Ladies and gentlemen, thank you for standing by and welcome to the Ator Lifestyle Holdings second quarter 2026 earnings conference call. At this time, all participants are in a 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, IR Director. Please go ahead, sir.

Thank you, operator. Good morning and good evening, everyone. Welcome to our second quarter 2026 earnings conference call. Today, you will hear from our founder, chairman, and CEO, Mr. Wang Haijun, and our EVP co-chef, Mr. Wu Jianfeng. Before we continue, please be aware that today's discussion will include forward-looking statements and 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 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 accessible on our website at ir.yaduo.com, where a copy of the results presentation is also available. Now, I will turn the call over to Mr. Wang, our CEO.

Thank you, Luke. Hello, everyone. Thank you for joining Ator's second quarter 2026 earnings call today. Comprehensive products and services continue to be suppressed, while companies with experience and brand value show stronger resilience. Specifically, the hotel industry is experiencing a change from expanding to high-quality development.

The focus of the competition gradually increased from a simple supply to product innovation, service capability and business efficiency.

In the retail market, while consumers are paying attention to the quality of the product, are also focusing on whether the product is in line with their own lifestyle. The need for individualization is increasing day by day. This means that under the new consumer trend, we will insist on quality investment for a long time, and continue to achieve differentiated experience brands, so that there will be more opportunities to win the recognition of consumers. In the first half of the year, we firmly promote the new three-year strategy of China Experience Brand Leading, which involves the two core businesses of hotels and retail, constantly breaking through and consolidating experience advantages.

Please turn to our results presentation In the first half of 2026, China's consumer market continued to show diverging performance In both the hotel and retail sectors, we saw a clear split Homogeneous products and services remained under pressure while companies that deliver differentiated experiences and have strong brand equity showed greater resilience. More specifically, the hotel industry is shifting from scale-driven expansion to high-quality growth. Competition is increasingly centered on product innovation, service capabilities, and operational efficiency rather than supply growth. In retail, Consumers are not only pursuing product quality but are also placing increasing importance on whether products align with their lifestyles and the demand for personalization is also growing. This means that under these new consumer trends, brands that consistently invest in quality and build differentiated experiences are better positioned to earn consumer recognition. In the first half, We firmly advanced our new three-year strategy, Chinese Experience, Brand-Led Excellence, making continuous breakthroughs across hotel and retail businesses. We also consolidated our experience advantage and enhanced brand momentum, driving long-term healthy and sustainable growth.

下面我將展開介紹2026年第二季度各項業務的具體情況。

Now I would like to provide more details on our business performance for the second quarter of 2026.

首先是住宿业务,二季度集团大盘RAWPAR为345.4元,为二五年同期的100.7% 其中ADI保持稳健增长为二五年同期的101.2% OCC为二五年同期的99.7% Let's begin with our hotel business. In the second quarter, our rough par was RMB 345.4.

representing 100.7% of the level in the same period of 2025. ADR maintained steady growth reaching 101.2% of its level in the same period of 2025 while OCC stood at 99.7%. Rough part for our mature hotels in operation for more than 18 months was RMB 336.8 Representing 97% of the level in the same period of 2025, ADR and OCC were 98.3% and 99% of their respective levels in the same period of 2025.

In terms of hotel network, we adhere to the principle of quality priority, strictly control project selection and opening standards. In the second quarter, the group contributed to the new opening of 101 hotels. Product power and location advantage were added and released. As for our hotel network, we continued to follow a quality first principle and maintain strict standards for project selection and new hotel openings.

In the second quarter, we opened 101 new hotels. Product strength and prime locations together enhanced the quality of our hotel presence in core markets. By the end of the second quarter, our total number of hotels in operation reached 2,175 and our pipeline of hotels under development remained at a healthy level of 811.

On the hotel channel front, our CRS channel continued its steady performance in the second quarter, accounting for 61.5% of total room nights sold.

The contribution of Room Night Soul to corporate members was 20.4%.

