Ryman Hospitality Properties (RHP) Q2 2025 Earnings Call Transcript

Executive Summary

Record consolidated revenue of $659.5M (+7.5% y/y), driven by Hospitality $516.2M and an all-time Entertainment high of $143.3M. GAAP diluted EPS was $1.12; Adjusted EBITDAre was $211.9M, both pressured by mix shift and lapping last year’s tax refunds.
Versus S&P Global consensus, revenue beat by ~$42.6M while EPS was modestly above; EBITDA was below consensus amid banquet/AV softness and mix. Management trimmed same-store Hospitality EBITDAre midpoint by $5M but raised consolidated Adjusted EBITDAre midpoint by $15M with Desert Ridge added* [functions.GetEstimates].
Guidance updated: Net income per diluted share midpoint to $3.47 (from $3.93); AFFO/unit midpoint to $8.21 (from $8.55); consolidated Adjusted EBITDAre midpoint to $790M (from $775M); shares outstanding step-up reflects equity offering.
Key drivers: association vs. corporate group mix shift reduced banquet/AV by ~$16M; Nashville transient rate pressure from new high-end supply; festival season weather impacted Entertainment margins, partly offset by strong demand and recent OEG investments.

What Went Well and What Went Wrong

What Went Well

All-time record Entertainment revenue ($143.3M) with momentum from Category 10, Block 21, and Southern Entertainment; strong consumer demand for live experiences despite weather headwinds.
Same-store Hospitality still delivered $187.0M of Adjusted EBITDAre (second-highest quarter in history, per call), with association room nights +~49k y/y and healthy long-dated group demand; management affirmed favorable group supply dynamics (long-term). “Group business on the books for 2026 and beyond remains healthy…positions our portfolio to benefit from growing group meeting demand in the years to come.” — CEO Mark Fioravanti.
Desert Ridge acquisition closed; capital structure actions (notes + equity) funded the deal; OEG simplified Block 21 debt via Term Loan B incremental borrowings.

What Went Wrong

Year-over-year margin compression: consolidated operating income margin -630 bps; Adjusted EBITDAre margin -590 bps; Hospitality EBITDAre margin -330 bps, partly from mix shift, timing of Easter, and lapping prior-year franchise tax refunds.
Banquet/AV revenue down by ~$16M due to mix shift toward associations and fewer corporate group room nights; ITYFTY cancellations rose 23.6% y/y.
Nashville transient softness (new high-end supply) prompted lowering same-store Hospitality EBITDAre midpoint (−$5M) and EPS/AFFO per share outlook; Entertainment margins also compressed y/y (weather plus Southern Entertainment impact).

View the full earnings report

Transcript

Speaker 5

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 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 reconcile each non-GAAP measure to the most comparable GAAP measure and exhibit to today's release. I'll now turn the call over to Colin.

Speaker 1

Jennifer, thank you. Good morning, everyone, and thanks for joining us today. Before we start, I'd like to take a moment to acknowledge the families and communities affected by the catastrophic flooding in central Texas. Managing through the devastating flood we experienced here in Nashville in 2010 that directly impacted our businesses, our employees, and our city was, I can tell you, one of the most difficult experiences of my entire career. We're heartened to see how communities across Texas have wrapped their arms around their neighbors. While our assets were not directly impacted by the flooding, we have contributed to the relief efforts through our Texas-based properties indirectly by making a donation to the Community Foundation of the Texas Hill Country. We will continue to engage in the recovery efforts as we learn more. The second quarter was an exciting one for our company, both strategically and operationally.

Strategically, we announced, funded, and closed the acquisition of the JW Marriott Desert Ridge in Phoenix, Arizona, an asset that has long been at the top of our acquisition list and one that we have tried to acquire, I don't know, several times in the last 10 years. Mark will talk about the acquisition in more detail in just a moment. In addition, we completed the presidential meeting space renovations at Gaylord Opryland, among several other projects smaller in scope, including food and beverage enhancements at the Gaylord Texan and the Gaylord National. The presidential meeting space, together with the recently renovated governor's space, represents approximately 40% of the carpet meeting space at Gaylord Opryland today. Actually, we will be unveiling new names for these meeting spaces in the coming weeks. For our entertainment business, the second quarter marked our first festival season with Southern Entertainment.

Operationally, our businesses delivered record consolidated revenue. In our same-store hospitality segment, the second highest adjusted EBITDAre in the history of that business, trailing only the second quarter of last year. In fact, for the year-to-date period, same-store hospitality adjusted EBITDAre came within $30,000 of our original operating plan for that part of the year, an incredible result given the complexities of the current operating environment. I said this on our last call, but it warrants saying again, we're living and operating in very unpredictable times. Throughout my 24-year tenure at this company, I cannot remember a period when there were so many different and complicated issues occurring at once. We and our customers are bombarded daily with the rhetoric around tariffs, inflation, interest rates, wars, and other issues that could have significant implications for our businesses.

