Q1 2022 Ryman Hospitality Properties Inc Earnings Call
Audio assistance during todays program.
Starz be around.
[music].
Okay.
Welcome to Ryman hospitality properties first quarter 2022 earnings conference call.
Hosting the call today from Ryman hospitality properties are Mr. Colin Reed, Chairman and Chief Executive Officer, Mr. Mark Fioravanti, President Ms, Jennifer Hudson, Chief Financial Officer, Mr. Patrick Chaffin, Chief operating Officer, and Mr. Scott Bailey, President Opry Entertainment group.
This call will be available for digital replay. The number is 890 590 951 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 MS. Jennifer Hudson Ma'am you may begin.
Good morning. Thank.
Thank you all 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 facts 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 reconciled each non-GAAP measure to the most comparable GAAP measure in exhibit to today's release I will now turn the call.
Thank you Jan and good morning, everyone.
The first quarter of 'twenty two was one of the most remarkable quarters I've witnessed in this business and I've been in it a long time, the raising change from week to week or month to month, and say Oh, My commentary machine, It and group demand, which.
Was unlike any other trajectory I'd seen except perhaps for the earliest days of the pandemic and the trajectory was essentially dust and hospitality portfolio went from 60 points of occupancy and 42 million of adjusted EBITDA in the month of December down to 33% unless I'm.
$1 million in January I see I see I'll make some impact was felt that in February rose to 46% occupancy and nearly $17 million of EBIT.
Oh E before in March reaching over 63 points of occupancy and 52 million of adjusted EBITDA or eight the pace of recovery exceeded our expectations as we anticipated it would be much harder to offset the I'll make from cancellations in such a short window as we did.
Just very clearly on our February earnings call.
But there were two primary factors that helped deliver these results. One is the continued strength of our leisure transient business.
We have highlighted before this trend carried over from the holidays too.
A robust spring break season in March.
Leisure transient ADR growth, 26% compared to the first quarter of 19 and 35% over the first quarter of last year.
The Gaylord palms saw some of the largest spring break crowds hosting 5000 more transient room nights in the first quarter of this year than in the first quarter of 19 in March the palms turned in the single best months performance on record for revenue and adjusted EBITDA.
And the hotels first quarter was only $1 1 million below its first culture of 19 levels and profitability. Despite 27 fewer points of occupancy due to the omnicom cancellations on the group side. This was truly a remarkable performance.
The fact, a leading us to support internal expectations was the rapid recovery and group travel as the weeks went on.
It gives you a sense of just how fast things were happening we quite literally had groups who are early in the quarter indicated that they would likely to cancel and then as things started to look better their message became well we still plan to me, but you should expect higher than normal attrition than as the meeting date arrives.
These groups not only traveled but exceeded their original blocks Crazy times indeed.
On the group side, we collected close to $20 million in cancellation and attrition fees and since the beginning of the pandemic. We've collected now over $95 million in fees, we feel very good about the strength of our contracts going forward as some of the last vestiges of the pandemic.
Actions fall away such as the airline lost mandate and travel shortly normalizes looking ahead for our hospitality business, we feel confident that the momentum we experienced in the first quarter will continue barring an exogenous event.
To highlight this at the end of the first quarter. Our lead volumes were the highest they have been since the pandemic began and only 4% below 2019 lead volumes, having added 2 million new leads in the three months in the first quarter.
And within those leads are near term in the year for the year lead volumes continue to exceed 2019 levels in terms of production. The 422000 gross group room nights booked in the first quarter exceeded the first quarter of 19 by almost 7% now to help frame.
How impressive this is consider that in the immediately preceding quarter that is in the fourth quarter of 'twenty. One we booked nearly 1 million gross group room nights typically a large fourth quarter production number like that like the one I just talked about includes some amount of draining the funnel.
At the year end so the following first quarter of the of the new year is more likely to see slower production as the funnel of new leads gets replenished.
Emphasis on driving future rate growth paid off handsomely in the first quarter with ADR or new group bookings, 8% higher than in the first quarter of 'twenty, one and 13% higher than the first quarter of 2019 the.
The value proposition, we offer natrium plant is through the investments that we've made in our portfolio over the last five years positions out of hotels with a significant competitive advantage in terms of quality and volume of amazing space variety and attractiveness of food and beverage outlets renovated room.
Product and extensive and unique amenities altogether, we feel very good about the trajectory of hospitality is on as well.
We exit the first quarter and the prospects for continued recovery in organic production.
For both this year and future years now turning to our entertainment business. We saw a similar pattern of month by month improvements as Omnicom abated, if we set aside our investment in circle and looked at the wholly owned operating businesses. In this segment led by the Ryman Opry House.
And our Ole Red venues these businesses start to generate a loss of $1 1 million and adjusted EBITDA are E. By February as attendance recover they generated positive $2 3 million and in March 10, and $6 4 million for this first quarter as a whole these businesses reached seven 4 million.
