Q3 2024 Ryman Hospitality Properties Inc Earnings Call
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Speaker Change: Good day, everyone and welcome to the Ryman hospitality properties third quarter 2024 earnings conference call hosting the call today from Ryman hospitality properties are Mr. Colin Reed Executive Chairman, Mr. Mark Fioravanti, President and Chief Executive Officer, Ms, Jennifer Hudson Chief.
Financial Officer, Mr. Patrick Chaffin, Chief operating Officer, and Mr. Patrick Moore, Chief Executive Officer Opry Entertainment Group. This call will be available for digital replay the number will be one 880 395685 with no conference I D required.
Speaker Change: At this time all participants have been placed on listen only mode. It is now my pleasure to turn the floor over to MS. Jennifer Hudson Ma'am you may begin.
Jennifer Hudson: Good morning, 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 any.
Jennifer Hudson: Any statements we make today that are not statements of historical facts may be deemed to be forward looking statements words, such as believes or expects are intended to identify these statements, which may be affected by many factors, including those listed in the company's SEC filings and in today's release.
The company's actual results may differ materially from the results, we discuss or project today, we will not update any forward looking statements whether as a result of new information future events or any other reason.
We will also discuss non-GAAP financial measures today, we reconciled each non-GAAP measure to the most comparable GAAP measure in exhibit to today's release I will now turn the call over to Colin.
Colin Reed: Thank you Jan and good morning, everyone.
Colin Reed: We are pleased to report strong third quarter 2020 full results.
Jennifer Hudson: Essential hospitality segment delivered record third quarter revenue and adjusted EBITDA driven by.
<unk> continued to strengthen our core business and the entertainment business delivered record third quarter revenue driven by continued momentum.
All Red brand during the quarter, we continued to make progress against our major capital investment initiatives.
Many of the 'twenty 'twenty four projects nearing completion, we are more excited than ever about the value. This will create for our shareholders in the year.
Jennifer Hudson: Is to call Mark will review the third quarter in more detail in just a moment, but first I'd like to remind you. How we think about some of these exciting improvements.
Jennifer Hudson: As we shared with you at our Investor day in our hospitality portfolio. We are focused on continuing to grow our business through investments that are custom customer informed and retro replicable across the portfolio, resulting in at least mid teens Unlevered returns.
Jennifer Hudson: This year alone we've undertaken a significant portion of the more than $1 billion capital program and the early results of these efforts are beginning to show in our bookings production to 26 and beyond.
Jennifer Hudson: Now the strategy sounds simple one.
Jennifer Hudson: We build demand two we provide the customer with great service three we would tell you the customers and then move them across our system and then further enhance and expand the product to generate superior returns on the capital we deploy.
Jennifer Hudson: But in reality, it's taken us to protect this strategy, but as superior T cell is because of this disciplined approach.
Jennifer Hudson: At the Gaylord Rockies, we've completely repositioned the entertainment spaces.
Jennifer Hudson: With beautiful Sellable space, that's that seamless seamlessly bridge, the indoor and outdoor spaces. We've also increased our food and beverage outlets seat count ahead of a potential so the rooms expansion at this resort.
Jennifer Hudson: The Gaylord Opryland, we are replicating what we've learned is the Gaylord Rockies to reposition under utilized courtyard space adjacent to our largest meeting space into a modern sports bar complex, featuring an event lawn and indoor outdoor pavilion. This complex will add flexible space for good bye.
Jennifer Hudson: So during a.
Jennifer Hudson: Low periods will provide necessary additional seats for our leisure transient guests at the same time, we're modernizing the governance in presidential Ballrooms, which together account for approximately 40% of the properties.
Jennifer Hudson: At its meeting space.
Jennifer Hudson: The Gaylord palms renovation of the lobby rooms to match the 2021 expansion. When these projects include nearly every group and guest facing aspects of that hotel will have been completely refreshed within the last four years, which is critical to our long term positioning in that market.
Jennifer Hudson: Our entertainment business.
Jennifer Hudson: We're wrapping up significant investments in Austin, and Nashville, including opening our first venue under the category, Tim Bryant, our partnership with country.
Jennifer Hudson: Music Superstar loop tons arguably the most successful country music artist today is often running.
Jennifer Hudson: Category 10 self opens over the weekend initially with a private event.
Jennifer Hudson: So loops bootleggers fan club and then more broadly to the public. This multifaceted entertainment venue is one of a kind in downtown Nashville, and we believe it will be hugely successful with the anticipated revenue growth of tourism.
Jennifer Hudson: In the city and the East tank development that is underway across the river. We look forward to hosting the Grand opening later in 2025 following the completion of the rooftop.
Jennifer Hudson: First quarter.
Jennifer Hudson: We will have that roof top down at the end of the first quarter and further expanding the Brian in the years to come let me go off script, just a second here.
Mark Fioravanti: David This is mark.
Jennifer Hudson: Category 10 is 70000 square feet most of the Buzz on Broadway that we often get payer that guys. Just small honky tonks. By contrast, there are five distinct entertainment experiences within category Ted Yes, we have a honky-tonk we have this beautiful.
Jennifer Hudson: <unk>, which we call hurricane hole that can accommodate up to 1500 people, which comes with an incredible life display the replication intense store and its one of the few places in this whole what people can actually dance.
Jennifer Hudson: There still is a VIP area for the affluent.
Jennifer Hudson: And the travels to Nashville, we have a sports bar that on Saturday was absolutely packed catering to the country lifestyle consumer that loves sports.
Jennifer Hudson: And then all of this will be supplemented as I say in the first quarter with this best route rooftop experience in downtown and I think you know the whole team and started a wonderful job of bringing this to fruition and I know, we're all very very excited about the prospects of category Ted.
Jennifer Hudson: Finally, we just announced that plans for roughly 100.
Jennifer Hudson: 2025 programming around the 100 anniversary of the Grand old offering, including 100 operate debuts that we'll be making and an international exposure with a special performance at London's reliable pool in the fall of 2025 tickets.