This level of uncertainty has caused some of our group and leisure customers to put activities on hold or at least proceed with caution. Since Liberation Day in early April, some of these near-term uncertainties have abated, and we've seen some improvement in meeting planner sentiment for 2025. In the year-for-the-year, bookings activity has trended better than our expectations in early May. Given the complexities of the overall economy, our outlook still contemplates the potential for slightly higher group attrition and cancellations in the second half of this year. For the portfolio, our leisure businesses, I would say, steady as she goes, with particular strength at the Gaylord Palms Resort & Convention Center and Gaylord Rockies Resort & Convention Center behind our recent investments in those assets, particularly offset by softness at Gaylord Opryland Resort & Convention Center.

For several quarters now, transient occupancy trends in Nashville have lagged the top 25 markets, and in the second quarter, so did transient rate trends, both of which we view as a temporary side effect of the substantial influx of new hotel supply in this market. Visitation and tourism in Nashville remain robust, and in fact, rooms sold in the market in the second quarter increased year over year. We expect the transient occupancy and rate trends to begin to reverse as tourism grows and hotel demand catches up with the new supply. Our entertainment business continues to perform well. Demand for live entertainment remains robust, and our recent capital investments in Category 10, Block 21, Ole Red Las Vegas are delivering strong results. Next month, the Opry heads to the Royal Albert Hall in London for its first-ever international performance, which we will also be broadcasting in the UK.

NBC will also be re-airing the televised Opry 100 special from earlier this year, and we've just announced that the Opry will have a special performance at Carnegie Hall in New York City in the first quarter of 2026. As we had anticipated through the market investments we're making behind Opry 100, we're reaching more fans than ever. Now, before I hand over to Mark, I want to make one more comment. As a fairly large investor in this company, I am, of course, very much interested in what's going on in the business on a daily basis. My focus always has been on the long term. At our hotel business, which represents the lion's share of Ryman, our customers are making decisions two to four years out, and in some cases, much longer. What's really important is how strong our relationship with these folks is. Do they trust us?

Do they recognize the superior proposition we're putting before them? Are we growing our share of their business? Do our advanced bookings for the future years look strong? Will the large capital projects that are underway create meaningful growth for our shareholders? The simple answer to all of these questions is an emphatic yes. Mark will now explain to you why Ryman, and our hotel business in particular, has never been in such a strong position.

Speaker 0

Thanks, Colin, and good morning, everyone. Before I discuss the second quarter, I'll spend a moment on our acquisition of the JW Marriott Desert Ridge. As Colin mentioned, this is an asset that's long been at the top of our acquisition list. For us, the Desert Ridge property is an ideal acquisition target, a large Marriott-managed group hotel with significant leisure demand in a top 10 meetings market, with opportunities to create value through inclusion in our portfolio and incremental capital investment. This acquisition unlocks incremental group rotation opportunities for our existing Gaylord Hotels customers and is the second JW-branded asset in our portfolio, rotation within the JW brand. For our Gaylord Hotels customer base, we estimate groups comprising approximately 25% to 30% of group room nights could rotate to one of our JW properties, with limiting factors being group size and ADR.

For our JW customer base, where those limitations don't apply, the opportunity is arguably more significant. We estimate the overlap in meetings today between the Desert Ridge and the Hill Country properties is approximately 5%. Our 2023 acquisition of the JW Marriott Hill Country provides a repeatable playbook for integration and subsequent value creation. With the benefit of that experience, we're moving quickly on Desert Ridge. We've already aligned the resources within Marriott dedicated to our portfolio, and our design and construction team is on the ground completing the meeting space renovations that were initiated prior to our purchase. In addition, we're pursuing a handful of capital-light, high-return enhancements to drive better yield, including converting approximately 5,000 square feet of vacant office space to sellable carpeted breakout space and enhancing some of the event lawn to support the addition of our ice programming for the 2026 holiday season.

We expect many of these enhancements will be completed by the first quarter of 2026. Longer term, we believe the dynamics in the Phoenix Scottsdale market will support a resort expansion, providing the ability to accommodate groups with over 1,000 room nights on peak, all under one roof. Today, the only larger hotel by room count in that market is the 1,000-room Sheraton, located in downtown Phoenix. Like the JW Marriott Hill Country, the more we learn about this property, the more we like it, and we look forward to sharing our progress over time. Now, let me provide more color on the second quarter results. Our same-store hospitality segment delivered results at the midpoint of the color we provided on our first quarter earnings call. RevPAR was essentially flat compared to last year, and total RevPAR declined 160 basis points.

