Q2 2023 Ryman Hospitality Properties Inc Earnings Call
Darius beers and Sunshine.
Not from the Grand Ole Opry signatures.
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Yes.
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All of that.
When we return at all.
Welcome to Ryman hospitality properties second quarter 2023 earnings conference call hosting the call today from Ryman hospitality properties are Mr. Colin Reed Executive Chairman, Mr. Martin theory, watching President and Chief Executive Officer, Ms, Jennifer Hudson Chief Financial Officer.
Mr. Patrick Chaffin, Chief operating Officer, and Mr. Patrick Moore, Chief Executive Officer Opera Entertainment Group.
This call will be available for digital replay. The number is 807 560554 with no conference I D required at this time all participants have been placed on a listen only mode is now my pleasure to turn the conference over to MS. Jennifer Hudson. Please go ahead ma'am.
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 are intended to identify these statements which may be effect.
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 our project today, we will not update any forward looking statements whether as a result of new information future events or any other reason.
I'll also discuss non-GAAP financial measures today, we reconcile each non-GAAP measure to the most comparable GAAP measure in exhibit to today's release I will now turn the call over to Colin.
Thank you Jennifer and good morning, everyone I wanted to start off this morning's earnings call, but somewhat breaking from the tradition of spending time talking about the last quarter of course with very pleased with the last quarter, but it's the future that really excites us. So let me tell you why.
20 years ago, when we decided to build a hospitality, Brian primarily focused on the group segment. We did this because we had discovered that there were tens of thousands of large groups that rotate market to market year by year.
We built world class physical assets backed up by a people focused culture that overtime build loyalty amongst our customers. The consequence was that we gained market share and for those investors who've been with US for this journey will know we've expanded a refined most of that hotels over the last decade.
As we grew demand.
Financially our performance has been substantially different from our peers. In fact, our company has significantly outperformed the ft S. E. NAREIT lodging sector index over the last 20 years and when you look at the average returns of the same index, whether it's on a year to date basis, a one year three or five year tenure.
We have substantially outperformed this index in each period are a measurement now this is not by law. This is because we have a differentiated strategy that enters into contracts with our large <unk> customers and provide really exciting experiences to the less leisure customers and they in turn reward us with their loyalty.
The consequence of which has resulted in lower annualized earnings volatility and higher annualized growth than our peers.
So really up after a once in a lifetime pandemic posting results that are mostly across the board record and as Mark will describe bookings and lead volumes that are really quite impressive and revenue on the books for next year and the years following at levels that exceed historical performance.
'cause it decimated many families and created extraordinary damage to humanity, but in some ways. It made us a stronger company. We went out of our way to nurture and care for the meeting planner evidenced by the tremendous REIT bookings, we achieved from the canceled room nights, we reengineer the organization and deployed.
Almost 500 million in new capital, while others shut up shop, we have emerged from code, but a stronger company as a quarterly earnings illustrate but the things that excite the thing that excites me is what we can do with that business over the years ahead next week, we will be with our board and I suspect most of it.
The conversation will be focused on the US ahead ahead of US our hotel business has and it's showing strong rate goes as a consequence of the attributes of our products and the strength of demand look forward bookings and lead volumes have us very excited and we'll be sharing with our board the many op.
<unk>, we have to grow that business, we are working on rooms expansions of certain hotels convention space expansion replicating some waves in several markets sports bar expansions as well as food and beverage repositioning all at our existing hotels, as we expand and refine supply to accommodate that.
Demand we are building.
So as I said next week, we will produce we will preview these opportunities with our board and between now and early December we'll be refining pro forma <unk>.
And prioritization and then we will share this plan in some detail at an Investor day.
We plan to hold sometime.
Mid first quarter of next year, so that we can lay out our growth plans, primarily for our hotel business, but also give you a glimpse of what we expect to do with our exciting entertainment business now right now we've identified about somewhere between 15 and 20 projects that we believe will materially grow profitability.
We estimate that will require about $1 billion.
Of new capital and by the way these known that number I've just explained to you excludes the plans that we're developing for the J W. Marriott Hill country.
Unlike most of the hospitality REIT sector, we have a very strong record of creating value for our shareholders and the plans that we are developing in the strategy that we have in place leads us to the conclusion that the future looks extremely exciting.
Now for the quarter as Marc and Jim will discuss our quarter came in almost exactly as our operating plan called for despite the shocking accident at our Colorado Hotel and we set records in many areas of our business. The quarter was highlighted by the acquisition of the J W. Merit Hill country.
Which we're very excited about that Mark will talk about that in a minute candidly. We've tried to buy this hotel several times over the last eight years and we are pleased that we were able to move quickly to facilitate this purchase and I'd like to thank the investors and bondholders, who came into our company at the time of purchase for having the confidence in us.
