various platforms for a seamless member experience.

Speaker Change: To enhance this integration we also revamped VR tour mini program to deliver a consistent experience for both hotel and retail members.

Speaker Change: As we move forward, we will continue to promote the synergistic growth of our hotel and retail businesses deepen the integration of our membership system and its operational pathways and optimize membership benefits.

Speaker Change: Ultimately, we aim to create a smooth consumption experience across diverse scenarios Bruce team member loyalty and reinforcing our brands competitive advantage there.

Speaker Change: It wasn't a hookup.

Speaker Change: Suddenly it all yesterday yesterday actually on the agenda <unk>.

Speaker Change: Last but not least a brief overview of her tours accomplishments across our ESG initiatives during the third quarter. Please turn to slide 16.

Speaker Change: So she didn't answer on that.

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Speaker Change: I don't know how to do chosen.

Speaker Change: Yeah.

Speaker Change: Is that dynamic spiritual oasis and gateway to human connection within our hotels. The bond book Library has evolved beyond a traditional library to become a platform for cultural communication and connection.

Speaker Change: We aim to advance this evolution integrating additional local cultural elements to transform each band book library into a cultural interaction space that uniquely reflects the character of the city.

Speaker Change: And she is doing since you don't know what would you tell you Dan that you bought so yeah, yeah, yeah, yeah yeah.

Speaker Change: So then in the Jordan.

Speaker Change: Women's homeowners or turbine oil have him to Tula.

Speaker Change: Shallow you should add to the auto <unk> targeting to Utah, and Michigan by the China.

Speaker Change: Generally, yes, that's showing volume, but over time sure Chris Hall at Hawaii Woodbury.

Yes.

Speaker Change: But those who do you see that going door to counter <unk> singled out of India to Cook Dolby and <unk> close would you ever what it's worth.

Julio: Hi, Julio closer towards.

Julio: Total digital inkjet.

Julio: To that end, we recently launched the Bam book Library, One city, one library initiatives with the first opening at the he and landline a tour a 4.0 hotel.

Julio: Through partnerships with renowned cultural brands, we've introduced a series of themed events such as book for book exchanges and the cultural salons using books as a medium to connect customers with the rich culture of she had to.

Julio: To date, a tour has established over 1500 bed bug libraries and more than 200 cities across China moving forward a tour players to expand this initiative to more cities fostering deeper connections among customers local communities and regional culture.

Julio: And contributing positively to cultural exchange and community engagement.

Julio: So <unk> would have found ways to address it.

So that I was involved with now I will turn the call over to our co CFO necessary, we can fund to discuss our financial results.

Speaker Change: Thank you hygiene now I would like to present, the company's financial performance for the third quarter of 2024.

Speaker Change: Please turn to slide 18 for the results presentation.

Speaker Change: Our net revenues for the third quarter of 2008, four grew by 46, 7% year over year, and five 7% quarter over quarter to RMB 1890 $9 million.

The year over year increase was driven by robust growth in the <unk> hotel and retail businesses.

The quarter over quarter increase was mainly attributable to an increase in revpar, which reached RMB 380 for the third quarter opportunities any four compared with RMB 350.

Speaker Change: <unk> 59 for the previous quarter.

Speaker Change: Revenues from our <unk> hotels for the third quarter of 284 were RMB $1117, 17, 9 million up by 51.0% year over year, and 14, 8% quarter over quarter.

Speaker Change: The year over year increase was primarily fueled by our ongoing hotel network expansion and the rapid growth of our supply chain business.

Speaker Change: The total number of <unk> hotels increased to 1500 <unk> four as of September 32000.

94 up by 39, 3% year over year.

Speaker Change: The quarter over quarter increase was mainly due to an increase in revpar revpar of our <unk> hotels was RMB 376 for the third quarter up 284, compared with RMB 355, or the <unk> culture.

Speaker Change: Revenue was contributed by all these hotels for the third quarter of 284 were RMB $190 million <unk>, reflecting a 24% year over year decline.

Speaker Change: Five 1% quarter over quarter increase.

Speaker Change: The year over year decline was primarily due to a decrease in the number of leased hotels.

Speaker Change: Results of our product mix optimization as well as a decree decrease in revpar.

Speaker Change: The quarter over quarter increase was driven by an increase in Revpar. Our leased hotels Revpar was RMB 527 for the third quarter of 294, compared with RMB 503 for the previous quarter.

