Atour Lifestyle, China’s fast-growing hospitality brand, has ambitious plans to open 500 new hotels this year despite facing headwinds in recent quarterly sales. This expansion push comes as the company navigates China’s uneven economic recovery in the post-pandemic travel market.
The hotel chain reported slightly lower-than-expected fourth-quarter revenue, yet its management remains bullish on growth prospects. CEO Wang Haijun told investors during last week’s earnings call that the company is doubling down on its distinctive “lifestyle” approach that blends local culture with upscale amenities. “We’re seeing strong demand for premium experiences even as overall consumer spending remains cautious,” Wang explained.
Atour currently operates over 1,000 properties across China, primarily in first and second-tier cities. The planned expansion would increase its footprint by nearly 50% in just twelve months. Industry analysts view this aggressive growth strategy as a calculated bet on China’s domestic tourism recovery.
The company’s fourth-quarter results showed a 4.2% revenue decline compared to the previous year, totaling ¥912 million ($126 million). However, this needs to be placed in context of China’s broader economic challenges. The country’s GDP growth has slowed to around 5%, while youth unemployment remains stubbornly high at nearly 15%, according to recent government data.
Despite these headwinds, Atour’s occupancy rates actually improved to 76.8% last quarter, up from 73.1% a year earlier. This suggests the brand continues to resonate with Chinese travelers seeking affordable luxury experiences.
The expansion strategy focuses heavily on China’s emerging “new first-tier” cities like Chengdu, Hangzhou, and Nanjing. These urban centers have growing middle-class populations but remain underserved by boutique and lifestyle hotel concepts. “There’s a real opportunity to capture travelers who want something beyond standard cookie-cutter accommodations,” said Lin Wei, Atour’s Chief Development Officer.
Funding for this ambitious growth comes partly from the company’s successful 2022 IPO on the Nasdaq, which raised approximately $52 million. Atour has maintained a relatively strong balance sheet with cash reserves of around $220 million as of December 2023.
Competition in China’s hotel market remains fierce. Industry giants like Huazhu Group and Jin Jiang International dwarf Atour in size, while international chains including Marriott and Hilton continue aggressive expansion in the country. What sets Atour apart is its focus on the upper-midscale segment with strong design elements and technology integration.
The company’s RevPAR (Revenue Per Available Room) – a key industry metric – stood at ¥231 ($32) in Q4 2023, slightly below its peak but still competitive for its market segment. This indicates Atour’s pricing power remains relatively strong despite economic pressures.
One challenge facing the expansion is China’s real estate market troubles. With property developers struggling and commercial real estate values declining, Atour must navigate carefully in selecting new locations. The company primarily uses a franchise model, which mitigates some direct property risk but still depends on partners’ financial health.
Industry consultant Zhang Mei of China Hospitality Review notes, “Atour’s asset-light approach gives them flexibility, but they’ll need to be extremely selective about franchise partners given current market conditions. Not all developers have the capital to maintain quality standards.”
Beyond physical expansion, Atour continues investing in its digital ecosystem. The company’s mobile app has over 15 million registered users, allowing for direct bookings and personalized services. This digital strategy helps reduce dependency on online travel agencies like Trip.com and Meituan, which typically charge commissions
