Q2 2019 Earnings Call

No look number right.

The what.

Welcome to Ryman hospitality properties second quarter 2019 earnings conference call.

Hosting the call today from Ryman hospitality properties are Mr., Colin Reed, Chairman and Chief Executive Officer.

Mr., Mark Fioravanti, President and Chief Financial Officer.

Mr., Patrick Chaffin, Chief operating Officer, and Mr., Scotland, Executive Vice President and General Counsel.

This call will be available for digital replay.

The number is 800 585.

8367, and the conference I'd number is 1115159.

At this time, all participants have been placed on listen only mode.

It is now my pleasure to turn the floor over to Mr., Scotland, Sir you may begin.

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 Companys expected financial performance.

Any statements we make today that are not statements of historical fact may be deemed to be forward looking statements words, such as believes or expects are intended to identify these statements, which may be affected by many factors, including those listed in the company's FCC 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 reconcile each non-GAAP measure to the most comparable GAAP measure in an exhibit to todays release I will now turn the call over to Karla.

Thanks, Scott Good morning, everyone and thanks for joining us.

Well I must admit I've been reviewing many of the reports for our industry.

That have come out over the last few weeks and for most part they've tended to be a little on the negative side now while I certainly understand the reasoning across the sector from that perspective at Ryman. These all the time the swim business is flourishing and model provides a path to growth.

As a consequence I see before us another chapter in a progression of building a resilient group focused customer centric centered portfolio a world class hotels with very little new competitive supply.

No I know quarter after quarter, we highlight that differentiation and talk about the Gaylord brand that our company built in years past, but a couple of weeks ago JD powers issued a report whereby they measure guest satisfaction for 15 upper upscale hotel brands and the Gaylord brand was included this time around now what was extraordinarily pleasing to US was that the Gaylord brand was only one of two brands to achieve their highest five socal rating.

Great customer satisfaction drives customer retention, which in turns creates which in turn creates superior profitability and that's what we're all about so I'm very pleased with the performance of our hotels in the first half of this year as well as with our outlook for the rest of the year and particularly into 20 and 21 and of course with the long term opportunity that remains ahead of us in this space.

But before we go there let me touch on.

And most recent results in the second quarter as same store hotels, excluding the Gaylord Rockies delivered 1.4% revpar growth of 1.6% total revpar growth year over year.

Now this is what we anticipated when we began the year based on the patterns and the groups on the books for the quarter, which is once more evidence of the visibility that our business model gives us.

And then and having now exited soft this quarter of the year with no real surprises. We won once again, we're in a position to increase that guidance for the year, which I'll summarize in a moment.

Now lets first.

Well, let me first briefly walk through our same store hotels, one at a time.

Hi, Nashville, Gaylord Opryland delivered 2.3% Revpar growth from 4.3% total revpar growth in the second quarter.

Corporate and corporate and association room nights were lower year over year at Opryland, leading to less food and banquet revenue than last year. However, total revpar still outgrew revpar. Despite this low SMB. Thanks to the contributions of sound waves, which experienced a very strong leisure demand in the quarter as well as fees collected for a large group cancellation.

That has contracted to travel in May and which we collected this quarter.

This was a cancellation due to a change in the customer CEO suite that we have talked about previously and which we knew would contribute to the second quarter being a little more challenged compared to last years second quarter.

Overall opryland delivered excellent flow through with adjusted EBITDA.

The 5.2% despite some continuation in the wage pressure from the very hot Nashville market in Dallas, The Gaylord Texan grew revpar, 3.1% and total revpar an impressive 8.6%. The text an expansion is proving to be a tremendous investment for us occupancy at the Texan grew a full 4.4 points in the second quarter.

And there's only been one quarter since we opened the new expansion in which occupancy has been diluted year over year.

Corporate room nights in food and banquet spending were up nicely with good flow through to the bottom line.

And despite an increase in property taxes from the expansion.