Next, I would like to share the latest developments across our hotel brands. Returning to the development process, the early impression of Yaduo Hotel to the users is a lifestyle hotel brand that focuses on high-end commercial needs. With the development of consumer trends and user needs, we continue to promote product generation and upgrade. The latest generation of Yaduo 3.6 has achieved the balance of product experience and investment return under reasonable investment, while maintaining the core experience advantage of the business, and incorporating a clearer sense of relaxation.

The upper mid-scale segment has long been Ator's core focus. Over the years, we have established a clear leadership position. Looking back at our development, Ator Hotel was initially perceived by users as a lifestyle brand catering to the needs of upper mid-scale business travelers. As consumer trends and user needs evolved, we continued to upgrade our products. With disciplined investment, the latest Ator 3.6 strikes a balance between the experience it delivers and investment returns. It preserves its strength in business travel while introducing a greater sense of ease. Atour 3.6 again delivered outstanding performance in the second quarter, with Revpar of hotels in operation exceeding RMB370, further validating market recognition of the product upgrade. Atour 3.6 again delivered outstanding performance in the second quarter, with Revpar of hotels in operation exceeding RMB370, further validating market recognition of the product upgrade.

Atour 3.6 again delivered outstanding performance in the second quarter, with Revpar of hotels in operation exceeding RMB370, further validating market recognition of the product upgrade. Within our upper mid-scale brand portfolio, Ator Origin and Ator Hotel are developing in parallel.

further expanding our growth potential in the segment. To date, more than 60 Attour Origin hotels are in operation, with over 90 projects in the pipeline. Attour Origin offers a more distinctive experience and commands stronger pricing power. In the second quarter, REVPAR of Attour Origin hotels in operation exceeded RMB 450, highlighting its strong differentiated competitive edge.

We hope to present the original look of Yaduo Village. Natural, quiet, warm, and simple. In April this year, we will have a series of different experiences. We will officially set up Yaduo Jianye Hotel across the country. We will have a different view when we arrive at the hotel. We will have a different view when we arrive at the hotel. We will have a different view when we arrive at the hotel. We will have a different view when we arrive at the hotel. We will have a different view when we arrive at the hotel. We will have a different view when we arrive at the hotel. We will have a different view when we arrive at the hotel.

Atour Origin is designed to reflect the Yaduo Village as it truly is, natural, tranquil, warm, and authentic. In April, we rolled out a series of distinctive experience touchpoints across Atour Origin hotels nationwide. Upon arrival, guests are welcomed by a wilderness-inspired signature scent. In the afternoon, they can enjoy the tea break in the chatting room. At night, they enjoy our deep sleep experience. and in the morning they are served a breakfast featuring local Yunnan flavors. Through this more complete experience, we want guests to feel closer to nature, feel like they're on vacation and to rediscover their inner peace.

In the mid-range market, the core of the difference lies in the user-sensitive experience. This is also the direction of long-term deepening. After continuous polishing, the cost model of QingJu 3.3 has entered the new stage of systematic optimization and scale-up. We will put resources more accurately into the core environment such as sleep and breakfast for users. Therefore, QingJu 3.3 not only provides consumers with a more comfortable and relaxed accommodation experience, but also improves the business efficiency of partners through a more reasonable investment model. In the second quarter, the roll-up of QingJu 3.3 Zaiying Hotel was more than RMB 340.

In the mid-scale market, differentiation ultimately rests on a stay experience that customers can truly feel. This has long been Ator Lite's focus. After continued refinement, the Ator Lite 3.3 cost model has entered a new phase of systematic optimization and scaled road out. We are concentrating resources more precisely on the core experience areas that customers care about, including sleep and breakfast. Atour Lite 3.3 not only provides customers with a more comfortable and relaxing stay, but also improves franchisees' operating efficiency through a more disciplined investment model. In the second quarter, a rough bar of Atour Lite 3.3 hotels in operation exceeded RMB 340, demonstrating strong operational resilience.

