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Atour Lifestyle Holdings Ltd
NASDAQ:ATAT

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Atour Lifestyle Holdings Ltd
NASDAQ:ATAT
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Earnings Call Analysis

Q2-2024 Analysis
Atour Lifestyle Holdings Ltd

Robust Revenue Growth and Strategic Expansion

In Q2 2024, Atour Lifestyle Holdings saw its net revenue grow by 64.5% year-over-year to RMB 1.8 billion, driven by strong performance in its manachised hotel and retail businesses. RevPAR improved by 9.5% from the previous quarter, reaching RMB 359. The company maintained vigorous momentum in hotel network expansion with 123 new hotel openings, setting a quarterly record. Retail business revenue surged by 156% year-over-year to RMB 537 million. For the full year 2024, Atour expects net revenue growth between 48% and 52% and plans to increase its annual hotel opening target from 360 to 400. Additionally, a three-year annual dividend policy was announced, with plans to distribute at least 50% of net income annually.

A Year of Accelerated Growth

Atour Lifestyle Holdings has witnessed remarkable growth during the second quarter of 2024, marked by a 64.5% year-over-year increase in net revenue, reaching RMB 1,797 million. This growth is buoyed by the robust performance of their manachised hotel operations and a significant expansion in their retail business, which saw revenues up 156% year-over-year. The company continues to benefit from the resurgence of domestic travel and evolving consumer preferences, aligning its offerings with current trends.

Performance Highlights in Hospitality Operations

Key metrics such as Revenue Per Available Room (RevPAR) achieved RMB 359 this quarter, a solid indicator of performance recovery as it constitutes 93.5% of the same period last year. The same-hotel RevPAR grew 2.7 percentage points above the group's overall performance, showcasing the resilience of their established hotels in a competitive market. The company operates a total of 1,412 hotels, following the opening of 123 new locations, reflecting a 37% year-over-year increase.

Cost Management and Margins Under Review

Despite strong revenue growth, operational costs rose significantly, with total operating costs of RMB 1,400 million, leading to adjusted net profit margin contraction to 18.2% from 22.8% year-over-year. This operational strain is primarily attributed to the increasing share of lower-margin revenue from their supply chain business and escalating selling and administrative costs. To combat this, Atour anticipates a focused approach on cost optimization without sacrificing service quality.

Strategic Focus on Retail Business

Atour's retail segment is experiencing exponential growth, accounting for RMB 537 million, driven significantly by innovative product launches, including their Deep Sleep thermal regulating comforter. The retail division's gross margin stood at 51%, showing healthy profitability and alignment with the consumer's growing interest in Sleep Quality products. The company foresees retail revenue doubling year-over-year for 2024, projectixng continued momentum in its core offerings.

Looking Ahead: Revenue and Dividends Guidance

For the full fiscal year 2024, Atour raised its revenue growth expectations to between 48% and 52%, increasing from a previous estimate of 40%. This upward revision signals strong confidence in sustained demand levels and ongoing expansion efforts across its hotel network and retail channels. Additionally, the company has established a three-year annual dividend policy, intending to distribute at least 50% of its net income, projected to signify a cash dividend of USD 0.15 per share, enhancing shareholder value amidst growth.

Commitment to Sustainable Growth

The company continues to engage in Environmental, Social, and Governance (ESG) initiatives, such as partnerships for biodiversity conservation. Atour's commitment to sustainability aligns with its business model, reinforcing brand loyalty among environmentally conscious consumers and enhancing its competitive edge in an increasingly eco-aware marketplace.

Earnings Call Transcript

Earnings Call Transcript
2024-Q2

from 0
Operator

Ladies and gentlemen, thank you for standing by, and welcome to Atour Lifestyle Holdings Second Quarter 2024 Earnings Conference Call. [Operator Instructions]

Today's conference is being recorded. At this time, I'd like to turn the conference over to Ms. Alison Zhang, Director of Investor Relations. Please go ahead, ma'am.

A
Alison Zhang
executive

Thank you, operator. Good morning, and good evening, everyone. Welcome to our Second Quarter 2024 Earnings Conference Call. Today, you will hear from our Founder, Chairman and CEO, Mr. Wang Haijun; and our Co-CFO, 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 certain non-GAAP financial measures solely for comparison purposes.

