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spk36: Welcome to Ryman Hospitality Properties' fourth quarter 2022 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 Hutchison, Chief Financial Officer, and Mr. Patrick Chaffin, Chief Operating Officer. This call will be available for digital replay. The number is 800- 839-9881, with no conference ID required. At this time, all participants have been placed on listen-only mode. It is now my pleasure to turn the floor over to Ms. Jennifer Hutchison. Ma'am, you may begin.
spk33: 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 facts 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 discussed 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 metrics today, We reconcile each non-gap measure to the most comparable gap measure in exhibits to today's release. I will now turn the call over to Colin.
spk13: Thank you, Jan, and good morning, everyone. Well, the fourth quarter was an appropriate exclamation point to close out an extraordinary year for our company. I don't think in all of my years in this industry I've seen anything like the last 12 months. going from just under 33 points of occupancy and $185 of total REVPAR in January of 2022 during the worst of the Omicron wave, and yet ending the year in December with just over 73 points of occupancy and a whopping $612 of total REVPAR. I really believe the results of this past quarter and our ability to recover so quickly from the last stage of the pandemic highlights the exceptional nature of our assets, and our strategy compared to the wider industry. Of course, we've always talked about these attributes since well before the pandemic, about our dedication to studying and understanding our core group customer and delivering the highest quality experiences to our guests, about our rotational system for world-class assets in top markets, which makes that customer's planning decisions so much easier by booking multi-year, multi-site meetings all at once, about our belief in investing significant capital into expanding and upgrading our assets against the backdrop of very limited news supply, and about our strategy to induce our own transient demand with innovative and compelling programs around the calendar. By 2019, we were just starting to really reap the dividends literally and figuratively of this strategy. As our newest property, the Gaylord Rockets, had just opened that year with an unheard of 1.2 million room nights on the books and generated over 85 million of adjusted EBITDA in its first full year of operation. And the other cylinders of our hotels were firing as well, with the opening of Soundwaves and the expansion of the Texan and groundbreaking underway at the Palms. And of course, our entertainment business was riding high on the back of National and Nashville's exponential growth. We found ourselves at the end of 19 sitting on then record performances across so many metrics and we felt like we were just getting started as we gave in February for what by all signs were going to be a bomb burner of the year on the heels of these investments. But within weeks it all came to a halt and the last three years since then have been a whirlwind. But now here we are, three years and three COVID waves later, at last prepared to give you all a complete set of annual guidance once again. And what we are planning for 2023 is already well beyond those figures we'd anticipated back in early 2020. Our law group customers are back in droves and spending healthily on property, thanks greatly to our emphasis on rebooking over fee collection during these dark days. Our assets themselves are transformed compared to this time in 2020, thanks to our commitment to invest capital. This includes the 300 new rooms at the Palms, the beautifully renovated rooms at the National, and a host of new ballrooms, meeting spaces, event lawns, pavilions, and atriums, either complete or now underway across the portfolio. And not to mention the entirely reconcepted food and beverage outlets with innovative new socialization and gathering opportunities for groups, new technologies in place, new staffing models in many areas of our hotel. The list goes on. And our entertainment business is equally transformed. We've opened All Red in Orlando, Broken Ground on All Red in Las Vegas, closed the acquisition of Block 21, which brings Austin's iconic ACL Live at the Moody Theater into the fold. And to cap it all off, in June, we sold 30% of the entertainment business to the impressive team at Ateros, bringing NBC Universal in the tent and valuing the business at over $1.4 billion. It's not a stretch by any means to say that our entire company has not simply recovered from the pandemic, but has undergone a complete transformation. Armed with our new understandings of our customers, both group and leisure, and all of the levers available to us now and in the future through our ongoing investments. And looking at the tremendous book of business we have on the books for all future years, I believe we're capable of delivering exceptional results well into the post-pandemic era. As Mark and Jen will report, notwithstanding the significant impact of Omicron in the first quarter, by almost all measurements, 2022 was a record for us. And as you will see from our guidance in 23, more records are likely to follow. Needless to say, I'm truly excited for this next chapter of our company. And it is a perfect moment for Mark to take over for me in the CEO role as I move to executive chairman. So I'll now turn over to Mark to let him give you more details of the quarter. and our results and how we're thinking about the coming year, Marcus.
spk27: Thanks, Colin. Good morning, everyone. The fourth quarter was a terrific quarter for us. As our most leisure-focused quarter, we were really looking forward to having our signature ice show back after a two-year hiatus due to COVID and travel restrictions on our Master Carvers from China. And we're happy to report this year's ice show surpassed our expectations selling 1.2 million tickets, or 115,000 more than the last time we presented ice in December of 2019. The renewed attraction of ice helped increase transient room nights above the fourth quarter of 2019, and transient ADR in the quarter was $317, a 43% increase over the fourth quarter of 2019. That's a record for the Gaylord brand, surpassing the third quarter of 2022 by $29. On top of this holiday strength, group performed well, with group room nights traveling only 2.5% below the fourth quarter of 2019 levels, more than offset by group ADR up almost 10% over the same period. While our reported total occupancy was three points below the fourth quarter of 2019, when you consider the new 300 rooms at the Palms we added in 2020, our total room nights traveled were only 1% less than the fourth quarter of 2019. Hospitality margin in the fourth quarter was 31.1%, was 30 basis points less than our fourth quarter of 2019, but was flat to that period when excluding the decline in interest income on the Gaylord National Bonds. This is despite the inflationary pressures we're all aware of in the broader economy and an average wage rate increase of 24% across the portfolio compared to 2019. At the bottom line, our hospitality segment delivered 150.1% million of adjusted EBITDA RE, which put the full-year profitability of the segment $12.7 million above the high end of our last upwardly revised guidance range for 2022. The quarter was an all-time record for both total revenue and total adjusted EBITDA RE for our hotel segment, and the month of December set the single-month record for both metrics as well. And what should be the last earnings call in which we use 2019 as a full-year comparison 2022 finished up 7.8% in hospitality revenue and 6.3% in hospitality adjusted EBITDA RE compared to that last pre-pandemic year, even with the material impact of Omicron in the first quarter. So just a tremendous holiday season to close out what proved to be a great recovery year throughout 2022. In terms of production, we booked over 1 million gross group room nights in the quarter, a 4.4% increase over the fourth quarter of 2021. and the average ADR of $254 on new bookings was 11% higher than the fourth quarter of 21 and 13.3% higher than the fourth quarter of 2019. New group rooms revenue booked in the quarter and in the month of December alone were both new quarterly and monthly sales records for the Gaylor brand. This level of production sets us up well for 2023 and beyond. On December 31st, we entered this year with 49.8% net group occupancy points on the books for 2023, four points more than we entered 2022 and an ADR of $222 or 5% higher than the start of 2022. This equates to over $53 million or 14.5% more net group rooms revenue on our books to start this year than we had 12 months ago to start 2022. You will see in our guidance, which we are bringing back in full according to our past practice, that we translate this into an expectation for REVPAR growth this year of 9% to 12% and total REVPAR growth of 6.5% to 9.5% over full year 2022. In terms of profitability, while we expect inflation will remain elevated and higher margin attrition and cancellation fees will return to more normalized run rates, the transformation of our business, which Colin described, including efficiencies across management ranks, staffing models, technology, and food and beverage outlet strategy, among others, is expected to deliver stable to modestly improved margins compared to 2022, or in an adjusted EBITDA RE range for the year of $550 to $580 million in our hospitality segment. At the midpoint of $565 million, this represents over 10% growth from 2022. I'll remind you that the first quarter of this year will be by far the strongest in terms of percentage growth in RevPAR and total RevPAR, simply due to the Omicron impact in the first quarter of 2022, creating a materially lower comp than the remaining three quarters. From an adjusted EBITDA RE perspective, we anticipate quarterly contributions similar to 2019 on a percentage basis. Looking further, beyond 2023, we see a similar favorable setup for our hospitality business for the foreseeable future. As of December 31st, once again, we have 9.6%, 6.8%, and 3% more net group rooms revenue on our books for T plus two through T plus four, respectively, or 2024, 25, and 26 than we did one year ago. And as we continue to add new production and increasingly healthy ADRs, such as we did in the fourth quarter, we expect to see our rooms revenue pace for future years pull further ahead. We believe our 2023 guidance and our on-the-books position for our hospitality segment for future years plainly evidences Collins' opening remarks about the transformation of our business from pre- to post-pandemic and the relative performance capability of our assets against the broader industry. But to emphasize it, we believe these levels of operating and sales performance are made possible by our unique strategy and its attributes of strong customer loyalty and broad customer exposure with very little concentration in any one industry, high-quality purpose-built assets fortified by high-return recent capital investments, and all of this in some of the most attractive, rapidly growing markets in the U.S. Note that three of our five markets, Orlando, Nashville, and Dallas, were in the top seven large metro areas for population growth over the last five years, and also in the top five for job growth in 2022. Denver was not far behind them as well in the top 25 for both metrics. It's no surprise, then, that all four of these markets, Dallas, Orlando, Nashville, and Denver, were in the top nine for hotel occupancy recovery in 2022 compared to 2019, according to Star. Against this backdrop of limited new supply growth and rapidly expanding markets, we see ample opportunities for our capital deployment strategy ahead of us. This includes over $69 million being spent right now to create an expansive indoor-outdoor group pavilion and to completely reimagine the Grand Lodge atrium at the Gaylord Rockies, increasing the volume of premium sellable group space and expanding food and beverage outlet selection capacity. And we see many more opportunities at the Rockies and elsewhere in the portfolio for additional rooms expansions, sound wave style water experiences, and more to continue differentiating our hotels, drive return group business, and attract high-spending leisure guests. Turning to our entertainment segment, the fourth quarter performance of our same-store assets compared to 2019 was equally impressive as our hotels. Same-store revenue for the segment was up 35%, and same-store adjusted EBITDA RE was up 62% compared to the fourth quarter of 2019. On a consolidated basis, including Block 21, which we acquired mid-year, adjusted EBITDA RE of $26.1 million, placed the full-year results for entertainment just above the midpoint of our most recent guidance range. For 2023, we're looking forward to a full-year contribution from the ACL Live at the Moody Theater and other Block 21 assets, and we have a slate of value-enhancing investments lined up in Austin for both the theater and the W. Austin hotels. We expect the acquisition plus steady growth in Nashville and across the Old Red brand to help drive 2023 adjusted EBITDA RE for this business to a range of $87 to $97 million for 2023. At the midpoint of $92 million, this is a full $30 million more than this business generated in 2019, truly a significant transformation on par with our hotel segment. Now, let me turn it over to Jennifer to update you on our balance sheet liquidity dividend in our consolidated guidance range.
