Atour Hotel Group has reported a year of strong financial performance and expansion, with a significant increase in both hotel and retail revenues in 2023. The company's revenue per available room (RevPAR) exceeded pre-pandemic levels, and they have ambitious plans to expand their nationwide portfolio to 2,000 premier hotels by 2025.
Atour's earnings call highlighted their strategy to enhance the customer experience through cultural experiences, digitalization, and a focus on sleep products. The company also discussed financial strategies, including rewarding shareholders and maintaining strong cash flow.
Key Takeaways
- Atour surpassed its expansion targets in 2023, opening 289 new hotels and signing 576 projects.
- The company plans to increase its portfolio to 2,000 hotels by 2025, focusing on cultural experiences and digitalization.
- RevPAR recovered to 109% of 2019 levels in Q4, indicating a strong post-pandemic recovery.
- Full-year GMV for the retail business reached RMB 1.14 billion, with a significant membership and corporate sales increase.
- Atour reported a year-over-year net revenue increase of 140.4% for Q4 and 15.3% quarter-over-quarter.
- Revenue growth was driven by expansion in hotel and retail businesses, with manachised and leased hotel revenues up by 133.3% and 40.4% year-over-year, respectively, for Q4.
- The retail business saw a 315.6% year-over-year revenue increase for Q4.
- Atour targets a 30% revenue growth for 2024 and expects retail revenue to grow more than 50%, reaching RMB 1.45 billion.
- The company enjoyed preferential tax policies in 2023, including a one-off tax exemption in Q4.
- Atour Light 3.0, the mid-scale hotel offering, performed well with over 90 new signings in 2023.
Company Outlook
- Atour aims to expand its portfolio with a focus on premier hotels and aims to reach 2,000 hotels by 2025.
- The company plans to enhance customer experiences by integrating cultural elements and advancing digital services.
- A 30% growth in revenue is targeted for the full year of 2024, with a strong focus on expanding product categories, particularly sleep products.
Bearish Highlights
- No specific bearish highlights were mentioned in the earnings call transcript summary provided.
Bullish Highlights
- Atour's RevPAR has fully recovered from the pandemic, surpassing 2019 levels.
- The retail business has experienced substantial growth, contributing significantly to the company's revenue.
- Atour Light 3.0 has shown competitive operational performance and is expected to become a leading brand in the mid-scale hotel segment.
Misses
- The summary provided does not contain any specific information regarding misses or underperformance.
Q&A Highlights
- Management expressed confidence in attracting more franchisees with the influence of their brand and competitive products.
- The expected tax rate decrease in Q4 2023 was discussed, along with plans for cash utilization, including potential shareholder rewards.
- The success of Atour Light 3.0 was a focus, with its popularity among franchisees and competitive RevPAR performance.
Atour Hotel Group (ticker not provided) has demonstrated a robust financial performance and strategic growth in the hotel and retail sectors, setting high targets for expansion and revenue in the coming years. Their focus on enhancing the customer experience through cultural and digital initiatives, along with a strong emphasis on their retail and mid-scale hotel offerings, positions them well for future success. The company's financial strategies indicate a commitment to shareholder value and a strong cash flow position.
InvestingPro Insights
Atour Hotel Group's impressive performance and ambitious expansion plans are reflected in their financial metrics and strategic positioning within the industry. Here are some insights from InvestingPro that shed light on the company's current financial health and market valuation:
InvestingPro Data:
- Market Cap (Adjusted): 2.47B USD, indicating a solid size within the sector.
- P/E Ratio (Adjusted) for the last twelve months as of Q4 2023: 24.93, suggesting the market has positive earnings expectations from the company.
- Revenue Growth for the last twelve months as of Q4 2023: An impressive 106.19%, highlighting the company's rapid expansion and increased market share.
InvestingPro Tips:
- Atour Hotel Group is a prominent player in the Hotels, Restaurants & Leisure industry, which aligns with their strategy of enhancing the customer experience and expanding their hotel portfolio.
- The company holds more cash than debt on its balance sheet, signaling a strong financial position that can support their ambitious growth plans.
