With revenue growth exceeding 100%, what did Atour do right?

This article deeply analyzes the ecological strategy behind Atour Hotel's revenue growth of over 100%, from scene retail to IP cross-border cooperation, revealing its diversified growth engine. Read this article to learn how Atour achieved a leap in performance through innovative business models. I hope it will be helpful to you.

Yaduo’s 2023 financial report is released, with many financial data showing impressive results.

The source of Yaduo's business growth is based on the recovery of the domestic tourism market, and its engine is its ecological business strategy.

After the liberalization, I won’t elaborate on the tourism environment, as everyone has a strong sense of it. Atour has the following six major ecosystems at the management level.

Next, we will break down its ecological strategy, hoping it will be of some inspiration to you.

1. Scenario Retail Ecosystem

In 2023, Atour's retail business revenue was 1.139 billion, accounting for 20.8% of total revenue (while the proportions in 2021/2022 were 8.9% and 11.2% respectively). Its core products are pillows, quilts and mattresses, and scene retail has become Atour's "second growth curve."

From the perspective of scene retail, hotels have their own "ecological gene" attributes. By dividing time, space and emotions into three coordinates: horizontal, vertical and oblique, and then matching vertical scenes, a three-dimensional quadrant diagram can be summarized.

Experience is the catalyst for retail, and high customer acquisition costs are the bane of retail.

Hotels naturally occupy the sleeping experience scene and naturally occupy the traffic entrance. Some people say that Atour is in the business of "selling pillows", but in fact it is in the " full-link retail business".

Why are hotels so effective in driving experiences?

The hotel offers rest functions and relaxing emotional values ​​(letting down one's guard in a private environment), so it is a safe haven for business travelers.

When you let down your guard and experience the product with a happy mood, the pillow is more than just a pillow; it is a kind of emotional comfort and a motivation to start again.

The premise of scene retail is a good experience, otherwise it will backfire, even if your product is good. Therefore, experience and retail itself belong to the same consumption chain.

The moat is never a single point, it is a line, or even a surface. Only with a holistic mindset can we break through the situation, rather than being confused by the situation.

A good experience directly leads to a reduction in price sensitivity and an increase in conversion rate. Atour not only sells on APP and mini programs, but also develops other e-commerce platforms.

The fundamental requirement for scene retail is that the product is excellent, and the process of using it is equivalent to trial use, which requires hard work in market research, product development, and supply chain management (supporting product development to meet the ever-changing tastes and needs of customers). If it is other online channels, that is another matter, and it does not belong to the offline scene retail we are talking about.

2. IP cross-border ecology

There are three key points for Atour to run a theme hotel: attracting traffic, raising unit prices, and building an image.

Yaduo can be said to be the hotel most active in IP collaboration. In the past, it has cooperated with brands/IPs such as Zhihu, Wu Xiaobo, The Drama, NetEase Yanxuan, NetEase Cloud Music, Hupu Basketball, Tongdao Uncle, Shanghai Animation Film Studio (such as "Havoc in Heaven", "Calabash Brothers", "Black Cat Sheriff", etc.), Tencent QQ Super Membership, One Way Space, GXG, etc.

When it comes to the cross-border physical experience, hotels are undoubtedly one of the "optimal solutions".

For the hotel, it can further attract people from different circles, and can also bring the rooms to a higher price range (after all, IP hotels are generally more expensive), and in the process it can also enhance Atour's brand image.

For IP, in addition to the mutual flow of traffic , what is more important is that the hotel provides IP with a high-value experience space. As we have said before, hotels naturally have experience advantages, which will further enhance the loyalty of IP fans.

Another point I would like to mention is that Atour and GXG’s “Inspiration Clothing Borrowing Station” is further refined to the usage scenarios of people on business trips.

3. Service Touchpoint Ecosystem

The hotel industry has a strong service attribute, and service is one of the core facilities of a hotel.

Atour breaks down the service links into smaller parts, finds areas where it can do better than its peers, and creates a special SOP manual.

Atour breaks down its services through 17 touch points: location, parking lot, lobby (borrowing books - returning books at a different location), check-in (text message greetings + tea offering + personalized hand-painted welcome notes before arrival), elevator, cleanliness, smell, TV, air conditioning, network, guest supplies (peace of mind cups - high temperature resistant paper cups + body, mind and spirit stimulation), toiletries (customized toothpaste + dental floss + mouthwash), hot water, bedding (own brand sleep products + eye masks + earplugs), sound insulation, dining (local breakfast + sobering tea), check-out (warm water when leaving the hotel).

Another extension of the service touchpoint is to give front-line service staff specific rights and interests. Every hotel employee will receive a "special fund" every month, which can be used to help customers with specific needs, such as buying medicine, providing a room for one night, etc.

Giving waiters permissions is very important and extremely relevant to user experience, because it can quickly and efficiently meet the user's immediate urgent needs. Atour can be described as a "senior player in user experience."

4. Hotel Operation Ecosystem

Atour adopts a light asset model in hotel expansion. As of December 31, 2023, it has 1,178 franchised hotels (accounting for 97.4%) and 32 self-operated hotels (accounting for 2.6%). In addition, self-operated hotels adopt a leasing model, and Atour currently does not have any real estate.

There are four main advantages of this model: first, reducing costs and risks; second, increasing the speed of expansion; third, a flexible exit mechanism; and fourth, concentrating resources to accomplish big things.

The revenue from franchised hotels mainly includes franchise fees, commission fees, installation and maintenance fees of the central reservation system, assistance in employee training, and costs of purchasing hotel supplies and other products.

The revenue from self-operated hotels (leased hotels) mainly includes room rentals, catering sales and other ancillary services, including but not limited to laundry, parking and conference reservations.

5. Membership Operation Ecosystem

As of December 31, 2023, Atour had 63 million registered individual members, compared with only 35 million in 2022, a year-on-year growth rate of 80%.

More notably, 62.3% of rooms will be booked through Atour's own channels (central reservation system, CRS) in 2023. Compared with hotels that rely on travel intermediaries, Atour has more autonomy and higher profit margins.

In addition, at the tob level, as of December 31, 2023, Atour has more than 8,000 registered corporate members.

6. Fourth Space Ecology

Atour summed it up very well with a sentence, "Behavior is the basis of space, and space provides a carrier for behavior."

Atour divides the space into four layers. The first space is for accommodation, the second space is for office, the third space is for socializing, and the fourth space is a fusion of the first three.

Yaduo continues to create content and build scenes based on the content, such as movies, concerts, book clubs, tea tasting parties, etc.

Summary: Competition is never a single point, but a line or even a surface, which is a comprehensive comparison of the overall ecology.

No matter what, the innovation layer needs to have a foundation, only on this basis can addition and multiplication be possible.

Author: Zang Feng; WeChat public account: Strategist Zang Feng