Speaker Change: Revenues from our retail business for the third quarter of 284 were RMB $480 million, reflecting.

Speaker Change: 104% year over year increased 10, 6% quarter over quarter decline.

Speaker Change: Year over year increase was driven by widespread recognition of our retail brands.

Speaker Change: And back to product innovation and development as we successfully broadened our range of our product offerings.

Speaker Change: Over quarter decline was primarily attributable to the seasonality of our retail business.

Speaker Change: Revenues from others for the third quarter of 284, RMB 50 million up 26, 4% year over year and down five 4% quarter over quarter. The year over year increase was driven by our fast growing membership business.

Speaker Change: Now, let's move to costs and expenses, please turn to slide 19.

Speaker Change: Operating costs and expenses for the third quarter of 284 totaled RMB 1440, $2 million, including RMB 3 million share based compensation expenses compared with RMB 949.

Speaker Change: $959 million, including RMB 10 million in share based compensation expenses for the same period of 2024 or 283.

Speaker Change: Hotel operating costs for the third.

Quarter of 2024 increased by 42, 1% year over year, and 12, 9% quarter over quarter to RMB 876 million these increases.

Speaker Change: Primarily due to an increase in variable costs, such as supply chain costs associated with our ongoing hotel network expansion the <unk>.

Speaker Change: Gross margin of our hotel business was $36 zero percent for the third quarter of 294, compared with 39, 5% for the same periods of 2023 due to a decrease in revpar attributable to the high base effect in the same period of 2000.

Speaker Change: As well as an increased share of revenue generated by the lower margin supply chain business.

Speaker Change: Retail costs for the third quarter opt in at any four rose by 102, 3% year over year, and discrete and decreased by 14, 3% quarter over quarter to RMB $227 million.

Speaker Change: The year over year increase was associated with rapid growth of the rapid growth of our retail business.

Speaker Change: The gross margin of our retail business was 52, 7% for the third quarter up 10, 74, compared with 52, 3% for the same period of 2023.

Speaker Change: Now please turn to slide 20.

Speaker Change: Selling and marketing expenses for the third quarter of 284 were RMB 218 million compared with RMB $112 million for the same period of 293. This increase was mainly due to our enhanced investments in brand recognition and the effect and the expected.

Speaker Change: India effective development of online channels of Knight with the goals of our retail business.

Speaker Change: Selling and marketing expenses accounted for 11, 5% of net revenues for the third quarter of 2024, compared with eight 7% for the same period of 2023.

Speaker Change: General and administrative expenses for the third quarter of 204, RMB $82 million, including RMB 3 million share based compensation expenses, compared with RMB $79 million, including RMB 9 million share based compensation expenses.

Speaker Change: The same period of 2023.

Speaker Change: Excluding share based compensation expenses.

Speaker Change: The increase was primarily due to an increase in labor costs.

Speaker Change: General and administrative expenses, excluding share based compensation expenses accounted for four 2% of net revenue for the third quarter of 2024 compared with five 4% for the same period of 2023.

Speaker Change: Technology and development expenses for the third quarter of 284 were RMB 30 million compared with RMB 20 million for the same periods of 2023. This increase was mainly due to increased investment in technology systems and in fact structure to support our expanding hotel network.

Speaker Change: And retail business and improve the customer experience.

Speaker Change: Technology and development expenses accounted for one 6% of net revenue for both third quarters of 2024 in the same period of 2023.

Speaker Change: Now please turn to slide 21.

Speaker Change: Adjusted net income for the third quarter of 2024 was RMB $384 million, representing a 41, 2% increase year over year.

Speaker Change: The adjusted net profit margin for the third quarter of 2024 was 22% representing a decrease of <unk> eight percentage points year over year.

Speaker Change: Adjusted EBITDA for the third quarter of 2024 was RMB $532 million up by 40% year over year.

Speaker Change: Within adjusted EBITDA margin of 28.0%, which decreased one four percentage points year over year.

Speaker Change: The decreases in both margins were primarily due to a decline in revpar and an increase the revenue contribution from lower margin supply chain business, along with organic growth in selling and marketing expenses, Amit our retail business.

Extension.

Speaker Change: Please turn to slide 22, and 'twenty three.

Speaker Change: Operating cash inflow for the third quarter of 2024 was RMB 333 million investing cash outflow for the third quarter of 2010.

Speaker Change: Q4 was RMB 570 to 72 million financing cash outflow for the third quarter of <unk> 94 was RMB $471 million.