San Antonio is a large city with incredible growth characteristics. In fact from 2020 to 21, San Antonio experienced the largest population growth in absolute terms, if any city in the United States.
During and during that time.
GDP of San Antonio.
It grew at the fifth highest rate in the country.
Theres a lot of upside potential for this hotel.
And.
Even though the hotel is performing extremely well and we look forward to really Raymond rising this hotel in the in.
In the in the coming period over the last several days, we've gone under contract to purchase.
In adjacent 41 acres of real estate that significantly helps us to be able to expand this hotel over time and then introduce this asset into the rotational offering for our group customers and Patrick and his high quality team are currently building the growth thesis for this world class asset, which we'll share with you.
In a few months now finally, let me just tell you what excites me about our entertainment business first first of all the coal business continues to get stronger and if you exclude a new block 21 assets, which delivered very good results in the second quarter adjusted EBITDA increased year over year by 21%.
On a 11% increase in revenue the Ole Red brand also delivered record results as did the Grand old Opry and the Ryman.
From a growth perspective, we're making headway in Las Vegas without already that we are building on the strip, but it looks like opening will occur in very early in 2024, which is a modest shift in the schedule due to the permit delays that we've.
Fortunately now have completely resolved as you all know we also announced a long term branding deal with Luke Combs, Luke is an extraordinary entertainers with international appeal, and we will be converting the wild horse into a full pot multifaceted entertainment destination here in Nashville, which when complete will be quite different.
From the boss you see in this town. So there we are a consolidated business operating at record levels and a balance sheet that has delivered materially over the last year for us. The dilemma is not how we grow but what levers we pull for us.
Wanted to just finish my section here by saying I am extremely proud of the team we have here at Ryman and their collective professionalism and understanding of our business and the future looks awfully awfully exciting some up let's talk about the second quarter.
Colin.
Yeah.
The company had another excellent quarter with a continuation of the great momentum we saw in the first quarter achieving record performances in a number of areas.
In addition, we are excited about the value creation opportunities that GW Marriott Hill country presents both the property and portfolio levels.
Starting with our hotel business, we continue to see strength in the group segment as we travel with approximately 528000 group room nights in the quarter.
Three 5% more than the comparable period in 2022.
And nearly a 98% recovery versus 2019 pre pandemic levels.
Across the board in both group and transient we continue to see strong rate performance is group and transient ADR were both up 5% versus the prior year quarter, and 16, 7% and 39 point.
37, 9%, respectively compared to the second quarter 2019.
Both segments set new all time records for ADR driving record second quarter hospitality revenue.
Outside the room spending this quarter saw continued strength with an increase of over 5% compared to the year ago period.
Despite an uncertain macro environment, we delivered hospitality adjusted EBITDA.
Of $152 $7 million in the quarter, which.
Which was the second highest performance in the Companys history, just one 5% behind the year ago period.
While there was a 200 basis point margin decline compared to the same period last year. This quarter's performance was solid as we faced some tough comparisons to the prior year quarter.
Coming off the omicron impacted first quarter, the second quarter of 2022.
Higher EBITDA margin quarter on record driven in part by Omnicom Omicron related re bookings attrition and cancellation fee collections and incentive management fee expense timing.
Attrition and cancellation fees and the most recent quarter were down by almost one third were $5 million on a year over year basis.
Illustrating the continued return of the group customer.
Likewise as our portfolio has generated higher levels of profitability management fee expenses increased commensurately or.
Our second quarter results included over $4 million more in recognized incentive management fees compared to the year ago period.
While these dynamics have a negative impact on comparable margins. They are favorable signs for the group segment in our business.
We anticipate a similarly challenging year over year comparison in the third quarter as well and then reaching more favorable comparisons in the fourth.
In addition to these year over year dynamics, the Gaylord Rockies performance in the quarter was negatively impacted by the tragic may six collapse of the HVA system.
The hotel's indoor pool.
Test volumes, primarily in the transient segment were impacted in the weeks following the incident, but have continued to recover.
We estimate this incident impacted the rocky second quarter profitability by approximately $2 million and we have an ongoing business interruption claim, which we hope to collect by year end.
As we look to the remainder of the year, we are reiterating our hospitality EBITDA, sorry, and entertainment segment EBITDA outlook with the addition of the J W Hill country for the back half of the year, thus raising our adjusted EBITDA guidance for the benefit of the new property.
Jennifer will detail our outlook shortly.
As we look beyond 2023.
We continue to see no deterioration in the key leading indicators we track.
We're again pleased with group sales production in the quarter as we booked nearly 652000 gross group room nights, which is up eight 4% compared to the year ago period.
If you exclude omicron related re bookings from the second quarter production last year production was up approximately 17% year over year.
We continue to prioritize ADR and our sales production leveraging the capital investments, we've made and capitalizing on the favorable supply demand outlook for the group segment.
