Welcome to Ryman Hospitality Properties Second Quarter 2017 Earnings Conference Call. Hosting the call today from Ryman Hospitality Properties are Mr. Colin Reed, Chairman and Chief Executive Officer; Mr. Mark Fioravanti, President and Chief Financial Officer; Mr. Patrick Chaffin, Senior Vice President of Asset Management; and Mr. Scott Lynn, Senior 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 48188575. At this time all participants have been placed in listen only mode. It is now my pleasure to turn the floor over to Mr. Scott Lynn. Sir, you may begin.

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 fact may be deemed to be forward-looking statements. Words such as believes or expects are intended to identify these statements, which may be affected by many factors, including those listed in the company's SEC filings and in today's release. The company's actual results may differ materially from the results 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 measures today. We reconcile each non-GAAP measure to the most comparable GAAP measure in an exhibit to today's release. I will now turn the call over to Colin.

Thanks, Scott. Hello, everyone, and thank you for joining us here today as we approach the end of yet another earnings season. As one-of-a-kind group focused lodging company with a thriving media and entertainment business alongside, we're fortunate to be in a position to give you somewhat of a different outlook to what you hear from those companies with whom we're often compared. Right now the number of growth projects we have going on is truly extraordinary. As we shift into the second half of '17 with '18 just around the corner, we approach a historic and exciting period for our company. We just hosted our first group customers in May at our new riverfront ballroom at Gaylord National in DC. In two months we'll have one new entertainment venue opening and then another in 12 weeks in the heart of Times Square. In spring of next year, the major rooms and convention expansion of the Gaylord Texan will open, followed shortly thereafter by the unveiling of Ole Red Nashville, our venue with Blake Shelton in the center of Nashville booming entertainment district. Then a little more than a year from now, the crescendo near its peak as we open a stunning and one-of-a-kind 19 million sound waves water experience at Opryland kept-off by the grand opening of the long way to Gaylord Rockies at the very end of next year. And by the way while all of this is been going on, our existing businesses generated just shy of 100 million of adjusted EBITDAR in the second quarter and are on track to turning yet another record year for our company. So let me turn down my enthusiasm for a moment and just recap the second quarter, as well as provide you an update on the key points of…

Thanks Colin, good morning everyone. In the second quarter the company generated total consolidated revenue of $298.8 million, up 0.9% and net income of $47.3 million or 7.9% decrease from the second quarter of last year. Second quarter consolidated adjusted EBITDA of $98.5 million represented 8.6% decrease over the second quarter of 2016 and a 40 basis point decrease in adjusted EBITDA margin. Second quarter AFFO of $79.8 million was 2.2% below the second quarter of last year and mounted to $1.55 per fully diluted share. As Colin outlined, we long anticipated that the second and third quarter of this year will be our most difficult for RevPAR growth given the strong comparisons of year ago and the group occupancy patterns on the books heading into this year which includes the impact of Easter and the ongoing renovation activity at Opryland. Against this backdrop, the modest 0.7% RevPAR decline driven purely by occupancy was within our expectations. In the year for the year cancellations this quarter improved modestly versus last year while attrition across the portfolio in the second quarter increased 1.6 percentage points compared to last year. As we do every quarter we study group cancellations and attrition very closely to determine if there are any discernible patterns. What we uncovered was the increase in attrition this quarter was attributable for specific groups, for reason that were limited to those groups internal dynamics and not related to any potential macroeconomic issue. Finally attrition in cancellation revenue collected in the quarter totaled $1.4 million. Turning to our guidance as Colin described earlier, with first half of the year actualizing about what we expected, we're increasing and narrowing our range for full year RevPAR growth to 1% to 3% which represents a 50 basis point improvement at the mid-point. In terms…

Thank you. We'll open the call up for any questions please.

[Operator Instructions] Your first question comes from the line of Chris Woronka of Deutsche Bank.