Speaker Change: We also made we also maintained a healthy cash position with stable growth momentum.

Speaker Change: As of September 32024, our cash and cash equivalents totaled RMB 2000, 741 million with net cash.

Speaker Change: With net cash of across mightily, RMB 2640 $9 million.

Speaker Change: Now please turn to slide 24.

Speaker Change: For the full year of 2024, we currently expect that the company's total net revenue to increase by 48% to 52% compared with full year 2023.

That concludes our financial highlights for the third quarter of 2019 for now let's open for Q&A.

Speaker Change: Thank you we will now begin.

Speaker Change: The question guys.

Speaker Change: If you would like to ask a question. Please press star one.

Speaker Change: Yes.

Speaker Change: If you're a large consumer reports.

Speaker Change: Okay.

Speaker Change: Looking for.

Speaker Change: All participants on today's call. If you raised your question in Chinese please.

Speaker Change: Repeat your question please.

Speaker Change: Immediate questions two months ahead of time.

Speaker Change: Again, we still have follow up questions. Please please join the queue.

Speaker Change: Our first question comes from the line.

Speaker Change: Please go ahead.

Speaker Change:

Speaker Change: So if you want to wait and see.

Speaker Change: Well, the <unk> Kwon musical Ralph part of our call.

Speaker Change: Oh, it was high teens.

Speaker Change: <unk> two ralph product be upset.

Speaker Change: Yes.

Speaker Change: Hi, Ralph how that helps this is yeah.

I have just a constant earnings Simeon Shannon there Ralph.

Speaker Change: Shannon.

Speaker Change: And then that's how Wuxi CFO <unk> Yoshida.

Speaker Change: Okay.

Speaker Change: Let me translate my question.

Speaker Change: And Chris.

Speaker Change: Thank you very much for taking my question management could you provide more color on the third quarter to two four and also October Ralph top performances.

Speaker Change: Also could you advise on the rough guidance for Joseph Paul would there be any change to their full year revenue growth guidance as well. Thank you very much.

Speaker Change: Oh, no no overlap with any of the windshield.

Speaker Change: Let me answer your question Rod.

Speaker Change: Tablet <unk>, China showed our screen issue.

Speaker Change: Cause issue legal in.

Speaker Change: So we opened the email after the title Mackenzie, Idaho, the Indian each on a carrier <unk> surgical use with the area should we opened much of the revpar calculation European share towards Idaho, Walnut plentiful and eager to other Eagle <unk>.

Speaker Change: When we split the <unk> revpar into details we can find that it was influenced by not just the high base from last summer, but also from a multiple factors, including the two typhoons. We faced in September the multiple new hotels that got opened near the end of the month and that.

Speaker Change: The public holidays were rearranged. So those were the main reasons for September revpar performance to be under pressure and impeding the overall <unk> performance.

Speaker Change: Ball Macondo Gulf issue that took a show in tertiary Elisha you wanted Ashish <unk>.

Speaker Change: She started a CDN showed our children the treater, Indeed, dunja diet on the OTC <unk> issue Youll Sortition Columbia.

Speaker Change: Colombia Aloha is there any way you think of Yodlee, rather charcoal Shenzhen <unk> show China negotiation.

Speaker Change: However, we do see that the high base effect has eased since October, especially during the National day holiday.

Speaker Change: We saw the traffic growth driven by leisure travel has led to an increase in OCC year over year. Although there are still some pressure on prices, but the decline in revpar has shown a narrowing track.

Speaker Change: So each and the Revpar that you grew up in a total knee into the engine.

Speaker Change: Children are upheld and attributes for that which anything though.

Speaker Change: Uhm withdrew OCC that even higher.

Speaker Change: Do we hear talking to show either.

Speaker Change: <unk> no more annuity change in Revpar, Toby Nangle shutdown, Tom about coal co issue.

Speaker Change: And as for the full year Revpar forecast well due to the influence of multiple factors. We believe there are still uncertainties, we will prioritize stabilizing our OCC and capture the core revenue opportunities ahead of us the full year Revpar is expected to decline by.

Speaker Change: A mid to high single digit year on year.

Speaker Change: So it <unk>, England, Rob how many important mile.

Speaker Change: Quite a few quarters under one law firm accounting Thunder <unk> boundaries, which are part of that material.

Eagle showroom.

Speaker Change: Energy.

