Q4 2023 Ryman Hospitality Properties Inc Earnings Call
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Speaker Change: Welcome to Ryman hospitality properties fourth quarter 2023 earnings conference call.
Hosting the call today from Ryman hospitality properties are Mr. Colin Reed executive Chairman.
Speaker Change: Mr Mark Fioravanti, President and Chief Executive Officer.
Speaker Change: Ms, Jennifer Hudson Chief Financial Officer.
Speaker Change: Mr. Patrick Chaffin, Chief operating Officer, and Mr. Patrick Moore, Chief Executive Officer of Opry Entertainment Group.
Speaker Change: I'll be available for digital replay. The number is 875 390 197 with no conference I'd be required.
Speaker Change: At this time, all participants have been placed on listen only mode.
Speaker Change: Pleasure to turn the floor over to MS. Jennifer Hudson Ma'am you may begin.
Jennifer Hudson: Good morning, and thank you for joining US today. This call may contain forward looking statements as defined in the private Securities Litigation Reform Act of 1995, including statements about the company's expected financial performance.
Jennifer Hudson: 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.
Jennifer Hudson: 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.
Jennifer Hudson: The company's actual results may differ materially from the results, we discuss or project today.
Jennifer Hudson: We will not update any forward looking statements, whether as a result of new information future events or any other reason, we will also discuss non-GAAP financial measures today, we reconciled each non-GAAP measure to the most directly comparable GAAP measure in exhibit to today's release I will now turn the call over to Colin Thank you Jen.
Colin: Good morning, everyone. We had a very busy start to the year here. So I thought I'd start of our call today on some of those developments in mid January we opened our newest a much anticipated already in Las Vegas to a very encouraging early stop Super Bowl weekend generated strong results, including an improper.
Colin: Impromptu visit and performance on stage by Blake and Glenn <unk>.
Colin: Corporate operations continue to ramp there and we will host our official Grand opening celebration in April and this will be a very hot ticket at the end of last month, we hosted many of you at our Investor day here in Nashville, where we also announced the name of that New brand partnership with Luke Combs category 10.
Colin: The response from loops fans in the country music community has been extremely positive and we look forward to reopening that venue in stages. Later this year, both Marc and Jim will get into.
Colin: The earnings discussion in a minute, but I thought I'd revisit some of the more salient points from our Investor day to help frame, how we think about our fourth quarter results.
Colin: The 24 outlook and why we're so excited as we look forward to the years 'twenty five and beyond.
Colin: For 20 years, our management team has executed a unique strategy built on our employee centric model that delivers long term customer satisfaction with a particular focus on the group customer we've built and continue to enhance and an industry leading portfolio of hotels to serve that customer and I.
Colin: Service model continues to drive high customer retention rotation and loyalty. Furthermore group demand has surpassed prior peak levels and as it grows and its very robust, especially against the backdrop of limited new supply under construction and structural constraints two new ground up development as.
Colin: As a result, we have significant visibility into the future.
Colin: Meaningful risk.
Colin: A meaningful reoccurring reoccurring revenue streams strong pricing power and ample high return investment opportunities to sustain that growth trajectory. This is been a formula for industry industry, leading shareholder returns.
I think speak for themselves.
Colin: Through building, great relationships with our customers, we build loyalty and the byproduct being retention that drives overall demand. This in turns allows us to expand our product restaurants hotel rooms convention space pool complexes etcetera. This is an awfully efficient way to generate very high return.
Colin: On investments that drive our superior shareholder returns and as the team explained in great detail at our Investor day, the demand we're building in the out years.
Colin: To some very exciting new projects at our existing hotels, thus stimulating further growth in our company on top of all of that we have an incredibly valuable entertainment.
Colin: Business built on some of the most iconic brands in the music industry and recent events such as Luke Combs performance with Tracy Chapman at the Grammy Awards and beyond <unk> recently released country singles continues to highlight the growing popularity of the country music lifestyle category.