Currently, QingJu has landed more standard projects in high-end cities and has received positive feedback from partners. The brand foundation is also becoming more and more stable. At this stage, QingJu will still insist on quality priority. Based on the operating capability of Hangshi, it will steadily expand the city coverage, leading to the innovation of products and experiences in the mid-end market. Atour Light has established more flagship projects in higher tier cities, which have received positive feedback from franchisees while the brand foundation continues to strengthen.

At this stage, Atour Lite will continue to take a quality-first approach as we strengthen our operating capabilities. We will steadily expand Atour Lite's city coverage and continue to drive product and experience innovation in the mid-scale hotel market. Meanwhile, we are deepening Atour Lite's connection with younger customers. In the second quarter, we introduced exclusive benefits for students, and launch the distinctive brand collaborations over the summer, further raising brand awareness among younger consumers.

SaHe is inspired by the vitality of breathing, and hopes to create a unique space in the city, so that visitors can breathe quietly and peacefully here. Since its launch, SaHe has taken on the role of breaking through the trend of the Asian brand, realizing the important progress of the brand concept, and continuously expanding its own value boundaries. have redefined the standard of high-end lifestyle. In the second quarter, Sa He's business performance continues to break through. The roll-up of Zanying Hotel has exceeded 1,000 yuan.

Drawing from the vital essence of breath, Sa He is devoted to creating serene spaces in the city where guests can breathe freely and feel truly at peace. Sa He has played a role in driving the upward breakthrough of Atour's brand portfolio since its launch. It has advanced our brand philosophy and continues to broaden the value it delivers, setting a new standard for upscale lifestyle. In the second quarter, Sa He's operating performance reached a new high, with rev power of hotels in operation exceeding RMB 1,000.

At Yuyin, we continue to enhance Sa He's refined management level, from brand standard service system to talent system. On the operation side, we continue to enhance SAHE's refined management capabilities.

Next is our retail business.

In the second quarter, the Asian planet has continued to grow rapidly, with a sales revenue of 15.75 billion yuan, which is 63% of the total growth. In terms of product structure, we are gradually moving from a single single product to a more abundant product range. In terms of product types, the Asian planet continues to consolidate the advantage of cutting-edge products in the pillow category. Since the introduction of the Shenzhen Pro series, the total sales have exceeded 12 million units. Moving on to our retail business.

In the second quarter, Atura Planet sustained its strong growth momentum with retail revenue reaching RMB 1,575,000,000, up 63% year-over-year. In terms of category mix, we are gradually shifting from a single blockbuster product model to a broader product portfolio. By product category, Atura Planet further consolidated its dominant position in the pillow category with cumulative sales of the Deep Sleep Memory Foam Pillow Pro series surpassing 12 million units since launch. The Deep Sleep Thermal Regulating Comforter Pro 3.0 summer season continued to see strong sales, driving rapid growth in the Comforter category. GMV of the Comforter category increased by more than 80% year-over-year. Fitted Sheets and Launchwear, two strategic categories we introduced the last year, maintained outstanding sales momentum and contributed a larger share of revenue.

From a long-term perspective, the continued breakthrough of retail business is the systematic ability that we have established around brand, product, supply chain, and content creation, as well as the firmness of this formation. First of all, after years of accumulation of brand capabilities, The brand of Yaduo Planet is deeply rooted in people's hearts. Users' trust in Yaduo's sleeping products is also constantly growing. Second, in terms of product development capabilities, we have always surrounded users with real sleeping needs and carried out product innovation. Through continuous overlap, we have established the ability to develop from single product breakthrough to product extension, gradually perfecting the formation of sleeping products. Third, in terms of supply chain capabilities, we have reshuffled the supply chain system of the industry. and many other companies have successfully broken the original standards of the industry. We have established a quality control system from raw materials to finished products, and the ability of consistent and reliable delivery of products has reached the leading level of the industry. Fourth, in terms of the ability of content creation and user connection, our strategy is always to accurately convey the value of the product. Through the expression of the content in a systematic and experiential way, users can have a more intuitive sense of depth.