Speaker Change: For our financial outlook, although our revpar faces some volatility, but thanks to our rapidly expanding our hotel network and our strong retail growth, we maintain our previous revenue guidance of growth for 48% to 52%.

Speaker Change: Thank you.

Speaker Change: Thank you Ronald next question. Please thank you.

Next question.

Speaker Change: Next question comes from Chris <unk> from CIBC. Please go ahead.

Speaker Change:

Speaker Change: And of course it tells.

Speaker Change: You know what you're doing now with the one who's using annualized Oh Wow.

Speaker Change: Look I didn't quiet Yahoo opinions about that.

Speaker Change: So Asia has you worried that hotels that are in line.

Or are you about shiga toxin, that's it's just not going to let those aqua culture issue that I did go revpar. The SGR I'll quickly take a whole suite of Teva to say, it's all so congrats on another strong quarter. My question is since this year, we have achieved rapid hotel opening where we maintain 400 hotel opening guidance I'll adjust again.

Speaker Change: And the new finance hours, though strong considering the revpar decline led by high base that supply growth will there be any changes any new finding momentum going forward. Thank you.

Speaker Change: Although current yesterday.

Speaker Change: <unk>.

Speaker Change: The wafer level towards autonomous shuttle.

Speaker Change: Thank you for your question, so Jay well this year, our overall rhythm of new openings in our new signings at both maintained quite good momentum.

Speaker Change: Hi, Amit <unk> junior is returning to the digital future even kind of <unk> yeah.

Speaker Change: Hello Omar.

Speaker Change: <unk>.

Speaker Change: <unk>, rather have somebody else will.

Speaker Change: She is biogen, yes sure.

Speaker Change: Your bill.

Speaker Change: Savannah.

Speaker Change: So I would predict.

Speaker Change: As for new openings. This year, we have some positive trends, which got continued in our third quarter.

Speaker Change: With a total of 140, new openings and that once again broke our quarterly record. So so far this year. We have opened 360 hotels and we are confident enough to raise our full year new openings guidance from the original 400 to 450.

Speaker Change: Yes.

Speaker Change:

Speaker Change: If I may ask.

Speaker Change: <unk> is a volatile.

Speaker Change: Average amongst the schedule you each of them for you.

Speaker Change: No matter, what if I mean, John Mcdonagh total year it can be done.

Speaker Change: Sure.

Speaker Change: Ladies and gentlemen on the.

Speaker Change: Traveller biannual Moshe.

Speaker Change: You cannot German continental decision.

So to document even.

Speaker Change: In terms of new signings, although our revpar has fluctuated, but the franchising demand is still very active with franchisees to invest in real estate in very strong in the third quarter to repurchase rate, our franchisees exceeded 50% and this number reflect it.

Is there sufficient confidence and the recognition of our eye toward brand.

Speaker Change: We have put on the charter the ship channel.

Speaker Change: Tobacco.

Speaker Change: I'm going to build through social media.

Speaker Change: Jonathan.

Speaker Change: Now.

Speaker Change: <unk> launched a woman nausea.

Speaker Change: <unk> hundred from Luna was anti dumping a modest mamounia venture, yes, John.

Speaker Change: Donna.

Speaker Change: Meanwhile, we will also strengthen our control over the quality of our new signings.

Speaker Change: We're gonna be selecting the contracted property conditions with stricter standards. Despite our accelerated new openings. This year, we still have a very sufficient reserve in our pipeline of hotels to steadily carryforward, our strategy of 2000 Premier hotels by next year.

Speaker Change: Okay. Thank you.

Speaker Change: Thank you next question. Please next question comes from the line, Okay Chi from Morgan Stanley. Please go ahead.

Okay Chi: Hi, Nathan.

Speaker Change: I'll go with you on that Youll able to sit down with the physicians to get them.

Jonathan: Sure Jonathan.

Jonathan: So I think that should get to a place for particular Golden I saw how Julien that's how you want them yet.

Jonathan: But she is alisha.

Jonathan: Sure.

Jonathan: Okay.

Jonathan: Is that what he says.

Jonathan: Go ahead please.

Jonathan: That's a good or bad in watching the highly cause the ECL play politics.

Jonathan: Anyway, good juices John's Goodson.

Speaker Change: Sure Glenn.

Speaker Change: Karl will be lighter weight classes.

Speaker Change: This is down from almost any we noticed the company recently launched an upscale brand Asahi.

Speaker Change: On the new breakthrough can you share more details on the unit economics of sorry.