We estimate the timing of the Easter holiday was a 130 basis point headwind to RevPAR growth. Higher association group mix, which came in with lower absolute banquet and AV revenue, was a 270 basis point headwind to total RevPAR growth. As anticipated, association group room nights traveled in the second quarter were approximately 49,000 higher than last year, and corporate group room nights traveled declined by a similar amount. 2024 had an unusually strong corporate mix of 59%, whereas the 2025 mix is more consistent with historical trends. Typical historical patterns reflect corporate group mix in the low 50% as a percentage of total group room nights and association group mix in the mid-30%. In general, association group ADR is lower than corporate group ADR. However, ADR for both segments were higher year over year and supported higher total group ADR.

Banquet and AV revenue declined approximately $16 million compared to last year, driven primarily by the group mix shift, and to a lesser extent, lower in-the-year, for-the-year bookings for travel in the second quarter. As Colin noted, in-the-year, for-the-year bookings activity improved in the second quarter, but bookings for travel in the second quarter were adversely affected by the first quarter pause in meeting planner decision-making. Banquet and AV contribution per group room night for spend per attendee actually finished slightly ahead of our expectations. As we've seen in recent quarters, group outside the room spending levels, once attendees are on site, continue to exceed our expectations.

Leisure demand increased approximately 4% compared to last year, driven by strong performance at Gaylord Palms Resort & Convention Center and Gaylord Rockies Resort & Convention Center, partially offset by softer demand at Gaylord Opryland Resort & Convention Center due to the supply-induced challenges in the Nashville market. Over time, we've consistently demonstrated that our group-focused strategy, irreplaceable assets, and capital investment strategies drive superior growth. Our competitive position has continued to strengthen in 2025. For the year-to-date period through June, relative to 2019, we've grown the STR RevPAR index for our Gaylord Hotels portfolio by more than seven points relative to both our primary national competitive set and the local luxury and upper upscale competitive sets in the markets in which our properties are located.

Same-store hospitality segment adjusted EBITDAre was $187 million, a decline of approximately $18 million year over year, but still the second highest quarter of all time. Same-store adjusted EBITDAre margin declined 280 basis points due to the timing of Easter, the group mix shift from corporate to association, the one-time franchise tax refunds received in the second quarter of last year, and the planned wage and benefit increases under the collective bargaining agreement for Gaylord National. Several properties delivered standout performances, including the Gaylord Rockies and the JW Marriott San Antonio Hill Country Resort & Spa, both of which achieved all-time monthly records for revenue and adjusted EBITDAre in the quarter. Outlet spend per occupied room at Gaylord Rockies increased nearly 30% compared to last year, as the repositioned Grand Lodge continues to perform ahead of our underwriting expectations.

The recent renovation at Gaylord Palms continues to be received favorably by our customers, and recent guest and meeting planner satisfaction scores for the property are some of the highest in Marriott's convention resort network. These results confirm our capital deployment decisions are driving value for our customers and shareholders alike. Same-store group production trends were also strong, but last year's record second quarter created a challenging year-over-year comparison. Gross group room nights booked in the second quarter for all future periods were down approximately 15% from last year's record second quarter, which benefited from a handful of very large multi-year bookings at Gaylord Opryland Resort & Convention Center. However, compared to the average quarterly bookings for the 2019 to 2023 period, this quarter's bookings were up high single digits. Given the uncertain near-term economic environment, lead volumes for the in-the-year, for-the-year period were down 16% year over year.

However, closure rates were up meaningfully, and gross group room nights booked in the second quarter for the year were up 3%. As a result, year-to-date, in-the-year, for-the-year group bookings demand recovered to flat to prior year levels, with mid-single-digit ADR growth. These results are a testament to the quality of our portfolio, the loyalty of our customer base, and the strong execution of our Marriott sales teams. Looking beyond 2025, group demand remains strong and our book of business remains healthy. Group rooms revenue on the books for 2026 and 2027 is up 9% and 10% compared to the same time last year for 2025 and 2026, and ADR growth is in the mid-single digits. Lead volumes for all future years remain robust, and the sales funnel sits near record levels.

Our entertainment segment delivered record revenue of $143 million and adjusted EBITDAre of $34 million, driven by our recent events and recent investments in Category 10, Block 21, and Southern Entertainment. Consistent with the color we provided on our first quarter call, entertainment adjusted EBITDAre margin declined year over year, due primarily to our investment in Southern Entertainment, as well as the one-time franchise tax refunds received in the second quarter of last year. Seasonality for the Southern Entertainment business is heavily weighted to the second quarter due to the timing of their largest festivals. This year, some unfavorable weather conditions impacted festival attendance and margin performance in that business. We continue to be very bullish on the long-term potential of the festivals business, given its customer demographics, capital-light growth potential, and artist reach.