Over the long term, the continued breakthroughs in our retail businesses are backed by systematic capabilities built across our brand, product, supply chain, and content creation. Together, they form a strong competitive moat. First, in brand building, Ator Planet has firmly established a natural deep sleep in users' minds over the years. while users' trust in our sleep products continues to grow. Second, in product development, we have always innovated to address users' genuine sleep needs. Through continuous iteration, we have built R&D capabilities that deliver breakthroughs in individual products and support expansion into new categories. This has enabled us to steadily broaden our sleep product portfolio. Third, in supply chain capabilities, We have reshaped the industry's supply chain system and set new industry standards for precision across multiple manufacturing processes. We have also established end-to-end quality control from raw materials to finished products with industry-leading product consistency and delivery reliability. Fourth, we have strong capabilities in content creation and user engagement. Our strategy has always been to communicate product value with clarity and precision. By creating content around real sleep scenarios and experiences, we make deep sleep more tangible and deepen the emotional connection between our brand and our users.

With the support of systematic capabilities, we have recently launched an upgrade to the core product range, including Deep Sleep Pro 4.0 and Deep Sleep Pro 3.0. The introduction of these new products is based on the ADO Planet Deep Sleep standard that we released last year. We hope to use this standard to transform users' feelings about sleeping into more scientific, verifiable, and sustainable product standards. Based on this concept, the Deep Sleep Pro 4.0 is a real focus on the change of multiple sleeping positions in the user's night. By upgrading the dynamic support system, it improves the comfortable experience under different sleeping positions. Building on these capabilities, we recently launched upgraded products in our core categories, including the Deep Sleep Memory Foam Pillow Pro 4.0,

and the Deep Sleep Thermoregulating Comfort-O-Pro 3.0 all season. Both new products are built on the Atua Planet Deep Sleep Standard we introduced last year. Through this standard, we aim to translate users' experience of sleeping well into product standards that are more scientific, verifiable and continuously refinable. Guided by this approach, The Deep Sleep Memory Foam Pillow Pro 4.0 addresses a real pain point of frequent position changes during sleep. With an upgraded dynamic support system, it provides better support across every sleeping position. The Deep Sleep Thermal Regulating Comforter Pro 3.0 All Season also addresses the need for sleep comfort under changing temperature and humidity conditions. Its temperature and humidity balancing system improve temperature regulation and moisture management, allowing it to flexibly adapt to seasonal temperatures, winds, and changes in how warm or cool users feel throughout the night.

Looking forward to the future, we will continue to use the long-term development concept to deepen our retail business. We will continue to promote the innovation and delivery of products around the needs of users, and further enhance the market share of core products to consolidate the leading advantages. At the same time, Looking ahead, we will continue developing our retail business with a long-term mindset. Guided by user needs, we will continue to innovate and evolve our product portfolio

will further increase our market share in core categories and consolidate our leadership. We will also continue strengthening AttorPlanet's brand value. By translating our strength in product development and technology into a lasting competitive mode for the brand, we will consolidate AttorPlanet's position as the sleep brand that users choose first and consistently trust.

In terms of membership, since the end of the second quarter, the number of registered members has reached 120 million. Turning to membership, by the end of the second quarter, Atura had 120 million registered individual members. As our membership base has grown, the strategic role of our membership ecosystem has become clearer.

It is not only a solid foundation for our hotel and retail businesses, but also a platform for retaining long-term users and cultivating user value.

At the same time, we are also building a more refined human resources operating system, which surrounds the core needs of the users, and provides a more appropriate right and experience for different people by dividing operations and accurate answers. We hope to continue to deepen the connection with users,

At the same time, we are building a more refined system for engaging different user groups. By focusing on their core needs, we deliver more relevant benefits and experiences through segmented engagement and targeted outreach. We aim to deepen our connection with users and build longer lasting relationships with them throughout the user lifecycle.