Speaker Change: Target ADR Revpar capex.

Speaker Change: Typical payback et cetera.

Whats the management strategy on upscale segment, which is currently still small compared to the company's portfolio. Thank you.

Speaker Change: Although not hit that Avalanche ethane.

Speaker Change: Regardless of the call.

Speaker Change: Ghansham validate our time on regardless of additional losses from that.

Speaker Change: You go to him the mandate.

Speaker Change: Yeah sure sure Sandy.

Speaker Change: You mean higher for Gamestop.

Speaker Change: Yes.

Speaker Change: Hana no.

Speaker Change: No.

Speaker Change: Energy <unk> Mayo Syngenta Youll see here.

Speaker Change: Georgia.

Speaker Change: No you bet.

Speaker Change: What led to the Doctor.

Speaker Change: Towards North project.

Speaker Change: <unk>.

Speaker Change: On the shelf.

Speaker Change: No.

Speaker Change: The Yahoo.

Speaker Change: <unk> E <unk> mirrored what hurt us comparator <unk>.

Speaker Change: No.

Jimmy: Sure Jimmy.

Jimmy: Hello Julien.

Speaker Change: <unk> what are you building up within him either chief.

Speaker Change: Nonetheless, a moment Tom Walsh.

Speaker Change: Oh, you're talking about.

Speaker Change: As we go forward.

Speaker Change: Within this total Sheila Murray.

Speaker Change: Thank you Dan.

Speaker Change: Let me address your question on the high end market rankings first.

Speaker Change: Nowadays, we see traditional upscale hotels are facing many structural challenges such as they are relatively aged facilities outdated product design and a stagnant services as many of those as we see in the market have a history of more than 10 years and in order to control.

Speaker Change: The cost they've got increasingly prominent operational pressure not only that undermines the confidence of investors, but also leads to many.

Speaker Change: Of those hotels compromising our service quality and that further affected their consumer experiences.

Speaker Change: We believe that the meaning of upscale brand lies in its unique brand value and deep understanding of user experiences. So our subsidiary are soccer, our hotel is position as a premium and hotel with selected services, we expect it to benchmark international standardized.

Speaker Change: Five star brands and on top of that basis, whether its inner core of Chinese experience and it's Oriental Serenity brand style. We believe it can inject new vitality into the upscale hotel market in China.

Speaker Change:

Speaker Change: Yes.

Speaker Change: Jody will revert on inquired over it.

Speaker Change: How are you going to shore tankage will either hidden she payback negotiated on the tender.

Speaker Change: <unk> hernia EMEA children, Modi gourmet and a 300 or so unfortunately, no assumption of Israel woman with Ginger.

Speaker Change: Chita <unk> Gander, Gordon, who will give a shot.

Speaker Change: No.

Speaker Change: Well, many of whom are higher sooner.

Speaker Change: Yes, sure sure Yamagata earthquake <unk>, so it wasn't too.

Speaker Change: Through Amazon.

Speaker Change: Okay.

Speaker Change: And as we all know upscale hotel market is not a segment for some short or fast speculations.

Speaker Change: But our market, which requires a long term mentality from us to grow alongside it.

Speaker Change: Lay out strategy of our first batch of soccer, our hotels will accurately anchor to the very essential core business districts in 11 major cities in China and to create a number of benchmark projects with priorities on quality.

Speaker Change: Therefore for us.

Speaker Change: Number of openings will not be our primary objective of developing the upscale hotel market, but the brand and a quality those are the things that really matter.

What I put only to a point, where you're spending more in the <unk>.

Speaker Change: Well, maybe you see the changzhou the esophageal again, Rob Panama Belmont should that will that will shoot our new balance sheet questions.

Speaker Change: No I apologize I should even go to court injunction he doesn't want to shop, we'll Miss you on bulk tanker and a soldier conscious <unk>.

Number one we can look at the digital more qualified to assure the hurricanes here going into 2014 on cobalt and some will go through the pinching puncture.

Speaker Change: Well, if you come to <unk>, the majority of that kind of on a massage, although you've got a total of about <unk> <unk>, so that Aegean North Dakota shop, So essentially you got any.

Speaker Change: And let me try to add some on the single hotel financial model.

Speaker Change: In terms of it suffers single hotel financial model, we expect our mature soccer hotel to have a revpar target in between 550 to 650, RMB. Meanwhile, with the breakthrough of design style and upgrade of soft and hard installations.