For investors interested in a deeper analysis, there are additional InvestingPro Tips available, including insights on cash flow, liquidity, and profitability. For example, Atour's cash flows can sufficiently cover interest payments, and their liquid assets exceed short-term obligations, providing financial stability. Analysts predict the company will be profitable this year, which is supported by the fact that Atour has been profitable over the last twelve months.
To explore these valuable insights, consider subscribing to InvestingPro. Use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. In total, there are 8 InvestingPro Tips available that could help investors make more informed decisions about Atour Hotel Group.
Full transcript - Atour Lifestyle Holdings ADR (ATAT) Q4 2023:
Operator: Thank you. Welcome to our Fourth Quarter and Full Year 2023 Earnings Call. Today you’ll hear from Chairman and CEO, Mr. Wang Haijun and our Co-Chief Financial Officer, Mr. Wang Shoudong and Mr. Wu Jianfeng. Before we continue, please be aware that today's discussion will include forward-looking statements under federal securities laws. These statements are subject to various risks and uncertainties, and 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 a 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 available on our website at ir.yaduo.com. Now, I will turn the call over to Mr. Wang, our CEO.
Haijun Wang: [Foreign Language] Thank you, Alison. Hello, everyone, and thank you for joining Atour's fourth quarter and full year 2023 earnings call today. [Foreign Language] 2023 was an exceptional year for Atour where we unveiled our strategic vision for expanding our portfolio to 2,000 premier hotels nationwide by 2025 and establishing the Chinese experience as the industry benchmark. Throughout the year, we worked diligently to enhance digitalization, organization and corporate culture, as well as our management and operations capabilities, which have become the pillars of our sustainable growth as an experienced proven business. Today, our signature Chinese experience is resonating deeply with people revoking a profound collective response. Moreover, we have achieved significant milestones in our hotel network expansion. In 2023, we opened a total of 289 new hotels and signed additional 576 projects surpassing the targets we set at the beginning of the year and laying a solid foundation for our goal of our 2,000 premier hotels by 2025. [Foreign Language] 2024 is poised to be a year of innovation and breakthroughs as we build on this success. To advance our Chinese experience strategy, we will remain dedicated to providing our customers with multi-faceted services and exceptional experiences that go beyond accommodation. First, we will promote greater awareness of our cultural inviting and interesting experiences. Cultivating lasting bonds with our discerning customers. Second, we aim to establish a virtual cycle fostering seamless customer crossover between retail and accommodation to bring our unique deep sleep experience to all of our members. Finally, we will continue to advance digitalization empowering experiential upgrades and elevating the Chinese experience to new heights. In terms of our network expansion strategy, we will continue to solidify Atour’s leading position in the upper mid-scale market, while expanding Atour’s brand awareness in the middle scale market and establish a sustainable mutually beneficial franchisee ecosystem to help drive our hotel networks’ steady growth. [Foreign Language] Now, I would like to provide more details on our performance for the fourth quarter and full year of 2023. [Foreign Language] Let’s begin with our hotel business. In the fourth quarter, our RevPAR recovered to 109% of 2019’s level with both ADR and OCC exceeding 2019’s level for the fourth consecutive quarter. Specifically, RevPAR’s recovery rate for October, November and December was 109%, 107% and 110% respectively, compared with the same periods in 2019. These results underscore the resilience of our hotel business, which is primarily fueled by business travel demand. Additionally, our mature hotels in operation for more than 18 months performed well during the quarter. Their same-hotel RevPAR recovery rates reached 110% of 2019’s level in the fourth quarter aligning with the overall performance of our hotel business. [Foreign Language] Meanwhile, we have assembled a highly competitive development team with an efficient organizational structure and a unified development strategy in core business districts to empower the rapid expansion of our hotel network. In the fourth quarter, we opened another 100 hotels, a record high on a quarterly basis, resulting in a total of 289 new openings for the full year. As of the end of 2023, we had a total of 1,210 hotels