Colin: For those of you who are fortunate to be at the Investor Day dinner that we hosted on the stage of the Grand Ole Opry I Hope you are thrilled as I was to get to see look up close previewing the incredible Grammys performance of Pascal. He is an exceptional artist and friend and some of them. We are proud to be in business with.
Colin: Both of that businesses have generated its sector, leading returns for our shareholders and we think this will continues to be the case going forward.
Colin: Said this many times before our business is not based on hope hope that that city Wides returned to a particular market hope that a particular city. It cleans up its image as strategy is grounded in the things, we know well and can control extensive knowledge of our customers and delivering what our customers.
Colin: And thus driving loyalty and with that let me turn it over to Mark to review, our fourth quarter results and 2024 outlook in more detail.
Mark Fioravanti: Thanks, Colin good morning, everyone.
Our record fourth quarter results were in line with the preliminary results we reported in mid January.
Mark Fioravanti: So for today's call I'll simply highlight a few key metrics that drove our financial performance in the quarter.
Mark Fioravanti: In the fourth quarter led by the strength of the group segment, our same store hospitality portfolio generated a record ADR of $260 up 2% compared to last year.
Mark Fioravanti: <unk> revenue increased 13, 5% driven primarily by higher contribution per group room night evidence of our continued success with attracting higher quality groups.
Mark Fioravanti: Gaylord National and Gaylord Palms achieved particularly strong results in October with the national sending a brand record for monthly banquet revenue and the palms, achieving record monthly banquet revenue for the property.
Our proprietary holiday programming continued to induce leisure demand during the seasonally low period for groups.
Mark Fioravanti: In the fourth quarter ice admissions equaled last year's record levels, while higher per caps yielded revenues above last year's high watermark with particularly strong results at Gaylord Opryland and Gaylord Texan.
Mark Fioravanti: This is the success of our holiday programming initiatives combined with the strength of Banqueting results I. Just mentioned resulted in record quarterly same store total revenue in the fourth quarter.
Mark Fioravanti: Furthermore, for the month of December Gaylord Opryland set an all time monthly brand record for total revenue and Gaylord Texan set an all time monthly brand record for total Revpar.
Early results from our initial holiday programming at the J W Hill country were encouraging and we look forward to activating the full slate of ice programming there this year.
Mark Fioravanti: Finally, we continue to command strong pricing power evident both in the fourth quarter ADR as well as in our group revenue pace.
At the beginning of 2024 group rooms revenue on the books for 2024 is pacing up 8% compared to the same time last year for the T plus seer zero period and booking trends through January have remained on pace.
Mark Fioravanti: This underscores the demand we continue to see in the group meeting segment for a quality meeting experiences like we provide.
Mark Fioravanti: Demand for live Entertainment and country music continues to drive growth in our entertainment business.
Mark Fioravanti: In the fourth quarter, driven by strong show calendars and higher per caps across the portfolio revenue grew four 1% and adjusted EBITDA grew 15, 8% translating into margin expansion of 340 basis points compared to last year.
Mark Fioravanti: Taken together the momentum we're seeing in both our business segments supports our confidence to continue to invest in our assets and as we laid out in our Investor day presentation, we have ample opportunities to deploy capital into high return projects.
And our hospitality business for 2024, we expect to invest approximately $290 million to $360 million and several major projects, including the repositioning of the Grand Lodge and a new group pavilion at Gaylord Rockies, which are already underway and expected to open in phases beginning this summer.
Mark Fioravanti: Transformation of the governors in presidential ballrooms, and pre function spaces at Gaylord Opryland.
And renovation of the lobby and the remaining 1416 rooms at the Gaylord palms.
Mark Fioravanti: Additionally, we are analyzing and designing our rooms at Soundwaves expansion at Gaylord Rockies are.
Mark Fioravanti: Our meeting space expansion, a new sports bar and event like Gaylord Opryland.
Mark Fioravanti: In a rooms renovation at the GW Hill country and Gaylord Texan.
We look forward to being able to give you more details on these rollouts later in the year.
Mark Fioravanti: In our entertainment business in 2024, we expect to spend approximately $70 million to $80 million.