Speaker Change: Cost of a single room shall be controlled around 200000 RMB.

Using a large proportion of modular design and define supply chain management, we could not only ensure the quality of the project delivery, but also to effectively control costs in a project progress.

Speaker Change: The return on investment period, including renovation period for soccer is expected to be four one years, which is expected to lead the upscale hotel market.

Speaker Change: Thank you Dan next question please.

Speaker Change: Thank you next question comes from the loyalty of Citi. Please go ahead.

Speaker Change: Oh, Oh, Oh, yes.

Speaker Change: No. It didn't I don't think he said the main goal.

Speaker Change: How about <unk>, our novel things done you've got good.

Speaker Change: <unk> seen them with you Nick can you talk about with you okay.

Speaker Change: Key Rama <unk>.

Speaker Change: Glenda do the cutting edge.

Speaker Change: Yes, no more novel Joshi swap you guys had happened that day.

Speaker Change: And I think the blender rep had equal an opinion synthetic.

Speaker Change: Hi management on media from CD, So I won't be far off the questions on the actual footprint.

Speaker Change: Unlike the three points.

Speaker Change: Actually I like the latest defining moment and also that your opening plans with these two products and particularly light therefore that mid and ran the Ottawa light points you get in that.

Speaker Change: Like driving mix also could be a downward pressure.

Speaker Change: Revpar next year. Thank you.

Speaker Change: Oh <unk>.

Speaker Change: Yeah, listen and entered into Asia, which one we can calculate.

Speaker Change: Casualty was up nominally a nano followed by industrial downturn, which our sugar cane.

Speaker Change: And with him on Macondo neighborhood Traveller Lucia Memorial We initially got Honeywell, Santa Anita you guys.

Speaker Change: And then one of your stronger shoulders without entering Keybanc annuity assumption thats yet.

Speaker Change: Sorry in maintaining a towards ensuring determine the chunky Tina <unk> you should be able to do that so each one is a merchant silicon interchangeably are essentially full circle to the heat pneumoniae chunky incident Inca in here.

Speaker Change: <unk>, China industrial and <unk>.

Speaker Change: Thanks Lydia.

Speaker Change: Our progress toward a 4.0 has been good all along with six stores in operation now and expect it to exceed 10 within this year as of now we have more than 60 at 4.0 Amman, our pipeline of hotels.

Speaker Change: <unk> 4.0 is a very forward looking products, we hope to provide business travelers with an experience of relaxation and a 12.0 hotels in operation also achieved outstanding performance through experience upgrade and product innovation. Therefore.

Speaker Change: Their overall performance aligns with our expectations and we believe that that those are 12, four zeros concise and the natural style will have a longer product lifecycle.

Speaker Change: By appointing <unk> woman Santee do the changes substantially above that.

Speaker Change: The tonnage hauled a woman chunky changed the button, Joshua <unk> carrier that understand and ensure that all the tissue do without.

Speaker Change: <unk> told us without Shire pathogen on Xiaomi, Iot <unk> Golar tundra contingent on any account, which you should actually two pool now you see it on the empty continued changes and any other financial Dr. John <unk> backdrop.

Speaker Change: As for our tour <unk> 3.0 hotels 38 were signed in this quarter in the third quarter, having continuing to account for more than 20% of total new signings.

Speaker Change: As of September 30, the number of mature life three zero of hotels in operation reached 76.

Speaker Change: Based on our differentiated product power and profound insight into multiple customer types in the Medicare market.

We will carry forward to the breakthroughs such worldwide 3.0. It is expected that by the end of this year the number of <unk> 3.0 in on.

Speaker Change: <unk> will exceed 100.

Speaker Change #100: Got my question to wrap up I mean, it wouldn't be I think one even familiar up how we should all tightened central to acquire <unk> <unk> syndrome, <unk>, Julien <unk> easily double ammonia with wholesale from Goldman time efficiency.

Speaker Change #100: In the <unk>.

Speaker Change #101: Sure TJ will be champions in Germany, sushi lateral repartee between economy buttoned up.

Speaker Change #101: As for your concern the Revpar, although our group Revpar will be affected by structural factors such as accelerated new openings high proportion of new hotels, Canada gradually increasing proportion of our lives.

We will continue to upgrade our products and our hotel renovation program to continuously improve product competitiveness and drive healthy growth of Revpar.

Speaker Change #102: Can you send an immediate while Mr. Ziad, <unk> RF and <unk> number one the TCE in country <unk> I don't know who they.