Finally, I would like to share some thoughts with you. Recently, we have launched the six promises of Yaduo Anxin. The core part of the whole process of user enrollment is to further clarify service standards and guarantee measures. We believe that Anxin is not a slogan, but an experience that users can clearly sense and stabilize every time they enter. By making these experiences more solid, we hope to make Anxin truly permeate the user's understanding of Yaduo brand,

Finally, I would like to share a few thoughts. Recently, we introduced a tour's six commitments to peace of mind, which further clarify our service standards and safeguards across key touchpoints of the guest journey. We believe peace of mind is not just a slogan. It should be an experience that guests can clearly feel and consistently enjoy during every stay. By delivering these experiences more reliably, we aim to make peace of mind an integral part of how people perceive the Ator brand. We also hope to set a new benchmark for service standard across the industry.

Behind every peace of mind experience, we can't leave out the service of the service provider. We also continue to pay attention to the development and work experience of the service provider, including the launch of a public service project for hotel customers across the country, Lijun Wang, Lijun Wang, Lijun Wang

Behind every experience that gives guests peace of mind is the dedication of our service staff. We continue to pay close attention to their development and enhance their experience at work, including launching a public welfare program for hotel housekeeping professionals nationwide, improving the work environment for frontline service staff, and expressing respect and gratitude to them through initiatives such as Service Staff Appreciation Day. We firmly believe that when service staff are seen, respected and treated with care, their kindness and warmth will reach guests naturally. This creates lasting trust between our brand and our users. With that in mind, we hope to continue advocating for service excellence and leading the industry toward a higher standard of experience.

We believe that quality is the foundation of long-term development. Only by continuously improving the quality of the product, optimizing the experience, and strengthening the organizational capability at the same time, can we continuously create user value and form the competitiveness that goes through the cycle. In the future, we will continue to insist on doing things that are correct and with temperature, with user experience as the core and organizational capability as the support,

These actions are grounded in Ator's long-term commitment. Across both our hotel and retail businesses, we have always believed that quality is the foundation of sustainable long-term growth. By improving product quality, refining the user experience, and strengthening organizational capabilities, We can keep creating value for users and build competitive strength that endures through the industry cycles. Looking ahead, we will continue to do the right things with warmth. With user experience at the center and organizational capabilities as the foundation, we will carry that warmth through every experience we deliver. This enduring warmth will define a tour as we navigate industry cycles and build for the long term. I will now turn the call over to our co-CFO, Mr. Wu Jianfeng, who will discuss our financial results.

Thank you, Haijun. Hello, everyone. I would like to present the company's financial performance for the second quarter of 2026. Our net revenues for the second quarter of 2026 grew by 41.4% year-over-year to RMB 3,419 million. Revenues from our monetized hotels for the second quarter of 2026 grew by 32.8% year-over-year to RMB 1,725 million. The increase was primarily fueled by the ongoing expansion of our hotel network as well as supply chain business development. Revenues contributed by our leased hotels for the second quarter of 2026 decreased by 11.8% year-over-year to RMB 132 million. The decline was primarily due to a decrease in the number of leased hotels. The total number of our leased hotels decreased from 24 as of June 30, 2025 to 19 as of June 30, 2026. Revenues from our retail business for the second quarter of 2026 increased by 63.2% year-over-year to RMB 1,575 million. The growth was driven by increasing brand recognition, successful product innovation, and a broadened range of product offerings. Growth profit of our hotel business for the second quarter of 2026 increased by 18.7% year-over-year to RMB659 million. The decline in the gross margin primarily reflected a shift in the revenue mix as our lower margin supply chain business grew faster and accounted for a larger share of hotel revenue. Gross profit of our retail business for the second quarter of 2026 increased by 57.4% year-over-year to RMB 809 million. The decrease in gross margin primarily reflected a shift in the product mix. Selling and marketing expenses accounted for 17.4% of net revenues for the second quarter of 2026, compared with 15.9% for the same period of 2025. The increase was mainly due to the investment in brand recognition and the effective development of online channels, in line with the growth of our retail business. G&A expenses, including share-based compensation expenses, accounted for 3.5% of net revenues for the second quarter of 2026, compared with 3.6% for the same period of 2025. Technology and development expenses accounted for 1.6% of net revenues for the second quarter of 2026, compared with 1.7% for the same period of 2025. Adjusted net profit margin for the second quarter of 2026 was 16.0%, representing a decrease of 1.3 percentage points year-over-year. Adjusted EBITDA margin for the second quarter of 2026 was 23.5%, decreased by 1.2 percentage points year-over-year. We maintained a healthy cash position as of June 30, 2026. Cash and cash equivalents totaled RMB 3.9 billion with net cash of RMB 3.7 billion. That concludes our financial highlights for the second quarter of 2026. And for the full year of 2026, we currently expect total net revenues to increase by 30% compared with the full year of 2005. Now let's open the floor for Q&A.

