Welcome to Ryman Hospitality Properties Second 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, Chief Operating Officer; 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 1115159. [Operator Instructions].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 thanks for joining us. Well, I must admit, I've been reviewing many of the reports for our industry that have come out over the last few weeks, and for most part, they've tended to be a little on the negative side. Now while I certainly understand the reasoning across the sector, from our perspective, at Ryman, these are the times where our business is flourishing and our model provides a path to growth. As a consequence, I see before us another chapter in our progression of building a resilient, group-focused, customer-centered portfolio of world-class hotels with very little new competitive supply.Now I know quarter after quarter, we highlight our differentiation and talk about the Gaylord brand that our company built in years past. But a couple of weeks ago, J.D. Power has issued a report whereby they measured guest satisfaction for 15 upper upscale hotel brands and the Gaylord brand was included this time around. Now what was extraordinarily pleasing to us was that the Gaylord brand was only one of 2 brands to achieve their highest 5-circle rating. Great customer satisfaction drives customer retention, which in turns creates -- which in turn creates superior profitability and that's what we're all about. So I'm very pleased with the performance of our hotels in the first half of this year as well as with our outlook for the rest of the year and particularly, into '20 and '21 and, of course, with the long-term opportunity that remains ahead of us in this space.But before we go there, let me touch on our most recent results. In the second quarter, our same-store hotels, excluding the Gaylord Rockies, delivered 1.4% RevPAR growth and 1.6% total RevPAR growth year-over-year. Now this is what we anticipated when we began…

Thank you, Colin. Good morning, everyone. In the second quarter, the company generated total revenue of $407.7 million, up 22.1% from the prior year. Underlying this growth was steady 3.4% revenue growth at our same-store hotels and, as Colin mentioned, an 8% revenue growth at our same-store Nashville Entertainment assets.Net income available to common shareholders, which excludes the minority interest attributable to our partners in the Gaylord Rockies, declined 11.1% in the second quarter to $49.4 million or $0.95 per fully diluted share. The decline in net income is attributable to the increase in both interest and depreciation expense from the consolidation of the Gaylord Rockies into our financial results this year.In terms of adjusted EBITDAre, the company generated $144.5 million on a fully consolidated basis or $135.8 million if you exclude the minority interest from the Gaylord Rockies. These results represent growth rates of 27.1% and 19.4%, respectively. Excluding the Rockies, our same-store Hospitality segment generated $109.6 million of adjusted EBITDAre, up 1.6% year-over-year in the second quarter.As we anticipated, incremental flow-through, while positive, was impacted by the mix of groups at the Nashville and Palms, which generally conducted less high-margin banqueting as part of their programming. Combined with anticipated increase in property taxes of Texan and wages at Nashville, this dynamic put pressure on year-over-year flow-through. The net result was in line with our expectations for the quarter.Attrition in the second quarter was 13%, which was an improvement over the 15.6% in the second quarter of 2018, while in the year for the year cancellations ticked up to a modest 8,800 room nights. As always, we review the reasons behind all of our canceled room nights and there were no discernible patterns other than customer-specific events.Moving to AFFO available to common shareholders. The company generated $104.3 million in…

Thanks, Mark. Let's get the questions. So Kristi, if you would open the lines, please, that would be wonderful.

[Operator Instructions]. And your first question is from Smedes Rose of Citi.

I guess I just wanted to ask you on the forward bookings. If you're hearing anything from customers that would maybe, sort of, underscore some more uncertainty in the broader economy. So either more flexibility on the contracts, the amount of space that they're wanting to book or anything along those lines. I know you provided your forward gross definite room nights and have some difficult comps this year. But any sort of additional color I think would be interesting.

Smedes, Colin. I think what I'm going to do is let Patrick answer this, but I would say to you we got our finger on the pulse on this group segment. We remember all too vividly what went on in 2008 in this economy and the impact that 2008 had on things like attrition rates, cancellation rates, lead volumes, desire by the meeting planner to book, pricing. And we are actively, actively following it as we navigate the economic headwinds from time to time that hit our economy. So I would say, generally speaking, we feel in very good shape about where the group business sits. But Patrick you want to get a little bit more granular?

Sure. Smedes, there's really three things that we would look at for groups to understand the trending and the behavior if it's indicative of something else going on. If you look at the contract terms, we're not getting any additional pushback. It is always our intent to strengthen our contract terms, and we're not having any problem with groups who are hesitant to sign up for attrition and cancellation clauses that are consistent with our history. So nothing on that front. The second would be on space. Groups are contracting with us for space quantities that are consistent with their historical patterns.So again, nothing that we see there. And then when they're traveling, the groups that are in-house over the past second quarter or that are contracting for or getting ready to travel here in the next couple of months, we're not seeing anything as far as a pullback in the amount of space that they are using. And the last would be banquet spend. Banquet spend really starts getting finalized in the last 90 and then especially 30 days prior to a group's arrival. And we have not seen anything from overall groups that would indicate to us that folks are pulling back. Their historical spend levels are consistent with what we're seeing them spend now. We have some groups there are outperforming. We always have some groups that underperform. But there's nothing really going on that would give us pause. And then I would say that as you've heard us talk about in Colin's comments, we have been successful in booking a lot of corporate room nights earlier in the booking window process. And so that is not something that we would think is reflective of a hesitancy by corporate medium planners, the fact that they're booking earlier and further out. So the 3 factors that we look at as well as their behavior in booking further out would make us feel that there's no negative trends emerging.