spk33: Thank you, Mark. In the fourth quarter, the company generated total revenue of $568.9 million and net income to common shareholders of $58.1 million, or $1.03 per fully diluted share. Now, once again, that our fully diluted share count in the quarter and going forward will continue to reflect the put rights held by Atteros as part of their Opry Entertainment Group investment. Even though these rights are not yet exercisable, and we will also have the option to settle any rights exercised in cash. Any exercise of the put rights would also result in Atteros' 30% ownership in OEG reverting back to Ryman, so just keep this in mind when estimating future per share amounts. Total consolidated adjusted EBITDA RE for the fourth quarter of $168.1 million put our consolidated full-year results over $17 million above the high end of our most recent guidance. For 2023, in addition to the operating segment guidance provided by MARC, we're estimating for our corporate segment an adjusted EBITDA RE loss of $29 to $32 million, which would be just slightly better than 2022 at the midpoint. This yields a total fully consolidated adjusted EBITDA RE guidance range for the year of $605 to $648 million. a 12.7% increase at the midpoint over 2022, and a 22.7% increase over 2019. We're estimating that adjusted funds from operations, or AFFO, for 2023 will be in the range of $392.5 million to $424 million. At the midpoint, this represents a growth of 12.3% over 2022 and 14.5% over 2019. and reflects the increased interest costs of our current debt portfolio compared to 2019, as well as the pro rata reduction in AFSO attributable to a tariff's minority interest in OEG. Turning to the balance sheet, we ended the quarter with $334.2 million of unrestricted cash on hand, and our $700 million revolving credit facility remained undrawn. Together with the undrawn $65 million revolving credit facility at Opry Entertainment Group, this yields almost $1.1 billion of available liquidity after deducting $10 million of outstanding letters of credit. We retained an additional $119 million of restricted cash available for certain FF&E projects and other designated uses. On a trailing 12-month basis, our net leverage ratio of total consolidated net debt to adjusted EBITDA RE stood at 4.6 times, And based on the midpoint of our guidance, we anticipate we will end the year at approximately 4.1 times, which is below our year-end 2019 leverage and comfortably within our target range. We are pleased to declare a quarterly dividend this month of 75 cents per share, which is a substantial increase from our December declaration of 25 cents paid in January. That December declaration was targeted to achieve our goal of paying a minimum of 100% of retaxable income attributable to 2022. And our intention with the current declaration of 75 cents and subsequent dividends we may declare this year will remain to pay a minimum of 100% of re-taxable income. Finally, in terms of interest rate exposure, as of quarter end, approximately 90% of our outstanding debt was at fixed rates, either directly or with the benefit of swaps, although we do have two swaps expiring in 2023 on both the Gaylord Rockies term loan and our corporate term loan fee. We will address the Rockies' maturity this year, our only maturity in 2023, which carries three one-year extension options that are fully available to us. We were pleased to have officially exited the cash suite status of that loan based on the strong performance of the Gaylord Rockies property post-pandemic. So our balance sheet and liquidity are in excellent shape to support all of our investment activity that Mark outlined, while also sustaining a meaningful dividend once again. And with that, I will turn it back over to Collin.
spk08: Thanks, Jen.
spk13: Chelsea, let's open up the lines for questions, please.
spk36: Yes, sir. At this time, if you would like to ask a question, please press the star and one keys on your touchtone phone. If at any time you have found that your question has been addressed, you may remove yourself from the queue by pressing star two. Once again, that is star one to ask a question. And our first question will come from Dori Keston with Wells Fargo. Your line is open.
spk05: Thanks. Good morning. Can you walk through your expectations for cancellation and attrition fees this year and just how it relates to your guidance? I'm just looking at the difference between rev par, total rev par, and then the 25 basis points of margin expansion.
spk15: Okay, Dori. Thank you. Patrick, are you going to handle that? Sure. Hey, Dori, good morning. Last year, as you probably are aware, we generated about $57 million in collective cancellation and attrition fees. We would expect this year to be in the, I don't know, $20 million to $25 million range, so a substantial reduction. We still have a few COVID cancellations that we're clearing out through the pipeline, but for the most part, we will be returning back to a more normal level of attrition and cancellation as we move through this year. Okay.
spk05: And what's your current view on an eventual expansion of the Rockies? Are we able to get some guidance on potential timing or the cost of that?
spk29: Do you want to take that one?
spk27: Yeah, I mean, Dory, that's an opportunity that's on our radar. As I mentioned in the prepared remarks, we're currently making a significant number of enhancements there. both adding incremental meeting space as well as completely, we're going to completely reimagine that Grand Lodge, add significant amount of buyout space for groups as well as incremental food and beverage. And once we're done with that project, we'll then be, we'll have the capacity that if we do do a rooms expansion and when we do a rooms expansion, we'll have the food and beverage as well as the meeting space necessary to handle those incremental rooms.
spk13: Yeah, the other thing I would say, Dory, is that, you know, the last six months we've been, with our finger on the pulse, looking at lead volumes, you know, by each hotel. And I would say that we – We as a company have been pretty excited about what we're seeing on lead volumes and particularly at the Rockies. And I suspect that sometime during 2023, we should be talking more positively about rooms expansion there simply because this is one hell of a market. We have by far the best convention hotel sitting in the middle of the country next to that airport, and we're very excited about the prospects for that hotel. So, you know, we're just going to monitor the next few months and then more communication on this subject.
spk12: Okay, great. Thanks.
spk36: Thank you. Our next question will come from Bill Crow with Raymond James. Your line is open.
spk19: Good morning. Congratulations on the quarter and the year. I want to follow up a little bit on Dory's question on cancellation of nutrition fees and the guidance for $20 to $25 million in 2023. Should we anticipate that that's largely front-end loaded, given that you're still trying to deal with cancellations from a year ago or a year and a half ago? And then, you know, as part of that, As we look at your guidance for the year, we understand that first quarter is really easy based on the Omicron last year. Are you implying that second half of the year is going to be flattish from a RevPAR perspective, maybe even down a little bit compared to last year? Do you want to take it, Pat?
spk15: Yeah. So on the first question, you were asking about how we expect nutrition cancellation to flow across the year. Honestly, given the length of time that it takes to communicate on these issues, I would expect it to be pretty evenly laid out across the year. So if we said $25 million, it should be $5 million a quarter, roughly, at $20 million, $4 million a quarter. The second question was around the second half of the year. Mark, did you want to take that, or do you want to add?
