Welcome to Ryman Hospitality Properties First Quarter 2019 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, 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 6139879. At this time, all participants have been placed on listen-only mode. And 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 we discuss 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. Good morning everyone and thank you for joining us. Well, let’s get straight to it, we expected the first quarter to be one of the strongest of the year for our Company and it sure was that. Our same-store hotels produced 5.4% RevPAR growth and 6.4% total RevPAR growth year-over-year, while adjusted EBITDAre for our same-store portfolio increased over 17%, pretty impressive. We’ve been talking about the health of the group segment for several years now and how our model differentiates us from those companies which were often compared to. And at the same time, we’ve been willing to invest a significant amount of capital in order to build a long-term competitive advantage. As you can see, our first quarter results are the fruits of these efforts and the condition of our business has us tremendously excited about 2019 and beyond. The first quarter was a team effort from all of our assets, including our Entertainment business. So let’s touch on them. The mother ship here in Nashville, Grand Ole Opry delivered 3.3% RevPAR growth and 7.5% total RevPAR growth in the first quarter. Food and beverage performance was particularly noteworthy both in terms of revenue growth and profitability due to a substantial mix of corporate groups. On the transient side, SoundWaves was a major contributor, helping us to drive 8,000 more transient room nights compared to the first quarter of last year and 38,000 admissions into SoundWaves in that three months. As a reminder, this was our first full quarter of operation for the indoor portion of SoundWaves only. We’ll be opening the outdoor portion in the next several weeks and we’re looking forward to a very busy summer season. And by the way, Opryland posted these results while having over 15,000 room nights out of order…

Thank you, Colin. Good morning, everyone. In the first quarter of 2019, the Company generated total revenue of $370.8 million, up 28.6% from the prior year. As you know, we are fully consolidating the Gaylord Rockies in our financial results, which just completed its first full quarter of operations. It’s noteworthy that excluding the Rockies, our same-store hospitality and entertainment segments collectively grew total revenue by 12.9% over the prior year. We’re very pleased with how our core businesses performed during the quarter and expect them to continue to perform well for the remainder of the year. Net income available to common shareholders which excludes the minority interest in the Gaylord Rockies that we do not own increased 7.6% in the first quarter to $29.4 million or $0.57 per fully diluted share. Moving onto our non-GAAP metrics, the Company generated $114.9 million of adjusted EBITDAre on a consolidated basis, a 45.5% increase over last year, excluding our non-controlling interest in the Gaylord Rockies, the Company produced $109.3 million of adjusted EBITDAre a 33.7% increase. In the Hospitality segment, first quarter same-store adjusted EBITDAre was $99.9 million, up 17.4%. As Colin pointed out both the Gaylord Texan and the Gaylord National particularly noteworthy this quarter, the Gaylord Texan grew adjusted EBITDAre by 40.7% to $29 million, as the hotel benefited from the rooms and meeting space expansion that opened in May of 2018. The Gaylord National is off to a great, producing one of its best quarter since the property opened in 2008. The hotel produced $15.8 million of adjusted EBITDAre a 23% increase over the prior year. We’re very pleased with how the National and the broader National Harbor development continues to mature, as a high quality meetings and leisure destination. In terms of AFFO available to common shareholders, the…

Thanks, Mark. Stephanie, I think rather focus on the line, we should open the lines up for questions.

[Operator Instructions] Our first question comes from Smedes Rose with Citi.

Hi, good morning. I just wanted to ask a little more about the pattern for gross booking and net booking nights. I understand there difficult comparison sequentially and year-over-year, but could you just talk a little bit more, I guess, about the leads that you said were coming to provision in the second quarter, and do you think you’ll get back to more sort of normal, I guess, sort of, seasonal patterns here over the balance of the year?

I think the responses. The answer is yes. And we’ve got really good lead volume is building in the business, but why don’t I hand over to Patrick to give you a little bit more color on this.