Wanted to ask you if you look out to more or so future years than this year, but are you seeing any shift in the - I guess composition of the groups you’re seeing in terms of industry? Are there any notable shifts in terms of whether it’s tech or healthcare or something else, things getting better here or things getting worse here. Are there any noticeable patterns?

Patrick, you spend your life analyzing every single piece of business, how would you answer that? From all of my discussions with the general managers, the answer is, we’re not seeing any major shift. But what would you say?

No, I agree with that, Colin. Good morning, Chris, this is Patrick Chaffin. Just to answer your question, we have not seen any kind of meaningful shift. We’ve talked about in the past that we've seen some short-term volatility in medical and healthcare with some of the questions coming out of the current administration in Washington. But in the long term, we've not seen any meaningful shift in the composition of our group portfolio if you will.

And then follow up is, Marriott and others have recently talked about, changes in cancellation policies, I think that's mostly on the transient side, and you guys always done a really good job of enforcing your cancellations. But are those changes that they’re implementing, do you think those are going to reach over to the group stuff at any point or are there any changes contemplated to your own cancellation policies going forward?

So, Chris, that’s a good question. The changes they’re making are predominantly on the transient side of the business. That helps us because than that carries over to our transient side. On the group side, quite honestly, we’ve always had the more strict stiffer language in our contracts. And I think Marriott is actually moving the majority of it’s group business more towards the contracts that you’ve seen on the Gaylord side. Notwithstanding that though, we have taken steps just as we look out to the future and making sure that we protect ourselves to even further strengthen some of the individual language clauses in some of our group contracts. So as we've done our analysis, we've identified a few opportunities to strengthen that language and we've taken action to do so.

Chris, this is something that we pay very close attention to. And in fact, one of the things that our internal audit department does of that company is audit the contracts that are being put in place by our manager to make sure that the contract terms are consistent with where they always had been.

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

Just a question on bookings, the two-year growth rate and net definite booking pace has been slowing a little bit in the past few quarters, in your mind, do that have more to do with the fact that with your portfolio operating at, I think you said at peak level of net definite bookings, there’s really just fewer pockets of time to sort of sell if you will.

Pat, you want to take that?

Yes, I would agree. I mean, we’re operating at very high levels of occupancy. We have the highest level of room nights on the books than in the history of our brand or the Gaylord brand. And the other thing I would point out is even with the additional 300 rooms coming online at Gaylord Texan next year, we're still booking a very solid piece of business in our head for '18. So I would tell you that, as we look across given the amount of room nights we’ve on the books, this is really more just of an issue of scarcity and availability.

And the net number in the second quarter of this year was distorted by that one piece of business that we took off the books. Right, Patrick?

Yes, from a net perspective, we saw that we did have a little bit more of a hiccup, and that was really just one piece of business that one of the hotels need that piece of business that low rated that cancelled and we agreed that it was probably the right decision the group had been struggling to get to their attendance levels over several years. So that impacted the net side as well.

And just sticking with the bookings, I’m just curious. Is the Gaylord Rockies, I know you’re including that in your numbers, do you feel like that’s siphoning off some level of bookings that might have otherwise gone into your operating portfolio, or is not really material?

So, Jeff, that’s something we watch very, very carefully. And one of the things we have the Rockies team measuring is the amount of business that they’re booking each year, that’s acquisition to the Gaylord brand. Obviously, with a presence in Denver, much more close to the West Coast, we want to make sure that we’re picking up new pieces of business that we can then rotate through the remainder of the brand that maybe have been, that are new to the Gaylord brand. If you look at 2017, year-to-date, Rockies has been introducing new business into the Gaylord brand at about 61% of their bookings. So this is a number that gives us a lot of encouragement that we're not just siphoning off. We absolutely do have groups that have rotated through our other properties that are now going to Rockies and adding that to the rotation, but we’re also making sure that we're bringing in a whole new segment of business maybe from the West Coast that we've never seen before. So we are not concerned that it’s siphoning off, and we watch that closely to make sure that that continues.