For the second quarter.
We achieved an average rate across all new group bookings of $265, an all time high for any quarter in the company's history up eight 7% compared to the second quarter of 2022, and 25, 2% compared to the second quarter of 19.
This ongoing strength and production continues to drive our revenue on the books for future years and supports our confidence to continue investing to enhance our one of a kind hotels create stronger customer loyalty and build an even greater competitive advantage.
As of the end of the second quarter, our group rooms revenue on the books for 24, and 25 are up nine 6% to nine 8%, respectively compared to the T plus one and T plus two time periods as of the second quarter of 2022.
Now turning to the acquisition of the J W. Myriad Hill country.
Colin gave you a brief overview of some of the fundamentals of the compelling San Antonio market, Let me add a little bit more color about this hotel and a tremendous opportunity it presents for us.
Since closing the acquisition on June 30.
Asset management team has been working with Marriott to quickly integrate the property into our portfolio to capitalize that capitalize on economies of scale improved contract terms of service levels from key vendors and leverage our portfolio wide above property activities and finance revenue management and group sales.
In addition, we are working to create an internet initial introduction of holiday programming to drive incremental transient occupancy and outside the room spending for the 2023 holiday season.
Due to its lead time, we will implement our full holiday programming, including ice in 2024.
Looking out further the expansion potential of this hotel is substantial.
Already a destination property at 1002 rooms, when you compare to the rest of our portfolio and consider the long term economic growth of the greater San Antonio Austin region.
The property represents an enormous opportunity to generate significant shareholder value through future capital investment.
To this end as Colin mentioned, we have signed a purchase agreement to acquire for Marriott 41 undeveloped acres immediately adjacent to the hill country property for $10 $1 million.
The purchase agreement is subject to customary closing conditions, including our due diligence efforts and the approval of Marriott's investment Committee.
We believe this land and the associated development rights will allow us to create a compelling master plan for an expansion of the resort in future years, we anticipate closing this transaction by the end of the third quarter.
Our entertainment group's performance this quarter was again another great storyline, with our marquee Nashville assets, leading the way.
The consolidated entertainment segment delivered $87 $1 million of revenue in $2029 $4 million of adjusted EBITDA, which are both records up 27, 4% and 33, 4% respectively versus the year ago period.
We also announced this quarter that form of Raymond Board member Patrick Moore has been appointed Chief Executive Officer of the companies offering Entertainment group.
Patrick brings decades of experience leading brands through transformative growth and his addition to our management team is an important step in executing our long term strategic growth plan.
We've worked with Patrick first as a consultant and most recently as a prime and board member.
I've known him for more than 16 years.
We're excited to add Patrick join us and for the leadership and strategic capabilities. He brings.
And with that I'll turn it over to Jennifer to discuss our financial results in greater detail. Thank.
Thank you Mark in the second quarter. The company generated total revenue of $504 $8 million and net income to common shareholders of $66 5 million or $1 15 per fully diluted share now what is usual that our fully diluted share count in the quarter reflects the put rights held by Vitaros as part of their operating Entertainment group investment.
Although those rights are not yet exercisable and we retain the option to settle any exercise of lease rights in cash any exercise of these put rights would also result in a <unk>, 30% ownership in OAG reverting back to Ryan.
Additionally, this quarter, we completed successful oversubscribed.
Equity capital raise in June associated with our acquisition of the J W. San Antonio Hill country property.
We issued a total of $4 4 million shares in the quarter, which is reflected in our weighted average shares outstanding for the quarter and year to date.
Total consolidated adjusted EBITDA for the second quarter was $174 7 million, which is an all time record.
And led by continued strength in both our hospitality and entertainment segments.
With the J W Hill country acquisition occurring on June 30, our second quarter balance sheet fully reflects the acquisition and the related financing transactions and future operating results starting next quarter will be fully reflected in our income statement.
As Mark mentioned, our businesses are performing well with strength and momentum moving forward.
As such we are reiterating our full year guidance for our same store businesses and updating our consolidated full year guidance for the addition of at the San Antonio Hill country property in the back half of the year.
As a result, we are.
Regarding consolidated adjusted EBITDA.
A $659 million to $704 million or an increase of $28 million at the midpoint compared to our previous guidance.
We are also increasing our guidance for adjusted funds from operations or <unk> for the year to a range of $437 million to $466 million, which is an increase of $12 million at the midpoint.
You can see our full guidance changes and reconciliation in the earnings release.
Turning to our balance sheet.
We ended the quarter with $508 3 million of unrestricted cash on hand, and our $700 million revolver remained undrawn.
Entertainment group's $65 million revolver had a balance of 7 million outstanding which is unchanged from last quarter.
The combined capacity of our revolving credit facilities and cash on hand gives us total liquidity of approximately one 5 billion after deducting $14 million of outstanding letters of credit.
