Atour Lifestyle Holdings - Earnings Call - Q3 2025
November 25, 2025
Transcript
Operator (participant)
Hello, ladies and gentlemen. Thank you for standing by, and welcome to Atour Lifestyle Holdings' third quarter 2025 earnings conference call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a Q&A session. Today's conference is being recorded. I would now like to turn the conference over to Mr. Luke Hu, Senior IR Manager. Please go ahead, sir.
Luke Hu (Senior IR Manager)
Thank you, Operator. Good morning and good evening, everyone. Welcome to our third quarter 2024 earnings conference call. Today, you will hear from our founder, Chairman, and CEO, Mr. Wang Haijun, and our EVP Co-CFO, Mr. Wu Jianfeng. Before we continue, please be aware that this discussion will include forward-looking statements under federal securities laws. These statements are subject to various risks and uncertainties, and the actual results may differ significantly from what is stated or implied in our comments today. The company is not obligated to update any forward-looking statements except as required by applicable laws. Additionally, during this call, our management will discuss certain non-GAAP financial measures solely for comparison purposes. For a clear understanding of these measures and the reconciliation of GAAP to non-GAAP financial results, please refer to the earnings release issued earlier today.
Furthermore, a webcast replay of this conference call will be accessible on our website at ir.yadoo.com, where a copy of the results presentation is also available. Now, I will turn the call over to Mr. Wang, our CEO.
Haijun Wang (Founder, Chairman, and CEO)
[Foreign language]
Thank you, Luke. Hello, everyone. Thank you for joining Atour's third quarter 2025 earnings call today.
[Foreign language]
Amid the ongoing volatility in the macro environment, consumers have shown a clear shift toward prioritizing value and making more rational purchasing decisions. Innovative experiences emerging from new scenarios and business models have become a key force driving the release of consumption potential. For the hotel sector, the overall market has shown a moderate recovery since the third quarter. While travel and leisure demand continues to be robust, the industry is also characterized by rapidly shifting hotspots and uneven recovery across regions. In the retail market, consumption is increasingly centered around experiential offerings and quality-of-life upgrades. Evolving consumer habits coupled with technological advancements are jointly fueling development across various segments. As a leading lifestyle group, Atour keenly observes the evolution of user needs and captures consumption trends with precision.
Through continuous innovation and enhanced experience in both our hotel and retail businesses, we consistently respond to and lead contemporary consumers' pursuit of quality living.
[Foreign language]
Now, I would like to provide more details on our performance for the third quarter of 2025.
[Foreign language]
Let's begin with our hotel business. Please turn to slide four of our third quarter 2025 results presentation. In the third quarter, our RevPAR was RMB 371.3, representing 97.8% of its level in the same period of 2024. Specifically, OCC nearly recovered to the prior year level at 99.9% of the same period in 2024, and ADR reached 98.1% of its level in the same period of 2024.
[Foreign language]
Please turn to slide five. In the third quarter, RevPAR for our mature hotels in operation for more than 18 months was 95% of the level in the same period of 2024, while OCC and ADR stood at 98.5% and 96.6% of their levels in the same period of 2024, respectively.
[Foreign language]
Please turn to slide six. Driven by our brand power and product excellence, Atour's hotel network steadily expanded with the successful launch of various high-quality projects. In the third quarter, we opened 152 new hotels, a record high for a single quarter. By the end of the third quarter, we had a total of 1,948 hotels in operation, representing a 27.1% year-over-year increase. We have full confidence in achieving our strategic target of the 2,000 premier hotels by year-end, laying a solid foundation for the next phase of our journey.
[Foreign language]
As of the end of the third quarter, our pipeline of hotels under development remained steady at 754. Amid our rapid expansion, we remain steadfast in our quality-first principle. By applying rigorous project selection criteria and strict quality standards, we are driving healthy and sustainable high-quality growth.
[Foreign language]
Next, I would like to share the latest developments for our hotel brands.