Before I turn it over to Jennifer, let me provide some color on our expectations for the rest of the year. Recall in early May, we lowered RevPAR and total RevPAR growth guidance ranges for increased conservatism around near-term group behavior. While in-the-year, for-the-year bookings activity has trended modestly better, we're maintaining our cautious outlook for higher group attrition and cancellations in the second half. In addition, the second half continues to present challenging year-over-year comparisons due to the unusually strong corporate mix in 2024. Market dynamics in Nashville for the transient segment are modestly softer than anticipated earlier this year. As Colin noted, transient demand in the market remains healthy. However, the significant influx of new hotel supply is pressuring room rates. While we continue to believe our hotels are well positioned in the market, we will revise our outlook to account for these dynamics.

Outside of Nashville, our leisure business continues to perform in line with our expectations. Our entertainment business is well positioned for the second half, with strong Opry 100 programming ahead of the Opry's birthday month in October, a strong show calendar for the Ryman, and continued momentum behind our recent investments. Taken together, our business is in a terrific position. We're pleased to have the first half largely in line with our original plan for the year. Along the way, we picked up a premier asset in the JW Marriott Desert Ridge that's been on our wish list for a long time, and we're nearly halfway through our multi-year capital program. At the midpoint, our adjusted EBITDAre guidance revision is less than 1% of full-year profitability. Now I'll turn it over to Jennifer to run through our guidance revisions and review our financial position.

Speaker 5

Thanks, Mark. Regarding our outlook for full-year 2025, we adjusted our guidance ranges to include the acquisition of the JW Marriott Desert Ridge. For our period of ownership in 2025, we expect to generate adjusted EBITDAre from Desert Ridge of $18 to $22 million, which reflects the normal seasonality of that business and some construction disruption related to the meeting space renovations currently underway. We also lowered the top end of our adjusted EBITDAre guidance range for the same-store hospitality business, which lowered the midpoint for that by $5 million to $690 million. This primarily reflects the flow-through impact of incremental transient rate risks for our Nashville-based hotel properties. On a consolidated basis, we now expect adjusted EBITDAre for the full-year 2025 in the range of $767 to $813 million.

Our revised guidance ranges for full-year AFFO and AFFO per fully diluted share incorporate the adjustments to adjusted EBITDAre, as well as the financing activities we completed in the second quarter. We now expect AFFO for the year in the range of $505 to $546.5 million and AFFO per fully diluted share in the range of $7.93 to $8.49. Let me also provide some additional color for how we expect the third and fourth quarters to play out. For the same-store hospitality business, in the third quarter, we anticipate RevPAR and total RevPAR to decline low to mid-single digits, with lower adjusted EBITDAre margin. In the fourth quarter, we expect those trends to reverse, driven by greater rooms availability at Gaylord Palms Resort & Convention Center this year and easier comparisons in our leisure business.

We anticipate RevPAR and total RevPAR growth in the low to mid-single-digit range with adjusted EBITDAre margin expansion. On the contribution for JW Marriott Desert Ridge this year, the typical seasonality for the Desert Ridge results in approximately 40% of adjusted EBITDAre generated in the first quarter and approximately 30% to 35% of its annual profitability in the back half. Finally, in our entertainment business, due to typical seasonality, we expect stronger adjusted EBITDAre contribution in the fourth quarter than in the third quarter. Now turning to our balance sheet, we ended the first quarter with $421 million of unrestricted cash on hand and our revolving credit facilities both undrawn. Total available liquidity was approximately $1.2 billion, and we've retained an additional $30 million of restricted cash available for FF&E and other maintenance projects.

During the quarter, we issued approximately 3 million shares and $625 million of senior unsecured notes to fund the acquisition of the JW Marriott Desert Ridge. The equity transaction represented the first marketed equity offering in the lodging REIT space since we last issued equity in 2023 to fund a portion of the Hill Country acquisition. Our current bond offering priced approximately 30 basis points better than the average yield for our credit ratings category. Additionally, and related to the JW Marriott Desert Ridge acquisition, we received a same-day credit ratings upgrade from S&P from B-plus to BB-minus. We also defeased a $128 million Block 21 CMBS loan that was set to mature in January of 2026 with an add-on to the existing Opry Entertainment Group term loan fee.

As a result, at the end of the quarter, our pro forma net leverage ratio based on total consolidated net debt to adjusted EBITDAre, assuming a full-year contribution of adjusted EBITDAre from the Desert Ridge, was 4.4 times. Finally, let me comment on our anticipated major cash outflows for the year. Regarding our outlook for capital expenditures in 2025, we are reiterating our expectations for $350 to $450 million for the year based on our latest construction timelines for projects currently underway. This also includes modest incremental capital investment at the Desert Ridge, which Mark touched on earlier. Regarding our dividend, it remains our intention to continue to pay 100% of our REIT taxable income through dividends. With that, operator, let's open it up for questions.

Speaker 3

Thank you. At this time, if you would like to ask a question, please press star one on your telephone keypad. You may remove yourself from the queue at any time by pressing star two. Once again, that is star one to ask a question. We'll pause for just a moment to allow questions to queue. Thank you. Our first question will come from Aryeh Klein with BMO Capital Markets. Your line is open.

