Q2 2024 Ryman Hospitality Properties Inc Earnings Call
**Music** **Applause** Grand Ole Opry star Darius Rucker joined the family in 2012. Here's Darius with beers and sunshine. Live from the Grand Ole Opry stage. **Music**
Unknown Speaker: Randall Lockley starred as Darius Rutherford, joined the family in 2012. Here's Darius with Beers and Sunshine, live from the Grand Ole Opry stage. Budweiser's summertime, Backwoods night in South Carolina, Ain't nothing finer than me and my girl striking off a little lighter, Everybody's down in a world gone crazy, Don't know how to pick up a life back, Maybe turn off the good times, turn off the TV. Yeah, the only BS I need is Beers and Sunshine.
Darius Luther: I'm going to work today, just want to sit around and play I'm going to hit miles off the top, kick back in my flip-flops No, no, nothing to the lender, nothing's fitting in the slender The only thing on my agenda is beers and sunshine But by the summertime, backwoods night in South Carolina Ain't nothin' finer than me and my girl strikin' off a little item Everybody's downtown and we're goin' crazy Don't know how to pick the one I like, baby Turn off the hood, I'll turn off the TV Yeah, the only BS I need is beers and sunshine
We're gonna call my girl and say, Let's get our friends and hit the lake Grab a boat and get to float A little buzzin', a little toastin' We're gonna hang and have a little fun now Flyin' high like we'll never come down We're gonna go until we run out of leaves and sunshine I bought fives in summertime Backwoods down to South Carolina Ain't nothin' finer than me and my girl So I got off a little lighter Everybody's down in the world
and the world gone crazy. Don't know how to play the bull, I bet I'll play me. Turn on the good times, turn off the TV. You're the only BS I need. A beer and sunshine. A beer and sunshine.
Unknown Speaker: Stand by, we're about to begin. Good morning, everyone. Hosting the call today from Ryman Hospitality Properties are Mr. Colin Reed, Executive Chairman Mark Fioravanti, President, Unknown Executive Office. This is Jennifer Hutcheson, Chief Financial Officer. Patrick Chaffin, Chief Operating Officer, Unknown Executive Office. This call will be available for digital replay. The number is 1-800-433-4232.
Speaker Change: Please stand by, we're about to begin.
Speaker Change: Good morning everyone. Welcome to Ryman Hospitality Properties second quarter 2024 earnings conference call.
Speaker Change: Hosting the call today from Ryman Hospitality Properties are Mr. Colin Reed, Executive Chairman.
Speaker Change: Mr. Mark Fioravanti, President and Chief Executive Officer Ms. Jennifer Hutcheson, Chief Financial Officer Mr. Patrick Chaffin, Chief Operating Officer and Mr. Patrick Moore, Chief Executive Officer, Operating Entertainment Group
Speaker Change: This call will be available for digital replay. The number is 1-800-753-9134 with no conference ID required. At this time, all participants have been placed on listen-only mode. It is now my pleasure to turn the floor over to Jennifer Hutcheson. Ms. Hutcheson, please go ahead.
Unknown Speaker: 7 5 3 9 1, Conference ID required. At this time, all participants have been placed. It is now my pleasure.
Unknown Speaker: 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. Additionally, any statements we make today that are not statements of historical fact may be deemed to be forward-looking statements. Words such as believed or expected 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 discussed or project today. We will not update any forward-looking statements, whether as a result of new information, future events, or any other reason.
Jennifer Hutcheson: 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.
Unknown Speaker: We will also discuss non-GAAP financial measures today. We reconcile each non-GAAP measure to the most comparable GAAP measure in the exhibits to today's release. Please also note that we provided an updated version of the press release this morning that corrects a clerical error that omitted the presentation of pro rata adjustments from JVs as well as the loss on extinguishment of debt in the funds from operations and adjusted funds from operations reconciliation to netting compared to the prior version of the press release issued on July 31st, 2024. The amount of FFO and AFFO for the periods presented is unchanged from the prior version of the release issued yesterday.
Speaker Change: Any statements we make today that are not statements of historical facts may be deemed to be forward-looking statements.
Speaker Change: Words such as believed or expects are intended to identify these statements, which may be affected by many factors, including those listed in the company's SEC filings and in today's release.
Speaker Change: The company's actual results may differ materially from the results we discussed or project today. We will not update any forward-looking statements, whether as a result of new information, future events, or any other reason.
Speaker Change: We will also discuss non-GAAP financial measures today. We reconcile each non-GAAP measure to the most comparable GAAP measure in exhibits to today's release.
Speaker Change: Please also note that we provided an updated version of the press release this morning that corrects a clerical error that omitted the presentation of pro rata adjustments from JVs as well as loss on extinguishment of debt in the funds from operations and adjusted funds from operations reconciliation to net income.
Unknown Speaker: I will now turn the call over to Jan. Thanks, Jan. And good morning, everyone. We're pleased to report strong second quarter 2024 results exactly in line with where we thought we'd be, even including some Hotel Leisure Transient Softness in Nashville and Orlando. Our same store hospitality segment delivered record second quarter revenue, driven by continued strength in our group business and all time record adjusted EBITDA RE, even excluding some one-time franchise tax benefits. Group Bookings production accelerated meaningfully from the results we reported in the first quarter of 24.
Speaker Change: Thanks Jan and good morning everyone. We're pleased to report strong second quarter 2024 results exactly in line with where we thought we'd be.
Unknown Speaker: Gross Group Rooms Revenue Book for All Future Years was a second quarter record, and Gross Group ADR Book for All Future Years was an all-time record. Equally impressive, our entertainment business delivered all-time record revenue and strong adjusted EBITDA RE. Considering the construction underway at W. Austin and Block 21 and the closure of the Wild Horse Saloon for the re-positioning to Category 10, these entertainment results are, I think, even more remarkable. Mark will review the second quarter in more detail in one minute.
Unknown Speaker: Now, a bit of a departure from our typical earnings call, I'd like to focus my remarks this morning on an important initiative regarding the tourism industry in one of our core markets, Nashville. As some of you may know, a couple of years ago, the CEO of the Nashville CBC and I pulled together a group of about 70 leaders across the city's hospitality and leisure industry to build a long-term strategic plan for supporting tourism in this wonderful city.
Speaker Change: Now, a bit of a departure from our typical earnings call, I'd like to focus my remarks this morning on an important initiative regarding the tourism industry in one of our core markets, Nashville.
Unknown Speaker: The result of that collaboration is a plan called Music City Next, which we released in June, and which provides a multi-year roadmap for addressing eight strategic priorities critical to the city's continued success. And you can find that plan on the National CBC website.
Speaker Change: As some of you may know, a couple of years ago, the CEO of the Nashville CBC and I pulled together a group of about 70 leaders across the city's hospitality and leisure industry to build a long-term strategic plan for supporting tourism in this wonderful city.
Unknown Speaker: Now, we've always been bullish on the national market, but some of the research and statistics that came out of this work were really, really exciting. So many folks wonder why Nashville has seen such a tremendous growth in visitation over the last few years, as well as the enormous amount of capital that has been deployed into physical assets such as hotels, celebrity bars, entertainment venues, and multiple airports. Nowhere in this country has such growth been witnessed around the platform of music, and the key question is, why has this occurred, and can this type of growth be replicated over the next decade? Nashville is without question the epicenter of country music, and what makes it so special is the fact that so many of the great artists live here.
Speaker Change: Now, we've always been bullish on the national market, but some of the research and statistics that came out of this work were really, really exciting.
