ATAT: How It Became the 'Haidilao' of Hotels

In China's hyper-competitive hotel market, Atour is the outlier rivals envy but struggle to decode. It lacks the scale of Huazhu and Jin Jiang, and it does not play in the luxury arena with Marriott or Hilton. On paper it sits awkwardly in the mid-to-upscale niche, a position where brands often end up neither here nor there. $Atour(ATAT.US)

Yet in 2024, as the sector slumped into a price war and closures, Atour broke away with 50%+ revenue growth and 70%+ profit growth, emerging as the lone high-growth benchmark. What enables this brand to carve out growth in a tight space, baffling peers along the way? How does its 'lodging + retail' dual-engine model rewire industry logic? Dolphin Research takes a closer look at what truly sets Atour’s model apart.

Details below: See the breakdown of the key sections.

1. Where does the mid-to-upscale premium come from?

Before diving in, a quick snapshot of Atour’s biz. and model. Broadly, Atour runs two segments: hotels and retail.

Hotel: As of 2024, hotels account for 67% of revenue. The segment includes franchised and self-operated properties, with a model similar to leading chains like Huazhu; franchising contributes nearly 60% of hotel revenue.

On franchising, one revenue stream comes from recurring fees for brand, management, systems and services (6% of monthly GTV for the hotel, including a 2% brand fee and a 4% management fee ) plus upfront franchise fees. Overall, these are highly correlated with franchise scale (installed store base) and operating efficiency (RevPAR).

The other stream is supply chain revenue from standardized materials to ensure brand consistency, as franchisees purchase one-off opening kits during build-out; this makes supply revenue cyclical with new openings and more volatile than franchise fees. Since the 2023 acceleration in openings, supply chain revenue mix has risen in the past two years.

Self-operated: Atour’s legacy core, involving leasing buildings, self-funding capex, and employing staff—classic heavy-asset ops. As the company pivoted toward a lighter franchise model, the self-op share shrank from 39% to about 10% in recent years.

Retail: Launched in 2016, initially positioned as 'middle-class lifestyle' with 'all-scenario shopping'. It leveraged offline hotel locations to sell miscellaneous lifestyle goods, F&B, and home items, broad in range but weak in brand identity, relying heavily on OEM/collabs without hero SKUs—effectively a 'hotel version of Miniso'. Results were lackluster and synergies with the hotel business were limited, serving merely as a supplement.

In 2021, Atour created its own brand 'Atour Planet', slashed the miscellany, and focused on sleep—closest to the hotel experience. It shifted to online via heavy content marketing on Douyin and Xiaohongshu, and built a dedicated e-commerce team to make online the main battlefield.

After launching the 'Deep Sleep Pillow Pro' in 2023, online sales took off, driving a retail surge; retail now accounts for 33% of total revenue, up from sub-10%, with online channels >90%.

Given the uniqueness of Atour’s retail, we will address it separately below. First, we compare Atour and Huazhu’s hotel segments—which look similar on paper—to see where their models diverge.

1) Differentiated entry into mid-to-upscale to avoid the red ocean

Back to Atour’s founding in 2013. By then the 'big four' economy chains—Home Inn, Hanting, 7 Days, and Jinjiang Inn—had reached an oligopoly, with CR4 above 50% and a mantra of cost-first efficiency.

Overall, economy hotels had turned into a red ocean, with homogenous products and services forcing brands into price wars to win demand. Meanwhile, the 'big four' continued to expand via M&A, squeezing smaller brands further.

On the other hand, domestic high-end was dominated by 4- and 5-star hotels, with 5-star and above largely controlled by Intl brands offering full-service formats (F&B, meetings, fitness, etc.), monetizing brand premium and property appreciation. These are heavy-asset plays, with >RMB 500 mn per property and 10–15 year paybacks.

In this context, Atour skipped both economy and high-end and went straight into the mid-to-upscale blue ocean with a differentiated strategy.

Source: China Tourist Hotels Association; compiled by Dolphin Research

2) Strip out redundancy, focus on the experience

Atour targets mid-to-upscale consumers. This cohort rejects the bare-bones feel of economy hotels, but is also unwilling to pay for non-essential services at high-end hotels.

On that insight, Atour put guest experience at the strategic core from day one, then used lean ops to balance cost and efficiency. Dolphin Research highlights three pillars:

a) Heavy soft furnishings, light hard fit-out:

Unlike typical mid-to-upscale peers who spend more on hard fit-out, Atour flips the script to invest in tactile, sensory details guests can see and feel.

First, hard fit-out in rooms follows 'practical and timeless' design, avoiding complex forms and luxury stone. It uses fast-install methods, ensuring essentials (soundproofing, waterproofing, safety) and simplifying non-critical areas, which meaningfully shortens construction time vs. traditional hotels.