A positive adjusted EBITDA on a same store basis compared to the first quarter of 19, and thus excluding both cell phone and Ole Red Orlando, which opened in 2020. This segment reached 93% of its first quarter 2019 performance, even with the impact.
On the call in January and February at Disney is in the first quarter was that we have reached an agreement with the terrorists and NBC universal to partner with them and sell 30% of that entertainment business at a minimum enterprise value of 141 5 billion with the potential.
<unk> to 151 5 billion if certain performance metrics are met in 'twenty three 'twenty four with both valuations inclusive inclusive of the presumed closing of block 21. This agreement is a win all around for our shareholders our employees our customers.
The artists that are on that stage and our new partners for sources. It sets a public valuation mark on this business, which was a long holiday was undervalued by the market.
The demand for live entertainment assets, especially ones is unique and irreplaceable.
The Ryman auditorium in the Grand Ole Opry House. It provides a boost of liquidity to alignment in the form of the tariffs roughly 200 and.
19 million equity purchase, which will lower our combined leverage by nearly a half a turn after fees and expenses and it helps accelerate that post pandemic deleveraging plans. It brings the extensive expertise in strategic capabilities and the terrorists and NBC universal to accelerate the reach and extend it.
Spanned the growth opportunities of this business across live entertainment performances content creation and digital distribution. It also creates scale unless new opportunities for our employees and new avenues and outlets for artists and consumers to discover each of us and retain 17.
The Senate the outside of all of these opportunities for our existing shareholders with a clear set of options to eventually fully separate this business from the REIT something we've always said was the best alignment for both businesses now turning back to our hotel business just for a moment, let me talk briefly about the future and here.
Where we get really really excited all of the proactive decisions that we've taken over the last few years, including product enhancements and expansion group sales staff retention and bringing in new folks to bolster our group sales processes have all resulted in a really strong book of forward business.
And a very impressive very impressive leisure business as a consequence of all of this the remainder of this year is shaping up to be remarkably strong.
Getting of April of this year, we had over 524000 net group room nights on the books for the second quarter and approximately $1 4 million for the remaining nine months of the year.
Now in terms of how these numbers compared to where we sat at the same time in 19, here's what's interesting as of the 31st in March of this year, our room nights on the books for the rest of 'twenty to represent 97% with 2019 group room nights on the books for now.
<unk>, but with an ADR growth of eight 6% and by the way when you look at the group room nights that we have on the books as of the 31st of March 2022 for the year of 2023. These represent a 102%, but the 2019.
Room nights, we have on the books as of the 31st of March 2019, again with an ADR growth of eight 6%. These are incredibly strong numbers considering we just spent the last two years fighting a global pandemic that Jim will share with you details of that guidance for the second quarter.
A year and you'll see given the strength of that business. We're projecting that the next nine months on a consolidated basis at the midpoint will exceed our 2019 performance from adjusted EBITDA perspective, now I'll stop here.
Both Mark and John joining me today is Jennifer has now stepped into our Chief Financial Officer, Ron and Jan Congratulations again on that and and amongst users have expanded as president of the company and congrats again, mark as well, so I'll turn it over to them for additional comments and.
Then we'll open up the lines for questions.
Thanks, Colin let me add a bit of color to the hospitality and operational results for the quarter, particularly a snapshot at March.
The best indicator of where our business stands close Tom crime.
Colin indicated the rapid improvement in the quarter group occupancy as we ended at 63% overall occupancy in the month of March.
I would add that our group mix for the month of March was 17% of total room nights and that compares to 76% of total room nights in March 2019.
In January of this year group was 61% of room nights traveled compared to 80% in January of 2019, so while the transient was very strong throughout the quarter. It was the group recovery really close the occupancy gap as the period went on.
And within those first quarter group room nights are mix of corporate groups was 66% compared to 60% in the first quarter of 2019.
So while early in the pandemic recovery corporate seem the most tenants have to dive back in we're happy to report that they're now coming back in the numbers.
Another positive trend in the quarter was the level of group outside the room spending.
For the full quarter, we saw about $229 a banquet spending per group room night, only one 5% below the first quarter of 2019. However in March that figure continues to improve and reached $254 per group room night, a seven 6% increase compared to March of <unk>.
19.
So with the return of more corporate groups, we're pleased to see outside the room spending activity reached pre pandemic levels. That's both leisure and groups are spending while on property.
Quickly a few trends by hotel the Gaylord palms had the steepest occupancy recovery month by month during the quarter going from 27% in January to 79% in March.
<unk> also performed very well with leisure transient picking up over 4600 transient room nights compared to the fourth first quarter of 2019.
Saying over 32% growth in transient ADR over the same period.
The group recovery was also pronounced at Opryland as total occupancy increased from 30% in January the 72% in March.
We gained more traction was close behind these leaders, reaching 72% occupancy in March and also adding 3000 transient room nights compared to the first quarter of 2019.
The Gaylord Rockies and Gaylord national over the two hotels, where the pace of recovery was not quite as dramatic month by month within the quarter.
The Gaylord Rockies gain 4900 transient room nights compared to the first quarter of 2019 and double occupancy from 27% in January to 54% in March.