[Foreign language]
Please turn to slide seven. Within our upper-mid-scale product portfolio, Atour 3.6 represents a new benchmark for Atour Series 3 hotels. To date, we have opened 19 Atour 3.6 hotels, which continue to gain market recognition and acclaim. Through meticulous attention to detail and optimized scenario design, Atour 3.6 seamlessly integrates functional amenities, premium service, and humane ambience. It effectively addresses the core needs of guests for efficiency and comfort, offering a new, more refined choice for travel experiences.
[Foreign language]
Please turn to slide eight. Grounded in a forward-looking understanding of consumers' long-term needs, Atour Series 4 has received strong market recognition, reaffirming its precise product positioning. In the third quarter, the RevPAR of Atour 4.0 hotels in operation for more than three months surpassed RMB 500. While delivering both functional utility and emotional value, Atour 4.0 hotels place greater emphasis on fostering a deep resonance with guests, creating a healing experience that promotes holistic well-being.
[Foreign language]
The upper-mid-scale segment has long been our core focus and a strategic foundation. By leveraging the synergistic deployment of Atour Series 3 and Series 4, we effectively serve the diverse needs of different customer groups. As Atour products continue to penetrate core business districts across cities, we will further solidify our competitive moat and a leading position in the upper-mid-scale market.
[Foreign language]
Please turn to slide nine. SAVHE Hotel represents a significant breakthrough for us in the upper-scale lifestyle segment. In the third quarter, the two operating hotels demonstrated robust performance, with RevPAR exceeding RMB 900. On November 18, our third SAVHE Hotel began its soft opening in Guangzhou and has already received positive market feedback. With its unique design style and exceptional accommodation experience, SAVHE Hotel continues to attract a diverse clientele, demonstrating its substantial growth potential.
[Foreign language]
SAVHE Hotel is dedicated to creating rejuvenating journeys for the discerning clientele, masterfully fusing Eastern cultural heritage with modern aesthetics. We are now collaborating with a professional institution to integrate scientific wellness concepts across the guest experience, from customized healthy diet to carefully curated in-room amenities, building a comprehensive deep experience for guests, and showcase our thoughts and practice of the Chinese experience concept in the upscale segment. For our expansion strategy, we will continue to adhere to precise site selection, striving to make every SAVHE Hotel a model of local upscale lifestyle.
[Foreign language]
Please turn to slide 10. For our mid-scale brand, we consolidated our differentiated advantages by continuously refining our products, improving operational efficiency, and enhancing brand building. Atour Light continued its strong performance in the third quarter, with the RevPAR of Atour Light Series 3 hotels in operation surpassing year-go levels. As the latest upgraded version, Atour Light 3.3 has seen its first batch of hotels successively opened. Atour Light 3.3 features a more mature model that incorporates targeted optimizations in practicality and spatial aesthetics, earning strong acclaim from both users and franchisees.
[Foreign language]
At the current stage, Atour Light will continue to concentrate its presence in higher-tier cities, advancing steadily while building brand recognition through benchmark projects. Simultaneously, we are systematically enhancing our operational framework by refining service touchpoints, optimizing operational standards, and strengthening talent development. These efforts ensure premium experiences while consistently driving operational efficiency, solidifying our competitive edge in the mid-scale segment and laying a solid foundation for long-term development of Atour Light brand.
[Foreign language]
Moving now to our retail business, please turn to slide 11.
[Foreign language]
During the third quarter, our retail business sustained strong growth, with GMV reaching RMB 994 million, representing a 75.5% year-over-year increase. Online channels continue to contribute over 90% of total GMV. During the recently concluded Double 11 Shopping Festival, Atour Planet has not only delivered its excellent sales momentum but has also further strengthened the deep sleep brand image in the minds of users. Meanwhile, across both the third quarter and the Double 11 period, Atour Planet also ranked among the top brands in the betting category on major third-party platforms.
