Welcome to the Gaylord Entertainment Company's First Quarter 2012 Earnings Conference Call. Hosting the call today from Gaylord Entertainment are Mr. Colin Reed, Chairman and Chief Executive Officer; Mr. David Kloeppel, President and Chief Operating Officer; Mr. Mark Fioravanti, Executive Vice President and Chief Financial Officer; and Mr. Carter Todd, Executive Vice President and General Counsel. This call will be available for digital replay. The number is (800) 585-8367, and the conference ID number is 69034636. [Operator Instructions] It is now my pleasure to turn the floor over to Mr. Carter Todd. Sir, you may begin.

Thank you, and good morning. My name is Carter Todd, and I'm the General Counsel for Gaylord Entertainment Co. Thank you for joining us today on our first quarter 2012 earnings call. You should be aware that this conference call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements, among others, regarding Gaylord Entertainment's expected future financial performance. For this purpose, any statements made during this call that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, words such as believes, anticipates, plans, expects and similar expressions are intended to identify forward-looking statements. You are hereby cautioned that these statements may be affected by the important factors, among others, set forth in Gaylord Entertainment's filings with the Securities and Exchange Commission and in our first quarter 2012 earnings release. And consequently, actual results may differ materially from the results discussed or projected in the forward-looking statements. Gaylord Entertainment undertakes no obligation to update publicly any forward-looking statements whether as the result of new information, future events or otherwise. I would also like to remind you that in our call today we will discuss certain non-GAAP financial measures, and a reconciliation of those non-GAAP financial measures to the most directly comparable GAAP financial measures has been provided as an exhibit to our earnings release and is also available on our website under the Investor Relations section. At this time, I would like to turn the call over to our Chairman and Chief Executive Officer, Colin Reed.

Thank you, Carter. Good morning, everyone, and thank you for joining us today. I will begin with some highlights from our first quarter performance and then offer some thoughts on how we are thinking about our business for the remainder of this year. Then our President, Dave Kloeppel, will offer some color on our sales and marketing activities; and Mark Fioravanti, our CFO, will conclude our prepared remarks by providing detail on our financial results for the quarter. Then we'll of course open up the call for questions. Last week, we provided the preliminary preview of some of our quarterly results, so you should already have a decent understanding for how we performed. Let me begin by saying that we were very pleased with our performance this quarter, as revenue across our hotels grew by 8%. This is especially good in light of the challenging comparable Gaylord Texan created by the 2011 Super Bowl in Dallas. While the quarter started slow, group performance momentum began to build in February and drove very strong results in March. While 2 months does not make a predictable trend, we did witness some encouraging group trends in the first quarter. Many groups delivered more room nights than we initially expected, and even more groups increased their spending behavior while on property. However, before I go into more detail on the highlights at our properties, I want to discuss what we believe to be the true story of the quarter: our profitability and margin performance. This quarter, we posted a Gaylord Hotels brand CCF of over $70 million, the highest in the history of our brand and representing growth of 24.3% compared to the same quarter last year. This translated into a CCF margin just over 31%, a 410 basis point improvement over the first…

Thank you, Colin, and good morning, everybody. In the interest of time, and so that we can move to the Q&A portion of the call sooner, I'm going to limit my comments this morning to our advanced group bookings performance during the quarter and then turn it over to Mark to discuss our financials. In the first quarter, Gaylord Hotels booked over 372,000 gross room nights for all future periods. This was an increase of 3.3% compared to the first quarter of 2011. On a net basis, we booked 306,468 room nights, which reflects an 11.6% increase. We saw good long- and short-term demand in the first quarter. Although our bookings for 2013 were down in the quarter compared to our production for '12 in the same quarter last year, our lead production for '13 is up over 25% compared to last year of the same time. The demand is there, and now we're focused on being wise about how we book this business for next year and at what rate we book it. As Colin mentioned, we continue to believe the pricing strategy we employed the past couple of years is the right one. We're seeing strong demand for '13 and beyond as corporate demand picks up. We're also seeing encouraging trends as it relates to room rate. The rate we booked business at in the first quarter was up 4% over the same quarter in 2011, and total revenue we booked increased 7% quarter-over-quarter. So with that as added color, I'll pass it over to Mark to go through the financials.

