Atour Lifestyle Holdings(ATAT 5.93%) reported earnings on August 26, 2025, posting net revenues of RMB2,469 million, up 37.4% year-over-year and adjusted net income of RMB428 million, up 30.2% year-over-year. Management raised full-year net revenue growth guidance to 30%, while separately increasing retail business growth expectations to 60% year-over-year. Key insights highlight robust hotel network expansion, surging retail segment performance, and a recalibrated profitability outlook driven by earnings mix and tax rate evolution.

Atour accelerates hotel network expansion

In the first six months of 2025, Atour opened 239 new hotels, ending the second quarter with 1,824 in operation and a 29.2% YoY increase, supported by a substantial pipeline of 816 hotels as of quarter-end. Mature hotel metrics, including revenue per available room (RevPAR), occupancy rate (OCC), and average daily rate (ADR), remained resilient at 94.4%, 96.5%, and 97.8% of 2024 levels, respectively, despite market volatility in China's travel sector.

"By the end of the second quarter, we had a total of 1,824 hotels in operation, representing a 29.2% year-over-year increase. Meanwhile, leveraging our solid brand momentum and continuously enhanced product strength, we have been gradually building differentiated competitive edges with multiple brands and product lines that precisely target various market segments. We offer franchisees a rich and diverse range of investment options. By the end of the second quarter, the number of hotels under development reached 816. The growth of high-quality pipeline projects is viewing strong momentum toward our strategic goal of 2,000 premier hotels."
-- Haijun Wang, Founder, Chairman and CEO

This scale-driven expansion, underpinned by disciplined brand differentiation and robust franchise interest, demonstrates Atour's ability to capture share and create a defensible pipeline in China’s fragmented hotel market, reflecting both strong operator reputation and systematic execution.

Retail segment propels Atour revenue mix shift

Atour's retail business achieved gross merchandise value (GMV) growth of 84.6% year-over-year to RMB1,144 million, with retail revenue accounting for around 38% of total revenues in the first half, up from around 29% last year, and maintaining GMV online channel penetration above 90%. Category innovation and flagship product launches, notably Deep Sleep Memory Foam Pillow Pro 3.0 and Thermal Regulating Comforter Pro 2.0, have driven AtourPlanet to leadership positions on major e-commerce platforms.

"Fueled by ongoing strong sales of new products and the momentum from promotional campaigns, our retail business maintained robust growth this quarter with GMV rising 84.6% year over year to RMB1,144 million. Online channels continued to account for over 90% of total GMV. Our retail GMV set a new sales record during the June 18 shopping festival reaching RMB578 million, up more than 86% from the same period last year. During this promotional campaign, AtourPlanet ranked first in terms of sales in the bedding category for the first time on major third-party platforms. This breakthrough signifies that AtourPlanet's deep sleep solutions brand positioning has further consolidated consumer mindshare."
-- Haijun Wang, Founder, Chairman and CEO

The transformation of the revenue mix towards higher-margin, branded sleep retail not only boosts overall growth, but also signals a successful brand adjacency expansion unlocking multi-channel consumer monetization beyond the core hospitality base.

Profit margins recalibrated as revenue growth diversifies

Adjusted EBITDA rose 37.7% year-over-year to RMB610 million, while adjusted net profit margin declined 0.9 percentage points year-over-year to 17.3%, as the retail revenue mix grew and withholding taxes raised the adjusted comprehensive tax rate to 30%, compared to 25% last year. Full-year adjusted net profit margin is now expected to decline year-over-year amid ongoing cash return initiatives and increased tax exposure due to dividend and repurchase programs funded by domestic subsidiary net profits.

"In the first half of the year, retail revenue accounted for around 38% of the total, up from around 29% last year. The contribution from retail revenue continues to increase. It is exerting a structural impact on our overall net profit margin, but we have maintained a relatively stable pretax profit margin through improved management efficiency. Meanwhile, as we have officially launched a comprehensive shareholder return program combining dividend and share repurchases this year, of which the funding source comes from our net income profit distribution of our domestic subsidiaries. Accordingly, the associated withholding tax will increase our overall effective tax rate this year. The adjusted comprehensive tax rate is expected to rise to 30% this year compared to last year's 25%. That will to some extent affect our full year net profit margin. As a result, we anticipate a year-on-year decline in full year net profit margin."
-- Haijun Wang, Founder, Chairman and CEO

While pretax profitability and cash generation remain strong, the evolving business mix and tax-related impacts require investors to recalibrate longer-term earnings expectations, particularly as return-of-capital strategies amplify effective tax headwinds.

Looking ahead

Management raised full-year net revenue growth guidance to 30% compared to 2024, with retail business growth guidance set at 60% YoY. The company reaffirmed its target of operating 2,000 premier hotels by year-end, with 500 new openings planned, and projected 70 to 80 closures for the year to maintain quality standards. No explicit new RevPAR or margin guidance was provided for the remainder of the year.