This resulted in adjusted EBITDA growth of 21.1% and yes, I did say, 21.1% in DC Gaylord National Revpar was up 2%, while total revpar was down 2% two groups with significant high margin banquet spend the travel in the second quarter of last year did not repeat in the DC market. This year. So adjusted EBITDA. He was down year over year by 8.8%, but often nationals, leading performance in the first quarter, we still expect it to be among among our top performers for the year.

No no Glenda Gaylord palms experienced a flat revpar growth and a 5.8% total revpar decline in the quarter and this was driven by a couple of factors specific to the quarter first in terms of Revpar citywide conventions in Orlando experienced a very self choose and so there was less compression of trends in demand in the market. During this time now this appears to be a mine uplift. The citywides in Orlando are expected to be higher in 2020 than in 2019, So clearly the market remains healthy.

Second in terms of total Revpar. It was a difficult comparison for the palms, because one of our highest spending corporate groups that stay there last June rotated out of the Orlando market This year, which shifted second quarter mix back towards associations I must point out that this is a value long term customer that is merely rotating through the brand and we already expect them back in Orlando next year.

But the reduction in high margin banquet and catering compared to last year contributed to a 12.1% decrease in adjusted EBITDA.

Now what is truly most exciting about the palms at this stage.

And we will turn to total overall bookings in a moment is that our prospects in lead volumes at this hotel up significantly due to the expansion that's underway.

The bookings for the 300 room expansion in Orlando is neck and neck.

With where the Texan expansion was at the same point in time its development cycle, and that's really encouraging for us when we look at how well the expansion is doing now in Texas and think about these bookings as an indication of what we can do in Orlando.

Now turning to overall bookings and Patrick will give you some more color on this in a minute.

In the second quarter, we projected we produced just over half a million gross group room nights for all future periods now while this was down 140000 room nights from last year's record second quarter. It is up 170000 room nights sequentially from our first quarter this year.

So as we said on the last call the incredible 1 million plus room nights that we booked in the fourth quarter of 18 drain the funnel at year end and we have been steadily replenishing it in a strong demand environment now the good news as same store lead volumes at the end of the second quarter were up 12% over last year, which in itself is another increase from the 4% higher leads we had at the end of the first quarter.

And as we look at production for the rest of the year. We expect we will see good year over year growth in the third quarter. There should be followed by a solid those softer on a year over year basis fourth quarter simply as we lap that million.

Plus room night performance in the fourth quarter of last year.

I should also note that we've had a lot of success in the past couple of years booking more and more multi year multi site contracts as corporate customers in particular extend their booking windows to secure a much needed space given limited new supply. This back to also contributes to the year over year challenge for 19, but we expect that trend to normalize in 20 as the bookings cycles for these multi year customer starts to come around again.

Just to remind you all on a same store basis. This year 2019. This bridge is projected to be a record year for us from an adjusted EBITDA perspective, but as we look forward to 20-F pace for next year is very strong with 2.7.

More net occupancy points and almost 9% more net rooms revenue on the books for next year than we had for 19 at this time last year as I said at the beginning of the call we could not be more pleased where we stand in terms of bookings both for the rest of the year and the future. We're also seeing good rate growth as we shift emphasis to price over volume given how many room nights, we booked over the past several years, if we adjust for the average length of bookings by applying the same T plus distribution to the second quarter as we experienced a year ago, we would have about 4% 80, all growth in the second quarter bookings.

We're also pleased with our hotels relative performance in their respective markets. We certainly knew that the second quarter would be the most challenging for Revpar and total revpar growth this year.

And we have had come through the quarter as good or better than expected, but what we also.

But what was also very nice to see is that all four of our same store results increase their market share. During this period as measured by still all four hotels increased Revpar index engage their competitive sets compared to the second quarter of 18 that is extraordinary and speaks to the investments we have made and the strength of our group business during the period of slower overall industry growth and I. Suppose this is not to be unexpected given what JD powers had to say about us recently.

Now before I move on to guidance and our other segments, let's hire the results the newest hotels the Gaylord Rockies.

In only its second full quarter full quarter of operations, the Rockies produced $23.6 million of adjusted EBITDA.

E. on $55.4 million of revenue now this really highlights the benefit of the incentive package that allowed us to develop this this property. In addition, the Rockies produced 149000 net new bookings.