For a clear understanding of these measures and the 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 accessible on our website at ir.yaduo.com, where a copy of the results presentation is also available. Now I will turn the call over to Mr. Wang, our CEO.

H
Haijun Wang
executive

[Interpreted] Thank you, Alex. Hello, everyone, and thank you for joining Atour's Second Quarter '24 earnings call today. During the second quarter of 2024, domestic travel market demand remained steady with leisure tourism expanding its healthy upward trajectory alongside continuously evolving customer demand by proactively adapting to these shifting marketing shifting market dynamics, we further strengthened our leadership in the upper mid-scale hotel market.

We consistently elevated the Chinese experience in our accommodation business during the first half of the year to better address our customers' personalized, diverse and quality-driven expectations. Meanwhile, we adaptively capitalized on emerging opportunities presented by the latest wave of retail business development. We made substantial headway in propelling holistic high-quality growth across our business and brand portfolio while continuously deepening our insights into customer needs and amplifying our brand reputation.

Now I would like to provide more details on our performance for the second quarter of 2024. Let's begin with our hotel business. Please turn to Slide 4 of our second quarter 2024 results presentation. Our RevPAR reached RMB 359 in the second quarter of this year, representing 93.5% of its level in the same period of 2023.

Notably, our OCC growth remained solid, reaching 101.7% of 2023's level for the same period further underscoring towards resilient demand and strong brand influence. ADR was 92.8% of its level in the same period of 2023 largely due to last year's high comparison base effect. Please turn to Slide 5. Our mature hotels in operation for more than 18 months continued to outpace group's overall performance during the second quarter. Excluding structural impacts, such as the ramp-up of new hotels, same-hotel RevPAR in the second quarter of 2024 reached 96.2% of 2023's level for the same period, outperforming the group's blended performance by 2.7 percentage points. Specifically, OCC increased by 2.2 percentage points year-over-year and ADR stood at 94.4% of the same period in 2023.

Please turn to Slide 6. Our synergistic development of Atour and Atour Light has unlocked the substantial growth potential for our group. In the second quarter, we maintained vigorous momentum in our hotel network expansion with 123 new hotel openings, up 76% year-over-year, setting a record pace in new openings for a single quarter. As of the end of the second quarter, we had a total of 1,412 hotels in operation, representing a 37% year-over-year increase, accelerating our progress towards our goal of 2,000 premier hotels nationwide by 2025.

Please turn to Slide 7. Franchisees' confidence remained strong and steadfast this quarter, bolstered by our robust brand influence and product competitiveness. We made significant strides in both the number and efficiency of our new signings with a notable pipeline expansion, the number of hotels under development reached 712 as of the end of the second quarter, underpinned by a substantial number of high-quality projects laying a solid foundation towards sustained growth and nationwide expansion.

Next, let me share Atour and Atour Light's latest development. Please turn to Slide 8. On June 28, to mark towards 11th anniversary, we proudly unveiled our first Atour 4.0 hotel in Xian, embodying Atour's commitment to its original aspirations. Atour 4.0 is inspired by Yaduo Village's natural beauty transforming the hotel into a serine retreat, limit the cities, hustle and bustle with extensive upgrades across various aspects of the hotel, including multifunctional workspaces, premium sleep settings in guest rooms and upgraded dining services, Atour 4.0 adopt an experience-driven approach, aiming to create an enhanced operating model characterized by superior quality, greater pricing potential and optimized efficiency.

During its first month of operation, Atour Hotel achieved an OCC surpassing 91% and a RevPAR exceeding RMB 710. This exceptional performance not only underscores the market's resounding endorsement of Atour 4.0, but also reaffirms Atour's leading position in the upper mid-scale hotel market. To date, we have signed 50 Atour 4.0 projects across more than 30 cities nationwide with flagship projects in core business districts set to be launched successively. As a pioneering product, reflecting our deep understanding of customer needs, we believe that Atour 4.0 will propel the upper mid scale hotel market into a new stage of high-quality development.

Please turn to Slide 9 and 10 for a closer look at Atour Light. Since its launch, Atour Light 3.0, our mid-scale product has garnered broad price and recognition from customers and franchisees. We are confident of growing Atour Light 3.0 into our second 1,000 hotel brand. In the second quarter, a total of 37 new Atour Light 3.0 hotels were signed accounting for more than 20% of our total new signings for the period. As of the end of the second quarter, we had a total of 54 Atour Light 3.0 hotels in operation. Among those Atour Light 3.0 hotels that have been in operation for more than 3 months, RevPAR exceeded RMB 310 in the second quarter, highlighting Atour Light's strong competitive edge in the mid-scale hotel segment.