in operation. Furthermore, our new signings remained robust in the fourth quarter with our pipeline continuing to expand. As of December 31st, the number of hotels under development reached 617, representing a 70% year-over-year increase. Atour Like 3.0, our mid-scale offering continued to garner market recognition as evidenced by 27 new signings during the fourth quarter accounting for over 15% of our total new signings for the period. As of the end of 2023, we had a total of 25 Atour Light 3.0 hotels in operation, which progressed swiftly through the ramp up phase and began demonstrating robust operational performance upon entering the mature stage. Particularly, in the core business districts of higher tier cities, these hotels have emerged as leaders in both operating performance and customer experiences highlighting Atour Light 3.0’s strengths across products, services and brand influence in the mid-scale market. [Foreign Language] Furthermore, we officially established an independent branding department for Atour Light in the fourth quarter with the primary focus on crafting a differentiated accommodation brand image preferred by young customers. We introduced a series of distinctive services represented by Blue Fronts[Ph] allowing customers to deeply explore local tourism, cultural and culinary specialties. These initiatives and efforts are dedicated to providing each of our Atour Light customers with a simple tour and relaxing accommodation experience. In addition to better catered to young business travelers preferences, we introduced our innovative exclusive Atour Light privilege services embracing the concept of ‘Life at Ease’ Atour Light 3.0 fulfills young business travelers’ demand for a stylish personalized and high quality accommodation experience and is earning increasing recognition among customers. As the next flagship brand, we are propelling towards the 1,000 hotel mark. We are confident in Atour Light 3.0’s tremendous potential and firmly believe that it will lead the comprehensive upgrade of China’s mid-scale hotel market. [Foreign Language] In the upper mid-scale market, we launched Atour 4.0 in November last year, capturing widespread attention and a claim from the market upon its release guided by even more even more stringent criteria we have successfully identified our batch of projects within carefully chosen properties across target cities. The very first Atour 4.0 hotel is progressing smoothly and is scheduled to open soon. We are confident that as we gradually unveil Atour 4.0 hotels, they will take our entire upper mid-scale portfolio to the next level. [Foreign Language] Moving now to our prime memberships, bolstered by Atour’s escalating brand recognition, our membership base grew substantially in the fourth quarter of 2023. As of December 31st, our registered members searched by 78% year-over-year exceeding 63 million. Furthermore, a key digitalization initiative this year is to seamlessly integrate retail scenarios into our membership benefits and establish a Unified One ID Atour Membership, which will ultimately encourage mutual access and growth between these two major business segments. Moving forward, we will augment premium benefits across all scenarios, unlock value through smooth integration of our corporate and individual membership ecosystems and foster deeper brand collaborations across diverse industries. [Foreign Language] Despite the softening of leisure travel demand during the fourth quarter, business travel activity remained solid. Atour as the preferred brand for business travelers experienced an increase in room night sold through our CRS to 65.1% for the fourth quarter and 63.4% for the full year. Coupled with the rapid expansion of our corporate membership, the contribution of room nights sold to corporate members rose to 20.8% in the fourth quarter. [Foreign Language] Last but not least, our retail business experienced a dramatic surge in 2023 with full year GMV reaching RMB 1.14 billion, approximately three times higher than last year. Online sales accounted for over 80% of the total GMV with significant breakthroughs on content e-commerce platforms. For instance, GMV contributed by Douyin soared to RMB400 million in 2023, a remarkable 16-fold increase compared with the previous year. [Foreign Language] Meanwhile, our Deep Sleep products emerged as a market powerhouse in 2023. Throughout the year, our retail business concentrated on sleep scenarios to gain a deep understanding of customers’ sleep-related need and address their sleep difficulties. With a goal of offering customers a relaxing and comfortable sleep experience, Atour Planet’s product capabilities continued to strengthen in 2023 with several blockbuster launches in our deep sleep series. Among them, our deep sleep pillow Pro sold over 1.2 