As most of you know the Gaylord National has the lowest leisure transient mix of arc five Gaylord hotels.
The national did not benefit as much from the strong leisure demand recovery and continued to experience the lingering impacts from the almond crop.
Group room nights.
Overall hospitality margins held up relatively well in the face of Omnicom.
In the quarter with adjusted EBITDA margins off a modest seven points year over year compared to the first quarter of 2019. Despite a 25 point decline in occupancy and a 21% increase in average wage rate over the first quarter of 2019.
Our emphasis on retaining key staff members.
As group business has returned and volume postpone yummy crime disruption.
And we continue to believe Theres occupancy recovers and high margin outside the room revenue streams return to these groups the productivity measures. We've implemented through the course of the pandemic will yield improved margins longer term compared to pre COVID-19 levels.
Looking ahead.
On the books position for the balance of the year looks very healthy it was call. It provided a snapshot of our group room nights on the books for the second quarter and the rest of the year.
Translating these figures to occupancy as of March 31 for the balance of this year.
At 48, four points of net group occupancy on the books down only three one points compared to the same time in 2019 for the balance of the year.
The ADR for these group room nights is eight 6% higher than the same period in 2019.
It means we are 5% more group rooms revenue on the books for the balance of the year and we get to the balance that we get through the balance of 2019.
And with our end of year for the year lead volume is also outperforming 2019, we feel very good about the rest of the year given this base of business and the momentum coming out of March.
On the investment front.
We're in the final stages of the assumption process with the <unk> servicer for block 21, and anticipate a closing before the first.
And we anticipate our strategic partnership with the tariffs and NBC Universal to close after the block 21 transactions.
By the end of the second quarter.
I'll now turn it over to Jennifer to provide a brief financial balance sheet liquidity update along with our guidance. Thank you Mark.
In the first quarter the company generated total revenue of $299 1 million and a net loss to common shareholders of $24 $6 million or a loss.
Peripheral liability chair.
In terms of our balance sheet net debt was approximately unchanged sequentially from the end of the fourth quarter of 2021 at $2 8 million.
The company had available liquidity of $638 $4 million, consisting of $510 million of capacity under our revolving credit facility and $128 $4 million of unrestricted cash.
We effectively exited our covenant waiver period for our secured credit facility with the end of the first quarter. The beginning with the second quarter. We will now once again D required to meet certain maintenance covenants in terms of consolidated fixed charge coverage and implied debt service coverage ratios. However, these ratios are modified to reduce thresholds to reduce threshold levels of one.
And then one one times respectively through the balance of 2022 and will be based on annualized result for that time.
All other special restrictions related to our pandemic covenant waiver are no longer in effect, which is Linda on discretionary capital spending acquisition investment or debt incurrence.
For the block 21 transaction, we expect to assume approximately $137 million in C. M. B S debt on the property when the deal closes.
To fund the balance of the $260 million purchase price with cash on hand or borrowings under the revolving credit facility.
Subsequent to the block 21 closing, we expect to receive gross proceeds from the terrorist investment and the new $300 million LNG segment level term loan b of approximately $590 million.
For transaction fees and expenses.
Which we used to retire our existing term loan a and outstanding amounts under our revolving credit facility.
We're currently making progress on the execution of the new term loan B for operating entertainment and expect to simultaneously placed a $65 million revolving credit facility for this business, which will be undrawn at close but available to support the businesses growth with our new partners.
The net result of this transaction as Colin noted earlier it should be around a one half turn improvement in net leverage on a consolidated basis.
And we will continue to prioritize the deleveraging post pandemic and taking advantage of high return reinvestment opportunities across our businesses with our free cash flow.
And finally, given the momentum with which we exited the first quarter, we are comfortable resuming the provision of guidance for the current year.
For the second quarter of 2022, we expect our hospitality business to deliver between 120 and $124 million of adjusted EBIT to Ari and our consolidated company to produce 135 to 145 million of adjusted EBITDA really including any partial quarter contributions from block 21 subsequent to.
Clothing.
For the full year 2022, we expect hospitality segment to deliver 425 million to $440 million of adjusted EBIT salary.
Combining that with our corporate segment and ops and our already published annual guidance for our entertainment business of $80 million to $88 million and adjusted EBITDA, Ari, which we issued last night in conjunction with the announcement of that tariff investment and which again includes the expected contribution of our pending acquisition of block 21.
We expect the consolidated company to produce $476 million to $502 million and adjusted EBITDA. This year.
At the midpoint of 489 million this.
This would represent over 95% of our freak Amgen in 2019 full year adjusted EBITDA of $510 million.
You subtract our first quarter actual results our guidance ranges for the balance of this year represent at the midpoint, 98% of our 2019 performance for our hospitality segment.
106% for our consolidated company.
With that I'll turn it back over to Colin Thank you Jan well done and thank.
Thank you Mark So Chelsea, let's open up the lines for questions and say, what's on folks' minds here. This morning.
Yes, Sir.
