Atour Q1 Earnings Likely to Beat Expectations, Driven by Retail and Supply Chain

Overview

This report presents Goldman Sachs’ earnings preview for China’s hotel industry in Q1 2026, focusing on Atour (ATAT) and Huazhu Group (HTHT). The core thesis is that Atour’s Q1 revenue and EBITDA will significantly exceed market consensus, driven by robust online retail sales and enhanced supply chain revenue, while Huazhu Group’s performance is expected to broadly align with its guidance. Although industry-wide RevPar growth has moderated due to higher airfare costs stemming from elevated oil prices, both companies are likely to deliver results better than their conservative guidance. Accordingly, Goldman Sachs has raised Atour’s target price and maintained its Buy rating on Huazhu.

Core views

Atour’s earnings outperformance is primarily driven by non-accommodation businesses. The report notes that Atour’s online retail GMV on major e-commerce platforms grew over 70% YoY in Q1, far exceeding management’s full-year target of 25–30%. While historical data suggests a potential 10–20% deviation between tracking data and actual reported figures, the strong momentum remains clear. Additionally, Atour has increased centralized procurement of consumables from franchisees, lifting supply chain revenue contributions, with per-room procurement value rising from below RMB 2,500 in early 2025 to approximately RMB 3,300 by year-end. As a result, Goldman Sachs models forecast Atour’s Q1 revenue growth at 44% YoY (vs. consensus of 30–35%) and EBITDA at RMB 699 million (up 48% YoY, margin of 25.4%), significantly above Bloomberg consensus of RMB 570 million. For Huazhu Group, performance is expected to be in line with guidance. Goldman Sachs models project Huazhu’s Q1 revenue growth at 6% YoY, at the upper end of its full-year guidance range of 2–6%. Domestic revenue is expected to grow strongly by 8% YoY, while overseas operations (Deutsche Hospitality) are projected to incur a seasonal loss of RMB 270 million, leading to a 4% YoY decline in overseas revenue. Huazhu’s Q1 EBITDA is forecast at RMB 1.8 billion, up 18% YoY. On industry fundamentals, Q1 RevPar is expected to grow 3% YoY. Despite strong momentum in January–February (+4% YoY), growth slowed to 2–3% in March due to higher fuel surcharges on airfares following Middle East tensions. Both companies’ RevPar performance is expected to broadly track industry trends (Huazhu +3%, Atour +2%), outperforming their own conservative guidance (Huazhu +2%, Atour flat). Regarding new store openings, delayed timing of Chinese New Year and slowing industry supply since Q4 2025 are expected to result in fewer net additions compared to the prior-year period—Huazhu is projected to add 550 new hotels, while Atour is expected to add 110.

Analysis framework

Goldman Sachs employs a hybrid analytical approach combining top-down industry tracking with bottom-up company-level analysis. First, macro-level RevPar, ADR, and occupancy trends are monitored using industry data sources like STR, with external factors (e.g., geopolitical impacts on aviation costs) used to explain short-term volatility. Second, company revenue structures are deeply dissected—particularly for Atour, where high-frequency online retail GMV tracking data and per-room supply chain procurement metrics are introduced as key evidence for predicting non-accommodation revenue outperformance, beyond traditional hotel KPIs (RevPar, store openings). Finally, investment conclusions are drawn by comparing consensus estimates and company guidance against valuation multiples (EV/EBITDA).

Methodology notes

• Industry/Sector Analysis FrameworkVolume-price decomposition

  Decomposing hotel revenue drivers into volume (occupancy rate, room count) and price (average daily rate, ADR) to analyze sources of RevPar (revenue per available room) changes.

  The report analyzes YoY changes in RevPar alongside potential shifts in ADR and occupancy to assess industry health. For example, it notes that March’s RevPar slowdown may reflect travel budget compression due to higher airfares.

• Valuation MethodologySOTP (Sum-of-the-Parts) Valuation

  Sum-of-the-Parts (SOTP): valuing each business segment separately and summing the results.

