Q3 2021 Ryman Hospitality Properties Inc Earnings Call
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Welcome to Ryman hospitality properties third quarter, 2021 earnings conference call.
The call today from Ryman hospitality properties are Mr. Colin Reed, Chairman and Chief Executive Officer, Mr. Mark Fioravanti, President and Chief Financial Officer, Mr. Patrick Chaffin, Chief operating Officer, and Scott Bailey President Opry Entertainment Group this call will be available for digital replay.
800, 938 to 113 with no conference I D required.
At this time all participants have been placed on listen only mode. It is now my pleasure to turn the floor over to Mr. Mark do you have on P. Sir you may begin.
Good morning, and thank you for joining us today.
This call may contain forward looking statements as defined in the private Securities Litigation Reform Act of 1995, including statements about the company's expected financial performance.
Any statements we make today that are not statements of historical fact may be deemed to be forward looking statements words, such as believes or expects are intended to identify these statements, which may be affected by many factors, including those listed in the company's SEC filings and in today's release.
The company's actual results may differ materially from the results, we discuss or project today, we will not update any forward looking statements whether as a result of new information future events or any other reason.
We will also discuss non-GAAP financial measures today, we reconcile each non-GAAP measure to the most comparable GAAP measure in exhibit to todays release I'll now turn the call over to Colin.
Thank you Mark and good morning, everyone.
When we last spoke on August <unk>, we were on the slope of a rising wave of COVID-19 Delta there in cases and bombarded by headlines about the potential return of the restrictive measures we saw last year the day.
Today three months later, we are past the peak of that wave and now clearly on a downward slope as of the end of last week. The National Seven day average of New COVID-19 cases had fallen out of the 59% from its peak on September 13th and about 19% in the last two weeks and hospitalization.
Following the same trend and I'm happy to report that despite the impact of the Delta in the third quarter. It's remarkable that our business performed in the upper end of our expectations, which we originally set and communicated before the Delta way began on a consolidated basis, we generated over 18 million.
On a positive cash flow per month in the third quarter, which we define as adjusted EBITDA.
A less cash interest and debt service. This is compared to our expected range again determined pre delta of $16 million to $19 million of positive cash flow per month. This is an impressive performance and I want to quantify the impact of the delta there and on our business during the third quarter because.
From the headlines we all read.
And from the media in General in August and September you, sometimes got the impression that the sky was falling on them, we would be returning to government mandates governor government mandated lockdowns and gathering restrictions in the third quarter. We saw about 160000 group room nights lost related to concerns of the.
This delta there. However, let me give you some important context around this figure first 160000 room nights is about 5% of the total cancellations, we have experienced since the start of the pandemic.
So in scale of the impact of the Delta wave was and is nothing like what we went through last year or earlier. This year. In addition, 93% of these third quarter cancellations with the travel dates this year or roughly 40% for the third quarter and 53% for the <unk>.
Fourth quarter with only a handful spilling into 2022. This means the cancellation window, we experienced in the third quarter with shorter about 50 days on average compared to the roughly 90 day window for cancellations. During the first phase of this pandemic what this demonstrates to us and what we are here.
Bring from the meeting planners themselves is that there continues to be a strong need and desire to hold their meetings. So many of these gatherings are mission critical to their organizations and they are waiting until the last possible moment as they watched the data before making any cancellation decisions as a result.
As the Delta Varian wave subsides.
The cancellation window has been shrinking which is good news for us as we look towards next year as of the end of the third quarter. We had 44 points of net group occupancy on the books for 2022 compared to 47 points at the end of the third quarter of 18 for 19 out of loss pre COVID-19 yet.
These group room nights for next year also contracted at a six 5% higher rate than a T. One rooms at the same time in 18. Therefore in total we have more group rooms revenue on the books for next year than we had at the same point in time headed into 19, which turned out to be a record year for our business.
And of course, it's important to highlight that even with these recent cancellations. We still traveled over 300000 group room nights in the third quarter that is more than double the number of group room nights that travel with us in the first half of the year before the Delta wave for the quarter.