Jennifer Hudson: Most of the 25 shows went on sale on October the 18th and sales are pacing very well I'm also very personally excited about the impact the outbreak will have in London as we work towards broadcasting that show two out that part of the world and in case you missed it over the last few weeks Icelandic kayo.
Jennifer Hudson: Which is which has a major hub routes through Scandinavia, and air Lingus have announced correct slides into Nashville, and we believe the European tourists flowed to the city is in its infancy taken the operator, London will be a big long term demand generator, we're really excited about the future of entertain.
Jennifer Hudson: <unk> business with our major capital investments nearing completion, and the opportunity to connect with more country lifestyle consumers too.
Speaker Change: Activation of operating 100 entertainment business is poised to have a very good year in 2025 taken together our businesses are in the best shape, they've ever been and our company's future looks awfully exciting now with that let me turn it over to Mark to review the third quarter.
Mark Fioravanti: Our results in more detail, thanks, Colin and good morning, everyone.
Mark Fioravanti: I'll provide a review of the third quarter highlight some of the trends, we're seeing in our business and discuss our revised guidance ranges before handing it over to Jennifer to cover our financial position and outlook for capital expenditures.
Mark Fioravanti: Both of our businesses continued to perform well in the third quarter. We finished the quarter with consolidated total revenue of $550 million, a third quarter record up four 1% year over year and record third quarter consolidated adjusted EBITDA of $175 million up two 3% year over year.
Jennifer Hudson: Our same store hospitality segment delivered year over year Revpar growth of two 1% and total revpar growth of four 2%.
Jennifer Hudson: ADR of $245 was a third quarter record up six 2% year over year, driven by record third quarter rate in both group and transient.
Jennifer Hudson: Same store hospitality adjusted EBITDA <unk> of $142 million was also a third quarter record.
Jennifer Hudson: Same store hospitality margin increased 30 basis points year over year to 34, 4% percent, despite a $4 million year over year reduction in attrition and cancellation fees, which flow through to profitability at 100% after management fees.
Jennifer Hudson: Leisure transient softness in the Nashville, and Orlando markets continued into the third quarter. However continued solid group performance robust out of room spending and operating efficiencies more than offset the profitability impact of leisure declines again, demonstrating the merits of our group centric model.
Jennifer Hudson: In the quarter same store group rooms revenue was a third quarter record up six 8% year over year banquet and AV revenue was also a third quarter record up nearly 16% on higher contribution per group room night travel.
Jennifer Hudson: <unk> was particularly strong at Gaylord Opryland, Gaylord palms, and Gaylord Rockies found.
Jennifer Hudson: Foundational to our differentiated business model are all under one roof offerings are uniquely positioned to capture out of room spending and drive market share gains relative to our competitors. We continue to see it in the numbers since the third quarter of 2019. The average total Revpar index as measured by Star for our five Gaylord hotels.
Jennifer Hudson: Compared to their Marriott defined competitive sets.
Jennifer Hudson: Has increased more than 20 points.
Jennifer Hudson: Looking ahead same store bookings production metrics remain healthy.
Jennifer Hudson: The third quarter, we booked over 581000 gross group room nights for all future years had a record third quarter gross ADR of $282, an increase of five 2% year over year.
Jennifer Hudson: Room night production was down approximately 16% due to the timing of a few large bookings and a tough comparison against the strong prior year quarter.
Jennifer Hudson: In October room night production rebounded to up approximately 75% year over year at a gross ADR of $283 up 11% year over year, both representing October records.
Jennifer Hudson: Year to date room night in rooms revenue production through October are up three 5% year over year, and 10, 5% year over year, respectively.
Jennifer Hudson: As of the end of the third quarter same store group rooms revenue on the books for 2025.
Jennifer Hudson: 2026, and 2027 were up 2%, 12% and 10% respectively compared to the same time last year for 'twenty four 'twenty five 'twenty six.
Jennifer Hudson: Notably rate growth comprises roughly 60% of the group revenue pace for 26%, 27%, which we believe is a testament to the value we're creating for our guests through our multiyear investment strategy.
Jennifer Hudson: Turning to the J W. Marriott Hill country in the third quarter. This property has delivered revpar growth of two 7% and total revpar growth of eight 5%.
Jennifer Hudson: What the same store portfolio banquet Navy revenue were up substantially due to higher contribution per group room night travel.
Jennifer Hudson: Adjusted EBITDA of.
Jennifer Hudson: A $17 $5 million was essentially flat year over year due to increased investment in leadership sales and banqueting and an infrastructure to support and launch our ice holiday programming.
Jennifer Hudson: These investments in people process and programming will generate returns for years to come.
Jennifer Hudson: In addition flow through was impacted by the timing of a $1 million incentive management fee accrual adjustment that was booked in the third quarter of 2023 related to the acquisition.
Jennifer Hudson: We continue to be very bullish on the long term potential of this asset under our stewardship.
Jennifer Hudson: Now turning to the entertainment segment despite plant construction disruption at the W. Austin Hotel of block 21 and category tenant Nashville.
Jennifer Hudson: <unk> reported revenue of $83 million, a third quarter record and adjusted EBITDA <unk> of $22 million driven by continued strong performance of our recently opened bold red Las Vegas venue.
Jennifer Hudson: With our major capital investments nearing completion, and our planned activation around operating 100. This business is poised to deliver meaningful growth in 2025 and beyond.
Jennifer Hudson: We're fortunate to own some of the most iconic brands and venues and live entertainment and we look forward to reaching more consumers in the years to come.
Jennifer Hudson: Now turning to our revised outlook for the remainder of the year.
Jennifer Hudson: For the same store hospitality segment, we are modifying the midpoint and tightening our full year guidance ranges for Revpar growth total revpar growth in adjusted EBITDA sorry.
Jennifer Hudson: Several factors are equally contributing to these adjustments.
Jennifer Hudson: Continued leisure softness in Orlando and Nashville incremental construction disruption at the Gaylord palms is labor shortages due to the construction of the new Universal theme Park has extended our renovation timeline and lost business related to Hurricane Milton.