Mark Fioravanti: On the major projects already underway, including the opening of old Red Las Vegas, the renovation of the W. Austin Hotel and other enhancements at block 21, and the redevelopment of the Wild horse saloon into category had a downtown Nashville.
Speaker Change: Now turning to our outlook for 2024.
Speaker Change: We are reiterating the full year guidance range as we presented at our Investor day, including same store hospitality Revpar growth of three five to five 5%, which reflects approximately 215 basis points of disruption from 2024 capital projects.
Same store hospitality total revpar growth of 3.25% to 5.25%, which reflects approximately 160 basis points of disruption.
Speaker Change: And consolidated adjusted EBITDA.
Speaker Change: $745 million to $785 million, which reflects $10 million to $11 million of disruption within the same store hospitality portfolio.
Speaker Change: The $10 million of disruption with it within the entertainment business.
Speaker Change: Below the line, we expect to generate adjusted funds from operations or <unk> of $484 3 million to $527 million and <unk> <unk> per diluted share of $7 60.
Speaker Change: To $8 20.
Speaker Change: Let me provide some color on how we expect the quarterly cadence to play out which will be a little bit different than what we saw in 2023, but largely in line with our historical trends.
In this first quarter, we expect same store hospitality Revpar and total revpar to decline low single digits compared to last year due primarily to the timing of Easter, which falls on March 31, this year compared to April 9th last year shift.
Speaker Change: Shifting group business out of the first quarter and into the second.
Speaker Change: We expect same store hospitality adjusted EBITDA margin in the first quarter to decline 150 to 200 basis points year over year due primarily to the Easter shift.
And the continued normalization of attrition and cancellation fees.
Speaker Change: As a reminder, the first quarter of 2023 was the highest first quarter adjusted EBITDA and.
And adjusted EBITDA margin on record.
Speaker Change: We expect the remaining three quarters to show positive same store Revpar and total revpar growth and adjusted EBITDA margin expansion.
Speaker Change: With high single digit Revpar and total revpar growth in the second and third quarters.
Speaker Change: Followed by low to mid single digit growth in the fourth quarter.
Speaker Change: In our entertainment business, we expect first quarter revenue growth to be tempered modestly by the severe winter weather, we experienced in Nashville in January.
Speaker Change: Insistent with historical trends, we expect the strongest growth in the second and fourth quarters, the third quarter will be heavily impacted by construction disruption.
Speaker Change: As Colin discussed at the outset, we are incredibly well positioned we have significant visibility into future bookings.
Speaker Change: Have a meaningful recurring revenue stream strong pricing power and ample high return investment opportunities.
Speaker Change: These investments that we're making though disruptive in 2024 will sustain our long term growth trajectory.
Speaker Change: And importantly, we can fund this growth.
Speaker Change: Plus our dividend from our balance sheet and free cash flow generation.
Speaker Change: And to that end I'll turn it over to Jennifer to discuss our balance sheet liquidity free cash flow and dividend.
Jennifer Hudson: Thanks, Mark we ended the year with $592 million of unrestricted cash on hand, and our $700 million revolving credit facility remained undrawn at least $65 million revolving credit facility had a balance of $5 million outstanding.
Jennifer Hudson: Taken together, our total available liquidity was approximately $1 3 billion net of approximately $15 million outstanding letters of credit.
Jennifer Hudson: We retained an additional $109 million of restricted cash available for F any and other maintenance projects.
Jennifer Hudson: Our net leverage ratio based on total consolidated net debt to adjusted EBITDA was four one times.
So where we ended the year in 2019 and at the low end of our targeted range of four to four and a half times on.
Jennifer Hudson: On a pro forma basis, assuming a full year contribution of adjusted EBITDA from the J W Hill country, our net leverage ratio was three nine times.
Jennifer Hudson: In 2024, we expect to generate free cash flow before payment of dividends and capital expenditures of between 500 million to $550 million, which together with our unrestricted cash balance of $592 million at year end.
Jennifer Hudson: Funds available in our F N E escrow accounts.