In the second quarter and as of June Thirtyth had 56 net points of occupancy on the books for next year.

And over 47 net occupancy points on the books for 2020 one.

Therefore bookings.

Exceptional and frankly I've been in this business, a long time and I do not recall any hotel that I've been associated with opening so strongly and having such a robust book of Ford business were tremendously pleased with the Gaylord Rockies and along with that partner, we're actively engaged in value in evaluating a 300 room expansion at this hotel.

In July shortly after the second quarter, we closed on a refinancing of the Rockies and as part of the transaction, we lined up in that $18 million of commit committed financing for just such an expansion project. So love to hear a decision on this in the months to come.

In short all five of our large hotels are humming along that bookings pace and lead volume is a very healthy and we're outperforming in our respective markets. Our recently completed capital investments are delivering on that promise an ongoing one's tracking to do the same.

Now a couple of weeks ago, Mark and I undertook a non deal roadshow in Minneapolis in Chicago.

And virtually every meeting we were asked why we believe we are different from our peers of course, we can talk about the quality of our assets. The group sector lack of competitive supply auto auto organizations like JD power say about us, but for me as a fairly large invested as one metric that I believe differentiates us if you look back over the last four years through 2018, we have grown at a AFFO at a compounded rate of almost 6% well ahead of our peer set and if you look at the midpoint of.

Guidance for this year, we expect double digit growth again in a AFFO.

And we would certainly expect good growth in 20 based on our current.

Strong.

Bookings bookings pace and the maturing maturing of the investments we have made.

Now by comparison the average two year.

To invest in a company that has demonstrated it can grow I would say from a AFFO materially more than its competitors over the last few years and if the analyst community is to believed we would do the same over the next several years due to the fact that we have built a relevant brand that delivers superior value to customers that allows us to deploy capital that generates high returns and that's not really we're all about delivering bottom line profitability and returns to our shareholders through investment in high return in projects and of course Smart capital allocation now would that noted we're in a position to again raise the midpoints of our guidance for our hospitality segment for the year.

For the full year same store revpar growth.

We are updating our guidance from a range of 2% to 4% to a range of 3% to 4% for the same store total revpar growth. We are moving from a range of three to four and a half to a range of three and a half to foreign off in terms of adjusted EBITDA, we are increasing the full year range.

For our same store hospitality segment at the midpoint by $1 million from 394 to 4.4 million to a range of 396 to four of four and for the Rockies will also increasing our adjusted EBITDA guidance at the mid point $5 million million Bucks from a range of 79 to 83 to a range of 80 to 84.

Now, let's turn to the entertainment business, where our investments are performing equally well in the second quarter revenue for entertainment business increased 20% and adjusted EBITDA Our E by over 52% if you exclude the benefit of.

The losses incurred last year with Opry city stage adjusted EBITDA grew 35% in the second quarter.

Nashville Tour tourism remains on fire evidenced by the showcase for the city of Nashville that was the NFL draft here held in April at core Nashville, same store assets. The Opry Ryman General Jackson Showboat, the Wildhorse the Springs, WSM radio and programming businesses grew revenue, 8% and adjusted EBITDA, our E by 27% in the quarter.

This performance was augmented by our portfolio of old Red venues in Nashville, Gatlinburg addition, ingo, which had been cruising along in the second quarter much like our hotel portfolio.

And they are soon to have a fourth member in Orlando in the spring of next year.

And we are actively engaged looking at new markets for the brand.

And now when we talk about the El Rey brand, we talk about it both as a venue and as the restaurant and Thats all and that is so important to remember because that is really what sets us apart cracker from our consumers now let me just give you.

Some perspectives on what we do in these locations year to date through the end of June across all three already locations. We hosted 1756 performances from 736 different artists that is over 5900 hours of entertainment in six months or an average of 10 hours per day per location that is what makes all read so different from just a theme restaurants because of our unique relationship with the artist community, where whenever fans walk into one of these venues. They know they will receive authentic country music and authentic country music experience, we boasted both established an up and coming offices.