Notably, with the opening of the Atour Light hotel in Lilial, Beijing in late May, Atour Light 3.0 has now established a comprehensive presence across all Tier 1 cities. In July, Atour Light hotel realized an outstanding operational performance with OCC exceeding 90% and RevPAR surpassing RMB 600 setting a new benchmark case for Atour Light 3.0 hotels.

Furthermore, as we expanded Atour Light's various service touch points to provide our customers with a superior service experience. We also practiced distinctive marketing campaigns for Atour Light to deepen customer awareness of the brand. In the second quarter, we partnered with renowned cultural IPs to launch a series of summer events at Atour Light 3.0 hotels, fostering stronger connections with customers and further enhancing Atour Light's brand visibility as we explore and embrace a more vibrant and diversified Chinese experience we have observed a notable rise in the proportion of young and female customers at Atour Light hotels.

Moving now to our retail business. Please turn to Slide 11. As our second growth driver our retail business sustained its outstanding performance in the second quarter, with GMV up by 157.6% year-over-year to RMB 620 million and sales from online channels accounting for over 90% of the total GMV.

aTOUR PLANET excelled once again during this year's June 18 shopping festival with total GMV reaching RMB 310 million, setting a new sales record for shopping festivals and significantly outpacing other brands year-over-year sales growth across many major e-commerce platforms. Furthermore, our Deep Sleep lightweight comforter has garnered extensive acclaim since its release earlier this year, underscored by surgeon sales momentum during the June 18th shopping festival with total sales exceeding 170,000 units, topping the sales chart in its category on Tmall, JD.com and Douyin.

Please turn to Slide 12. aTOUR PLANET's impressive growth in the second quarter despite market softness stems from Atour's deep insight into and relentless pursuit of the Deep Sleep concept, coupled with an efficient new product development mechanism. This approach has successfully brought multiple blockbusters to market and consistently drive iterative product upgrades based on customer demand.

Since the beginning of this year, aTOUR PLANET has achieved significant breakthroughs across research and development as well as new product launches in the comforter category. Following the Deep Sleep lightweight comforters success, we introduced another groundbreaking product in July, the Deep Sleep thermal regulated Comfort Pro. This new product features our innovative dual layer temperature control system, significantly enhancing its worth and breathability, crafted from cutting-edge fiber materials the thermal regulating comforter outperforms silk in temperature and humidity variation tests, delivering superior temperature regulation and dryness.

Additionally, it adopts our deep sleep lightweight comforters highly praised coverless design and is also machine washable and dryer friendly, ensuring a minimal list and authentic deep sleep experience that allows deep sleep to occur naturally.

Looking ahead, we will remain focused on customer needs as we further develop and enrich our deep sleep product offerings, enhancing and perfecting the Atour experience. Our goal is to bring deep sleep into more homes and immerse customers in aTOUR PLANET touch points, fostering a deeper connection with the Atour brand.

Transitioning to our membership business. Please turn to Slide 13. Our consistent refinement of the membership program and the resulting rapid growth of our membership base have dynamically propelled towards development. As towards brand recognition flourishes and climbs, our membership base has rapidly expanded. As of the end of the second quarter, our registered individual members surpassed 76 million, marking a 72.5% increase year-over-year. Meanwhile, our CRS channel remained healthy contributing 62.9% to the total room nights sold during the second quarter. The contribution of room nights sold to corporate members rose to 19.3% during the second quarter, up 0.9 percentage points from the same period last year, further solidifying Atour's leading position as the preferred brand for business travel.

Please turn to Slide 14. We launched a series of distinctive events in the second quarter to further enhance membership benefits and experiences. For example, during the Labor Day holiday in May, we successfully hosted the Atour Line Down festival in Nantong, catering to the new wave of tourism consumption and precisely aligned with today's diverse leisure travel demand for comfortable and relaxing travel experiences.

Furthermore, we continue to tap into new consumption drivers in the hospitality and the lodging industry, such as the music plus and sports plus concepts, ensuring that every state at Atour's is memorable and reinforces the distinctiveness of the Atour experience. Please turn to Slide 15. Last but not least, I would like to highlight Atour's ESG progress. Following the release of our first ESG report earlier this year, Atour has deepened our commitment to sustainable development, extending our warm carrying efforts to a broader range of communities and natural environments.