spk27: Yeah, I mean, Bill, generally, as you work your way through the year, the comps get tougher and tougher and tougher. In 2019, or in the fourth quarter of 22, we essentially traveled the same number of room nights as we did in 2019. So, you know, we're really back to more normalized levels. So to your point, as you work your way through the year, you know, what the guidance indicates is that that comp gets tighter and tighter.
spk37: Yeah. All right. Thanks.
spk19: And then if I could just, one more, Colin, you talked about how your pulse is on the of the demand side of things. I'm just curious whether you're seeing anything in forward booking activity that might reflect some of the macro concerns and the layoffs we've seen over the past month or two, at least as it concerns corporate meetings.
spk13: Yeah, we really haven't seen that in our lead volumes, Patrick. We just haven't.
spk15: Yeah, I would say that you know, when the tech sector started to see some challenges, I think everyone kind of took a pause and got a little nervous, but I think they've realized that what's going on in tech is not necessarily the macro situation as much as some hangover from COVID and some of the actions taken by tech during that period of time. And I would say that just even the past four or five weeks, we've seen meeting planners start to relax a little bit and, uh, You know, they're still a little gun-shy, but the lead volumes are very promising in the year for the year. It looks very good. And so we feel that recessionary fears are abating a bit among meeting planners.
spk18: Great. I'll yield the floor. Thank you. Thanks, Bill.
spk36: Thank you. Our next question will come from Patrick Scholes with Truist Securities. Your line is open.
spk21: Great. Good morning, everyone.
spk24: Good morning. Good morning. How are you thinking about wage and benefit cost increases this year and related to that, just overall operating cost increases year over year?
spk22: Thank you.
spk15: Yeah, I mean, we are expecting to – let me pull up to make sure I've got the exact number – but we are expecting there continue to be headwinds as it relates to average wage rate increases. I would say that we're expecting somewhere in the 5% to 6% increase as we move through 2023, so not quite to the level that we've seen in the past two years, but continued headwinds there, and we're planning for that. If it's less than we are currently planning for, then that will help us. but we're trying to be realistic and make sure that we take into account that it has been a challenging couple of years from a wage rate perspective.
spk27: Patrick, the one thing I'd say on margins is, you know, you'll know from our guidance that we're projecting some modest improvements in margin this year. And, you know, wage rates, obviously inflation, you know, the IMF, Marriott IMF, you know, being back in full force, you know, all those put pressure on margins. But, you know, on the other side of the ledger, You know, we have really nice ADR growth, particularly on the transient side. You know, we've been able to move F&B pricing. We've made some productivity gains. You know, if you look at, while wage rates have increased, if you look at the wage margin, it's flat compared to 19. And then, you know, as we've talked about on previous calls, you know, Patrick and his team have worked diligently with Marriott in terms of kind of rethinking how these hotels operate. our staff, particularly from a management perspective. And when you look at management headcount, we're running about 12% fewer supervisors and above in our hotels post-COVID than we were prior to the pandemic. So there are a number of things that are on the plus side of the ledger to help offset that wage rate increase.
spk15: Yeah, and I would only add that longer term, we're spending a lot of time looking at technology and understanding how we can deploy additional technology opportunities in the hotels to further increase our productivity as well as guest satisfaction and bring our overall costs down.
spk24: Okay, thank you. I do have just two follow-up questions. Number one, you know, how is the national looking for this year given that D.C. has been certainly a slower market to recover? And then number two, any further thoughts about becoming, should we say, involved or with the Chula Vista project. Thank you.
spk13: Patrick National, we're pleased with the renovation, what we've done there, the reengineering of the food and beverage facilities there that has allowed us to eliminate costs in that hotel. and we're generally very happy with the trajectory of that hotel. We're actually seeing good lead volume, too, for Washington. What have I missed on that?
spk15: No, you haven't missed anything. I would agree completely. Gaylord National, not quite back to the level of room nights on the books that it saw in 2019, but moving back to that level quickly. The D.C. market has been a little more challenged. I think we've been a bright spot in that market, and to Colin's Comments a moment ago, we've taken the opportunity over the past few years to address some structural cost issues that are really yielding themselves nicely. If you look at food and beverage performance and how it compares to prior year and to 2019, you can see that there's definitely some bottom line margin improvements that are occurring at that hotel, especially in food and beverage. And so we continue moving it up from an occupancy perspective, but rate has been a bright spot there. And we feel actually very good about where National is heading.
spk13: The last part of your question is regarding Chula Vista. And, you know, Mark, I think our answer to your question is there is nothing has changed since the last time we got asked that question back in December, which is that, you know, we at this stage have no desire to be an investor in that business.
spk20: Okay. Thank you for the update.
spk11: Thank you, Patrick.
spk36: Thank you. Our next question will come from Smeeds Rose with Citi. Your line is open.
spk26: Hi, thanks. I wanted to just go back a little bit to the group bookings that you have on deck for this year and maybe just talk a little bit more about the composition of the groups. Are you seeing more corporate versus... you know, association-type business? And, you know, is there any kind of piece of the business that's lagging or any kind of piece that's, like, fully recovered in your view?
spk15: Yeah, I would say that what we've seen as far as recovery has been most pronounced in technology, in medical, and areas like that. Corporate has come back roaring, and we're very pleased with what we see. From a mixed perspective, I'm actually pulling up the actual – numbers right now, so give me just a second. But as we look at this next year, we are a little bit more heavily weighted towards our corporate, but it's pretty consistent with what we saw in 2023. We do think that from a... Consistent with what we saw in 2023, you said? I'm sorry, consistent with what we saw in 2022. Thank you for correcting me. But I would say that in the year for the year is very promising from a corporate perspective. So While we have a little bit more in corporate on the books as of right now, we would expect that to continue to improve as we move through 2023.
spk27: Smith, the one thing to keep in mind, you know, when you look at the business on the books for 23, about three-quarters of that business was booked, you know, pre-2022. And so, you know, as we roll forward 23, 24 to 25, you're going to see those older room nights burn off and newer room nights that are at these higher rates come on. And so, you know, that will be a nice tailwind for our business from a rate perspective in the group segment.
spk26: Okay, thank you. And then I'm sorry if you said this, but what do you see capital spending for the year on the major – and maybe could you just line out the major projects that you're working on? You mentioned the Rockies.
spk32: You got that, Jen?
spk33: Yeah, we – As Mark mentioned, one of the bigger projects we have going on right now is at the Rockies, a couple of projects going on there with a new pavilion and the reimagining of the Grand Lodge and creating more usable group sellable space there along with food and beverage. I think our estimate for capital is about $130 million this year all in, including growth and maintenance, and that would include you know, of the contribution to FF&E reserves that are obviously linked to revenue. So as those grow, those will continue to grow as well.
spk15: Yeah, the only thing I would add to that is we're doing a lot of, you know, we talked about this in our prepared comments a few minutes ago. We're doing a lot of work around food and beverage. We continue to see if food and beverage is a massive opportunity for our brand going forward. And so we're investing in our old hickory steakhouses at Gaylord National and Gaylord Poem's. We're renovating spaces at Gaylord Palms, like our Osceola ballroom, which is 50,000 square feet. And then from an ESG perspective, we've got a pretty sizable investment going into solar panels that we'll be putting on top of the convention center at Gaylord National, be one of the largest projects in the nation. And we think a really bold statement as far as our priority on ESG and doing things that help the environment long term.
spk33: Let me clarify that number. I was off by $100 million. It's $230 million when you're including growth.
spk27: Smeeds on the entertainment side, Smeeds, Old Red Las Vegas is under construction. And then we are renovating the W as well as making some enhancements at the theater in Austin, Texas. So those two projects combined are probably going to be in the $50 million, $60 million range this year.
spk26: Okay, and then just one last question on Old Red in Las Vegas. Is that the kind of venue where you can start pre-selling events at this point, I guess, to corporations or social staff, or is that not how that piece of the business works?
spk13: It's both. In Las Vegas, where that building sits right on the strip in front of in front of, right across from the Bellagio Fountains. You know, there's 120,000 people a day walk by it. So there's going to be a lot of what we call transient business in there. But this facility is also, we do a lot of corporate buyouts in our All Reds. As an example, here in Nashville, we do, what, about $4.5 million in revenue in corporate buyouts. And in Las Vegas, this is going to be, I think, a big part of that business. But, you know, you've got to step back. We're doing this. Corporate buyout is sort of the icing on the cake. But we're doing this because we want to capture those country lifestyle consumers that are in that market. And that's why we've put it in that market. And I think it's going to be extraordinarily successful.