Unknown Speaker: What has happened over the last decade is that the products of the artists have been made available to consumers all over the world by what has evolved through technology into things like streaming. At the same time, social media was born, and these artists' social media followings have exploded, and today, these artists are essentially marketing their music and this town to literally tens of millions of fans around the world daily. As a consequence, demand for this city has really exploded, and this is what is driving our growth.
Unknown Speaker: So we're from here, and that's what the strategic plan lays out, and artists' penetration of markets domestically and internationally will only increase. Product-wise, there are so many new drivers under development, a new domed stadium that should accommodate things like Final Fours, Super Bowls, college playoffs, and year-round concerts. There is a massive East Bank development being planned, and the National Yards development, and thousands of new hotel rooms to accommodate this growing demand, as well as, I'm sure, another expansion at some point to our magnificent airport.
Speaker Change: as well as, I'm sure, another expansion at some point to our magnificent airport. Now, in order to project what the future looks like in terms of visitation and revenue, we computed growth through three different screens.
Unknown Speaker: Now, in order to project what the future looks like in terms of visitation and revenue, we computed growth through three different screens, that the future mirrors the historical rate of growth, growth at a modest rate of inflation, i.e., about 3%, and then the average of the historical and inflation rates. So here's a quick snippet of what the plan concludes. In the next 5 to 10 years, annual visitor growth is expected to surpass 20 million people, bringing with it close to $15 billion in annual visitor spending.
Unknown Speaker: The hotel occupancy and state local sales tax rates for Nashville make it one of the highest tax revenue generating cities in the country, creating an alignment of interest between state and local government and the hospitality companies operating in this market.
Speaker Change: and the drivers of...
Speaker Change: of Music City's appeal are only increasing. As an example, in the last six months alone, downtown Nashville has seen new entertainment and F&B outlets with Eric Church, Garth Brooks, Morgan Wallen, and outside of the country music genre from the likes of John Bon Jovi.
Unknown Speaker: So while Nashville, like all tourist destinations around the country, will see economic softness from time to time, just like we did through COVID, the long-term potential for this market is incredible for leisure and group alike. And by the way, from a group perspective, Nashville has risen to a top five place to visit simply because it's an exciting and fun place to be. Both our business segments have their origins in this town.
Unknown Speaker: Thus, our business is uniquely poised to benefit from the growth that will be coming here over the next few years. In our hospitality business, we've built and continue to enhance an industry-leading portfolio of hotels to serve the group and leisure customer segments. As a result, we have achieved strong pricing power, demonstrated by the continued rate growth, and our all-under-one-roof offering allows us to capture profitable out-of-the-room spend. A multi-year capital investment program that we shared with you earlier this year has identified numerous high-return investment opportunities that will further strengthen these competitive advantages, with a large portion of that investment dedicated to Gaylord Opryland, given our long-term belief in this market.
Speaker Change: Both our business segments have their origins in this town. Thus, our business is uniquely poised to benefit from the growth.
Speaker Change: that will be coming here over the next few years. In our hospitality business, we've built and continue to enhance an industry-leading portfolio of hotels to serve the group and leisure customer segments.
Speaker Change: As a result, we have achieved strong pricing power demonstrated by the continued rate growth
Unknown Speaker: Within the entertainment business, we own some of the most iconic brands in the music industry, including the Grand Old Opry, the nearly 100-year-old show that made country music famous and is, in large part, responsible for Nashville's rise to music fame.
Unknown Speaker: Our success here in Nashville drives growth throughout the rest of our portfolio and vice versa. Group and leisure hotel customers that experience Gaylord Opryland for the first time often rotate to our other properties in our portfolio. And in our entertainment business, our effort to reach more country lifestyle consumers in new markets through new brands continues to be successful, most recently evidenced by Old Red Las Vegas, which has opened, shall we say, to an encouraging start. We look forward to introducing our new brand category 10 with superstar Luke Combs towards the end of this year.
Speaker Change: And in our entertainment business, our effort to reach more country lifestyle consumers in new markets through new brands continue to be successful, most recently evidenced by Old Red Las Vegas, which has opened, shall we say, to an encouraging start.
Speaker Change: We look forward to introducing our new brand, Category 10, with superstar Luke Combs.
Unknown Speaker: So our business is in the best shape it's ever been. Our company's future looks awfully, awfully exciting. And with that, let me turn over to Mark to review our second quarter and give his thoughts on the year. Thanks, Colin. Good morning everyone.
Speaker Change: towards the end of this year. So, our business is in the best shape it's ever been. Our company's future looks awfully, awfully exciting. And with that, let me turn over to Mark to review our second quarter and touch on the year. Mark?
Mark Fioravanti: I'll provide a brief review of the second quarter, highlight some of the trends we're seeing in our businesses, and discuss our revised guidance ranges before handing it over to Jennifer to cover our recent refinancing activities and outlook for capital expenditure. In the second quarter of 2024, consolidated total revenue was $613 million, a second quarter record, up 21.5% year-over-year, and consolidated adjusted EBITDA RE was $233 million During the quarter, we recognized the favorable impact of a recent change in Tennessee franchise tax law, which has resulted in franchise tax refunds of approximately $9 million.
Mark: In the second quarter of 2024, consolidated total revenue was $613 million, a second quarter record of 21.5% year-over-year.
Mark Fioravanti: Even excluding this one-time impact, consolidated adjusted EBITDA RE set an all-time quarterly record, up approximately 28% year-over-year, with impressive contribution from both segments. The same-store hospitality segment delivered year-over-year REVPAR growth of 4.6%. Total REVPAR growth of 9.4% and adjusted EBITDA RE margin expansion of 200 basis points excluding the franchise tax refund. We estimate the timing of Easter accounted for approximately 200 basis points of same-store hospitality REVPAR growth year-over-year. Leisure transient softness in the Nashville and Orlando markets continued in the second quarter.
Mark: We estimate the timing of Easter accounted for approximately 200 basis points of same-store hospitality RevCorp par growth year-over-year.
Speaker Change: Leisure transient softness in the Nashville and Orlando markets continued into the second quarter
Mark Fioravanti: However, group outperformance, operating efficiencies, and our continued investment in our offerings more than offset the profitability impact of that softness, demonstrating the merits of our group-centric business model and long-term growth strategy. Let me share with you now some of the key proof points.
Speaker Change: However, group out performance, operating efficiencies, and our continued investment in our offerings
Speaker Change: more than offset the profitability impact of that softness, demonstrating the merits of our group-centric business model and long-term growth strategy.
Speaker Change: Let me share with you now some of the key proof points.
Mark Fioravanti: First, we continue to expect to travel record same-store group room nights in 2024, surpassing the prior high water mark in 2019 with favorable group mix, particularly in the second half of the year relative to the second half of 2023. As of the end of the second quarter of 2024, same store group room nights and rooms revenue on the books for the remainder of the year were 1.4% and 8% higher, respectively, than the same time last year for the remainder of 2023.
Speaker Change: First, we continue to expect to travel record same-store group room nights in 2024, surpassing the prior high-water mark in 2019 with favorable group mix, particularly in the second half of the year relative to the second half of 2023.
Speaker Change: As of the end of the second quarter of 2024, same store group room nights and rooms revenue on the books for the remainder of the year.
Speaker Change: were 1.4% and 8% higher respectively than the same time last year for the remainder of 2023.
Mark Fioravanti: Second, our customers are traveling at higher room rates. In the second quarter of 2024, we delivered a record second-quarter same-store ADR traveled of approximately $254, an increase of 3.8% year-over-year, with growth in both group and transient ADR.
Speaker Change: Second, our customers are traveling at higher room rates.