In June, we proudly launched the project in partnership with a nonprofit organization. This initiative helps to protect the critically endangered Sky Walker Gibert, one of China's rarest and most valuable primate species. The Go Eagle mountains in Linan are one of the last remaining habitats for the Skywalker Hoolock Gibbon as one of China's critically and endangered specious, fewer than 200 of these gives remain in existence today.

To raise awareness, we have created an exclusive Atour branded image of the Skywalker hoolock gibbon and are conducting educational campaigns as well as merchandise sales featuring this image calling on the public to join us in safeguarding one of China's most endangered species. Moving forward, we remain committed to taking tangible steps to preserve biodiversity and protect endangered species.

Now I'll turn the call over to our Co-CFO, Mr. Wu Jianfeng to discuss our financial results.

J
Jianfeng Wu
executive

Thank you, Haijun. Now I would like to present the company's financial performance for the second quarter of 2024. Please turn to Slide 17 for the result of the result presentation. Our net revenue for the second quarter of 2024 grew by 64.5% year-over-year and 22.4% quarter-over-quarter to RMB 1,797 million. The year-over-year increase was driven by robust growth in the manachised hotel business and retail business. The quarter-over-quarter increase was mainly attributable to an increase in RevPAR, which reached RMB 359 for the second quarter of 2024 compared with RMB 328 for the previous quarter.

Revenues from our manachised hotels for the second quarter 2024 were RMB 1,027 million, up by 63.9% year-over-year and 22.8% quarter-over-quarter. The year-over-year increase was primarily fueled by our ongoing hotel network expansion and the rapid growth of our supply chain business. The total number of manachised hotels increased to 1,382 as of June 30, 2024, up by 38.1% year-over-year. The quarter-over-quarter increase was mainly due to an increase in RevPAR. RevPAR of our manachised hotel was RMB 355 for the second quarter of 2024 compared with RMB 324 for the previous quarter.

Revenues contributed by our leased hotel for the second quarter of 2024 were RMB 180 million, reflecting a 17.9% year-over-year decline by about 7.3% quarter-over-quarter increase. The year-over-year decline was primarily due to a decrease in the number of these hotels as a result of our product mix optimization as well as a decrease in RevPAR.

The quarter-over-quarter increase was driven by increase in RevPAR. Our leased hotels RevPAR was RMB 503 for the second quarter of 2024 compared with RMB 455 for the previous quarter. Revenues from retail business for the second quarter of 2024 were RMB 537 million, marking a significant increase of 156% year-over-year and 28.8% quarter-over-quarter.

These increases were driven by widespread recognition of our retail brands and effect product innovation and development as we successfully broadened our range of product offerings. In the second quarter of 2024, comforter sales accounted for over [ 70% ] of retail revenues, further accelerating the growth of our retail business. Revenues from others for the second quarter of 2024 were RMB 53 million, up 51.2% year-over-year and 11.5% quarter-over-quarter driven by our fast-growing membership business.

Now let's move to costs and expenses. Please turn to Slide 18. Operating costs and expenses for the second quarter of 2024 totaled RMB 1,400 million, including RMB 24 million share-based compensation expenses compared with RMB 816 million, including RMB 10 million share basis compensation expenses for the same period of 2023. Hotel operating costs for the second quarter of 2024 increased by 52.3% year-over-year and 17.2% quarter-over-quarter to RMB 776 million.

These increases were primarily due to the increase in variable costs such as supply chain costs associated with our ongoing hotel network expansion. The gross margin of our hotel business was 35.7% for the second quarter of 2024 compared with 39.8% for the same period of 2023, due to an increase in RevPAR attributable to a high base effect in the same period of 2023 as well as an increased share of revenue generated by the lower-margin supply chain business.

Retail costs for the second quarter of 2024 rose by 146.4% year-over-year and 28.6% quarter-over-quarter to RMB 265 million. These increases was associated with the rapid growth of our retail business. The gross margin of our retail business was 50.6% for the second quarter of 2024 compared with 49.2% for the same period of 2023, driven by an increasing contribution for -- from higher-margin online sales.