We just so happened to do it in a great setting with wonderful wonderful food and beverage too.

And it and it is a tremendous outlet for the artists themselves, who get to perform and connect with their existing fan base or to or to be discovered by new ones. It is truly a win win for our consumers and for the artist. We're building relationships with now the next step in fostering these connections and relationships is our media joint venture that we announced last quarter with Gray television. This venture will bring our unique country lifestyle and music focused content and programming direct to our core audience through both linear TV and streaming.

Just cycle read this channel will not just be a destination for consumers, but an outlet for artists and the thousands of miles of content, we own and we're looking forward to low to launch date in early 2020.

On the back of these strong results for our entertainment business, we are raising the full year guidance range for adjusted EBITDA for the segment by $4 million at the midpoint from a range of 48 to 52 to a range of $52 million to $56 million.

Were also modestly moving the guidance range for the corporate segment by one and a half million at the mid point from a range of 28 to 26 million to a range of 29 to 28 million and this adjustment reflects increases in administrative and employment costs associated with supporting the company's continued growth initiatives.

In our hospitality and entertainment segments.

So all in all while it might might being our most challenging quarter of the year. The second quarter of 19 was a solid performance wrap business evidenced by our 12% FX, Hey, AFFO growth, particularly relative to the broader industry and we believe that guidance for the full year, our pace for 20 Nm Bottomline ETF growth if growth in the coming years will set us apart even further.

One final note as we look ahead.

Is how we think about our balance sheet and Mark will give you more color on that we've always believed that a strong and flexible balance sheet is important component of our strategy.

And in order to.

To undertake these high return investment projects that we that are available to us.

In pursuit in pursuit of that we have begun the process of refinancing at 21 maturities in order to take advantage of the strong debt capital markets, which will allow us to gain additional tenure of China practice.

Obtain attractive pricing and reload capacity under our revolving facility.

So long reportedly thought lots going on I'll turn over to Mark to give you a little more color on the financials.

Thank you Carl and good morning, everyone.

In the second quarter, the company generated total revenue of $407.7 million up 22.1% from the prior year.

Underlying this growth was steady 3.4% revenue growth at our same store hotels and as Colin mentioned, an 8% revenue growth and our same store Nashville Entertainment assets.

Net income available to common shareholders, which excludes the minority interest attributable to our partners and the Gaylord Rockies declined 11.1% in the second quarter to $49.4 million or 95 cents per fully diluted share.

The decline in net income is attributable to the increase in both interest and depreciation expense from the consolidation of the Gaylord Rockies into our financial results. This year.

In terms of adjusted EBITDA Ari the company generated $144.5 million on a fully consolidated basis.

For $135.8 million, if you exclude the minority interest in the Gaylord Rockies.

These results represent growth rate of 27.1, and 90.4% respectively.

Excluding the Rockies, our same store hospitality segment generated $109.6 million of adjusted EBITDA, Ari up 1.6% year over year in the second quarter.

As we anticipated incremental flow through while positive was impacted by the mix of groups at the national homes, which generally conducted less high margin banqueting as part of their programming.

Combined with anticipated increases in property taxes, and taxing and wages in Nashville. This dynamic put pressure on year over year flow through the net result was in line with our expectations for the quarter.

Attrition in the second quarter was 13%, which was an improvement over the 15.6% in the second quarter of 2018, while in the year for the year cancellations ticked up to a modest 8800 room nights.

As always we review the reasons behind all of our canceled room nights and there were no discernible patterns other than customer specific events.

Moving to an FFO available to common shareholders. The company generated $104.3 million in the second quarter, but the equivalent of $2.01 per share.

That's an 11.7% increase on a per share basis compared to the second quarter 2018.

Year to date.

Capital at attractive returns.

That brings us to the balance sheet.

As of June Thirtyth, we had net debt outstanding of $2.51 billion.

Subsequent to the end of a quick second quarter, we successfully refinanced the Gaylord Rockies construction in mezzanine debt.

The new loan consist of a four year $800 million secured term loan with an option for an additional $80 million of borrowing capacity should we decide to pursue an expansion of the hotel.

