Ryman Hospitality Properties, Inc. Q1 FY2025 earnings call

Management Statement and Operational Highlights

• Strong First Quarter Results: Consolidated revenue increased 11%, consolidated adjusted EBITDAre increased 15%, and AFFO per fully diluted share increased 28%.
• Hospitality Segment Details: Easter holiday timing contributed ~220 basis points to RevPAR growth. ADR of $264 was a first quarter record, with growth in both group and transient segments. Outside room spending from group customers was better than expected, with banquet and AV revenue up nearly 7%.
• Entertainment Segment: Strong performance with new projects back in service and growth projects identified. Generated revenue and adjusted EBITDAre as first quarter records.
• Strategic Actions: Worked closely with Marriott on margin management, implemented proactive cost control measures, and asset management team focused on efficiencies and communicating with meeting planner customers.
• Market Uncertainty: Uncertainty from trade rebalancing and government cost-cutting initiatives affecting group business, leading to modified guidance.

Segment Performance

• Hospitality Segment: Record first quarter revenue and adjusted EBITDA, with RevPAR up 10% and total RevPAR up 9%. ADR was $264, a first quarter record. Outside room spending from group customers was better than expected. Revenue contribution from Hospitality segment is significant.
• Entertainment Segment: Generated revenue growth of 34% year-over-year and adjusted EBITDAre of $21 million, up 35%. Both were first quarter records.

Guidance

• RevPAR and Total RevPAR: Revised guidance for hospitality RevPAR in the range of 1.25% to 3.75% and total RevPAR in the range of 0.75% to 3.25%.
• Adjusted EBITDA and AFFO: Maintained guidance ranges for consolidated adjusted EBITDAre ($749 million to $801 million), AFFO ($510 million to $555 million), and AFFO per fully diluted share ($8.24 to $8.86).
• Capital Expenditures: Lowered capital expenditures outlook from $400 million to $500 million to $350 million to $450 million based on project timelines.

Risks

• Market Uncertainty: Uncertainty from trade rebalancing and government cost-cutting leading to potential group business pullback.
• Tariffs Impact: Potential impact on project budgets from tariffs, though efforts made to mitigate sourcing from other countries.
• Government Business Pullback: Concerns about government-related group business cancellations affecting performance.

Question and Answer

• Q: Chris Woronka on April production and capital deployment A: April production showed improvement in lead volumes. Capital deployment program remains intact with confidence in long-term value creation.
• Q: Jack Armstrong on Southern Entertainment acquisition A: Southern Entertainment offers opportunity to expand live venues and leverage artist flywheel effect. No immediate plan to spin out OEG.
• Q: Duane Pfennigwerth on in-year demand composition A: In-year demand composition includes leisure and corporate, with government business driving recent cancellations.
• Q: Smedes Rose on government business composition A: Government business cancellations are across the portfolio, dominated by the government side.
• Q: Aryeh Klein on project pullback and tariffs A: Evaluating project pullback based on macro conditions, tariffs impact minimized through sourcing adjustments, and projects underway proceed with adjustments.
• Q: Shaun Kelley on government exposure and strategy A: Government exposure not massive, and strategy includes proactive management and leveraging market opportunities during uncertainty.
• Q: David Katz on productivity plan and entertainment behavior A: Productivity plan with Marriott focuses on labor efficiency and talent recruitment. Entertainment business resilient with local/regional drive-to markets.
• Q: Chris Darling on financial crisis lessons A: Lessons from 2009 include reliance on cancellation fees and contractual nature of business providing downside protection.
• Q: Jay Kornreich on leisure transient customer A: Leisure transient customer showed strength, spring break performed well, and positioned to benefit from staycations.
• Q: John DeCree on international travel exposure A: Limited international travel exposure, with some Canadian pullback but offset by new international clients.