Sure. Good morning, Smedes, this is Patrick. Just to give you a little bit more detail into that. We’ve looked very carefully at what’s been going on. We had a historic high in 2018 and finished off with a really strong Q4. The first question as you come into the first quarter is how long will it take you to rebuild the funnel, is there an overall slowing in demand, given the fact that our first quarter was down a little bit. We have concluded that there’s definitely not a slowing in demand, and that there is not any loss of business to our competitors or to other brands out there. We really think this is just the impact of the fact that we have been building a book of business where there is much less availability, and that we’re seeing for 2019 trends that will probably put us more in line with our 2016 or 2017 production levels, which again were very, very strong, but maybe not as strongest as 2018 simply because we just don’t have as much availability, we have seen a little bit of elongation in the corporate booking window. We think that’s probably due to the fact that a lot of corporate groups are seen the amount of demand that’s filling up some of the patterns out there, and so they’re taking action to try and make sure that they have spaces to hold their meetings before those spaces are filled up by other groups. So overall we think everything remains very healthy and as we move through 2019 we don’t expect it to be quite as strong as 2018, but still strong in comparison towards the past few years.

The 2018 was a record-breaking.

That’s right.

We built – just reminds me – how many rooms actually we booked in 2018.

Just over $2.3 million.

And a really high quality year for us is around two , right?

That’s right. Yeah. The other thing that you may want to reference Patrick is the – I wouldn’t say pressure, but the focus that we’ve been putting on with Maryland as it relates to rate.

That’s right. We talked a little bit if you moments ago, Colin, give you a little bit of color at some of the success we’ve seen in driving rate that has been our focus in 2019. given the book of business, we have already we think now is the time to really focus on that, we were very successful in doing so at Gaylord National and Gaylord Texan. I’m sorry – at Gaylord Opryland, Texan had an opportunity to fill some need dates, some of the lower volume group travel dates and we always take those opportunities. They usually fill at a little bit lower rate. So if you take the need date volume out of the picture, we saw a healthy rate growth across the brand, but a couple of properties had an opportunity to fill those need dates and we always take action to make that happen. So the focus on rate is starting to produce results, and we think that will continue through the year.

So bottom line Smedes, we’re pretty happy with our pace of bookings, the book of business that we have and just the outlook at 2020 business that we have on the books for 2020 is materially up against what we would typically have this time of the year , for the coming year. So we’re very happy with the way things set up or setting up.

Okay, great, thanks for that incremental color.

Thank you.

Our next question is from Jeff Donnelly with Wells Fargo.

Hey, guys. Maybe a few questions if I could just one on the broader group outlook. I mean some of the, I guess I’ll call the 3rd-party meeting providers out there reporting that demand in 2019 is maybe a little softer, but that’s clearly contrary to what you guys are seeing, is that an outlook that’s just like a simply not accurate or do you feel you’re taking share in a fairly static market, I’m just curious what your perspective

Hey, Jeff. I’m assuming you’re probably referring to Cvent and some of the reporting that they put out there, I guess I would remind you that, what Cvent looks at primarily leads for smaller groups, and I would tell you, they probably are seeing a little bit of softness, because as we’ve been talking about over the past couple of years with the historic room night production that we’ve been doing for the past three or four years, we’ve been filling up the patterns that are out there. So there is less availability. And so, if you’re a third parties that is tracking small groups that historically fill in the year for the year or closer to travel date, there’s definitely going to be a lot less availability and therefore they’re probably seen a drop in the level of demand there booking in. I don’t think that’s representative of what’s going overall – going on overall in the industry. I think that’s what’s happening in a small segment that is more in the year for the year focused. From our perspective, as we’ve talked about, we have more room nights on the books and we have ever historically seen. So we don’t see any kind of slowing in pace. We don’t see a slowing in demand. But if you’re looking at one small segment of the industry, you may see that simply because there is less availability for that sector to sell into.

And lead volumes look very healthy.