For soft furnishings, given frequent sleep issues among business travelers, Atour prioritizes sleep quality in budgeting. Mattresses, Deep Sleep pillows, and temperature-regulating duvets account for 40%+ of soft furnishing budgets, well above Huazhu’s mid-to-upscale brands like Ji Hotel and Orange (20%–30%).

Beyond the room, versus Ji Hotel’s cookie-cutter design, Atour’s design team visits local museums, craft studios, and historic streets during pre-opening to extract 3–5 cultural motifs, then modularly infuses them via photography, reading nooks, etc. This builds a 'one city, one hotel' identity and elevates the humanistic experience.

This approach reduces single-hotel fit-out and refurb costs while boosting brand premium and stickiness through culture-centric experiences.

b) 'Warmer' service:

For service delivery, Atour leans on the peak-end rule—memories are shaped by the peak emotional moment and the final impression, while duration and the average matter far less.

It maps the user journey into 17 touchpoints across booking–arrival–stay–departure–repurchase, and allocates scarce resources to 'peak-end' moments to maximize ROI. Specifically, Atour targets at least two in-stay peaks and one departure peak per guest.

As shown below, standard peak moments anchor Atour’s core brand experience and must be executed across all hotels and guests. While Huazhu’s mid-to-upscale brands may share motions like lobby tea or express checkout, Atour’s execution is more granular and consistently better.

Additionally, beyond the fixed peaks, staff tailor 'dynamic peaks' by guest type, travel purpose, and preferences to create personalized moments. For early flyers, staff confirm needs the night before and pre-pack breakfast. Frontline staff also have a RMB 500 discretionary budget to handle surprises without escalation, enabling on-the-spot dynamic peaks. Other mid-to-upscale hotels have similar policies, but Atour empowers deeper and makes it routine.

In our view, Atour’s innovation is productizing intangible service into concrete offerings with clear value propositions, each defined by 'scenario + deliverables + value'. This avoids random, ad-hoc personalization while ensuring consistent 'warmth' across hotels and staff, balancing differentiation and efficiency.

That raises the question of how Atour ensures consistent execution by staff. Let’s continue.

Source: Hundun Academy

c) Dual-track management, real empowerment, fast feedback

To ensure stable service delivery, Atour deploys dual leaders—'Xianzhang + Political Commissar'—stationed on-site, both assigned by HQ with separate reporting lines and KPIs.

The Xianzhang is akin to a GM, overseeing daily ops, driving SOPs across the 17 touchpoints, supervising service behaviors, and bearing KPIs like RevPAR, OCC, and customer satisfaction. In essence, this is the hotel’s 'business CEO'.

The Political Commissar is unique to Atour and focuses on building a 'warm' team to ensure stable transmission of service values—people first. As shown below, the role is measured on culture adherence, staff retention, and employee satisfaction rather than revenue, acting as the hotel’s 'culture CEO'.

Because Atour’s service model ultimately relies on frontline employees, their state determines the 'warmth' customers feel. The commissar is thus mission-critical, owning capability building through daily huddles, case reviews, and team rituals, while providing genuine care and respect so staff live the service values with real intent.

In our view, the commissar is Atour’s ballast for service. Service competition boils down to people: whoever best 'activates' frontline staff delivers superior service and ultimately retains customers. Organizationally, the commissar solves for consistent delivery at scale. As shown by the 2024 China Chain Hotels Service Quality White Paper, Atour outperforms the industry on service consistency and staff retention.

In practice, the Xianzhang does not interfere with the commissar’s culture/HR remit, and the commissar stays out of business decisions; both are top managers at the same rank and report to the regional head. Yet they collaborate deeply on service quality and people management, ensuring unified output of standardized service with personalized warmth, a core reason Atour leads in mid-to-upscale.

Hotel-wise, the commissar and added service staff lift the staff-to-room ratio vs. peers, increasing management costs. But with similar OCC, Atour’s ADR is 5%–10% higher than peers in the same tier (Orange Crystal, Pu Yin), and that premium is driven by differentiated service.

Moreover, experience-led execution strengthens stickiness and cultivates a loyal core base. In the data, Atour’s core member repurchase rate exceeds the industry avg. by 5pct+; this base gives Atour more resilience in down cycles.

In short, vs. Huazhu’s mid-to-upscale brands (Ji Hotel, Orange Crystal, etc.), Atour deliberately avoids head-on competition in scale and standardization, and instead leans into experience through productized service plus empowered feedback loops, creating a virtuous flywheel: higher labor input → higher experience premium → higher ADR → higher RevPAR.

II. From 'selling rooms' to 'selling sleep': building 'deep-sleep converts'

That’s how Atour secured its mid-to-upscale footing. Now to the fast-growing retail segment: Atour is not the first hotel group to try retail, but it is the only one to make it a true second growth curve.