Jennifer Hudson: Be more than sufficient to fund the dividend and the capital investment priorities that mark outlined.
Jennifer Hudson: At the end of 2024, we expect our total available liquidity to remain above $1 billion.
Jennifer Hudson: And our net leverage ratio to remain well within our target range.
Jennifer Hudson: And our projections demonstrate our balance sheet and liquidity position continued to be in excellent shape to support the capital deployment opportunities available to us.
Jennifer Hudson: And the continued growth of our businesses.
Jennifer Hudson: Finally, we are pleased to announce the declaration of our first quarter dividend of $1.10 payable to shareholders of record as of March 29, 2024. It remains our intention to continue to pay 100% of our REIT taxable income through dividends.
Speaker Change: With that we can open it up for questions.
Speaker Change: Yes.
Speaker Change: Thank you at this time, if you'd like to ask a question. Please press the star and one on your telephone keypad, you may remove yourself from the queue at any time by pressing star too.
Speaker Change: Once again that is star and wanted to ask a question.
Speaker Change: And we'll take our first question today from Chris will Ranke with Deutsche Bank.
Speaker Change: Hey.
Good morning, everyone and congratulations on another really great year.
Speaker Change: Yeah.
Speaker Change: You know one of them.
Speaker Change: I think that you guys made sure throughout the course of 2023 was that you saw almost all the groups performing in excess of the contract by about 10 minutes.
Speaker Change: Out of room spend and I'm curious as to whether you are you still seeing that and also whether you're able to.
Speaker Change: Renegotiating or negotiating new group contracts every quarter, whether you're you're continuing to bring up those minimums on things like.
Speaker Change: Out of room spend.
Speaker Change: I will take that metric sure Hi, Chris This is Patrick Chaffin, good to hear from you. This morning.
Patrick Scholes: To your question, how we're pacing so far in the first quarter.
Patrick Scholes: Like the entertainment business, we had a little bit of a setback just from the the weather in Nashville in January but overall the group trends continue to be encouraging.
Speaker Change: We are seeing groups that are showing up and signing up for a lot more food and beverage outside the room than they originally had anticipated. So I don't know that we'll see quite the outsized performance that we saw last year, but thus far we are encouraged by what we've seen as far as how we're contracting going forward, we continue to make sure that the inflationary.
Speaker Change: Pressures that we've all been feeling across the industry get priced into our food and beverage in real time.
Speaker Change: And so we are making sure that the pricing is appropriate and always trying to move folks to a higher food and beverage minimum.
Speaker Change: I would say there is no there's been no material change in how contracting has gone forward thus far.
Speaker Change: Okay Super helpful. And then just as a quick follow up you mentioned and also at the Investor Day, a lot of a lot of.
Speaker Change: Capital projects on the horizon.
Speaker Change: Are you thinking about prioritizing those based on whether it's an ROI or just expected performance on a given property or a market.
Speaker Change: Yes.
Speaker Change: You want to take that Mark yeah. So the way that we're looking at these Chris is one is based on ROI and the others based on customer feedback in terms of in terms of what's important.
Speaker Change: Uh huh.
To the meeting planner and the attendee the feedback we've gotten through.
Speaker Change: Not only primary research, but also the customer satisfaction scores that we receive.
Speaker Change: And then also ultimately.
Speaker Change: Managing construction disruption.
Speaker Change: As we look at the various hotels room renovations et cetera, some of that timing is determined.
Speaker Change: When is the best time to.
Speaker Change: <unk>.
To undertake those projects.
Okay very helpful. Thanks.
Okay.
Speaker Change: Our next question will come from Dori Kesten with Wells Fargo.
Hey, good morning.
Dori Kesten: Given the phasing of renovations over the next few years would you expect this year to be the most disruptive to earnings.
Dori Kesten: I mean, if you look at the next.
Dori Kesten: Probably the next two or three years, you will have about the same level I think of of disruption as we rotate through the portfolio with the with the various room renovations.
Dori Kesten: We've got.
Three slated I guess for the next two years.