Thanks, Dave. Good morning, everyone. On a consolidated basis, Gaylord Entertainment revenue for the first quarter of 2012 was $238.9 million, an 8.2% increase from the first quarter of 2011. During the quarter, the company generated income from continuing operations of $6 million or $0.12 per diluted share, compared to a loss from continuing operations of $2 million or $0.04 per diluted share in the prior year quarter. Company-wide consolidated cash flow was $56.6 million, a 23% increase from $46 million the same period last year. Turning to the hotel segment for the quarter. Gaylord Hotels RevPAR increased 3.8%, while total RevPAR increased 4.9%. Gaylord Hotels in-the-year, for-the-year cancellations in the quarter totaled 8,817 room nights compared to 20,596 room nights in the first quarter of 2011. Attrition rates fell 1.6 percentage points from 6.1% to 4.5% in the first quarter of this year. During the quarter, we continued to benefit from attrition cancellation fee collections, and collections totaled $1.2 million compared to $1.6 million for the same period last year. As Colin discussed, driven by strong margin performance across the brand, Gaylord Hotels CCF increased 24.3% in the first quarter to $70.2 million, while CCF margin increased 410 basis points year-over-year. The Opry and Attraction segment also performed well, with revenue increasing 12.9% in the quarter to $12.8 million, and CCF increased $1.4 million to $2.1 million. As it relates to the Corporate and Other segment, CCF in the quarter totaled a loss of $15.5 million compared to a loss of $11.2 million in the prior year quarter. And as Colin mentioned earlier, this loss reflects $3.1 million of nonrecurring expenses. Moving on to the balance sheet. As of March 31, we had long-term debt outstanding of approximately $1,061,000,000 and unrestricted cash of $19.9 million. Additionally, $340 million of…

Mark, I think it's -- we'll open the call up for questions. And so, Jackie, if you could do that for us, please, that will be helpful.

[Operator Instructions] Your first question comes from the line of Andrew Didora with Bank of America.

Colin, with the shareholders' meeting this Thursday, can you help us understand the timeline involved in exploring these strategic options? Just curious because with the $3 million spent in 1Q, it seems like this could create a little bit of a distraction for senior management. And any key dates or milestones we should look towards in order to check your progress on this front could be helpful.

Yes, Andrew. Look, we actually signal, I think, back in February, that we were looking at ways to unlock value within -- we've been at work on this for now 6 months and had a fleet of advisors and folks helping us think through all of the options before us. And we could've not said anything in this release, but the reality is our corporate costs did go up by 30% in the quarter. And you all are smart people, you would've asked what on earth is going on here with your corporate costs. And of course, we like to be transparent. We don't like to mislead you or investors, so that's why we've talked about this. We've put a lot of effort into this. And I think we are reaching the back end of all of this work. And I wish I could be a little bit more expansive, but the facts are, the plan needs some final work to it, some discussions with our board. And I think it would be inappropriate for me to sort of set expectations here in terms of timelines because anything can happen in this crazy environment. But I'm pretty confident -- let me say this. This review that we've undertaken, basically, has looked at everything. It's very, very extensive. And I believe that once we lay our plans out, I think it will make it much easier for investors to value our company. So let me hedge on it for a moment, Andrew, if you don't mind, and just be a little bit more patient with us because there's a little bit more work to be completed.

Great. And I guess 2 quick follow-ups. First is when is your next board meeting? And then second, since you put it out there that you are looking at these -- exploring options, would you be required to disclose, if you decide that a transaction is not in your best interest?

We -- first of all, let me answer the first part of the question. The next board meeting we have is our regularly scheduled board meeting that precedes our annual shareholders meeting. So it starts at lunchtime tomorrow and will conclude at lunchtime on Thursday. And in terms of disclosures, once this review is done, we will -- and completed, I think we will make disclosures whichever direction we decide to go in, period.

Your next question comes from the line of Kevin Milota with JPMorgan.

Was wondering, on your updated bookings commentary, if you could give us a sense for where you are with occupancy on the books for '12 and '13? And also if you could give the same stats for revenue on the books? And then additionally, for the pricings take-in for '12, '13 and '14, give us a sense for where ADRs are coming out year-over-year?

David?

Sure. Let me get a little bit of data here for you. So on the books right now for '13, we have 36.2 points of occupancy on the books. And for '14, we have 30.2 occupancy points on the books. And those are on the books at rates that -- '13 bookings are on the books about 12% higher than we finished 2011, and the '14 rates are a little bit above that.

Okay, great. And then in terms of occupancy, is that ahead or behind of where you typically are at this point in your cycle?