Jennifer Hudson: For the GW Hill country, we're raising the midpoint and tightening the range of our full year 2024, adjusted EBITDA guidance.
Jennifer Hudson: For the entertainment segment, we're lowering the midpoint and tightening the range of our full year 2024, adjusted EBITDA guidance to account for incremental disruption at the W. Austin Hotel.
Jennifer Hudson: In total we are revising the midpoint of our full year 2020 for consolidated adjusted EBITDA guidance by $5 million or <unk>, 7%.
Jennifer Hudson: It's important to note that this revised guidance midpoint of $775 million, representing an 11, 5% increase over last year and a record performance by our company.
Jennifer Hudson: Finally, we are raising the midpoint and tightening the range of our full year 2024 guidance ranges for adjusted funds from operations or <unk> <unk> per diluted share as we expect lower interest expense to more than offset the downward revision to adjusted EBITDA.
Jennifer Hudson: In summary, we had a terrific third quarter, we remain incredibly bullish on the current performance of our businesses and we're excited about the value creation opportunities associated with our multiyear investment strategy in the years ahead and importantly, we can fund this strategy plus a growing dividend from our balance sheet and free cash flow generation, so to that end ill turn it.
Jennifer Hudson: Over to Jennifer to discuss our balance sheet liquidity and capital expenditures outlook.
Jennifer Hudson: Thanks, Mark we ended the third quarter with $535 million of unrestricted cash on hand, and our $700 million revolving credit facility Undrawn.
Speaker Change: $80 million revolving credit facility had a balance of $16 million outstanding.
Jennifer Hudson: Together, our total available liquidity was approximately $1 3 billion net of approximately $4 million of outstanding letters of credit.
Jennifer Hudson: We retained an additional $36 million of restricted cash available for F N E and other maintenance projects.
Jennifer Hudson: At the end of the quarter, our net leverage ratio based on total consolidated net debt to adjusted EBITDA was three eight times.
Jennifer Hudson: We continue to have the flexibility and liquidity to support our capital allocation priorities and the continued growth of our business.
Jennifer Hudson: So that and we are pleased to announced the declaration of our fourth quarter dividend of $1.15 payable.
Jennifer Hudson: Payable on January 15, 2025 to shareholders of record as of December 31, 2024.
Jennifer Hudson: This represents a four and a 5% increase in our quarterly dividend and a four 2% yield based on yesterday's closing price.
Jennifer Hudson: It remains our intention to continue to pay 100% of our REIT taxable income through dividends.
Jennifer Hudson: For the full year 2024, we expect to invest capital of approximately $400 million to $450 million.
Speaker Change: So collyn and Mark discussed much of our 2024 major capital activity is nearing completion.
Jennifer Hudson: And our hospitality business at Gaylord Rockies the final phase of the Grand Lodge repositioning, which includes several additional food and beverage outlets will reopen at the end of this month phase.
Jennifer Hudson: Phase one of this project, which opened in May is already driving incremental out of room spend.
Jennifer Hudson: Hey, Gaylord Opryland, the repositioning of the currently underutilized Magnolia courtyard into a new sports bar complex, including a group pavilion and event one state is well underway.
Jennifer Hudson: We expect to complete this project in early 2026.
Jennifer Hudson: And Marriott sales teams are already selling into these improvements.
Jennifer Hudson: Renovation of the Governor's ballroom, there and pre function space is also progressing well and we expect to complete this work in early 2025.
Jennifer Hudson: Renovation of the presidential ballroom and pre function space is scheduled to begin later this month.
Jennifer Hudson: At the Gaylord palms, we expect to complete the final phase of the lobby renovation by year end and the rooms renovation in the first quarter of 2025.
Speaker Change: As Colin mentioned when these projects are completed nearly every guest and group facing aspect of the property will have been refreshed within the last four years positioning the property well as growth of the Orlando market Reaccelerate.
Jennifer Hudson: In our entertainment business, both major projects or at least partially reopened to positive early reception at the W. Austin Hotel, the public spaces food and beverage concepts have reopened and the rooms renovation is expected to be completed by year end.
Jennifer Hudson: Finally, as Colin mentioned, our first venue under the category 10 brand soft opened over the weekend. The construction on the rooftop is ongoing and will complete in the first quarter of 2025.
Jennifer Hudson: With that David let's open it up for questions.
Jennifer Hudson: Yes.
Speaker Change: Absolutely at this time, if you'd like to ask a question. Please press the star and one on your telephone keypad keep in mind you may remove yourself from the question queue at any time by pressing star and two again to ask a question. It is star and one will.
Jennifer Hudson: We'll take our first question from Patrick Scholes with Truest. Please go ahead. Your line is open.
Patrick Scholes: Hey, good morning, everyone. Thank you.
Patrick Scholes: A couple of questions here.
Patrick Scholes: It looks like in your full year guidance Capex is going up.
Jennifer Hudson: Can you.
Patrick Scholes: Talk a little bit what is driving that and then I have one or two more questions. Thank you.
Speaker Change: Sure. It is a modest increase in terms of the base of spending that we're estimating now of $400 million to $450 million range.
Speaker Change: And really that's more a function of timing of the cash spend we've not added any incremental projects or changed the scope of projects. That's caused that that to increase nor has the budget estimates for our individual projects.
Speaker Change: Kelly changed again this is just largely a function of.
Speaker Change: The timing of the cash payments, whether we're carrying into this year carrying into next year.
Speaker Change: Okay. Thank you and then on a similar topic I've been reading some media reports about.
Speaker Change: Potential expansion.
Speaker Change: Sure Colorado property.
Speaker Change: Maybe you can give us some color on that and related to that.
Patrick Scholes: What type of ROIC would you target from that it seems like it would be.
Patrick Scholes: Sort of a pod add on to an existing.
Speaker Change: Property, so what what do you target with that thank you.
Speaker Change: Mid teens.
Patrick Scholes: Patrick Good morning Collyn.
Jennifer Hudson: Hey.
