RHP Q3 2014 EARNINGS CALL NOTES

11/04/14 11:40AM EST

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
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