Speaker Change #102: Just a quick touch issue once enrollment changes done in the morning.

Speaker Change #103: Hope that I can help you that wholesale.

Chairman Chang Pal I can assure you, though when we bought <unk> in Germany now material woman, who is a sofa to ship without their hard shops should ensure that we don't <unk>. It was for sure. The mobile me, if we don't see huge Suzhou Chongqing Chengdu Chongqing image.

Speaker Change #104: But there'll be a hollow tubes in the future.

Speaker Change #105: Taking a tour of <unk> 3.0, as an example, since its launch in February last year, we have been continuously improving its model based upon our operating status and user feedback not just bringing better experience to users, but also sustainable and stable returns to franchisees with that we consolidated that.

Speaker Change #105: Product competitiveness in the Midscale market.

Speaker Change #105: We believe that it is necessary to normalized product updates iterations at this time when consumer trends are constantly changing so we will continue to focus on product innovation to meet users.

Speaker Change #105: Constantly changing needs for accommodation visit.

Speaker Change #106: Thank you. Thank you Lydia next question please.

Speaker Change #107: Thank you next question so goodbye.

Speaker Change #108: From UBS. Please go ahead.

Speaker Change #108: Okay.

Speaker Change #108: Oh, Hey, Bill once.

Speaker Change #108: Again.

Speaker Change #108: Okay. Thank you Glenda.

Speaker Change #108: Sure.

Speaker Change #108: Thanks, Alex.

Speaker Change #108: Thank you David.

Speaker Change #108: Alright gotcha.

Speaker Change #108: Yes.

Yes.

Speaker Change #108: Charger initiatives.

Speaker Change #108: Millions of Greene, Washington.

Speaker Change #108: This exchange here from UBS.

Speaker Change #108: Two questions.

Speaker Change #108: First question is that we have seen an increase in hotel because I'm sure. This year would you mind just sharing your index to EXL.

Speaker Change #108: The sector continues to win.

Speaker Change #108: For these two hotels also decreased.

Speaker Change #109: No the reason.

Speaker Change #109: Okay.

Speaker Change #109: Our citizens.

Speaker Change #109: Energy <unk> essential key gap, the Martinez is on PD and Assurant with Palo Alto.

J J sort of answer to you on the three different syn <unk> dose with us.

Speaker Change #109: No woman She's also GDT only other interest in the Gulf of <unk> in <unk> syndrome, <unk>, Yeah, well go ahead, Jeff.

Speaker Change #110: No more but judging from what Jon negotiation adhesion Patriot <unk> hundred 90, <unk> shoot adhesion.

Speaker Change #109: Minions, which they flow.

<unk>.

Speaker Change #111: Yeah. So we're looking hard at tissue on Dominion downturn in China, and we'll be able to ship.

Speaker Change #111: Changing regarding our closures a total of 37 hotels were closed in the first three quarters of this year and our full year closures are expected to reach around 50. This decision is based on intensive evaluations of the property quality and operational performance of our groups hotels.

Speaker Change #111: And operation.

Speaker Change #111: We are always committed to providing consistent high quality of tour services. So for those hotels that still do not meet expectations. Even after a rectification we will terminate the contract. According to agreed the terms we believe that through this screening mechanism we can ensure that.

Speaker Change #111: This improvement of the overall quality of our hotels, we will maintain a similar pace of closures next year and this position shall be helpful to achieve our strategic goal of 2000 Premier hotels by next year.

Speaker Change #112: Reaching the end of on a woman in the RT two incentive do not you won't see all of Dr. Jean can shop, She's only done machine with I don't know teacher hope woman couldn't year to you all here, Sean George Hello, gentlemen.

Speaker Change #113: No what we let a woman to within one quarter or how should we think the shutdown will Moshe we too. Thanks.

Speaker Change #113: While the Neogen Gander Syndicate Teapot, well no hidden agenda in total DAU teacher and continue to teach out of our colleague <unk> Hershey and Shanghai Tang Wei don't neutral adjusting <unk> <unk> for the torture hurdle.

Speaker Change #113: Termination of leased hotels, while in the second and the third quarter of this year. The total number of leased hotels was reduced by two four the one hotel among them, we had smooth communication with the owner after the expiration of previous leasing contracts and converted the hotel into a tour.

Speaker Change #113: Hotels.