Jennifer Hudson: Pat.
Jennifer Hudson: Don't like three big projects.
Speaker Change: All of them are mid teens. So you want to just get Patrick Scholes, a little bit of color sure, yes to <unk> point, our internal rate of return we're targeting to be in the mid to high teens. The Grand Lodge revisions are at that level or higher the group pavilion that we just opened which.
Speaker Change: Both assets are meeting great success, and exceeding pro forma thus far.
Jennifer Hudson: And in the mid to high teens from an expansion perspective, we've made it very known that we would like to expand that property and we continue to explore that and we'll be having conversations with our board of directors in the coming months around potential expansion and the recent and Patrick the reason.
Jennifer Hudson: Patrick Scholes. The reason why we are going to talk to our board about this is when you look at the business on the books across our portfolio. This is the hotel was sticks out with having the most room nights on the books the 'twenty.
Jennifer Hudson: The percentage of available for $25 26, the numbers look really really strong for the Rockies. So we're very very excited about this long term for this this particular building and I think you've heard US say before there is no reason over time why this.
Jennifer Hudson: Building comp.
Jennifer Hudson: Morph to something.
Jennifer Hudson: Physically it looks like all three labs.
Jennifer Hudson: And.
Jennifer Hudson: When you when you when you look at the geographic positioning of this hotel the airlift the customer reaction.
Jennifer Hudson: I think over time. This thing this hotel can do extremely well for us.
Jennifer Hudson: The only thing I was going to say as Patrick.
Jennifer Hudson: Hotel when it originally opened had.
Jennifer Hudson: Meeting space to carry the expansion. So we won't have to add additional meeting space and with the most recent capital investments. We've made we've added about 650 food and beverage seats in that hotel. So it will have the food and beverage capacity as well.
Speaker Change: Okay. So I mean are you.
Speaker Change: You're talking ballpark 200 rooms, maybe a thousand rooms or is it too early to.
Jennifer Hudson: Yes.
Speaker Change: Hey, Patrick this is Patrick Chaffin again, what we're looking at right now is that potentially a two phased expansion. The first expansion would be around 450 rooms.
Speaker Change: If that stabilizes and performs the way we would expect we would come back and do a second expansion down the road when it makes economic sense based on how the first expansion performs.
Patrick Scholes: Okay. Thank you for the color I'm going to hop back in the queue. Thank you.
Speaker Change: Thanks, Patrick.
Speaker Change: We'll take our next question from Chris <unk> with Deutsche Bank. Please go ahead. Your line is open.
Speaker Change: Hey, good morning, guys. Thanks for taking the questions.
Chris: Yes, so really really impressive rate performance in the quarter.
Speaker Change: And also on the on the forward.
Speaker Change: My question is yeah, we obviously lost a little bit back in Q3, and I know that might be related to leisure. The question, though is <unk>.
Speaker Change: Are you at a point, where you begin to consciously trade a little group Ark in favor of rate.
Speaker Change: I know there was another component to that which is the out of room spend but I'm just curious as to whether whether we should expect maybe slightly lower off levels over the next peak, but with much better rate growth than we've seen in the past. Thanks.
Jennifer Hudson: Okay.
Speaker Change: Well I mean, our goal is still.
Speaker Change: Obviously to get these hotels to our.
Speaker Change: And aspirational, 80% occupancy running consistently but to your point, Chris coming out of it.
Speaker Change: Out of the pandemic, we have really focused on driving driving the rate.
Jennifer Hudson: Because with the with the capital investments that we've made we feel like we are delivering.
Jennifer Hudson: Value to the customer and the customer is responding.
Jennifer Hudson: These enhancements and you can see that in our bookings.
Jennifer Hudson: Ultimately, we're trying to drive and maximize our Revpar and total revpar in the yield of the hotel.
Jennifer Hudson: But I don't I don't I wouldn't necessarily.
Jennifer Hudson: Fairly assume that.
Jennifer Hudson: Sure.
Jennifer Hudson: That means that we ultimately.
Jennifer Hudson: Peak at a lower occupancy rate we are in a segment that has.
Jennifer Hudson: Very limited supply growth and demand continues to grow and when you look at our assets and how they are positioned relative to our peers. We're in a pretty good position.
Jennifer Hudson: Hey, Chris This is Patrick the only thing I would add to that is I would point out that we've only seen a couple of months post pandemic, where demand levels got back to where they were pre pandemic and so you weigh that against the type of rate and occupancy.
Jennifer Hudson: Room nights that were putting up and were extremely pleased with how the sales teams are doing in driving room nights, and especially rate and as that demand continues to build back to where it was pre pandemic.
Jennifer Hudson: To Mark's point, we think we're going to have the best of both worlds, where you have strong rate performance based on the improved value proposition from these investments in hotels as well as.
Jennifer Hudson: Similar or even better.
Jennifer Hudson: Occupancy performance.
Speaker Change: Okay very good did have a quick follow up which is.
Speaker Change: Yes, I think theres been a been a lot of San Diego, what you'll have is the right and you're getting closer to come across the finish line.
Jennifer Hudson: Curious as to whether there's any updated thoughts on you know.
Jennifer Hudson: Whether that's something you can.
Jennifer Hudson: Your messaging has been pretty clear in the past.
Jennifer Hudson: It can only be on the table if certain conditions are there I'm just curious as to whether any of the conditions you look at or are more likely or less likely than our last update. Thanks.
Jennifer Hudson: Yes.
Jennifer Hudson: We will go well.
Jennifer Hudson: You do it.
Jennifer Hudson: I mean <unk>.
Jennifer Hudson: Haven't changed.
Jennifer Hudson: I mean, our position relative to our participation in that asset.
Jennifer Hudson: Really hasnt changed.
Jennifer Hudson: I would say that again as they move closer to opening and continue to sell that hotel, we've not seen any cannibals cannibalization in our production numbers.
Jennifer Hudson: And in fact, we are we're seeing.
Jennifer Hudson: Room nights and groups that are originating there booking into.
Jennifer Hudson: Booking into our part of the portfolio.
