Ryman Hospitality Properties Inc. Q1 2023 Earnings Call
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Grand Ole Opry Star Blake Shelton joined the family in 'twenty 10 here Blake.
Welcome to Ryman hospitality properties first quarter 2023 earnings conference call hosting the call today from Ryman hospitality properties are Mr. Colin Reed Executive Chairman, Mr. Mark Fioravanti, President and Chief Executive Officer, Ms. Jennifer Hutchinson Chief.
Officer and Mr. Patrick Chaffin, Chief operating officer. This call will be available for digital replay. The number is 870 574768 with no conference I D required at this time all participants have been placed on a 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 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 fact may be deemed to be forward looking statements words, such as believes or expects.
Our intended 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 any 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 todays release I'll now turn over the call over to Colin Thanks, Shannon and good morning, everyone.
If you recall, we exited 2022 on a high note led by a fantastic fourth quarter response to our holiday programs, while I am pleased to report today that in the first quarter of 'twenty three our momentum continued with that group business off to a tremendous staff for the quarter our consolidated hospitality.
Portfolio achieved 72, 3% occupancy and first quarter Records for group transient and total ADR as well as total revenue and total adjusted EBIT EBIT.
EBITA E. This is quite a feat and something the overall industry cannot yeah Bose.
It's a testament to our differentiated group focus the strategies, we have employed and the capital when the capital we have invested over the last three years, whether it was strengthening our customer relationships rebooking pandemic cancellations, capturing new group and leisure demand with expand.
Good programming and offerings or improving our operating efficiencies and technology altogether as strategies and investments elevated high value proposition for group and leisure customers and this is really what you're witnessing in these results and hotels finished the first quarter strongly with the month of March.
The best non December months for total revenue of all time and March adjusted EBITDA being the all time highest of any month, including December on that note. We're pleased to substantially increase our guidance range for the hospitality segment for the year as Marc and Jim will detail.
Our strategy over the last three years is clearly paying dividends dividends figuratively and literally as I'm also happy to announce our board has authorized an increase in our quarterly dividend to $1 per share from 75.
Entertainment business, we're off to an equally impressive start to the new year, excluding acquisition of block 21 on a same store basis compared to last year's first quarter Entertainment portfolio delivered 33% revenue growth and more than doubled same store adjusted EBITDA.
He Nashville continues to flourish as a destination for all things music and entertainment.
Assets here set a number of records of their own in the first quarter BC.
Besides simply total revenue and adjusted EBITDA.
These include record total attendance for the Opry show and record tour attendance for the Opry House as well the Ryman Auditorium also set a record for the number of events and just as the groups in our hotels are spending well on property, we saw record per cap food and beverage revenue and the opry and the right.
And I could go on but I will stop here and remind you that the work is not finished for this business are either in fact quite the contrary. We're in the early stages of of new growth as illustrated by the progress, we're making on building out a new and latest and biggest Ole red venue in Las Vegas.
And we've begun to transform our operations on the ground at block 21 in Austin.
And hopefully you'll see our latest announcement that we did a couple of weeks back when we unveiled our new partnership with country Music's biggest sensation today and my body Luke Combs together with look we will completely reinvent the wild horse saloon in downtown Nashville converted it into a mall.
T level multi concept immersive entertainment experience capped by the best situated rooftop venue in Nashville or.
With themes inspired by Luxe music and his passions.
One times ahead, so stay tuned now Mark why don't you get the folks and update on the.
The numbers.
For the quarter. Thanks Colin.
The first quarter was a great way to start a new year, especially relative to the last three the.
Strong performance, we saw across our businesses was more affirming and it was surprising for us given the strategic investments and the work we've done over the last three years.
We were pleased to see both group and transient contributed to the strong occupancy ADR and total Revpar results, we reported last night.
On the group side, we traveled just over 4% more group room nights in the first quarter of 2019.
The occupancy comparisons to 2019 was helped by the Rockies as it was in its first quarter of operation. After opening in December of 2018 on the other hand, we also have 300 additional rooms in inventory compared to the first quarter of 2019 due to the palms expansion opening in 2021.
To reach this level of occupancy across the portfolio of our size less than a year. After Ami crown is impressive.
Something you still won't find more broadly in our industry.