Thank you. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. For the benefit of all participants on today's call, if you raise your question in Chinese, please immediately repeat your question in English. Please limit your question to one at a time. If you wish to have a follow-up question, please rejoin the queue.

Please stand by as we compile the Q&A roster. The first question comes from Dan Chee from Morgan Stanley.

Good evening, everyone. I'm Dan from Morgan Stanley. Thank you very much for this opportunity. I'd like to ask about This year, the contract and opening of the entire hotel industry, we have seen that the overall supply of the industry has decreased this year, which will affect the opening and signing of the company. We have seen that the pipeline and the stock market have also grown steadily. In addition, I would like to ask about the opening and closing of the company all year round. Is there any adjustment like before? Please allow me to translate my question. This is Dan from Morgan Stanley. My question is about hotel opening and signing. Since the beginning of this year, the overall industry supply has seen deceleration. Will this affect the company's upcoming signing interest? And additionally, we would like to ask if the company is keeping or any adjustment to the guidance of the hotel gross opening and closure. Thank you. Thank you.

Okay, thank you, Dan. The construction changes in the hotel industry are affected by various factors such as the public-private environment, public-private relations, and property resources. It will present a periodic fluctuation. I think this is also a process of industry development entering the mature period and normal adjustment. In terms of the scale of supply in the entire industry, what we are more concerned about is the high quality supply that can really have competitiveness and meet the consumer quality needs. In the current market environment, what our entrepreneurs are more concerned about is the ability of the brand to continue to grow and the long-term competitiveness of the period. The experience is leading, the brand is strong, the product model is mature, and the investment return is stable. Thank you, Dan. There are multiple factors behind the supply dynamics in the hotel industry, including macroeconomic environment, supply-demand relationship, and property availabilities.

they all lead to cyclical fluctuations. So this is a natural adjustment process as the industry matures. Rather than focusing solely on overall supply volume, we place greater emphasis on truly competitive, the high-quality supply that meets consumers' quality expectations. In the current market environment, franchisees are more focused on a brand's ability to sustain growth and its long-term resilience through market cycles. The leading brands with superior customer experiences, strong brand equity, and proven product models and stable investment returns remain at their top choice for those franchisees when making their investment decisions. We believe that the industry adjustment period is precisely a critical phase for leading brands to further consolidate their strengths and increasing their market share.

We are not simply pursuing growth in quantity. The core goal is to establish a sustainable brand in all levels, to build a firm brand power, and to achieve the expansion of our brand scale on the basis of sustainable growth in brand power. Currently, our brand holdings have covered a wider range of price bands and consumer scenarios, and can also meet the more diverse needs of consumers. We are not pursuing scale expansion alone. Our core goal

is to build sustainable brands and strong brand equity across all tiers. And on the foundation of steadily enhancing brand strength, we are expanding our brand presence. Currently, our brand portfolio already cover a broader range of price points and consumption scenarios capable of accommodating diverse property conditions and meeting more varied market demands. In terms of project distribution, We center around user needs and long-term brand value. With higher tier city core business districts still remaining as our primary focus, at the same time we are actively expanding into strong third tier cities, areas surrounding the 5A rated scenic spots and distinctive property opportunities arising from urban renewal projects as a supplement.

In the first half of the year, our contract has continued the trend of stable electricity. The reduction in the number of pipes has also been improved. This also provides high-quality reserves for our future opening business. Based on these, we maintain the goal of opening electricity all year round and maintain the same. In addition, since the second quarter, the overall speed of closing electricity has also been significantly slowed down. We also maintain the goal of closing electricity all year round, which is about 80 plus. Thank you.