Thanks. Maybe first just on the lead volumes, I think they were down 16% year over year. Curious how that's trended since. Are you seeing kind of month-over-month improvement, and how you just expect that to play out the rest of the year?

Speaker 1

Yeah, please.

Speaker 4

Hey, good morning. This is Patrick. Our lead volumes have definitely felt some pressure on the in-the-year, for-the-year, and we expect that to continue as we continue to move through the rest of this year. Our lead volumes look very good for 2026, 2027, and beyond. We do believe that some of the pressures and headwinds that we've been seeing have thus far been relegated just to the 2025 calendar year.

Got it. That may be more of a strategic question. You talked a little bit about the potential for rotation within the JW brand now that you acquired Desert Ridge. Curious how you're thinking about JWs more broadly, longer term, and creating, you know, something where you own more JWs, kind of replicate what you have within the Gaylord Hotels that you own. Is that something you would potentially consider?

Speaker 0

That certainly is, as we think about what the growth strategy is for the portfolio, adding JWs in the right markets that allow us to create that rotation, not only between JW and Gaylord, but also across JWs, is something that we think quite a bit about.

Speaker 1

Ari, this is Colin. When we put the crosshairs on these two, just happened to be JWs 10, 12 years ago, we did so because we like San Antonio as a market, and we very much like Scottsdale as a market. The reason we like those markets is because the large group meeting planner wants to frequent those markets. Those markets are both top 10 markets. These hotels were, in our opinion, leaders within those two markets. Both these hotels, in our opinion, have the ability for us to extend these assets from around 1,000 rooms to 1,250, 1,500 rooms over time. Of course, they're within the portfolio of Marriott. You know, we can aggregate and bring our sales structure into them. I would, I think, Mark, the other benefit of JW is the rate structure of JW has been a little more favorable.

Speaker 0

It is certainly higher than Gaylord.

Speaker 1

The Gaylord brand, and so picking these customers up that go there today and then rotating them into our infrastructure is a good thing. The primary reason we like these assets is the market and the fact that our big group customers want to go to these markets. In our opinion, this was a very efficient way to get into these businesses.

Thank you for the call.

Speaker 0

Thank you, man.

Speaker 3

Thank you. Our next question will come from Chris Woronka with Deutsche Bank. Your line is open.

Hey, good morning, guys. Thanks for taking the question. I had kind of a two-parter. The first one is, you know, it seems like the out-of-room spend is continuing to hold up really well, even in cases where you're maybe having a little bit of attendance attrition or less pickup. Just curious as to what you think is driving that in the context of a little bit of softness you mentioned here and there. The second part is maybe we can talk a little bit about the D.C. market and what you're seeing there. There's a lot of noise in the market. We've heard some mixed things. Can you just talk about maybe your near and medium-term outlook for the national and how you can maybe offset some of the broader market hiccups if there are any things?

Speaker 4

Hey, Chris. This is Patrick. Good to hear your voice. Let's start with your first question on out-of-the-room spend. Yes, we agree. It has been extremely resilient. When you take into account the mix shift that we've seen in the second quarter and some of the other things we've seen for the remainder of the year, we're still very, very positive on how banquet and outside-the-room spend contributions per group room night are holding up. Groups continue to react to some of the things that they're seeing in the macro environment. When they get on property, they continue to do very, very well. That is a trend that we've been seeing for several years, and it continues to hold up, especially on the corporate side, but the association is definitely not underperforming on that side either. We've been very encouraged by that. To your second question on the D.C.

market, I would tell you that we're really pleased that the Gaylord National Resort & Convention Center has been doing a really good job in a very challenging market and continues to move in a very positive direction. We've made some fundamental structural changes to that hotel in the wake of COVID when we reopened it, and those have continued to pay benefits for us long term. While there is some pressure from the government side, Gaylord National Resort & Convention Center seems to have really found its space to operate in a very healthy way and continues to move in a positive direction. We feel good about where it's heading.

Speaker 1

Chris, hey, good morning, Colin. I want to add just one more comment to Patrick's answer to the first question about average spend. When you step back and you look at what is really going on within the economy of the United States of America, things aren't all that bad. Yeah, we had a rough first quarter for multiple reasons, but the second quarter, GDP has just come out, 3% GDP growth. If you look at where the S&P 500 is trading, you look at where the market is trading, you look at underlying profits of corporations throughout this country, things are in pretty good shape. Our thesis is, if interest rates do come down, the big, beautiful bill takes effect where people, organizations can invest in new infrastructure and claim 100% tax depreciation.

Our view, as a company, is over the next one, two, three years, this economy should be pretty decent. I think that's one of the reasons why the average spend is holding up. It's very complicated because we're being bombarded every single day with things like what is going on with tariffs and wars. The consumer is pulling their hair out and trying to understand what things are going to be like six months from now. I think my personal view is I think things could be decent for 2026, 2027, and 2028.

