Atour Lifestyle: A Dual-Engine Growth Story in China's Evolving Hospitality and Retail Sectors

In the dynamic landscape of China's hospitality and retail industries, Atour Lifestyle Holdings Limited has emerged as a standout player, leveraging a dual-engine growth strategy to drive robust financial performance and strategic diversification. By combining aggressive expansion in its hotel operations with innovative retail initiatives, the company has positioned itself as a leader in the upper midscale hospitality segment while tapping into the burgeoning consumer demand for lifestyle-driven products.

Strategic Expansion in Hospitality: Scaling the Hotel Network

Atour's hospitality division has been a cornerstone of its growth, with the company rapidly expanding its hotel network to solidify its market dominance. As of September 30, 2025, Atour operated 1,948 hotels with 219,359 rooms, reflecting a 27.1% year-over-year increase in hotel count and a 25.2% rise in room inventory. This expansion underscores the company's focus on high-quality, sustainable growth, as it continues to strengthen the competitive differentiation of its hotel brands.

The company's third-quarter 2025 results highlight the financial impact of this strategy: net revenues surged by 38.4% year-over-year to RMB2,628 million (US$369 million), driven by the growth of managed and franchised hotels. Despite a slight decline in net income due to elevated operating costs, adjusted net income and EBITDA metrics showed strong growth, signaling improved operational efficiency. This resilience is a testament to Atour's ability to balance scale with profitability, even in a competitive market.

Retail Innovation: Capturing Consumer Trends

While hospitality remains a core pillar, Atour's retail segment has emerged as a second engine of growth, fueled by a deep understanding of evolving consumer preferences. The company's retail gross merchandise value (GMV) in the third quarter of 2025 reached RMB994 million, a staggering 75.5% year-over-year increase. This growth is largely attributed to the company's strong online channel, which contributed over 90% of total GMV.

Central to this success is the launch of the "Atour Planet Deep Sleep Standard," a retail initiative that integrates sensory science into product design to enhance customer experience. By aligning with consumer demands for experiential offerings and quality-of-life improvements, Atour has transformed its retail business into a complementary ecosystem that reinforces its hospitality brand. For instance, the second quarter of 2025 saw retail GMV reach RMB1,144 million, an 84.6% year-over-year jump, demonstrating the scalability of this approach.

Dual-Engine Synergy: A Competitive Advantage

Atour's dual-engine model is not merely additive but synergistic. The company's hotel operations provide a ready-made customer base for its retail products, while its retail innovations enhance the value proposition of its hospitality services. This cross-sector integration creates a flywheel effect: loyal hotel guests become retail customers, and vice versa.

Moreover, Atour's strategic focus on operational efficiency and innovation has allowed it to outpace competitors. Founder and CEO Haijun Wang emphasized the company's commitment to capturing consumption trends and delivering value to customers, a philosophy that has translated into consistent revenue growth across both sectors. For example, first-quarter 2025 net revenues rose by 29.8% year-over-year to RMB1,906 million (US$263 million), driven by the dual-engine strategy.

Risks and Opportunities

While Atour's growth trajectory is impressive, challenges remain. Rising operating costs have temporarily pressured net income, though adjusted metrics suggest underlying strength. Additionally, the retail sector's reliance on online channels exposes the company to digital market volatility. However, Atour's ability to innovate-such as through the "Deep Sleep Standard"-positions it to mitigate these risks by continuously differentiating its offerings.

Looking ahead, the company's long runway for growth lies in its ability to expand its hotel network into underserved regions and further diversify its retail product portfolio. With China's hospitality and retail markets projected to grow in tandem with rising disposable incomes, Atour's dual-engine model is well-positioned to capitalize on these trends.

Conclusion

Atour Lifestyle's strategic diversification into hospitality and retail has created a resilient, high-growth business model. By leveraging its hotel operations as a foundation for retail innovation and vice versa, the company has built a competitive moat that aligns with evolving consumer demands. For investors, Atour represents a compelling case study in how dual-engine growth can drive both scale and profitability in a rapidly changing market.