But the post these levels of Revpar and total revpar, while not yet exceeding 2019 on occupancy is remarkable.
Our ADR and Revpar posted over 18% growth compared to the first quarter of 2019, and our total Revpar grew 24, 5% against the same period.
By segment group ADR was up 12, 7% and transient ADR was up 39, 3% again compared to the first quarter of 2019 as both segments reached new all time first quarter records for ADR.
This performance came against a not so easy macro economic backdrop with record inflation and difficult wage environment compared to 2019.
Yes, we executed sharply on our improved operating model delivering over $151 million of adjusted EBITDA, and our hospitality segment or 33% growth over the first quarter of 2019.
This is over 180 basis points of margin improvement to a record first quarter adjusted EBITDA margin of 35, 6%.
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Group outside the room spend truly shine this quarter, notably in terms of catering driven by a favorable mix of corporate group room nights and groups spending freely on property. Several hotel set individual monthly catering revenue records in March.
And total food and beverage revenue grew over $44 million or 26% compared to the first quarter of 2019.
And the operational improvements and re concept we have accomplished across many of our outlets drove excellent flow through on this revenue stream of close to 47%.
Excluding higher cancellation and attrition fee revenues and a lower contribution from Gaylord National Bond interest, we drove a total of $79 5 million of incremental operating revenue at 40% flow through over the first quarter of 2019.
This is despite being back into the incentive management fee with Marriott and the material labor expense differential compared to that year.
On the strength of this quarter and as we move into the year and gain further visibility. We're pleased to increase our full year guidance ranges for Revpar and total revpar growth as well as adjusted EBITDA for the hospitality segment.
We now expect Revpar growth on a year over year basis to be in the range of 11 to 13, 5% and total revpar growth to be in the range of eight and a half of 10, 5%.
This is an increase of 175 and 150 basis points at the midpoint, respectively compared to our initial guidance in February .
We expect full year adjusted EBITDA, sorry for the hospitality segment to be in the range of $570 to $600 million, an increase of $20 million at the midpoint.
By quarter, we expect the last three quarters of the year should each contribute about the same share to their three quarter total has the last three quarters of both 2019 and 2022 did to theirs that is the second and fourth quarter should contribute a bit more than one third of the total in the third quarter a bit less.
We continue to see noted tier duration in the key leading indicators, we track but of course, we read the same headlines as everyone else and so we believe we have had in our pro an appropriate amount of caution in our near term views.
Looking beyond 2023, we were also pleased with the group sales production in the quarter, we booked over 348000 gross group room nights in the quarter, which while down compared to the fourth first quarter of last year was up 9% when you back out the omicron related re bookings in last year's first quarter.
As we've frequently emphasized we continue to prioritize ADR and our sales production to capitalize on the favorable supply demand backdrop in our space.
On that front, we were successful yet again in the first quarter with an average rate across all new group bookings of $252, an all time high for the first quarter and up 9% in the first quarter of 2022 and 23% in the first quarter of 2019.
This ongoing strength and production continues to bolster our confidence for the remainder of 2023 as well as future years.
As of April one we had more net group rooms revenue on our books for the balance of the current year as well as each of the next four calendar years from 2024 to 2027.
As we did back on April one 2019 for the balance of that year and for the period 2020 through 2023.
In short our hotel business is in the best position, it's ever been in terms of total group rooms revenue on the books for all future years, which sets us up to continue driving the profitability of these assets in the years to come.
In addition to our on the books revenue. We also look forward to our current and planned growth capital investments, making their own contributions in the years ahead led by our latest project. The renovation of the Gaylord Rockies Grand Lodge and the construction of a new group Pavilion, which we expect to open next year. These.
These types of investments will further differentiate our portfolio compared to the industry as we emerge in the post pandemic era.
As we finally lap the omicron impact of first quarter.
Last year, we look forward to demonstrating the full year earnings power and growth potential of this great one of a kind portfolio, including the contributions to come from these high return investments.
In our entertainment segment, the first quarter performance of our same store assets. The Colin highlighted was another great storyline with the city of Nashville, continuing to out to itself.
Adding the incremental contribution of block 21 on a consolidated basis, the business generated $67 $3 million of revenue in 2000 $14.3 million of adjusted EBITDA compared to 32 8 million and $8 1 million in the first quarter of 2019, respectively.