<unk> Hotel portfolio reached 54, 5% occupancy with a peak of $63 four in the month of July just before the Delta Barry took hold in fact for the month of July excluding the just reopened Gaylord national National which only reopened on the first of July the other four.
Gaylord hotels reached 69 points of occupancy for that month now think about that for a moment, we reached nearly 70 points of occupancy in hotels of our size, including the additional inventory of 300, new rooms at the Gaylord Palms again. This is a clear signal that the pent up demand among both grew.
And leisure travelers for our hotels have to offer.
I'd add that we've already seen cancellations materially decline in recent weeks. After it became more apparent that the delta wave had subsided in mid September.
Each brings us to another very important dynamic to note in our group business, which is that we collected over $10 million in cancellation and attrition fees for the third quarter for context through the end of the third quarter, we have collected $28 million in cancellation and attrition fees year to.
Date, which is the same level of fees, we collected in 2009 during the great financial crisis as you know the contractual nature of our business provides a level of downside protection, which we have highlighted with you often over the years and sets us apart from the rest of our hospitality peers.
That are not as group focused with all of our hotels now open and operating and plenty of group meeting successfully.
And given there were no further government governmental restrictions on gathering sizes in our markets. The collectability of our contracted fees for groups, who do choose to cancel has become much stronger now switching over from group from the other areas with momentum in our hospitality business.
Which was even less affected by Delta is the powerful resurgence we've seen in our leisure demand.
We sold over 215000 transient room nights in the third quarter third quarter, which is over 11% more than in the third quarter of 19 before COVID-19.
And our transient ADR in the quarter exceeded $250, which is almost 24% higher than the third quarter of 2019. This transient momentum has continued into the fourth quarter, which is very exciting for us as we head into atmos leisure heavy months of the year.
Over the holiday season, we recently began publicizing out 2021 Christmas program for the Gaylord hotels, which this year will be completely a completely new multi sensory experience built around the Warner brothers L franchise with several highly unique interactive.
Active challenges for families to complete this program is generating great response, driving material leisure leisure transient pickup compared to last year. The bottom line is the while the Delta wave took a bite out of that group business in the third.
Which would also linger into the fourth it did not stop the broader reawakening that we have been witnessing in our hotels since the beginning of this year when the vaccine rollout commenced.
And when it comes to our entertainment business the effect of Delta was barely noticeable indeed, our entertainment business was just a few percentage points from matching the levels of 2019 third quarter on a same store basis that is excluding the contributions of both Ole Red Orlando.
A N a circle media joint venture neither of which we had in the third quarter of 19 revenue and adjusted EBIDTA R. E. In the third quarter were 92% of 19, 5% respectively of 2019 as third quarter Live Entertainment demand has clearly been re animated.
Post pandemic.
That is also why we're excited to have reached a new agreement with stocks as proppant as announced last week to acquire block 21, the one of a kind mixed use entertainment complex in the heart of downtown Austin Block 21 is anchored by the iconic 2000 and 750 seat ACL live at the Moody Theater.
On accompanied by the 310 at ACL Live club, the 251 room W. Austin Hotel and over 50000 square feet of Premier class, a commercial space, we could spend quite a bit of time discussing the menu of exciting opportunities created by this marriage of Nashville.
The music city with Austin, the live music capital of the World. Those of you who have followed our company since before COVID-19 knows the history of this transaction, which we had originally announced in December of 19, but were forced to cancel in the depths of the pandemic we stay close.
We stayed in close contact with starts with throughout the past year and a half and we were delighted to bring this deal back to fruition and as we said the first time, we announced this acquisition opportunities to own assets like this isn't in an absolute fantastic growth market like Austin do not come around very.
After the acquisition of block 21 will be transformation B, a transformational deal for entertainment segment, providing not only a tremendous increase in scale and geographic diversification, but also a host of opportunities to leverage our existing capabilities, including our artist and audience relationship.
To create value across our physical and digital platforms. For example, we see opportunities to further utilize the ACL live venue across all day parts to cross market, our customer bases and cross promote content and artists between ACL live and our other venues and channels.
To improve the W. Austin hotel utilization.
Especially in our wheelhouse of group business, and finally to enhance margins through out through shared services and to be clear.
