Ryman Hospitality Properties, Inc. (REIT)

Welcome to Ryman Hospitality Properties' first quarter 2020 earnings conference call. Hosting the call today from Ryman Hospitality Properties are Mr. Colin Reed, Chairman and Chief Executive Officer, Mr. Mark Fioravanti, President and Chief Financial Officer, and Mr. Patrick Chaffin, Chief Operating Officer. This call will be available for digital replay. The number is 800-585-8367. and the conference ID number is 6554839. At this time, all participants have been placed on listen-only mode. It is now my pleasure to turn the floor over to Mr. Mark Fioravanti. Sir, you may begin.

Thank you. Good morning, everyone. Thanks 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 an exhibit to today's release. And with that, I'll turn the call over to Colin.

Thank you, Mark, and good day everyone. First of all, I hope this call finds all of our regular analysts and investors who are joining us well right now during this unprecedented period. I'm happy to report that our team at Ryman is doing just fine. We're all healthy, secure and laser focused on managing our company through this debacle and getting back to serving our customers again in the safest and most secure environment possible across our wonderful hotels and entertainment venues. I suppose I could spend time talking about our first quarter results which were on a Really strong track through the months of January and February. In fact, for the majority of the first quarter, 2020 was shaping up to be the phenomenal year which we've been expecting for a long time. Alas, that was not to be as COVID-19, the outbreak unfolded rapidly in the months of March, culminating in nationwide stay-at-home orders and ultimately our decision to close the Gaylord Hotels on March 24th as well as most of our entertainment venues around that time as well. At this moment, January and February seem like ages ago and our attention and I'm sure yours is focused entirely on what the rest of 2020 will look like once we reopen and what our industry and our business will look like in 2021 and beyond. Of course, our answers to these questions must come with the caveat that the situation is fluid. and our current expectations and plans are subject to change pending new data or developments. The reality is there is so much at this time that we cannot control but what we're doing is focusing intensely on the things that we can influence and that is what I'd like to talk about this morning. Before I delve into the details, let me remind you of our background. I remember the many discussions we had with the potential REIT investors back in 2013 as we were in the throes of converting from a C Corp to a REIT. The comments I often heard was that our management was not made up of REIT folks, we were operators. We were in fact the folks that crafted the Gaylord brand. Well at times like these our background comes in handy. We know what needs to be done. and are in detailed discussions with our manager, directing what we want to see occur across all aspects of the reopening process. So first, our hotel segment and our forward book of business. Prior to March, our hotel business was in the best shape it's ever been. We entered this year with 8 million net room nights on the books for all future periods, including the Gaylord Rockies, which was a record by far. In fact, the total cancellations and attrition related to COVID-19 as of Friday the 1st of May, after netting out the time 167,000 room nights we had rebooked already by that date, is still just under 10% of that forward book of business for all future years which we entered 2020 with. and with 74% of those COVID-19 cancellations clustered between February and June of this year and 35% of related rebookings placed into the second half of this year, we continue to have a very decent booker group business for the latter part of 2020. Specifically, as of May 1st, we had 742,000 net room nights on the books for the second half of 2020, which compares to 902,000 at the same time last year for the second half of 2019. Of course, this assumes we open our hotels in the mid-June to July timeframe, which I'll talk about in a moment. But let me also give you an update on our pace for 2021 as well. Looking at next year, as of the first quarter end, March 31st, We had 42.2% net occupancy room nights on the books for 21. Now while this is down compared to the extraordinary comparisons of 46.9 points we had at this time last year for 2020, it is exactly in line with 42.2 points we had for 2019 back during the first quarter of 18. And just to remind you, 2019 was a record year for our company. And to be clear, These are all apples to apples comparisons, including the Gaylord's Rockies. So at this point, 2021 looks like a typically good year when you compare it to our recent history. Furthermore, we know that meeting planners remain active, and not just latter in 2020 and 21, but well into the future. While our first quarter 2020 gross Bookings declined year over year by approximately 107,000 room nights to 288,000. Our gross bookings just in the month of March were 126,000 and only 29,000 of those were COVID-19 rebookings. Likewise, as we also disclosed in our business update a couple of weeks ago, our sales team generated 3.9 million new leads in the month of March and that excludes a half a million leads related to previous COVID-19 cancellations. The sales teams at Marriott and our asset management team at Ryman have done a terrific job of juggling the inbound cancellations and rebooking activity with regular long-term booking activity. Our overarching emphasis throughout this process has been the same as always, focusing on the customer and their needs and creating, building and cementing long-term profitable relationships. That is why even early on, before government restrictions and shutdowns were put in place, our teams focused on accommodating customers' concerns around cancellations by finding alternative dates for meetings rather than aggressively pursuing cancellations and attrition fees. We're seeing the fruits of this strategy now as our rebookings continue to build and I'm sure when we get into the Q&A Patrick will give you an update on what has transpired since the end of April on rebookings as well which is all good news. When you look at all this data and the work we are doing on the sales side with our customers and you consider that the new supply of large group hotels was thin even before this incredible disruption then anyone with a long-term view should understand why we have confidence that despite recent COVID-19 cancellations, our competitive position in the group's market will come out of this period stronger than before. Now let me talk about the reopening process and what our businesses look like when we come out of all of this. This is what we've been spending a great deal of time on during the shutdown period, working closely with our partner at Marriott, on the hotel side to design, implement those best practices for each phase of reopening that will ensure our customers and employees feel safe and secure upon their return. Now let me tell you how we've been thinking about this. Last week, I conducted several media interviews as May 2nd witnessed the 10-year anniversary of the Great Flood of Nashville. A time when most of our businesses in this city were devastated and our two primary businesses were shut down for six months. At the time, the consequences were awful, just like now. But I remember quite vividly saying to our team at the time, let's focus on how we can bring these great assets back to a position that is stronger than they were when we went