spk27: Smeece, to your question, we're targeting a November opening in time for the Grand Prix. We already have interest in buyouts as it relates to that event. And then, of course, that's followed quickly by National Rodeo, which is in Las Vegas every December, and the Super Bowl is there in February next year. So we're already fielding calls about those types of opportunities from corporations and other organizations.
spk35: Great, well, thank you. Thank you.
spk36: Our next question will come from Chris Rowanka with Deutsche Bank. Your line is open.
spk16: Hey, good morning, guys, and congratulations on the quarter and also the year. I had a question as to in the year, for the year pickup, mostly on the group side. kind of what's implied in the guidance, and maybe you can give us a, you know, refresher on how in the year for the year track in 22, and should we assume that, you know, that's generally going to be the higher rated kind of smaller corporate group meetings? Thanks. Yeah.
spk15: As far as how much... Chris, the specific figures there, we can follow up with you on that as far as what we booked last year, but Yeah, most of your in-the-year, for-the-year is going to be corporate-focused type business. Every now and then we get a larger piece of business that is obviously welcome, but usually there's not pattern availability for it. But we are very encouraged based on what we saw in 22, and then our in-the-year, for-the-year volumes for lead volumes are very, very encouraging. I've got them right here. They're up, you know, at the end of the year they were up 56%. So On 21. Yeah. 56% over 22. Yeah. So as we look at in the year for the year lead volumes, we're very encouraged by what we see. And yes, that'll usually be smaller groups, but we'll follow up with you with the specific figures around exactly how much we booked last year and, you know, what we've built into our guidance for this year.
spk16: Okay. Thanks, Patrick. And then might be a question for Colin. As this entertainment business continues to grow and evolve, I remember the days it was just a few assets in Nashville, and Nashville is still very important, but how do we think about the key drivers in the business, Colin? I know you're involved. There's also the Circle TV piece that I think a lot of us sometimes struggle to model it, frankly. Can you give us any thoughts on that? What are the key drivers outside of some of the purely leisure assets? Thanks.
spk13: Yeah, I'm going to sort of fly up to 65,000 feet on this. The growth opportunities in this business are almost unlimited. We've got so many different things that we're looking at, and we're frankly just getting to it with our with our friends from Ateros, Comcast, NBC. So, you know, we're going to work hard during the course of this year, identify new avenues of growth. We probably will look at the, you know, physical venue side of the business, go through additional physical venue sides of the business, but also on the... the digital distribution of content we create. And, and I say, you know, I don't, I don't think you're going to see any sort of major changes to the structure of that business this year. But, you know, we're very excited about the growth, growth avenue here. And so I would say, you know, I would say to our investors that love this part of the business, it's a, You know, we're going to have some fun with this business over the next one or two years.
spk15: Hey, Chris, it's Patrick. Let me follow up with you. I was able to kind of pull some numbers quickly. Our expectation is that we'll book around, you know, 14% to 15% of our group room night total for the year in the year for the year. And how that compares to prior year is tough because of Omicron because that's a net number. And if you remember, Omicron was creating so many cancellations. I'll have to follow back up with you as far as once you take out the impact of Omicron in the first quarter of last year, what did our in-the-year, fourth-year business actually look like? So I'll follow up with you on that. But roughly 14% to 15% of what we expect to do for the total year in group should be booked in the year-forth year.
spk17: Okay. All very helpful. Thanks, guys. Thanks, Chris.
spk36: Thank you. Our next question will come from Jay Kornreich with SMBC. Your line is open.
spk25: Hey, thanks. Good morning. I guess first let's follow up on the entertainment piece. And, you know, you talked about all the possibilities of growth and, you know, just the year-over-year growth seems to be, you know, more potential on that segment than maybe they'll tell currently. So I'm just curious, do you outline, you know, a potential percent of the overall portfolio you see the entertainment fees getting to or want to get it to versus the roughly 10% pre-pandemic?
spk27: We really don't think of it that way, Jay, in terms of its growth in relationship to hotels. We really think about it as a separate opportunity with a very different set of demand drivers and and capital opportunities. The longer-term aspiration for this business is to create a standalone live entertainment and media business that really focuses on the country lifestyle consumer, helps promote country music, and engages with those consumers, both in location-based entertainment opportunities as well as virtually. So we don't think about it. Really, the only way we think about it in relationship to the hotels is how we think about capital deployment from our perspective and then, frankly, how it fits within the REIT structure because we do have some limitations there. But from a growth perspective, we're nowhere near those limitations at this stage.
spk25: Okay, thanks for that perspective. And then just another question on the Gaylord Rockies. I guess if you look at the run rate, Q3 this year, it was your top performing asset, 87% occupancy. For Q, it dropped down to 70%. I'm sure it's more of a group-oriented asset. But I'm just curious if you can kind of run through kind of how you see that run rate in 2023 and kind of the year-over-year growth of that asset.
spk06: You want to take that, Patrick?
spk15: Yeah, absolutely. So, you know, we think that Rockies is going to continue to mature into its stabilized level. I would expect that we will see you know, occupancies at that hotel in the mid-70s, which is consistent with what we would expect at Gaylord Opryland, Gaylord Palms, and Gaylord Texan. So I would say 2023 is a great indication of what that hotel should be looking like from a stabilized performance level. And then from a margin perspective, we continue to, you know, it is a newer hotel that really kind of cut its teeth in the So we've identified additional opportunities to continue strengthening its margin performance, and then Colin and Mark both have alluded to some of the investments that are going in there. So while I think it'll truly be at a stabilized level consistent with what Palms, Texan, and Opryland perform at in 2023, there's still additional upside given the investments we're making into the property.
spk13: And as we went into this year, Patrick, room nights on the books, we were – we were pretty happy with where we sit for the Rockies, and that should manifest itself into the, translate into the performance for 2023.
spk15: Yes, that's correct. To Colin's point, 2023 had more room nights on the books than we did at this time in 2019. So the hotel is built very well for a solid performance in 2023.
spk09: Okay. Thanks very much for all that. Appreciate it. Yep. Okay.
spk13: We'll do one more call, and Chelsea, so if we have another question, we'll take it.
spk36: Okay. Our last question will come from Danny Assad with Bank of America. Your line is open. Danny, please make sure that you're unmuted on your end.
spk03: Hi, guys. Sorry about that. And good morning, and thank you for sneaking me in. So it's just a two-parter. My first question is, in your rev par outlook of 9% to 12%, can you help us parse out how much of it is occupancy growth and how much you're underwriting to come from rate? And then just at a higher level, how do you guys feel about your ability to push rate on group Not just, you know, for this upcoming year, but if we kind of look out further out to, you know, 24 and 25 and beyond. Thank you.
spk13: Well, as Mark pointed out in his remarks, that so much of the rate for this year was predetermined last year, the year before, and the year before that. But one thing that we have been able to do over last year and the year before is for the business that we booked last year, we saw really good rate growth. And that should translate into the, excuse me, busted spam, of course. That should translate into positive rate growth this year. And we're actually very excited about what happens in 24, 25, 26. But we have been really pushing rate like no tomorrow with our friends at Marriott through the sales organization and And Pat, do you want to give a little bit more color on that?
spk15: Sure. I mean, just at a very simple level, most of our road park growth in 2023 is based off of occupancy growth versus 2022. To Colin's point, you know, the great growth that we've seen and what we've been able to book on the group side will really start to materialize and manifest for us in larger quantities as you get into 24, 25, and 26. So we've built in some continued transient rate growth. Honestly, every time we build that in, it comes back and surprises us in terms of what we're able to actually achieve. And I would expect the same on the end of the year, fourth year on the group side. But at a very basic level, the majority of our rev park growth in 2023 is based off of occupancy recovery.
spk27: And Danny, as we mentioned earlier, a lot of that is going to happen in the first quarter off of off that Omicron comp, because we were only about 47 points in the first quarter of last year.
spk13: Any other questions from you, Danny? Okay. If there are no other questions, I'd like To thank everyone for being on the call this morning. We're very proud of the results that we accomplished as a company last year, and we're very excited about the prospects for 23 and future years. So if you have any follow-up questions, you know how to get hold of us, and thank you very much indeed. Operator, we're going to close the lines. Thank you.