million units across the year topping sales charts in pillow segment on Tmall, Douyin and jd.com during the Double Eleven Shopping Festival. We also maintain our top position as the most mentioned pillow product on [Indiscernible] also our deep sleep temperature control quilt, a key addition to Atour Planet’s ever expanding product portfolio surpassed 100,000 units in sales in 2023 fueled by our relentless pursuit of innovation and product development, Atour Planet deep sleep portfolio is poised for further expansion. We made significant strides in our retail business over the past year as we focused on deep sleep scenarios ensure that exceptional experiences. Following our Chinese Experience Strategy, we achieve an industry-leading shopping experience across leading third-party platforms. Moreover, by merging retail and accommodation scenarios, we offered our customers the opportunity to experience and enjoy the comfort provided by the Atour Deep Sleep Pillow Pro through APLUS services during their stay with us, which has attracted a vast pool of customers and recorded more than 400,000 orders to-date. [Foreign Language] Leveraging our invaluable deep sleep insights, we maintain our product growth trajectory in 2023 consistently launching premier products, finally attuned to the evolving demands of this era. This strategic approach contributed substantially to the rapid expansion of our retail business. At the same time, we boosted our efforts across brand building and upgrades, as well as product development. Drawing upon extensive feedback from our members real sleep experiences, we continually optimize our deep sleep offerings thereby amplifying our brand and product strength. As we move into 2024, our focus will remain on brand-driven growth and establishing a comprehensive brand value continuum. We will continue to enhance our products competitive edge and expand product categories utilizing our efficient product development mechanism, providing our customers with diverse and superior sleep products. Furthermore, we intend to propel synergetic development between our retail and hotel businesses leveraging our hotels to create a closed loop experiential ecosystem that will allow our customers to engage in a truly immersive sleep experience during their stays. [Foreign Language] Over the past year, we have witnessed a gradual recovery in domestic business travel demand, coupled with explosive growth in leisure travel. Looking into 2024, we expect a sustained upward momentum in business travel and the popularity of experience driven leisure tourism to persist. As a leading upper midscale hotel chain in China, Atour’s unique neighborhood style services innovative deep sleep experience will continue to provide customers with unparalleled accommodation experiences further enriching Atour’s brand value and expanding the mind share of the Chinese experience. [Foreign Language] Now, I will turn the call over to our Co-CFO Mr. Wu Jianfeng to discuss our financial results
Jianfeng Wu: Thank you, Haijun. Now I would like to present the company's financial performance for the fourth quarter and the full year of 2023. Our net revenues for the fourth quarter of 2023 grew by 140.4% year-over-year and 15.3% quarter-over-quarter to RMB1,505 million. Net revenues for the full year of 2023 increased by 106.2% year-over-year to RMB4,666 million. The strong increases was driven by the robust growth in both hotel and retail business. Revenue from our manachised hotels for the fourth quarter were RMB851 million, up by 133.3% year-over-year and 9.0% quarter-over-quarter. For full year 2023, revenue from our manachised hotels increased by 98.8% year-over year to RMB2,706 million. The being increases were primarily fueled by the ongoing expansion of our hotel networks and the increase in RevPAR. The total number of manachised hotels increased to 1,178 as of December 31, 2023, up by 31.0% year-over-year and 9.1% quarter-over-quarter while RevPAR recovered to RMB353 million and RMB371 for the fourth quarter and the full year of 2023 respectively. Revenues contributed by our leased hotels for the fourth quarter were RMB195 million, representing an increase of 40.4% year-over-year and a decrease of 18.1% and a decrease of 18.1% quarter-over-quarter. For full year of 2023, revenues from our leased hotels increased by 51.9% year-over-year to RMB880 million. These increases were primarily due to an increase in RevPAR, which recovered to RMB 495 million and RMB 517 million for the fourth quarter and the full year of 2023 respectively. The quarter-over-quarter decrease was mainly due to the seasonality and the closure of one leased hotel in September. Revenue from the retail business for the fourth quarter increased by 315.6% year over year and 75.3% quarter-over-quarter to RMB412 million. For