Atour's second-quarter results met raised expectations, with strong retail performance driving another increase in full-year revenue guidance

Overview

The report assesses Atour's 2Q26 results, hotel network and RevPAR performance, and the sustainability of growth in its retail and supply chain businesses. Overall results were in line with Goldman Sachs' previously raised expectations, while strong retail performance prompted management to raise FY26 revenue guidance again. At the same time, a higher contribution from lower-margin businesses and a higher tax rate will continue to weigh on margins. Goldman Sachs maintains its Buy rating and US$52.00 target price.

Core views

2Q26 revenue growth was driven primarily by the retail and supply chain businesses. Group total revenue increased 41% year over year to RMB3.490 billion, slower than the 48% growth recorded in 1Q26. Retail sales increased 63% year over year to approximately RMB1.6 billion, while supply chain revenue grew by more than 40%, summarized in the report as 45% growth, to approximately RMB900 million. Pure hotel revenue growth slowed from 18% in 1Q26 to 13%, with F/M hotel revenue increasing 20% and L/O hotel revenue declining 12%, reflecting slower hotel expansion and RevPAR growth. Government subsidies of approximately RMB40 million supported earnings, down from approximately RMB90 million in 1Q26. 2Q26 adjusted EBITDA increased 35% year over year to RMB821 million, above the Bloomberg consensus range of approximately RMB780 million to RMB815 million, but adjusted EBITDA margin declined 1.2 percentage points year over year to 23.5%. This was because the revenue mix continued to shift toward the lower-margin retail and supply chain businesses, which accounted for 45% and 28% of revenue, respectively, compared with 39% and 27% in 2Q25. Selling and marketing expenses increased 54% year over year and represented 17.4% of revenue, up from 15.9% in 2Q25, with the growth rate tracking retail sales growth more closely than before. As more capital was transferred offshore for share repurchases and announced dividends, accrued income tax increased, and net profit rose 31% year over year to RMB558 million, below the 42% growth recorded in 1Q26. Hotel network expansion slowed sequentially, but the existing pipeline still supports the full-year target. Atour opened 101 hotels in 2Q26, down from 110 in 1Q26 and 118 in 2Q25. A total of 211 hotels were opened in 1H26, down 12% year over year and equivalent to approximately 44% of the full-year guidance of 480-490 hotels, broadly consistent with the seasonal pattern of completing 45%-50% of annual openings during the first half in previous years. Hotel closures declined to 14, compared with 37 in 1Q26 and 21 in 2Q25. The total hotel count reached 2175 at period-end, up 4% sequentially and 19% year over year. Hotels under development and in the pipeline increased 8% sequentially to 811, indicating that new signings remained healthy. At the current opening pace, pipeline contracts can support approximately 1.8 years of new openings, compared with 1.4 years for H World, 2.7 years for Jin Jiang, and 1.1 years for BTG Homeinns. Management maintained its full-year targets of 480-490 new openings and 80 closures. 2Q26 blended RevPAR increased 0.7% year over year, below the 2.4% growth in 1Q26 and consistent with a temporary weakening in industry demand. Occupancy declined 0.2 percentage points year over year to 76.2%, while ADR increased 1.2%. Blended RevPAR still outperformed same-hotel RevPAR, which declined 3% year over year. The gap between the two has widened to approximately 3%-4% since 4Q25, which Goldman Sachs attributes to product upgrades such as Atour 3.6 and Atour Light 3.3 and the launch of new brands such as Atour S Hotel. The number of Atour Light hotels increased 21% year over year, with their share of the total hotel count remaining stable at approximately 10%. Slower-than-expected expansion in the midscale market also reduced its dilution of blended RevPAR. Management stated that severe weather in certain regions caused weakness in early July, but RevPAR improved in late July, and it maintained full-year guidance for flat to modest growth. This implies that 2H26 RevPAR may decline modestly by 1%-2% year over year. The performance of new brands provides structural support for the hotel business. Atour S Hotel has 61 hotels in operation and more than 90 in the pipeline, with RevPAR exceeding RMB450, above the group average of approximately RMB345. Atour 3.6, which targets business travelers, has RevPAR exceeding RMB370. Atour Light strengthened its connection with younger customers and university students through summer brand collaborations. The report believes that product innovation and upgrades are narrowing the RevPAR performance gap between Atour and H World while maintaining healthy hotel growth. Retail business growth accelerated further, with no signs of cooling in July. Cumulative sales of the Deep Sleep Memory Pillow Pro series have exceeded 12 million units, while duvet insert GMV increased by more than 80% year over year. In 2Q26, pillows, duvet inserts, and loungewear and bedding accounted for approximately 50%, 30%, and 10% of retail GMV, respectively. The main pressure was a 1.9-percentage-point year-over-year decline in retail gross margin to 51.4%. Management explained that this reflected a higher contribution from faster-growing but lower-margin categories such as duvet inserts, loungewear, and fitted sheets, rather than excessive discounting to drive sales. The newly launched Deep Sleep Memory Pillow Pro 4.0 has received positive market feedback. Given approximately 60% year-over-year retail revenue growth in 1H26, management raised FY26 retail revenue growth guidance again, from 30%-35% to 40%. Supply chain revenue growth came primarily from centralized procurement of construction materials and other products before hotel openings, which accounted for approximately 70% of supply chain revenue. Related procurement revenue per room increased from approximately RMB30,000 in the prior year to RMB50,000, while capital expenditure per room was approximately RMB110,000 to RMB140,000. Management believes there is still room to increase centralized procurement penetration. The remaining approximately 30% came from consumables such as shampoo and toothbrushes, equivalent to approximately RMB19 per occupied room night in 2Q26. Goldman Sachs believes this demonstrates Atour's ability to monetize non-room revenue by leveraging its brand influence and business scale. Driven by stronger-than-expected retail performance, management raised FY26 group revenue growth guidance from 24%-28% to 30%, corresponding to revenue of RMB12.7 billion, but still expects a deterioration in the revenue mix and a higher tax rate to cause net margin to decline year over year. Goldman Sachs forecasts FY26 revenue growth of 33% year over year, adjusted EBITDA of approximately RMB3.1 billion, up 24% year over year, and non-GAAP net profit of approximately RMB2.2 billion, up 23% year over year, corresponding to margins of 23.6% and 16.5%, respectively. The forecast table raises FY26, FY27, and FY28 revenue estimates from RMB12.6774 billion, RMB14.8863 billion, and RMB17.0202 billion to RMB13.0602 billion, RMB15.3377 billion, and RMB17.4235 billion, respectively. Corresponding basic EPS estimates were adjusted from RMB14.27, RMB16.58, and RMB18.83 to RMB14.29, RMB16.40, and RMB18.56. Goldman Sachs only fine-tuned its FY26-FY28 adjusted EBITDA forecasts by 0%-1%, indicating that the revenue upgrades did not fully translate into earnings upgrades. Goldman Sachs maintains its Buy rating and 12-month target price of US$52.00. The target price is based on a sum-of-the-parts valuation, with the core business valued at 14 times FY26E EV/EBITDA and other investments valued at book value. The report expects incremental retail contribution and hotel network growth to drive an FY26-FY28 EBITDA CAGR of more than approximately 20%. Based on the report's methodology, the stock trades at approximately 8 times FY27E EV/EBITDA and an approximately 7% free cash flow yield, compared with approximately 10 times and approximately 8%, respectively, for H World. Despite the solid results, Goldman Sachs notes that the strong performance was already consistent with the expectations set out in its August 10 preview report. Together with a potential RevPAR slowdown against a high base in 2H26, this may lead to near-term share price volatility.