Dori Kesten: So I think that this year and next year. It would be your two most have the most amount of disruption and I would guess about the same dollar for dollar amount.
Let me add to this I mean, we can look at disruption.
Dori Kesten: Is half empty, but the half full potable this was showing enormous growth in our hotel business.
Dori Kesten: And and and and I suspect that we'll see in 'twenty five 'twenty six as some of these projects start to come online.
Dori Kesten: Very very good growth, but it's just it's just part of.
Dori Kesten: The price you have to pay for building superior demand into your business. We have this ability to grow our business materially and we will do that and we'll manage disruption just like we have over the last.
Dori Kesten: Picking a decade.
Dori Kesten: Yes, George this is Patrick I would tell you that even on the palms renovation, which is a 1400 room renovation for slated for this year that will start in a few weeks, we're continuing to massage that schedule to make sure that when we see high demand opportunities to take advantage of that we manage the design and construction process. So that the tail's not wagging the dog.
Dori Kesten: And that we're putting in.
Dori Kesten: Value creation first even in the midst of this disruption yeah. This many many times this year.
Dori Kesten: Hotel with already it's contracted book of business will be basically full crime will manage around that and this is the way we we run.
Dori Kesten: Run this business over the last decade, and we know how to do this but the real exciting thing is the <unk>.
Dori Kesten: Underlying business that we have on the books for T plus one T plus two and the Patrick when we look at things like lead volumes bookings.
Dori Kesten: I feel like we're going to see very good growth over the next few years, but.
Dori Kesten: Disruption is going to happen because.
Dori Kesten: We're going to be doing these projects.
Dori Kesten: George just one other point on the entertainment side.
The projects that are creating disruption this year will be completed this year. So.
Dori Kesten: We shouldnt have any next year.
Dori Kesten: In that business.
Right and I, probably should've said fashion.
Dori Kesten: And then on.
Dori Kesten: Austin City limits can you can you walk through I guess what I'm.
Dori Kesten: Maybe what best practices from your Nashville assets, you've been able to is still there to drive results.
Sure Noah This is Patrick Moore speaking so.
Dori Kesten: In the Investor day, we outlined.
Dori Kesten: Our value creation program that we deploy across all of the venues and when you look at Austin City limits, there's a number of factors that were there.
Patrick Moore: Sort of pushing both the top and bottom line. For example, we brought food and beverage in house, we are taking over some of the frontline staff that is outsourced.
Patrick Moore: We are improving overall show count and driving sort of.
Demand relative to pricing and dynamic pricing, we are looking at things like block.
Patrick Moore: Block booking and routing from some of the Nashville based assets into Austin, So theres, a number of factors across a range of.
Patrick Moore: Areas that we're driving at ACL two other ones that I would mentioned is his first redeveloped and some of the areas between the hotel and Austin city limits to have private events and other events before the show.
Patrick Moore: And I'd say the second thing is like we have in other assets. We are driving a tour business that we expect to launch at the end of this year.
Speaker Change: Okay, and if I can keep you Patrick would you expect the majority of growth at <unk> over the next few years to come from your internal growth drivers.
Patrick: You just talked about and then just the.
The projects that are ongoing or is there a likelihood of external growth there.
Speaker Change: Often specifically dori.
Speaker Change: No.
Yeah.
Total yes.
We're putting three major projects online Vegas category, 10, which is which is going to be as Colin outlined a significant upgrade to that property and then obviously the improvements both to the W Hotel in Austin and Austin City limits I would say that the short answer is we're looking predominantly at the organic growth of the things that.
Speaker Change: We have because we're putting so much capital.
Speaker Change: The service that being said, we're always looking for unit growth of our existing brands.
Speaker Change: And other investment opportunities.
Speaker Change: Yes.
Speaker Change: Again, Patrick I think.
Speaker Change: Conversations yesterday with our board.
Speaker Change: We talked about.
Speaker Change: Focusing on those those new opportunities that are not embedded into our <unk>.
Speaker Change: And so our business today, we should see very good growth next year and the year. After just based on what we're doing today on the existing assets, but we're looking at multiple other things here with this business. It's a it's a very interesting business that we have many different avenues to go do.