Jennifer Hudson: At a rate premium so.
Jennifer Hudson: Sure.
Jennifer Hudson: Operationally and how that hotel relates with the increased distributions at the San Diego market.
Jennifer Hudson: Its performance as it relates to the to the overall portfolio was kind of unfolding as we thought it would because it's consistent with what our experience has been historically when we've opened.
Jennifer Hudson: Other properties, but in terms of us participating in and our view at this point Hasnt changed.
Speaker Change: Okay Fair enough. Thanks, guys appreciate it.
Jennifer Hudson: Thanks, Chris.
Speaker Change: We will take our next question from Smedes Rose with Citi. Please go ahead. Your line is open.
Smedes Rose: Hi, Thank you I just wanted to ask you a little bit more about.
Smedes Rose: Some of the leisure trends, you're seeing in the fourth quarter.
Smedes Rose: I think on your last call you talked about maybe some weakness at the lower end consumer but at the higher end.
Jennifer Hudson: Consumer was maybe hanging in there and I was just kind of.
Jennifer Hudson: Interested in any discussion around kind of any changes you've seen.
Jennifer Hudson: To that customer.
Speaker Change: Well Smedes as you know fourth quarter is very leisure centric.
Jennifer Hudson: Is the biggest quarter of the year from a leisure demand perspective.
Jennifer Hudson: You want to give.
Jennifer Hudson: Give some.
Jennifer Hudson: It's a little indication of what we're seeing on the fourth quarter sure.
Jennifer Hudson: Good morning Smedes.
Jennifer Hudson: I start by saying that the trends that we've seen all year long continue.
Jennifer Hudson: Dallas.
Jennifer Hudson: Denver, Washington D. C are all doing okay from a transient perspective.
Jennifer Hudson: Antonio is doing well.
Jennifer Hudson: The opportunity has always been primarily in the Orlando market with some spillover into the Nashville market.
Jennifer Hudson: Orlando market continues to see the greatest challenge.
Jennifer Hudson: A lot of speculation in the market as the result of the fact that a lot of folks believe that this is the consumer waiting until Universal Studios opened their new theme Park epic next year.
Jennifer Hudson: And that's creating a drain currently on the market.
Jennifer Hudson: Those trends have continued sustained and the same segments that we've been seeing previously.
Jennifer Hudson: Our perspective.
Jennifer Hudson: The metrics that we can look at is really lead indicators of how the fourth quarter transient performance will actualize.
Jennifer Hudson: Ice tickets are pacing right at our expectations.
Jennifer Hudson: And have held pretty steady now we've only booked about 15% of the total tickets that we expect to book for the quarter, but early indicators are that we're doing exactly what we believe we will be able to do.
Jennifer Hudson: From a transient room night packages perspective.
Jennifer Hudson: Pacing largely in line with our expectations. So we've built in lower expectations on the transient side Thats reflected in our guidance based on the trends we've seen primarily in Orlando somewhat in Nashville, and we are thus far holding that those expectations now I will caution you just to say that a lot.
Jennifer Hudson: Ice packages and tickets are booked within 30 days of arrival and even greater portion of our booked within seven days.
Jennifer Hudson: Experiencing an event. So we will continue to watch it closely but right now.
Jennifer Hudson: We believe that our guidance and our forecasts are in line with what expectations are where it will actualize for the quarter.
Patrick Scholes: Thanks, and then I just wanted to follow up Mark you mentioned.
Speaker Change: I just wanted to make sure I understood that right that not only its tuelivista not impacting any of your group bookings are cannibalizing that you. It sounds like you think it's in fact benefiting your group bookings going forward.
Patrick Scholes: Yeah.
Patrick Scholes: Thus far we picked up about a little over 200000 room nights.
Patrick Scholes: Rotated into the portfolio that originated from.
Patrick Scholes: From Chula Vista, So we're seeing that we've seen that behavior begins.
Patrick Scholes: When you look historically, though what typically happens is as that.
Jennifer Hudson: <unk>.
Jennifer Hudson: Those people, who experienced the brand in a new location like that.
Jennifer Hudson: Once they've experienced it then they book rotational business. So you would expect that percentage to increase over time as people experienced the asset and the brand. This is exactly what happened in Colorado, Colorado. It also the same thing happened in Washington D C.
Jennifer Hudson: To put a fine point on it those roughly 200000 room nights booked into Pacific and driven those 200000 additional room nights for the rest of the brands have come in at about 9% premium on ADR versus other multi year programs. So we've talked about this in the past when you enter into the brand and the gateway market with high rate like San Diego.
Jennifer Hudson: Those groups have a higher propensity to book through at a much higher rates. So we believe that will benefit the entire portfolio and the Gaylord brand long term.
Speaker Change: Thank you I appreciate it.
Jennifer Hudson: Thanks Smedes.
Jennifer Hudson: We will take our next question from Dougherty Casey with Wells Fargo. Please go ahead. Your line is open.
Dougherty Casey: Thanks, Good morning.
Dougherty Casey: Based on your expectations for Q4 group bookings what group revenue pace would you expect to enter 25 wins from the 2% today.
Dougherty Casey: Yes.
Speaker Change: Dori I don't know that we are prepared to give that level of granularity. We will tell you that we are expecting.
Dougherty Casey: We had a historic second quarter third quarter came in exactly where we expected it to given the fact that we had the second best production and revenue quarter.
Dougherty Casey: For our second quarter ever and we just finished October October came in as the best October ever both in terms of rate with the highest rate ever achieved for forward bookings and the highest October production in the history of the portfolio. So we will watch November December closely but I would tell you from a funnel perspective lead volumes are very.
Dougherty Casey: Very very <unk>.
Dougherty Casey: Promising and we believe we will turn in a really solid performance both on occupancy and on rate, where we stand right now year to date I will tell you that it's the best revenue on the books ever in the history of the portfolio by $45 million over the next best performance. So we feel.