[Foreign language]
Please turn to slide 12. The outstanding performance of Atour Planet keeps validating our ability to provide comprehensive sleep solutions in the market. In our core categories, we pursue breakthrough innovation through initiatives like collaborative R&D with academic institutions, consolidating our competitive advantages while gradually expanding market reach. Meanwhile, based on in-depth insights into user needs, we are also developing new categories such as Deep Sleep Fitted Sheet and Deep Sleep Loungewear, refining and enriching the sleep ecosystem of Atour Planet. Next, I will now walk you through the latest updates on Atour Planet's core categories.
[Foreign language]
Please turn to slide 13. In the third quarter, Atour Planet continued to lead the market in the pillow category across major third-party platforms. Deep Sleep Memory Foam Pillow Pro 3.0 has received glowing reviews for its excellent support and comfort. Since its launch, it has shown strong sales performance, exceeding RMB 100 million GMV in just 25 days, reducing 19 days compared to the previous generation. Up till now, the cumulative sales volume of the Deep Sleep Pillow series has exceeded 8 million units since its release. In addition, we've expanded the pillow portfolio with products like Deep Sleep Travel Pillow and Deep Sleep Pillow for children, gradually building a product portfolio that covers different scenarios and serves various user groups. This expansion demonstrates our execution capabilities in enhancing sleep experiences while reinforcing our category leadership position.
[Foreign language]
Please turn to slide 14. Atour Planet is leading the transformation of the comforter category driven by the exceptional performance of our Deep Sleep Thermoregulating Comforter Series. At the season's change, we launched two upgraded products in the third quarter: Deep Sleep Thermoregulating Comforter Pro 2.0, all-season and winter season, both feature an upgraded dual-layer temperature control system that dynamically adjusts the sleep microenvironment for more stable rest. To date, the cumulative sales volume of the Deep Sleep Thermoregulating Comforter Series has exceeded 2 million units since its launch.
[Foreign language]
Please turn to slide 15. With the launch of new products targeting users' core sensory needs during sleep, we officially released the Atour Planet Deep Sleep Standard, covering the dynamic pressure stabilization factor for the pillow category and the dynamic temperature management factor for the comforter category. In the future, this standard will serve as the core criterion for product iteration, ensuring high quality and consistency of products. The establishment of this standard has also driven us to continuously enhance our supply chain capabilities, further strengthening our competitive advantages and the technical barriers in the sleep field. Our goal with this is to elevate industry standards and make natural deep sleep an experience that every user can truly perceive and achieve.
[Foreign language]
In the current market where imitators and followers are emerging, Atour Planet remains committed to its founding aspiration, dedicated to listening to users' genuine needs and refining product details. Our deep understanding and agile responsiveness to user needs have become a solid moat supporting long-term brand development. In the meantime, we'll keep strengthening our foundational capabilities. We'll pursue excellence in product development, supply chain management, and quality control to solidify a strong foundation for healthy growth. Looking to the future, we're ready to work with our industry partners to move forward together and guide China's sleep industry to a new stage of higher quality development.
[Foreign language]
Please turn to slide 16. Last but not least, I would like to share our progress across our membership business and channel development.
[Foreign language]
With our growing brand influence and the continuous enrichment of our membership benefit system, our membership base maintained robust growth. By the end of the third quarter, the number of registered individual members exceeded 108 million, representing a year-over-year growth of over 30%. In terms of channel development, our core CRS channel remained stable, accounting for 62.4% of the total room nights sold in the third quarter. The contribution of room nights sold to corporate members was 20% during the quarter.
[Foreign language]
Please turn to slide 17. The evolution of the A-CARD system and the upgrade of membership benefits stem from our deep understanding of members' genuine needs. By integrating online and offline resources, we've created multi-scenario end-to-end service experiences that continuously explore innovative possibilities in quality living. Looking ahead, we will sharpen A-CARD's brand positioning. With a focus on a complete customer lifecycle, we'll analyze consumption patterns across accommodation and retail scenarios among different user groups, expanding lifestyle experiences and introducing compelling benefits and activities to deepen emotional connection with our members.
