Healthy group outlook
PREPARED REMARKS
Colin Reed, CEO
Hotel Operations:
- Operating Metrics up across the board
- RevPAR driven by 3% occupancy, 5.7% ADR
- Total RevPAR ~10%
- Group: group room nights 31,000 more than YoY
- Transient: room nights marginally down, less availability due to stronger group and 10,000 room nights out of service at Texan, ADR +$15 or 9.2%
- Hospitality EBITDA: Adj Margin 50bps
- FCC Opryland settlement
- Flow through ex "noise" 50%
- Working to maximize efficiency and profitability
- Decline in IYFY cancellations
- Attrition levels declined
National & Washington DC
- City/Area better, while unpredictable due to Fed'l Gov't spending, outlook improving
- National Harbor development refocusing attraction to area
Sales Production
- In line with expectations
- 390,000 room nights
- Net room nights up
- Booking pattern cyclical
- During Q2: 640K nights booked, pulled forward
- ADR for future year bookings is increasing
Opryland
- Performance strong
- Largest convention center outside of Las Vegas
- On pace to have best year ever
- Q3: occupancy 80%
- All trends better, shift toward premium groups
- 33% Margin performance
Entertainment Assets:
- Misunderstood by many investors
- 43% QoQ growth in Adj EBITDA
- Country music is driving Nashville
- Tourist based growth driving Nashville and performance
- Reviewing options to unlock value for shareholders
Balance Sheet:
- Convertible Notes matured & settled on Oct 1
- Cash settled 2.4 million warrants for $57.9 million
Group Bookings:
- More nights on the books for 2015 than had on the book for 2014 one year ago and at higher rate
- Funnel is full
- Appear to be improving
- Into Q4, funnel is healthy
- Confident Q4 will follow traditional pattern
- See booking performance improve via working with manager
- Plan mapped out to achieve historical production levels
Mark Fioravanti, Chief Financial Officer
Hospitality Segment:
- Increased employee costs hindered margins
Balance Sheet:
- Subsequent to quarter end, paid off convertible notes
- Cancelled equal shares of common stock = no dilution
Dividend:
- $2.20/share with remaining payment in January 2015 - revisit dividend in January
Q&A
Q: Group business - why not benefit more?
- Seeing good performance, ADR up currently, 2015 pace strong, don't have new supply affecting, so should translate into good 2015 and 2016 - especially given current pace which is ahead for 2015 and 2016
- 5.1 million room nights on the book for all future years
Q: Attractions segment - how to think about business vs. Nashville in evolutionary cycle against long-term growth?
- RHP has 10% of Nashville room supply, but Nashville is experiencing extraordinary music base - not just country music all forms of music
- Need to focus on airlift and infrastructure to get visitors and workers to downtown
Q: Trends for outside the room spend pricing?
- Not looking at minimums. Higher rates will generate higher out of room spend
- Not pricing a steak today for a stay four years from now, pricing F&B on <90 days until arrival date
Q: National margins?
- Union costs (benefits), CITY booking costs due to incremental bookings, some one-time items in the prior year Q3
Q: Mix in Q3 2014 Group vs. Transient vs. 2013?
- 75% Group / 25% Transient, Group slightly higher in 2014 than 2013.
Q: Booked room nights on forward basis?
- More on books for 2015 than YoY forward basis and at higher rate due to corporate group. Larger bucket of leads this year than last year about 8% higher and attrition rates lower.
- 2015 mix likely 75% Group / 25% Transient
