Ryman Hospitality Properties : Q1 2025 Ryman Hospitality Properties Inc Earnings Conference Call Transcript (1aea00)

Published: 2025-05-13 09:27:06 ET RHP

Published on 05/13/2025 at 09:27

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RHP.N - Q1 2025 Ryman Hospitality Properties Inc Earnings Call

EVENT DATE/TIME: MAY 02, 2025 / 4:00PM GMT

‌Welcome to Ryman Hospitality Properties first quarter 2025 earnings conference call. Hosting the call today from Ryman Hospitality Properties are Mr. Colin Reed, Executive Chairman; Mr. Mark Fioravanti, President and Chief Executive Officer; Ms. Jennifer Hutcheson, Chief Financial Officer; Mr. Patrick Chaffin, Chief Operating Officer; and Mr. Patrick Moore, Chief Executive Officer, Opry Entertainment Group. This call will be available for digital replay. The number is 800-934-3032 with no conference ID required. (Operator Instructions)

It is now my pleasure to turn the floor over to Ms. Jennifer Hutcheson. Ma'am, you may begin.

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 fact 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 in exhibit to today's release.

I'll now turn it over to Colin.

Thanks, Jen. Good day, everyone, and thanks for joining us. We reported a very strong first quarter, including new first quarter records on top and bottom line. And we continue to grow the number of group room nights on the books for all future years relative to the same time last year. Gross group room nights booked in the first quarter of 26 and beyond were up double digits year-over-year at a record ADR booked during any first quarter.

In addition, our recent investments that have come back online delivered strong growth, while the investments currently underway in our Hospitality segment remain on time and on budget. I suppose our first quarter results could have warranted an increase in our outlook for the rest of the year, but last, we're living and operating in very strange times.

Our federal government's objective of rebalancing US trade with the Rest of the World is, to say the least, creating uncertainty and stress in not just our economy, but most major countries throughout the world. Businesses, both big and small, are trying to work out what it means to them, and we are no different.

For our meeting planners, this uncertainty has caused a new layer of complexity in their decision-making in regards to near-term meetings. As we sit here today, we started to see an uptick in attrition for meetings expected to travel over the next few quarters, as well as a modest pullback in demand for the in the year, for the year bookings.

I'll go off script for a second here now. Earlier today, we received our April production numbers, which were somewhat encouraging. And I think Patrick will give you some color on this data at the Q&A time. But it is our judgment that it is more likely than not that this caution will continue until some of these clouds of uncertainty disappear, which they will, but at this stage, we just don't know when. Primarily, that is what has caused us to slightly modify some aspects of our guidance that I'll touch on in a minute.

The second objective of federal government is to materially lower the cost of government after years of unprecedented cost increases. And here, we're dealing with what we have now come to know as DOGE. When this new department was announced, our expectations were that we could see some pullback in government-related business, which was captured in the low end of our prior guidance range. And so far, that is what has transpired.

The good news for us is that we made a decision at the very start of the year to get ahead of any potential pullback. And together with our operator, Marriott, we took an aggressive approach to margin management. In addition, our hotel leisure business returned to growth in the first quarter --reversing the trends we saw late in the holiday period of last year.

So how do we interpret all of this as we look to the rest of the year? First of all, we think it's prudent to modify our full year outlook for hospitality RevPAR and Total RevPAR to reflect the likelihood that in the year for the year group business will be somewhat weaker than our assumption several months ago and also to reflect the potential for incremental attrition and cancellation activity beyond what we have seen so far this year. Jennifer will take you through the detail of these changes in a minute.

You'll note, we're not lowering our outlook for adjusted [EBITDAre] or adjusted funds from operation, our strong first quarter results, together with our unique business model and the proactive efforts we have taken since the beginning of the year to manage our operating model and expense structure, allow us to maintain these ranges.

Our business model is particularly important during times like this, the diversification of our customer base, specifically our exposure to association group business, mitigate short-term fluctuations during periods of uncertainty. Associations are in the business to meet. And generally, those meetings occur regardless of economic conditions the global pandemic, I suppose, notwithstanding. In 2025, we happened to have more association business on the books than we did in 2024.

In addition, the contractual nature of group bookings provides a measure of downside protection through attrition and cancellation fees. Taking the great financial crisis as an example, our profitability decline in 2009 was approximately half that of the broader lodging REIT sector.

And finally, our single manager model, uniform hotel asset base and how we deploy our asset management resources, allow us to identify and effect changes to the operating model quickly, efficiently and on a broad scale across the portfolio. Importantly, our focus on the customer means these efficiencies aren't coming at the expense of the customer value proposition.

As regards to entertainment business, things are in good shape all around, good first quarter performance and newly renovated projects back in service, new growth projects identified and approved a few new projects that we have identified that we haven't discussed publicly, as of yet, are being worked on. Taken together, this means we can continue to focus on the long-term view while remaining nimble and responsive to the short-term market dynamics. And for our investors, this means we couldn't be better positioned for the current environment.

Having managed this business through 9/11, the great financial crisis, a once in a lifetime flood in Nashville in 2010 and the unprecedented COVID-19 pandemic that shuttered our hotels and venues in 2020. I remain as confident as ever in our management team's ability to navigate this period of dislocation, and emerge an even stronger company as we have demonstrated in prior periods of stress.

‌Now with that, let me turn over to Mark to discuss the quarter and our positioning in more detail. Mark?

Thanks, Colin, and good afternoon, everyone. As Colin mentioned, our first quarter results were terrific. Consolidated revenue increased 11% compared to last year. Consolidated adjusted EBITDAre increased 15% and AFFO per fully diluted share increased 28%. Our Hospitality segment delivered record first quarter revenue and adjusted EBITDAre, driven by year-over-year RevPAR and total RevPAR growth of 10% and 9%, respectively.