Given this performance and our current pace for the remainder of the year, we're increasing our guidance for the entertainment segment profitability to a range of $94 million to $104 million of adjusted EBITDA, an increase of $7 million at the midpoint compared to our range of February .
This represents $41 million more in profitability at the midpoint and this business delivered in full year 2019.
That's a significant amount of growth over a four year period interrupted by a pandemic.
And as Colin noted we have more on tap we're working on some truly exciting opportunities in both our hospitality and entertainment businesses and our balance sheet and liquidity is an important element in allowing us to execute on multiple opportunities opportunities at once so I will turn it over to Jennifer to update you on where those stand as well as our dividend and.
Consolidated guidance range. Thank.
Thank you Mark in the first quarter. The company generated total revenue of $491 7 million and net income to common shareholders of $61 3 million or $1.02 per fully diluted share note as usual that our fully diluted share count in the quarter reflects the put right Phil Bioterrorists as part of their offering Entertainment group.
Lynn.
Although those rights are not yet exercisable and we retain the option to settle any exercise of these rights in cash.
The exercise of the put rights would also result in a terrorist is 30% ownership in OAG reverting back to Raymond Cohen.
Total consolidated adjusted EBITDA for the first quarter was $157 7 million led by the outperformance of both our hospitality and entertainment segments, while our corporate segment remained within our expectations and we are reaffirming our corporate segment guidance with this release.
Together with the operating segment guidance Mark outlined this puts our new consolidated adjusted EBITDA guidance range for the year at $632 million to $675 million or an increase of $27 million at the midpoint compared to our previous guidance.
The midpoint also represents a 17, 6% increase over 2022 and 28% increase over 2019 actual results.
We are also increasing our guidance for adjusted funds from operations for the year.
So a range of $425 million to $454 million primarily.
Reflecting the flow through of the increased adjusted EBITDA Army.
At the midpoint this represents growth of 21% over 2022, and 23% over 2019 for U S. S. L.
Turning to the balance sheet, we ended the quarter with $318 5 million of unrestricted cash on hand and our.
700 million revolving credit facility remained undrawn.
Our entertainment group $65 million revolver had a balance of $7 million outstanding.
The combined capacity of our revolving credit facilities and cash on hand give us total liquidity of approximately $1 1 billion. After deducting 14 million of outstanding letters of credit we.
We retained an additional $95 million of restricted cash available for certain <unk> projects and other maintenance.
On a trailing 12 month basis, our net leverage ratio total consolidated net debt to adjusted EBITDA stood at four times.
Based on the midpoint of our guidance, we anticipate we will end the year at approximately the same ratio factoring in the resumption of the dividend at the newly declared $1 per share, which represents a 33% increase over our prior dividend level of 75 cents per share.
This is a significant accomplishment looking back at the losses, we sustained during the pandemic.
Is it as this leverage levels not only well within our target range, but also below our year end 2019 level.
This is another testament to the actions we took during the pandemic rebooking loss business and investing for the recovery ahead to get us to this point.
In terms of interest rate exposure maturities as of quarter end, approximately 90% of our outstanding debt was at fixed rates either directly or with the benefit of swaps.
With two swaps expiring in 2023 on the Gaylord Rockies term loan and our corporate term lumpy.
We've met all the requirements to exercise the first of our three one year extensions on the Gaylord Rockies term loan.
And we today launched the recast of our corporate credit facility and term loan B with our bank group.
These actions address our maturities through 2024, and ultimately through 2026, when taking into account the remaining extension options on the Rockies.
Any impact to interest expense as a result of these refinancings were extensions has been incorporated into our guidance range.
Our balance sheet and liquidity continue to be in excellent shape to not only support our capital deployment opportunities, but also to continue delivering meaningful dividend growth as our business continues to reach new levels.
And it remains our intention to pay 100% of our REIT taxable income through dividends and with that I'll turn it back over to Colin.
Thanks Jen.
I think.
Gretchen will open up the lines for questions. Please.
At this time, if you'd like to ask a question. Please press the star and one on your Touchtone phone you may remove yourself from the queue at any time by pressing star to once again that is star one to ask a question. We will take our first question from Smedes Rose from Citi.
Hi, Thanks.