[Foreign language]
Please turn to slide 18. Moving forward, we will continue to deepen our focus across three key areas of user, employee, and fundamental capabilities. As for our users, we will always adhere to the user-first philosophy, embedding it across all touchpoints of our hotel and retail businesses. We'll continuously enhance users' experiences and deepen our emotional connection with them. For our employees, we pay close attention to their growth trajectories and accumulated experience. Through diversified mechanisms, we redefine traditional industry promotion and development paths, driving continuous organizational evolution. To strengthen our foundational capabilities, we have been leveraging digital solutions alongside granular operations management, thus driving a comprehensive upgrade in both efficiency and the customer experience, providing a solid foundation of the group's long-term sustainable high-quality growth.
[Foreign language]
I will now turn the call over to our co-CFO, Mr. Wu Jianfeng, who will discuss our financial results.
Jianfeng Wu (EVP and Co-CFO)
Thank you, Haijun. I would like to present the company's financial performance for the third quarter of 2025. Please turn to slide 20 of the result presentation. Our net revenues for the third quarter of 2025 grew by 38.4% year-over-year and 6.5% quarter-over-quarter to RMB 2,628 million. Revenues from our manachised hotels for the third quarter of 2025 were RMB 1,560 million, up 32.3% year-over-year and 20.1% quarter-over-quarter. The year-over-year increase was primarily fueled by the ongoing expansion of our hotel network. The total number of our manachised hotels increased from 1,504 as of September 30th, 2024, to 1,924 as of September 30th, 2025. The quarter-over-quarter increase was mainly due to the growth in RevPAR and our supply chain business. Revenues contributed by our leased hotels for the third quarter of 2025 were RMB 164 million, representing a decrease of 13.4% year-over-year and an increase of 9.7% quarter-over-quarter.
The year-over-year decline was primarily driven by a decrease in the number of leased hotels as a result of our product mix optimization. The quarter-over-quarter increase was mainly due to an increase in RevPAR. Revenues from our retail business for the third quarter of 2025 were RMB 846 million, reflecting a 76.4% year-over-year increase but a 12.3% quarter-over-quarter decline. The year-over-year growth was driven by increasing brand recognition, successful product innovation, and a broadened range of product offerings. The quarter-over-quarter decline was primarily due to the seasonality of our retail business. Now let's move to cost and expenses. Please turn to slide 21. Hotel opening costs for the third quarter of 2025 increased by 23.5% year-over-year and 21.1% quarter-over-quarter to RMB 1,082 million. These increases were primarily due to higher variable costs, such as supply chain costs and hotel manager costs, associated with our ongoing hotel network expansion.
Gross margin of our hotel businesses expanded to 37.3% in the third quarter of 2025 from 36.0% during the same period of 2024, primarily due to a lower proportion of leased hotels as a result of our product mix optimization. Retail costs for the third quarter of 2025 went up by 36.3% year-over-year and down by 11.2% quarter-over-quarter to RMB 400 million. The year-over-year increase was associated with the rapid growth of our retail business. Gross margin of our retail business remained stable compared to the same period of 2024. Now please turn to slide 22. Setting and marketing expenses for the third quarter of 2025 were RMB 355 million, compared with RMB 218 million for the same period of 2024. Setting and marketing expenses accounted for 13.5% of net revenues for the third quarter of 2025, compared with 11.5% for the same period of 2024.
The increase was mainly due to investment in brand recognition and the effective development of online channels, in line with the growth of our retail business. General and administrative expenses for the third quarter of 2025 were RMB 100 million and included RMB 10 million in share-based compensation expenses, compared with RMB 82 million for the same period of 2024, which also included RMB 3 million in share-based compensation expenses. General and administrative expenses, excluding share-based compensation expenses, accounted for 3.4% of net revenues for the third quarter of 2025, compared with 4.2% for the same period of 2024. The decrease was primarily due to improved management efficiency and economics of scale. Technology and development expenses for the third quarter of 2025 were RMB 44 million, compared with RMB 30 million for the same period of 2024.