We expect to be accretive we expect this deal to be accretive to F. F. O in its first full year, therefore as delta fades into the fourth quarter at focus is squarely on returning to growth. This includes the investments.
We are making in block 21 to supercharge, our live entertainment strategy on the significant amount of capital we have deployed into our hospitality business in the last three years that we look forward to maturing in the years to come and these include the Texan and palms expansions soundwaves at Opryland the national renovation.
And a full ownership stake in the Gaylord Rockies and we take a full plate.
The.
Future investment opportunities under consideration across our businesses from scouting new locations for Ole Red to develop opportunities for the recently acquired land round around the Gaylord Rockies to further enhancements renovations and expansions across our hotel portfolio to continue to serve our group and <unk>.
As your customers and their evolving and their evolving needs as this long awaited recovery continues to take hold now before I hand, it over to Mark who will review our balance sheet and the detail financial details of the block 21 transaction, Let me just make one last comment.
I've been in this business for a long time and I've witnessed my share of crisis over that span COVID-19, mainly being the last however, as I sit here today I cannot emphasize how excited I am about everything happening in our portfolio and the opportunity set set in front of us.
Our team at teams inside and out of our hotels and entertainment venues have done just a wonderful tremendous job taking care of our customers in that asset through this extraordinary period of time and I believe we as a company have emerged better for it given everything we've learned.
So with that let me hand over to Mark.
Thank you Colin.
And good morning, everyone in the third quarter. The company generated total revenue of $306 $9 million and a net loss to common shareholders of $8 $5 million or <unk> 16 per fully diluted share.
On a non-GAAP basis, the company's third quarter consolidated adjusted EBITDA.
It was positive $86 million and <unk> available to common shareholders was $52 $1 million or 94 per diluted share.
This marks the second quarter of positive consolidated adjusted EBITDA, sorry, since the first quarter of 2020 before the COVID-19 pandemic and as Colin noted we delivered in the upper end of our previously expected range for monthly clear cash flow as we defined it generating an average of over $18 million per month in the quarter.
These results are a marked improvement in our business over the third quarter of last year. When we had substantial substantial monthly cash burn during the height of the pandemic and illustrates how far our businesses have recovered in the last 12 months.
While cash cancellation rates in the last few weeks related to Delta.
Have materially improved.
Collin noted approximately one half of those group cancellations occurred for travel dates in the fourth quarter. These cancellations will have a lingering impact on this current fourth quarter, we expect that fourth quarter average monthly cash flow after debt service will be in the mid teens.
As those cancellations flow through the balance of this year.
In terms of liquidity due to our positive cash flow, we require retired $45 million of our revolver in the third quarter and ended with an outstanding balance of $180 million.
This last $520 million available and combined with the $53 2 million of unrestricted cash gives us approximately $573 million of available liquidity.
As we announced last week the purchase price for the acquisition of block 21 will be $260 million of which we will assume approximately $138 million of the property's existing nonrecourse <unk> debt.
We plan to finance the balance of approximately $122 million using our available liquidity.
We expect the transaction to be accretive to <unk> on a full year basis, and the combined purchase price net of a projected $11 million of cash reserves acquired represents approximately 15 times. The last 2019 pre COVID-19 EBIT adjusted EBITDA of block 21, and approximately 12 times our anticipated 2023.
Adjusted EBITDA contribution.
This acquisition is fully permitted under our existing credit facility Covenant waiver and we expect to be able to exit that waiver on schedule early next year.
The company once again did not tap of our existing ATM program in the third quarter, but it remains in place and available to us as we look at our recent and upcoming capital investment activity. This includes block 21, and the many exciting opportunities we see for the newly combined entertainment portfolio. After this transaction as well as the next gen.
Our ratio of expansions enhancements or improvements across our hotel portfolio and with that I'll turn it back to Colin for any closing remarks. Thanks Mark.
Aye.
I Hope my remarks, let's.
<unk> does do some Q&A.
And then maybe we'll have a closing remark at the end.
At this time, if you'd like to ask a question. Please press star one on your Touchtone phone you may or may be stuck in the queue at any time by pressing the punky once again that is star and one to ask a question and we will take our first question from Bill Crow with Raymond James.