spk36: Yes, sir. Ladies and gentlemen, this does conclude today's call and we appreciate your participation. Please enjoy the rest of your day. Thank you. you Thank you. Thank you. Thank you you Welcome to Ryman Hospitality Properties' fourth quarter 2022 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 Hutchison, Chief Financial Officer, and Mr. Patrick Chaffin, Chief Operating Officer. This call will be available for digital replay. The number is 800- 839-9881, with no conference ID required. At this time, all participants have been placed on listen-only mode. It is now my pleasure to turn the floor over to Ms. Jennifer Hutchison. Ma'am, you may begin.
spk33: 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 facts 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 discussed 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 metrics today, We reconcile each non-gap measure to the most comparable gap measure in exhibits to today's release. I will now turn the call over to Colin.
spk13: Thank you, Jan, and good morning, everyone. Well, the fourth quarter was an appropriate exclamation point to close out an extraordinary year for our company. I don't think in all of my years in this industry I've seen anything like the last 12 months. going from just under 33 points of occupancy and $185 of total REVPAR in January of 22, during the worst of the Omicron wave, and yet ending the year in December with just over 73 points of occupancy and a whopping $612 of total REVPAR. I really believe the results of this past quarter and our ability to recover so quickly from the last stage of the pandemic highlights the exceptional nature of our assets and our strategy compared to the wider industry. Of course, we've always talked about these attributes since well before the pandemic, about our dedication to studying and understanding our core group customer and delivering the highest quality experiences to our guests, about our rotational system for world-class assets in top markets, which makes that customer's planning decisions so much easier by booking multi-year, multi-site meetings all at once, about our belief in investing significant capital into expanding and upgrading our assets against the backdrop of very limited news supply, and about our strategy to induce our own transient demand with innovative and compelling programs around the calendar. By 2019, we were just starting to really reap the dividends, literally and figuratively, of this strategy. As our newest property, the Gaylord Rockets, had just opened that year with an unheard of 1.2 million room nights on the books and generated over $85 million of adjusted EBITDA in its first full year of operation. And the other cylinders of our hotels were firing as well, with the opening of Soundwaves and the expansion of the Texan and groundbreaking underway at the Palms. And of course, our entertainment business was riding high on the back of National's Nashville's exponential growth. We found ourselves at the end of 19 sitting on then record performances across so many metrics and we felt like we were just getting started as we gave in February for what by all signs were going to be a bomb burner of a year on the heels of these investments. But within weeks it all came to a halt and the last three years since then have been a whirlwind. But now here we are, three years and three COVID waves later, at last prepared to give you all a complete set of annual guidance once again. And what we are planning for 2023 is already well beyond those figures we'd anticipated back in early 2020. Our law group customers are back in droves and spending healthily on property, thanks greatly to our emphasis on rebooking over fee collection during these dark days. Our assets themselves are transformed compared to this time in 2020, thanks to our commitment to invest capital. This includes the 300 new rooms at the Palms, the beautifully renovated rooms at the National, and a host of new ballrooms, meeting spaces, event lawns, pavilions, and atriums, either complete or now underway across the portfolio. And not to mention the entirely reconcepted food and beverage outlets with innovative new socialization and gathering opportunities for groups, new technologies in place, new staffing models in many areas of our hotel. The list goes on. And our entertainment business is equally transformed. We've opened All Red in Orlando, Broken Ground on All Red in Las Vegas, closed the acquisition of Block 21, which brings Austin's iconic ACL Live at the Moody Theater into the fold. And to cap it all off, in June, we sold 30% of the entertainment business to the impressive team at Ateros, bringing NBC Universal in the tent and valuing the business at over $1.4 billion. It's not a stretch by any means to say that our entire company has not simply recovered from the pandemic, but has undergone a complete transformation. Armed with our new understandings of our customers, both group and leisure, and all of the levers available to us now and in the future through our ongoing investments. And looking at the tremendous book of business we have on the books for all future years, I believe we're capable of delivering exceptional results well into the post-pandemic era. As Mark and Jen will report, notwithstanding the significant impact of Omicron in the first quarter, by almost all measurements, 2022 was a record for us. And as you will see from our guidance in 23, more records are likely to follow. Needless to say, I'm truly excited for this next chapter of our company. And it is a perfect moment for Mark to take over for me in the CEO role as I move to executive chairman. So I now turn over to Mark to let him give you more details of the quarter. and our results and how we're thinking about the coming year, Marcus.
spk27: Thanks, Colin. Good morning, everyone. The fourth quarter was a terrific quarter for us. As our most leisure-focused quarter, we were really looking forward to having our signature ice show back after a two-year hiatus due to COVID and travel restrictions on our Master Carvers from China. And we're happy to report this year's ice show surpassed our expectations selling 1.2 million tickets, or 115,000 more than the last time we presented ice in December of 2019. The renewed attraction of ice helped increase transient room nights above the fourth quarter of 2019, and transient ADR in the quarter was $317, a 43% increase over the fourth quarter of 2019. That's a record for the Gaylord brand, surpassing the third quarter of 2022 by $29.00. On top of this holiday strength, group performed well, with group room nights traveling only 2.5% below the fourth quarter of 2019 levels, more than offset by group ADR up almost 10% over the same period. While our reported total occupancy was three points below the fourth quarter of 2019, when you consider the new 300 rooms at the Palms we added in 2020, our total room nights traveled were only 1% less than the fourth quarter of 2019. Hospitality margin in the fourth quarter was 31.1%, was 30 basis points less than our fourth quarter of 2019, but was flat to that period when excluding the decline in interest income on the Gaylord National Bonds. This is despite the inflationary pressures we're all aware of in the broader economy and an average wage rate increase of 24% across the portfolio compared to 2019. At the bottom line, our hospitality segment delivered 150.1% million of adjusted EBITDA RE, which put the full-year profitability of the segment $12.7 million above the high end of our last upwardly revised guidance range for 2022. The quarter was an all-time record for both total revenue and total adjusted EBITDA RE for our hotel segment, and the month of December set the single-month record for both metrics as well. And what should be the last earnings call in which we use 2019 as a full-year comparison 2022 finished up 7.8% in hospitality revenue and 6.3% in hospitality adjusted EBITDA RE compared to that last pre-pandemic year, even with the material impact of Omicron in the first quarter. So just a tremendous holiday season to close out what proved to be a great recovery year throughout 2022. In terms of production, we booked over 1 million gross group room nights in the quarter, a 4.4% increase over the fourth quarter of 2021. and the average ADR of $254 on new bookings was 11% higher than the fourth quarter of 21 and 13.3% higher than the fourth quarter of 2019. New group rooms revenue booked in the quarter and in the month of December alone were both new quarterly and monthly sales records for the Gaylor brand. This level of production sets us up well for 2023 and beyond. On December 31st, we entered this year with 49.8% net group occupancy points on the books for 2023, four points more than we entered 2022 and an ADR of $222 or 5% higher than the start of 2022. This equates to over $53 million or 14.5% more net group rooms revenue on our books to start this year than we had 12 months ago to start 2022. You will see in our guidance, which we are bringing back in full according to our past practice, that we translate this into an expectation for REVPAR growth this year of 9% to 12% and total REVPAR growth of 6.5% to 9.5% over full year 2022. In terms of profitability, while we expect inflation will remain elevated and higher margin attrition and cancellation fees will return to more normalized run rates, the transformation of our business, which Colin described, including efficiencies across management ranks, staffing models, technology, and food and beverage outlet strategy, among others, is expected to deliver stable to modestly improved margins compared to 2022, or in an adjusted EBITDA RE range for the year of $550 to $580 million in our hospitality segment. At the midpoint of $565 million, this represents over 10% growth from 2022. I'll remind you that the first quarter of this year will be by far the strongest in terms of percentage growth in RevPAR and total RevPAR, simply due to the Omicron impact in the first quarter of 2022, creating a materially lower comp than the remaining three quarters. From an adjusted EBITDA RE perspective, we anticipate quarterly contributions similar to 2019 on a percentage basis. Looking further, beyond 2023, we see a similar favorable setup for our hospitality business for the foreseeable future. As of December 31st, once again, we have 9.6%, 6.8%, and 3% more net group rooms revenue on our books for T plus 2 through T plus 4, respectively, or 2024, 25, and 26 than we did one year ago. And as we continue to add new production and increasingly healthy ADRs, such as we did in the fourth quarter, we expect to see our rooms revenue pace for future years pull further ahead. We believe our 2023 guidance and our on-the-books position for our hospitality segment for future years plainly evidences Collins' opening remarks about the transformation of our business from pre- to post-pandemic and the relative performance capability of our assets against the broader industry. But to emphasize it, we believe these levels of operating and sales performance are made possible by our unique strategy and its attributes of strong customer loyalty, broad customer exposure with very little concentration in any one industry, high-quality purpose-built assets fortified by high-return recent capital investments, and all of this in some of the most attractive, rapidly growing markets in the U.S. Note that three of our five markets, Orlando, Nashville, and Dallas, were in the top seven large metro areas for population growth over the last five years, and also in the top five for job growth in 2022. Denver was not far behind them as well in the top 25 for both metrics. It's no surprise, then, that all four of these markets, Dallas, Orlando, Nashville, and Denver, were in the top nine for hotel occupancy recovery in 2022 compared to 2019, according to Star. Against this backdrop of limited new supply growth and rapidly expanding markets, we see ample opportunities for our capital deployment strategy ahead of us. This includes over $69 million being spent right now to create an expansive indoor-outdoor group pavilion and to completely reimagine the Grand Lodge atrium at the Gaylord Rockies, increasing the volume of premium sellable group space and expanding food and beverage outlet selection capacity. And we see many more opportunities at the Rockies and elsewhere in the portfolio for additional rooms expansions, sound wave style water experiences, and more to continue differentiating our hotels, drive return group business, and attract high-spending leisure guests. Turning to our entertainment segment, the fourth quarter performance of our same-store assets compared to 2019 was equally impressive as our hotels. Same-store revenue for the segment was up 35%, and same-store adjusted EBITDA RE was up 62% compared to the fourth quarter of 2019. On a consolidated basis, including Block 21, which we acquired mid-year, adjusted EBITDA RE of $26.1 million, placed the full-year results for entertainment just above the midpoint of our most recent guidance range. For 2023, we're looking forward to a full-year contribution from the ACL Live at the Moody Theater and other Block 21 assets, and we have a slate of value-enhancing investments lined up in Austin for both the theater and the W Austin hotels. We expect the acquisition plus steady growth in Nashville and across the Old Red brand to help drive 2023 adjusted EBITDA RE for this business to a range of $87 to $97 million for 2023. At the midpoint of $92 million, this is a full $30 million more than this business generated in 2019, truly a significant transformation on par with our hotel segment. Now, let me turn it over to Jennifer to update you on our balance sheet, liquidity dividend in our consolidated guidance range.