Speaker 0

Yeah, I mean, in addition to the macro trends, Chris, the one thing I would add is that when you look over the last several years at how we've invested capital into these hotels in terms of food and beverage, carpeted breakout space, things like what we've done in Colorado, right? All those investments have been to drive outside-the-room spending and to attract a higher quality customer and a higher rated customer. I think that you're starting to see those investments pay off in some of the outside-the-room spending behavior that you're seeing in our hotels.

Okay. Very good. Appreciate all the perspectives, guys. Thanks.

Thanks, Chris.

Speaker 3

Thank you. Our next question will come from Smedes Rose with Citi. Your line is open.

Hi, thank you. I wanted to ask a little bit more about your expectations at the Gaylord Opryland. Does that property do more transient business, maybe relative to your other properties? I guess I was a little surprised to see that you brought down the guidance based on transient, given the emphasis on group across your properties. Just on the room supply pressure that you mentioned, I maybe haven't been paying attention closely enough, but I feel like room supply in Nashville has been increasing fairly steadily for a long time now. I'm just wondering why you think now you're starting to see the impact, whereas maybe you hadn't seen it as much in prior years.

Speaker 1

Shall I start?

Sure.

Okay. Let's step back a sec and understand what is going on here in the city and where then we'll get onto Opryland. There is a unique product that emanates from Nashville. It's called music, country music. There's not another city in America that has the infrastructure that we have here. This product has become global. Over the last 5 to 10 years, it has gone global. All these great artists that live here, play here, are now playing in cities all across the world. This is generating a tremendous amount of demand for the city of Nashville. In addition to that, you're right. We've seen over the last decade, I would suggest probably 15,000 new hotel rooms. There's not another city in America that's seen this supply. We forget about Airbnb that didn't exist 10 years ago, now does. We've got about 7,000 of those babies in this town.

On the other hand, when you look at the demand generators, the things that are underway in this city, things like this brand new stadium, and we call it the Titan Stadium, but it's a dome stadium similar to the stadium in Las Vegas. This stadium will, I suspect, do 25 to 50 new big concerts a year, playing in front of 70,000 people. This stadium almost certainly over the course of the next few years will attract a Super Bowl, will attract a Final Four, has, in fact, recently signed WWE to come here, which was, quite frankly, when it was in Vegas a year ago, was one of the biggest demand generators for that city. We have massive development going on on the East Bank with new demand generators being built there.

We have the Bridgestone Arena downtown Nashville that the current owner of is a guy called Bill Haslam, the ex-Governor of the state, owns the Predators, has very, very, very exciting plans for the expansion of that. I look out of my office window here, I see cranes everywhere. We have relocations coming into Nashville, the likes of which we haven't seen before. We have Oracle bringing their world headquarters here over a period of time, $4 billion relocation. This city is in an extraordinarily unique position. Now, Opryland, we talk about it and we take it for granted, 2,880 rooms. This hotel where Mark and I got here, 20-plus years ago did $40 million of EBITDA. That baby this year is going to push just under $200 million of EBITDA. This is the most relevant convention resort in America.

We have added, as you all know, things like Soundwaves because of the incredible amount of influx that we've seen from a tourism perspective. This hotel does more tourism business than the rest of our hotels, than any of the other hotels, but it's simply because we've got far more rooms and, you know, 30% of its business is leisure. Leisure is going to continue to grow in this market. By the way, I didn't mention what has happened at the airport. There is not another airport in America that's had two major expansions in the last decade. There is not another airport in America that when you speak to the CEO of the airport, good guy, Doug Kruger, who runs it, and you ask him, you've just put a new whole series of gates in, he will tell you that we're 30 gates short today.

We're 30 gates short of what the demand for airlines flying to this town will be. Our thesis for Nashville, I know this is a long-winded answer, Smedes, to a very simple question. Our thesis for this market is because of this unique product and the desire for consumers to touch it and feel it, we're going to continue to see growth in this market big time, I think, over the next 10 years. By the way, I forgot one other thing. On Monday of this week, I beg your pardon, last week, The Boring Company, which is Musk's company that digs tunnels, this is the second city that they have selected to come to. They have been working with the governor's office for the last 12 months to connect the airport to downtown Nashville. We met with them, and we would obviously like them to connect it through Opryland.

This is exciting. This is going to move people from very crowded streets to subterranean and will, I think, be another benefit to tourism in this city. That's how we think about it.

Okay. If I could just ask a quick follow-up and back up a little bit. You obviously have improving visibility into 2026 and into 2027. You talked about some of the positives there. Are you still comfortable with the EBITDA ranges on a same-store basis that you provided back in, I think, January of 2024 in terms of being able to get to those levels in 2027?