As shown below, retail was sub-RMB 100 mn in 2019. In just five years, retail revenue reached RMB 2.2 bn in 2024, or ~30% of total. How did Atour get there?

a) Right category, right hero SKU

Echoing its mid-to-upscale hotel entry, Dolphin Research believes a critical driver of Atour’s retail breakout is its focus on sleep.

With faster-paced lives and higher work intensity, sleep issues are more prevalent. Based on the 2025 China Sleep Health White Paper, Avg. night sleep is 6.9 hours, and 65% of people suffer sleep problems 1–2 times a week, with medium-to-severe distress still rising.

That has made demand for sleep aids and quality improvement more explicit. Bedding—being the core, high-frequency contact surface—has become a natural purchase to improve sleep.

Among bedding, Frost & Sullivan research shows consumers rate pillows as the most critical factor, so Atour chose pillows as the entry point.

b) Innovate around the sleep experience to solve real pain points

Before Atour’s Deep Sleep Pillow, pillows in traditional home textiles were framed by two parameters: yarn count (higher is softer/finer) and GSM (heavier is thicker/warmer). These are convenient for mass production and QC, so products converged, concentration stayed low, and there were few hero products; CR5 remained under 5%.

The problem is that yarn count and GSM reflect only base quality (soft/firm, thin/thick) and miss the essence of sleep—its dynamic nature requiring dynamic adaptation. Body temperature and pressure points vary through the night and across body areas.

On that insight, Atour’s R&D launched Deep Sleep Pillow Pro 1.0 in 2023 to address two pain points: dynamic pressure regulation and intelligent temperature control. On pressure, the pillow uses a three-zone design (head support + neck support + shoulder fit), with varying firmness (softer head, firmer neck, medium shoulders) to spread cervical pressure and keep a natural curve.

On temperature, the fabric combines cooling fibers with a moisture-wicking layer: the cool-touch surface lowers skin temperature for faster sleep onset, while the inner layer absorbs sweat at night to prevent dampness—enabling dynamic thermoregulation.

Leveraging deep consumer insight, the first-gen Deep Sleep Pillow became a hit on launch, climbing to No. 1 in the category across platforms within nine months.

c) Hotel flywheel: high-frequency drives low-frequency

Great products still need exposure. The step that truly turbocharged Atour’s retail was the hotel business as a built-in amplifier.

First, all Atour sub-brands equip rooms with the Deep Sleep Pillow, turning guest rooms into live demo and trial spaces. 'Try-what-you-buy' lowers purchase friction and lifts conversion. With hundreds of millions of room-nights of real use, Atour forged a strong mental link: 'Atour pillow = quality sleep', which is a durable moat because lived experience beats ads.

Second, Atour unified lodging and retail memberships in its official app, letting lodging points fully offset retail spend and vice versa. This effectively turns the hotel’s 100 mn+ members into a natural traffic pool for retail.

Stepping back, the high-frequency lodging scene solved retail’s classic pain points of low trust, high CAC, and weak conversion. Retail users, once onboarded into the sleep habit, in turn prefer Atour when traveling, creating a loop of high-frequency lodging feeding low-frequency retail, and retail cognition feeding lodging repurchase.

This two-way membership reuse materially expands LTV and maximizes ARPU. Per company disclosures, in 2024, 60% of retail revenue came from hotel members, and 67% of active retail members also booked stays—clear cross-sell.

d) KOL seeding to shape the sleep conversation

Marketing focuses on sleep scenarios and the insomnia crowd on Douyin and Xiaohongshu. On Xiaohongshu, Atour engaged top KOLs like Li Dan, Papi Jiang, and Chen Luyu as 'Deep Sleep Experience Officers' and 'cervical spine saviors' via livestreams and interviews, pushing the 'deep sleep' lifestyle idea and reinforcing Atour Planet’s authority in sleep, which spurred heavy UGC and a seed-and-harvest community flywheel.

Source: Xiaohongshu 'Atour Planet'

III. Takeaways

Atour has reshaped hotel logic via 'experience depth + scene synergy'. Its core edge is a growth ecosystem where hotels and retail reinforce each other—breaking the 'scale first' inertia in chains and opening a new path to monetize scene value in retail.

For hotels, Dolphin Research sees clear parallels with Haidilao: values-driven service, standardized SOPs plus empowered staff, and a full-loop guest experience. Organizational safeguards and a robust talent system underpin high repurchase and brand premium.

Retail’s breakout is a strategic extension of hotel scene value. By focusing on sleep and creating hero SKUs like the Deep Sleep Pillow Pro, Atour solved real pain points and escaped the 'hotel Miniso' trap. Leveraging hotels as natural experience hubs, it turned hundreds of millions of stays into trust for retail, forming a loop where high-frequency lodging drives low-frequency retail and retail cognition boosts lodging repurchase.

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