And, Patrick, on a net, net basis, when you look at the bookings, like for instance in '16, it was a record year for the Gaylord brand and we booked almost about 400,000 room nights for Denver. And that same phenomenon is going on this year, Jeff. So we’re very, very happy with what is coming out of the Denver hotel. And frankly, this is the same phenomenon that we saw when we opened The National back in 2008 where we started to deal with customers that we hadn't seen before and we pick those customers up and then rotated them back into our existing business. So we’re very happy with the current patterns that we’re seeing.

And Colin, I don’t know if you can comment, but your partner in Rockies project is clearing some hurdles in Chula Vista to move ahead with the project there. I know it’s very early. But is there an opportunity for you guys maybe to hang around the hoop on that project? I mean, is the second time the charm in Chula Vista for you, or is it just too early to comment?

Here is what I would say, obviously, we know that market well. We did a lot of work there, and we left that market because of things that we're going on in that market that we were not happy with in terms of outside influences trying to shake the way that hotel was built. I would say to you that we still have a great admiration for that greater San Diego market. And under the right terms and conditions, we would certainly look at it. But, we have to be sure that it's going to generate high returns for our company.

And actually one last one is, the combination with Starwood has given Marriott a footprint of rooms, it didn't have before. For example, I think Marriott now manages something like 30% of the full service rooms in Boston. I recognize they're not all under one roof. So it's not an easy solution in that regard. But do you think Marriott can market those sort of new found large clusters of managed rooms? Is there another type of venue for large groups that's not served presently by Gaylord? Or your experience that just really less likely because it doesn’t really fit with what meeting planners are looking for when they book for a large group?

I would say that I think that clustering effect is an effective strategy for them against other brands to keep all the room nights in the family. I think that in terms of it being a highly substitutable alternative for the experience that we provide, not so much because you still face the same issues with your attendees that you would regardless of who manages those hotels. That's transportation and moving people from venue to venue, dealing with multiple vendors et cetera. So I'm not sure that it changes the competitive dynamic that much in terms of how we execute our business versus the competitor.

Your next question comes from the line of Bill Crow of Raymond James.

One quick one on the Rockies, can you talk about the '19 bookings and whether there's hesitancy, especially early in the year for meeting planners to book there because of fears over construction delays?

I don’t think we’re saying any of that. Are we, Patrick?

No, this is Patrick. Part of what we’ve done is built in a window if you will to make sure that we’re really not selling into the hotel until we’re very comfortable that the hotel will be up and operating and operationally very efficient in taking guests. So there may be a month or two when we're taking predominantly transient guest and some short-term group guests that we may book at the last minute. But the largest groups we've built in a bit of a buffer to make sure that when we say we will be open by this date, meeting planners have the full confidence that we will deliver on that. The other thing I would tell you is because of the mild winter that we experienced in Denver this past year. The construction of the project is going very, very well and we are getting less and less concerned that there will be any material delays of any kind.

We should have that enclosed I think Patrick by November.

Yes, in fact we have a topping out ceremony for the final Steel Beam in the next two weeks so making great progress.

Bill, the other thing I would say to you, I know for instance, we are seriously looking at when we open up the inventory on the Texas expansion, simply because initially when we plan this we feel we would have it open in that sort of late June, early July timeframe, that's when we’re – bookings into it for 2018 but it looks like that we’re going to have that project finished more in the April, May timeframe this spring, simply because this is also essentially enclosed and moving really well ahead of where we thought it would be.

That's great, counter to what we're hearing in other commercial construction, so congratulations on that. Let me ask you about corporate groups. We're hearing that maybe there's a little bit of change in the cadence there that maybe they're holding fewer but larger meetings, which seems like that would benefit your properties. But are you seeing any of that on the corporate side?