Speaker 5

The short answer to Smedes is yes. I think there's obviously, as you go through a period of looking at a four-year time period, things that are going to be better. There's pluses, there's minus, there's puts, there's takes. There are a lot of ways we can get to that answer, but the short answer is, yeah, we're as positive as ever on the portfolio of businesses that we have and how we're going to be able to get to that profitability.

Speaker 1

I'm really, really glad, Smedes, you remember that because it's something that all of us sitting around this table focus on every single day. You know, as we look out to 2027 and we look out to what dividends should be, where the EBITDA ranges should be, as Jen said, there's going to be some ups and downs. Overall, our guide slope is well and truly intact.

Speaker 4

Yeah, Smedes, this is Patrick. I would just add to it that, you know, to summarize what everyone's saying, this is a short-term phenomenon. You had a pretty significant increase in supply come into the Nashville market in the short term. A lot of our competitors got panicky and dropped their rates pretty dramatically. We tested that within our own hotel at Gaylord Opryland to make sure that we were responding. I'm proud to say that the hotel did a great job of holding their ADR share, and they grew their group base, even as some of the transient occupancy pulled back a bit. On the transient rate side, the entire market went down significantly, and the hotel did a great job of managing through that. It is a short-term phenomenon.

You see it with some of the more price-conscious consumers that are going to places like Las Vegas, New Orleans, and Nashville. It is a short-term phenomenon that we think we're going to move through. To your question earlier, just to build on Colin's point, Gaylord Opryland does more absolute room nights of transient, but it is in line with what the rest of the brand does from a percentage basis of its total room nights.

Thank you, guys. Appreciate it.

Speaker 1

Thanks. Thanks, Smedes.

Speaker 3

Thanks. That's helpful. On cancellations, I wonder if you could put a finer point on how that has evolved since this initial shock period of March, April, and maybe just speak to the underlying assumptions in the back half there. I know you touched on it in your prepared remarks, but I wonder if you could provide any more detail. Thank you.

Sure. Most of the cancellations that we saw were in reaction to some of the tariff issues and macro concerns. That was more of the elevation that we saw in the first quarter. The second quarter, if you look at a three-year average, really is in line with what we've seen. A little bit more in the first quarter. We've seen groups not so much on the cancellation front, but just modifying their blocks and maybe showing up with fewer folks than they originally anticipated. That really is going to manifest mostly in the third quarter. We feel like we're going to move in a positive direction. As Colin mentioned, the next six to nine months could be a very positive period for the hotel. Some short-term issues we saw, some of that manifests in the third quarter.

The cancellations are a little bit higher in the first quarter, but no long-term issues from what we can see.

Speaker 0

Most of that cancellation activity is around government and consultants, a lot of the large consultants that had significant government contracts that were, you know, canceled as a part of D.O.S.

Speaker 4

Yeah, absolutely.

Helpful. Thank you.

Thanks, Sean.

Speaker 3

Thank you. Our next question will come from Cooper Clark with Wells Fargo. Your line is open.

Yeah, to Jen's point, this is Patrick. We are very bullish about the festival segment as a market that we recently entered. Similarly to the amphitheater that we just won the contract for in downtown Nashville, both of those are market segments from an entertainment standpoint that we did not participate in before this year. We are super bullish on both of those opportunities providing us more surface area for the operating entertainment group business to grow. To Jen's point, it's more seasonal, just given the sort of summertime nature of those two business segments. Separately, from an entertainment and a live entertainment perspective at a more macro level, we're very excited about what's happening in the live entertainment space. It continues to be a very robust demand for that.

When you think about through-cycle demand for live entertainment and what people spend their time and their money on, live entertainment tends to be very, very stable relative to some other business segments in the world. We're seeing good traffic at the Opry, Ryman, Austin, and most of our live entertainment venues outside of Nashville, the Ole Reds, and the one in Nashville, Ole Red here, Category 10 here, they're all performing as we would anticipate.

Speaker 0

Yeah, to Colin's point, we're also offering premium experiences in these markets with a set of distinctive capabilities that we believe set us apart. The entertainment business is sort of working very well. We're excited about the prospects for the future.

Speaker 1

Speaker 3

Thank you. Our next caller will come from Dan Pulitzer with J.P. Morgan. Your line is open.

Hey, good morning, everyone, and thanks for taking my question. This is the high-level one. Mark, Colin, last quarter we sat here, and I think it was early May, you guys said, with a tweet, things could change dramatically. As we sit here three months later, I guess arguably we got that tweet, though probably a few others along the way. How do you think about your business and the level of uncertainty in this environment versus three months ago? How do we reconcile that with what's changed in terms of lead volumes? Maybe as you look to group and leisure ex-Nashville, how are you kind of reconciling the kind of outlook now versus three months ago?