Now please turn to Slide 19. Selling and marketing expenses for the second quarter of 2024 were RMB 225 million compared with RMB 94 million for the same period of 2023. This increase was mainly due to our enhanced investment in brand recognition and the effective development of online channels aligned with the growth of our retail business. Selling and marketing expenses accounted for 12.5% of revenue -- of net revenues for the second quarter of 2024 compared with 8.6% for the same period of 2023.

General and administrative expenses for the second quarter of 2024 were RMB 91 million, including RMB 50 million share-based compensation expenses compared with RMB 73 million, including RMB 9 million share-based compensation expenses for the same period of 2023. Excluding share-based compensation expenses, the increase was primarily due to an increase in labor cost. General and administrative expenses, excluding share-based compensation expenses, accounted for 4.2% of net revenues for the second quarter of 2024 compared with 5.9% for the same period of 2023.

Technology and development expenses for the second quarter of 2024 were RMB 33 million compared with RMB 18 million for the same period of 2023. This increase was mainly due to increased investments in technology systems and infrastructure to support our expanding hotel network and retail business and to improve customer experience.

Technology and development expenses accounted for 1.8% of net revenues for the second quarter of 2024 compared with 1.6% for the same period of 2023. Now please turn to Slide 20. Adjusted net income for the second quarter of 2024 was RMB 328 million, representing a 31.6% increase year-over-year. Adjusted net profit margin for the second quarter of 2024 was 18.2%, representing a decrease of 4.6% -- 4.6 percentage points year-over-year. Adjusted EBITDA for the second quarter of 2024 was RMB 443 million, up by 28.6% year-over-year with an adjusted EBITDA margin of 24.6%, which decreased 6.9 percentage points year-over-year. The decreases in both margins were primarily due to a decline in RevPAR and and increased revenue contribution from lower-margin supply chain business, along with organic growth in selling and marketing expenses amid our retail business expansion.

Please turn to Slide 21 and 22. Operating cash inflow for the second quarter of 2024 was RMB 577 million. Investment cash outflow for the second quarter of 2024 was RMB 306 million. There were no cash flows from financing activities for the second quarter of 2024. We also maintained a healthy cash position with a stable growth momentum. As of June 30, 2024, our cash and cash equivalents totaled RMB 3,323 million, with net cash of approximately RMB 3,231 million.

Please turn to Slide 23. For the full year of 2024, we currently expect the company's total net revenue to increase by 48% to 52% compared with full year 2023. Please turn to Slide 24. As part of the company's ongoing efforts to enhance shareholder value. Today, we also announced a 3-year annual dividend policy. Under the annual dividend policy, we plan to declare and distribute dividends with an aggregate amount of no less than 50% of net income for the preceding financial year in each of the 3 financial years commencing this year.

In accordance with the annual dividend policy today, we declared a cash dividend of USD 0.15 per ordinary share or USD 0.45 EPS. The aggregate amount of the cash dividend to be distributed will be approximately USD 62 million. That concludes our financial highlights for the second quarter of 2024. Now let's open for Q&A.

Operator

[Operator Instructions]

Our first question comes from the line of Dan Chi from Morgan Stanley.

U
Unknown Analyst

[Interpreted]

Please allow me to translate my question. This is Dan from Morgan Stanley. First of all, congratulations on the new quarterly record on hotel new openings. I have 2 related questions on hotel opening and signing. We saw signing progress trend very well in Q2, but Mr. Wang also mentioned about RevPAR year-on-year decline due to high base. So will this change in RevPAR affect the signing progress in second half this year compared to the number of signing in the first half this year?

My second question is given the strong opening so far year-to-date, will the company changed the full year opening target of 360 hotels? That's all for my question.

H
Haijun Wang
executive

[Interpreted]

Thank you, Dan. Well, first, we have seen some quite nice progress in both new openings and new signings overall this year. And in the second quarter, we maintained a very positive trend in hotel network expansion with 123 new hotel openings which also once again broke our quality record. And due to this acceleration of openings in the first half of the year, we are now confident that this full year's new openings target will increase from 360 to 400.

And as for new signings, due to our continuously strengthening brand influence and product competitiveness in the upper mid-scale and mid-scale markets, it's fair to see that we have franchisees having very great confidence and being strongly willing to join our tour system. We have now more than 700 hotels under development by the end of the second quarter.