We estimate the timing of the Easter holiday contributed approximately 220 basis points to the RevPAR growth. ADR of $264 was also a first quarter record, up nearly 6% compared to last year with growth in both group and transient segments.

Our Entertainment segment generated revenue growth of 34% compared to last year and adjusted EBITDAre of $21 million, an increase of 35%. Both figures for revenue and adjusted EBITDAre, were also first quarter records. While there's been a considerable decline in consumer confidence through the first four months of the year, the consumer segments our businesses serve continue to demonstrate strength in the first quarter.

In our hospitality segment, outside the room spending from our group customers was slightly better than we had anticipated with banquet and AV revenue up nearly 7% due in part to higher catering contribution per group room night despite a mix shift towards association. Associations comprised 28% of group room nights traveled in the first quarter an increase of nearly 300 basis points from the first quarter of last year, and on average, associations tend to spend less outside the room.

The increase in catering contribution for a group room night is encouraging as a reduction in outside-the-room spending can be a leading indicator in a slowing business environment. And capturing demand from premium groups regardless of their segment is a primary objective we're trying to achieve with the growth capital that we're deploying throughout the portfolio.

Consistent with our expectations, the capital projects that have come back online, are already driving early returns. At Gaylord Rockies, the reconcepted and expanded food and beverage outlets in the newly repositioned Grand Lodge, delivered 30% growth in outlet revenue per occupied room compared to last year.

And at Gaylord Palms, with the extensive rooms and lobby renovation complete, the first quarter of 2025 marked the second highest adjusted EBITDAre quarter of all time. Our leisure transient customers also performed well in the first quarter. Both demand and ADR increased 3% year-over-year. This quarter marked the first with year-over-year growth in leisure room nights since the first quarter of 2022. Performance was broad-based across the portfolio, except for Gaylord Opryland, which was impacted by new hotel supply that continues to be absorbed in the Nashville market.

Overall, our hotel portfolio meaningfully outperformed the industry in the first quarter, achieving a RevPAR and total RevPAR index relative to our Marriott defined competitive set of 110% and 155% of fair share. In our entertainment business, we continue to see our brands resonate with

country lifestyle consumers. The first quarter benefited from our recent investments at Category 10 and the W Austin Hotel coming back online. And overall, our venues saw higher attendance per show, particularly for the Grand Ole Opry as it celebrates its 100th birthday throughout 2025.

First quarter hotel bookings production was strong. Gross group room nights booked for all future years increased 10% year-over-year, with particular strength in bookings for 2026 and 2027, which were up 13% and 35%, respectively, compared to the same time last year for 2025 and 2026.

As Colin mentioned, more recently, we've seen some hesitancy among businesses and meeting planners to source near-term meetings, which has had an impact on in the year for the year group demand contributing to lower lead volumes and booking activities for 2025 relative to the same time last year for 2024.

To date, we've not seen a macro-driven pullback from our leisure transient or entertainment customers. While we have very limited visibility into how or when the current economic uncertainty will be resolved, we believe its impact on group business is a 2025 issue. And as the pandemic proved, the group meetings business is resilient and here to stay.

As a result, we're maintaining our focus on long-term value creation, while managing the short-term dynamics. Since the beginning of the year, our asset management team has been working closely with our operator, Marriott, to identify and implement operating model efficiencies and proactively communicate with our meeting planner customers that are focused on in the year for the year execution.

Our design and construction team has been sensitized in construction timelines to limit disruption as well as aggressively managing our sourcing and purchasing decisions to mitigate the potential impact of tariffs on our project budgets. Specifically, we've been diversifying our sourcing away from China to other countries where trade negotiations have been more productive and we've been expediting procurement for projects currently underway to get our materials and case goods to US ports within the 90-day window.

Our Entertainment business development team continues to drive profitable growth recently winning a 10-year contract to manage the 6,800 seat of send amphitheater located in downtown Nashville beginning in 2026. We are thrilled to be able to take on the stewardship of this wonderful venue.

And finally, our finance team continues to manage our liquidity position and maturity schedule, which Jennifer will discuss in more detail in a moment. The priorities we laid out last year at our Investor Day have not changed and we continue to operate our businesses to achieve the long-term financial objectives and capital returns we outlined.

As we shared at that time, our plans were based on a stable macro environment of low single-digit GDP growth. If ultimately, we face a more difficult environment. We have unique high-quality assets. We have a strong book of forward business and we have the ability and option to adjust our posture to navigate any near-term challenges. Given our strong first quarter results, our resilient business model and the proactive efforts we've been making since the beginning of the year to drive efficiencies, we couldn't be better positioned.

And with that, I'll turn it over to Jennifer.

Thanks, Mark. Regarding our outlook for full year 2025, we now expect hospitality RevPAR growth in the range of 1.25% to 3.75% and Total RevPAR growth in the range of 0.75% to 3.25%. These revised guidance ranges for RevPAR and Total RevPAR growth reflect additional conservatism around government-related group business and in the year for the year group demand, as Colin and Mark discussed.

At the midpoint, our revised RevPAR growth guidance reflects lower group business volumes compared to 2024 and leisure volumes that are essentially flat to last year when excluding Gaylord Palms, which was under renovation for much of 2024.

Disclaimer

Ryman Hospitality Properties Inc. published this content on May 13, 2025, and is solely responsible for the information contained herein. Distributed via Public Technologies (PUBT), unedited and unaltered, on May 13, 2025 at 13:26 UTC.