Dougherty Casey: Really good about where bookings are going to come in and 2025 does have the impact of some disruption from work going on at Opryland, and Texan, but we're going to manage through that very effectively and believe will turn out and really solid 25 based on how bookings are pacing.
Speaker Change: Okay, and then just on that can you provide a little bit more context on renovation headwinds versus tailwind that you would expect next year and then I.
Dougherty Casey: Yes.
Speaker Change: I think theres been about $10 million to $12 million of.
Speaker Change: In entertainment would.
Speaker Change: Would you expect those to fully reverse.
Speaker Change: And then I guess on top of that it's the 100th anniversary yet you'll receive more tailwind sports I'll just provide some context around the headwinds and tailwind we should think of next year.
Speaker Change: And to entertain wise, we will we will have basically zero disruption next year and.
Speaker Change: And.
Speaker Change: Suspect that when we when we deliver add guidance to you in February.
Jennifer Hudson: You'll see you'll see decent year over year growth in entertainment.
Jennifer Hudson: The hotel business.
Jennifer Hudson: We'll also show goes next year year over year.
Jennifer Hudson: And but as Patrick Chaffin said that we do have this major refurbishment at the Texan and and also this transformation thats underway at all three lines that that will absolutely pay huge dividends in 2006, and 2007 and I think mark.
Jennifer Hudson: Said it.
Jennifer Hudson: When.
Jennifer Hudson: He did his piece.
Jennifer Hudson: The room nights on the books.
Jennifer Hudson: And revenue on the books for T plus two right now is tracking 10% up.
Jennifer Hudson: As we come out of this refurbishment program that we're going to be doing which we're underway right now in our hotel business and also also next year as we come out of that.
Jennifer Hudson: Lift will be very very good.
Speaker Change: No I think that's right and just to again put a finer point on that the data that we have given as it right now it's what's on the books for T plus one plus two plus three in terms of contracted rooms revenue.
Speaker Change: And again I would point to the fact that we did declare a 5% increase in our quarterly dividend and that has implications in terms of our expectations for free.
Speaker Change: Free cash flow that we'll generate next year.
Speaker Change: Got it thank you.
Speaker Change: We will take our next question from Shaun Kelley with Bank of America. Please go ahead. Your line is open.
Shaun Kelley: Hi, good morning, everyone. Thanks for taking my questions.
Shaun Kelley: I wanted to go back to Patrick's discussion, if we cut on just the leisure point and really just a clarification, but.
Shaun Kelley: So I'm trying to get my arms around a little bit of what changed exactly on the leisure outlook I mean, as we go back to maybe April of this year I think that's when you started to kind of comment that leisure was coming in a bit weaker was it really that we just didn't derisk in the fourth quarter and maybe there were higher expectations that ultimately actualize, the things will rebound or was it something.
Jennifer Hudson: That was kind of different than expected because again, you said the behavior is not that different than what you've been experiencing but clearly that's a big enough yes.
Jennifer Hudson: Change to impact the outlook here.
Speaker Change: You want to handle it well.
Speaker Change: Yeah, I mean, we've continued to see I think softness says we've moved move through the year.
Jennifer Hudson: To your point it started really in the spring and then as we moved into summer we saw some increases as it relates to the adjustments to.
Jennifer Hudson: The guidance, it's really there's really three components. There a portion of it is is leisure, but we also have some incremental disruption.
Jennifer Hudson: And we also have the impacts of hurricane Milton So theyre really kind of almost a third a third a third when you.
Jennifer Hudson: When you break the numbers down so it's not the guidance change that we're making as we look at the at the rest of the year is not strictly.
Jennifer Hudson: The lesions.
Shaun Kelley: And.
Shaun Kelley: And look.
Shaun Kelley: The reality is.
Shaun Kelley: We're going to.
Shaun Kelley: When you look at our.
Shaun Kelley: Guidance for the year and you dissect it for the fourth quarter. The fourth quarter is going to show good growth over the fourth quarter of last year.
Shaun Kelley: Load is not falling apart here. These are these are rounding errors.
Shaun Kelley: That we're trying to be very precise in laying out what we expect to happen in the fourth quarter and as Mark said. This is the modification that we are making to EBITDA is is is de minimus.
Shaun Kelley: When you look at the year over year growth as a company. This is a minor modification.
Shaun Kelley: And there's really no no substantive change in our thinking about leisure trends and group trends, which are tremendous.
Shaun Kelley: Okay.
Shaun Kelley: We are a challenge for US is Q4 is so heavy leisure and it's where we have.
Shaun Kelley: The least amount of visibility as Patrick mentioned, most most folks are booking within 30 days. So we're sitting here today with about 15% of the business on the books and so.
Shaun Kelley: So we're trying to be trying to be mindful of.
Shaun Kelley: The risks and appropriately provide the right level of guidance.
Speaker Change: Thanks for thanks for just elaborating there and then just as a follow up and I know I think people kind of hit on the bridge for next year, a little bit in terms of question earlier about sort of group pace that you've got on the books. If we just think about the operating cost outlook, we're starting to kind of get into that season, where.
Shaun Kelley: People are forming for formulating budgets just what are you seeing out there on the labor side in particular for your model in for your markets kind of what do you think is the right general inflationary range to be thinking about operating expenses next year. Thanks.
Speaker Change: That's a good question.
Speaker Change: Do you want to take the hotel side, Patrick breakdown between Union non Union and what we're saying, yes. So to <unk> point, we have one Union hotel I'm happy to report that we have finalized our negotiations with local 25. The agreement has been ratified so we have a new collective bargaining agreement in place.
Speaker Change: We were.
Shaun Kelley: We were pleasantly.
Speaker Change: We're pleased when we saw that with the results Thats about a 6% CAGR over the course of four years. So we feel that our long range plan and our expectations for next year fully.
Shaun Kelley: Comprehended.
Shaun Kelley: That growth in labor and wages.
Shaun Kelley: On the.
Shaun Kelley: The non union side.
Shaun Kelley: We're going through the budgeting process with Marriott right now.
Shaun Kelley: But a much more moderate growth rate than what we've seen over the past few years.