into this situation. And that is precisely how we are thinking about COVID-19. The fact is society here in the United States has been shaken to its core with this pandemic and our responsibility is to provide a safe, clean environment when our customers return. And our goal is to be the very best at this and to develop a reputation as the best that will drive greater loyalty and higher retention. In multiple conversations I've had with the leadership of one of the nation's best hospital systems, this is what I think will happen. There will essentially be a bridge period that we will have to deal with between reopening and such time there is a viable vaccine that comes forth and customers, employees will feel safe to go about business the way they did prior to COVID-19. During this bridge period, companies like ours will have to adopt enhanced practices to keep our customers and employees secured and I will describe some of these in a moment. But first our thoughts around the opening dates. Right now we anticipate and are planning towards the reopening of Opryland Palms, Texan and the Rockies in mid to late June. The Gaylord National we are currently planning on reopening slightly later in mid to late July. Our entertainment venues in Nashville such as Old Red We anticipate opening slightly earlier as the state's governor has given the national leaders discretion as to when they may reopen and city officials here have indicated a number of benchmarks that if met in May would permit that to happen. All of these dates are of course subject to change but are meant to communicate our current planning posture. Now reopening does not mean going back immediately to the way Group meetings were held just before this crisis. There will be differences, which we expect to roll out in phases. Broadly, phase one would be the most restrictive, employ some of the same recommended social distancing guidelines in our hotels and venues as we see across the nation today. For example, this would include reduced setups in dining and banquets, banquets to space guests further apart, as well as no standing at bars, reduce staffing and requiring PPE for employees and so on. What is really the number one focus for us however is the development of an entirely new set of cleaning protocols utilizing across the board hospital grade equipment, materials and methods including introduction of electrostatic sprayers for example. To help us overcome this aspect We're in discussions with a major medical center to form a partnership whereby Gaylord Hotel employees can receive training on these new methods from their experts with ongoing compliance checks and monitoring. Hand-in-hand with these cleaning protocols is an effort to redesign our processes to minimize physical guest touchpoints, often taking advantage of more enhanced technology. From a sales perspective, in the first 90 days we'll focus specifically on the leisure customer as more rigid distancing restrictions induce less friction for these customers than for the larger gatherings. We see pent-up regional travel demand in the leisure segment and an opportunity in local markets, social events and gatherings that may have been postponed by stay-at-home orders and need to find a new venue. Phase 2 of our reopenings will involve what we describe as moderate distancing measurements. These might include increasing dining capacity but not fully to 100%, increasing staffing and so on, but of course maintaining the new frequency and level of cleaning and disinfecting. Phase 3 or minimal restrictions would be a return to what could be called the new normal. allowing guests to go above their routines with less noticeable disruption and normal staffing levels but with new cleaning and touchless technology investments and best practices remaining in place. The exhaustive list of procedures and practices in each phase and the duration of each are to be determined but this is to give you all an idea of how we're thinking about a return to normal and what our industry looks like on the other side of this. The good news is that as recently as this past weekend, doctors are saying there could be a viable vaccine by year end, which will be good news for 21, which as I illustrated, our book of business looks pretty good. It's our guiding principle in all of this detailed work to be at the forefront of our industry, taking the lead in setting the standards as safe operations for both customers and employees. that they have come to expect of the Gaylord brand and our entertainment brands. Now while I've painted an operational picture, we're still finalizing many of the details and we'll have more to say later in May. This includes working on the financial specifics of what these practices mean for our margin structure. We expect to be able to give more detail on this once we get back opening and reporting on our results. Now let me touch on our entertainment business for a minute and share with you some of my thoughts as it relates to the three primary brands. First, All Red. We expect to open each location under Phase 1 social distancing sometime mid to late May and providing COVID-19 is in check in each market, we expect these establishments to be operating at 100% capacity with live music by the end of July. The Ryman will be somewhat challenged this year simply because so many artists have cancelled their entire tours for the year. Given the fact that so many artists live here in Nashville, we'll probably be able to book concerts on a one-off basis, but we expect that by 21 we should have a strong concert calendar. As regards the Grand Ole Opry, initially we expect to open it up with an audience sometime in July, but with social distancing. Depending on how quickly Nashville tourism cranks up, we'll decide on how many weekly shows we host. So that's where we are today and I understand that there are likely many more questions that there are answers at this point. Now what I want to emphasize is that this management team has been through many crises. We experienced the nationwide travel shutdown in the days following September the 11th. We endured a deep painful recession after the great financial crisis of 2008 and 2009. And we bounced back from natural disasters such as the Nashville flood which shut down Gaylord Opryland, our largest asset, for a full six months. And in all of these cases, this company and its management team never lost sight on the long term, and we followed the same playbook, focusing on the long term needs of our customers, employees, and our assets, and ensuring that we are prepared and ready for the inevitable recovery. Because make no mistake, our industry and our company will recover. We don't know whether that will take weeks or months or a year, but we do know that groups and individuals desire to travel, to gather in person, to make connections, to share knowledge and to bond over common interests. This is not going away. Even in a world where work at home emerges more prevalent, we've seen before that companies adopting these arrangements often increase the frequency of large group meetings. in order to make up for lost daily interactions. This fundamental underlying demand for fellowship and for travel is simply human nature and that is not going away. That is why we are confident that our company and our one of a kind hotels and entertainment venues will emerge on the other side of this stronger than how we entered. And with our competitive moat Our competitive moat against an even smaller supply pipeline will only widen. Now with that, I'll turn over to Mark to touch base on the balance sheet and what we've been up to with the banks. Mark.