You have a lot of positive data on the on the group outlook. Just wondering if you could just talk a little bit about group composition, and maybe what you're seeing coming from association versus corporate.
Are there any areas, where there's still room to make up versus maybe areas that are now back to kind of peak levels kind of as you think about your group segmentation.
Patrick.
Good question.
If you look at our mix for the remainder of this year. It was pretty similar to what we saw in 2022, a little bit heavier mix of corporate versus association. If you look at what's on the books for 2024, there is an increase a pretty material increase in the amount of corporate on the books, which we see as a very good sign because of the.
So that creates for us on the banquet side of the house.
And I would tell you that that's indicative of what we've seen so far corporate has come back much faster, they're doing very well outside the room and we are getting excellent rate growth from corporate groups Association has been a little bit slower.
You would expect just given the nature of that piece of the industry, but we're also getting very good rate from association as well. So good signs that association is coming back, but not quite as fastest corporate but that bodes very well for our business going into the future late volumes lead volumes look very very good our lead volumes at the end of the first quarter.
<unk> were up over 22 and 2019.
On the corporate side that was clearly the winner in terms of lead volume growth versus 2019.
Great. Thank you.
I just wanted to ask you too I know you have to report the way you too because of tariffs as options to put its interest back to you, but I think you have about almost four quarters now with them under your belt.
Maybe give a sense of their satisfaction with the arrangement that you have it now and kind of are they.
Contributing from a strategic perspective, or maybe you could just sort of update us on how that relationship.
I'll start and Marc may want to jump in but.
I can tell you from my perspective.
Things were a little slow.
As we were navigating the you know the massive organization of.
Comcast NBC universal.
But I would say over the last six months.
We become very very excited about the prospects here.
I'd tell you these folks that we're dealing with the tariffs are really good people and we have a very strong relationship our company does with them.
And and.
And I really.
Enjoy the.
The amount of sort of strategic.
Thoughts thoughts that we get from from this organization, but we got a lot of good stuff that we're working on with them.
We announced the <unk>.
People's choice our choice of countries.
We're producing an operating Christmas special with NBC.
So those projects are starting but.
Smedes to Collins 0.1 of the one of the important aspects of why why we selected a tarots NBC Universal was was cultural compatibility I think how they viewed.
The business that way.
Ron currently in terms of the.
The brands and the stewardship.
Possibilities there.
As well as kind of what the what the broader long term growth opportunities are so.
We are working very closely with them.
On a whole bunch of different.
Not only near term opportunities, but longer term strategic opportunities, yeah, and I would hope that over the course of the next.
Six months is going to be more announcements, we will be able to make to you.
Illustrates the importance of this partnership.
Great. Thank you. Thank you guys appreciate it.
Thanks Nate.
Our next question comes from Shaun Kelley Bank of America.
Hi, good morning, everyone.
Colin or Mark I, just wanted to maybe start with <unk>.
Kind of looking out to 2024 and beyond.
Can you just give us a sense of pricing across the portfolio the strength of that and also maybe a little bit of color around mix shift and the reason I'm asking is obviously.
With the way the group business.
Tends to work you're going to you should have some I think continued benefits from that going forward, even beyond sort of all of the recovery years that are now increasingly behind us. So I'm just trying to get a sense of magnitude of how much kind of price on the books could be up as we start to move into again, a much more normalized and in some case.
So maybe a little bit of a slower.
Operating environment, how much do you have kind of locked in on that side in 'twenty four 'twenty five and beyond.
Yes.
Let me make one statement and then we're going to I'm going to turn it over to Patrick and I don't know, whether you want to weigh in on this market as well, but we have been very aggressive.
With our manager Marriott as it relates to pricing of the group industry, we feel the way we have invested capital.
The level of quality that our assets are.
Deliver to the consumer we feel that there's still opportunity on pricing here. So we have been.
Pretty aggressive on pricing and as you're quite right is as the business that we booked last year and the year before flows into our company and 24 and 25.
We are very excited about at <unk>.
<unk> grid, so Pat you want to.
Give show more data on this sure. So just give you a couple of data points.
The first quarter of this year, we booked room nights at a 9% growth in ADR and I would tell you that we are targeting that 7% to 10% range each quarter with the sales team.
That's a pretty.
The target, but we see a window of opportunity here and we're having great luck with achieving that.