Speaker Change: In the second quarter of 2024, we delivered record second-quarter same-store ADR travel of approximately $254, an increase of 3.8% year-over-year, with growth in both group and transient ADR.
Mark Fioravanti: Thirdly, once on property, groups are continuing to spend at record levels outside the room. Our all-under-one-roof offerings are uniquely positioned to capture that spend and continue to grow our market share. In the second quarter, Same Store Banquet and AV Revenue set a new all-time record, surpassing the prior high-water mark for the first quarter of 2023 by nearly 7%. Though second quarter group business certainly benefited from the timing of Easter, the majority of growth in banquet and AV revenue was driven by a higher contribution per group room night travel. Looking ahead, same-store bookings production metrics remain robust.
Speaker Change: Third, once on property, groups are continuing to spend at record levels outside the room.
Speaker Change: Our all-under-one-roof offerings are uniquely positioned to capture that spend and continue to grow our market share.
Speaker Change: In the second quarter, Same Store Banquet and AV Revenue set a new all-time record surpassing the prior high-water mark the first quarter of 2023 by nearly 7%.
Speaker Change: Though second-quarter group business certainly benefited from the timing of Easter, the majority of growth in banquet and AV revenue was driven by a higher contribution per group room night traveled.
Speaker Change: Looking ahead, same-store bookings production metrics remain robust.
Mark Fioravanti: In the second quarter, we booked over 781,000 gross group room nights for all future years, a second quarter record at an all-time record ADR of $284, an increase of 7% year-over-year and 3% from the prior period in the fourth quarter of 2023. As of the end of the second quarter of 2024, same store group room revenue on the books for 2025 and 2026 is up 3% and 11%, respectively, compared to the same time last year for 2024 and 2025, a sequential improvement compared to our bookings position at the end of the first quarter. And finally, our continued enhancement.
Speaker Change: In the second quarter, we booked over 781,000 gross group room nights for all future years, a second quarter record, and an all-time record ADR of $284, an increase of 7% year-over-year and 3% from the prior period in the fourth quarter of 2023.
Speaker Change: As of the end of the second quarter of 2024, same store group rooms revenue on the books for 2025 and 2026.
Speaker Change: are up 3% and 11%, respectively, compared to the same time last year for 2024 and 2025, a sequential improvement compared to our bookings position at the end of the first quarter.
Speaker Change: And finally, our continued enhancements.
Mark Fioravanti: Investments in expansions and enhancements, coupled with very limited new supply, have improved our competitive position. Since the second quarter of 2019, the average total REVPAR index, as measured by STAR, for our five Gaylord hotels, compared to their Marriott-defined competitive sets, has increased 26 points, demonstrating strong return on investment for the capital deployed during that time period. Before turning to our entertainment segment, let me make a few comments on the J.W. Hill Country.
Speaker Change: Investments in expansions and enhancements, coupled with very limited new supply, has improved our competitive positioning.
Speaker Change: Since the second quarter of 2019, the average total REVPAR index, as measured by STAR, for our five Gaylord hotels compared to their Marriott-defined competitive sets, has increased 26 points, demonstrating strong return on investment for the capital deployed during that time frame.
Speaker Change: Before turning to our entertainment segment, let me make a few comments on the J.W. Hill Country.
Mark Fioravanti: Having now owned this resort for a full year, we continue to be very pleased with its performance. For the trailing 12 months ended June 30th, the resort delivered adjusted EBITDA RE of $67 million, consistent with our underwriting expectations. We've started to realize the benefits of our short-term investments, and we've made good progress toward our long-term expansion. We are more bullish today on the potential for this property than when we purchased it.
Speaker Change: Having now owned this resort for a full year, we continue to be very pleased with its performance.
Speaker Change: For the trailing 12 months ended June 30th, the resort delivered adjusted EBITDA RE of $67 million, consistent with our underwriting expectations.
Speaker Change: We've started to realize the benefits of our short-term investments and we've made good progress towards our long-term expansion plans.
Speaker Change: We are more bullish today on the potential for this property than when we purchased it.
Mark Fioravanti: Now turning to our entertainment segment, in the second quarter of 2024, the entertainment segment reported all-time record revenue of $94 million, an increase of 8.1% year-over-year, with adjusted EBITDA RE margin expansion of approximately 60 basis points, excluding the franchise tax benefit related to prior tax years. A strong show calendar for the Grand Ole Opry and strong performances from Old Red Las Vegas following its opening in the first quarter of 2024 drove the result.
Speaker Change: Now turning to our entertainment segment.
Speaker Change: In the second quarter of 2024, the entertainment segment reported all-time record revenue of $94 million, an increase of 8.1% year over year, with adjusted EBITDA RE margin expansion of approximately 60 basis points, excluding the franchise tax benefit related to prior tax years.
Speaker Change: A strong show calendar for the Grand Ole Opry and strong performance from Old Red Las Vegas following its opening in the first quarter of 2024 drove the results.
Mark Fioravanti: As with our hospitality portfolio, we monitor the health of our entertainment consumers closely, and despite some softness in the national leisure market, demand for our entertainment offerings remains strong. We're fortunate to own some of the most iconic brands and must-see venues in the National Market.
Speaker Change: As with our hospitality portfolio, we monitor the health of our entertainment consumer closely, and despite some softness in the Nashville leisure market, demand for our entertainment offerings remains strong. We're fortunate to own some of the most iconic brands and must-see venues in the Nashville market.
Mark Fioravanti: Turning now to our revised outlook for the remainder of the year, we are raising our outlook for full-year consolidated and segment-level adjusted EBITDA RE to reflect the favorable impact of the changes in Tennessee franchise tax law, which includes $9.1 million of refunds for prior years recognized in the second quarter and an approximate $4 million reduction in 2024 expenses. Our outlook for core operations is unchanged from last quarter as group strength, particularly in out-of-room spend and operating efficiencies, has offset some of the unfavorable impact of the leisure transient software.
Speaker Change: Turning now to our revised outlook for the remainder of the year.
Speaker Change: We are raising our outlook for full-year consolidated and segment-level adjusted EBITDA RE to reflect the favorable impact of the changes in Tennessee Franchise Tax Law.
Speaker Change: which includes $9.1 million of refunds for prior years recognized in the second quarter and an approximate $4 million reduction to 2024 expense.
Speaker Change: Our outlook for core operations is unchanged from last quarter as group strength, particularly in out-of-room spend and operating efficiencies, have offset some of the unfavorable impact of leisure transient softness.
Mark Fioravanti: We're also raising our outlook for adjusted funds from operations, or AFFO, and AFFO per share to recognize the favorable impact of the franchise tax reductions, plus estimated cash interest expense savings resulting from the refinancing of our OEG credit facility, which Jennifer will discuss in more detail. Our lower outlook for full-year same-store hospitality REVCAR and total REVCAR growth reflects additional conservatism for the continued leisure transient softness we've seen through and into the third quarter.
Mark Fioravanti: To provide some additional color on quarterly cadence, where it might be helpful, the decline in our outlook for same-store hospitality REVPAR growth is marginally more heavily weighted to the third quarter. Therefore, we anticipate stronger same-store REVPAR growth in the fourth quarter than in the third. For JW Hill Country, in the third quarter, we anticipate several hundred basis points of adjusted EBITDA RE margin compression year over year due to an unfavorable incentive management fee comparison related to the timing of the acquisition and the P&L impact of our investments in leadership group sales in holiday programming, including the inaugural year of ICE.