full year 2023, revenue was from our retail business increased by 283.2% year-over-year to RMB972 million. The increases were attributable to widespread recognition of our retail brands and compelling product offerings, as well as improved product development and distributions facility. Now let's move to cost and expenses for the fourth quarter increased by 106.0% year-over-year and 18.9% quarter-over-quarter to RMB933 million. The year-over-year increase was mainly due to the increase in variable costs such as supply chain cost associated with the ongoing extension of our hotel network. The quarter-over-quarter increase was mainly due to an impairment of RMB47 million from our leased hotel booked in the fourth quarter of 2023 compared with RMB13 million booked in the previous quarter. Hotel operating costs for full year 2023 were RMB2,241 million, an increase of 60.8% year-over-year. Gross margin for our hotel businesses were 29.9% and 36.8% for the first quarter and the full year of 2023 respectively compared with 29.3% and 27.2% for the same period of 2022. Retail cost for the fourth quarter increased by 295.4% year-over-year to RMB232 million. For full year 2023, retail cost increased by 238.1% year-over-year to RMB513 million. The increase was associated with the rapid growth of our retail of our business. Gross margin of our retail business was 43.7% and 47.2% for the first quarter and the full year of 2023 respectively, compared with 40.8% and 40.1% for the same period of 2022. The increases were attributable to increase in contribution from high margin online sales. Selling and marketing expenses for the first quarter of 2023 increased by 283.2% year-over-year to RMB207 million. Selling and marketing expenses for full year 2023 increased by 235.6% year-over-year to RMB470 million. The increases were mainly due to our increased investments in brand awareness and online channel development associated with our retail business. General and administrative expenses for the fourth quarter of 2023 were RMB105 million including RMB2 million share-based compensation expenses, compared with RMB217 million including RMB150 million share-based compensation expenses for the same period of 2022. For full year 2023, general and administrative expenses were RMB451 million including RMB152 million share-based compensation expenses, compared with RMB350 million including RMB160 million share-based compensation expenses for full year 2022. The increases excluding the impacts from share-based compensation were primarily due to increased cost related to management personnel professional services expenses. Technology and development expenses for the first quarter of 2023 increased by 39.7% year-over-year to RMB22 million. Technology and development expenses for full year 2023 increased by 16.8% year-over-year to RMB77 million. Adjusted EBITDA for the fourth quarter of 2023 was RMB251 million, up by 115.1% year-over-year. Adjusted net income for the fourth quarter increased by 175.8% year-over-year to RMB222 million. Adjusted net profit margin for full year 2023 was 19.4%, up by eight percentage points year-over-year. The significant increase in gross profit margin in both our hotel and retail businesses, along with our optimizing operating leverage improvement in the group’s overall networking margin. Note that we have maintained a healthy cash position with stable growth momentum as of December 31st 2023, our cash and cash equivalents totaled RMB2.8 billion among the net cash was approximately RMB2.8 billion. That concludes our financial highlights for the fourth quarter and the full year 2023. With that, let’s open for Q&A.
Operator: [Operator Instructions] We will take our first question. Your first question comes from the line of Lydia Ling from Citi. Please go ahead. Your line is open.
Lydia Ling: [Foreign Language] Hi, management. This is Lydia from Citi. So congratulations on the results. And so my question is mainly focused on the growth outlook for 2024 and so basically first is underlying the hotel opening plan and we saw actually further growth in the - in fourth quarter. So what would be your spot opening plan for this year? And the second part is on the RevPAR trend which actually lies a little above last year. So, what is your latest expectations for RevPAR trend for this year and also your revenue guidance? And if any color on the fourth quarter trend that would be very helpful and as the Timmy and the Liberty Holiday is approaching so what it will be your expectation on the RevPAR performance for these two holidays? And lastly, is on the margin trend and so what would be your latest guidance and looking into the 2024 and we some actual increase in the light access ratio in the fourth quarter. So what would be your expectation for the like 2024? Thank you.