Speaker 1

Yeah. You know, Dan probably shouldn't talk about this on the call, but we have our board meeting starting tomorrow afternoon and Thursday at our hotel in Aurora. One of the speakers we have is your head economist for JP Morgan that is coming in to talk to our board and our management about the backdrop that we are operating in. I wanted him to come in and do this because, you know, there's a lot of balls in the air right now. When we were operating in May, we had the promise of the big, beautiful bill and some of these certainties around tax being discussed, but the bill hadn't passed. It now has. We haven't moved interest rates down. There's more clarity around the impact of tariffs. That thing changes almost daily.

I think our sense, my sense, and I don't want to talk for Mark, but he can do it himself, is that we could find our economy through the rest of this year looking pretty decent. I think there will be a lot more capital investment into the economy of the United States of America. I think there will be more certainty around the issue of tariffs and the impact that that will have on businesses. My personal view is I'm an optimist about the next 12 to 24 months. I sit on the board of a fairly large regional bank, and the activity in banking is not negative. It's decent.

We spend a lot of our time as we, because we've got a lot of capital plans, not just underway, but plans that we're looking for, looking to do, expanding things like Colorado, expanding Hill Country, Desert Ridge assets that we have purchased. This question that you ask is something that's top of mind for us in terms of the economic well-being of this country and what is likely to happen. Right now, I think I'm a little bit more optimistic than I certainly was in May. Mark, we had a conversation last night on just this subject. I think you normally have a half-empty diet.

Speaker 0

You were surprised I was optimistic. Yeah, exactly. Look, you know, you still wake up every day and don't know what could happen, you know, and what could get tweeted. I would argue that the economy's been fairly resilient. The consumer's been fairly resilient, particularly at the higher end. You know, rates will come in eventually. That's another big, that should be a tailwind. Our business, you know, I think our business has proved to be very, very durable, both on the leisure side as well as on the group side. It really comes down to the fact that the model that we have, the assets we have, are incredibly unique, incredibly well positioned.

When you look at the geographic distribution of our portfolio, I can't think of other markets I'd rather be in than how we're distributed when you think about what's happening more broadly economically with, you know, economic growth and population migration. We are, we're extremely well positioned. When you look at 2026 and 2027, you know, our on-the-books position has been, remains very, very strong. We are really focused on the things that we can control, making sure that the capital we're deploying, we're doing it efficiently. The projects that we have underway, we're executing those and minimizing disruption and just really trying to control the things that we can control. We'll keep watching, you know, Twitter and Truth Social for the next announcement.

Speaker 1

Some of the stuff that Patrick talked about this morning, Patrick Chaffin, you know, we are taking share. When you look at how our hotels are performing in their markets, we are taking share. Customers like us. It bodes really well. The other question that was asked earlier this morning about how do we think about the projections that we laid out back 18 months ago, whenever it was, you know, for 2027 and 2028. Our business looks really good in 2027 and 2028. We have a 5% there or thereabouts dividend yield right now. If you look out 2027 with the capital we're deploying, the growth, you know, our dividend grows, you know, pretty well. That should create a lot of value for our shareholders. Your question is a really good one.

I'm really happy that, you know, we have an analyst that focuses on the long term here, which is a really good thing because this is what's really important.

Speaker 3

We're at the top of the hour.

Thanks so much for all the detail.

Speaker 1

Yeah.

Speaker 0

We'll try to.

Speaker 1

Yeah, we'll do one more question. It's top of the hour. Katie, let's just do one more question and we'll keep our answers short. Let's see if we can get through. Let's see if we can blow through this. We're excited. I know. We're excited.

Speaker 3

Our next question comes from John DeCree with CBRE. Your line is open.

Speaker 4

Hi, this is Max Marsh on for John DeCree. Thanks for taking my question. Considering your expectation for softness in Nashville is really just isolated to that transient side, could you talk a little bit about the resilience of your group business against new competition in that market and broadly?

Speaker 1

You want to take that?

Speaker 4

Yeah, absolutely. To your point, transient ADR is really the only challenge that's going on at Gaylord Opryland right now. There's a lot of excitement at that hotel as groups are starting to come in and seeing what we're doing from a CapEx perspective into the hotel. The groups that are performing are performing well at the hotel. We continue to move the mix towards a higher corporate mix as they're seeing the renovations and the improvements as well as the expansions coming to fruition. I feel really good that we have a really solid product to offer to group guests against this downtown or any other downtown in the area. We feel really good about where Gaylord Opryland's positioned from a group perspective.

Great. Thank you for that.

I'm sure there are no further questions at this time.

Speaker 1

Okay, Katie, thank you. Thank you for chaperoning this meeting this morning. Thank investors for their time and effort. If they have any other questions, you know how to get hold of either Jen or Mark and/or our Aisim. Thank you, and we'll be speaking with you soon.

Speaker 3

Thank you, ladies and gentlemen. This concludes today's event. You may now disconnect.

Ryman Hospitality Properties - Earnings Call - Q2 2025

Executive Summary

What Went Well and What Went Wrong

What Went Well

What Went Wrong

Transcript

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