Ryman Hospitality Properties : JPMorgan Gaming, Lodging, Restaurant & Leisure Management Access Forum Transcript

Ryman Hospitality Properties

Ryman Hospitality Properties presentation delivered at the J.P. Morgan Gaming, Lodging,

Restaurant & Leisure Management Access Forum - Virtual on Monday, September 14, 2020 at

2:10 PM

[music]

Patrick Omar: All right. Good afternoon, everyone, and thanks for joining us. We're here live with Colin Reed, Chairman and CEO, and Mark Fioravanti, CFO of Ryman Hospitality. Colin, Mark, thanks for being here and taking time today. Obviously, interesting times we're living in so let's jump in.

You guys provided an update last week with some recent occupancy and operating trends. Maybe we could just rehash some of those and what you've seen over the last couple weeks and months as we progress through the pandemic.

Colin Reed: Let's start with our hotel business. Mark, if I miss anything, please jump in here. Four of our five hotels are open right now. We have two small ones we really don't count as we talk about hotels in the context of big ones. Four are open. One are not. The one that isn't is based in Washington.

The four that are open, we reopened the first one of those early in June. We opened the other three towards the end of June. We've been pleasantly surprised with the levels of occupancy we're been putting through those hotels.

We've been generating anywhere from 15 to 20 points of occupancy at weekends. Those occupancies have moved up into the 30 percentage range. What I'd like to point out, Omar, to the folks that are listening in to this -- 20 points of occupancy in one of our hotels is a hell of a lot of room nights.

Our smallest hotel is 1,400 rooms. Our largest is 2,880. We're generating a lot of hotel rooms and a lot of outside of the rooms spend. We've been very happy with what is going on, especially with

COVID.

Obviously, in our hotel business that have a lot of room nights canceled, just like every group hotel and every convention center across the nation. We laid it out in the report that we've put out

on Friday, if you referenced. We've had about 1.7 million room nights canceled.

We have rebooked just over 45 percent of those room nights, which is substantial. We're very pleased about that. On the cost side, we have worked very, very hard with Marriott, our manager, in we furlough basically I would say 90 percent of our payroll in these hotels.

As we have reopened them and we have been bringing back certain of our management...to give you an example, in the Texan that has been operating probably at the highest level of all of those four hotels, we have about 180 managers, supervisors, managers, directors, vice presidents. We brought back Patrick, I think somewhere in the 80 range.

Our margins are pretty good. What we have laid out in these updates is that we estimate that if we can continue to build this and get to 30 points of occupancy, we should have those hotels breaking even from a cash flow perspective. That's where the hotel business is.

Our entertainment business, we've obviously been subjected to the criteria that a city like Nashville has put out, where businesses were closed and then slowly they've been allowing businesses to reopen now. For instance, our restaurant business here is operating at 25 percent seats available, but our Ole Reds that we have opened have all opened pretty well.

We've been very pleased with that. We've been live streaming at the Ryman. We've been doing paper views for the last four weeks on a Friday. We've been live-streaming the opera on a Saturday night, in front of no crowds whatsoever, just zero people in the opera house. We've been getting huge online activation.

Last weekend, not this weekend, going on the weekend before, we had Brad Paisley and Carrie Underwood. We streamed that to two million people, and we also had it placed on our Circle TV network.

Given this very, very unusual circumstance, I would say, we're in as good a shape as we can be in this very current time. I suspect that through the fourth quarter and into the early part of next year, you'll see, I think, our businesses continue to reopen and strengthen.

That is reflected in the estimated cash burn that we referenced in Friday's release, down materially from the third quarter, down materially, third quarter was materially down from the second quarter. We estimate somewhere between 22 and 24 million monthly cash burn, and that's after debt service too. We're making progress in a very unusual and difficult time.

Patrick: Awesome. You alluded to it earlier, but the Gaylord National is the only major hotel of yours that's closed. Can you give an update as to what you would expect or what would need to happen for that hotel to open whether it be on the operating side or the [inaudible] side?

Colin: Yeah, sure. We think about every hotel in a very consistent way, and there are a number of factors that we take into consideration. One, how much group business does the hotel have on the books between now and the year-end? Is it likely that we can generate tremendous leisure business in a particular hotel?

The fact of the matter is Gaylord National, the National has the highest percentage of group business on an annualized basis, and our leisure business in that market is relatively limited. That was a factor as to why we didn't open it.

The second part of it is the cost structure dealing in a market like Washington DC is higher simply because it is a union hotel.

The third thing that we took into consideration is that this is the only hotel that we have an outstanding major capital rooms refurbishment. What we have done is we've accelerated that refurbishment. We started doing that back in the June time frame, Patrick, I think. We're attempting to get 1,000 rooms done by the end of the year.

Over the next month to two months we'll be probably a little bit more definitive on when we're opening it. I very much doubt whether that hotel will open much before the year-end.

Patrick: OK. Awesome. That's helpful. Obviously a lot of the demand and a lot of the recovery has been driven by that drive to leisure guest. What are the different levers that have worked and didn't work in capturing that shorter lead time, that shorter lead time leisure guest?

Colin: What I would like to do is answer that question in a little bit more of a complicated way, which I think will be helpful to those that are listening. Our brand, this Gaylord Hotels brand, is a brand that this company designed, built, and operated. We handed it over to Marriott in the early part of '13.

Part of the characteristics of this brand was that we wanted to make sure that the physical product was exceptional, that we put entertainment in these things, that we have great service and we know the customer better than anybody else.

These hotels, Omar, I don't know whether you visited any of these hotels, but these hotels are very different to what you tend to see parked next to a large convention center in a city let's say like Indianapolis or pick it wherever you want to go.

These hotels have extraordinary attributes. We have beautiful stars. We have beautiful pool complexes. We have multiple restaurants. We have retail. We have beautiful atriums. The list goes on and on, sports bars.

There are one or two folks in the sale side, your brethren on the sale side, not with JP Morgan, that would say you're a group business. You're a group company. Therefore you can't drive leisure. That is so far from the truth.

The busiest time of the year for this company, for this brand, is in the period between Thanksgiving and the end of the year where we don't do group business. We overlay it with these really beautiful leisure propositions.

That's truly what we've been up to here with Marriott since this pandemic hit in early middle March. We obviously shut the hotels down, and then we prepared them for opening.

In that period in middle May through the middle of June, we spent a lot of time building leisure- driving programs in these particular hotels and frankly generating about 20 points of occupancy with the average hotel size I would think is probably 2,000 rooms, that's 400 room nights a night since we've reopened them in each of these hotels. If this was a 500-room hotel, each of our hotels were 500 rooms, we'd be running at 80 points of occupancy.

That's what we've been up to. Patrick Chaffin who runs asset management side and essentially responsible for our hotel business has been working with Marriott putting together these beautiful programs. In our disclosure, Mark, on Friday, we put in some illustrations of some of those programs.

They've been working pretty well. I would like it if we had maybe a bigger pool complex at one or two of our hotels, but right now, the assets that we have and the way we've marketed them, I think we're doing pretty well.

Patrick: Maybe if we pivot a little bit to the group business and talk about cancellation trends. How would you describe the evolution of the forward cancellations today? How far in advance are