spk33: Thank you, Mark. In the fourth quarter, the company generated total revenue of $568.9 million and net income to common shareholders of $58.1 million, or $1.03 per fully diluted share. Now, once again, that our fully diluted share count in the quarter and going forward will continue to reflect the put rights held by Atteros as part of their Opry Entertainment Group investment. Even though these rights are not yet exercisable, and we will also have the option to settle any rights exercised in cash. Any exercise of the put rights would also result in Atteros' 30% ownership in OEG reverting back to Ryman, so just keep this in mind when estimating future per share amounts. Total consolidated adjusted EBITDA RE for the fourth quarter of $168.1 million put our consolidated full-year results over $17 million above the high end of our most recent guidance. For 2023, in addition to the operating segment guidance provided by MARC, we're estimating for our corporate segment an adjusted EBITDA RE loss of 29 to 32 million, which would be just slightly better than 2022 at the midpoint. This yields a total fully consolidated adjusted EBITDA RE guidance range for the year of $605 to $648 million, a 12.7% increase at the midpoint over 2022, and a 22.7% increase over 2019. We're estimating that adjusted funds from operations or AFFO for 2023 will be in the range of $392.5 million to $424 million. At the midpoint, this represents a growth of 12.3% over 2022 and 14.5% over 2019 and reflects the increased interest costs of our current debt portfolio compared to 2019 as well as the pro rata reduction in AFSO attributable to a tariff's minority interest in OEG. Turning to the balance sheet, we ended the quarter with $334.2 million of unrestricted cash on hand, and our $700 million revolving credit facility remained undrawn. Together with the undrawn $65 million revolving credit facility at Opry Entertainment Group, this yields almost $1.1 billion of available liquidity after deducting $10 million of outstanding letters of credit. We retained an additional $119 million of restricted cash available for certain FF&E projects and other designated uses. On a trailing 12-month basis, our net leverage ratio of total consolidated net debt to adjusted EBITDA RE stood at 4.6 times. And based on the midpoint of our guidance, we anticipate we will end the year at approximately 4.1 times, which is below our year-end 2019 leverage and comfortably within our target range. We are pleased to declare a quarterly dividend this month of 75 cents per share, which is a substantial increase from our December declaration of 25 cents paid in January. That December declaration was targeted to achieve our goal of paying a minimum of a 100% of re-taxable income attributable to 2022. And our intention with the current declaration of 75 cents and subsequent dividends we may declare this year will remain to pay a minimum of 100% of re-taxable income. Finally, in terms of interest rate exposure, as of quarter end, approximately 90% of our outstanding debt was at fixed rates, either directly or with the benefit of swaps, although we do have two swaps expiring in 2023 on both the Gaylord Rockies term loan and our corporate term loan fee. We will address the Rockies maturity this year, our only maturity in 2023, which carries three one-year extension options that are fully available to us. We were pleased to have officially exited the cash suite status of that loan based on the strong performance of the Gaylord Rockies property post-pandemic. So our balance sheet and liquidity are in excellent shape to support all of our investment activity that Mark outlined, while also sustaining a meaningful dividend once again. And with that, I'll turn it back over to Colin.
spk08: Thanks, Jen.
spk13: Chelsea, let's open up the lines for questions, please.
spk36: Yes, sir. At this time, if you would like to ask a question, please press the star and one keys on your touchtone phone. If at any time you have found that your question has been addressed, you may remove yourself from the queue by pressing star two. Once again, that is star one to ask a question. And our first question will come from Dori Keston with Wells Fargo. Your line is open.
spk05: Thanks. Good morning. Can you walk through your expectations for cancellation and attrition fees this year and just how it relates to your guidance? I'm just looking at the difference between rev par, total rev par, and then the 25 basis points of margin expansion.
spk15: Okay, Dori, thank you. Patrick, are you going to handle that? Sure. Hey, Dori, good morning. Last year, as you probably are aware, we generated about $57 million in collected cancellation and attrition fees. We would expect this year to be in the I don't know, $20 to $25 million range, so a substantial reduction. We still have a few COVID cancellations that we're clearing out through the pipeline, but for the most part, we will be returning back to a more normal level of attrition cancellation as we move through this year. Okay.
spk05: And what's your current view on an eventual expansion of the Rockies? Are we able to get some guidance on potential timing or the cost of that?
spk29: Do you want to take that, Mark?
spk27: Yeah, I mean, Dory, that's an opportunity that's on our radar. As I mentioned in the prepared remarks, we're currently making a significant number of enhancements there, both adding incremental meeting space as well as completely, we're going to completely reimagine that Grand Lodge, add significant amount of buyout space for groups as well as incremental food and beverage. And once we're done with that project, we'll then be, we'll have the capacity that if we do do a rooms expansion and when we do a rooms expansion, we'll have the food and beverage as well as the meeting space necessary to handle those incremental rooms.
spk13: Yeah, the other thing I would say, Dory, is that, you know, the last six months we've been with our finger on the pulse looking at lead volumes by each hotel. And I would say that we as a company have been pretty excited about what we're seeing on lead volumes and particularly at the Rockies. And I suspect that sometime during 2023, we should be talking more positively about rooms expansion there simply because this is one hell of a market. We have by far the best convention hotel sitting in the middle of the country next to that airport. We're very excited about the prospects for that hotel. We're just going to monitor the next few months and then more communication on this subject.
spk12: Okay, great, thanks.
spk36: Thank you. Our next question will come from Bill Crow with Raymond James. Your line is open.
spk19: Good morning. Congratulations on the quarter and the year. I want to follow up a little bit on Dori's question on cancellation of nutrition fees and the guidance for $20 to $25 million in 2023. Should we anticipate that that's largely front-end loaded given that you're still trying to deal with cancellations from a year ago or a year and a half ago. And then, you know, as part of that, as we look at your guidance for the year, we understand that first quarter is really easy based on the Omicron last year. Are you implying that that second half of the year is going to be flattish from a RevPAR perspective, maybe even down a little bit from, you know, compared to last year? Do you want to take it back?
spk15: Yeah, so on the first question, you were asking about how we expect attrition cancellation to flow across the year. Honestly, given the length of time that it takes to communicate on these issues, I would expect it to be pretty evenly laid out across the year. So if we said $25 million, it should be $5 million a quarter, roughly, at $20 million, $4 million a quarter. The second question was around the second half of the year. Mark, did you want to take that?