At this time, if you would like to ask a question. Please press the star and one on your Touchtone telephone.
You may remove yourself from the queue at any time by pressing the pound key.
Once again that is star one to ask a question and we'll pause for a moment to allow questions.
Sure.
Our first question will come from Shaun Kelley with Bank of America Merrill Lynch.
Hi, Good morning, everyone. Thank you for all the detail and color.
Gratulation on a really strong March.
So if I can just start maybe the best place I think would be to dig in on the revenue side a little bit. So appreciate all the clarity on guidance on the bottom line trajectory of where everything is that if we think about the mix of where you're at I think the numbers given where.
48.4% of net group room occupancy on the books down about three percentage points and then up.
5% overall in group room revenues can you help us think about how that translates into just the overall revenue or Revpar picture for Ryman, just given that obviously, there's still some work to be done on the balance of the year. So what are some of your assumptions around kind of that that book of business or what needs to be what kind of needs to go in to fill in.
The gaps between here and the rest of the year.
Right.
So first of all the.
I think Patrick the reach we have is pretty limited.
We're in really good shape on on reach Oh group side for the for the year given the tremendous book of business, we have and particularly the rate yeah. The thing that we didn't really talk about as we think about the rest of year is what is going on on leisure and.
And you know we are we are seeing leisure volumes, how do I describe this are very very encouraging in terms of room nights, but extraordinarily encouraging in terms of the rates that were booking these leisure room nights at so surely we feel.
Really pretty good all round about right now that's why we're United.
Prefer to give guidance for the year, we feel very good about where we sit right now for this year.
You want to add to that sure hi, Shaun it's Patrick.
To your point a minute ago, we talked about the 48 points of occupancy that's about 1.38 million room nights on the books from a group perspective.
If you add onto that just what we did in 2019 from a transient perspective, which was about 22 points of occupancy or 620000 room nights that would get you about 2 million room nights for the remainder of the year, which would imply around 70% occupancy for the remainder of the year as far as what we have on the books on group, what we expect to do.
On transit at a minimum.
We anticipate that will exceed the transit we did in 2019, because as you've seen over the past couple of years, we've gotten more savvy with our transient leisure programming.
More and more folks have become aware of unique offerings that are amendment for our hotels have from a leisure amenity perspective. So I expect we will exceed the transit room nights. So if you say, okay. They do nothing else on the group side, they're going to be you know roughly 70%. We anticipate that we will obviously do a lot more and Oh.
On average I would say, we would book probably somewhere between 60 and 80000 more room nights for the remainder of the year so that.
That would give you a feel from the group side that would give you a feel for how much more we think we can still do so.
Then you add onto that the rate Mark mentioned that familiar with room nights on the books from the group perspective, better up eight 6% in terms of rate growth over 2019, and if you look at just what we did in the first quarter on the leisure transient side, we saw a growth of 14% ADR.
And what actually traveled during the first quarter so room nights.
Nothing else happened, we'd be in good shape, we expect obviously to outperform and continue to deliver more room nights on the group side and on the transient side, a great story, especially with what's going on in the right spot.
Oh, sorry.
Sorry, sorry, sorry, Collyn Sean.
Right.
Don't want to Crow about this but you know we we've taken as a company a very different approach to what what I think most of our competitors have done in terms of you know continuing to enhance the product through from Omi called you know, we we spent a lot of money on on.
Improving just the proposition.
And and I and I think we've also you know Patrick on the hotel side I think we worked with Marriott and encourage them to be more creative on the programming side for leisure.
All of this you know stands is in really really really good stead to.
<unk> 19, this year as Jan said and.
And and and if things happened the way I hope. They happen you know may be you know come in stronger, but you know.
Business looks really good right now.
No clearly from the numbers that that seems to be the case and then second a follow up question would just be could you help us think a little bit about like maybe the the ramp up of <unk>.
<unk> and National Harbor, obviously.
It was a little bit.
Those two properties sound like they were a little bit behind the trajectory you're seeing in some of the other markets. So how is either the pacing at those properties or the.
The step function that you may expect to see because overall clearly the portfolio is getting to levels that you know what.
Ryan with 2019, but is that you know disparate between our.
There are some properties well above and those two are still trailing or does it or do you see those catching up meaningfully in the next in the next couple of quarters.
The latter.
But let me say this the reason why these two hotels.
Slow coming out of the gate is because they don't have the same stage of their life you got to remember or as you know two and a half years old.
And it doesn't it doesn't this this hotel does not have the leisure amenity and amenities and the and the and the historical relationship with hundreds of thousands of customers at the other hotels have been opened.
You know a long time and and we've been able to build a book of really strong leisure business in the all freelance the Texans and the palms now but.
But we've got plans for that and and and I would say Aurora has shown some strength on the leisure side. This year. The group book of business for Aurora looks extraordinarily good and Patrick you may want to touch on that in terms of Ah in terms of Washington.
The hotel by hotel just doesn't have the same pool complex massive food and beverage offerings that some of these other hotels do and those are the things that we are fixing you know they they the the the Washington Hotel relies more on group than it does on transit.