Shaun Kelley: So we feel that we've made the appropriate increases in 2021 'twenty two and 'twenty three.
Shaun Kelley: And finishing up here in 'twenty four 'twenty five we'll not see quite as steep of an increase on the wage side. So I'll give you more color when we get to February and we finalize the budgeting process with Marriott, but we feel great from a union perspective that we've got it locked in and the non Union side, we don't see any significant surprises.
Shaun Kelley: And a much lower level of growth in wages and what we've seen in the past few years.
Shaun Kelley: Would you also Patrick comment here.
Shaun Kelley: Sure.
Shaun Kelley: What has happened margin wise in our hotel business over the last couple of years, because even though we've seen this wage pressure, we have been able to increase the margin of that business materially.
Shaun Kelley: Because we've we've dealt with more and more efficiencies. So maybe you could just comment on that too.
Speaker Change: Yes, there were two things I would call out to that number one we've done a phenomenal job and I really want to complement.
Shaun Kelley: Revenue management teams as well as the sales teams in driving both leisure rate and Youre seeing more and more of the group rate show up and that puts us in a great position to.
Shaun Kelley: To absorb a lot of these wage increases successfully and still drive margin. The second two Collins point as we improved our wage margin even as wages are going up so we became more and more efficient we did that both on the management side as well as the non management side. So we held marriott's feet to the fire and they prove to be great.
Shaun Kelley: Partners in helping us reassess and rationalize all of our management positions and hold to a agreed upon level as far as how many to add back post COVID-19.
Shaun Kelley: I think it's fair to say, we've taken great care of the stars.
Shaun Kelley: And so we've been able to gain additional efficiencies even as wages have gone up and so both in terms of room rate and efficiencies gained in the business with.
Shaun Kelley: The management and non management side of the business, we've been able to drive margin.
Shaun Kelley: At the midpoint of our guidance were growing year over year margin for same store will be up 70 basis points and that's on a midpoint revpar growth of a half a point and 3% so.
Shaun Kelley: The margin management has been very very good the team has done a terrific job.
Shaun Kelley: I would add to that we identified in early January that's transient was going to be soft.
Shaun Kelley: And so worked with the properties to start putting in place profit improvement plans. Some long term some short term, but to make sure that we were continuing to manage the business very very closely in light of short term headwinds and that has paid great dividends for us.
Speaker Change: May I just want to add one last comment Sean you've been around with us for quite a while.
Speaker Change: And you will have heard over the years, Mark and I talk about.
Shaun Kelley: We want to get this business this hotel business.
Shaun Kelley: Stable, 35% margin.
Shaun Kelley: <unk>.
Shaun Kelley: We went on a tear to get that done pre COVID-19 COVID-19, obviously, not so sideways, but when you look at the consolidated.
Shaun Kelley: EBITDAR that company in 'twenty, two we were at 33% in 'twenty three we were at 34, 2%.
Shaun Kelley: And if you look at sort of the midpoint of that guidance as Marc said.
Shaun Kelley: We're pushing 35% margin. So all of this wage stuff I think our teams have done both in our entertainment business and our hotel business had a really good job.
Speaker Change: Thank you so much.
Speaker Change: Thank you.
Speaker Change: And as a reminder, if you'd like to ask a question. Please press the star one key on your telephone keypad.
Speaker Change: We'll take our next question from Jay Kornreich with Wedbush. Please go ahead. Your line is open.
Jay Kornreich: Alright, Thank you and good morning.
Jay Kornreich: As you're getting those robust group bookings into future years that you've outlined so can you just comment on kind of the demand segmentation, you're experiencing and where you've been able to push rate. The most from among corporate association and smart customers.
Speaker Change: Catherine.
Catherine: Yes, I would tell you that our.
Catherine: Our folks it's been across the board.
Shaun Kelley: And so let me give you a couple of examples obviously on the corporate side.
Shaun Kelley: That is probably where you had the greatest success.
Shaun Kelley: Not the harder sell.
Shaun Kelley: A little bit tougher on the association side, but I would tell you that we've we've made some really tough decisions in the past three years and said goodbye to some of the smurfit groups and some of the associations by sharing with them that given the value proposition improvements from all the investments we've talked about right was going to have to go up for some of these groups that were maybe lower rated.
Shaun Kelley: And we have parted ways with a few groups and told them Hey, take a look around and if you can find a better value proposition for what we offer for rate.
Shaun Kelley: As low as what you are asking good luck to you and some of those groups have done their own way some of them actually have come back to us. So it is a full court press both on corporate Association and on Smurf, you, obviously have tremendous success on the corporate side. It is the easier sell but we've had great success, both in association and <unk>.
Shaun Kelley: <unk>, because we have made some tough decisions recognizing our own value and how that's improving with these investments.
Shaun Kelley: One of the ways to manage this with some of the more rate sensitive groups is what dates they travel over so it's not just.
Shaun Kelley: Not a consistent rate obviously for every travel pattern.
Shaun Kelley: So we'll see.
Shaun Kelley: The sales teams. It was worked with these more rate sensitive groups.
Shaun Kelley: Hopefully a comment accommodate them during a travel pattern that works for us as well.
Speaker Change: I want to add something here I wanted to give you Patrick Chaffin in your asset management folks I wanted to give you a shout out here because I'll give you I'll give you. One example, we had a group here at Opryland I'm not going to tell you, which it as well you had a group here and operate on the staying with us for 20 years and they basically fill up our line for <unk>.
Shaun Kelley: Days in March.
Shaun Kelley: And and and it's an association and they have historically been low rated and they started to check when we pushed new rate a new rate structure for them Patrick Chaffin brought the CEO of that association here into Nash.
Shaun Kelley: Phil and we spend a couple of hours educating these folks on all of the work that we have done at this hotel the millions and millions of dollars of investment to upgrade the quality at the hotel and make it a better experience at the end of the day. This group just book 20000 room nights for us with us in the month of October.
Shaun Kelley: But our team I've seen mustain individually working with these longstanding groups to educate them on the transformation that has taken place within within our properties. So shout out to Patrick and his team, but they've played a big role here.