Mark Fioravanti: In the fourth quarter, we anticipate operating leverage from occupancy gains in ICE will drive margin expansion year over year. Finally, for the entertainment segment, we anticipate a stronger adjusted EWITRE contribution in the fourth quarter compared to the third due to the timing of completion of the capital projects we have currently underway. In summary, we are incredibly well positioned for the second half of the year 2025 and into 2026. We continue to see record group performance, robust forward bookings, and positive early results from Old Red Las Vegas, the Grand Lodge renovation at Gaylord Rockies, and our acquisition of the J.W. Hill Company
Mark Fioravanti: Taken together, these trends strengthen our conviction in our group-centric model and multi-year investment strategy. Importantly, we can fund this strategy plus our dividend from our balance sheet and free cash flow generation. And following the refinancing transactions we've undertaken this year, our balance sheet has never been better positioned. And to that end, I'll turn it over to Jennifer to discuss our balance sheet, liquidity, and capital expenditures outline. Thanks, Mark. We ended the second quarter with $498 million of unrestricted cash on hand and our $700 million revolving credit facility undrawn.
Mark Fioravanti: During the quarter, we refinanced OEG's revolving credit facility in Terminal B, which I'll discuss in a moment. And as of the end of the second quarter, the new OEG $80 million revolving credit facility had a balance of $17 million out. Taken together, our total available liquidity was approximately $1.3 billion, a net of approximately $4 million of outstanding letters of credit. We retained an additional $52 million of restricted cash available for FF&E and other maintenance projects. At the end of the quarter, our net leverage ratio, based on total consolidated net debt to adjusted EBITDA RE, was 3.9 times.
Speaker Change: Thanks, Mark. We ended the second quarter with $498 million of unrestricted cash on hand and our $700 million revolving credit facility undrawn.
Speaker Change: Taken together, our total available liquidity was approximately $1.3 billion, a net of approximately $4 million of outstanding letters of credit.
Speaker Change: We retained an additional $52 million of restricted cash available for FS&E and other maintenance projects.
Jennifer Hutcheson: As I mentioned, during the quarter, we refinanced OEG's approximately $296 million Terminal in B and $65 million Revolving Credit Facility with a new $300 million Terminal in B, now due 2031, and an upsized $80 million Revolving Credit Facility, now due 2021. As part of the transaction, we reduced the interest rate spread on that Term Loan B by approximately 160 basis points and on that revolver by approximately 100 basis points. We estimate cash interest expense savings from this transaction of approximately $2 million for the remainder of 2024, which is reflected in our updated full-year guidance ranges for AFFO and AFFO per share, as Mark outlined.
Speaker Change: now due 2031, and an upsized $80 million revolving credit facility now due 2029.
Speaker Change: As part of the transaction, we reduce the interest rate spread on that Term Loan B by approximately 160 basis points, and on that revolver by approximately 100 basis points.
Jennifer Hutcheson: Regarding our dividend, it remains our intention to continue to pay 100% of our retaxable income through dividends. Before we open for questions, I'd like to take a couple of minutes to discuss our expectations for 2024 capital investment and provide some updates on our progress year to date. In 2024, we expect to invest approximately $375 to $425 million, including $305 to $345 million in our hospitality business and $70 to $80 million in our entertainment business. All of our projects prioritized for 2024 are now underway.
Speaker Change: All of our projects prioritized for 2024 are now underway.
Jennifer Hutcheson: At Gaylord Rockies, the first phase of the Grand Lottery positioning opened in May, and we completed construction of the Group Pavilion in July. As Mark mentioned, the new Lobby Bar, Embers, in the Grand Lodge of the Gaylord Rockies is already driving incremental out-of-room spend. The second phase of the Grand Lodge repositioning, which includes several additional food and beverage outlets, is scheduled to open in the fourth quarter. At Gaylord Palms, the first phase of the lobby renovation is completed, and the room renovation is underway.
Speaker Change: At Gaylord Rockies, the first phase of the Grand Lodge repositioning opened in May, and we completed construction of the group pavilion in July. As Mark mentioned, the new lobby bar, Embers, in the Grand Lodge of the Gaylord Rockies is already driving incremental out-of-room spend.
Mark: At Gaylord Palms, the first phase of the lobby renovation is completed and the rooms renovation is underway. We expect to complete the second phase of the lobby renovation in the fourth quarter and the rooms renovation in January 2025.
Jennifer Hutcheson: We expect to complete the second phase of the lobby renovation in the fourth quarter and the rooms renovation in January 2025. At Gaylord Aqualand, we started construction on the Governor's Ballroom and pre-function space, which we expect to complete early next year. Renovation of the presidential ballroom and pre-function space is scheduled to begin in the fourth quarter.
Jennifer Hutcheson: In addition, we started construction to reposition the currently underutilized Magnolia Courtyard at Aquiland into a new sports bar, group pavilion, and event lawn space, which we previewed at our investor desk. We expect to complete this project in early 2020. At the W. Austin Hotel, the renovation of that public space is nearly complete, and the room's renovation is expected to finish in the fourth quarter. And finally, the transformation of the Wild Horse Saloon from downtown Nashville to Category 10, as Colin mentioned, continues, and we expect that venue to reopen by the end of the year.
Speaker Change: We expect to complete this project in early 2026.
Speaker Change: And finally, the transformation of the Wild Horse Saloon in downtown Nashville to Category 10, as Colin mentioned, continues. And we expect that venue to reopen by the end of the year.
Jennifer Hutcheson: As our projections demonstrate, our balance sheet and liquidity position continue to be in excellent shape to support the capital deployment opportunities available to us and the continued growth of our business. And with that, we can open it up to questions. Okay, folks. Let's go.
Speaker Change: Okay both, thank you.
Unknown Speaker: Thank you, Mr. Reed. Ladies and gentlemen, at this time, if you would like to ask a question, please press star 1 on your telephone keypad. You may remove yourself from the queue at any time by pressing star 2.
Shaun Kelley: Again, that is star number one for a question. We'll go first this morning to Shaun Kelley at. Hey, good morning, everyone.
Colin Reed: Thanks for taking my question. You know, Colin, in the prepared remarks, and, I think, the undertone of everybody's remarks, you talked a little bit about, you know, some transient softness that you're seeing out there. You know, this has been the theme of earnings season, you know, around the hotel and broader leisure space. So could you elaborate on just a little bit where you're seeing things deteriorating at all?
Colin Reed: You know, sequentially, because you did obviously call this out last quarter and then just talk about, you know, how fully you risk you are, particularly as we get into kind of q4 around the holiday programming. I think, as we left it last quarter, you felt conservative there, but you probably were still banking on a good programming season. So how do you feel about that, you know, updating it for three months later? Thanks.
Colin Reed: Yeah, well, both Patrick and Mark can, you know, share some details about how we're thinking about the first quarter, but look, this leisurely decline that we're witnessing, and you're right, we called it out in the last earnings call we did back in very early May. Frankly, what we're witnessing is really not surprising. And it's really more so focused towards what I would categorize as the budget conscious leisure consumer.
Speaker Change: We'll be updating that for three months later. Thanks.
Speaker Change: This leisure decline that we're witnessing, and you're right, we called it out in the last earnings call we did back in very early May.
Speaker Change: You know, frankly, what we're witnessing is really not surprising, and it's really more so focused towards what I would categorize as the budget-conscious leisure consumer.
Colin Reed: You know, when we did our operating plans back at the end of the year for this year and for 2024, and then we shared with you how back in January at the investor day, the anticipation was that we were going to see like three potential rate cuts this year, inflation easing, and, you know, it's been slower. And so what I think we're witnessing, quite frankly, is really not surprising. And it's stuff that, you know, some of the older members of our team that have been around for some time, you know; we've seen this sort of issue before.