He has the slowest.
And is this hotel is the lowest percentage a transient business and but it's but again, we've got we've got ideas and thoughts about how we over time, we will fix that issue, but the the book of group business for Washington looks really really good.
Over over the next few months you want to give some data on that yeah, let's just consider the market's first right. So in the first quarter D. C was 23 out of the <unk> ranked number 23 in the top 25 markets from an occupancy perspective. The D. C market has struggled to get back compared.
Compared to some of the other cities across the country. So you have a market phenomenon going on there and it's not too different from what has happened in Denver D. C is much harder hit, but Denver rank from a revpar perspective about 17 out of the top 25 markets. So both markets have been a little bit slower to come back for D C more pronounced but.
<unk> point, you know national depends more on the group side and I would tell you as you look at the summer.
They have a very strong book of business and we're very encouraged by what we've seen there.
From a margin perspective, I'm very encouraged because you know as we've talked about we took the COVID-19 period to really make some positive changes at that hotel. We did a rooms renovation, we're doing a full renovation of our food and beverage outlets, but from a margin perspective, you know that helps on the F&B is helping on the margin side, but we made some fundamental changes.
And our union contract that help us position the hotel to perform better.
Sort of have handcuffs on it and we've removed those handcuffs. So the hotel should perform much better, especially in the food and beverage outlets.
So we see the group book of business is strengthening as we go into the summer. We're encouraged by that we're very encouraged by how that hotel is performing on the margin side and the set up for success and you know for a Union hotel. It's it's been hitting the top of the brand in terms of guest satisfaction. So it's doing all the right things and as that book of business is increasing on the <unk>.
<unk> side I think it's set up for success.
Rockies Collins point, it takes four or five years for us to build the transient base on which you can drive transient demand into a hotel and because of Covid, that's been stunted a bit and so we're very encouraged when we know Rockies game is going to get there and if you look at this summer. They also have.
A tremendously strong book of business.
The summer will be above 80% occupancy throughout the summer so feel really good about where rockies without even though that is transient builds that hotel will be set up for futures future success.
Very much so Q1 was a tough quarter seasonally and both of those markets to relatives in Nashville, Orlando and Dallas.
Yeah, it's a tough quarter.
Yeah. Thank.
Thank you everyone.
Does that good enough for them that's perfect. Thanks, Thanks, everyone.
Thanks Marty.
Thank you. Our next question will come from Bill Crow with Raymond James.
Hey, good morning, guys.
I appreciate all the details so far.
Question number one the two.
Talk about the stability of the workforce from two different perspectives, I guess, just staffing levels slash turnover.
Would be one and then kind of where is labor cost from a stability perspective have we seen the biggest increases or are those continuous.
You want to tell you I'm sure.
Let's take wage increase versus you know we saw roughly 20% increase in the fourth quarter, we saw about 21% wage increase in the first quarter. So it feels like the pace of increase has slowed a bit and we're normalizing. So you know we we think there'll be additional wage increases, but we don't think it'll be as dramatic an increase is what we.
In 2021, so we get a little bit more comfortable and better handle on how to forecast for the future from that perspective from a staffing perspective, we've tried to stay ahead of this.
We've been very aggressive in trying to get quality folks on staff get them trained and then use our bonuses and other means to keep them in place. So we've I would say relative to our peers, we've been able to keep our turnover a little bit lower from a staffing perspective, though I would say, we still have a little bit of room to go.
Given the levels of occupancy that we're projecting for the summer and we're getting aggressive applicant flow has increased over the past 60 days and so we're encouraged that we're going to be able to get there, but I would say that we were probably at 75% to 80% depending on the hotel of the the full level of staffing we want it and uncomfortable.
We will get to 95 or 100% here in the next.
45 days remind bill about the efficiencies around management, Patrick to offset the increases that we're seeing in frontline.
And I want to make sure we draw clear comparison Arctic a clear distinction here on the frontline we are going to come back to the original level of staffing you know those frontline stores and housekeeping and front desk will go back to the original numbers, but from a management perspective, we've driven some synergies into the business.
Putting in quality over quantity and not just throwing bodies at problems, but really using the COVID-19 time to solve some of those issues. So that we can be more efficient on the manager side.
You know, we think that there's a long term probably at least 15% reduction in our management head count as a result that will drive margin improvement into the business.
Great I appreciate that the other question I had.
It's really what are you hearing from prospective groups for next year and clearly the the advanced bookings pace has been terrific.
Are you getting any any indication of concerns about.
Economic growth slow in a recession.
As you talk to prospective groups for that sure.
Well, we're seeing none of that it's something that we you know we we monitor lead volumes Patrick and his team are engaged I mean daily with these sales leaders and I think we see a lot of the car.
<unk> signals in that business.
Yeah.
This this industry Bill is big and deep.
And there's just a ton of organizations across America. The one in May and we just need to continue to Norway and and slowly.