Well, we’ve been seeing that for the last couple of years. If you remember that piece of work that Smith Travel did what was it a year ago Patrick. Where they analyze what was taking place in the group sector and all of the real growth in the amounts of meeting attendees were in the large group area. And this is one of the reasons frankly that we put more on ballroom space in Washington and we’re doing this expansion at the Texan, and taking a look at one of our other hotels at the moment. So, this is something that we are certainly cognizant of. We’re seeing our large groups get stronger, I think that's a fair way of describing it, Pat right.

Yes.

So getting stronger, the large group; but are they doing fewer -- are they continuing to shrink the number of meetings, and therefore fewer but larger -- that trend continues today?

We have not seen a wholesale reduction in the number of meetings that they are having. The more immediate thing that we have seen is, folks using banquets in the short-term as sort of the equalizer to their budget. They're coming in and because of some of the fears around what’s coming out of Washington. Corporate and Association groups are both saying hey we have to hit our budget. And so they go ahead and schedule the majority of the meeting, and then they look to their banquet budgets to say what do we have left? And so – you see some of that and how we positioned our guidance for the remainder of year is we’re just kind of watching the banquet side of the business. But we haven't seen a significant reduction in the number of groups or the number of meetings.

Then finally from me, I think historically we've seen some fatigue develop in Vegas. We've seen it in New Orleans through the years. I'm just wondering whether -- I think I know the answer to this -- but whether you're seeing any kind of tourism fatigue or plateau in Nashville.

In National or Nashville?

Nashville.

This morning at 9 o'clock I had a choice, I had to be on this earnings call or being at an announcement downtown on British Air coming in, bringing in airplanes next year in May of next year to Nashville. The issue that we have with Nashville is just supply of hotel rooms. We’re running a very high levels of occupancy and very, very high rates, if you look at the RevPAR growth in this town, it's quite extraordinary what's taken place. And also home prices have just exploded here simply because of so many people have been buying up houses to put into Airbnb. So the issue is not one of demand, the issue is one of supply, and over the next I think two years we’re looking at something like 6,000 hotel rooms coming into the downtown corridor, simply to accommodate the growth in demand. And we like this obviously because we got so many businesses that play to that demand and frankly, one of the reasons we are going ahead and doing this really provocative water facility at Opryland is so that, we have a competitive advantage against this growing demand base. So no, we haven't seen fatigue here.

Colin, would you consider – go ahead, I'm sorry.

I was going to say but I think the other thing you have to keep in mind with Nashville is that, we are seeing tourism growth and we are seeing supply growth in terms of hotel rooms. But we’re also seeing incredible increase in demand generation. When you look at the companies that are moving here, the expansions that are incurring, the new entertainment assets, that are being constructed, right. They are going to be more and more product in this market and more and more players in this market that will generate demand to help absorb new supply.

That’s very right, Mark.

Colin, would you consider buying an asset downtown?

A hotel asset?

Yes.

No.

Okay. That’s it for me.

The reason for it Bill, we could spend hours on this, right. No one is going to sell us a hotel asset downtown, at an eight or 10 multiple, right. I mean these things are trading well north of that and when you look at the internal rates of return, right. When you compute it on sort of a unleavened basis, it's sort of like 10% returns and we can take this capital and put it – all these projects that we are building are going to generate in the 15% to 18% high double-digit returns. And so, it doesn't make any sense to us to deploy our capital that way.

Yes, we want to grow share in this market right the best use of capital will be to expand our current footprint

That’s right.

Because the incremental returns are much higher.

And we got all of the back of house stuff there and you are exactly right, Mark. So you’re not going to see us do that.

Your next question comes from the line of Shaun Kelley of Bank of America.

Maybe just speak with all the initiatives and growth stuff you guys have going on. Mark, if you could run us through just growth and maintenance CapEx numbers for this year and I know it's probably even a ahead of your budget. But shifting directionally about how 2018 is going to shape up with some of those projects kind of roll off, and are completed?