Analysis framework

Goldman Sachs first breaks down 2Q26 revenue, profit, and expense performance to identify the differing contributions of the retail, supply chain, and hotel businesses to growth and margins. It then analyzes hotel operating trends using openings, closures, the development pipeline, occupancy, ADR, and same-hotel RevPAR, while comparing Atour with H World, Jin Jiang, and BTG Homeinns. The report subsequently evaluates the impact of new products, brand upgrades, the retail category mix, and centralized supply chain procurement on future revenue and margins, updates FY26-FY28 financial forecasts, and finally tests the target price using a sum-of-the-parts valuation and peer trading multiples.

Methodology notes

• Valuation methodologySOTP valuation

  Sum-of-the-parts valuation

  The report divides Atour into its core business and other investments, values the core business at 14 times FY26E EV/EBITDA, and includes other investments at book value, resulting in a target price of US$52.00.

• Valuation methodologyEV/EBITDA valuation

  Peer comparison using EV/EBITDA and free cash flow yield

  The report uses enterprise value relative to EBITDA to assess the valuation of operating assets and compares Atour's approximately 8 times FY27E EV/EBITDA with H World's approximately 10 times, while also referencing free cash flow yields of approximately 7% and approximately 8%.

• Industry analysis frameworkVolume-price decomposition

  RevPAR decomposition into occupancy and ADR

  The report decomposes changes in revenue per available room into occupancy and average daily rate: 2Q26 occupancy declined 0.2 percentage points year over year, while ADR increased 1.2%, together resulting in 0.7% growth in blended RevPAR.

• Industry analysis frameworkSupply-demand framework

  Analysis of hotel supply, signed pipeline, and travel demand

  The report combines industry hotel supply expansion, Atour's openings and contracted pipeline, and changes in weather and business travel demand to assess the sustainability of hotel growth and pressure on RevPAR.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Atour Lifestyle Holdings (ATAT.US)

  A Chinese hotel chain operator that also expands non-room revenue through proprietary-brand retail and hotel supply chain businesses; Goldman Sachs maintains its Buy rating.