Speaker Change: To continue to grow it.
Speaker Change: Alright, thank you.
Speaker Change: Thanks Stuart.
Our next question will come from Bill Crow with Raymond James.
Hey, good morning, Congrats on another.
Bill Crow: Mark I was wondering if you could address the national it just it's been slower to ramp post pandemic.
Speaker Change: We don't spend a lot of time talking about that as it on these calls.
Bill Crow: Just wondering from a momentum perspective.
Bill Crow: How is that asset doing relative to the rest of the portfolio.
Mark Fioravanti: I would say relative to the rest of the portfolio. It has been slower to ramp, but what's what's really driving that bill is the market. The DC market has not recovered as quickly as the other markets that we're participating in and when you when you compare the national to itself and how it performed pre pandemic.
Mark Fioravanti: That hotel has never performed better whether youre looking at.
Mark Fioravanti: How they're performing.
Mark Fioravanti: We're forming with groups group penetration food and beverage revenues food and beverage margins.
Mark Fioravanti: Customer satisfaction scores.
Mark Fioravanti: That team there has really done a terrific job and the investments that we made both in terms of renovations and food and beverage during the pandemic have paid dividends for us. So we are we're always working to drive better results, but we're pretty happy with where the national is and where.
It's going in is that market as that market recovers.
Mark Fioravanti: That hotel is very well positioned to perform the other thing that I've noticed with the National Patrick you might want to talk about this is.
Mark Fioravanti: Just the pace of bookings that we've seen over the last 12 months, it's been very encouraging we have a very good 2023.
In that hotel in terms of bookings for future years and lead volumes of.
Mark Fioravanti: <unk>.
Speaker Change: Uh huh.
Speaker Change: Very.
Speaker Change: Attracted to this hotel.
Speaker Change: Yes, I would agree I mean, everything Mark and Collin we agree with.
Speaker Change: The hotel, while the market is a bit slower.
Speaker Change: Slower to respond we've seen tremendous growth on all fronts to both market and Collins point so.
Speaker Change: One of the things that we told the property a few years ago was that we needed to.
Speaker Change: Fixed some of the things that had been.
Maybe lagging behind its sister properties and the hotel has done an outstanding job of getting everything on par with its sister properties and that allows us to start talking about growth for that hotel long term and I think we've reached that point now and so while we as we talked about at Investor Day, We're prioritizing acre land Rockies and then our Texas hotels, we are starting to happen.
Speaker Change: Conversations around what do we do to stimulate additional growth with investment at Gaylord national because they've done such a great job of really getting the ship righted and much more competitive with the system of hotels.
Speaker Change: Patrick.
Speaker Change: Through through Covid Phil.
Speaker Change: Unlike all of our competitors in that market.
Speaker Change: Patrick we probably invested thinking.
Speaker Change: <unk> almost $100 million when you think about the rooms refurbishment and food and beverage and the food and beverage and repositioning we put $100 million into that and as Mark said in his comment to your question.
I think this year, we're going to accomplish internally a number for this hotel is the best year, we've ever had and it's a consequence of all of those repositions.
And I've really I've been personally very encouraged by some of the booking trends that we've seen in this hotel over the last few months.
That's great color exactly what I was looking for if I could just do a follow up and I can't remember if this was addressed at the <unk>.
Speaker Change: Mr de or not but.
Speaker Change: I know when you went into Austin there was originally talked about about.
Speaker Change: So in the W.
Speaker Change: It's now part of the tariffs.
Speaker Change: Deal does that change.
Speaker Change: The outlook for sale or does the closure of the Convention Center Baker sale.
Speaker Change: Less likely at.
Speaker Change: At least for the next handful of years.
Speaker Change: I don't yes, I don't think that the convention center.
Speaker Change: Renovation and closure.
It will influence that decision.
Speaker Change: We've we were undertaking.
Speaker Change: Full renovation there.
Speaker Change: And generally the way that we think we think about it from an entertainment business perspective is is that you know.
