In 2024, the domestic tourism market has continued its growth momentum. According to data from the Ministry of Culture and Tourism, in the first half of this year, the total number of domestic trips in the country was 2.725 billion, a year-on-year increase of 14.3%; the total expenditure of domestic tourists was 2.73 trillion yuan, a year-on-year increase of 19.0%. Both key indicators in the second quarter exceeded the level of 2019.
The booming tourism industry has driven the hotel industry to a new growth trend. According to the monitoring data of Aowei Cloud Network, in the first half of 2024, there were 0.023 million newly opened hotels, close to 59% of the total number of stores opened in 2023; the number of rooms reached 1 million, accounting for 61% of the total number of rooms opened in 2023. And due to the increasing pursuit of high-quality accommodation and services by consumers, the mid-to-high-end hotel market has also shown strong growth momentum. The exploration and release of the potential of this blue ocean market by hotel brands will be the key to driving future capital market valuation recovery.
In this logic, the author found that Atour Group, as a representative of the mid-to-high-end hotel, has delivered a remarkable second quarter report. With this latest performance data as the starting point, we can explore the company's value opportunities and it is highly referential for the development direction of the industry.
The second quarter set a record high for new store openings, and strong demand for mid-to-high-end hotels supported by the strong tourism nation.
The cultural tourism market continues to recover, and the release of tourism demand combined with the recovery of business travel demand has brought the hotel industry into a new stage of strong recovery and high-quality development, from which Atour Group has fully benefited.
According to the financial report, Atour Group achieved a total operating revenue of 1.797 billion yuan in the second quarter of this year, a year-on-year increase of 64.5%; the adjusted net profit was 0.328 billion yuan, a growth of 31.6%; the adjusted EBITDA was 0.443 billion yuan, a year-on-year increase of 28.6%.
In terms of hotel performance indicators that investors are most concerned about, in the second quarter, Atour Group's average revenue per available room (RevPAR) was 359 yuan; average daily rate (ADR) was 441 yuan; occupancy rate (OCC) reached 78.4%, a year-on-year increase of 1.3 percentage points, demonstrating strong operational resilience and market influence.
It can be seen that Atour has a stable occupancy rate, coupled with high-quality product services and excellent bargaining power, the revenue has gained higher elasticity. Atour has been deeply cultivating the mid-to-high-end track for a long time. In the strong recovery stage of the hotel industry, the success of its business model has been further verified with the growth of performance.
From the perspective of industry development, the mid-to-high-end hotel market has always existed, but with the upgrading of consumer experiences, the complexity of consumer demands has become more prominent, placing higher demands on brands in terms of design, products, and services. With its performance in the second quarter of this year, as well as the demonstrated product strength and brand influence, Atour can be said to provide a good reference for the industry, greatly enhancing market confidence.
And under the policy drive this year, the tourism and hotel industry is also undergoing positive changes.
There is continuous effort in policy to improve the modern tourism industry system, promoting China to accelerate the construction of a powerful tourism country, with the tourism industry becoming a new engine for economic growth. The policy will have a strong positive effect on the development of the supply side of the tourism industry, combined with the steady increase in demand expectations on the demand side of the tourism industry, resulting in a sustained upward trend in the prosperity of the tourism industry. In the future, the hotel industry is expected to indirectly benefit from the policy dividends, with an increase in the number of guest stays and transaction volume, further accelerating development.
Furthermore, it can be foreseen that hotel investment and the confidence of hotel franchisees will be comprehensively boosted. With the increasing number of Atour stores, its core business continues to grow strongly with a high level of certainty. At the same time, based on Atour's leading position in the mid-to-high-end hotel market, its profitability will most likely remain at a high level. Market share will further increase, attracting more attention from investors and market funds.
"Experience" is the underlying logic of the development of the supply side, and Atour provides sample references.
Returning to the hotel itself, the success and enduring nature of mid-to-high-end hotel brands always comes down to the consumer experience. Will customers want to make repeat purchases and become long-term loyal users of the hotel? From the investor's perspective, this will truly impact and determine the hotel's performance, user base, and user stickiness, thereby changing the capital market's value judgment of hotel brands.
According to a research report, in the post-epidemic era, consumers are paying more attention to lifestyle and personalized experiences. Mid-to-high-end brands with a focus on service experiences are likely to benefit first. This means that, to capture the needs of business travelers and leisure vacationers, "experience" will be the key for hotel brands to break through in the competitive second half.
In this regard, Atour has already taken a unique path worthy of industry reference. Up to now, Atour has deeply managed its customer base, extending the 'Chinese experience' from daily hotel operations to covering clothing, food, lodging, transportation, entertainment, and many other scenes. At the same time, the operation of stores from booking to check-out has been subdivided into 17 service touchpoints.
In the second quarter of this year, Yado's hotel network continued to expand to better meet consumers' experiential needs. In the second quarter, 123 new hotels were opened, further accelerating from the 97 in the previous quarter, setting a new quarterly record. As of the end of the second quarter, Yado Group has a total of 1,412 operating hotels, a year-on-year growth of 36.6%, and there are 712 hotels in the development pipeline.
The retail business, which is extended based on experience, has also experienced rapid development. Financial report data shows that Yado Group's GMV in the retail business has reached 0.62 billion yuan in the second quarter, a year-on-year increase of 157.6%.
The recognition of Yado's own brand by users is increasing, which has also led to continuous growth in the scale of Yado A-Card members. As of the end of the second quarter, the number of registered members of Yado has exceeded 76 million, a year-on-year increase of 72.5%. Having a high self-owned customer base allows for an effective reduction in OTA commission rates and enhances the profitability of individual stores, which is essentially a positive feedback brought about by the upgrading of user experience.
In the long run, as Yado continues to upgrade the user experience, the hotel and retail businesses will form synergies, further optimizing the membership system's cost, and open up broader growth space for the company's performance.
Therefore, whether it is for the development of the mid-to-high-end hotel industry or for investors to make investment judgments, Yado's differentiated operating strategies, diversified layout, and brand operation model provide valuable references.
Conclusion:
Looking ahead, the growth of the mid-to-high-end hotel market is certain. In the short term, summer cultural and tourism consumption is reaching new highs, so Yado's performance in the third quarter is still worth looking forward to. In the long term, the brand penetration rate and chain rate of the mid-to-high-end hotel market are relatively low, and the industry has sufficient room for development.
It is worth mentioning that after the financial report was published, Yado Group also announced a three-year dividend policy, planning to distribute dividends of no less than 50% of the previous fiscal year's net profit each year. This year, the company will distribute cash dividends of approximately $62 million, at a rate of $0.15 per ordinary share or $0.45 per ADS, and it is expected to be paid around September 30.
With a clear future dividend plan, providing shareholders with clear expectations effectively boosts market confidence in the company's future development. In addition, against the backdrop of China's strong tourism industry, policies promoting the development of the cultural and tourism industry will be successively introduced at the national and local levels, driving the hotel industry upward. Yado is expected to be favored by investors in the long term.