As you look to sort of your second question as far as mix.
If you think about what I was sharing with Smedes a few minutes ago right now we have a higher mix of corporate room nights on the books for 2020 for a pretty material increase of where we stood this time of year for 2023, a year ago, so with that.
<unk> and corporate mix.
We will help us continue to push on rate as well as then expand our banquet contribution per group room night once the group actually travels so we actually see 'twenty four 'twenty five.
And hopefully beyond but just speaking to 'twenty four 'twenty five as very encouraging as we see group room rate moving in a very positive direction getting to the upper single digits.
In some cases some months, we're pushing into double digits growth in ADR and then the higher mix of corporate helping us on the banquet side and audio visual side as well.
Let me just say one more thing.
<unk> shown you focused on rate, but the other part of all of this that that I think is so extraordinarily important.
Is the issue of demand when Patrick talk just a few minutes ago about what's going on in lead volumes as we look at our lead volumes sort of today.
They are tremendous and one of the things that we've encouraged Marriott to do is add more sales personnel into our hotels because demand is demand that looks pretty robust.
That should flow through in pricing, but the other side of the coin is supply is there's no new supply coming in and out.
On a segment and so this is we're at a pretty decent sweet spot.
For group and Frank quite frankly, this is one of the reasons that we're able to.
Post revenue gains and profit gains with the likes of which we have.
The third leg of that chart is that.
As I mentioned in my remarks.
We've been investing capital in some enhancements, particularly around food and beverage re concept Inc.
Both at the national at the palms as well as significantly at all.
Out of the Rockies, and so what thats going to drive us.
Incremental.
Outside the room spending both leisure and Andrew customers over the next.
A handful of years yet.
That's a very important point.
Thank you. Thank you for all the color.
As my follow up if we could just go to entertainment for a minute.
Obviously, a great result in the quarter a year ago, we were talking a little bit about some touring schedule and things that I think impacted the business as we were kind of coming out of Covid and some noise, there and it seems like or back to.
Gross cadence so could you just talk a little bit about the both the drivers in the quarter and then I think more importantly, going forward on some of the Capex, that's going to be driving that.
That division and pipeline moving forward.
We won't take it yes so.
If you look at if you look at the results in the quarter for the entertainment business really across the board we saw.
Very strong demand.
And all of our all of our venues whether that was the number of concert nights, we had it at the run which was a record.
It was the number of admissions or tours that we had at the Grand Ole Opry again.
Record so we're seeing strong.
Strong demand continued demand for the product.
Same we had we had record we set some records set block 21 as well.
In terms of of <unk>.
<unk> production, but also in terms of food and beverage because we brought that we bought that business in house.
Starting January one as opposed to outsourcing. It so we were able to drive significantly higher profitability from food and beverage.
In terms of in terms of capital we have a number of projects currently Colin mentioned to earlier with Las Vegas, and the work that we're doing with loop.
Down at Wild how force, but we're also in the middle right now of we've expanded our retail offering at <unk>.
We're building out a VIP lounge experience at the Ryman, which will also help drive.
Ticket pricing as well as his spending in the venue and then we have a number of projects we are undertaking.
Block 21, as we continue the evolution of that venue in terms of tour enhance tour product enhanced retail that will open in AR.
In a month or so.
And enhanced food and beverage.
One thing I would say Mark is that the other thing that we're so blessed about is the fact that.
Product is in.
Really great markets.
Running like no tomorrow and so.
The opportunity we have is really really tremendous year end and the other thing is the quality of our product is really strong it's different to a lot in here in Nashville, the quality of our product is different from what you tend to see in this market and that's why with PA.
<unk> the numbers with posting.
Thank you very much.
Thank you both.
Our next question comes from Dori Kesten from Wells Fargo.
Thanks, Good morning.
If I give you back out the cancellation and attrition fees for last year and this year.
Our total revpar guidance.
<unk> nine to $2, 5% growth for out of them spend can you can you walk through why youre thinking out of room spend will lag.
And this year.
Another question on warrant at why out of room spend will lag what.
Rent expense.
Out of room spend will lag room spend well I mean in the short term, we're achieving tremendous growth rates in ADR from our transient side as well as in the year for the year group. So we're getting a much higher growth rate on that rate that we're booking in the short term.