That’s right.

It’s helpful. Maybe just if I could stick with you, Patrick is that. I know it’s very early, but have you seen folks who have hosted meetings at the Rockies in the first few months of operations rebook for future meetings at Rockies or even other Gaylord properties or is it just too soon to see that happen?

I mean they’re certainly interest the word of mouth has been very strong on the property. But given the fact that it takes a number of months for a lead to work its way through the funnel, I would not be able to really point to material re-bookings. The post conjure the post convention feedback surveys getting for meeting planners have been very, very positive. They’ve been very impressed with the attentiveness of staff to filling their needs, the service levels are very high. There’s always opportunities that we’re focused on, but I would say that we feel very good that the re-booking rate is going to be very high for those who are staying at the Rockies.

We’ve only been open month Jeff and we probably only put through, I didn’t know, Patrick, I would think – in that four-month period 20, 25 large groups through there. So, but the customer feedback, which is something that, Patrick, and his team monitoring with – very good.

And maybe just one last question for you Colin. Hilton recently announced it was launching a group focused brand, I think called Signia with a few new builds are conversions, I think Orlando, Atlanta, and Indianapolis. You guys have looked at smaller format hotels in the past. Have you, did you have discussions with them. I’m just curious what your thoughts are and is that something you guys would look at?

No, we haven’t had, we haven’t had discussions with them, but look none of this, none of this surprises me. But you can’t in the group safety you just come sort of make a decision overnight to be in it. You’ve got to have the quality of product, you’ve got to have the service standards in place. You’ve got to build the forward book of business, so it doesn’t surprise me that, no would want to do this. But look, as we have said so many times Jeff with our 26,000 of these large groups in this country every year that rotate from market to market, all we need is a 100 of those in each of our big hotels and we are very, very happy and generating lots of profitability. So, there aren’t a lot of big hotels that can build 300,000 square feet of meeting space, they just can’t do it, I know they can’t do it, because we’ve looked at every big hotel in the country and how much land they have contiguous. So, our business, our model is very, very, I think, strong and we wish Hilton well.

Great, thank you.

Our next question is from Bill Crow with Raymond James.

Hey, good morning, guys. Maybe for Mark, now that we’ve got one quarter under our belts at the Rockies. Could you talk about maybe the cadence of contribution through the year. Just trying to figure out seasonality of EBITDA contribution.

Yes, so as a market it’s actually going to be a strong summer market for us, it’s a little bit different than our traditional hotel pattern. And EBITDA contribution, obviously we’ll build as we move through the year into next year. Patrick, you’re looking through some numbers there.

Yes, I mean to Mark’s point, the Rockies has been a great compliment to our overall brand because the third quarter, most of our hotels is a little bit softer, simply because of the heat that you find in Dallas and Orlando and even here in Nashville humidity whereas third quarter in the Denver market is a very temperate mild pleasurable experience with low humidity. And so we look for more and more opportunities, people are making fun of me, but that’s the way we would describe it. We look for more and more opportunities to define what maybe a currently a brand opportunity where we can add another hotel and Rockies fits that perfectly. So third quarter will be a very strong quarter for that hotel from an occupancy perspective. And then the first quarter, a little bit lighter, but as again as Colin already pointed out, we exceeded our expectations for the first quarter of 2019.

Colin in the press release, you talked about the Gaylord National turning away from the casino demand as a driver. And I’m just curious, is that – it’s just not a good fit, or the casino is not doing as well or are there enough other hotels to take –

No, it wasn’t, a comment to opine on the performance of that casino, it’s the – what - Bill you know, the casino – pretty business pretty well and regional casino rate, hotel rates are not off the charts, good and we have – we own a world-class hotel there and National Harbor continues to build out as an entertainment destination. So we have a sort of moved away from putting discounted casino rooms out and moving to more leisure orientated rooms that are non-casino and that’s played a real, has had a real impact on rate and performance and Pat, do you want to add to that.