Hey, Good morning, guys, Mark just following up where you left off.
Block 21 are the financing and long term basis is that accretive in the first full year if you.
Maintaining your capital structure in other words kind of a 50 50 debt equity.
Assumption.
Yeah.
Yes, yes marginally.
Okay.
And then the other question I wanted to clear up is on the cancellation fees, what do they look like or what have you collected for the fourth quarter. If you could tell us that.
And based on cancellations.
As you look forward can you give us a picture for what that those fee collections could be next year.
Yeah.
Hey, Bill this is Patrick Chaffin.
As we look to the fourth quarter I think this was already mentioned we're expecting in the mid teens are not quite as high as what we saw in the fourth quarter of 2020, but pretty close as a.
It's a much easier discussion with meeting planners they cancel for delta.
In August and September and so as we collected roughly nine or $10 million in the third quarter, we expect a mid teens for the fourth quarter and based on how everything is going so far that we are standing by that forecast as we look to next year. We do expect those cancellation fees to start declining rapidly as we are seeing.
You were in fewer cancellations I mean delta at the peak of Delta we were seeing three to 5000 cancellations per day room nights room nights.
And that's now dropped to below our pre pandemic level of about 600 per day. So we're definitely getting back to a much more normalized state of cancellations and therefore, we would expect to see cancellation fees declined in 2022.
Alright.
Oh I may jump back in place.
Hey, Bill let me just add one thing to Mark's comment about accretion at first year of operation, it's going to take us a good 12 to 18 months to put things like tool. This tool is.
Into into.
Into the Moody theater, it's going to take us some time to get the renovations of this hotel, which I mean, we're very excited about it I mean, you think about that W Hotel.
We purchased that baby.
250, <unk> something like that.
$2 $2 million, a key and and so you know.
This thing will crank up.
In the in that 12% to 24 month period, but.
We're very excited about this deal.
Great. Thanks Carl.
Thanks Bill.
Well go next to Shaun Kelley with Bank of America.
Hey, good morning, everyone on Colin you're rattling couple of these off quite quickly at the beginning and I just wanted to make sure I caught it so.
And you gave your sort of your updated performance metrics as it relates to what's on the books for 'twenty two if I caught it correctly I think it was 42%.
Occupancy on the books.
Modest.
Maybe I could just start there was that the right number.
No no.
Number.
I Didnt raffle.
Thank.
Thanks.
44, we had 44 points of net off can't stay on the books, which compares to 47 at the end of the third quarter of 18 to 19, but the rate is materially higher so net net we've got more revenue on the books for next year than we did in 18 to 19, but you know the.
Other piece of this that this is very important and the great part of this is very important and by the way we saw there.
Really good group bookings in the month of October and lead volumes, we will have all of the lead volume data here Patrick in the next 24 hours, but we we.
We built a bunch of rooms in the month of October but the thing you got to keep it keep focused on in my mind is is.
Can we keep the level of leisure business that we have seen in the middle of this pandemic next year.
Product is fabulous.
Assets that we own are really great for the leisure customer.
We booked in the third quarter, 11% more leisure rooms at a rate that is about 2022 I think the number was 20% up on last year. So so when we talk about our group business.
Revenue wise being above where we were in 18 to 19 I am hopeful that our leisure production is going to be materially better in 'twenty two than we saw in the year of 2019. So.
I've sort of branched out from your question you said that that's that's.
That's how we sort of see the world next year.
Thanks for clarifying and sorry about the Rad also let's just say that the 44 compares to I believe on the last update 43, if I if I looked at the data correctly so is that.
So you did actually see things still in a little bit more for 'twenty, two and just help us think through do you expect to get those last couple points do you actually or do you actually hold the back as we move through the fourth quarter, because youre because the rates youre seeing are so good you want to see what you can do in the year for the year just talk a little bit about the maybe the the booking psychology for the last kind of still in for.
'twenty two.
Yeah, Yeah, so the odds.
Gave you my answer and then I'm going to throw it over to Pat to amplify.