You know build out share here the way, we've been doing it and and you know we've done it through the way we treat our salespeople the recruitment of more salespeople.
And and the quality of our products and the quality of our service and so you know.
If we have a recession for six to nine months whatever it might be you know you go back and look at what happened to us into our NIE and financial crisis.
We because of the quality of our business and the quality of our people you know we absolutely look at these periods of times the likes of which we've just gone through a period of time, where we can actually gain share and we think that's what we've done here and that's why we're optimistic and confident.
This forward book of business. So you know if there is a recession yeah I think we'll do just fine through it.
Yeah, I mean, I would only add that you know.
The current behavior. It may not be a full indication of where we're going but current behavior, but we just in three weeks ago had a group in house the spent $680 per person.
Oh, I'm, sorry per group room night, and they're banquets alone. So our folks are getting on property and increasing their spend.
And a very encouraging way, so maybe things will pullback at some point, but we don't see any indication of it right now.
Okay. Thanks, guys.
Thanks Bill.
Thank you. Our next question will come from Smedes Rose with Citi.
Hi, Thank you I was just wondering with your as the business builds back for the balance of 'twenty two 'twenty three.
Soldiers in.
New customers versus repeat customers that would make you.
Suggests that maybe you're getting share from either other cities or other other group houses.
And my second question I'll, just kind of pop in I'm, just wondering if you're seeing any changes.
And customer behavior around cyclical housekeeping that might help you on the margin side or is that kind of gets returned back to more normal expectation just given you know more normal operating environment.
Yeah.
Patrick you want to talk about retention.
Yeah.
So one of the things that we did coming off of opening Rockies is set pretty aggressive acquisition targets because we don't want it always just be taking from the same customer pool, we have very very loyal customer base, but we know that we need to be always feeding into that so that we can increase our group business long term.
And you know, we have set pretty aggressive targets and the hotels year to date have.
<unk> been beating those targets. So we are very encouraged by the level of acquisition into the brand.
That's not happening because we're losing customers our loyal customers continue to return, but we're growing the pie. So yes, we do believe we have stolen some share mark we're going to have something.
I would just.
We increased our we recruit salespeople from competing brands.
For this reason that's right and then on the housekeeping side you know, we brought housekeeping daily housekeeping back at our hotels back in the October November timeframe and that has been met with very positive responses and reactions I think that's something that a lot of folks struggled to get back but from a labor perspective, we were able to bring it back I'm not sure if that answers your question.
Or not.
Well I was just wondering you know I think there's always a percentage of our customers that choose not to have housekeeping regardless of the environment. I was just wondering if you've seen a market change in that percentage trade credit mark or down.
No I would tell you that.
Especially on the transient side with rates going up votes folks expect.
To get daily housekeeping, if they can there's always going to be some folks who opt not to do that but we haven't seen a material change in that mix.
Okay, great. Okay. Thank you.
Thanks Nate.
I think you are.
Our next question will come from Dori Kesten with Wells Fargo.
Thanks, Good morning.
Historically, what's been the difference in transient and group rates and then what's your expectation for that spread going forward.
Okay.
Got it.
Oh, Yeah go into it.
All right Patrick.
No you're fine I mean.
You know as we've I mean, it's obviously been involved in jewelry because as we've added things like soundwaves, we'd been able to drive a lot better rates at opryland and as we've added additional pool amenities at the other hotels that increases our ability.
Historically, we've looked at it and we said the group customer is much more valuable to us.
From a total revpar perspective, the rate really depends on the time of year.
But historically you know most corporate groups and some of your premium association groups have been able to outperform them on the right side.
As we've added these pool amenities, we've seen the transient total revpar portfolio.
Or you know.
Total package has increased to the point that.
Other than banquets.
The the transient customers worth almost as much to us as the group customer, which is a very positive thing to see but I mean, it really depends on the time of year that youre looking at during the holidays in the summer period transient drives extremely high rates.
And then group drives much higher rates during the historic group travel periods, but give me just a second to look at some additional data and I'll follow up later or call you separately. After this but here's the dynamic that's really really really really interesting you know we through this pandemic because being able to be.
Because of what Patrick said because of product.
And because of just manages and the quality, we've been able to move out nishu rates up materially now this plays into the group side Big time, because we have very sophisticated yield management system. It comes a group sales person comes in and says to.
The yield management.
Folks the pricing people. This is a growth I want to bring to third have made to the fifth of may and the price they want to pay us X well now yield management is saying well. Okay. Historically, you know alisha right was X, but now it's X plus 15, 20% and so this is now having a P.
They've impact on Oi.
What is going on in group and that's one of the reasons why you know when we make comments about what happened in the month of in the month of.
Module in the first quarter in terms of room nights booked you see a rate fairly healthily and by the way you know we haven't talked about this but we just closed.
Close the books for April from a sales perspective, and we booked over 150000 room nights in April again at a very healthy rate. So.
There is a very interesting dynamic taking place here and I think it's going to be very favorable to us long term.