Speaker Change: It's a terrific asset.
Speaker Change: And the real question for US is how we want to operate that block 21 complex and what are the relationships and synergies that we can drive and create between the hotel and the venue.
Speaker Change: It is an asset that.
Speaker Change: We do have we do have the opportunity to monetize if we would choose to in the future. It is it is not encumbered by management or.
Speaker Change: Or.
Speaker Change: Brand on sale.
Speaker Change: So.
Speaker Change: In terms of value creation, there is an opportunity for that hotel to be repositioned if someone wanted to build a luxury product there. So.
Speaker Change: We have that Optionality bill.
Speaker Change: I think we know at this point.
Speaker Change: What we want to do with that asset we want to get through the repo.
Speaker Change: The consequences of that which we're excited about.
Speaker Change: Yes.
Speaker Change: Alright. Thanks, that's it for me I appreciate it.
Speaker Change: Thanks Bill.
Speaker Change: Once again press Star one if you have a question, we'll hear from Jay Kornreich with Wedbush Securities.
Jay Kornreich: Alright, Thank you and good morning, it looks like your future room bookings in the fourth quarter came in at <unk>. It looks like eight 5% above the prior year. So I'm curious now as we think about into your fourth year bookings in 2024, what kind of rate increases do you expect over 2023, and maybe also just remind us what.
Jay Kornreich: Percent of the total bookings that in the year for this segment typically represents.
Jay Kornreich: Yeah.
Jay Kornreich: Yes, Hi, this is patrik. So let's start there were a couple of questions there.
Patrik: Typically enter the year with about 50 points of occupancy on the books from a group perspective, and we book somewhere between 15 to 20 in the year for the year, we expect that that will be consistent with this year from a rate perspective, just to give you a sense of.
Patrik: Let me break it down this way and see if this answers your question our Revpar for 2024 assumes about a third of the growth our revpar growth assumes about a third of that is coming from occupancy and about two thirds of it is coming from ADR growth.
Patrik: And if you look at our Revpar growth in total in the guidance. We provided about 45% of that is coming from group ADR growth alone. So we've entered with a great position and we believe that we will even further that position with some of these in the year for the year bookings. Our sales team is doing an outstanding job of pushing group rate with the.
Patrik: That we're putting into the hotels. It further justifies that we're not just raising and increasing pricing, but we're enhancing the value proposition and groups are responding in a positive way to that end. We are very very pleased with where group rate is heading.
Speaker Change: That's very helpful. Thank you and then just one other follow up.
Speaker Change: You referenced fully overlaying the ice program on the J W. Marriott Hill country. Later this year in the fourth quarter and I was wondering if you can give any context as to the EBITDA contribution of upside you believe that can provide.
Speaker Change: So we enter into a market with ice for the very first time.
Speaker Change: It takes a little while to build.
The.
Speaker Change: The customer base, if you will we.
Speaker Change: We see it takes two to three years. However, given the fact that Dallas is only about four hours away our analysis of the markets in the Msas indicates to us that this could be a strong performer for us and so maybe a little bit better than what we would normally see but I would I would say that we believe there is somewhere between $3 million to $5 million.
Speaker Change: Our revenue and profitability opportunity from putting eisen at this property in the first year and we will see how it goes.
Speaker Change: Okay. Thank you very much that's it for me.
Speaker Change: Thank you.
Speaker Change: Our next question will come from Smedes Rose with Citi.
Smedes Rose: Hi, Thanks, I just wanted to circle back on you talked about kind of the cadence of Revpar growth over the course of the year. So are we right in thinking that the first quarter will maybe be the weakest of the year, followed by the fourth quarter, the second and third quarter being.
Smedes Rose: The past two quarters, we've got the right way to think about just kind of the seasonality of earnings.
Speaker Change: Yes, that's correct Smedes you got that right.
Speaker Change: Okay.
Speaker Change: And then I was just also kind of wondering.
Speaker Change: <unk> talked a fair amount about this.
Speaker Change: Capital projects.