In the first half of the year, our signing momentum remained a steady trend and pipeline achieved solid increase quarter over quarter, providing a high quality reserve for future hotel openings. Thus, we maintain our full year opening target unchanged. In addition, the overall pace of closures has slowed significantly on a sequential basis since the second quarter. Therefore, we are also keeping our full year guidance of approximately 80 hotel closures unchanged. Thank you. Next question, please.

Thank you. Just a moment for our next question, please. Next, I have Ronald Leung from Bank of America.

Hello, everyone. Good evening. and Ronald Leung from the U.S. Stock Exchange. My question is about RAFPA. Since the second quarter, the data on RAFPA has been fluctuating. I would like to know how the medical management has seen the performance of RAFPA in the second half of the year. Let me translate my question into English. We have observed a relatively volatile RAFPA trend since Q2. Could management share your view on RAFPA performance in the second half of the year? Thank you.

Thank you, Ronald. Let me address this question. We believe that the long-term demand in the quality accommodation market continues to rise. Whether for business travel or leisure tourism, this fundamental logic has not changed. In the short term, due to weather factors such as typhoons and heavy rainfall in some regions during early July, the travel pace during this summer season was slightly delayed

Compared to previous years, but since the end of July, with the arrival of peak season, summer travel demand has shown signs of stabilizing and picking up. So we also hope that the market can jump out of these high-level data to pay more attention to the trend adjustment trend of the industry and the ability of the advantageous brands to resist the cycle Over the longer term, demand resilience remains intact and the industry's trend toward higher quality development is clear In this process, companies with strong brand equity and a solid customer base will continue to capture structural opportunities We therefore hope the market can look beyond short-term data points and focus more on the positive adjustment trends within the industry and the ability of leading brands to withstand cycles. Thank you. Next question, please.

Thank you. Next question comes from Jiwen Lu from Citi. Please go ahead.

I translate my question. I'm Jiwen from Citix. I would like to ask management how you view the current demand structure Are there any new changes or opportunities in business and their travel respectively? Thank you.

Thank you, Diwei. First of all, in terms of business needs, the customer structure is becoming more and more diversified. We have seen that large-scale K&A business customers are an important source of demand in the past. And with the changes in the market environment, we have also seen a lot of new demand opportunities such as local core enterprises, universities, and scientific institutions. Thank you, Jiwei. First, with business demand, the customer base is becoming more diversified. Before, larger KA enterprise clients were a major source of demand.

However, as the market landscape evolves, we are now also seeing new opportunities emerging from local core enterprises, universities, and research institutions. Therefore, while we continue to serve our core corporate clients well, we are also enhancing our business travel system to tap into new resources of business travelers, thereby strengthening both our demand coverage and the stability of our customer structure.

In addition, on the leisure travel demand side, more and more consumers are paying greater attention

the experiential value of their stay beyond simply fulfilling functional accommodation needs. This aligns well with Atour's direction of pursuing high-quality and multi-brand development. Through differentiated positioning, our brand portfolio is able to more precisely match the needs of different customer segments and the consumption scenarios.

At the same time, inbound tourism is also a key growth market that we have been focusing on over the long term. With the gradual recovery of the inbound tourism market,

We are actively advancing cooperation with overseas distribution channels and brand communications and capture the long-term opportunities brought by the growth of international guests in the future. Thank you.

Next question please.

Thank you. Next we have Lydia Ling from Citi. Please go ahead.

Hello, I'm Lydia from Huachi. My question is about retail business. We can see that in the second quarter, the sales performance of the company is still very strong, at more than 60%. What is the core reason behind this? Can you share it with us? Based on the trend in the first half of the year, what is the latest guidance of the management for the whole year's retail business? Hi, management. This is Lydia from Citi. I have questions on the retail business, and we continue to see very strong momentum for the retail business in the second quarter. And so what would be the core reason behind the distress? And given the strong growth in the first half, what's your latest guidance for your retail business for the full year? Thank you.