spk02: Yeah, I mean...
spk27: Bill, generally, as you work your way through the year, the comps get right tougher and tougher. In 2019, or in the fourth quarter of 22, we essentially traveled the same number of room nights as we did in 2019. So, you know, we're really back to more normalized levels. So to your point, as you work your way through the year, you know, what the guidance indicates is that that comp gets tighter and tighter.
spk37: Yeah, all right, thanks.
spk19: And then if I could just, one more, Colin, you talked about how your pulse is on the demand side of things, and I'm just curious whether you're seeing anything in forward booking activity that might reflect some of the macro concerns and the layoffs we've seen over the past month or two, at least as it concerns corporate meetings?
spk13: Yeah, we really haven't seen that. in our lead volumes, Patrick. We just haven't.
spk15: Yeah, I would say that when the tech sector started to see some challenges, I think everyone kind of took a pause and got a little nervous, but I think they've realized that what's going on in tech is not necessarily the macro situation as much as some hangover from COVID and some of the actions taken by tech during that period of time. And I would say that just even the past four or five weeks, we've seen meeting planners start to relax a little bit. And, you know, they're still a little gun shy, but the lead volumes are very promising in the year for the year looks very good. And so we feel that recessionary fears are abating a bit among meeting planners.
spk18: Great. I'll yield the floor. Thank you. Thanks, Bill.
spk36: Thank you. Our next question will come from Patrick Scholes with Truist Securities. Your line is open.
spk21: Great, good morning, everyone. Good morning.
spk24: How are you thinking about, good morning, how are you thinking about wage and benefit cost increases this year and related to that, just overall operating costs increases year over year?
spk22: Thank you.
spk15: Yeah, I mean, we are expecting to, let me pull up to make sure I've got the exact number. but we are expecting there continue to be headwinds as it relates to average wage rate increases. I would say that we're expecting somewhere in the 5% to 6% increase as we move through 2023, so not quite to the level that we've seen in the past two years, but continued headwinds there, and we're planning for that. If it's less than we are currently planning for, then that will help us. but we're trying to be realistic and make sure that we take into account that it has been a challenging couple of years from a wage rate perspective.
spk27: Patrick, the one thing I'd say on margins is, you know, you'll know from our guidance that we're projecting some modest improvements in margin this year. And, you know, wage rates, obviously inflation, you know, the IMF, Marriott IMF, you know, being back in full force, you know, all those put pressure on margins. But, you know, on the other side of the ledger, You know, we have really nice ADR growth, particularly on the transient side. You know, we've been able to move F&B pricing. We've made some productivity gains. You know, if you look at while wage rates have increased, if you look at the wage margin, it's flat compared to 19. And then, you know, as we've talked about on previous calls, you know, Patrick and his team have worked diligently with Marriott in terms of kind of rethinking how these hotels operate. our staff, particularly from a management perspective. And when you look at management headcount, we're running about 12% fewer supervisors and above in our hotels post-COVID than we were prior to the pandemic. So there are a number of things that are on the plus side of the ledger to help offset that wage rate increase.
spk15: Yeah, and I would only add that longer term, we're spending a lot of time looking at technology and understanding how we can deploy additional technology opportunities in the hotels to further increase our productivity as well as guest satisfaction and bring our overall costs down.
spk24: Okay, thank you. I do have just two follow-up questions. Number one, you know, how is the national looking for this year given that D.C. has been showing a slower market to recover? And then number two, any further thoughts about becoming, should we say, involved or with the Chula Vista project. Thank you.
spk13: Patrick National, we're pleased with the renovation, what we've done there, the reengineering of the food and beverage facilities there that has allowed us to eliminate costs in that hotel. and we're generally very happy with the trajectory of that hotel. We're actually seeing good lead volume, too, for Washington. What have I missed on that?
spk15: No, you haven't missed anything. I would agree completely. Gaylord National, not quite back to the level of room nights on the books that it saw in 2019, but moving back to that level quickly. The D.C. market has been a little more challenged. I think we've been a bright spot in that market, and to Colin's Comments a moment ago, we've taken the opportunity over the past few years to address some structural cost issues that are really yielding themselves nicely. If you look at food and beverage performance and how it compares to prior year and to 2019, you can see that there's definitely some bottom line margin improvements that are occurring at that hotel, especially in food and beverage. And so continue moving it up from an occupancy perspective, but rate has been a bright spot there. And we feel actually very good about where National is heading.
spk13: The last part of your question is regarding Chula Vista. And, you know, Mark, I think our answer to your question is there is nothing has changed since the last time we got asked that question back in December, which is that, you know, we at this stage have no desire to be an investor in that business.
spk20: Okay. Thank you for the update.
spk11: Thank you, Patrick.
spk36: Thank you. Our next question will come from Smeeds Rose with Citi. Your line is open.
spk26: Hi, thanks. I want to just go back a little bit to the group bookings that you have on deck for this year and maybe just talk a little bit more about the composition of the groups. Are you seeing more corporate versus... you know, association-type business? And, you know, is there any kind of piece of the business that's lagging or any kind of piece that's, like, fully recovered in your view?
spk15: Yeah, I would say that what we've seen as far as recovery has been most pronounced in technology, in medical, and areas like that. Corporate has come back roaring, and we're very pleased with what we see. From a mixed perspective, I'm actually pulling up the actual numbers right now, so give me just a second. But as we look at this next year, we are a little bit more heavily weighted towards our corporate, but it's pretty consistent with what we saw in 2023. We do think that from a... Consistent with what we saw in 2023, you said? I'm sorry, consistent with what we saw in 2022. Thank you for correcting me. But I would say that in the year for the year is very promising from a corporate perspective. So While we have a little bit more in corporate on the books as of right now, we would expect that to continue to improve as we move through 2023.
spk27: Smith, the one thing to keep in mind, when you look at the business on the books for 23, about three-quarters of that business was booked pre-2022. And so as we roll forward, 23, 24 to 25, you're going to see those older room nights burn off and newer room nights that are at these higher rates come on. And so, you know, that will be a nice tailwind for our business from a rate perspective in the group segment.
spk26: Okay, thank you. And then I'm sorry if you said this, but what do you see capital spending for the year on the major – and maybe could you just line out the major projects that you're working on? You mentioned the Rockies.
spk32: You got that, Jen?
spk33: Yeah, we – As Mark mentioned, one of the bigger projects we have going on right now is at the Rockies, a couple of projects going on there with a new pavilion and the reimagining of the Grand Lodge and creating more usable group sellable space there along with food and beverage. I think our estimate for capital is about $130 million this year all in, including growth and maintenance, and that would include you know, of the contribution to FF&E reserves that are obviously linked to revenue. So as those grow, those will continue to grow as well.
spk15: Yeah, the only thing I would add to that is we're doing a lot of, you know, we talked about this in our prepared comments a few minutes ago. We're doing a lot of work around food and beverage. We continue to see if food and beverage is a massive opportunity for our brand going forward. And so we're investing in our old Hickory Steakhouses at Gaylord National and Gaylord Poem's. We're renovating spaces at Gaylord Palms, like our Osceola ballroom, which is 50,000 square feet. And then from an ESG perspective, we've got a pretty sizable investment going into solar panels that we'll be putting on top of the convention center at Gaylord National, be one of the largest projects in the nation. And we think a really bold statement as far as our priority on ESG and doing things that help the environment long term.
spk33: Let me clarify that number. I was off by $100 million. It's $230 million when you're including growth.
spk27: Smeeds on the entertainment side, Smeeds, Old Red Las Vegas is under construction. And then we are renovating the W as well as making some enhancements at the theater in Austin, Texas. So those two projects combined are probably going to be in the $50 million, $60 million range this year.
spk26: Okay, and then just one last question on Old Red in Las Vegas. Is that the kind of venue where you can start pre-selling events at this point, I guess, to corporations or social staff, or is that not how that piece of business works?
spk13: It's both. In Las Vegas, where that building sits right on the strip in front of in front of, right across from the Bellagio Fountains. You know, there's 120,000 people a day walk by it. So there's going to be a lot of what we call transient business in there. But this facility is also, we do a lot of corporate buyouts in our All Reds. As an example, here in Nashville, we do, what, about $4.5 million in revenue in corporate buyouts. And in Las Vegas, this is going to be, I think, a big part of that business. But, you know, you've got to step back. We're doing this. Corporate buyout is sort of the icing on the cake. But we're doing this because we want to capture those country lifestyle consumers that are in that market. And that's why we've put it in that market. And I think it's going to be extraordinarily successful.