We retained an additional $105 6 million of restricted cash available for our <unk> projects and other maintenance.
On a trailing 12 month basis, our net leverage ratio of total consolidated net debt to adjusted EBITDA stood.
There's about five five times, which is a modest increase from last quarter, but includes our recently completed high yield note offering without including any EBITDA contribution from the Jws Hill country.
Adjusting for the EBITDA contribution of J W. Hulme country, we are closer to four times.
We completed meaningful capital markets transactions in the second quarter to fund the acquisition of J W. Hulme country as well as to extend the maturity of our credit facility and refinanced our term loan b debt.
J W Hill country acquisition was funded through the equity offering a $4 4 million shares of common stock par value of one cent per share at a price to the public of $93 23.
As well as the private placement of $400 million of aggregate principal amount of.
A seven and a quarter senior notes, which are due 2028.
Both of these transactions.
Were very well received by the market and were upsides in both cases to satisfy strong demand for our securities are.
On our credit facility refinancing, we successfully extended our revolver maturity to 2027 and term loan B maturity to 2000, 22030, excuse me and eliminated the previous mortgage collateral requirements.
In addition, we reset our term loan b to 500 million, providing us an additional $130 million of liquidity.
In terms of interest rate exposure as of quarter end, approximately 80% of our outstanding debt was at fixed rates either directly or with the benefit of swaps.
As we've discussed previously we exercised the first of our three one year extensions on the Gaylord Rockies term loan pushing out that maturity to July 2024, and we reset our interest rate swap to cover that period.
With the further actions we've taken this quarter to finance, the Jws Hill country acquisition as well as manage our debt maturity schedule.
Our balance sheet and liquidity continue to be in excellent shape to support the capital deployment opportunities available to us and the continued growth of our business.
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, Jeff.
Travis, let's let's open the call up for questions. Please.
Yes, Sir at this time, if you would 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'll pause for a moment to allow questions to queue.
Yes.
Okay.
Our first question comes from Bill Crow Raymond James.
Hey, good morning. Thanks.
Two questions for me.
Mark.
I'm just curious Las Vegas has always been a pretty good group market Marriott's, new deal seems like it might change the equation makes it even stronger I'm wondering how you think that might impact the rotational groups.
And the pace of when.
When they come to your properties.
Yes, I don't know that it really changes the pace of when they come to our properties.
As we've looked at research over the years about about half of about half of groups want to go to Vegas and about half don't I think the opportunity.
But it really presents for us.
Is that the.
Maryann will now have.
A substantial presence there from a from a.
Bond void perspective, and what that what that essentially does for US is opens up I think more opportunities for us to capture those large groups.
Either into either as a denver into our other hotels.
Hotels as part of a rotational pattern.
The.
The other part of it Bill is that.
Mary will have access to.
That massive gaming market.
Leisure customer that.
Actually spent time in other markets other than Las Vegas, and so I think we have an opportunity.
Of getting leisure demand into into some of the great hotels as well so I think.
I think Mark is right, we will ultimately there'll be <unk>.
Benefits from the group side, but also I think there is some leisure lift here as well.
And Colin you mentioned.
The potential for $1 billion of capital projects.
Going forward I'm, just thinking about how that might be financed and.
And whether that might be dependent upon modernization of operating entertainment group.
No.
It is certainly not what has happened here bill.
And Jennifer alluded to this is that you know.
We cut the cost stack company, when you sort of estimate it round numbers about $1 billion.
And.
And leverage levels like a lot of the other hotel companies have shutdown went up into the mid <unk> pushing sevens.
But because of the strength of our business and our cash flows our leverage levels have gone off a cliff.
As Jennifer alluded when you when you normalize for the Hill country and you look at the new debt that we had were trading at about four times and you know.
And so when we look and Mark alluded to 'twenty 'twenty four we're looking at.
Group <unk>.
Bookings on the books.
Up substantially from.
From historical paces and the same for the year after that as we as we lay out our long range plan and this is again something that will be just shy going to our board next week, you can essentially finance.
These capital projects from our balance sheet and.
Okay.
And by the way this assumes that our dividends over the next two to three to four years are going to have to increase fairly substantially because it's about <unk>.
REIT taxable income. So this is a very exciting situation that we got ourselves into here by literally building a brand in the eyes of these group customers in the leisure customers this differentiated and so.
We expect to be able to.
Generate really good quality.
High returning growth here over the next three to four years.
And by the way I pro forma is.
You now have even though we're going to deploy $1 billion of capital because of the way because of the way.
Assumptions look on what this capital does to the underlying EBITDA of the business.
And our leverage levels don't go up through this period of time naturally decline. So this is a very exciting situation, we got ourselves into.
At the midpoint of our guidance our consolidated adjusted EBITDA has increased.
Almost 34% over 2019, yes, so over the last three years this business has grown.
