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
© 2024 Hedgeye Risk Management, LLC. The information contained herein is the property of Hedgeye, which reserves all rights thereto. Redistribution of any part of this information is prohibited without the express written consent of Hedgeye. Hedgeye is not responsible for any errors in or omissions to this information, or for any consequences that may result from the use of this information.