spk27: Smeece, to your question, we're targeting a November opening in time for the Grand Prix. We already have interest in buyouts as it relates to that event. And then, of course, that's followed quickly by National Rodeo, which is in Las Vegas every December, and the Super Bowl is there in February next year. So we're already fielding calls about those types of opportunities from corporations and other organizations.
spk35: Great, well, thank you.
spk36: Thank you. Our next question will come from Chris Rowanka with Deutsche Bank. Your line is open.
spk16: Hey, good morning, guys, and congratulations on the quarter and also the year. I had a question as to in the year, for the year pickup, mostly on the group side. kind of what's implied in the guidance, and maybe you can give us a, you know, refresher on how in the year for the year track in 22, and should we assume that, you know, that's generally going to be the higher rated kind of smaller corporate group meetings? Thanks. Yeah.
spk15: As far as how much... Chris, the specific figures there, we can follow up with you on that as far as what we booked last year, but Yeah, most of your in-the-year, for-the-year is going to be corporate-focused type business. Every now and then we get a larger piece of business that is, you know, obviously welcome, but usually there's not pattern availability for it. But we are very encouraged based on what we saw in 22, and then our in-the-year, for-the-year volumes for lead volumes are very, very encouraging. I think I've got them right here. They're up, you know, at the end of the year they were up 56%. So On 21. Yeah. 56% over 22. Right. Yeah. So as we look at in the year for the year lead volumes, we're very encouraged by what we see. And yes, that'll usually be smaller groups, but we'll follow up with you with the specific figures around exactly how much we booked last year and, you know, what we've built into our guidance for this year.
spk16: Okay. Thanks, Patrick. And then might be a question for Colin. As this entertainment business continues to grow and evolve, I remember the days it was just a few assets in Nashville, and Nashville is still very important. But how do we think about the key drivers of the business, Colin? I know you're involved. There's also the Circle TV piece that I think a lot of us sometimes struggle to model it, frankly. So can you give us any thoughts on that? What are the key drivers outside of some of the purely leisure assets?
spk13: Thanks. I'm going to fly up to 65,000 feet on this. The growth opportunities in this business are almost unlimited. We've got so many different things that we're looking at. We're frankly just getting to it with our with our friends from Ateros Comcast NBC. So, you know, we're going to work hard during the course of this year, identify new avenues of growth. We probably will look at the, you know, physical venue side of the business, go through additional physical venue sides of the business, but also on the... the digital distribution of content we create. And, and I say, you know, I don't, I don't think you're going to see any sort of major changes to the structure of that business this year. But, you know, we're very excited about the growth, growth Avenue here. And so I would say, you know, I would say to our investors that love this part of the business track in itself, you know, we're going to have some fun with this business over the next one or two years.
spk15: Hey, Chris, it's Patrick. Let me follow up with you. I was able to kind of pull some numbers quickly. Our expectation is that we'll book around, you know, 14% to 15% of our group room night total for the year in the year for the year. And how that compares to prior year is tough because of Omicron because that's a net number. And if you're a member of Omicron was creating so many cancellations. I'll have to follow back up with you as far as once you take out the impact of Omicron in the first quarter of last year, what did our in-the-year, fourth-year business actually look like? So we'll follow up with you on that. But roughly 14% to 15% of what we expect to do for the total year in group should be booked in the year-forth year.
spk17: Okay. All very helpful. Thanks, guys.
spk11: Thanks, Chris.
spk36: Thank you. Our next question will come from Jay Kornreich with SMBC. Your line is open.
spk25: Hey, thanks. Good morning. I guess first let's follow up on the entertainment piece. And, you know, you talked about all the possibilities of growth and, you know, just the year-over-year growth seems to be, you know, more potential on that segment than maybe they'll tell currently. So I'm just curious, do you outline, you know, a potential percent of the overall portfolio you see the entertainment fees getting to or want to get it to versus the roughly 10% pre-pandemic?
spk27: We really don't think of it that way, Jay, in terms of its growth in relationship to hotels. We really think about it as a separate opportunity with a very different set of demand drivers and and capital opportunities. And the longer-term aspiration for this business is to create a standalone live entertainment and media business that really focuses on the country lifestyle consumer, helps promote country music, and engages with those consumers both financially in location-based entertainment opportunities as well as virtually. So we don't think about it, really the only way we think about it in relationship to the hotels is how we think about capital deployment from our perspective and then frankly how it fits within the REIT structure because we do have some limitations there. But from a growth perspective, we're nowhere near those limitations at this stage.
spk25: Okay, thanks for that perspective. And then just another question on the Gaylord Rockies. I guess if you look at the run rate, Q3 this year, it was your top performing asset, 87% occupancy. For Q, it dropped down to 70%. I'm sure it's more of a group-oriented asset, but just curious if you can kind of run through kind of how you see that run rate in 2023 and kind of the year-over-year growth of that asset.
spk06: You want to take that, Patrick?
spk15: Yeah, absolutely. So, you know, we think that Rockies is going to continue to mature into its stabilized level. I would expect that we will see you know, occupancies at that hotel in the mid-70s, which is consistent with what we would expect at Gaylord Opryland, Gaylord Palms, and Gaylord Texan. So I would say 2023 is a great indication of what that hotel should be looking like from a stabilized performance level. And then from a margin perspective, we continue to, you know, it is a newer hotel that really kind of cut its teeth in the So we've identified additional opportunities to continue strengthening its margin performance. And then Colin and Mark both have alluded to some of the investments that are going in there. So while I think it'll truly be at a stabilized level consistent with what Palms, Texan, and Opryland perform at in 2023, there's still additional upside given the investments we're making into the property.
spk13: And as we went into this year, Patrick, room nights on the books, we were pretty happy with where we sit for the Rockies, and that should manifest itself into the – translate into the performance for 2023.
spk15: Yes, that's correct. To Colin's point, 2023 had more room nights on the books than we did at this time in 2019. So the hotel is built – very well for a solid performance in 2023. Okay.
spk09: Thanks very much for all that. Appreciate it. Okay.
spk13: We'll do one more call, and Chelsea, so if we have another question, we'll take it.
spk36: Okay. Our last question will come from Danny Assad with Bank of America. Your line is open. Danny, please make sure that you're unmuted on your end.
spk03: Hi, guys. Sorry about that. And good morning, and thank you for sneaking me in. So it's just a two-parter. My first question is, in your rev par outlook of 9% to 12%, can you help us parse out how much of it is occupancy growth and how much you're underwriting to come from rate? And then just at a higher level, how do you guys feel about your ability to push rate on group Not just for this upcoming year, but if we kind of look further out to 2024 and 2025 and beyond. Thank you.
spk13: Well, as Mark pointed out in his remarks, that so much of the rate for this year was predetermined last year, the year before, and the year before that. But one thing that we have been able to do over last year and the year before is for the business that we booked last year, we saw really good rate growth. And that should translate into the, excuse me, busted spam calls. That should translate into positive rate growth this year. And we're actually very excited about what happens in 24, 25, 26. But we have been really pushing rate like no tomorrow with our friends at Marriott through the sales organization. And Pat, do you want to give a little bit more color on that?
spk15: Sure. I mean, just at a very simple level, most of our red part growth in 2023 is based off of occupancy growth versus 2022. To Colin's point, you know, the great growth that we've seen and what we've been able to book on the group side will really start to materialize and manifest for us in larger quantities as you get into 24, 25, and 26. So we've built in some continued transient rate growth. Honestly, every time we build that in, it comes back and surprises us in terms of what we're able to actually achieve. And I would expect the same on the end of the year, fourth year on the group side. But at a very basic level, the majority of our rev park growth in 2023 is based off of occupancy recovery.
spk27: And Danny, as we mentioned earlier, a lot of that is going to happen in the first quarter off of you know, off that Omicron comp, because we were only about 47 points in the first quarter last year.
spk13: Any other questions from you, Danny? Okay. If there are no other questions, Mike, To thank everyone for being on the call this morning. We're very proud of the results that we accomplished as a company last year, and we're very excited about the prospects for 23 and future years. So if you have any follow-up questions, you know how to get hold of us, and thank you very much indeed. Operator, we're going to close the lines. Thank you.
spk36: Yes, sir. Ladies and gentlemen, this does conclude today's call and we appreciate your participation. Please enjoy the rest of your day.
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