Shaun Kelley: And the continuation of this rate growth. So Jay just put one final point on this if you look at through September year to date rate growth and production that was booked for this year for all future periods CT.
Shaun Kelley: Corporate Association and Smurf have almost the identical growth rate and rate for everything thats been booked this year for all future periods. So again, it's a full court press on all fronts and.
Shaun Kelley: We are very pleased with how the sales team has hit all of them appropriately with this improved value proposition from the investments.
Speaker Change: Great I appreciate all that color and then just one follow up going back to the entertainment side. It looks like there was some sequential softness in the third quarter on EBITDA and margins and so I'm. Just curious if you can expand on maybe what that was attributed to and if you expect a pickup in the fourth quarter.
Speaker Change: Well some of the sequential softness youre looking at as is.
Speaker Change: Sort of the disruption that $8 million to $10 million of disruption related to the wild horse being closed this year versus being opened last year.
Shaun Kelley: Sure.
Shaun Kelley: And then we had the W hotel disruption as well so those two components.
Shaun Kelley: We're predominantly the reasons for some of that change on a year over year basis in the third quarter.
Speaker Change: Okay. So I guess.
Shaun Kelley: Fair to say that.
Speaker Change: And then third quarter came in with where you were expecting.
Speaker Change: And then just following up on that do you expect.
Speaker Change: Fourth quarter to be a bit better, especially as hertz has.
Shaun Kelley: The hurricanes.
Shaun Kelley: Has that opened up.
Speaker Change: Yeah, No. We're very excited about the opening as Colin mentioned of category tenant opened up extremely well and above our expectations. It's obviously just a few days opened but Luke combs is a fantastic partner in that building that multifaceted entertainment concept is incredibly unique and distinctive relative to any other property.
Shaun Kelley: On Broadway or in the market. So we're incredibly encouraged by the <unk>.
Shaun Kelley: Potential of that particular asset.
Speaker Change: Okay. Thank you that's it for me.
Speaker Change: Thank you.
Shaun Kelley: David It is.
Shaun Kelley: If there are any more questions, we'll take one more ethanol, we'll we'll shut it down.
Shaun Kelley: And there are no further questions on the line at this time for turning the program do you.
Shaun Kelley: Excellent well. Thank you everyone for taking the time this morning.
Shaun Kelley: The team articulated the business is in really good shape.
Shaun Kelley: We look forward to.
Shaun Kelley: Getting through the next couple of months since we closed the year out and then articulating 25 and beyond Thank you everyone and if you have any further questions you know how to get holders appreciate it David Thank you.
Speaker Change: And this does conclude today's program. Thank you for your participation and you may now disconnect.
Speaker Change: Here's currently Pierce with what he didn't do live from the Grand Ole Opry.
Shaun Kelley: [music].
Shaun Kelley: Everybody that channel with the Hill have no in general at all.
Shaun Kelley: Thanks, Tom.
Speaker Change: We don't see anything yet.
Speaker Change: Okay.
Shaun Kelley: Thanks.
Shaun Kelley: Okay.
Shaun Kelley: Got you.
Shaun Kelley: Thank you.
Shaun Kelley: <unk>.
Shaun Kelley: <unk>.
Shaun Kelley: <unk>.
Shaun Kelley: [music].
Shaun Kelley: Ron.
Shaun Kelley: Yes.
Shaun Kelley: [music].
Shaun Kelley: Yes.
Shaun Kelley: [music].
Shaun Kelley: Yes.
Shaun Kelley: [music].
Shaun Kelley: Already halfway over.
Shaun Kelley: They can come in.
Shaun Kelley: [music].
Shaun Kelley: Thanks.
Shaun Kelley: We just don't know.
Shaun Kelley: [music].
Shaun Kelley: Got it.
Shaun Kelley: Got it.
Shaun Kelley: 90 days.
Shaun Kelley: Got it.
Shaun Kelley: Thank you.
Shaun Kelley: Got it.
Shaun Kelley: Okay.
Shaun Kelley: [music] and all that.
Shaun Kelley: Hum.
Shaun Kelley: Okay.
Shaun Kelley: [music].
Shaun Kelley: <unk>.
Shaun Kelley: Yeah.
Shaun Kelley: Demand.
Shaun Kelley: Thank you.
Shaun Kelley: The treatment.
Shaun Kelley: Okay.
Shaun Kelley: [music].
Shaun Kelley: All right.
Shaun Kelley: Okay.
Shaun Kelley: [music].
Shaun Kelley: Yes.
Shaun Kelley: [music].
Shaun Kelley: Got it.
Shaun Kelley: Okay.
Shaun Kelley: And trade.
Shaun Kelley: <unk> Atkins joined the Grand Ole Opry family in 2003, <unk> celebrating Hello, Rob Remember, let me note that what's changed or in my house.
Shaun Kelley: [music].
Shaun Kelley: I've never heard before.
Shaun Kelley: Okay.
Shaun Kelley: Lou.
Shaun Kelley: Move.
Shaun Kelley: There are some changes who at all.
Shaun Kelley: The earnings.
Shaun Kelley: Yes.
Shaun Kelley: Ooh Ooh.
Shaun Kelley: <unk>.
Shaun Kelley: <unk>.
Shaun Kelley: So prism.
Shaun Kelley: [music].
Shaun Kelley:
Shaun Kelley:
Shaun Kelley: So Matt.
Shaun Kelley: Okay.
Shaun Kelley: So strange.
Shaun Kelley: <unk>.
Shaun Kelley: Yes.
Shaun Kelley: Some math.
Shaun Kelley: Grant.
Shaun Kelley: Away from me.
Shaun Kelley: [music] suits.
Shaun Kelley: Sure.
Shaun Kelley: <unk>.
Shaun Kelley: A million miles.
Shaun Kelley: And when I ask.
Shaun Kelley: All right.
Shaun Kelley: Q2.
Shaun Kelley: Too much too soon.
Shaun Kelley: Yes.