What we have told our sales folks is that we want to put occupancy on the books for next year.
Right is obviously important but we want to bring our people back to work and we want to put occupancy on the books.
And and so.
I don't know what I haven't got the detail of the 160000 room nights that we booked in October Patrick in terms of.
T plus one.
I will have that data here.
Shortly.
Do you have that data with you alright, we'll put it on yes. So.
Just talking about what we booked in October we booked about 163000 room nights about 51000 of that was going into T plus one or 2022, that's a good number and as you think about that our average.
In October four T plus one is about 33% to 35000 room nights.
2019 was our high point it was the best that we ever did in terms of how many room nights, we booked in it was about 60 63000 or something like that so not quite as good as the very best we ever did but certainly above the average at 51000 and so.
Delta, obviously had some impact on 2022 and it slowed down folks it didn't necessarily stop them from looking but it stop them from the decision making process and so to your question Q4 is a very important quarter for us. We do expect the delta will have a little bit of hangover because it takes us we talked about 90 day cancellation.
Relation window. It takes us about 90 days to sort of overcome and get the lead volumes going again and so we do think that the continued we saw what happened in October was very encouraging and we hope that that will continue through the rest of this quarter, but I think a lot of what we saw in the second quarter will occur again in 2022, and what I mean by that is.
In the second quarter of this year, we saw a lot of in the year for the air business start showing up again and pent up demand starting breaking free.
So we're hopeful and are looking towards 2022, and believing that there will be more in the year for the year business than we saw in 2021.
So yes, we are a little bit of ground to make up if youre comparing us to 2019 the best ever.
Fourth quarter will be important in helping close some of that gap, but we think that the end of the year for that your business will be display and the fact that pent up demand is ready to start booking again.
Keep in mind, you're comparing occupancy rates with the 300 more rooms at the palms as well, we're selling more rooms, yeah. That's.
Good point, but net net.
Pretty encouraged.
With what's gone on with its glide slope with Delta and witnessing the behavior of the meeting planners. The when Patrick gave me these numbers for October yesterday.
It has surprised me a little bit surprised me on the upside and the number he has just gotten this morning.
For the T plus one that 50, plus thousand room nights, that's really encouraging so I.
I'm I'm pretty optimistic you know absent another wave of whatever.
I think 2022 hotel wise is going to be could be pretty good for us.
Great and maybe just as my my final question would just be could you talk a little bit about I mean, obviously, we did see occupancy pick up a lot in the quarter July.
And in August both.
Can you talk a bit about just what's the group spending behavior. So when people are on site.
Are you seeing them act relative to maybe kind of let's call. It pre COVID-19 type levels in terms of uptake on food and beverage uptake on other amenity is just what's the psychology of the groups as they are.
Once they are actually on site.
We wanted to take it to Sean I would sum it up as the psychology is we wanted to get back to business. We wanted to get back to meeting and so when they are on site. We are seeing folks opening up their pocket book, obviously, there are trimming their budgets just to match up to the occupancy of the group. That's in house. So maybe they have fewer attendees simply because of delta or something else.
<unk>.
But on a per person basis.
We're very encouraged by what we've seen and we're getting.
Corporate has been getting back to 2019 levels in many cases so.
Folks are definitely ready to get moving we've talked about this before people know that they need to be meeting again and once they get together. They are excited to be together again, and that's showing up in the food and beverage revenues that they're <unk>.
Capturing.
Thank you very much.
Thanks, Sean.
Well go next with Mediasite as a city.
Thanks.
I wanted to ask you a little bit more about next year as well and you talked about the.
Significant rate improvement for the groups that are on the books now for 'twenty, two but could you maybe talk a little bit more about what youre seeing on the expense side and I think for the quarter for what it's worth your margin was better than what we had expected, but I'm just wondering if there's what youre seeing on the kind of labor costs in food and beverage costs.
How much of those rate increases what kind of flow through to margin improvement next year.
Yeah well.
Why don't I, let Patrick handle this rob.
Rather than the starting and then handing over your go forward yes.
Yes.
You're very correct.
Labor is the biggest challenge we've seen increases in the third quarter versus 19.