Yes, the thing that the MGM casino, a national harbor has trade tremendous success with, then I would say a maybe on speaking on turn about think even that casino is been more is been surprised and pleased with the locals turn out probably better than – what they initially anticipated. And so that casino has been very locals focus within the DC, Maryland, Virginia market. And so, there has not been as much of an opportunity for us to bring in regional customers because there simply just not advertising in the region and so we initially tried to just bring in some of their more value-oriented customers but at the end of the day, we just decided that from a rate perspective to Colin’s point, it just wasn’t making sense to continue to bring those folks in and so we’ve gone back to a higher rated more premium customer within the region and had tremendous success with bringing that customer back to the hotel.

Okay, that’s helpful. One final one for me. As you think about some of the expansion projects that you have underway and potentially do in the Rockies, et cetera and you think about funding that is there any thought of pairing the couple of small assets, the AC, National Harbor, the Opryland from your portfolio.

Bill. The answer is no, and the reason is if you take the Inn at Opryland that hotel make somewhere in the $4.5 million to $5 million. Right. If we were to extracted from the mother ship and go sell it to somebody. We’re not going to sell it at a 12 multiple because there won’t be the overflow into that business, as there is today. So these assets are generating really good returns for us and our view is that. We don’t need to go sell those assets. And look 2019 when we funded, if you recall, we’ve funded as we moved into the beginning of this year and you look at our leverage levels and our leverage levels were relatively high but we funded SoundWaves, we funded Denver and we’ve had no income from these businesses. These businesses have opened, these businesses are doing really well and our leverage levels dropped drop materially, so we don’t need to, if we want to go expand Denver as an example, we don’t need to go sell hotel to do that. We just don’t need to do it because of the underlying cash flows of this business.

That’s great, thanks for the time.

Our next question is from Shaun Kelley with Bank of America.

Hi, good morning everyone. I just wanted to speak a little bit more about maybe the ramp that you’re experiencing in the Rockies so we noticed across the portfolio, it looked like outside the room spend or your spread between total RevPAR and RevPAR was quite strong, but it really stuck out at the Rockies, so do you, is that something that is sustainable or is that a little bit of just mix as you have lower occupancy and as you ramp that’ll probably normalize relative somebody other properties.

Shaun, I think this is Patrick, I think that’s going to normalize, it all comes down to the mix of who you got in-house and I think we ended up with some groups early on that were premium customers, little bit more heavy towards the corporate mix, that hotel is going to see more and more association business with its maturity coming – that’s more in line with our other properties. If you think about it, some of the association customer we’re booking much further in advance when that property was still under construction and so they were really having to buy into the promise of what would be there versus some of the corporate customers that we’re buying into something they can actually see almost finished. So as we ramp up over the next couple of years, we’ll have more and more association customers coming in and we’ll see that stabilize relative to the other hotels.

Thanks for that. And maybe just more broadly when you sort of look at back at you said very clearly that it exceeded your expectations, and that it’s all to a strong start. The margin itself to sort of be out of the box for a quarter and be above 30% is quite impressive, is there, can you just talk a little bit more about which areas of the property exceeded your expectation and is that type of margin outlook 30% plus sustainable from here or is that going to bounce around again as mix shift throughout the year.

Yes, I would tell you that from a performance perspective, the food and beverage banqueting results were a great surprise a very pleasant surprise for us. And then, obviously, you’re seeing the impact of the tax incentive package that we’ve negotiated or there was negotiated for the property benefit into the bottom line. Mark, do you want to add anything to that.