You gave me a minute or two to actually do some math I can come back to you. Some more data. So if you go back about four years, our group rate was about 88% of the transient rate right, but the outside of the room picture makes the group customer much more valuable.
The transient rate has continued to increase here recently.
'twenty two is more like group rate is about 73% of the transient rate so a little bit more distance between the two but again, we've seen the banquet spend and the outside the room picture continue to grow on the group side. So the distance between them as I was mentioning earlier is narrowing and total spend there.
Rate differential has grown a little bit. So you know we honestly we are looking at it doesn't say that we can get really great transient customers in here during the summertime that helps us not have to take some of the lowest rated groups just to fill space.
Both customers are becoming more and more valuable to us given the change in mix of what we've been able to drive by driving a more fluid higher rated transient customer.
What we have this.
Several weeks back when the RNC the Republican National Convention.
Was looking to come to Nashville, but you know.
Got myself as calls and says we need to pass in rooms at Opryland for three days, while we talk to opryland.
And you.
You know.
The rate for May because of it's now a very strong leisure period. The races out you know $40 or more than it was a year or two years ago.
And so the feedback to the RNC is if you want to come and you wanted 2000 rooms across the price you have to pay us X. So.
This is this is a very interesting period of time for us as a company and I I I I know this is going to sound melodramatic, but I think we're in the middle of essentially rewriting the.
The value of our hotel business, because because I think the leisure customer has discovered us.
We've been able to price aggressively.
And and and and group demand is very healthy and I think overall this is going to lead to you know really really good right close.
Well on both sides of the they are no new supply and no new supply exactly right Marc Yeah, I mean dori.
Wow.
I keep thinking about this more and more and I want to make sure. Its clear while transient has been picking up steam faster on the rate side as of late group is getting on board and ourselves teams do an outstanding job of driving a rate to match serve if you will on the transient side. So you know mark talked about earlier, how the room nights on the.
Remainder of the year on the books are up about eight 6% in terms of rate.
But you know you look at April production for all future years, we booked an ADR increase of 13%. So our sales team is doing an outstanding job of understanding the timing, if you will and going out there and as we've talked about in past calls they have a very different value proposition pitch. They are a narrative that is hey, we're not just raising rates on it.
<unk> side because of inflation or what's going on in the environment, we're raising rates because we've delivered a lot more value to our customers in the past few years by continued investment into the brand when a lot of brands, we're not investing into their brands through COVID-19. So.
Transient is sort of at the head of the pack right now in terms of growth, but we really do believe the Collins point, the group's gonna come up and be able to match match that growth here over the next few years.
Yeah.
Okay. Thank you.
I'm sorry.
I think Chelsea wheel.
Couple of more.
Our next question will come from Chris <unk> with Deutsche Bank.
Hey, good morning, guys.
<unk>.
Yes, Colin I know, you're you're always kind of thinking about the next.
What's next for the company and you have a lot of potential projects right that that could come to fruition, but one of the things I want to ask about was Nashville, and you know you have a lot of varied offerings, there, obviously with opryland hotel, but but all the other attractions I. The one thing you don't have right is kind of as.
No luxury boutique kind of thing and we've seen a lot of that spring up downtown is that something you think you need or want at opryland.
Well actually boutique hotel.
Yeah, something like that I mean, we're seeing a lot of it was still a lot of those popped up right in Nashville prior to Covid and you know I think there's more still kind of on the drawing board does that is that something where you can you know keep folks kind of on site instead of now.
Some of them migrating downtown.
Hum.
So.
The answer to the question is.
Not something that's on my agenda mind, right out and I don't think its own marks either and but what is on our radar. You know is do we need more rooms, do we need more meeting space, given the demand and rather than going and building you know a luxury hotel.
In downtown Nashville will you have to pay more.
Multiple millions of dollars an acre for no incentive to build and maybe I didn't know at 9%, 10% return, we'd rather plow the capital into meeting space and leisure room nights that we can plug into opryland.
15 15 returns.
That's that's how we think about it.
Yes, Thanks Colin.
Take luxury hotel way all the way Mark is right.
We haven't got out a luxury boutique hotel that we are guiding to a sprint.
Sprinkle, a pixie dust in Austin, Texas.
Right right right no actually no. Thanks, guys I was actually thinking about that hotel being on site of operating land not downtown but I think it sounds like you're still.
They're more focused on how do we take.
Water.
I think given what's going on with leisure.
Now in Nashville, when you know if you think about what is taking place here. This this this this.
This town and it's called product music is being plugged in St technology, all across the world.
One of the reasons, we've done this deal with NBC Universal is because they own sky in Europe , and we want to put this music in front of these Europeans and we wanted them drag those Europeans own British air or whoever we whatever the flights are here to Nashville, and we want to fill a hotel.
That's why we're thinking more family oriented rooms, and rooms that are can be used for group. We see this market here growing you know tremendously over over the next five to 10 years, if we do things right in the city and I think that's where our focus is going to be.
Okay understood, calling and then just as a follow up I wasn't that long ago that we had your colon.