Of about 20% in terms of labor wage increases now we're working very hard to offset that we are we've talked about this for several months that we are targeting significant decreases in our management head counts simply because we've learned so much through COVID-19 and believe we can operate with.
Fewer folks highly.
Our highly talented highly compensated, but fewer bodies in place and so we've targeted.
Around the mid teens in terms of reductions in head count in the management ranks to help offset the hourly increases in wages.
Pricing in our rooms is obviously, helping and obviously the food and beverage can be priced and more real time and.
Meeting planners understand that food and beverage is going to go up as the cost of meat and proteins go up we're doing other things, though to help offset that by bringing some of our meat preparation protein preparation in house and doing some of the butchering in house, we're making housekeeping.
For installing more and more technology to help with the check in process with beverage ordinary process.
With the way finding so looking for more and more opportunities to have less bodies and play more efficient and easier for our customers actually use us we're moving into more grab and go options on the food and beverage side, because it's much more efficient to offer a grab and go as opposed to sit down dining obviously, we will continue to have that option.
But just looking for more and more ways to do things efficiently and then looking for efficiencies on the utility side with cogeneration and other opportunities. So doing a lot of things to help offset that were in our budget process right. Now we have not landed on what that margin is going to be but between the increases in rate and a lot of the efficiency.
We're achieving we're hopeful that we can offset a lot of the labor increases.
Smedes Colin.
I'm going to give a shout out to.
Not a manager.
Krishna Zeta made a comment he was being interviewed I don't know when it was but it was reported here I read it maybe on Sunday or Monday.
He made a very important point, which is this industry that we are very much part of entertainment business as well as our hotel business is unique in one respect we can reprice that business basically every day.
And and so we've been on the offense as it relates to rate.
And and we've been on the offense as it relates to cost and that's why I think you saw margins.
The way they were in the third quarter.
I'm not saying this is easy.
But.
I feel like 'twenty, two is going to be a good year for this company.
I think we still when you net it all down we still believe that we have margin expansion post pandemic, yes, prepays, yes, because of all of the things we've done from an offensive perspective.
Is that okay Smedes, yes, no. That's good I wanted to ask just one more question about this.
And do you have any sense of are you getting I guess, maybe new customers that are coming out that may be.
Yes.
Mark.
Of course.
Hum.
Okay.
Yes.
Nathan further.
Sure.
No.
If I can.
Yes.
Alright.
Yes, yes. Good question, we've actually hired additional sales resources, who are specifically focused on the acquisition.
Stealing market share away from some of our competitors and we are having success with doing that initially it came in the form of folks Couldnt meet maybe where they wanted to in the past and so we became a new option for them and we've been able to win over their business. So we've specifically hired sales folks to help us do that and we're very encouraged.
But what we're seeing and again I don't want to keep touting. The same horn. This was a directive that we made to our manager Marriott.
Months ago.
Italy, probably 12 months ago in the height of the either the.
Pandemic and that is we want we want to go on the offense here, we do not want to be a victim.
We want to go.
Our salespeople that have been disenfranchised by our competitors and that's what we've done and we will probably do more of that and and it sets us up really well for next year.
Thank you.
Thank you.
Well go next to do a question with Wells Fargo.
Hey, Thanks, good morning.
You previously said that you would entertain.
Mhm.
And about $75 million in EBITDA and the right management team in place.
Moving operating environment.
Any update you can give us regarding your view on the timing of the spin.
No.
No.
Because we've got just so much going on with this business right now we've got up.
TV platform.
Media platform that is in its.
In its growth in a growth mode.
We got to bring in block 21, fully and explain to shareholders what this.
This group of assets look like.
We are working on other growth initiatives at this stage.
But I feel confident that over the course of the next few months six months nine months.
We will be able to one way shape or form demonstrate too.
Our shareholder group the underlying value of this enterprise, whether it's stand alone or whether it's still within the company remains to be seen.
But this is a very valuable business and one of which we're very excited about.
Yeah.
And how are you thinking about.
Your holiday programming longer term I mean would you when do you expect to return to ice or have you found that the programming of last year and this year may have a better return.
No. We we love US the problem is with all of the travel restrictions from China to this country.
