Atour Lifestyle Holdings Limited — FY2022 Form 20-F
Reporting period: Fiscal year ended December 31, 2022. This is an annual report, not a standalone fourth-quarter filing; the supplied filing text does not provide clear Q4-only financial results. Financial statements are audited under U.S. GAAP. KPMG issued an unqualified opinion and noted adoption of ASC 842 lease accounting in 2022.
Business context
Atour operates a China-focused hotel and lifestyle business, primarily through franchised-and-managed “manachised” hotels, with a smaller leased-hotel portfolio and a growing scenario-based retail business. At year-end, it had 932 hotels across 163 cities, 107,998 rooms, 363 hotels in development, and approximately 35 million A-Card members. The company completed its Nasdaq IPO in November 2022.
Financial and operating performance
| Metric | FY2022 | FY2021 |
|---|---|---|
| Net revenue | RMB2,263.0 million (US$328.1 million), up 5.4% | RMB2,147.6 million |
| Operating income | RMB165.0 million; 7.3% of revenue | RMB196.1 million; 9.1% |
| Net income | RMB96.1 million; 4.2% of revenue | RMB139.7 million; 6.5% |
| Net income attributable to Atour | RMB98.1 million | RMB145.1 million |
| Operating cash flow | RMB283.7 million | RMB417.9 million |
| Cash and cash equivalents at year-end | RMB1,589.2 million | RMB1,038.6 million |
| Borrowings at year-end | RMB174.0 million | RMB109.4 million |
Revenue mix in 2022 was RMB1,360.8 million from manachised hotels (60.1% of revenue), RMB552.9 million from leased hotels (24.5%), and RMB349.2 million from retail and other activities (15.4%). Scenario-based retail GMV rose 41.9% to RMB323.7 million; GMV is not the same as recognized revenue.
Operating costs and expenses totaled RMB2,136.1 million, or 94.4% of revenue, versus 91.9% in 2021. General and administrative expense rose 77.6% to RMB350.0 million, including RMB160.5 million of share-based compensation. The company recorded RMB163.2 million of total share-based compensation expense in 2022. Excluding that expense, Atour reported non-GAAP adjusted net income of RMB259.3 million and adjusted EBITDA of RMB424.4 million; these measures are not substitutes for GAAP results.
Hotel operating performance weakened: occupancy fell to 63.0% from 67.7%, ADR to RMB391.2 from RMB415.2, and RevPAR to RMB260.7 from RMB294.9. Retail growth and manachised-hotel expansion partly offset the declines. Manachised-hotel revenue increased 11.5%, while leased-hotel revenue decreased 12.3%.
Cash, debt and liquidity
Net cash from operating activities was RMB283.7 million, down from RMB417.9 million, which management attributed mainly to accelerated payments to franchisees and COVID-related disruption. Investing activities used RMB192.2 million, including increased investment in short-term financial products; financing activities generated RMB456.3 million, mainly reflecting IPO proceeds. Year-end short-term investments were RMB157.8 million.
Borrowings totaled approximately RMB174.0 million, including current and non-current amounts. Atour also reported RMB2,125.0 million of operating lease liabilities after adopting ASC 842; these are separate from borrowings. Undiscounted operating lease payments were RMB2,510.1 million. The filing reported RMB279 million of unused credit facilities and compliance with its financial covenants. Management stated that available cash and expected operating cash flow should cover anticipated needs for at least 12 months.
Changes, outlook and material risks
- COVID-19 restrictions and hotel requisitions weighed on demand and hotel metrics in 2022. The government had requisitioned 482 Atour hotels at various times since the outbreak; none were requisitioned as of the filing date. Restrictions began easing from November 2022, but the recovery remained uncertain.
- IPO-related share-based compensation materially reduced reported earnings. The IPO generated net proceeds of US$55.9 million; the company stated that these proceeds had not yet been used as of December 31, 2022.
- Management identified no material adverse trend it was aware of beyond disclosures elsewhere in the report and gave no quantified revenue or earnings guidance. It expects continuing investment in hotel expansion and technology.
- Atour is a Cayman Islands holding company whose operations and substantial assets are in China. Dividends and transfers of funds from PRC subsidiaries are subject to retained-earnings, reserve, foreign-exchange and regulatory restrictions. The company reported RMB411.2 million of PRC-subsidiary retained earnings and RMB83.9 million of restricted reserves at year-end.
- Key business risks include continued hospitality weakness, competition, franchisee financial distress or non-compliance, hotel lease and property-title defects, collection risk, data privacy and cybersecurity requirements, and evolving PRC oversight of overseas listings. New CSRC overseas-offering filing rules took effect March 31, 2023 and apply to future qualifying offerings.
- Management and the auditor identified material weaknesses in internal control over financial reporting, including insufficient U.S. GAAP/SEC reporting expertise and inadequate trained control resources. Management described remediation plans. Disclosure controls and procedures were assessed as effective; the company was exempt from auditor attestation as an emerging growth company.
- The PCAOB reported full inspection access in China and Hong Kong in 2022, but future access remained uncertain. The company said it did not expect to be identified under the HFCAA for FY2022.
- The filing disclosed a September 2021 lawsuit involving agency service fees at a leased hotel, with a potential loss of up to RMB12.3 million above the amount accrued. Management did not believe pending proceedings would have a material adverse effect overall.
Important facts for investors to verify
- Whether hotel demand, occupancy, ADR and RevPAR recovered after the 2022 COVID-related declines, and whether reported hotel counts exclude temporarily closed or requisitioned properties consistently.
- How much 2022 earnings were affected by IPO-triggered share compensation, and how GAAP results compare with non-GAAP adjusted measures.
- Cash-flow conversion, franchisee receivable collectability, and the accessibility of cash held in China relative to offshore obligations.
- The full economics and maturity profile of lease obligations alongside borrowings and available credit facilities.
- Progress in remediating the disclosed internal-control material weaknesses, and any subsequent audit, regulatory, licensing or litigation developments.
- Completion of required PRC filings for any future overseas securities offerings and continued PCAOB inspection access.