Speaker Change: And I know you're doing a fair amount of work at the Rockies.
And then just a quick question is this.
Speaker Change: Didn't go in and kind of make the property more accommodated group.
Speaker Change: It seems like it's relatively new is it may be misunderstood in the market or to misunderstand the kinds of groups that were coming in I'm just wondering.
Speaker Change: What do you ascribe that to is it just kind of live and learn and everything you know.
Speaker Change: Open and then you've got to figure out what you have to do differently or is there something.
Speaker Change: So you are particularly kind of pinpoint this year that you would have to put as much capex in.
Speaker Change: When it's still a relatively new property.
Yes, it's not a misunderstanding of the groups.
Speaker Change: <unk>.
Speaker Change: Keep in mind that we were a minority partner in the Rockies through the construction period.
Speaker Change: And then bought our partners out after opening and.
Speaker Change: Really what we're what we're doing with the Rockies is is that we're taking.
Speaker Change: Essentially that Grand Lodge, which is the best real estate in that hotel at converting it from.
Areas that are seeming that are not revenue producing and converting that square footage in the space that is sellable that we can generate revenue.
Speaker Change: By servicing groups.
Speaker Change: It will allow us to drive profitability service more groups. So grant pavilion as it is an expansion of Canadian space, which really speaks to the demand that we're seeing there versus the.
Speaker Change: The original product that was bill. So this is it's not it's not that.
Speaker Change: We misunderstood the market.
Speaker Change: I think it really is more an issue of design and how that hotel was built in.
Speaker Change: And how they used to.
Speaker Change: The Sellable square footage to maximize the profitability of the asset.
Speaker Change: Do you mind, if I add to this.
Speaker Change: The other thing that.
Speaker Change: So that our investors.
Speaker Change: Need to understand is prior to this hotel arriving in Colorado. There was not another convention result in that in that state that.
Kate.
Speaker Change: Joe drove really.
Speaker Change: Any material group room nights into that state and when we open this hotel.
Speaker Change: As Mark said, we were a minority partner.
Speaker Change: At the time.
Speaker Change: When we opened this hotel, we had well over 1 million room nights on the books of which the vast majority had never been to the state of Colorado before so what we have discovered is that this market.
Speaker Change: Next to this airport is so attractive to the group consumer and that is why we've been deploying this capital to make sure that this hotel once it's fully complete it by the way we're looking at potentially adding three to 400 hotel rooms here, we're looking at.
Speaker Change: Some waves here and it's because of what we have discovered.
Speaker Change: In terms of the appetite and desire of the group meeting planners to frequent dislocation and what we're trying to do with this hotel over time is create an asset that looks a little bit like.
Speaker Change: Size wise Opry land that is that is so competitively superior and that is what we're doing here and it's this is a this is a very exciting.
Asset.
Very good market with extraordinary extraordinary tax benefits that we have that really that really help generate very high returns on capital. So if there are any members of the investment community that don't understand that we're happy to help them but.
Speaker Change: I think most of the folks Jennifer the people that we may understand what we're doing is resurgent repositioning this hotel into something that we believe will be quite extraordinary one is completed.
Speaker Change: Great Thanks for that.
Speaker Change: Answer.
Thanks Nate.
That will conclude today's question and answer session I will now turn the call over to our presenters for any additional closing remarks.
Speaker Change: I think we're done.
Speaker Change: No no no no.
Speaker Change: We thought.
Speaker Change: We've done this earnings call. This morning, but it's on the back of the.
Good day and a half.
Speaker Change: Even though the investor meetings, we had just several weeks ago. So I think.
Speaker Change: If we keep talking with just repeating everything that we've said over the last months that thank everyone.
Speaker Change: Being on the call. This morning, and if you have any additional questions. Please feel free to reach out to our IR folks or Jennifer or Mark and we look forward to.
Speaker Change: All the conferences that our team will be participating in over the next couple of months. So thank you everyone.
Speaker Change: This does conclude today's conference call. Thank you for your participation you may now disconnect.
Speaker Change: Okay.
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Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: Thank you.
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