Okay, thank you, Lydia. Let me answer the first half of the question first. Thank you Lydia. Let me answer the first part of your question. In the first half of this year,

A tour plan has continued to maintain relatively fast growth. However, for us, growth itself is merely an external reflection of the building of our capabilities. What matters more is the continuous accumulation and improvement of our systematic capabilities across brand, product, supply chain, content, and other areas.

The Asia-Pacific planet has always been not chasing short-term hot spots. A Tour Planet has never chased the short-term trends or run discount promotions.

Instead, we focus on product innovation and brand building around users' real sleep needs. We believe that products that truly create user value and deliver consistent quality will ultimately earn long-term recognition from the users.

In terms of products, with the development of our business, we have gradually formed more and more sleep products. The pillow products continue to maintain our leading advantage. On the product side, as the business developed, we have gradually built a more comprehensive sleep product portfolio. While our pillow category continues to maintain its leading edge, our comforters also achieved rapid growth.

New categories extending from the sleep scenario such as fitted sheets and launch wear are also becoming important growth drivers. Regarding the full-year revenue guidance for the retail business, based on the strong performance in the first half of the year and the solid sales momentum following new product launches, we are raising our full-year retail revenue growth guidance to 40% year-over-year. Thank you. Next question, please.

Thank you. Last question comes from and Xing Chen from UBS. Please go ahead.

谢谢各位领导给我这次提问的机会。 我是UBS的陈欣。 我的问题是围绕在财务问题上面的。 此前公司提到了全年费率会有所提升, 想请教一下信息段对全年利润率的指引是否有变化。 另外想问一下公司在股东回报方面有什么样的变化。 and let me translate to English. This is Shunqing from UBS. I'd like to ask questions about financial. Previously, the company indicated the full-year big expensive ratio would increase. Could you please elaborate on whether there has been any change to the full-year popular margin guidance at this stage? Second question is about shareholder return. Has there been any change to the company's shareholder return policy?

Thank you. Thank you, Chen Xin. Let me address this question.

Currently, we still maintain our initial judgment from the beginning of the year that the full-year net profit margin will see a slight year-on-year decline. However, we observed some shifts in the factors affecting our profit margin.

In the beginning of the year, we estimated that in order to adapt to the long-term ability of construction, the investment in the expansion of talents, technological development, and other aspects, will drive the rise of our GNA and R&D cost rates and will have a certain impact on the net profit rate. But from the actual business situation in the first half of the year, a relatively positive change has occurred, which is that the company's income increase exceeded the expected year-end. So while continuing to invest in ability construction, the growth of cost and income basically maintain a match, so the GNA and R&D cost rates are expected to remain relatively stable.

At the beginning of the year, we anticipated that increased investment in talent expansion and technology R&D aimed at supporting long-term capability building would drive up our G&A and R&D expense ratios and exert some pressure on net margin. But based on our actual first-half performance, a positive development has emerged. Revenue growth exceeded our initial expectations. So while we continue to invest in capability building, the expense growth has remained broadly aligned with revenue growth. As a result, we now expect the G&A and R&D expense ratios to stay relatively stable.

全面来看的话,预计我们酒店供应链和零售业务的收入增速都将超过我们年初的预期,带动我们集团收入结构的一个变化。 As the full-year revenue growth for both our hotel supply chain business and retail business is expected to exceed our initial estimates,

driving a shift in the group's revenue mix. In addition, as we continue to execute our shareholder return program, the group's effective tax rate is also expected to rise compared to last year, which will have a certain impact on net margin. Considering both the revenue mix shift and the higher tax rate, we anticipate a modest year-over-year decline in the group's full-year net profit margin.

And as in terms of shareholder returns, we have consistently executed it in accordance with our established strategy and pace.

The initiation of the share repurchase program up to the end of the second quarter. The cumulative repurchase amount has exceeded US$150 million. In terms of dividends, we are also continuing to steadily implement our existing dividend policy. Thank you.

Thank you. That concludes today's Q&A session. I would now like to turn the conference back to Mr. Luke for any additional or closing comments.

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.