I mean, I haven't seen the calculation youre speaking to but.
That is the first thing I'd point, you dory that youre getting really good strong growth in outside the room spend but it may not be quite as strong as what you are getting in terms of room rate because the environment. We're in right now room rate is positioned to grow.
Much faster and higher than we've seen it in the past.
Long as microliters existed.
Okay.
And then I guess as you think through your guidance.
For the remainder of the year how.
How much conservatism. If you think there is do you think is built in with respect to Sydney Airport to your booking cancellation attrition or our transient as you look forward into Q4.
Well.
You know look we sit here al by Al.
Listen to all of the rhetoric coming from multiple economists Federal reserve.
Interest rate hikes.
Bank problems and we sit here and we we say to ourselves.
Get no benefit from being herculean in terms of our guidance because if we miss it by a penny we get hammered so.
We've provided guidance that.
That we believe is appropriate given the business levels that we are seeing in the business that we have we have on the books and.
No.
I just want to make this one statement.
Not only to use already but also the other analysts that are listening.
The.
Last year, we raised guidance three times in the course of last year and we've raised it one more time this year and when you look at the.
The midpoint of our guidance for this year and you compare it to 2019, which is the last year.
We all remember pre pandemic with growing profitability.
Almost $150 million in this period of time between 19, and 20 in 2020 three and so.
I I feel that outperform its my personal view is that this performance is extraordinary and theres no other hospitality REIT posting numbers like this so if there is a little bit of conservatism in the in the factories three three months three quarters, it's because.
Frankly.
<unk> bye.
Economic environment that we're dealing with and the other thing that <unk>.
<unk> seem to forget is that what we did last year on the second third and fourth quarter of last year was unprecedented we grew profitability in the second third and fourth quarter last year over 19 by 100 almost $100 million.
And no other hospitality REIT did that this is spectacular numbers. So we're.
We're coming off the back of an incredible backend of last year as we sit here today, we're saying this.
This is this is this is decent guidance and and and we'll see what happens and hopefully when we do the earnings call in August we'll be telling you. The hopefully we are going to increase guidance again, because that's what we've been doing here for the last year and a half hey, Dori, It's Patrick.
The hotel nerd in the room at the moment I would tell you, there's probably four things that I'm kind of watching and not sure where they're going and so this may be part of the reason that we're taking a cautious approach and just trying to wait and see what happens.
Ice.
I'm back for the first time in 2022 after being gone through all of Covid.
And we have been trying to figure out exactly how much of that demand that we saw was pent up demand was at 5% was at 20%.
So not knowing exactly how much of that was pent up demand after the show being gone for a number of years and how that impacted transit performance of admissions to the show that makes us say, we need to wait and see how Q4 built for 2023 it could be similar could be dissimilar. We don't know the second thing I would tell you is banquet performance in the first quarter of 'twenty three.
He was phenomenal March, especially we saw groups performing at levels, we've just never seen our performance.
We had a great mix of corporate room nights in the first quarter, but we don't know if that trend was.
Just specific to the first quarter or if it will carry into the rest of the year and so with only three months under our belt, we did not want to predict the future until we have a better sense of how the remainder of the year will play out and then in your note you talked about cancellation and attrition.
Yeah, we're not going to collect anywhere near what we collected in 2022, because we don't have as much COVID-19 remaining from omicron another.
But as room rates increase our ability to collect higher levels of attrition is increasing so could there be some upside there, yes, we'll kind of watch that and see what materializes and then the last thing I would point to is we're now up against a lot more incentive management fee with Marriott, which is a really good problem to have but we have to figure that into our.
<unk> for the remainder of year as well, but putting all of that aside putting all of that is solid.
We're going to grow profitability this year at the midpoint over last year by $100 million.
And putting it all aside it was going to grow profitability over 2019 2019 at the midpoint about 100 and its about $143 million.
These these are tremendous numbers and I don't know where else in our industry Youre seeing this type of performance.
Thank you I appreciate that response.
Our next question comes from Christopher <unk> from Deutsche Bank.
Okay.
Hey, good morning, guys. Thanks for all the detail so far.
Wanted to ask you about.
Out of room spend looking forward as we think about.
And I think Patrick just kind of touched on it but.