Speaker Change: You know, when we when we did our operating plans back at the end of the year for this year for 2024 and then we shared with you how back in in January at the Investor Day, you know, the anticipation was that
Speaker Change: that we were going to see like three potentially rate cuts this year, inflation easing, and, you know, it's been slower. And so what I think we're witnessing, quite frankly, is really not surprising, and it's stuff that...
Colin Reed: And, you know, the budget-conscious leisure consumer will absolutely recover, whether it's, you know, towards the end of this year or next year. It will happen as interest rates decline, mortgage rates decline, and the consumer feels a little bit better off. It's, it's, it's a weird phenomenon because what occurred last year and the year before was this massive desire to get out and spend money and not live in a basement post COVID that the world hasn't experienced in, you know, 100 years. So, from my perspective, this is absolutely nothing to panic about; we are not seeing sequential month over month declines here. Patrick, do you want to talk about that?
Speaker Change: You know, some of the older members of our team that have been around some time, you know, we've seen this sort of issue before.
Speaker Change: and, you know, the budget-conscious leisure consumer.
Speaker Change: will absolutely recover whether it's you know towards the end of this year or next year it will happen as interest rates decline mortgage rates decline and the consumer feels a little bit better off it's
Speaker Change: It's a weird phenomenon because what occurred last year and the year before was this massive desire to get out and spend money and not live in a basement post-COVID that the world hasn't experienced in, you know, 100 years.
Speaker Change: So
Speaker Change: From my perspective...
Speaker Change: This is absolutely nothing to panic about. We are not seeing sequential month-over-month declines here. Patrick, you want to talk about that and how we're thinking about, you know, the back end of this year? Because, you know, our customized leisure programming...
Colin Reed: And how we're thinking about, you know, the back end of this year because, you know, our customized leisure programming has been successful. We, you know, look, this is not the first year we've done it; we've been doing this for 15 years. And, and, you know, we've been doing it in periods where we weren't witnessing all-time highs in the stock market, home prices, you know, being extraordinarily, having grown, and accreted, you know, extraordinarily over the last two to three years, the affluent leisure consumer is feeling very affluent. And so I think our view of the back end of this year is based on good history. And I think we're feeling good about it, Patrick. Yeah, hey, Shaun, this is Patrick.
Patrick: has been successful. We, you know, look, this is not the first year we've done it. We've been doing this for 15 years. And, you know, we've been doing it in periods
Patrick: where we weren't witnessing all-time highs in the stock market, home prices, you know, being extraordinarily having grown, having accreted, you know, extraordinarily over the last two to three years. The affluent
Patrick: leisure consumer is feeling very affluent and so I think our view of the back end of this year is based upon good history and I think we're feeling good about it, Patrick.
Patrick Chaffin: Just to build on what Colin's already said, and to kind of put a fine point on some of your questions, we saw it primarily in Gaylord Palms and in the Orlando market. And you heard us talk about it as we went through the back half of last year. And then again, to your point, we've been talking about it through the first half of this year, primarily in the Orlando market, and we have seen it on the lower end from an economic perspective. We also then signaled that we're starting to see it occur somewhat in Nashville, to a lesser extent.
Patrick: Hey Sean, this is Patrick. Just to build on what Colin's already said and to kind of put a fine point on some of your questions, we saw it primarily in Gaylord Palms and in the Orlando market, and you heard us talk about it as we went through the back half of last year. And then again, to your point, we've been talking about it through the first half of this year.
Patrick: So primarily in the Orlando market, and we have seen it on the lower end from an economic perspective. We also then signaled that we were starting to see it occur somewhat in Nashville, to a lesser extent.
Patrick Chaffin: But, you know, as it accelerated a bit as we went through the summer, we're confident that we're coming to the end of the summer, and some of the transient demand that has been softer is kind of coming to an end as we shift back over to a much more group-heavy mix going to the back end of Q3 and into Q4. But to answer your question, how do we think about Q4, especially the 45 days between the middle of November and the end of December?
Speaker Change: But you know it as it accelerated a bit we as we went through the summer We're confident that we're coming to the end of the summer and some of the the transient
Speaker Change: demand that has been softer is kind of coming to an end as we shift back over to much more group heavy mix going to the back end of Q3 and into Q4. But to your question, how do we think about Q4, especially the 45 days between the middle of November and the end of December?
Patrick Chaffin: You know, we've done a lot of research just here recently to make sure that we understand how that guest will perform. Historically, our Q4 holiday guests can buck the system, buck the trends that you see overall through the year. To Colin's point a moment ago, they do spend more outside the room, so it's a little bit less of a budget-conscious guess. They are coming for the very unique programming that we create at our hotels that is very different from anything else that's really out there in the market.
Speaker Change: You know, we've done a lot of research just here recently to make sure that we understand, you know, how that guest will perform. Historically, our Q4 holiday guest...
Speaker Change: can buck the system, buck the trends that you see overall through the year. To Colin's point a moment ago, they do spend more outside the room, so it's a little bit less of a budget-conscious type guest.
Speaker Change: They are coming for the very unique programming that we create at our hotels that is very different from anything else that's really out there in the market. And they spend a lot more time planning for it. And so there seems to be a much greater loyalty.
Patrick Chaffin: And they spend a lot more time planning for it. And so there seems to be much greater loyalty. So between the uniqueness of our programming, the loyalty that we see from those guests, and the higher outside-the-room spend, which indicates that they're not the budget-conscious consumer, we believe that there's a reason to believe that our fourth quarter could come together nicely, despite some of the transient softness that we've seen. But we will continue to watch that very carefully and signal if we see something different. But for now, we feel cautiously optimistic. Not to beat a dead horse here, but just to...
Speaker Change: So between the uniqueness of our programming, the loyalty that we see from those guests, and the higher outside-the-room spend, which indicates they're not the budget-conscious consumer,
Speaker Change: We believe that there's a reason to believe that our fourth quarter could come together nicely despite some of the transient softness that we've seen But we will continue to watch that very carefully and and signal if we see something different, but for now we feel cautiously optimistic just
Mark Fioravanti: The one thing I would say is that, Shaun, what we've tried to do with our guidance range here is to consider a wider range of outcomes in the fourth quarter while, to Patrick's point, while we look historically at how transients performed during that holiday period, we have tried to consider a little more downside risk in the fourth quarter as part of this revised guide. The other thing I would say is that, you know, keep in mind that, in our business, a point of same-store REVPAR is a little less than $7 million in room revenue. So, you know, when you think about the reduction, it's not a tremendous amount of revenue.
Speaker Change: range of outcomes in the fourth quarter. To Patrick's point, while we look historically at how transients performed during that holiday period, we have tried to consider a little more downside risk in the fourth quarter as part of that.
Patrick: The other thing I would say is that, you know, keep in mind that, you know, in our business a point of same-store REVPAR is a little less than 7 million bucks of rooms revenue. So, you know, when you think about the reduction, it's not a tremendous amount of revenue.
Mark Fioravanti: Obviously, we focus on total revenue and profitability, just given our, given our model. So, you know, that's what we're really looking at total spend and total revenue. And when you look at the midpoint of our same store guidance for the rest of the year, you know, we've got really nice growth and profitability. I think that the midpoint EBITDA RE is up about 7% over the back half of 23. At the midpoint, it's about 80 points of margin expansion.
Speaker Change: obviously we focus on total revenue and profitability just given our given our model so you know
Speaker Change: We're really looking at total spend and total revenue. And when you look at the midpoint of our same store guidance for the rest of the year, we've got really nice growth and profitability. I think that
Speaker Change: The midpoint EBITDA RE is up about 7% over the back half of 23.