  Goldman Sachs applies SOTP valuation to both Atour and Huazhu, assigning a 14x 2026E EV/EBITDA multiple to core hotel operations and book value to other investments. This method better captures the true value of diversified businesses like Atour’s retail segment.

• Company Fundamentals & Financial Framework

  High-Frequency Alternative Data Tracking

  The report leverages third-party platforms (e.g., Moojing, Chanmama) to track Atour’s monthly GMV on e-commerce platforms as a leading indicator for quarterly retail revenue—offering more timely insights than waiting for official financial reports.

Asset mapping & comparison

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

• Atour Lifestyle Holdings (ATAT.US)

  Primary beneficiary; retail and supply chain outperformance driving earnings

  Strengths

  High-growth online retail GMV (>70% YoY); rising per-room supply chain procurement value; low valuation (10x EV/EBITDA); strong cash flow from asset-light expansion strategy.

  Weaknesses

  Underperformed peers over the past six months; relatively high dependence on business travel recovery.

  Comparison

  Compared to Huazhu, Atour offers higher earnings surprise potential and a lower valuation multiple, making it more attractive on a near-term risk-reward basis.

  Risks

  Slower-than-expected hotel unit growth; intensified competition in mid-tier segment diluting RevPar; intense retail competition increasing revenue and profit volatility.

• H World Group (HTHT.US / 1179.HK)

  Stable performer; in-line results, benefiting from industry consolidation

  Strengths

  Strong domestic revenue growth (+8% YoY); solid leadership position; benefits from rising chain penetration and value-oriented consumption trends.

  Weaknesses

  Seasonal losses from overseas operations (DH) dragging overall performance; slower store opening pace due to industry-wide supply moderation.

  Comparison

  Slightly higher valuation than Atour (12x EV/EBITDA); high earnings certainty but limited upside surprise.

  Risks

  Macroeconomic weakness slowing RevPAR recovery; tightened financing channels for franchisees; sluggish business travel demand recovery; underperformance of DH operations.

Key data

• Atour Q1E Revenue Growth+44% yoyWell above Bloomberg consensus of 30–35%
• Atour Q1E EBITDARMB 699 millionUp 48% YoY, margin of 25.4%
• Atour Online Retail GMV Growth>70% yoyQ1 tracking data from major e-commerce platforms
• Huazhu Q1E Revenue Growth+6% yoyAt the upper end of company’s full-year guidance of 2–6%
• Huazhu Q1E EBITDARMB 1.8 billionUp 18% YoY
• Industry Q1 RevPar Growth+3% yoyJan–Feb +4%; March slowed to 2–3%
• Atour Target PriceUS$52.0Raised from US$51.0

Impact & implications

The report notes that Atour’s stock underperformed Huazhu over the past six months (-6% vs. +32%), resetting market expectations to a low base. Given its potential for meaningful revenue and EBITDA beats in Q1 and a current valuation of only 10x 2026E EV/EBITDA (vs. Huazhu’s 12x), Atour offers superior investment value and is expected to outperform Huazhu going forward. For Huazhu, while results are in line with expectations, its valuation remains reasonable, and it continues to benefit from industry consolidation and value-conscious consumption trends.

Risks

• Slower-than-expected hotel unit growth due to competition from domestic and international brands for franchisees
• RevPar dilution from mid-tier market expansion and rapid industry supply growth
• Intense retail competition, especially from other online platforms, increasing revenue and profit volatility
• Macroeconomic weakness leading to slower-than-expected recovery in business and leisure travel demand
• Weakened financing channels in China reducing franchisee additions
• Weak operational performance and cash flow drag from overseas business (Deutsche Hospitality)

What to watch

• Confirmation of retail GMV and supply chain revenue details in Atour’s Q1 earnings release on May 13
• Huazhu’s Q1 earnings release in mid-May, focusing on domestic RevPar and store opening progress
• Whether industry-wide RevPar growth in Q2 can recover from the negative impact of elevated airfares
• Franchisee enthusiasm for new store signings and actual conversion rates to openings