Concurrent with the loan closing we were successful in hedging the interest rate exposure of this new debt to an attractive 4.15% fixed rate for the first three years alone.

After retiring the outstanding construction debt the payment of fees in the distribution to minority partners of their pro rata share. We retain net proceeds from the transaction of approximately a $153 million, which were used to pay down amounts under our revolving credit facility.

Taking our second quarter, ending balance sheet, and giving pro forma effect to the subsequent transaction our available liquidity, including both unrestricted cash cash and capacity under the revolving credit facility is approximately $427 million.

With the Rockies and refinancing now complete we have turned our attention to our upcoming 2021 2021 maturities, which include both the revolving credit facility and our $350 million issue of senior notes.

With interest rates at attractive levels and debt capital markets, showing attractive demand and liquidity, we anticipate undergoing a more comprehensive refinancing later this year to extend our debt maturity schedule improve interest costs and provide additional capacity to continue funding future growth.

On the subject of growth in June we broke ground on the rooms tower and meeting space portion of the Gaylord palms expansion.

Phase one of the expansion of new parking structure was completed at the end of May.

The project is on schedule and on budget with an expected opening of spring 2021.

Also in Orlando construction commenced in May on our fourth goal Red location in the heart of the Icon Park Entertainment District. The project is also on budget and scheduled to open in May 2020.

Finally, turning to guidance based on our performance year to date and visibility in the back half of the year. We are in a position to once more increased the midpoint of our expectations for both our business segments.

Collyn provided ranges for Revpar and total revpar growth I'd like to further add on a quarterly basis. We continue to expect the third quarter to be our strongest with both metrics up mid single digits.

Our updated outlook for 2019 also includes an increase in our expectations for FFO available to common shareholders.

To a range of $316.1 million to $331.2 million, an increase of $1.9 million at the midpoint, while our updated range for adjusted FFO available to common shareholders moved to $344.2 million to $361.3 million up $5.6 million at the midpoint.

A detailed reconciliation of our current guidance can be found as a supplemental schedule to our earnings release.

One final housekeeping note in terms of subsequent events.

As was anticipated on July 30, Onest, we closed on the purchase of a residual 0.9% ownership interest in the Gaylord Rockies from one of our development partners for a total net cash consideration of $5.5 million. This brings our total ownership in the property to 62.1%.

And with that I will turn it back over to Collin for any closing remarks. Thanks Mark.

Let's let's get questions.

So Christine if you would open the lines please that will be wonderful.

Certainly the floor is now open for questions.

To ask a question press Star then the number one on your telephone keypad.

And your first question is from Smedes rose of Citi.

Hi, good morning.

I guess I just wanted to ask you on the forest.

Bookings, if you're hearing anything from customers.

That would maybe.

Sort of underscore some more uncertain than the broader economy, so either more flexibility on the contracts.

The amount of space that they're they're wondering if that book or anything along those lines.

I know you provided to Ford gross definite room nights and shows.

Difficult comps this year, but any sort of additional color I think would be interesting.

Smedes good morning, Colin.

I think what I'm going to do is let Patrick I'll answer this but I would say to you we got a finger on the pulse on on this group segment as well.

We remember all too vividly what went on in 2008 in this economy and the impact. The 2008 eight had on things like attrition rates cancellation rates need volumes desire by the meeting planner to book.

Pricing and and we were actively actively following and as we navigate the.

The economic.

Headwinds from time to time that hit our economies. So I would say generally speaking we feel in very good shape, where right where the group businesses, but Patrick you want to get a little bit more granular sure good morning speeds.

There's really three things that we would look at for groups to understand the trending of the behavior. If that's indicative of something else going on if you look at the contract terms. So we're not getting any additional pushback. It is always our intent to strengthen our contract terms and we're not having any problem with groups.

Who are has allowed them to sign up for attrition and cancellation clauses that are consistent with our history. So nothing on that front. The second would be on space groups are.

Contracting with us for space quantities that are consistent with their historical patterns. So again nothing that we see there and then when they are travelling the groups that are in house over the past second quarter or that are contracting for.

