To sell pillows, Yado has indeed mobilized the full strength of the hotel.
To sell pillows, Yado has indeed mobilized the full strength of the hotel.
For those mental laborers who work tirelessly day and night, insomnia has become a part of their lives, and staying up late has become the norm. Take Jiang Yu, a mental worker who has long been troubled by insomnia; her heavy workload during the day leads her to fall asleep only around two or three in the morning. However, after spending a week in a hotel due to a business trip, she was deeply attracted to the hotel's comfortable pillows and mattresses and decisively decided to take them home.
Atour Hotel's star product, the memory foam pillow "Deep Sleep Pillow Pro," became a hot seller in the retail market. Public data revealed that in 2023, this product sold over 1.2 million units. With a retail price of 309 yuan each, the sales revenue of Atour Hotel's single product exceeded 365 million yuan.
To promote pillow sales, Atour Hotel spared no effort. In the lobbies of other hotels, the most eye-catching decoration might be art installations, but in Atour Hotel lobbies, a variety of pillows are the centerpieces. In an Atour Hotel in Beijing, different sizes of pillows are displayed in the center of the lobby, and guests inevitably pass by these pillows whenever they enter or exit the elevators.
Providing customers with free trial pillows cleverly triggered their desire to try new experiences. Many members often choose to purchase the "Deep Sleep Pillow Pro" when checking out after experiencing it. Despite this, Atour Hotel's leading "Deep Sleep Pillow Pro" is not cheap; even with various discounts included on platforms like the app, Tmall flagship store, and JD.com, the average selling price remains above 300 yuan. According to the Atour app, the most expensive pillow is the "Peaceful Sleep Hybrid Down Pillow," starting at 599 yuan, which is more than twice the price of many well-known home textile brands such as Fuanna and LuoLai.
In the market, consumers can easily buy affordable pillows, with some brands offering a pair for only 70 yuan. However, for loyal Atour Hotel fans like Li Hang, despite the slightly higher price, the quality and comfort of Atour pillows ultimately made him decide to purchase. Li Hang's job often requires him to travel on business, and the pillows provided by Atour Hotel have become a deciding factor in his hotel choice. During a stay at an Atour Hotel in Zhongshan, he took a few more looks at the pillows on display in the lobby, and the service staff enthusiastically recommended these products to him. For someone who had just entered the workforce like him, the price of a pair of pillows was not easily affordable. Nonetheless, he added the pillows to his shopping cart and bought them during a promotion. After experiencing it in person, he found that the "Deep Sleep Pillow Pro" provided more support compared to the ordinary pillows in the hotel room, offering an extremely comfortable overall sleep experience.
During the "Double 11" shopping festival in 2023, the sales of Atour pillow exceeded 250 million yuan on third-party e-commerce platforms, six times the sales volume of the same period last year. And Atour's "Deep Sleep Pillow Pro" became the top-selling pillow product on e-commerce platforms such as JD.com and Tmall.
Atour Hotel's transition into retail not only stems from the seasonal nature of the hotel industry but also the year-round sales potential of home products. According to Salt Finance's investigation, although hotel industry gross margins typically do not exceed 20%, home retail can achieve 40%-60%. Therefore, retail presents a lucrative market, and Atour founder Wang Haijun has deep insights into this. In media interviews, he stated that hotels are not just for accommodation but also provide an environment to experience sleep. Thus, everything from pillows, mattresses, towels, bath towels, to hand soap in the hotel holds business opportunities.
Atour Group now has three original lifestyle brands: the sleep experience brand Atour Planet, the fragrance aesthetic brand Saha, and the comprehensive travel brand Z2GO&CO. These brands are closely tied to the hotel business, offering products such as pillows, bedding, bath products, and travel essentials. It seems Atour Group not only manages hotels but is also actively establishing new consumer models.
According to their 2023 financial report data, Atour boasts 63 million members. These members are not only potential customers for Atour's retail, but there are also consumers who have purchased their products without staying at their hotels, and these individuals could become future guests. The financial data shows that in mid-2022, Atour had a member repurchase rate of 52.8%.