Meanwhile, we have also applied more stringent requirements on project quality this year if we aim to achieve quality growth with quality. Franchisees also recognize that they recognized our leading operating performance and the long-term investment return of our brand across the markets, and we will maintain that momentum to have a healthy and solid signings pace in quarter 3.

And besides, we believe that now in China with the increasing chain rate of upper mid-scale and mid-scale hotel market also that we see the customers are having increasing demand for higher quality products and a better accommodation experiences. And we do have enough capabilities to leverage our Atour and Atour Light brands to differentiate ourselves and exert our brand influence to bring some impact to the hotel market, and there is enough room for our future growth of both Atour and Atour Light.

Operator

Next question comes from the line of Xin Chen from UBS.

X
Xin Chen
analyst

[Foreign Language] Let me translate. I'm Xin Chen from UBS. The first question is that can you share with us the company's RevPAR performance since July? And does the company have a guidance for the full year 2024 wrap-up? The second question is that considering the changes in the group's revenue structure, can you give us some color on the full year margin outlook?

H
Haijun Wang
executive

[Interpreted]

Thank you Xin Chen, and let me try to answer your questions. Well, in quarter 3 last year, with the full recovery of domestic tourism we saw the number of tourists embarked on their summer trips significantly exceeded 2019 level.

And this year, our performance in the tourism market actually showed some resilience. However, we still do expect that a high base effect due to the summer peak season last year will still exist in this year's July and August performance.

Well, looking on the whole year, we do notice that there are still some uncertainties remain for RevPAR. But at Atour, we are quite confident of our performance, especially after removing the impact of new hotels ramping up we can see that the same hotel RevPAR for Atour hotels in operation for more than 18 months, their performance is expected to outperform the group's blended performance by about 2 percentage points which is maintained at a relatively stable position.

And as for our revenue guidance, despite some volatility in RevPAR, we do expect the group's 2024 revenue to maintain a faster growth. And like we previously mentioned, we would like to raise our 2024 full year revenue growth guidance from 40% as we estimated in the last quarter to 48% to 52% year-over-year, maintaining our industry-leading growth rate driven by our continued expansion of hotel network and a rapid development of our retail business.

As for profit, considering the fluctuation of RevPAR this year and like you have mentioned, our revenue structure change and continuous optimization of our cost structure. Our adjusted net profit margin is expected to remain at about 18% for the whole year.

Operator

Next question comes from the line of Sijie Lin from CICC.

S
Sijie Lin
analyst

[Foreign Language] So congratulations for another strong quarter and very happy to see that we achieved continuous breakthrough in product upgrades. Could you please share with us the opening guidance of Atour 4.0 this year? And how will this contribute to RevPAR increase? And regarding our upscale brands, we mentioned before, we are doing some brand upgrades. So how does it progress?

H
Haijun Wang
executive

[Interpreted]

Thank you, Sijie, for your question. With the grand opening of our first Atour 4.0 hotel, our upper mid-scale hotel market has entered a new stage of high-quality development as we see it. Now there are 50 Atour 4.0 hotels in our pipeline. The benchmark projects in various core business areas will be introduced to the market gradually. And it is expected that 8 to 10 Atour 4.0 hotels will be opened within this year.

For the first batch of Atour 4.0 projects, we are having a higher standards and requirements on those projects. For example, such as on-site and property conditions. We have strict screening because we aim to create a batch of benchmark to Atour 4.0 hotel projects to better demonstrate our brand value and market competitiveness.

We previously said during its first month of operation, our first Atour 4.0 hotel achieved a RevPAR exceeding RMB 710 and OCC surpassing 91%. Its outstanding operating performance has far exceeded our product model expectation, and that further boosted our confidence in this product of Atour 4.0. We believe that with the scale of Atour 4.0 hotels gradually expect, those hotels will also make a positive contribution to the RevPAR of the whole group as a whole.

And you also mentioned in your question, you want to know about our upscale brand. Well, our plan is to officially launch our next-generation upscale brand within this year, hoping to continuously boosting the development of our brands with some new vitality. Sijie, thank you.

Operator

Next question comes from Ronald Leung from Bank of America.

R
Ronald Leung
analyst

[Foreign Language] Congratulations to management for achieving very rapid expansion in the mid-scale market. Could you break on the new opening target for at Atour Light 3.0 this year? And also, could you share some color on the initiatives of Atour Light to connect with younger demographic and enhanced brand recognition?