Technology and development expenses accounted for 1.7% of net revenues for the third quarter of 2025, compared with 1.6% for the same period of 2024. Please turn to slide 23. Adjusted net income for the third quarter of 2025 was RMB 488 million, representing a 27.0% increase year-over-year. Adjusted net profit margin for the third quarter of 2025 was 18.6%. Adjusted EBITDA for the third quarter of 2025 was RMB 685 million, up by 28.7% year-over-year. Adjusted EBITDA margin for the third quarter of 2025 was 26.1%. Now please turn to slide 24. We also maintained a healthy cash position. As of September 13th, 2025, our cash and cash equivalent totaled RMB 2,670 million, with net cash of RMB 2,603 million. Please turn to slide 25.
In line with our commitment to enhancing shareholder value and our annual dividend policy adopted in August 2024, today we declare our second cash dividend for 2025, totaling approximately US dollar 50 million. Through a comprehensive shareholder return initiative encompassing dividends and share repurchase, we are taking concrete actions to reward shareholders' trust and support, enabling all shareholders to share in the company's growth achievements. Please turn to slide 26. For full year 2025, given ongoing network expansion and rapid growth of our retail business, we currently expect total net revenues to increase by 35% compared with full year 2024. That concludes our financial highlights for the third quarter of 2025. Now let's open for Q&A.
Operator (participant)
Thank you, Management. We will now begin the question and answer session. To ask a question, please press star one one and wait for a name to be announced. For the benefit of all participants on today's call, if you raise your questions in Chinese, please immediately repeat your questions in English. Please limit your questions to one at a time. If you wish to have follow-up questions, please rejoin the queue. One moment for the first question. Our first question comes from the line of Dan Chee from Morgan Stanley. Please go ahead.
Dan Chee (VP of Equity Research)
[Foreign language] Hello Management, could the management share the RevPar trend since October? And also, if it's possible, can you provide your outlook for RevPAR in the fourth quarter and also potentially next year? Thank you.
Haijun Wang (Founder, Chairman, and CEO)
[Foreign language]
Thank you, Dan. Let me address your question. Since the beginning of this year, with the continued recovery in industry supply and the demand dynamics, we sticked to a high-quality development and leveraged a refined strategy of revenue management, demonstrating strong operational resilience. Throughout the first three quarters of this year, our RevPAR has shown a trend of progressive improvement on a year-over-year basis.
[Foreign language]
During the National Day holiday, leisure travel demand remained robust, but the market exhibited some significant structural divergence. Driven by stronger ADR, our RevPAR achieves year-on-year growth. After the holiday, the market returned to a business-dominated environment. But benefiting from active exhibitions and business travel activities, the demand in core cities demonstrated strong resilience. Therefore, we expect the pressure from the year-on-year decline in RevPAR to further ease in the fourth quarter.
[Foreign language]
Looking ahead, the market will continue to show divergence, with still some challenges and uncertainties remaining. We will continue to deeply understand user needs, strengthen our foundational capabilities, attract the users with high-quality hotel products, and differentiated experiences. By forging deeper emotional ties with them, we will secure long-term advantages in a volatile market environment and demonstrate our resilience for development.
[Foreign language]
Thank you.
Luke Hu (Senior IR Manager)
Thank you, Dan. Next question, please.
Operator (participant)
Thank you for the question. Next question comes from Sijie Lin of CICC. Please go ahead.
Sijie Lin (Analyst)
[Foreign language] So thank you, Management. Could you please share more about the recent new hotel signing trends and whether there are any changes to the full year hotel opening and closure targets? Thank you.