Haijun Wang: [Foreign Language] Thanks, Lydia. Let me answer your question on the new openings. In 2023, we opened 289 new hotels and the total number of hotels in operation by the end of the year was 1,210 and that was a 30% increase and we aim to keep that growth rate as well in this year. So this year, our target for new openings would reach 360. And among those 360, about 200 to 220 will be Atour hotels, while 60 to 80 will be Atour Light hotels. And all of this would help us to march towards the 2,000 premier hotels by the year of 2025 and that 2025 and that is our goal. [Foreign Language] Okay. Now Lydia, let me try that answer your second and the third question. First to regarding the development trend of RevPAR, well from the perspective of RevPAR structure, this year we will maintain a 30% growth rate of new hotel openings. As those new hotels will account for a relatively higher proportion than those of our peers, meanwhile the expansion momentum of our mid-scale offering Atour Light was strong. And that means with more Atour Light hotels to open. They may have a certain impact on our overall RevPAR and considering what we already have from tier-ones data and taking some uncertainties in the external environment into account, overall we hold a cautiously optimistic attitude for this year's RevPAR growth. We aim to match last year's RevPAR levels. [Foreign Language] And as for the Timmy and - first holidays, looking from the reservation data we have we've seen very active traffics and obviously, they are going to turn out to be pretty nice results for those two holidays. [Foreign Language] And also let me try to update our revenue guidance a little bit as well. As in revenue with the rapid development of both our accommodation and the retail business, we expect the 2024’s full year revenue to grow by around 30%. [Foreign Language] One more note on revenue, that 30% growth will be a leading growth across the industry. And as for profit, we have to confidence to improve it in each of our business segments, along with our cost of structural optimizations and the increase of management and operation efficiency. However, our overall profit margin may be subjective to changes in the contribution of each revenue streams. We do expect our profit margin to continue with the trend of the relatively stable and moderate growth. Thank you.
Alison Zhang: Thank you, Lydia. Let's have next question.
Operator: Thank you. Please stand by. Your next question comes from the line of Sijie Lin from CICC. Please go ahead. Your line as open.
Sijie Lin: [Foreign Language] I’ll translate my question to English. Thank you management. We have talked about the new opening. I have a follow-up question on the new signing. So, what's the target of the new signing this year? And what's the progress in Q1? And there is the obvious change in the franchisees’ confidence and interest since this year. Thank you.
Haijun Wang: [Foreign Language] Thank you, Sijie for your question. As for new signings we signed 576 projects in the full year of 2023, which was an outstanding performance. And now entering Q1 2024, we have maintained that strong momentum on signings overall. And as we see it the franchise market is still active. In 2024, we are confident that by leveraging Atour’s growing brand influence and with our newly launched product competitiveness more franchisees are to be attracted into Atour’s system for searching.
Alison Zhang: Thank you, Sijie. Let's have next question.
Operator: Thank you. We will take our next question. Your next question comes from the line of [Indiscernible] from Morgan Stanley (NYSE:MS). Please go ahead. Your line is open.
Unidentified Analyst: [Foreign Language] My question is about scenario-based retail business? you reported a very exceptional performance last year. I would like to ask about the management’s 2024 strategic plan on this segment, especially on your product plans and also any rough revenue guidance contribute to the total revenues 30% year-over-year growth revenue guidance? Thank you.
Haijun Wang: [Foreign Language] Well, thank you Dan for your question. Retail business is our second growth driver has achieved an outstanding result in 2023 with the full year revenue of RMB970 million accounting for 20.8% of our total revenue. In 2024, we will continue to drive with the healthy growth of retail business and to keep on strengthening the building of our basic capacity to further focus on the brand and our products. [Foreign Language] And in terms of branding, we do have the plan to focus on Atour Planet and our deep sleep products. We will consistently improve our R&D capability for retail products to further tap into the deep sleep categories. In 2023 we availed of the momentum from three pillow products with RMB100 million sales each, successfully launched our deep sleep Temperature Control Quilt, which had won the consumers favor and very decent sales. In this year's March 21st, I mean 2024’s March 21st, on the World Sleep Day, we launched yet another new product The Atour Planet Deep Sleep Summer Cool Quilt as a continuous expansion of our product portfolio. [Foreign Language] At the same time, we will also continue to strengthen the combination of retail business and our combination of scenarios to place more deep sleep products into our Atour Hotels this year to create an immersive deep sleep experience scenario for our consumers and to keep on strengthening the mind share of Atour deep sleep experience. [Foreign Language] And you probably have noticed that beginning with this latest financial report, we started to disclose information of the retail business as an independent business unit. We also plan to enhance the fundamental capabilities in retail including capabilities in organization, R&D, data infrastructure, channels, et cetera. We try to build a solid foundation for our longer term static growth. Since the beginning of 2024, our retail business continued its positive momentum. And we do expect 2024 full year retail revenue to grow more than 50% reaching RMB1.45 billion. [Foreign Language] Thank you.