Materially, yes, and that includes that includes.
Our.
Entertainment, such as ourselves, but to that point Bill. This is an important thing that Mark has just referenced you.
Guys sit around you you take apart all of these other companies.
Companies that the.
Talk about the earnings but if you just look at our company if you take the midpoint of that guidance.
For this year.
Total revpar that numbers about $443 and this excludes the hill country and this reflects growth of 19% to 15% and growth of 9.5% over last year.
You look at the EBIT.
E for the same store guidance for the year at the midpoint, which.
<unk> excludes the hill country, which is 585.
Million.
This shows growth of 21% over 19 growth in EBITDA of 21% over 19, and 14% over last year. Most of the competitors that you guys write about the sort of flat to down.
And it's because of this.
Does this strategy that we have built and the.
The.
The contracts that we have in place.
This is this is what our business looks like and we're very very excited about it.
Okay sounds good thank you Bob.
Thank you.
Our next question comes from Smedes Rose.
City.
Hi, Thanks.
Just follow up on that I, just wanted to be clear you are talking about investing $1 billion.
Over a three to four year period, and you see your leverage not going above four times and in fact, maybe declining over that same timeframe.
It will be within that trade on a half to four five times through that period.
Depending upon depending upon the cadence.
Yes time period for the spend is probably closer to five years is this year.
But again it depends on the cadence right. It depends on how quickly we laid these projects over each other.
Okay and then.
Could you talk a little bit about just kind of the scope of investment you might envision at the J W, which sounds like that would be separate and away from what Youre planning.
Legacy properties.
Yes, Mark you want to take that.
Yes.
I would say that from a from a hill country perspective, initially our investments are really around where we see opportunities to quickly impact.
The impact of business there we're looking at.
Food and beverage.
Room renovations.
And the potential to take space commercial space that is currently underutilized and not producing revenue and making it making it more efficient and delivering more options to consumers longer term, we think theres opportunities to grow rooms.
Increased meeting space.
As well as potentially increase.
The leisure amenities there but.
Honest with you Smedes, it's a little bit early for us to to really lay out.
Nicely, what we think.
The right mix of that is we're just really getting into that hotel.
And understanding it's operations and the consumer feedback.
Modify weigh in on that just for a second so smedes. If you if you look adapt Texan Gaylord Texan hotel.
It is.
By far the most successful convention resort in the state of Texas, When we opened that baby.
We hope that we were going to get somewhere between 45, and 50 million of EBITDA, We've expanded that hotel several times now and that hotel. This year is going to do somewhere in and around $120 million and and and we sort of see San Antonio and that hotel in San Antonio.
<unk> is having the same DNA that over time this hotel can if.
Literally become the second best Convention resort in the state of Texas, and so we're very excited about this hotel and that's why we tried to buy it for five tons of over the last eight years.
Great and could I just ask one first of all I appreciate you guys breaking out.
The cancellation fee.
Nice incremental disclosure.
It looked like cancellation room nights.
Up quite a bit in the second quarter I realize it's down a lot through the six month, but I was just wondering if you could sort of explain that a little bit.
That's up 83%.
Yes.
Hey, Smedes this is Patrick.
Yes, it was up a little bit there were about five or six groups that canceled for future periods, a little bit larger than normal, but as we looked at the specific conditions around each one of them there was no.
Cost from CERN, there was nothing that pointed to macroeconomic trends or anything like that it was just the lumpiness of all cancellations come in now and then and so a little bit larger, but we dug into that and don't have any cause for concern based on what we saw.
Okay. Thank you.
Our next question comes from Patrick Scholes True Securities.
Hi, good morning, everyone.
Sorry, if I missed this earlier, but I believe you said you're facing.
Nine point about 9% for 2024 and around nine for 2025.
Looking through the transcript last quarter I can see.
Just you had discussed that did those numbers improved since your last earnings call over the last three months or where were they.
You don't know until I get that yeah, So art.
Good morning, our numbers continue to improve I mean, if you look at.
Group revenue pace.
Total room revenue for 2024.
Actually up just give you another data point up 22% over 2019.
And that's both on the room nights and the rate as well and that continues to improve and in fact, we just closed July and had some really solid bookings with a couple of hotels just for the in the year for the year and the T. Plus one so that continues to improve and gives us a lot of confidence as we head into 2024. Additionally on top of that are.
Mix continues to move in a very positive direction, we have a higher mix of corporate business on the books for 2024.
Where we stand right now an improvement over where we are for 2023. So a lot of reasons to feel really good about where we're heading for 2024.
Okay. Thank you.
And then on your leisure business.
<unk> from other hotel Reits in vacation ownership companies and the like here, obviously, you're seeing pressure in the summer and back half of the year.
About tell me if I'm wrong here when I think about leisure for you folks, it's more country music and holiday ice events, which is probably not something.