Haijun Wang (Founder, Chairman, and CEO)
[Foreign langauge] Sijie [Foreign language]
Thank you, Sujie. Let me answer your question. In recent years, we found that during our scale expansion, Atour has consistently maintained our strategic focus on premier hotels, concentrating on core locations for expansion, and we strictly controlled quality. At the same time, we have launched several new hotel products that align with market needs. With the successful launch of many high-quality projects, our brand strength and differentiated competitive advantages have been further solidified. So we do not endorse a growth strategy driven purely by scale. We firmly believe that only by advancing scale growth on the foundation of quality can we achieve sustainable value.
[Foreign language]
Regarding signings, as we mentioned earlier, we maintain a strict selection mechanism, focusing on expansion in core business districts of key cities. With high quality being a prerequisite, the total number of new hotel signings this year is generally in line with last year, maintaining a steady development pace. At the same time, we are also clearing stalled projects in the pipeline in an orderly fashion to promote the healthy development of our pipeline.
[Foreign language]
In terms of openings and closures, we opened 152 hotels in the third quarter. We have full confidence in achieving the full year guidance of 500 new openings and reaching our strategic target of 2000 premier hotels by the end of this year. Meanwhile, for the operating hotels of ours, we place great emphasis on operational quality and user experience. By strengthening standard implementation and refined management, we can ensure that every hotel can deliver consistently high-quality service. To this end, we maintain a certain proactive replacement rate to continuously enhance the quality of our overall hotel network. In the third quarter, we closed 28 hotels and expect approximately 80 closures entirely for this year. Thank you.
Luke Hu (Senior IR Manager)
Thank you, Sijie. Next question, please.
Operator (participant)
Thank you for the question. Next questions come from Chen Xing of UBS. Please go ahead.
Xing Chen (Investment Banking Analyst)
[Foreign language] This is Chenxing from UBS, and my question is about the retail business. Could the management share your perspective on the competition in the retail business? In addition, given the consistent overall performance of the retail business, would you consider any adjustments to your full year retail revenue guidance? Thanks. [Foreign language]
Haijun Wang (Founder, Chairman, and CEO)
[Foreign language]
Thank you, Chen Xing. Let me start by sharing the development strategy of ours and the competitive landscape of our retail business. Since Atour Planet entered the sleep industry, our brand and product power have gradually gained market recognition. This has been followed by a rise in imitators and industry participants, leading to an increasingly fierce competition. However, we always believe that the real competition is not about the peers, but is about the ever-evolving user needs.
[Foreign language]
To address this, we did not simply follow the existing industry path. Instead, we progressively built our products and supply chain system with our distinctive characteristics. For example, we officially launched the Atour Planet Deep Sleep standard recently. This standard differs from traditional industry metrics like fabric weights or thread counts, but it is based on sensory science and the natural rhythms of human sleep, focusing on two core sensory indicators of sleeping users: the fluctuation of pressure and the change of temperature. This standard also places higher demands on our product development and production. We aim to continuously strengthen our product barriers through this forward-looking standard while collaborating with the upstream supplier partners to jointly lead the industry progresses.
[Foreign langauge]
As a relatively new player in the industry, we always plan our layout with a longer-term mindset. While developing quite rapidly, we have been constantly building and consolidating our foundational capabilities. I believe our underlying philosophy is consistent between the retail and hotel businesses, which is to always prioritize quality over scale. Moving forward, Atour Planet will continue to strengthen our product power, remain user-centric, focus on the systematic development of our long-term capabilities, and practice towards group's long-termism development path.
Jianfeng Wu (EVP and Co-CFO)
[Foreign language]
Well, let me address your question about our retail revenue. During the double eleven period, Atour Planet delivered outstanding performance and continuously strengthened our brand presence in the minds of users. Based upon our strong performance in Q3 and the double eleven, we're now raising our full year retail revenue growth outlook to at least 65% year-on-year, and accordingly adjust the group's full year revenue guidance to a growth of 35% year-on-year.
