Ryman Hospitality Properties, Inc. Q2 FY2025 earnings call

• Announced, funded and closed the acquisition of the JW Desert Ridge in Phoenix, Arizona. • Completed presidential meeting space renovations at Gaylord Opryland and other projects like food and beverage enhancements at Gaylord Texan and Gaylord National. • Second quarter was exciting strategically and operationally, with the company delivering record consolidated revenue and same-store hospitality segment having the second-highest adjusted EBITDAre. • Entertainment business had first festival season with Southern Entertainment. • Gaylord Rockies and JW Marriott Hill Country achieved all-time monthly records for revenue and adjusted EBITDAre in the quarter. • Recent renovation at Gaylord Palms received favorable response from customers and had high guest and meeting planner satisfaction scores.

The same-store Hospitality segment adjusted EBITDAre was $187 million, a decline of approximately $18 million year-over-year, but still the second highest quarter of all time. The Entertainment segment delivered record revenue of $143 million and adjusted EBITDAre of $34 million. For the hotel business, leisure demand increased approximately 4% compared to last year driven by strong performance at Gaylord Palms and Gaylord Rockies, partially offset by softer demand at Gaylord Opryland. Same-store group production trends were strong, but last year's record second quarter created a challenging year-over-year comparison. Gross group room nights booked in the second quarter for all future periods were down approximately 15% from last year's record second quarter, but compared to the average quarterly bookings for the 2019 to 2023 period, this quarter bookings were up high single digits.

• Adjusted guidance ranges to include acquisition of JW Marriott Desert Ridge, expecting adjusted EBITDAre from Desert Ridge in 2025 to be $18 million to $22 million. • Lowered top end of same-store hospitality business adjusted EBITDAre guidance range, with full year consolidated adjusted EBITDAre expected in range of $767 million to $813 million. • Revised AFFO guidance for full year 2025 to range of $505 million to $546.5 million and AFFO per fully diluted share to range of $7.93 to $8.49. • Anticipates RevPAR and total RevPAR to decline low to mid-single digits in third quarter for same-store hospitality business, and reverse in fourth quarter with low to mid-single-digit growth. • JW Desert Ridge's typical seasonality results in approx 40% of adjusted EBITDAre in first quarter and 30% to 35% in back half. • Entertainment business expected stronger adjusted EBITDAre contribution in fourth quarter than third quarter due to seasonality.

• Macro economic uncertainties like tariffs, inflation, interest rates, wars that could have significant implications for businesses. • In Nashville market, substantial influx of new hotel supply pressuring transient occupancy and rate trends. • Southern Entertainment business seasonally weighted to second quarter and unfavorable weather conditions impacted festival attendance and margin performance in second quarter.

Q: Maybe first, just on the lead volumes. I think they were down 16% year-over-year. Curious how that's trended, are you seeing kind of month-over-month improvement and how you just expect that to play out for the rest of the year?

A: This is Patrick. Yes, I mean, our lead volumes have definitely felt some pressure on the in-the-year-for-the-year, and we expect that to continue as we continue to move through the rest of this year. But our lead volumes look very good for 2026, 2027 and beyond. So we do believe that some of the pressures and headwinds that we've been seeing have thus far been relegated just to the 2025 calendar year.

Q: Aryeh Klein: Got it. And then maybe more of a strategic question. You talked a little bit about the potential for rotation within the JW brand now that you acquired Desert Ridge. Curious how you're thinking about JWs more broadly longer term and creating something where you own more JWs, kind of replicate what you have within the Gaylord hotels that you own. Is that something you would potentially consider?

A: I mean that certainly is -- as we think about what the growth strategy is for the portfolio, adding JWs in the right markets that allow us to create that rotation, not only between JW and Gaylord, but also across JWs, is something that we think quite a bit about.

Q: Chris Jon Woronka: Kind of a two-parter. The first one is it seems like the out-of-room spend is continuing to hold up really well even in cases where you're maybe having a little bit of attendance attrition or less pickup. But just curious as to what you think is driving that in the context of a little bit of softness you mentioned here and there. And then the second part is we talk a little bit about D.C. market and what you're seeing there. There's a lot of noise in the market. We've heard some mixed things. Can you just talk about maybe your near- and medium-term outlook for National and how you can maybe offset some of the broader market hiccups, if there are any?