Could easily transferred going to Europe .
So I'll, probably not apples to apples with last.
Our ski resort Beach resort.
How do you how do you think about.
The leisure business as it relates to those pressures.
Right, Let me start Patrick and then you.
I just wanted to do the.
50000 feet.
Part of this one of the things that we did years ago was when we built these hotels and added to these hotels, we put in really well course leisure facilities into into these assets and we've continued to embellish the leisure attribute to these.
Hotels.
Over the last three or four years, yes country music and the demands that we're seeing here in Nashville affects all three labs, but country music really doesn't have an impact when you look at the Texan, Aurora, Washington, and the palms, but.
When you when you have a quality asset.
It just does pretty well and putting things like sound waves into into Nashville has had an enormous impact on on leisure.
But we do a lot of programming here too Patrick.
But Patrick Chocolate why don't you just talk about the demand that we induced because of the specialized programs that we put in place Felicia yeah, absolutely just to build on what Colin has already saying and <unk>.
To your point, because I think youre anticipating this our core fourth quarter holiday traveler is really more of a local regional traveler and.
No we absolutely saw a little bit of summer softening in the leisure business I would say a lot of that though was tied into the pool complex incident at Gaylord Rockies, which obviously put a damper on the transient production into that hotel and we agree that we think theres been some international travel that's gone out of the states, but not necessarily.
Seeing the same level coming back into the states so that impacted the summer, but as we move towards the holidays.
Folks are looking for a local regional solution for families to get together and as we've talked about many times the programs, we've put in place, especially with ice coming back last year and returning again this year.
Provides a solution and so we're hopeful that the summer softening we saw will not continue into the fourth quarter and that the local regional traveler will still be very strong for the fourth quarter of this year.
Patrick you are correct.
Yeah.
The structural trip occasion, this is different for our hotels versus.
Versus going to Europe , or going somewhere for a week or two weeks. These are these are short.
Regional stays family vacation getaways, they're really not substitutable with a trip to Europe .
Yes, I understood.
And then for you or maybe you have said this in the past, but now for your acquisition in Texas are you planning to put it.
Put it in the holiday events like ice at that hotel.
Yes, we're going to do in a phased approach.
Because we acquired the property on June 30th we do not believe there is time for us to get the property completely ready for an ice type programming offering, but we are going to be offering some holiday programming and step up as we move from 'twenty three 'twenty four we anticipate that by holiday of 2024, we'll have ice.
And the 10 and everything all set up so we're going to give them a little taste of what we're going to be bringing in 'twenty for this year and then in 'twenty for the full complement.
Okay, Okay, and then any other.
Other.
Entertainment segment programs that you would introduce at that hotel.
Hi, guys.
That's back to Mark's point earlier.
That is something that we're studying and looking at and trying to understand what fits best in that market and then that hotel given the customer base and the opportunities around it.
Okay.
Got you. Thank you for the color I'm all set.
Thanks, Patrick.
Our next question comes from Chris <unk> Deutsche.
Deutsche Bank.
Hey, good morning, guys. Thanks for all the details so far.
So maybe we could go back to a minute call in your intro comments talked about <unk>.
<unk> J W, which I think is a great term.
Trade market.
But the question is how much.
If we were to bucket. These at a high level how much of this is kind of getting a different kind of grouping there or versus operational changes efficiencies versus new revenue streams I know that's a.
That's a lot of buckets, but maybe some high level thoughts on.
What's the level of difficulty of getting this to the broad answer is yes.
The short answer is yes to all of the above.
Patrick do you want to.
Just some of the process stuff that we've been working with Marriott on which is all good.
And then.
How we think about the inducing of new demand into that market, absolutely mark kind of touched on this already.
Initial focus right now is on getting new vendor contracts in there. So we can really take advantage of a very similar.
Portfolio and get the economies of scale into whether it be parking contracts retail contracts whatever it might be Wi Fi audio visual contracts et cetera, and then as we just talked about with Patrick a moment ago than introducing the holiday program. This year and stepping it up in 2024, Mark alluded to converting space into.
A more revenue generating or getting higher yield out of the spaces that are there today, we think there's sizable ADR opportunities, but to your question specifically once we get beyond those initial six to 18 months short term opportunities, it's really studying the property and asking ourselves to what level do we want to <unk> or <unk>.
Bring it towards the Gaylord.
The property has tremendous leisure capabilities and we want to continue to respect that because it drives a tremendous amount of leisure business, but we do believe that and with the acquisition of this 41 acres. We do believe there is some opportunities for us to look at growing the pool. Additionally from where it is today as well as potentially some meetings.
Face an additional rooms and so we are already ahead architects visiting the property and then my team is digging in with the property to start asking ourselves to what level do we think it would make sense to potentially grow. This property long term, so that'll be ongoing and we'll be talking about that more in the future, but a lot of short term things that we're going after and then longer term figuring out how to.