Speaker Change #113: The future our hotel network expansion will still mainly be in the form of asset light franchise model with no plans to open at least the hotels for the time being we will negotiate with the owner of leased hotels before their contracts expire taking into account the branded display location within.

Speaker Change #113: The core business districts and other factors to decide whether to renew or to terminate our cooperation with them.

Speaker Change #114: Thank you. Thank you next question please.

Speaker Change #115: Thank you and our next question comes Joe Goodbye.

Speaker Change #115: <unk> from Citi. Please go ahead.

Speaker Change #115: Okay.

Speaker Change #115: Alright.

Speaker Change #115: Well it sounds good.

Speaker Change #115: So for me in April.

Yeah.

Speaker Change #115: Sure Burnley.

In other words, if I'm quite well no headroom Diamondback database.

Speaker Change #117: So yes.

Speaker Change #118: Got it.

Speaker Change #117: Yeah, I guess I'd answer.

Speaker Change #117: Yeah Yeah.

Speaker Change #117: They always had plenty tongue well mentioned is that something that you can take <unk>.

Speaker Change #119: All core Jacob.

Speaker Change #120: European Union So Julien.

Speaker Change #120: Sure Yeah.

Speaker Change #120: I'll translate my question regarding retail.

Speaker Change #120: Although the company recently conducted a toward HCV product launch culprits, indicating the company's strategic plan for the retail segment.

Speaker Change #120: How the management per se with growth potential and category plenty of that retail business. What are the revenue projections for next year. Thanks.

Speaker Change #121: Our tier two or whatever it is.

No mobile mirrors tissue inventory to encountering in the project push as usual so, especially on the view on <unk> based on one quarter, you got Thunder Macomb gender.

Speaker Change #121: Oh on the auto since you only have to work culture seat on the exchange rate change.

<unk> has a socially upstream industry Shaw insulin what kind of opinion, while net initial yield of year's EPS in the Eagle repeat come down yet.

Paul Unfortunately centric Gen will continue that pace of PMA gaucher totally equal, it's really going to pour a cultural change in our stance at baseline.

Speaker Change #121: Remaining either comparing journey issue tissues tissue.

Thank you <unk>, let me address your questions.

As for our prospects and retail business, we believe that people have critical demand for healthy sleep and that prices for a massive sleep economy market and this has great room for growth with a tour planet, we leverage our scientific and systematic deep sleep solutions and that help us too.

Speaker Change #121: Accurately meet consumers' needs for healthy and comfortable sleep. Therefore, we can see this year, we have the highlighted retail performance apart from our deep sleep pillar being an absolute hard sale. Our quilts also made significant breakthroughs. This year, we efficiently launched three new quotes.

Speaker Change #121: <unk> to elevate our brand influence in the sleep economy.

Speaker Change #121: Okay later, colleena enrollment that essentially publicly have saw $10 associated.

Speaker Change #122: Well I won't hazard, which issued a <unk> country entity, you've been shooting towards streaming E countrymen.

Speaker Change #122: Not only that one that you should or can they put on a social total food grade alcohol. Finally go self insured.

Speaker Change #122: As we advocate our concept of natural deep sleep in the deep sleep conference.

Speaker Change #122: In the future, we will focus on and deepen the field of sleep continue to expand the sleep in a past sleep categories and we will continue to deepen our advantage categories to cover a wider range of consumer groups.

Speaker Change #123: That's why your shoulder Gilles will then wages in yen Toby fanbase, Toby Trinian ton payloads and good initial shoulder GE.

Speaker Change #123: Three many of the things you touched upon a multilingual EMEA towards <unk> hundred <unk>.

Speaker Change #123: So you mentioned <unk>.

Speaker Change #123: Colombia trigger metrology downtrend in actual michelle's enrolment ensure than Hong Kong, and Tokyo twofold year would at home.

Speaker Change #123: Sure.

Speaker Change #124: What are you guys getting counted on that.

Speaker Change #124: And as for revenue forecast for this year, we maintain our previous guidance of doubling year on year and as for next year's growth forecast. We are now still in progress of making our annual budget and for the accident year. So generally speaking our retail business will continue to contribute.

Speaker Change #124: With a year over year growth faster than our hotel business in the near term to achieve normalized healthy growth.

Speaker Change #125: Thank you.

Speaker Change #126: Thank you for joining us.

Do you have any further questions. Please feel free to contact our IR team. We look forward to speaking with you again next quarter, Thank you and goodbye.

Speaker Change #126: Okay.