Alison Zhang: Thank you, Dan. Let's have next question.
Operator: Thank you. We will take our next question. The next question comes from the line of Xin Chen from UBS. Please go ahead. Your line is open.
Xin Chen: [Foreign Language] This is Xin Chen from UBS. I have two questions. Now firstly from that - I have noticed about the expected tax rate has decreased significantly in the fourth quarter may I know the main reason? The second question is about the company’s plan on the use of cash. Is the company considering about a dividend payout or share buyback to increase the shareholder retention? Thanks.
Haijun Wang: [Foreign Language] Well, thank you Mr. Chen. As for the taxation question, we do have an entity which enjoyed preferential tax policies in 2023 and there was a one-off tax exemption in the fourth quarter. [Foreign Language] As for your second question on cash utilization, well, thanks to our robust business growth and our asset light mode, the Group’s cash flow maintained healthy growth. On December the 31st last year, our Group’s net cash and short-term investment at banks reached a total of RMB3.5 billion. [Foreign Language] And in this year, we will thoroughly consider various means and different ways of rewarding the shareholders such as dividend payout, share buybacks, et cetera to continuously enhance the efficiency of our cash utilization. Thank you.
Alison Zhang: Thank you. And we can take one more question.
Operator: Thank you. We will take our final question. Your final question comes from the line of Candice Tsang[Ph] from Bank of America (NYSE:BAC). Please go ahead. Your line is open.
Unidentified Analyst: [Foreign Language] Thanks for the opportunity to raise my question. This is Candice Tsang[Ph] from Bank of America. My questions are specifically Atour Light was going zero. Management has just shared hotel opening target for 2024 would you have any goals for you signings of Atour Light 3.0 in this year? And how the performance and operator status of those open hotels? Lastly, can management share your views on the competitive landscape of the mid-scale hotel segment overall? Thank you.
Haijun Wang: [Foreign Language] Well, thank you, Candice. Atour Light 3.0 is our mid-scale offering targeting young business travelers and it has been quite popular with the franchisees since it’s launched in February last year evidenced by more than 90 new signings in 2023. [Foreign Language] Atour Light 3.0 focus is on core business districts in higher tier cities aiming to set benchmarks for the quality in the mid-scale hotel segment. And by now, we had Atour Light 3.0 hotels opened in 21 cities including Shanghai, Guangzhou, Shenzhen all with quite decent operational performance. For instance, the average RevPAR for our exemplary hotel, the Atour Light Hotel at Guangzhou, Guangzhou Exhibition Canton Tower Subway Station since its opening in the November last year it has exceeded RMB600 its RevPAR far exceeding the performance of the surrounding competitors. [Foreign Language] And regarding your second question on the competition in the mid-scale market, we believe that the scale of this market has been verified already. It’s with Atour Light 3.0’s design catering to the aesthetic view of the young people and the consistent service experience we offer, it can well match the young business travelers’ needs for high quality accommodation experience and it has been successfully recognized by the consumers. [Foreign Language] And as I previously said, the operation performance of Atour Light 3.0 hotels are very competitive in their business districts. And at the advantage in the cycle of return on investment is quite obvious. We believe that with its powerful competitiveness and the extensive market recognition, Atour Light is poised to become our second brand within Atour Group to hit the scale of 1,000 hotels. Thank you.
Operator: And that concludes the question & answer session. I would like to turn the conference back over to you Allison Zhang for any additional or closing comments.
Alison Zhang: Thank you for joining us today. If you have any further questions, please feel free to contact our IR team. We look forward to reconnecting with you next quarter. Thank you and goodbye.
Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.
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