Despite the booming business in pillows, Atour faces many challenges. The retail market is highly competitive; Atour competes not only with traditional textile brands but also faces competition from supermarket private labels and internet companies like NetEase Yanxuan and JD.com Jingzao. Furthermore, as pillows have low technical barriers and Atour does not own production facilities but works with external manufacturers like Mlily for production, all these factors pose challenges for Atour's retail business.
When a brand succeeds in the market, imitators surge like a tide, a warning for any brand. After experiencing popularity with its pillow products, the Atour brand began to closely monitor such phenomena. However, Atour has yet to find a second best-selling product like the pillow. In a context of increasing competition and slowing market growth, Atour, relying solely on pillows as an entry to the retail market, must maintain a sense of crisis.
Turning our attention back to Atour's core business—the hotel industry, in the face of intensified global travel competition, the industry is particularly competitive. Compared with other hotel brands such as Huazhu, Jinjiang, and BTG Homeinns, Atour has a significant gap in both revenue and scale. According to Atour Group's financial report, in 2023 they achieved a revenue of 4.666 billion yuan and a net profit of 739 million yuan, which is only a quarter of Huazhu's.
In the hotel industry, where competition focuses on product and service quality and scale advantage, Atour ranked seventh in the 2023 China Hotel Association's market share ranking for hotel brands, with a market share of only 1.84%. The top five hotel brands—Jinjiang, Huazhu, BTG, GreenTree, and Dossen—collectively occupy over 60% of the market share. The market's trend towards consolidation is becoming increasingly evident.
Despite this, leading brands such as Atour are expanding against the trend, opening nearly three hundred new stores in 2023. By the end of the year, Atour has over 1200 hotels under its banner, with 617 more in preparation. The Atour management team announced in the financial report conference call that they plan to expand the number of stores to 2000 by the end of 2025, aiming to double the growth on the current base. This number still has a significant gap compared to its competitors. Huazhu Group and Jinjiang Hotels opened 1641 and 828 new stores, respectively, and both have a total number of hotels far exceeding that of Atour.
According to the data, among the current 1200+ stores of Atour, about 3% are directly operated, and 97% are franchised. Such a large proportion of franchised store model means that Atour needs to invest more capital to support the operations of these stores, involving multiple aspects such as advertising marketing, market operations, and brand promotion. Atour's total operating costs and expenses in 2023 amounted to 3.8 billion yuan, accounting for over 80% of total revenue, a ratio higher than the industry average.
Although the franchise model is relatively more "asset-light," Atour hotels still face the problem of a high debt ratio, which has always been a doubt in the capital market. Atour's debt ratio in 2023 is 68.72%, which, although it has decreased by 6.35% from the previous year, the total amount of debt has risen from 1.681 billion yuan in 2021 to 4.527 billion yuan. On this, Zhao Huanyan, a senior economist in the tourism and hotel industry, believes that Atour Hotel, as a company that listed during the pandemic and started from scratch, is different from those companies that were stable before the pandemic, "high debt and operating costs are understandable".
Industry experts reveal that the average Revenue Per Available Room (RevPAR) of Atour Hotel has approached 400 yuan, which has even surpassed the average level of five-star hotels. The average room price of the Atour brand is generally around 400 yuan in different cities across the country.
An anonymous hotel industry analyst told the media that with a stable cash flow and a strong debt repayment ability, an appropriate increase in debt has limited impact on the overall operation of the enterprise. He pointed out that under the current market demand is not strong, Atloud Hotel achieved an occupancy rate (OCC) of 77.8% and an average daily rate (ADR) of 464 yuan in 2023, which are very excellent achievements in the entire hotel industry.
When we compare Atour Hotel with other top hotel groups in the country, we can find that Atour achieved a net profit of 739 million yuan in 2023, which is almost on par with the net profit of 795 million yuan of BTG Homeinn Hotel Group. Overall, Atour, with its mid-to-high end boutique positioning and its retail business, has become one of the fast-growing brands in the industry.
Famous hotel investor and founder of Zhuhui Jingyu Hotel Group, Zhu Xinjiang, pointed out that in the face of the current competition among domestic hotel groups, Home Inn appears to be falling behind. Zhu Xinjiang believes that looking to the future, Artyz Hotel may enter the top tier of this field and compete with industry giants.
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