Earnings Report Analysis: Atour Lifestyle 2023 Q4: Revenue Growth Significantly Exceeds Expectations, Achieves Substantial Turnaround from Loss to Profit

On Thursday, March 28, before the U.S. stock market opened, Atour Lifestyle Holdings Limited (ATAT) released its 2023 fourth-quarter earnings report, showing strong growth. The company achieved revenue of 1.505 billion yuan in the fourth quarter, a year-on-year increase of 140.4%, exceeding market expectations of 1.217 billion yuan.$Atour(ATAT.US)$NASDAQ Composite Index(.IXIC.US) $Dow Jones Industrial Average(.DJI.US) $Direxion S&P 500 Bull 3X(SPXL.US) $Hang Seng Index(00HSI.HK) $HWORLD-S(01179.HK) $Invesco QQQ Trust(QQQ.US)

I. Summary of Personal Views

1. Atour's fourth-quarter performance was outstanding, with strong revenue growth and continuous optimization of cost control, leading to better profitability.

2. From the specific data, Atour's operational metrics continued to recover in the fourth quarter, with significant improvements in hotel scale, occupancy rate, and average daily rate (ADR), returning to 2019 levels. This reflects the positive impact of recovering travel demand and brand influence.

3. In terms of stock performance, Atour's stock has performed relatively well among Chinese concept stocks, despite some post-earnings decline, it remains worth monitoring.

In summary, Atour delivered an impressive performance in the fourth quarter of 2023, achieving robust revenue growth and further optimizing cost control, which enhanced profitability. Key operational metrics such as hotel scale, occupancy rate, and ADR showed significant improvement, returning to 2019 levels, highlighting the positive effects of travel demand recovery and brand strength. In the capital market, Atour's stock has been relatively stable among Chinese concept stocks, and despite some post-earnings volatility, it remains a stock worth watching.

II. Financial Analysis: Revenue Growth Far Exceeds Expectations, Significant Turn to Profitability

In terms of revenue, Atour achieved 1.505 billion yuan in the fourth quarter, a 140.4% year-on-year increase, surpassing market expectations of 1.217 billion yuan. As a player in the chain hotel industry, Atour's performance this quarter was strong, with revenue significantly exceeding expectations, partly driven by the rapid growth of its retail business.

In terms of profit, the fourth quarter saw a net profit of 220 million yuan, a significant improvement from the loss of 83 million yuan in the same period last year. Adjusted profit for the quarter was 222 million yuan, up 175.8% year-on-year. With cost-cutting and efficiency improvements, profitability grew even faster than revenue, and earnings per share also exceeded expectations.

III. Operational Analysis: Cost-Cutting and Efficiency Improvements Drive Profitability, Hotel Metrics Show Clear Improvement, Travel Recovery Trend Continues

1. Cost-Cutting and Efficiency Improvements Drive Profitability

Specifically, Atour achieved significant revenue growth and profitability improvement in the fourth quarter of 2023, demonstrating its strong capabilities in operational optimization and cost control.

From the financial data, although hotel operating costs and retail costs rose significantly due to increased customer traffic, Atour showed excellent cost control, particularly in general administrative expenses, which dropped sharply from 217 million yuan in the same period last year to 105 million yuan this quarter. This reduction not only eased financial pressure but also helped keep overall cost growth within a reasonable range.

Notably, while costs increased, the growth rate was significantly lower than revenue growth, thanks to Atour's efforts to improve operational efficiency. By optimizing management processes, enhancing employee productivity, and adopting advanced hotel management systems, Atour ensured rapid revenue growth.

These efforts collectively led to a remarkable turnaround in operating profit, from a loss of 78.38 million yuan in the same period last year to a profit of 214 million yuan this quarter. This achievement highlights Atour's strength in cost control and operational efficiency, laying a solid foundation for future growth.

2. Significant Improvement in Hotel Operational Metrics

Atour's hotel operational metrics also showed clear improvement, with growth in hotel scale, occupancy rate, ADR, and revenue per available room (RevPAR). This performance was supported by the staggered recovery of domestic and international markets and the strong contribution of overseas operations, helping Atour emerge from the industry downturn with noticeable growth momentum.

As of December 31, 2023, Atour's hotel network comprised 1,210 hotels with 137,921 rooms in operation, representing year-on-year growth of 29.8% and 27.7%, respectively. This expansion reflects Atour's aggressive efforts in scaling up and its strong competitiveness in the market.

Occupancy rate in the fourth quarter was 78.4%, significantly higher than the 63.1% in the same period last year and close to the 82.4% in the previous quarter. Notably, this figure has recovered to 105.9% of 2019 levels, demonstrating Atour's strong post-pandemic recovery.

ADR in the fourth quarter was 438 yuan, up from 388 yuan in the same period last year and close to the 495 yuan in the previous quarter, recovering to 103.6% of 2019 levels. RevPAR reached 358 yuan, up from 259 yuan last year and close to the 424 yuan in the previous quarter, recovering to 108.8% of 2019 levels, reflecting Atour's strong pricing and operational efficiency.

Beyond hotel operations, Atour's retail business also performed well, with full-year revenue reaching 1.139 billion yuan, up 298.3% year-on-year. This success underscores Atour's diversification strategy and lays a solid foundation for future growth.

3. Travel Recovery Trend Continues

The post-pandemic travel recovery has been ongoing, with major players across segments—from OTA leaders like Trip.com to chain hotels like Huazhu and Atour—adjusting strategies to adapt to new industry dynamics. After a significant reshuffle, the industry is witnessing a new wave of recovery and growth.

Leading companies are expanding their market presence, deepening existing customer relationships, and targeting new demographics to gain a competitive edge. They are exploring both upstream and downstream markets to drive multi-faceted growth.

Policy adjustments have played a key role in the recovery, particularly in outbound travel. However, domestic markets have also shown vitality, with trends like the Zibo barbecue craze and Harbin tourism boom injecting new energy into the sector and highlighting its potential.

This article is a personal interpretation of the earnings report, reflecting my own analysis and insights. Feedback is welcome. Note that this does not constitute investment advice, and readers should conduct their own research.