For '13, it's a little bit behind where we were this time last year for '12. For '14, it's ahead. And as I've said in my comments, we're seeing a significant increase in lead volume for the short-term period in the first quarter. Leads for 2013 were up about 25% or so, leads for '14 were up a little bit more than that. And so -- and then we saw good experience in April. We've disclosed our preliminary April production in our release, I guess that was last week. And that production was very, very good, as you know, across the board. And the vast majority of it was short-term T-0 to T-3. So we're seeing those leads convert now and we're feeling good about how we're feeling for '13 and '14.

The other thing that is going on here, Kevin -- this is Colin -- is that with the increase in our focus on the leisure side, we're seeing tens of thousands of room night more in production of leisure room nights this year over last year and last year over the year before. And this has been a conscious decision to eliminate the lower-priced summertime groups, put these resort pools in, and drive much higher-rated leisure business into these hotels. And that's one of the reasons why you saw last year at the Texan a record for the Texan in terms of profitability for the year. And we're continuing that strategy. And this summer will be the first summer that we will actually have our relationship with DreamWorks in operation. The other thing that's going on is we're being a little bit more, as we've signaled before, a little bit more of sticklers around pricing. And as Dave just reflected, the pricing lift from '13 to '12 is pretty good. So we're making some shifts here to hopefully drive much higher levels of profitability, eliminating the lower-rated groups in the summertime which tend to book 2, 3, 4 years in advance of the association business, and replacing it with, as this economy's improving, with this better transient business. And frankly, we booked a lot of transient business in the first quarter of this year as well, and that's one of the reasons why you saw us having the first quarter that we did.

Yes. If you look at transient bookings year-to-date were up in the mid-20s percentage over the same time last year. So that's what's -- actually what's consumed in the first quarter plus what's on the books through -- and also what was consumed in April and what's on the books for May, and then there's a little bit of a trickle of bookings that are on the books for June, July and even some for Christmas right now.

Your next question comes from the line of Jeffrey Donnelly with Wells Fargo.

First question for you, Dave, it might be coming softball [ph], though I don't mean it as such. Most of your hotel earnings from the out-of-room spend and room rate or RevPAR numbers moving in tandem. But at the Texan, they actually moved opposition, if I'm doing my math right, looks like your RevPAR pulled back. But you’re out-of-room spend actually increased I think 2% or 3% year-over-year. And I'm curious, is that indicative of something in the prior year comp such as the DreamWorks event, or is that a sign of, I guess, growing demand for out-of-room offering and thus, maybe a little more sustainable in future quarters? I'm just curious what your thoughts are.

Yes. Let me address that generally and then I'll get to the Texan, specifically. I mean, generally, we're seeing out-of-room spend grow at a slightly more rapid rate than inside-the-room spend at all the properties. And this is what we typically see when you start to see more kind of CEO confidence, more business confidence. We saw it back in, I guess, the 2004, 2005 period, as we started to see the beginning of the strength of that cycle. So we're seeing groups now where the meeting planner, when they're coming on-site and saying, "We think we're going to still be at x," and then the CEO comes on-site 3 days before the conference and says, "Well, we don't want x. We want x plus something, something, something." And they upgrade the overall experience. So we're seeing that generally. The Texan dynamic is a little bit different because Super Bowl rates pushed up the ADR, kind of overly inflated the ADR that we booked -- that we had for same time last year. So that's why you seeing a negative in RevPAR but you still see strength from an outside-of-the-room spend perspective.

But I'm curious why is it that you're not really seeing that – or maybe, again, I'm just not perceiving this right, but you're not really seeing that out-of-room spend at the Gaylord National year-over-year. It looks like that piece has been relatively flat.

It's hard to kind of be specific property by property and expect to see the exact same trend. But if you have a couple of different groups and a little bit different mix of business, it can adjust the percentage growth factors. I mean, these groups are so large that if one of them has an unusual experience and comes in and really blows it out. For instance, we had one group at Opryland that, in March, when they came the last week or so of March, and 2 weeks before that they said, "Oh, by the way, we just bought a company and we're going to add more room nights to the meeting. And oh, by the way, we want to upgrade our banquet facilities, our banquet experiences significantly to reflect the enthusiasm we have for this new company we just bought." So any single group, if it's a multimillion dollar group, is going to – could skew the results a little bit ahead of single property.