Meeting planners agreed to these higher room rate increases how do they look at agreeing to the higher out of room spend as well and I'm really just trying to get a <unk>.
Some perspective on how the meeting room planners look at increasing the cost of meetings is at an all in approach or are they kind of drilling down and say, we're going to do we have to have rates up double digits do we want to do less on the out of room, if that makes any sense.
Yes, a great question and something we were kind of wondering about as we were coming out of Covid and the rate environment started improving.
Allow us to start pushing rates up the first thing I would point to is what I've already talked about as far as the increase in corporate mix as we get into 'twenty, four and beyond but the other thing I would say is yes, they are paying a higher rates.
But the feedback we continue to get from meeting planners from attendees is.
I recognize more than ever the importance of getting together face to face.
And.
And so for them to bring everyone together and then.
Go on the cheap as far as how they take care of their attendees and their employees in this big group meeting it would not look good for them to do that because they are trying to bring everyone together and get the company moving a lot of our meeting planners, who said these medians are becoming essential for our culture given how <unk>.
Spread out and disconnected our workforce is now and so when they're getting on property. We saw it happening in 2022, and it's continuing into 2023.
Their willingness to open up their wallets and.
<unk> spend a lot more outside the room has been very encouraging.
And the other the other thing Pat.
We've got to remember is the market the stock market is trading at about 33 34000 corporate profits are really good at.
And we're not in an <unk> environment, where organizations, so let's pull back let's pull back benefiting from inflation as well.
Exactly right and so you know this this is a this is a moment in time that we have to take advantage of.
I mean that was one of the hotel one of our hotels earlier this month and.
They really didnt have if you looked at what they had in March that had tremendous banquet performance, but they didn't have any of the marquee groups.
Traveled to that hotel during the month and so we're kind of scratching their heads and said how are you able to get such tremendous growth in outside the room spend and they said, we just saw across the board mid sized groups and large groups and none of the ones that are normally the marquee top performers, but a lot of these groups that showed up just opened up and spent a lot more than that.
I ever have in the past and so we're very encouraged by that.
Yes, thanks for all the color on that guys.
Super Helpful. And then kind of a follow up is on the.
Go back to the entertainment business and look you guys you've got the programming at the hotels nailed that you've been doing it for a long time doing it well now you are kind of evolving.
The entertainment segment Youre growing it in different ways.
Sure would be is there any at any point, where you think you want to kind of integrate these and I don't mean from a structural standpoint, I mean from a <unk>.
Branding standpoint, or a customer standpoint is there any opportunity to kind of.
Bring these things in house and I know Marriott has the brand the ryman the Gaylord brand. So it's not really that quite it's not really that going down that path. It's more from a customer experience is there anything you can do to integrate these hotels more.
Into the entertainment businesses, if that if that question makes any sense.
Well.
Well with where the product.
Sits sits close to one of these big hotels, we do that.
We push hotel rooms through the opry into a pre lacked we.
We divert opryland customers into the Grand old offering into the wild horse.
The the banqueting Pat the banqueting revenue that we're generating at the wild horse downtown downtown events from our pre lab customer best ever.
We're doing that but we've got some other ideas Chris Your question is a real global.
We've got some other ideas that Patrick and the team are working on.
Right now but.
It also potentially situate entertainment experience next to one or two of our big hotels outside of outside of Nashville, and those are the things that we're looking at but.
Being able to maximize the worth of the customers that we have relationships with is something that's on our mind alley.
Okay.
Very helpful. Thanks, guys.
Thanks, Bob Thanks, Chris.
Your next question comes from Patrick Schultz from choice Securities.
Hey, good morning, everyone.
Yes.
Question for you do you think you're taking share.
From.
Open market.
Or <unk>.
<unk> within those other urban markets. Thank you.
I want to take that.
Yes, I would.
I would say that the answer is yes, particularly when you look at our geographic distribution.
Do you think about the sunbelt locations.
It's like Florida, Texas Nashville.
Denver.
We are seeing and hearing more and more from meeting planners and organizations that they're moving out of.
Some of the more controversial.
Kind of socially challenged markets.
<unk> like <unk>.
San Francisco, Portland, Chicago et cetera, So we definitely think that.
We're seeing we're seeing that opportunity geographically.