Entertainment kind of transaction and adventure and you know one of the questions, we get a lot from investors as well.
You know what else can that business, because we think of it as just being the you know the.
The live entertainment venues, but we know that it's it's more than that Theres a content side is there any way to just think about directionally.
You know your Blue Sky scenario years out what percentage of that business is still live entertainment versus what what's like monetization of content in it.
Or is there any way to.
Think about that in a in a clean way.
You know I'm going to just say it this way one sentence in that is I think the the potential of this business is only constrained by our imagination I think we have so many avenues for growth in this business.
The thing that Marc and I talked to the team about is staying focused on the things that deliver the greatest level of value because there's so many different things that are coming at us. So in this deal.
And and and you know yes, it's the core of this business is live entertainment right now, but I really do think it will evolve and there there are so many great all the changes here.
Chris obviously.
That notion is what factored into.
Well the important factor in and the partner that we chose when you think about the relationship of apparel.
Comcast NBC universal.
They obviously bring a.
Lots of strategic muscle through the media side.
Content distribution side.
Yeah.
Okay very helpful. Thanks, guys.
Okay.
Great. Thank you think time, one more question.
Alright, yes, Sir our last question will come from Jay Kornreich with S. M D C.
Hey, Thanks, good morning.
This is a follow up to the last question I'm curious what are some near term expansion opportunities in the portfolio beyond Nashville, I believe you previously considered a 300 room expansion to the Rockies. So curious if that's back on the table or any other potential near term reinvestment opportunities you're considering.
Yeah, well we've.
I think in Oh.
Last board meeting in February when we talk to our board about yeah potentially.
You know half a billion three quarters of $1 billion worth of capital, we can deploy into our hotel business.
By doing some really really interesting things with room expansion some way of expansions at some waves has proven to us. This concept to what we put here. It offered that has created enormous value for us through this pandemic and we we've really I think proven the thesis of doing something of this size.
Scale and we can we can replicate it in two or three of these hotels. So we just don't have lots of different options here as this recovery takes shape and and.
We're very excited about it really truly.
In the near term, we've got the national food and beverage re contracting that's already underway.
The 130 acres of land outside of Rocky.
Well, yeah, we sit on Atlanta, you know the Texan, we sit on an enormous amount of land here in Nashville.
There's just there's just lots of lots of ideas that when that baked and approve with communicate them to you because some of these things are a little.
Different to what our competitors are doing.
Are doing and we don't want to preview that prematurely.
Alright that makes sense so.
I know that sounds I know that sounds a little town believes they believe we really truly do have some very interesting ideas in terms of positioning these extraordinary assets in a way that's a little different to what lay out today.
Alright, so I suppose if we for a bit more color there and I guess, just one follow up.
You mentioned corporate group, representing about 66% of the group demand makes the first quarter, which is a bit elevated relative to that mix. Historically I'm wondering if that's due to no corporate groups getting to travel more than the historically have or if it's from smurf associations being a bit more subdued I'm just curious how you see that trend continuing for the remainder of the year.
Yeah, I would say, it's corporates coming back much stronger than anyone anticipated in a much faster fashion. So.
You know we were very lucky that a lot of the associations and the reboot phase of Covid, we're very anxious to get rebooked into future periods.
And the corporate folks kind of held off and I would say that the mix that we're seeing is an indication they're coming back fast and Swift and are anxious to get moving again, so I think it's a growth in corporate not a not.
Not a decline in association or smart.
Yeah.
I would say.
I would say it slightly differently is it growth in corporate no question that corporations all across this country are being cocooned for the last two years people haven't gotten together talk culture strategy and you know organizations that have done well through the carpet has a deep desire to do that in a safe and secure way.
And that is what is happening here and and the good news is it's giving organization an organization like us the opportunity to build relationships with companies.
Companies that we haven't seen his shop so.
I am this is a very interesting time I, thank him and the hospitality lifecycle and and that business is going to do just fine here over the next 12 24 months.
That makes a lot of sense all right. Thanks for the time.
Thank you for your time Chelsea. Thank you.
And for those folks who are still on the call. Thank you very much indeed, the tuning in if you have questions you know how to get hold of <unk>.
Jennifer Hudson, who is our CFO Claude seafood. He is our treasurer and if there are questions you have for Mark or Patrick you just call into the company and they would be very happy to communicate with you. So again. Thank you be safe speak soon thank you.
Ladies and gentlemen, this does conclude today's program and we thank you for your participation you may disconnect at any time.
Yeah.
[music].
Hum.
Hmm.
[music].
Yeah.
[music].
Hum.
Hum.
[music].
No.
[music].
Okay.
Yeah.
[music].
Okay.
Yeah.
Uh huh.
[music].
Okay.
[music].
Yeah.
Yeah.
Okay.
Okay.
Yeah.
Yeah.
[music].
Okay.
[music].
Yeah.
Yeah.
Okay.
Okay.
Yeah.
Okay.
Yeah.
Okay.
Okay.
[music].
[music].
Yeah.
Yeah.
Okay.
Right.
[noise].