Colin, I don't want to leave you out, and maybe Dave can chime in on this, too. But concerning Mesa and Aurora, I think this has been asked in prior quarters, but do you think Gaylord could handle a balance sheet aspects of 2 projects at one time?

Probably. It depends on the project. We -- from a 30,000-foot perspective, Jeff, you've seen our balance sheet. Our balance sheet, through the worst time in the world since 2008, plus a flood, our balance sheet is – we've continued to delever. And this year, we're going to throw there, or thereabouts, $100 million of free cash flow. We've got a very powerful little business on our hands here. So we've been cautious about growth and development through this downturn because all of us have been sort of trying to figure out when does the world move back to more of a normal time. But we think whichever direction we decide to go in, and I would say to you this, that in all probability, if we – if the company stays in the form that it's in, and let me just leave the sentence like that. And we were going about development the way we've gone about development 3 years ago, 5 years ago, 10, 8 years ago, I think our view would be that we should look at partners on these big developments, get this debt -- some of this debt off our balance sheet. And because we've now built the brand -- the brand is a very successful brand. The brand has great traction with the meeting planners and we're moving into a different phase as a corporation, as a company. And so I think we have good growth opportunities ahead of us. How we determine to structure it, I suspect, will be different prospectively than it has been in the past.

Yes. I'm curious if I can as a follow-up on that. Many hotel brands, historically, emphasize honing their flagship hotels, define the brand. But given the size of your company, I guess, do you – what is your philosophy in the ability to separate the ownership of the asset from the management? Are you concerned that maybe you sacrifice something there?

Let me -- because I'm drifting, if I start getting in detail -- getting you a detailed answered to that, as you know, leading question. Jeff, you're a smart guy. I think what I'd like to do, rather than speculate about does the brand lose anything if we were to separate real estate from our operating side of the business, rather than speculate on that, let's -- if I could, let's table that until we have something more definitive to talk about in terms of these options that we've be looking at.

Okay. And if I could ask one more question and then I'll -- the floor is – because I think it's a question on a lot of people's minds is do you expect you'll be providing any more disclosure on your alternatives at the shareholder meeting this week, or do you think it'll be sort of consistent with what you're doing today in the…

I don't think that's going to be practical simply because of the way our board meeting works with the shareholders' meeting. I don't think it'll be practical to give -- to come to the conclusion that we're going to say something a little bit more definitive on Thursday. But just bear with us on this. We've been working very, very hard at it and hopefully, we'll have something good to let our shareholders know about here and be able to help them understand the underlying value of our business.

[Operator Instructions] Your next question comes from the line of Sam Yake with BGB Securities.

I have kind of a little bit of a follow-up on the last gentleman's point, kind of a longer-term question. I mean, you've done an exceptional job of building the brand, as you mentioned, and it seems to me like you have a tremendous amount of growth potential. What are your thoughts on how many properties Gaylord could ultimately have?

Sam, this is Colin Reed. I think I was the last gentleman. It's not very often that I get called a gentleman. But we believe in the form that these hotels are in today, big ones, that we could have 8 to 10 of these across the country. But we also, as we discussed 5 years ago, before we hit the wall with this sort of mega-recession that we've all been wrestling with, we had put together a comprehensive strategy which we had, at the time called Gaylord Light that talked about the -- because of the relationship that we have built with the meeting planner, this would be putting the company into the 700-, 800-room, more secondary city convention center hotels, and then use the feeder system that we have built and the relationships that we have built with the meeting planners to deliver consumers into those cities. That is something that we -- that's a strategy that we, as a management team, continue to talk about. And as we get comfort about the growth of this economy, moving in the right direction, that's a strategy that we will take off the shelf and dust off at the appropriate time.

Okay. And one other thing, how is customer satisfaction? Is it as high as ever?

Absolutely. It is the highest in, I think, David, in our company's history right now. And that's actually something we're pretty proud about. Navigating through this recession, so many of our competitors have put the tourniquet on their operating platforms and sometimes, that has hurt the customer. You read analyst reports about how refurbishment programs have not been done in hotels and customer satisfaction scores and particularly casino, large casino hotels and customer satisfaction scores have declined. That is not the case with our company. We've worked very hard on that through this downturn and that's paying dividends with our relationship with the meeting planners.

And we have no further questions. I'll turn the floor back over to you, Mr. Reed.

Thank you, everyone, for joining us. Appreciate your patience, and when we have more to say, we'll be saying it. Thanks very much.

Thank you. This concludes today's conference call. You may now disconnect.