A: Chris, this is Patrick. Good to hear your voice. Let's start with your first question on out-of-the-room spend. Yes, we agree, it has been extremely resilient. And when you take into account the mix shift that we've seen in the second quarter and some of the other things we've seen for the remainder of the year, we're still very, very positive on how banquet and outside-the-room spend contributions per group room night are holding up. Groups continue to react to some of the things that they're seeing in the macro environment. But when they get on property, they continue to do very, very well. And that is a trend that we've been seeing for several years, and it continues to hold up, especially on the corporate side, but the association is definitely not underperforming on that side either. So we've been very encouraged by that. To your second question on the D.C. market, I would tell you that we're really pleased that the Gaylord National has been doing a really good job in a very challenging market and continues to move in a very positive direction. We've made some fundamental structural changes to that hotel in the wake of COVID when we reopened it, and those have continued to pay benefits for us long term. And so while there is some pressure from the government side, Gaylord National seems to have really found its space to operate in, in a very healthy way and continues to move in a positive direction. So we feel good about where it's heading.

Q: Smedes Rose: I wanted to ask a little bit more about your expectations at the Gaylord Opryland. Does that property do more transient business maybe relative to your other properties? Because I guess I was a little surprised to see that you brought down the guidance based on transient given the emphasis on group across your properties. And just on the room supply pressure that you mentioned, I maybe haven't been paying attention closely enough, but I feel like room supply in Nashville has been increasing fairly steadily for a long time now. And I'm just wondering why you think now you're starting to see the impact, whereas maybe you hadn't seen it as much in prior years?

A: Shall I start? Okay. So let's step back a second and understand what is going on here in the city, and then we'll get on to Opryland. There is a unique product that emanates from Nashville. It's called music, country music. There's not another city in America that has the infrastructure that we have here. This product has become global. Over the last 5 to 10 years, it has gone global. All these great artists that live here, play here are now playing in cities all across the world. And this is generating tremendous amount of demand for the city of Nashville. In addition to that, you're right, we've seen, over the last decade, I would suggest probably 15,000 new hotel rooms. There's not another city in America that's seen this supply. And we forget about Airbnb that didn't exist 10 years ago, now it does. We've got about 7,000 of those babies in this town. But on the other hand, when you look at the demand generators, the things that are underway in this city, things like this brand-new stadium, and we call it the Titan Stadium, but it's a domed stadium similar to the stadium in Las Vegas. And this stadium will, I suspect, do 25 to 50 new big concerts a year, playing in front of 70,000 people. This stadium, almost certainly over the course of the next few years, will attract the Super Bowl, will attract the Final Four; has, in fact, recently signed WWE to come here, which was, quite frankly, when it was in Vegas a year ago, was one of the biggest demand generators for that city. We have massive development going on, on the East Bank, with new demand generators being built there. We have the Bridgestone Arena in downtown Nashville that the current owner of is a guy called Bill Haslam, the ex-Governor of the state, owns the Predators, has very, very, very exciting plans for the expansion of that. I look out of my office window here, I see cranes everywhere. We have relocations coming into Nashville, the likes of which we haven't seen before. We have Oracle bringing their world headquarters here over a period of time, $4 billion relocation. So the city is an extraordinarily unique position. Now Opryland, we talk about it, and we take it for granted, 2,880 rooms. This hotel, when Mark and I got here 20-plus years ago, did $40 million of EBITDA. That baby this year is going to push just under $200 million of EBITDA. This is the most relevant convention resort in America. And we have added, as you all know, things like SoundWaves because of the incredible amount of influx that we've seen from a tourism perspective. Yes, this hotel does more tourism business than the rest of our hotels, than any of the other hotels, but it's simply because we've got far more rooms and 30% of its business is leisure. So leisure is going to continue to grow in this market. And by the way, I didn't mention what has happened at the airport. There's not another airport in America that's had 2 major expansions in the last decade. There's not another airport in America that when you speak to the CEO of the airport, good guy, Doug Kreulen, who runs it, and you ask him, "You've just put a new whole series of gates in," he would tell you that we're 30 gates' short today. We're 30 gates' short of what the demand for airlines flying to this town will be. So our thesis for Nashville, I know this is a long-winded answer, Smedes, to a very simple question. Our thesis for this market is, because of this unique product and the desire for consumers to touch it and feel it, we're going to continue to see growth in this market big time, I think, over the next 10 years. Oh, and by the way, I forgot one other thing. On Monday of this week -- I beg your pardon, last week, The Boring Company, which is Musk's company that digs tunnels, this is the second city that they have selected to come to. And they have been working with the governor's office for the last 12 months to connect the airport to downtown Nashville. And we met with them, and we would obviously like them to connect it through Opryland. And this is exciting. This is going to move people from very crowded streets to subterranean and will, I think, be another benefit to tourism in this city. So that's how we think about it.