Maintain the integrity of what this jws been able to do but also bring some strength to it from what we know how to do on the group side. It's a very successful hotel Pat you may want to just touch as well on the thoughts about the overall in our food and beverage in our hotels as well because we think there's great potential there as well.
You've heard us talking about this over the past 18 to 24 months in the Gaylord hotels brand.
We see food and beverage.
Area that continues to emerge as more of a more of a differentiator and we want our attendees and leisure guests to be leaving the hotel's saying they had culinary experience not just that they got fed and so we continue to refine what we're doing on the banqueting side and like the Gaylord. So we think that GW Hill country has some potential.
Upside.
And the type of offering they have on the food and beverage restaurant perspective, the number of seats, they have and just the innovation and creativity around those concepts.
We're gonna be digging into that we think there's substantial opportunity there.
Okay very helpful. I appreciate all the all the color there and then as a follow up.
A lot of talk about expansion right.
I think a lot of people first go to Rockies and then they think about.
J W. Now, but I was hoping to kind of go back to Nashville.
It may seem like a silly question, because you've got 2900 rooms and more if we include the <unk> across the street.
But I know at one time, you had talked about doing.
A different kind of hotel.
Your family oriented or up luxury hotels, something like that so any thoughts on just the the opry land itself. I mean is there actually is that possible for expansion at some point.
The answer to the question Acs.
And again, here's the reason why.
We don't expand because we wake up one day and say you know what it would be nice to extent, we bet, we expand because we we induced demand and then when we cannot fulfill that demand that's what triggered that and so we were ready to pull the plug on.
On an expansion, which was going to be your rooms expansion and meeting space expansion back in 2019, because as we were looking into 'twenty before Covid This hotel with.
Yes, you quite rightly so almost 3000 rooms.
Pro forma for that year for 'twenty had us operating over 80% in occupancy and so very.
Efficient deployment of capital too.
Generate really really good returns now as a as a business is building back and the other thing that's going on here of course in Nashville is the Halo of the city is getting stronger and stronger we.
The group segment.
And overall in Nashville is growing but leisure is really growing so the answer to your question is yes. We're looking at this we're looking at a complete re re overhaul on food and beverage and this hotel major investments on food and beverage major investment on potentially.
A big a big sports bar here.
And we are also looking at potentially expanding both rooms and group space Chris.
If you look across our portfolio, we're extremely fortunate in that we are in markets where.
Those markets are continuing to grow economically so.
And their business friendly frankly, whether it's whether it's texas or whether it's Nashville.
Orlando Denver.
These are all markets that are.
Long term appear to be.
Very very strong group and leisure markets.
And let me just put a fine point on offer land Chris because.
We are very excited about what we can do there.
Opryland is coming up on 50 years here pretty soon as far as how long it's existed and when Opryland was built in the first few expansions that went through the focus was and the needs of the customer was more towards exhibit halls, and opryland has done phenomenal phenomenal job with the space that they have but they've been at somewhat of a disadvantage in terms of.
Premium carpeted space per guest room, thats available to the meeting planner and so as we look at the opportunities. We think there is an opportunity to rebalance the type of groups going into this hotel by adding potentially more carpeted space and giving up your land a little bit more of a more level playing field with its <unk>.
Our hotels, and we think that creates substantial upside for the hotel.
Okay.
Outstanding very very helpful. Thanks, guys.
Thanks, Chris.
Our next question.
Go ahead.
Yes, Travis we do a couple more questions and then we'll shut it down and let people get on with their life.
Our next question comes from Dori Kesten Wells Fargo.
Thanks. Good morning can you talk about the Q2 bookings that you have the $650 million is there anything notable between corporate association smart either on demand or rate.
Hey, Dori, it's Patrick good to hear from you, yes, the Q2 bookings Theres a couple of things that stand out to me number one to your point the rate we saw a really really strong bookings in terms of rate and again like I was alluding to earlier really really strong growth on the corporate sector. One of the things that is most income.
<unk> to me is over the past 18 months or so we've been talking a lot about the growth in the funnel and the lead volume funnel for.
The current in the year for that business as well as T plus one T plus two in T plus three.
We're starting to see a lot of substantial growth in the funnel for T plus four and beyond the reason that's encouraging to US is we were definitely meeting our short term needs, but because of the amount of re bookings that we did we had concern that maybe we had skipped booking cycle with some of the association groups that book up further and we're now seeing that.
That longer range booking window really start to to fill back up from a funnel perspective.
So.
We're really pleased with the bookings that we had and the rate and the mix of business, but we're even more excited by the fact that the funnel is really filling back up for that long term business.
It just gives us more confidence that as we talk about these capex investments.
We're getting more and more visibility and greater opportunities to really fill up the book of business for the future.