And I would also I would also argue that we're seeing an opportunity because of the investments we're making in our product.
That.
We're finding ways to create more and more value and deliver.
More and more benefits to both the meeting planner and the attendee and so.
Our on a market by market basis, I think we are.
Superiorly positioned but also on a asset by asset basis. When you look at us compared to our competition, we just offer more to the consumer.
Okay. Okay. Thank you that's it.
Thanks, Patrick.
Last question comes from Bill Crow from Raymond James.
Good morning, I guess I'll just knock in the <unk>.
Deadline there.
The question really is is.
Two parter.
First in Washington, DC can you just kind of tell us how that recovery.
How that recovery is playing out relative to the recovery you saw it.
The other major assets over the last year.
Yeah.
Well.
Mark.
We're really pleased with.
We've undertaken to improve the quality of that asset and I think Patrick we're pleased with the response from the customer.
Yeah, I would point to several things.
There's no doubt the DC market has recovered slower than the other top 25 markets, especially the ones in which we operate.
There's a lot of challenges going on specific to that market, but tomorrow.
Southern Boy, So we're kind of the heart of the tallest hogging the trough as far as the challenged market, but we're really performing well against the competition in the market.
Plus we've made a lot of change to that hotel since we went into the Covid period, and Thats benefiting our employee satisfaction, our guest satisfaction. Our group satisfaction, we're seeing levels of performance hotel that we've never seen before so we've made some of the rate changes we did a renovation of the room product.
<unk> done a complete re concept and a repositioning of most of the food and beverage outlets to set them up better to operate in a union environment and some of the realities of the National Harbor around that hotel that has benefited us tremendously we're seeing in our food and beverage outlets perform at levels, they've never performed in the past and so.
On all fronts, we're seeing great recovery in that hotel, even though it isn't a challenged market and that's translating into really solid EBITDA growth for the hotel given where occupancy is at so.
That that market will continue to recover and we will continue to watch that but we feel like we're doing all the right things to get that hotel moving faster than the rest of the market and as we did.
Pre pandemic, we dramatically over index as it relates to group the challenge that we have and the opportunity that we have in that hotel is how do we bring more transient leisure business to national Harbor and into that hotel.
This segment, where I think we have the greatest opportunity.
Yes.
That's helpful. Thanks, and then finally.
Austin and the acquisition I just wanted to see how it was.
When compared to your underwriting expectations.
Well, we've been I mean.
I think it's fair to say Mark we've been pleasantly surprised.
<unk>.
We use we knew this asset.
That combination of assets that was world class.
And and even with just a little bit of Pixie dust, we've seen really improved performance there.
I think over the course of the next 12 to 18 months this week.
As we deploy capital.
We I think we're going to be very very happy with that investment I mean financial performance has been better than we underwrote it.
One.
One difference from how we thought about it when we when we bought it was just kind of the timing of some of the renovation work, particularly around the hotel.
Push that a little bit into <unk>.
In the 'twenty four.
Just as we've gone through the design and pricing process and ultimately.
I think we've said a lot of time, a time period that will actually reduce.
Sure.
Our disruption because we'll get past south by southwest and then we will we will undertake the rooms renovation. So we're really we're very very happy with performance, thus far and I would tell you that where we feel more confident in the potential there longer term and I think when we when we underwrote it initially.
Okay. Thank you al.
Thanks Bill.
Question. Thank you.
I think that is.
This mornings.
Earnings call and if anyone has any other questions that they want to pose they know how to get hold of Mark Chen.
And the team so thank you everyone more to follow.
Thank you ladies and gentlemen. This concludes today's conference you may now disconnect.
Okay.
Thank you.
[music] Nabil Dib and.
Shannon it's Tom.
<unk> silver linings in the glass.
And if it starts to rain.
Rebound is staying at home all rose colored Ray ban.
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<unk> Award winning group Little Big town live from the Grand Ole Opry.
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She is with light on in the kitchen always check do fully laden.
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<unk>.
Holly.
Good morning, and thank you.
[music].
You're listening to performances from the stage of the World famous Grand Ole Opry Ryman hospitality properties company.
Next up we have a Grammy and CMA Award winner. She has been a member of the Opry since 2021 here.
Here's currently Pierce with what he didn't do live from the Grand Ole Opry.
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Already halfway silver.