H
Haijun Wang
executive

[Interpreted] Thank you, Ronald. Since the launch of our Atour Light 3.0, it has been highly recognized in the market. In the second quarter this year, we had a total of 37 new signings of Atour Light 3.0, and that accounted for more than 20% of our total new signings. As of the end of June, the number of Atour Light 3.0 hotels in operation had reached 54. And we expect that the number of new openings of Atour Light 3.0 hotels within this year will be around 70 to 80 and the number of Atour Light 3.0 hotels in operation could possibly reach 100 by the end of this year.

And based on our initiatives of the diversification and youngness of the Chinese experience, we now see a significant increase in the proportion of young consumers and female consumers, both of them for Atour Light. In the first half of this year, the proportion of under 30 years old consumers of Atour Light increased to 30% and nearly -- that was nearly 5 percentage points higher than 2023. The proportion of female consumers was also close to 50%.

To build upon our ethos of life at, we've been consistently introducing and refining the distinctive services at Atour Light hotels, such as we expanded co-branded collaborations with renowned cultural, we better address the needs of young business travelers to deepen their awareness of our brands Atour Light and continue to grow our membership and our consumer base.

Operator

Next question comes from the line of Liu Wei from Citic.

U
Unknown Analyst

[Foreign Language] I translate my question. I'm Liu Wei from Citic. I thought company announced a dividend plan for the next 3 years, roughly calculating the dividend payout ratio is about 60% of the last year net growth. So what's the guidance on the dividend payout ratio for the next 2 years? Also I want to know if the company will consider other shareholder return plans such as share.

H
Haijun Wang
executive

[Interpreted] Thank you, Liu Wei, for your question. And we have always been evaluating and implementing sustained returns for our shareholders. Based on our confidence in the company's future long-term development, and upon careful consideration of our profit distribution, we have declared the distributed dividends with an aggregate amount of no less than 50% of its net income for the preceding financial year in each of the announced 3 financial years commencing this year.

However, as our company is still now in a rapid growth phase, we will maintain some flexibility and capital utilization while ensuring business development. The specific dividend amounts will be comprehensively evaluated based on the company's actual and projected results of operations, financials and cash position, capital requirements and as well as other factors.

And in addition to cash dividends, we will continue to explore and actively consider other feasible ways to share the benefits of our growth with our shareholders. Thank you.

Operator

Next question comes from Lydia Ling from Citi.

L
Lydia Ling
analyst

[Foreign Language] I have a question regarding the retail business, which we saw still have very solid momentum in the second quarter. So can management share like what's the growth driver behind this very solid growth and also could you share your latest retail revenue or guidance for the retail business? And yes, and also like what kind of products are you planning on the pipeline? And and also the OP margin for the retail business.

H
Haijun Wang
executive

[Interpreted] Thank you, Lydia. aTOUR PLANET focuses on Deep Sleep scenarios, and we address the consumer needs for improving their sleep quality. We are not only paying attention to the innovation of design and materials during our new products, R&D, but we also pay special attention to the iterative upgrading of products to ensure that aTOUR PLANET products can timely capture the needs of consumers and whatever the market is changing towards and so that we can continue to provide better sleep experiences to them.

And as you asked about any new product, we previously mentioned that we recently had the official launch of our Deep Sleep thermal regulating comforter Pro. And that product is a groundbreaking addition to our aTOUR PLANET Deep Sleep series. And it had another -- for another time, reinforce our commitment to product development driven by user needs.

And as for retail revenue, our second quarter retail revenue reached RMB 537 million, a year-over-year increase of above 150%. This not only maintained well because that it's above the growth rate of the industry but it also even led to the overall growth of the relevant categories on those e-commerce platforms. And based upon this strong performance in the first half of the year, we believe our retail revenue for the full year of 2024 is expected to double year-over-year.

And as for retail OP margin, you can see that with our product gross margin improved and because of our product structure and our channel structure being optimized and in the second quarter, the gross margin was maintained at 51% and expenses are being well controlled. And we do believe that the retail OP margin will be maintained within a double-digit.

Operator

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.

A
Alison Zhang
executive

Thank you for joining us today. If you have any further questions, please feel free to contact us. We look forward to speaking with you again next quarter. Thank you, and goodbye.

Operator

Ladies and gentlemen, that concludes today's conference call. Thank you for your participation. You may now disconnect.

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]

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