Well. I would add is that when you think about the way that property is configured, it has more meeting space – room and more breakout space. So you can generate a higher quality mix and more banqueting spend. That’s what I was going to say, the just this way, the way this hotel that’s being built is just a lot more efficient than the – what I would call the first and second generation Gaylords and then the other part of it is that when we talk about, we are very happy with this performance, we’ve been pleasantly surprised with the leisure room nights, that we have been putting into this hotel, one of the big things we’ve had tremendous visibility of the Group, we went into this opening this hotel with 1.2 million room nights on the books that we didn’t have a lot of lease of business on the books, because the leisure business doesn’t book months in advance. But what has really happened here is our leisure business has been really, really good and Bill Crow made a comment about potentially expanding this hotel and it’s something that we’ve said publicly, we’re looking at because if we build an expansion on this footprint we get the benefit of the tax incentives and I – we are looking at all of this as we speak, but this hotel is been a pleasant surprise to us.

Thank you very much.

Our next question is from Chris Woronka with Deutsche Bank.

Hey, good morning guys. I wanted to ask you a little bit about SoundWaves. I think you’re the indoor parts been opened probably about five months now, is that ramping kind of in line with your expectations, and I guess how much seasonal build do we expect when the outdoor piece opens.

Again the highlights here that the reaction of the customer reaction – the responses from the folks that have been there – have been above what we had hoped for and the amount of throughput through this place as being really, really good particularly at weekends and we haven’t really gone to the math on the marketing of it. So we opened the outdoor portion of this in a couple of weeks, Patrick while towards the middle end of May and it looks wonderful. So you have, any comments you want to add on this.

Yeah, Chris. The only thing I would add to what Colin already said is June, July and August will be the high point of SoundWaves because the outdoor facility to be opened, school will be out and based on the tremendously strong response that we’ve gotten from the local and regional market thus far. We think that there will be a strong buy – for the outdoor component, to Colin’s point, we’ll open the outdoor on May 17 and then we will shut it down in the September timeframe as school opens back up again and we’ll move just to the indoor component and then that will ramp back up again with the indoor component really seen lots of strong performance in the holiday period. Similar to what we saw last year, but last year we were only opened for a fraction of the holiday period, as compared to what will be open in 2019.

Okay, very good, thanks guys.

Our next question is from Gregory Miller with SunTrust Robinson.

Good morning. I’m on for Patrick Scholes. A couple of questions from our end. Could you explain your EBITDA guidance revision with greater detail with the $7 million increase at the midpoint, equivalent to the amount of your 1Q beat versus your internal expectations.

What I would say is it’s a combination of our performance in Q1 with the expectations that we have for the remainder of the year, but it’s primarily driven by the beat that we, that we had in Q1.

Okay. And then the second question I had, digging into your release this morning on National you had a group mix shift towards premium Association groups and I’m curious if this is a revised strategy that you anticipate continuing well beyond 1Q 2019.

When it comes to association business where the average lead time of booking is like 4.5 years, you can turn it on and off. We’ve always been focused on association business we love it. It’s recession-proof and we, it’s not like we have a strategy in National to go after premium association business we go up the premium association business everywhere as being part of that DNA for 15 years in our business and will continue to be part of DNA. You want to add to that, Patrick.

Yes. The other thing I’d completely agree with what Colin said the only thing I would add is that I think what you’re also seeing is, we’ve really been working with our property brought in some new sales leadership with a couple of years ago and with a focus on doing a bit Our job of stacking groups and so you have your base of association and we’re always trying to get those premium association groups, but then making sure that we stack in and really fill that property up to the best of our ability and the sales deployment tweaks that have been made by the leadership team has come in the past couple of years, I think it’s really starting to pay dividends for us. I’ll give a shout out to the effort by our sales team their on property, who is really not just getting premium groups in but making sure that we’re maximizing and using the space as efficiently as possible to drive occupancy.

Okay, that’s all from us. Thanks.

[Operator Instructions]

If there are questions. Stephanie, we can move on with our day.

There are no questions at this time.

All right. Well, again, thank you everyone for joining the call and we are very happy with where our Company – sits. If you have any further questions you know how to get to us. Thanks a lot.

Thank you. That does conclude today’s conference call. You may now disconnect.