Mark Fioravanti: So while we've taken that REVPAR number down, when you look at how our business is performing, I think it just speaks to the operating model, the strength that we're seeing in the group, and, frankly, the job that Patrick and his team have done on the asset management side to, you know, get in front of these trends early, make sure we're managing costs, make sure that we're hitting our profitability targets at each of our hotels. Thank you so much.
Speaker Change: at the midpoint, it's about 80 points of margin expansion. So, you know, while we've taken that REVPAR number down, you know, when you look at how our business is performing, I think it just speaks to the operating model, the strength that we're seeing in group. And frankly, the...
Speaker Change: You know, the job that Patrick and his team have done on the asset management side to, you know, get in front of these trends early, make sure we're managing costs, make sure that we're hitting our profitability targets at each of our hotels.
Speaker Change: Thank you so much.
Mark Fioravanti: Thanks, Shaun. Thank you. We go next now to Dori Kesten at Wells Fargo. Thanks, good morning. Patrick, just on the end of that last question, when are the majority of ICE reservations made? I'm sorry, but when are the majority of what?
Speaker Change: Thanks you all.
Dory Keston: Thank you. We go next now to Dory Keston at Wells Fargo. Thanks. Good morning. Patrick, just on the end of that last question, when are the majority of ice reservations made?
Dori Kesten: Booking window for ice and holiday. Yeah, so, you know, it's primarily a 30- to 90-day window. Once we get to essentially the first week of December, we have a pretty good idea of how everything is going to come together because you do get quite a bit of ice bookings just in those last 30 days going into December. So, you know, we'll be watching it and trying to respond as best we can. But, you know, we have a greater number of group room nights on the books for December than we had last year, so that positions us a little bit better where we don't need quite as many transient bookings. But, you know, we'll be watching that 30-to 90-day window pretty closely. When do we launch, Patrick? When are we going to be launching the whole Christmas program?
Speaker Change: I'm sorry, when are the majority of what. Booking window for ice. Ice. Yeah so
Speaker Change: You know, it's primarily a 30- to 90-day window. Once we get to essentially the first week of December, we have a pretty good idea of how everything is going to come together because you do get quite a bit of ice bookings just in that last 30 days going into December.
Speaker Change: You know, we'll...
Speaker Change: We'll be watching it and trying to respond as best as possible.
Speaker Change: You know, we have a greater number of group room nights on the books for December than we had last year, so that positions us a little bit better where we don't need quite as many of the transient bookings.
Speaker Change: But, you know, we'll be watching that 30-90 day window pretty closely. When do we launch, Patrick? When are we going to be launching the whole Christmas program? So, we went ahead and started the bookings process in July. We always announce the Christmas offerings in July and we had...
Unknown Speaker: So we went ahead and started the booking process in July. We always announce the Christmas offerings in July, and we had a really strong number of impressions and responses to the marketing materials and collateral that we put out, which is always a great sign. We will essentially open ICE and the holiday programming in the November 18th type time window, so just before Thanksgiving.
Patrick: Really strong number of impressions and responses to the marketing materials and collateral that we put out which is always a great sign
Patrick: We will essentially open ICE and the holiday programming in the November 18th type time window, so just before Thanksgiving. But once we get past Thanksgiving, we get a much better feel for how it's going to come together.
Unknown Speaker: But once we get past Thanksgiving, we get a much better feel for how it's going to come together. Okay, um, and just on the lead pipeline, how much of the pipeline today is for meetings in 25? [inaudible] I can give you, yeah, I can give you the leads 425. Give me just one second, Dori.
Speaker Change: Okay, and just on the LEADS pipeline, how much of the pipeline today is for meetings in 2025?
Speaker Change: Do you remember that number?
Speaker Change: I can give you, yeah, I can give you the leads 425. Give me just one second, Dory.
Unknown Speaker: Sir, I guess I'm trying to build up to, like, based on what's in the pipeline and then expected conversions, do you think the 3% group revenue pace for 25, it can go up to 4 just with bookings that come online? I know it went from last quarter to 2 to 3 now. Yeah, to your point, we made some progress against where we stood at the end of the last quarter. Let me answer your first question, then I'll go to the second.
Speaker Change: I guess what I'm trying to build up to, based on what's in the pipeline and then expected conversions, do you think the
Speaker Change: The three percent group revenue pays for 25, it can go up to four, just with bookings that come online. I know it went from last quarter to two to three now.
Speaker Change: To your point, we made some progress against where we stood at the end of the last quarter. Let me answer your first question, then I'll go to the second.
Unknown Speaker: So if you just look at the second quarter, we had about 4.3 million leads come into the system for T plus one or 2025. That was an improvement over where we stood at the same time last year for the second quarter. So you know, we, as we just discussed, we made some progress against 2025. Over the past three months, leads continue to improve for 2025. But you know, one of the things that we're taking into consideration is, if you look at 25 and 26, 25 is up about 3% in revenue, as you already mentioned. And then 2026 is in really, really good shape.
Speaker Change: So if you just look at the second quarter, we had about 4.3 million.
Speaker Change: came into the system for T-plus-1 or 2025.
Speaker Change: That was an improvement.
Speaker Change: over where we stood same time last year for the second quarter.
Speaker Change: So, you know, to what we just discussed, we've made some progress against 2025 over the past three months.
Speaker Change: Leeds continue to improve for 2025, but you know one of the things that we're taking into consideration is if you look at 25 and 26, 25 is up about 3% in revenue as you already mentioned and then 2026 is in really really good shape.
Unknown Speaker: So what's happening there is you have a lot of group guests who are looking at Opryland and saying, okay, in 2026, that new sports bar will be open. And a lot of these renovations, you know, roughly 30% of the hotel will be brand new. I really want to get into that hotel as soon as I can after those renovations.
Speaker Change: So what's happening there is you have a lot of group guests who are looking at Opryland and saying, okay, in 2026 that new sports bar will be open and a lot of these renovations, you know, roughly 30% of the hotel.
Speaker Change: will be brand new. I really want to get into that hotel as soon as I can after those renovations. So we feel good about where 2025 is. Could it improve? Potentially, but we feel really great about where it's heading for 2026 as folks say, hey I'm excited about getting into Opryland post-renovation.
Unknown Speaker: So we feel good about where 2025 is, could it improve potentially, but we feel really great about where it's heading for 2026, as folks say, hey, I'm excited about getting into Opryland post renovation. Hey, just one other point on the leaves that I would mention is that, you know, in the second quarter, we had a terrific bookings quarter when you look at what we have booked for all future years. Despite that, when you look at where our lead volumes are currently, they're essentially flat with where we finished the first quarter. So we didn't deplete our lead volume. No. No. We'll continue to refill. Continue to refill, yeah.
Speaker Change: One other point on LEADS that I would mention is that, you know, the second quarter, we had a terrific bookings quarter when you look at what we what we booked for all future years.
Speaker Change: Despite that, when you look at where our lead volumes are currently,
Speaker Change: They're essentially flat with where we finished the first quarter, so we didn't deplete our lead volume, those lead volumes continue to refill. I have to give a shout out to our sales team, they've done a phenomenal job coming off of a historic Q4.
Unknown Speaker: Yeah. Yeah. I have to give a shout out to our sales team. They've done a phenomenal job coming off of a historic Q4, filling that funnel back up quickly, looking at a tremendous second quarter. And third quarter looks good as well, and fourth quarter is always very good.