We spent two to three months.
With applications into Beijing to try and get.
Visas for these artisans from Harbin.
<unk>.
Unfortunately, because of the travel restrictions. It just is this was dragging on and we couldnt get it. So we have to make a audible here.
And that's why we've gone with <unk>, which we're very excited about but I think Patrick we will bring ice back as soon as we can get those folks from China, Yes, Dori. This is Patrick we definitely.
Even further believe in the power of ice I would say, though that what we learned over the past two years is how we can take some of the interactive programming that we've got in place now to further enhance ice and make it even more exciting and a little bit fresh.
As well as the fact that we've gotten better at the ancillary offerings around <unk> some of the other attractions.
I would say that we've learned more about our transient customer we've learned more about what they like on the holiday side and we've learned how to to enhance ice for the future. So we're very excited as we look forward and get the.
Chinese artisans traveling again, hopefully next year.
Okay. Thanks.
Yeah.
Well go next to Craig will.
Well go next to Chris <unk> with Deutsche Bank.
Hey, good morning, guys. Thanks for all the data points.
A question about how do you know how much business cancel whether it's yours or maybe broader industry view hasn't has it.
<unk> booked yet it seems like Theres, a pretty good opportunity you guys are already getting a lot of rate growth for next year. It seems like there's even more.
Rate growth opportunity coming shorter term right, because there's going to be just a shortage of space everybody gets more confident in there and their need to meet so is there any is there any way to quantify that or maybe that's more of a 2023 opportunity as well.
We find it difficult to quantify is simply because.
Our competitors.
<unk> sort of tend to all the.
Analyst community tend to cause.
Compas too.
We don't disclose too much data around group.
Insulation rebook.
Really one of one when it comes to this degree of transparency I think.
But the point, you're making is extraordinarily important because the meetings industry has been decimated.
Over the last 18 months and this is one of the reasons.
Why we won on the offense in terms of going in recruiting salespeople why we won in the first week of Covid why we we instructed Marriott to instruct our salespeople that.
Let's not worry about cancellation fees and argue about force majeure or let us do rebooked somewhere 65% of the almost 2 million room nights.
We've re booked 65% of the almost 2 million room nights have been canceled.
We're working with a big bucket.
Room nights that have cancel with us that haven't rebuilt.
We're working through that process, but the competitors of ours have have also.
At this time.
Same set of issues and we see this as a huge opportunity and particularly the other part of it all is.
Is the city City convention centers that just shut the doors down you know and basically shunted their customers <unk> said.
We cant hold these these conventions.
We picked up some business from these companies that Athene Sn.
Essentially shattered.
And.
And put them into hotels of ours, and so there's a big opportunity here every time Pat.
Patrick every time, we have seen.
Problem is within the group industry. This occurred in two O. Nine there are those organizations are triggered the customer well in those organizations that didn't and we came out of 209, a stronger company.
Our budget.
Same thing is going to happen here, we're going to we're going to attract new customers, we're going to attract the best salespeople.
I think that really bodes well for 'twenty two 'twenty three 'twenty four you want to add to that I think you captured it.
Right.
Great.
Colin and then follow up for you on when we think about kind of the out years, you, obviously have the opportunity to expand the Rockies.
How would you and there's obviously whatever the cost may be to do that.
You weigh that against.
But potential to buy an existing property or another market or possibly joint venture in a new market for you just trying to get a sense as to how important building out that historical historical rotation strategy is versus possibly getting obviously, a pretty pretty attractive return on expanding Rockies.
Yes.
This is.
This is the real interesting part of that job and I think it's going to be something that.
Mark and I and Patrick will spend a ton of that time.
Laying here over the next six months because.
We're in a very fortunate position that we have a lot of opportunity here to grow this company and we've got some really.
Exciting.
Citing.
Return projects that we can do we've we've proven the thesis of Soundwaves. When we built this baby there was a lot of there was a lot of concern of do we build it to bid why did you put a water park in <unk>.
Big Group dominant group hotel like Opryland.
When you look at the you know the.
The 240000 tickets we saw this year.
I think upon room nights.
So this year we've.