So in terms of maintenance CapEx, it’s about 5% of revenue, so I mean that’s the best way to think about maintenance CapEx and FF&E. In terms of growth, if you look across the projects we have under development right now for the remainder of 2017 the back half we’ve got about $85 million of capital that we budgeted, that we’ll spend. And then to finish those projects out in 208 we’ll be another say, $85 million to $90 million of CapEx.

Yes, we’re fully invested in.

Great and that’s pretty much the full right, so everything including entertainment stuff as well as…

That’s all of our hotel project as well as our – the three venues we have under development on the entertainment side.

Just when – you look at your own internal forecasting, when do you have sort of leverage actually came down a little bit this quarter. When do you have that, do you have that going up at all and do you have that peaking at some point either Q4 or Q1 sort of, it’s going to depend on again, probably the roll offs of these projects. But when are you anticipating that or do you think it’s actually closer to flat from current levels just given the way cash flow works?

I think we’re going to be pretty close to flat from current levels. And then once we get into 2018 and these projects open and begin to deliver cash flow, you’ll see us delever quite rapidly.

If you remember that slide, Shaun that we showed at our Analyst Day last year that – is where we expect to be 19 and 20. Our leverage levels - the high probability is though we will have other things that we will be doing. Other high generating return projects that will be doing but if we shut up shop today and don't do anything other than what we've announced, our leverage levels in 2019 and 2020 go into the low threes that's what that analysis shows.

And then last question from me would just on, can you remind us just how much debt or project level that will be on Rockies when I guess sort of at completion when the loans are fully drawn for the project?

I want to say it’s $550 million.

Yes, it’s a $500 million borrowing…

And it's $200 million of equity which add contributions if I run right.

So sorry, 550 is the total including the miz?

Yes.

Your next question comes from the line of Gregory Miller of SunTrust Robinson-Humphrey.

Just going back to 2018 for a moment, can you provide color on recent trends you’re seeing specifically for your toll group pace for the year? And specifically what kind of trends are you looking at in terms of pricing power on group rate?

Well I think we've been clear on pace of the year right Patrick, that was part of our disclosures we’ve got I am just remembering 1.2%, 1.4% more occupancy points on the books right now.

Yes, we have about 60,000 more room nights on the books for 2018 than where we stood at this time last year. Our revenue so that’s about 4.5% or 6% something like that, I am sorry trying to remember but we stand in a pretty good position going into 2018 and that's even with the opening of the text and expansion of an additional 300 rooms. From a pricing perspective, yes we are working with our sales teams to identify specific patterns and demand periods where they can push pricing further. Obviously we are always sensitive to not pushing pricing as much over need dates but there are definitely periods given the book of business that we have right now that we are being more aggressive with and have seen some good results from that. We just closed at the month of July and our bookings there showed really strong growth in pricing just for what was booked during the month of July for all future periods. So when we're looking at the periods of higher demand we’re having good success in pushing rates.

And just one quick follow-up a Marriott and other REITs with - Marriott branded hotels we know some commentary about a deceleration in terms of 2018 pace and I'm curious what you're seeing?

We’re seeing the opposite we just - I think the amount of business we have on the books and pace for 2018 is stronger than where we sat this time last year for '17 and our pace for '18 looks pretty good.

Okay.

I will add as we decide to open up Texan a little bit earlier to Colin’s comments a few minutes ago, that increases our availability in the equation and if we’re opening early we’re going to have less time to sell into those. So there will be a little bit of increased availability that will impact you know how we’re pacing for 2018, but again to Colin’s point we’re in a really good position right now as we look to the year.

At this time there are no further questions. I will now turn the call to Mr. Colin Reed for any additional or closing remarks.

Okay, well thank you operator and thanks everyone for joining us today. And if you think of any other questions that you want to pose to us you know where we are. Speak to you soon.

Thank you. That does conclude today's Ryman Hospitality Properties' second quarter 2017 earnings conference call. You may now disconnect.