We're getting ready to travel here in the next couple of months, we're not seeing anything as far as a pullback in the amount of space that they are using and the last will be banquet spend banquet spend really starts.

Getting finalized in the last 90, and then, especially 30 days burn or groups arrival and we've not seen anything from overall groups that would indicate to us that folks are pulling back their historical spend levels are consistent with what we're seeing them spend now we have some groups that are outperforming we always have some groups that underperformed, but theres nothing really going on that would give us pause and then I would say that as you've heard us talk about in Collins comments.

We have been successful in booking a lot of corporate room nights earlier in the booking window process and so that is not something that we would think is reflective of a hesitancy by corporate meeting planners. So the fact that they are booking earlier and further out.

So the three factors that we look at as well as their behavior in booking further out would make us feel that.

There is no negative trends emerging and Patrick.

You may want to talk about that dynamic pricing, because obviously when meeting pena start to get skittish, which we which we have.

Mid mid 2008, yeah, we tend to see that.

Translates into pricing, but.

Just give the listeners is a little bit of color on what we're seeing on pricing right now okay. Yes, that's a great point. Thanks, Colin Yes. The brand produced the highest Q2 production rate in the brand's history.

Over this past quarter.

Now that may not materialize in the numbers that you see and the reason for that is we produce less room nights in the T plus five.

Bookings period and beyond so we were booking fewer room nights as a percentage of the total mix. We are booking fewer room nights out beyond T plus five our bookings were more concentrated in the T plus zero. So 2019 through T plus four so a greater mix closer in and as you can imagine your highest rates are going to be booked in the further out periods. So if you're to equalize as Colin mentioned in his comments. If you were to equalize the number of room nights that we booked you'd actually see a very healthy rate of growth in room night rate. So again the rate is moving in a very positive direction. We have the best second quarter in terms of rate that we've ever had and we are optimistic that groups are continue.

Are going to continue to show their willingness to pay for the premium periods that they want to look into and I know, we don't sort of tend to talk about periods outside of the quarter that we have.

Communicating about but we just closed July bookings and with we're seeing no disconnect in July we had a very healthy.

Bookings patent in July and rate to Patrick.

I think thats right, yes, that's correct, we had a very encouraging July production.

Okay. That's great additional color. Thank you can I just ask you to any color. There is there anything that you can say at this point on the on.

On the Chula Vista.

Development in your potentially becoming a part of that.

No.

Not really we you know we are continuing to.

Take a part that southern California location.

And and look we're only going to do it.

We're only going to be involved in it.

If.

If it makes economic sense, if the as I say, if the telx lift the dive and if the if the the the risk of constructing a project in southern California over the three years that the returns of superior and it makes sense right company lot. We're only do that and there is a lot more work to be done the add on development partner in Denver is obviously, taking the lead on this until let's see where all this goes over the next few months.

Great.

Appreciate it thank you.

Thank you Smedes.

Thank you. Your next question is from Chris Woronka of Deutsche Bank.

Hey, good morning, guys.

Wanted to ask.

With now having a most of the summer it sound way of spied yet it sounds like you've been off to a really good start and pleased with how it's going.

Does that make you.

More or less likely to think about doing something similar to that one of your other hotels or do you see soundwaves as having maybe some.

Brand potential beyond just just your hotels.

So.

Let me sort of give you a known emotion on officer, and then an emotional on so the the non emotional answer is that we.

We really want to get through the season here. We only opened this baby. The initial portion here right at the end of <unk>.

In December of last year. So we want to give this this facility a good 12 months I would say to you that we've been very pleased with.

How the summer since since we opened the outdoor portion in May how this summer has has built I think Patrick as well I think as of the end of July we put through like 50000 people through this thing I think that was the number yes. The month of July alone July alone. That's in the month of July line, we put through can you believe that 50000 people. So.

We're very encouraged with it by it.

And we're encouraged with the room night production.

This this facility has has generated.

And I would say to you.