[Foreign language]
Thank you.
Luke Hu (Senior IR Manager)
Thank you, Chen Xing. Next question, please.
Operator (participant)
Certainly. Next question comes from Ronald Leung of Bank of America. Please go ahead.
Ronald Leung (VP)
[Foreign language] Let me translate my question into English. So, we noticed, Atour has announced a second dividend distribution plan this year. could management provide an update on the planning and progress regarding shareholder returns? Thank you.
Haijun Wang (Founder, Chairman, and CEO)
[Foreign language]
Thank you, Ronald. Regarding dividends, as we announced today, our second dividend distribution this year amounts to approximately 50 million US dollars, representing about 29% of last year's net income. Consequently, the cumulative dividend total for this year reaches about 108 million US dollars, accounting for approximately 62% of the prior fiscal year's net income, exceeding our commitment of no less than 50% of that. Additionally, we formally commenced our share repurchase program in September and will continue to execute them in accordance with our established three-year plan.
[Foreign language] gap [Foreign language] payout ratio. [Foreign language]
Looking ahead, we will continue to implement our comprehensive shareholder return program, combining dividends and repurchases, targeting a payout ratio of 100% based upon the previous fiscal year's gap net income, with the specific implementation pace to be dynamically arranged in line with our business development and capital planning. Through these tangible actions, we are committed to creating long-term value and sharing the success of the company with our shareholders in appreciation of your ongoing support and trust.
Luke Hu (Senior IR Manager)
Thank you, Ronald. Next question, please.
Operator (participant)
One moment for the next questions. The next questions come from Lydia Ling of Citi. Please go ahead.
Lydia Ling (Director of Equity Research)
[Foreign language] Thanks management. I'm Lydia from Citi. we noticed the strong operation performance for the, to a light in the third quarter. So could you share, your plan for the, to a light in the next steps and, any plan for accelerating the, store expansion? Thank you.
Haijun Wang (Founder, Chairman, and CEO)
[Foreign langauge] Lydia. [Foreign language]
Thank you, Lydia. Well, yes indeed. In the third quarter, the rap bar of operating Atour Light Series 3 hotels surpassed the level from the same period last year, performing pretty decently. And in fact, since the beginning of this year, Atour Light has achieved notable results in brand building, operational efficiency, user experience, with both operational performance and scale growth meeting our expectations.
[Foreign language]
We always believe that the core of a brand lies in its products. The Atour Light hotel product accurately aligns with the needs and aesthetic preferences of today's young users. The newly launched Atour Light 3.3, with its constantly optimized investment model, achieves a better balance between service experience and operational efficiency. Through the implementation of the first batch of our Atour Light 3.3 project, we are constantly gathering feedback from various sides, refining product details and strengthening our differentiated competitive advantage in the mid-scale market. We expect this scale of Atour Light Series 3 hotels in operation will be reaching 170 to 180 by the end of this year.
[Foreign language]
We are firmly optimistic about the long-term development of Atour Light. At this current early stage of the brand development, we are particularly focused on solidifying the operational foundation and our systematic capabilities. As for our next step, we will systematically build a dedicated operational system for Atour Light, strengthening its differentiated positioning in all aspects, including from brand concept to service delivery. This will not only distinguish it from our main Atour hotel brand, but also highlight the unique value in the mid-scale hotel market. On this basis, we will steadily advance towards a longer-term development goal of hitting 1,000 hotels milestone for Atour Light brand. Thank you.
Luke Hu (Senior IR Manager)
Thank you, Lydia. Next question, please.
Operator (participant)
that concludes today's questions and answer session. I would like to turn the conference back to Mr. Luke for any additional, comments or closing comments.
Luke Hu (Senior IR Manager)
Thank you for joining us today. if you have, any further questions, please feel free to contact our IR team. We look forward to speaking with you again next quarter. Thank you and goodbye.
Operator (participant)
This concludes today's conference call. Thank you for participating. You may now dis.