  Strengths

  Strong brand influence, a healthy hotel pipeline, cash-generative asset-light expansion, product upgrades that enable blended RevPAR to outperform same-hotel results, and rapid growth in the retail and supply chain businesses.

  Weaknesses

  Slowing pure hotel revenue and RevPAR growth, a rising contribution from lower-margin retail and supply chain businesses, and margin pressure from higher selling and marketing expenses and tax rates.

  Comparison

  The hotel pipeline is equivalent to approximately 1.8 years of openings, above H World's 1.4 years and BTG Homeinns' 1.1 years but below Jin Jiang's 2.7 years. At approximately 8 times FY27E EV/EBITDA, Atour trades below H World's approximately 10 times.

  Risks

  Hotel openings falling below expectations, dilution of RevPAR due to midscale expansion or increased industry supply, and greater revenue and earnings volatility from the highly competitive retail market.

Key data

• 2Q26 total revenueRMB3.490 billionUp 41% year over year, compared with 48% year-over-year growth in 1Q26.
• 2Q26 retail salesApproximately RMB1.6 billionUp 63% year over year, accelerating further from 54% in 1Q26.
• 2Q26 supply chain revenueApproximately RMB900 millionUp more than 40% year over year; the report summarizes the growth rate as 45%.
• 2Q26 adjusted EBITDARMB821 millionUp 35% year over year, with a margin of 23.5%, down 1.2 percentage points year over year.
• 2Q26 government subsidiesApproximately RMB40 millionApproximately RMB90 million in 1Q26.
• 2Q26 net profitRMB558 millionUp 31% year over year, affected by higher accrued income tax.
• 2Q26 new hotel openings101 hotels110 hotels in 1Q26 and 118 hotels in 2Q25.
• Total hotels at period-end2175 hotelsUp 4% sequentially and 19% year over year.
• Hotels under development and in the pipeline811 hotelsUp 8% sequentially, equivalent to approximately 1.8 years of opening pipeline.
• Full-year opening and closure targets480-490 new openings and 80 closuresManagement maintained the targets unchanged.
• 2Q26 blended RevPARUp 0.7% year over yearUp 2.4% in 1Q26; occupancy was 76.2%, while ADR increased 1.2% year over year.
• 2Q26 same-hotel RevPARDown 3% year over yearBlended RevPAR outperformed same-hotel RevPAR by approximately 3%-4%.
• Atour S Hotel RevPARAbove RMB450The group average was approximately RMB345; 61 hotels were operating and more than 90 were in the pipeline.
• Retail gross margin51.4%Down 1.9 percentage points year over year, mainly due to changes in the category mix.
• FY26 retail revenue growth guidance+40%Previous guidance was 30%-35%.
• FY26 group revenue guidanceRMB12.7 billion, up 30% year over yearPrevious growth guidance was 24%-28%.
• Goldman Sachs FY26 revenue forecastRMB13.0602 billionThe previous forecast was RMB12.6774 billion, representing 33% year-over-year growth.
• Goldman Sachs FY26 earnings forecastAdjusted EBITDA of RMB3.1 billion; non-GAAP net profit of RMB2.2 billionUp 24% and 23% year over year, respectively, corresponding to margins of 23.6% and 16.5%.
• 12-month target priceUS$52.00Maintained unchanged; current price US$37.00, implying 40.5% upside.

Impact & implications

The report believes that the retail and supply chain businesses have become important sources of Atour's revenue growth and brand monetization and, together with hotel network expansion, support FY26-FY28 growth. However, these two businesses have lower margins than the traditional hotel business, so higher revenue forecasts will not translate proportionally into profit growth. Brand upgrades and new product launches help blended RevPAR outperform same-hotel results, but the high base in 2H26, industry supply growth, and softer business travel demand may cause near-term volatility in operations and share price performance.

Risks

• Competition among domestic and international hotel brands for franchisees may cause Atour's hotel network growth to fall below expectations.
• Expansion into the midscale market, continued rapid industry supply growth, or a weaker recovery in business travel, on which Atour is highly dependent, may dilute RevPAR.
• Intense competition in the retail market, particularly from other online participants, may increase revenue and earnings volatility.

What to watch

• Monitor whether the full-year targets of 480-490 new hotel openings and 80 closures can be achieved as planned, as well as the conversion pace of the 811 hotels under development and in the pipeline.
• Monitor whether 2H26 RevPAR falls within the implied range of a 1%-2% year-over-year decline and whether the improvement since late July can continue.
• Monitor the new guidance for 40% FY26 retail revenue growth and the sales momentum of new products such as the Deep Sleep Memory Pillow Pro 4.0.
• Monitor changes in retail gross margin, EBITDA margin, and net margin as the revenue contribution from retail and supply chain increases.
• Monitor the contribution of brand upgrades such as Atour S Hotel, Atour 3.6, and Atour Light to RevPAR and the signed pipeline.