Speaker Change: Filling that funnel back up quickly looking a tremendous second quarter and third quarter looks good as well and fourth quarter is always very good So our sales team is just doing a phenomenal job This is this thing that I think
Unknown Speaker: So our sales team is just doing a phenomenal job. This is the thing that I think the more savvy investors in our company really focus on, which is the underlying strength of corporate America today. When you look at profits... for the, for a large part of the economy of this country.
Speaker Change: The more savvy investor in our company really focuses on, which is the underlying strength of corporate America today. When you look at profits...
Speaker Change: for a large part of the economy of this country.
Colin Reed: You know, organizations are in really, really good shape. And that is why they're willing to book. I mean, to book the amount of room nights we book, about 750,000 room nights in the second quarter at an all-time high rate for us, is extraordinary. That's what is really important in our business. Okay, thank you guys. Thanks, Dori. Thank you. We'll go next to Patrick Scholes of Truist.
Speaker Change: You know, organizations are in really, really good shape, and that is why they're willing to book. I mean, to book the amount of room nights we book, about 750,000 room nights in the second quarter at an all-time high rate for us.
Speaker Change: is extraordinary. That's what really is important in our business.
Speaker Change: Okay, thank you guys.
Doug: Thanks, Doug. Thanks, Gordon.
Speaker Change: Thank you. We'll go next now to Patrick Scholz of Truist.
Patrick Scholes: Hey, good morning, everyone. On Marriott Corporation's earnings call, they had called out some choppiness or weakness for the week around the election and then also, somewhat surprisingly, the following week.
Patrick Scholes: I'm wondering if you're seeing similar choppiness around that. Thank you. No.
Patrick Scholz: Good morning, everyone.
Speaker Change: On Marriott Corporation's earnings call, they had called out some
Speaker Change: choppiness or weakness for the week around
Patrick Scholz: the election and then also, somewhat surprisingly, the following week. I'm wondering if you're seeing...
Speaker Change: sort of similar choppiness around that. Thank you.
Patrick Chaffin: Yeah. Hey, Patrick. This is Patrick. We are not seeing any kind of choppiness.
Speaker Change: No.
Patrick Scholz: Yeah, hey Patrick, this is Patrick. We are not seeing any kind of choppiness if you look at room nights on the books There's no discernible difference
Patrick Chaffin: If you look at room nights on the books, there's no discernible difference. As we get into the election, you know, closer to the election, there may be a little bit of an impact as far as year-end bookings are concerned. But we've, for the most part, really booked everything that is going to get booked for this year. We just have a very small amount of group reach remaining. So I just really don't think that we're going to see much of an impact either from Jewish holidays or from the election process.
Patrick Scholz: As we get into the election, you know, closer to the election, there may be a little bit of impact as far as in the year for the year bookings.
Patrick Scholz: But we, for the most part, have really booked everything just about that is going to get booked for this year. We just have a very small amount of group reach remaining. So I just really don't think that we're going to see much of an impact either from Jewish holidays or from the election process.
Patrick Chaffin: Okay, okay. Interesting to hear. Thank you. That's it.
Speaker Change: Okay, interesting to hear.
Patrick Scholz: Thank you. That's it.
Unknown Speaker: I appreciate it. Thanks, Pat. Thank you. We do, Mr. Reed. We'll go next, though, to Smedes Rose of... Hi, thanks.
Speaker Change: Appreciate it.
Patrick Scholz: Thanks, Patrick.
Speaker Change: Thank you for your time.
Patrick Scholz: We do, Mr. Reed. We'll go next though to Smead Rose of Citi.
Smedes Rose: Colin, I just wanted to follow up on your comments there about, you know, corporate profits being so strong, and you obviously saw this really impressive surge in group bookings. I'm just wondering, are you seeing any kind of change in the composition of group bookings? Or, you know, maybe certain sectors kind of coming back to book meetings that maybe hadn't been there before? Just anything along those lines of interest.
Smead Rose: Hi, Tom. Thanks.
Colin Reed: Colin, I just wanted to follow up on your comments there about, you know, corporate profits being so strong and the obvious you tell that's really
Smead Rose: impressive surge in group bookings. Just wondering, are you seeing any kind of change in the composition of group bookings or, you know, maybe certain sectors kind of coming back to book meetings that maybe hadn't been there before? Just anything along those lines of interest.
Colin Reed: Yeah, that's a really good question. You know, candidly, that's how Patrick and his team think about it, and we spend a lot of time, he spends a lot of time, Patrick and his team spend a lot of time focusing our sales team on the segments that we think have the greatest, you know, short-term, mid-term potential. Pat, do you want to talk about that a little bit? Yeah. You know, one of my classmates is Patrick. What we've been talking about, you've heard us talk about for the past, I don't know, 18 months, is the resurgence in corporate interest and the amount of demand that we've seen from corporate leads.
Smead Rose: Yeah, that's a really good question and, you know, candidly, that's how Patrick and his team, they think about it and we spend a lot of time, he spends a lot of time, Patrick and the team spend a lot of time focusing our sales team
Speaker Change: on the segments that we think have the greatest short-term, mid-term potential. Pat, do you want to talk about that a little bit?
Smead Rose: Yeah, it hates me. It's Patrick
Patrick Scholz: You know, what we've been talking about, you've heard us talk about for the past, I don't know, 18 months.
Patrick Scholz: is the resurgence in corporate interest and the amount of demand that we've seen from corporate leads. If you look at our room nights on the books for 2024, you see a tremendous increase in corporate mix and we continue to see that in the lead volumes booking out.
Colin Reed: If you look at our room nights on the books for 2024, you see a tremendous increase in corporate mix, and we continue to see that in the lead volumes booking out. With us continuing to invest in the value proposition with all of these investments in the hotels, we're making it easier for folks to sign up and sign up at higher rates because we are improving the value proposition. And so we're taking advantage of that corporate mix increase both in leads and on the books and really trying to take advantage of it to drive higher revenue as a result.
Speaker Change: With us continuing to invest in the value proposition with all of these investments into the hotels, we're making it easier for folks to sign up and sign up at higher rates because we are improving the value proposition.
Patrick Scholz: And so we're taking advantage of that corporate mix increase, both in leads and on the books, and really trying to take advantage of it to drive higher revenue as a result. Within corporate, you know, we've been watching.
Patrick Chaffin: Within corporate, we've been watching the growth within our portfolio of West Coast tech, as we get more exposure from a geographic distribution perspective, as well as the sales deployment, just continues to do a great job going after some of that West Coast tech. So we're very encouraged by what we see from the corporate sector and think it is going to drive long-term growth for us. Let me just add one other thing, if I may, be assertive with our manager about recruiting more high-quality salespeople dedicated to the corporate segment, the multi-year segment of our business.
Speaker Change: The growth within our portfolio of West Coast Tech as we get more exposure from a geographic distribution Perspective as well as the sales deployment just continues to do a great job and going after some of that West Coast Tech
Speaker Change: So, we're very encouraged from what we see from the corporate sector and think it is going to drive long-term growth for us. Let me just add one other thing, if I may. We have been very...
Speaker Change: assertive with their manager.
Speaker Change: about recruiting more high-quality salespeople.
Speaker Change: dedicated to the corporate segment.
Speaker Change: the multi-year segment.
Patrick Chaffin: And the reason for that is that, you know, we have a fundamental belief that when we see, you know, lead volumes increasing, we see the state of the market being pretty good, pretty solid from a corporate profits perspective. We believe there's a really strong return on investment for increasing the amount of people that we have dedicated in each hotel to bring more sales business into our company. And we have done that.