Chris We are an organization that that does construction projects and learn from them and then we we move them on to the next facility and Thats, what Weve really done with with this rooms expansion and meeting space in Texas now moving it onto.

On to the problems, we're probably going to do the same thing here in Denver.

We won't have to do meeting space expansion, but we certainly are looking at room space expansion. So.

I would say to the clinical view of this is that we want to get through the rest of this year and we will look at the.

The final IR AWS on this project and its applicability to two other locations, but I would say to you that all of us sitting around this table here, having this conversation with you. This morning, I think we all we all have very excited about this would be the sort of more emotional piece of this we're excited about what is happening I'm getting a lot of comments from customers that go to this place has is Patrick.

In terms of.

In terms of people, who are excited and behavior is being changed because of it so.

It wouldn't surprise me if you you read us looking at one of these types of projects in one of our other hotels that doesn't have.

Sound waves in it.

It wouldn't surprise me if you have something like that in the middle of next year, but we want to get through this year too.

Two.

Property assessed the the impact on value creation for shareholders.

Okay Fair enough and then just as a follow up.

Interesting data points on some of the.

The forward pricing, you're getting I wanted to ask about some of the contractual increases on the out of room spend that you're able to get what does the maybe its course for Patrick what does.

Customer reception to that how do you kind of.

Any time, there even temporary pauses.

In the bigger picture, how do you get folks over the finish line and some of those out of room increase.

Yes, so Chris good question, it's really a sales process.

Obviously, its aided by the fact that.

JD power has just released this information, indicating that we're a very highly rated brand in that.

It demonstrates not only our ability to deliver on the promise, we've been making to folks in the past, but in our future ability to do so, but it's a sales process.

That really gets to a fever pitch again 90 days out and then even further about 30 days out and our event management and banquet services teams will reach out to the customer and start building individual menus, an individual events and.

Their job is to make sure that they deliver.

And experience that exceeds expectations and so a lot of that is working with the customer identify what their needs are and then putting together a banquet package and outside the room spend that exceeds our expectations and so thats a sales process and.

We're always studying up folks initially in the contract with the food and beverage minimum, but thats never what we intend to sell at the end of the day and so we have some very capable folks who can really.

Create innovative experiences on the banquets and event side and really while folks and as a result of that we are able to sell higher and higher levels of outside the room spend.

Okay very helpful. Good color thanks, guys.

Thanks, Chris.

Thank you once again, if you would like to ask a question Press Star then the number one on your telephone keypad.

And our next question is from Patrick Shoals Suntrust.

Hi, good morning, calling mark.

Good morning, Patrick question. Good morning, a question for you looking out.

A couple of years here, certainly theres, some new convention space.

Coming in and Vegas next year.

Seen any pressure for that in 2021 and beyond bookings.

The answer the answer to the question is.

Vegas always plays a role but.

One of the things that you know we'd ask you to reflect on is our business is focused on these 500 at peak plus groups and there is 25000 to those in the US 50% on a go to Vegas, 50% never want to get go to Vegas and these of groups. The one all under one roof experience, we need Patrick as a company we need about 80 of those per hotel per year. So even if vegas doubles its supply, it's not a competitive threat to our business and.

And yes, you know we read the wind is going up.

Ill add.

How many hundreds of thousands of square feet of meeting space and but our business continues to get stronger and stronger. So it's not an issue for US. Yes. Then this is Patrick Patrick to the only thing I would add to it is that the unique attribute of our brand.

Is that we focus on group, we met group number one we value them above all else and.

No matter what amount of space gets added in Vegas that will never be the case the group customer will never go there and know that they are number one in that facility and so yes. They will continue to add space, but we truly believe that the brand differentiation of putting that brand customer or that group customers number one and how they are treated makes a big difference.

Okay. Thank you thats it.

Thank you.

Christy.

Any other questions.

There are no further questions.

Excellent well.

Alright, well. Thank you everyone for taking the time this morning.

We're very pleased with where our company sits and if you have any other questions.

You can always get hold of the small myself.

Or Todd Siefert, who runs I offer us and thank you for joining us this morning.

Thank you. This does conclude today's conference call you may now disconnect.