We've really proven the thesis of this thing it's operating at or above.
Total rates of return, which we had mid teens. So balancing these types of projects with the unique opportunity of finding an asset in a market that would aid the rotational strategy is something that we're spending a lot of time online now.
But I really do believe that net net six to nine months 12 months from now.
Going to demonstrate to our shareholders that we have got a tail here of growth that is pretty compelling.
I'm not going to tell you, which one comes first which one comes second and by the way. The same thing applies to our entertainment business. We've got some really good interesting opportunities in our entertainment business as well. So this is going to be a firm period of time for us I think over the next 12 months.
Not as we start ourselves in the chest being the victim. It's how we've transformed this company for its next wave of wonderful growth.
Okay, well very good appreciate all the thoughts call.
Thanks, Bob.
Uh huh.
Well go next to practice shows that your scale.
Hi, good morning.
Couple of questions here.
It sounds like you know theres been a bit of geographic shift in.
Youre, taking some business from other markets.
Any particular markets that you have been able to take share from you know certainly markets like New York City, San Francisco, Chicago are really hurting right now as far as group business at any particular markets.
Standout to you.
I don't know how to answer that question, because it's not obvious from out the inflammation that we've sent you can conclude that our business has been pretty solid all the way across.
And yes.
Yes, we've recruited salespeople out of Las Vegas, and Southern California, and will continue to focus on those markets.
But.
Our business.
The amount of business that we have conducted in this third quarter has been pretty uniform across each of our businesses and we've seen a lot of customers that we've seen in prior years do you want to add any comments on that Patrick no I would agree I mean geographically I think it's pretty consistent I think we've picked up.
Some.
<unk> is out of the tech area, we've picked up some opportunities out of the medical devices and services areas, but geographically I think it's pretty consistent.
Okay.
Okay.
Question here.
Right.
The purchase of block 21, or how should we think about.
Capex spend for next year.
Well.
At this stage.
The only capital that we have planned for next year.
The.
Would be.
The capital replacement reserve.
We don't have any <unk>, we don't have any major projects that we've announced yet.
Yes.
Beyond just <unk> and maintenance.
We will be finishing up the F&B repositioning at the national.
We will put some capital to work at block 21.
To the to be announced.
Correct.
Terms have been enhanced as we think about tour product, Okay sure sure both food and beverage location Havent, we havent enough, but thats not a significant amount.
Out of money so the biggest depending on when we close block 21.
Whether it's year end or early in the first quarter that will be the biggest capital outlook.
Okay. Thank you my last question and I won't.
The term rattled, but.
Google says ran through quickly.
And for that.
You had mentioned did you say mid <unk> mid teen monthly positive cash flow or was that correct and if so is that.
Okay.
A comparable figure.
Look at those the monthly <unk>.
We ask that you put out is that comparable to what you had talked about most recently the positive 16 to 19 does that kind of apples to apples how to think about that.
Yes, yes.
So here's the here's the.
Good thing is we.
We get into the fourth quarter, the fourth quarter shifts from.
Group dominant to leisure dominant and leisure we all know.
Is is both short term.
So what we've seen.
So far into the fourth quarter for.
Alicia has been exciting and the issue is does that continue so.
We.
We've said mid teens, and we're pretty comfortable with that and then we move into 'twenty, two where group takes over again.
Okay.
Fair enough. Thank you for the clarification.
Good thank you.
Thank you.
I will turn the program back over to Colin for any closing or additional remarks.
Thank you and.
Folks on the call. Thank you very much indeed for taking the time. This morning, we're very excited about where our company sits we're very excited about the growth opportunities for <unk> to those that we have.
<unk> already announced and hopefully we'll have some more interesting projects to share with you over the months ahead.
And if there are any more questions that you may have the one clarification on please feel free to reach out to either Mark Fioravanti.
Or.
Seafood.
Our guy and.
And thank you again look forward to.
Two meeting face to face at some point and if we don't speak beforehand and have a great holiday season, both Thanksgiving and Christmas program. Thanks, So much.
Okay.
This does conclude today's program. Thank you for your participation you may disconnect at any time.
Okay.
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