Speaker Change: of our business. And the reason for it is that, you know, we have a fundamental belief when we see, you know, lead volumes increasing, we see the state of the market being pretty good, pretty solid from a corporate profits perspective.
Speaker Change: We believe there's a really strong return on investment for increasing the amount of people that we have dedicated in each hotel to
Speaker Change: to bring more sales business into our company, and we have done that. And Patrick, how many additional sales people over the last 12 months have we recruited into?
Patrick Chaffin: And Patrick, how many additional salespeople have we recruited into our organization over the last 12 months? Specifically, over the past 12, I'm not sure, but we brought in about 10 to 12 just in the last months where it would be 12 to 18 months.
Patrick Scholz: into our organization.
Patrick Scholz: specifically the past 12, I'm not sure, but we brought about 10 to 12 just in recent months, whether it be 12 to 18 months, so we continue to make that investment and see that the benefits. Yeah, so Smeeds, it's not just
Patrick Chaffin: So we continue to make that investment and see the benefits of it. So Smedes, it's not just a belief, you know; we're putting real investment behind this because we think it is, over time, something that's going to pay huge dividends for our, Okay. Thank you for that, Colin. I appreciate it. Thank you. Do we go next to Jay Kornreich?
Speaker Change: We're putting real investment behind this because we think it is, over time, something that's going to pay huge dividends for our company.
Speaker Change: Okay. Thank you for that, Colin. Appreciate it.
Speaker Change: Thank you.
Speaker Change: Thank you. We go next now to Jay Kornreich of Wedbush Securities.
Jay Kornreich: Hey, good morning. Going back to guidance, you mentioned a better than initially expected group demand in the second half of the year to largely offset the leisure transient slowdown. So can you maybe break that up further as to how much better group demand is versus initial expectation versus deceleration on the leisure side, and is the benefit to the group coming most from out of room spend or also on room revenue?
Jay Kornreich: Hey, good morning. Going back to guidance, you know, despite lowering REVPAR, you mentioned a better than initially expected group demand in the second half of the year to largely offset the leisure transient slowdown. So can you just maybe break that up further as to how much better group demand
Speaker Change: is versus initial expectation versus the deceleration on the leisure side, and is the benefit to group coming most on the out-of-room spend or also on room revenue?
Jay Kornreich: So, just to clarify, I want to make sure that we're clear, you know; we've taken our guidance down to take into account what's happened on the transient side. And I wouldn't say that the group is offsetting it.
Speaker Change: So just to clarify, I want to make sure that we're clear, you know, we've taken our guidance down to take into account what's happened on the transient side.
Patrick Chaffin: What we did see in the second quarter was that the group's catering spend outside the room definitely helped mitigate and offset it somewhat, but it's not completely taking care of that. But, yeah, we continue to see that when groups get on site, they perform better from a catering perspective and outside the room spend. And as we look through to the second half of this year, we have an increase in the number of room nights on the books and the amount of revenue on the books.
Speaker Change: And I wouldn't say that group is offsetting it. What we did see in the second quarter was that the group's catering spend outside the room definitely helped mitigate and offset it somewhat, but it's not completely taking care of that. But, yeah, we continue to see, when groups get on site,
Speaker Change: They perform better from a catering perspective and outside the room spend. And as we look through to the second half of this year, we have an increase in the number of room nights on the books and the amount of revenue on the books. And with that catering behavior continuing forward, which we see no signs of it slowing down.
Mark Fioravanti: And with that catering behavior continuing forward, which we see no signs of it slowing down, we are encouraged at how strong the group business is despite some of the transient softness. So Jay, to kind of parse it a little bit, the REVPAR guidance. Decrease relative to our previous guidance think about that in terms of transient soft, Everything Patrick is talking about in terms of additional outside-the-room spend is allowing us to mitigate that from a total REF PAR standpoint, right, driving that additional incremental outside-the-room from group and from leisure guests that are traveling onto our property, and then even further mitigating that if you layer on top operating to then be able to hold the operating adjusted EBITDA guidance consistent with our program.
Speaker Change: We are encouraged at how strong the group business is despite some of the transient softness that we've seen.
Speaker Change: So Jay, to kind of parse it a little bit, the REV-PAR guidance...
Jay: decrease relative to our previous guidance, think about that in terms of transient softness and everything Patrick is talking about in terms of additional outside the room spend is allowing us to mitigate that from a total REF PAR standpoint, right, driving that additional incremental outside the room from group and from leisure guests that are traveling onto our properties as well and then even further mitigating that if you layer on top operating discipline to then be able to hold the operating adjusted EBITDA guidance consistent with
Patrick Chaffin: Yeah, and I would just like to give a shout out to the operating teams at our hotels. We identified in early January that we felt that the trends on transient were gonna continue, and we started challenging them to get very, very disciplined, from Jennifer's point of view just a moment ago. And they've responded very, very well, which is why you see our EBITDA continuing to perform very strongly in our guidance. Okay, great. Thanks for that clarification.
Speaker Change: our previous guidance.
Speaker Change: Yeah, and I would just like to give a shout out to the operating teams at our hotels.
Speaker Change: We identified in early January that we felt that the trends on Transient were going to continue.
Speaker Change: And we started challenging them to get very, very disciplined to Jennifer's point of view just a moment ago. And they've responded very, very well, which is why you see our EBITDA continuing to perform very strongly and our guidance actually improving.
Speaker Change: Okay, great. Thanks for that clarification. Thank you.
Unknown Speaker: Thank you. Thank you. Thank you, and leave. Actually, Mr. Reed, we have no further questions. Okay. Excellent. Okay.
Speaker Change: Thank you. Thank you, and leave.
Jay: Actually, Mr. Reed, we have no further questions at this time, sir.
Colin Reed: Well, we'd like to thank those that have been on the call this morning. Just to summarize, our company is very proud of the results that we announced this morning, and we're very excited about the back end of this year and into 25. If you have any more questions, you know how to get hold of our IR team or Mark or Jennifer. Thank you very much, indeed, for being on the call this morning.
Speaker Change: Okay. Excellent.
Speaker Change: Okay, well, we'd like to thank those that have been on the call this morning. Just to summarize, our company, we're very proud of the results that we've announced this morning and we're very excited about the back end of this year and into 2025. And if you have any more questions, you know how to get hold of our IR team.
Speaker Change: or Mark or Jennifer, and thank you very much indeed for being on the call this morning.
Colin Reed: Both thank you. Thank you, Mr. Reed. Ladies and gentlemen, again, that will conclude our conference for this morning. We'd like to thank you all so much for joining us and wish you all a, Nobody's asking what the hell happened, wondering why it all went wrong And mama always said, if you can't say something nice, then don't say anything at all And I've got my side of the story, and he's got his side too So I ain't gonna go and tell you what he did, but I'll tell you what he did to me Treat me right, put me first, be a man of his word, say wrong cause he wanted to He always tried to blow my love for the sky like it's nothing, but he couldn't stand the blues The devil sent me deep down, I walked down that aisle and he put me through
Speaker Change: Both thank you.
Speaker Change: Thank you, Mr. Reed. Ladies and gentlemen, again, that will conclude our conference for this morning. We'd like to thank you all so much for joining us and wish you all a great day. Goodbye.
Speaker Change: He's asking what the hell happened, wondering why it all went wrong And mom always said if you can't say something nice then don't say anything at all And I've got my side of the story and he's got his side too So I ain't gonna go and tell you what he did, but I'll tell you what he did to me Treat me right, put me first, be a man of his word Say one good thing, want it too And always try to blow my love for the sky like a storm But he's got it moving in the blue The devil's in the detail