NEWS WRAP: Atour’s revenue grows 30% on strong gains for retail business

The hotel operator’s retail business grew 67% in the first quarter, and now accounts for more than a third of its revenue

By Doug Young

Atour Lifestyle Holdings Ltd. (ATAT.US) on Thursday reported strong revenue growth in the first quarter, as new hotel openings and strong gains for its retail business offset weakness in its core hotel business during China’s economic slowdown.

The hotel operator reported revenue of 1.91 billion yuan ($265 million) for the first three months of the year, up 29.8% from 1.47 billion yuan a year earlier, according to its latest quarterly report. The company said it expects to report similar growth in the current quarter, forecasting revenue growth of 25% to 30% for the three months to June.

Revenue from its hotel business rose 16% year-on-year to 1.16 billion yuan in the first quarter, accounting for 61% of its total. Its retail business, which allows customers to buy products they see in their rooms, such as pillows and other bedding, rose by a much faster 67% year-on-year to 694 million yuan. That lifted its retail business to 36% of total revenue, up from 28% a year earlier.

The company opened a net 108 new hotels during the quarter, raising its total by 6.7% to 1,727 at the end of March. Its average occupancy rate dropped to 70.2% from 73.3% a year earlier, while its average nightly room price dropped to 417.9 yuan from 430 yuan over that period. As a result, its revenue per available room (revpar), an industry metric that combines room occupancy rates and prices, fell 7.2% to 304.4 yuan in the first quarter from 327.9 yuan a year earlier.

The company’s net income for the quarter fell 5.5% year-on-year to 244 million yuan, though its adjusted net income rose 32.3% to 345 million yuan.

“In the first quarter of 2025, China’s domestic travel market experienced fluctuations amid a complex and volatile macro environment with numerous uncertainties presenting both challenges and opportunities,” Chairman and CEO Wang Haijun said on the company’s earnings call. “Entering the second quarter, we observed continued divergence in market demand. While there was some recovery in business travel, it remained quite uncertain to some extent. Leisure travel demand has demonstrated some notable resilience.”

Atour’s stock rose 8.9% to close at $32.86 on Thursday after the release of its latest announcement. The shares are up 24% this year and trade at a price-to-earnings (P/E) multiple of 26, similar to the 25 for domestic rival H World Group (HTHT.US; 1179.HK) and ahead of the 20 for France’s Accor (AC.PA), operator of the Sofitel and Ibis hotel brands.

Chinese hotel operators have faced growing headwinds from the country’s economic slowdown, which is dampening demand for travel. Operators of more budget-friendly brands, like H World’s Hanting chain, are generally faring better than names like Atour, which focuses on the middle to upper end of the market.

To subscribe to Bamboo Works weekly free newsletter, click here