Okay, and then I guess, one more thing on ice and I apologize if I missed this historically have you found that your Ics in the repeat guests from the summer.
From a summertime perspective.
Local traveler I would say, yes, because you have a great example is a lot of the guests that are coming to opryland to go to Soundwaves are then returning to come back and do the holiday programming and ice.
Around Christmas time, the regional traveler.
It's more of a onetime a year type tradition for them because theres just not a whole lot of options for them at the holidays.
So I would say the local traveler is a repeat customer the regional traveler is more of a once a time come in bring the whole family and this is where they all gathered for the holidays.
Okay. Thank you.
Alright.
Question.
Yes, Sir our final question comes from Shaun Kelley Bank of America.
Hi, good morning, everyone. Thanks for thanks for putting me on here.
So Colin Patrick just maybe first off you are.
As we think about the development plans or the.
Capex side in the $1 billion that you laid out Colin I mean, do we have any more precision around kind of ground breaks, particularly the Rockies.
Just trying to think through.
The.
The timing here and the cadence because I know those have been on the radar screen for a while is now the right time to start to get there given where the portfolio is at in its recovery.
Do we is that something we're going to get more explicit color on it at some point.
The near medium term.
Yes. Good question. The answer is we're going through that process with our board first.
Which Marc and I is as I said, he and I will be starting that process.
Next Thursday morning, with our board of directors, Patrick and his team have been working their tails off over the last six months literally looking at as I said somewhere between <unk> 15, and <unk> projects and by the way. This does not include the <unk>.
<unk> schedule room with the 1 billion basically is rough order of magnitude a really new projects that we're looking at but the process is the way we want to go through this is.
Over over the next two to three months to refine that plan with our board get confident.
<unk>.
With each of the markets that we're going to deploy capital in built the cadence of that and then mark and Jen have been.
Figuring out a time for us to do.
Really high quality IR Investor day in Nashville, and with thinking we were trying to get it done before the holidays, but.
With everything that we've got schedule, that's going to be impossible, but I think Jana Mark you're thinking now sort of late January early February type timeframe, and what we will be doing that I think.
Sean is laying out these are the projects that we really like this is these are the markets that we.
We will be deploying capital in.
And this will be the order of play and and I suspect, though between now and that that.
Investor relation day IR day.
We might pull the trigger on one or two of these Patrick.
A really high priority for us and just to your question.
We continue to be very interested in the long term plans for expansion at Rockies I would remind you that we are in the midst of.
Some pretty substantial investment right now the Grand Lodge or what you'd call an atrium at one of our other hotels is currently under a full renovation and it's going to completely transform that area into really the hub of the hotel as well as the addition of a new group pavilion outside so from a cadence perspective.
I really can't get going on the expansion until we got some of these other projects done. So we remain very interested in that but we're just trying to make sure that we go about it in an appropriate process. Yes, I think you talked about the Rockies shown but I think in a mark.
Our our appetite at that hotel zoning sort of strengthened over the last year or two it hasnt waned at all because it hasnt.
Given us any thoughts or should we deemphasize room expansions, we're very excited about the Rockies. So when you look at the you look at the Rebooking characteristics of that coming out of Covid, yes. So it was the strongest in the brain.
Well over 75% right.
Very good.
Any other questions, yes, just one more mark sorry didn't mean don't leave your name out of there My first list.
But big Yeah, just big picture and this is not meant to sound.
Greedy or on thankful, because I actually think the whole country asset is fine.
Fantastic addition, but youre very high level question, maybe wrap up would be are there borehole countries out there I mean, clearly this is something you've underwritten chime in again, but yet for probably many of us in the investment community. It's always still a little bit of like Ah ha like it's kind of hidden in plain sight, so without naming names because obviously that does know when a benefit.
But do you think there are more opportunities of similar scope and scale of $500 million plus big assets that could be.
Impactful to the portfolio that look or feel like this because it does feel to me at least.
Absolutely spot on for probably what Youre looking to do for the portfolio.
Yes, I mean, I think the general the general answer the question is yes, but it is a short list and to your point our.
Our focus.
And acquisitions has been we want to we want to buy things that check every box for us.
We have a very.
A very specific focused strategy as Colin outlined at the beginning of the call and any any hotels that we bring into our portfolio.
We want them to.
Be consistent with that strategy and ultimately be able to drive value not only not only at that property level, but also be able to drive value across the portfolio.
Critical thing for us absolutely.
Thank you very much.
Thanks, Sean.
Okay, Travis Thank you and.
The investors that have been on this morning. Thank you for your time and effort. If you have any other questions you know how how to get hold of us here and.
And onward.
We've got an exciting company on our hands and.
And we expect to create tons of value here over the years ahead. So thank you everyone.
This does conclude today's program. Thank you for your participation you may disconnect at any time.
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