And Patrick, you may want to talk about the dynamic of pricing. Because, obviously, when meeting planners start to get skittish, which we observed in mid-2008, we tend to see that translate into pricing. But -- so just give the listeners a little bit of color on what we're seeing on pricing right now.

Okay. Yes. That's a great point. Thanks, Colin. Yes. The brand produced the highest Q2 production rate in the brand's history over this past quarter. Now that may not materialize in the numbers that you see and the reason for that is we produced less room nights in the T-plus-5 bookings period and beyond. So we were booking fewer room nights as a percentage of the total mix. We were booking fewer room nights out beyond T-plus-5. Our bookings were more concentrated in the T-plus-0 so 2019 through T-plus 4. So a greater mix closer in. And as you can imagine, your highest rates are going to be booked in the further out periods. So if you were to equalize -- as Colin mentioned in his comments, if you were to equalize the number of room nights that we've booked, you'd actually see a very healthy growth in room night rate. So again, rate is moving in a very positive direction. We had the best second quarter in terms of rate that we've ever had, and we are optimistic that group's are continue -- are going to continue to show their willingness to pay for the premium periods that they want to book into.

And I know we don't, sort of, tend to talk about periods outside of the quarter that we are communicating about, but we just closed July bookings and we are seeing no disconnect in July. We had a very healthy bookings pattern in July and rate too, Patrick. I think that's right.

Yes. That's correct. We had a very encouraging July production.

Great. That's great additional color. Can I just ask you to -- I mean, Colin, is there anything you can say at this point on the Chula Vista development and your potentially becoming a part of that?

No. Not really. We are continuing to take apart that Southern California location. And look, we're only going to do it -- we're only going to be involved in it if it makes economic sense. If the -- as I say, if the pool is worth the dive. And if the risk of constructing a project in Southern California over 3 years that the returns are superior and make sense for our company, we're only going to do that. And there's a lot more work to be done. Our development partner in Denver is, obviously, taking the lead on this, and we'll see where all this goes over the next few months.

Your next question is from Chris Woronka of Deutsche Bank.

I wanted to ask with now having most of the summer at SoundWaves behind you, it sounds like you've been off to a really good start and pleased with how it's going. Does that make you more or less likely to think about doing something similar to that at one of your other hotels? Or do you see SoundWaves as having maybe some brand potential beyond just your hotels?

So let me, sort of, give you a nonemotional answer and then an emotional answer. The nonemotional answer is that we really want to get through the season here. We only opened this baby -- the indoor portion here right at the end of -- in December of last year. So we want to give this facility a good 12 months. I would say to you that we've been very pleased with how the summer -- since we opened the outdoor portion in May, how the summer has built. I think Patrick, as of the end of July, we put through like 50,000 people through this thing? I think that was the number?

Yes. The month of July alone.

July alone. That's it. In the month of July alone, we put -- can you believe 50,000 people. So we're very encouraged with it -- by it. And we're encouraged with the room night production that this facility has generated. And I would say to you, Chris, we're an organization that does construction projects and learns from them and then we move them on to the next facility. And that's what we've really done with this rooms expansion and meeting space in Texan and now moving it on to the Palms. We're probably going to do the same thing here in Denver. We won't have to do meeting space expansion, but we certainly are looking at room space expansion. So I would say to you, the clinical view of this is that we want to get through the rest of this year, and we will look at the final IRRs on this project and its applicability to other locations. But I would say to you that all of us sitting around this table here having this conversation with you this morning, I think, we all are very excited about -- this will be the, sort of, more emotional piece of this, we're excited about what is happening. I'm getting a lot of comments from customers that go to this place, as is Patrick, in terms of people who are excited and behaviors being changed because of it. So it wouldn't surprise me if you read us looking at one of these types of projects in one of our other hotels that doesn't have SoundWaves in it. It wouldn't surprise me if you heard something like that in the middle of next year but we want to get through this year to properly assess the impact on value creation for our shareholders.

Okay. Fair enough. And then just as a follow-up, interesting data points on some of the forward pricing you're getting. I want to ask about some of the contractual increases on the out-of-room spend that you're able to get. What is -- maybe it's a question for Patrick. What is the customer reception to that? And how do you kind of -- any time there even temporary pauses in the bigger picture, how do you get folks over the finish line on some of those out-of-room increases?

So Chris, good question. It's really a sales process. Obviously, it's aided by the fact that J.D. Power has just released this information indicating that we're a very highly rated brand. And that demonstrates not only our ability to deliver on the promise we've been making to folks in the past, but in our future ability to do so. But it's a sales process that really gets to a fever pitch, again, 90 days out and then even further about 30 days out. And our event management and banquet services teams will reach out to the customer and start building individual menus and individual events. And their job is to make sure that they deliver an experience that exceeds expectations. And so a lot of that is working with the customer, identify what their needs are and then putting together a banquet package and outside-the-room spend that exceeds their expectations. And so that's a sales process, and we're always setting up folks initially in the contract with the food and beverage minimum, but that's never what we intend to sell at the end of the day. And so we have some very capable folks who can really create innovative experiences on the banquets and events side and really wow folks. And as a result of that, we're able to sell higher and higher levels of outside-the-room spend.

[Operator Instructions]. And your next question is from Patrick Scholes of SunTrust.

Question for you looking out a couple of years here. Certainly, there's some new convention space coming in, in Vegas next year. Are you seeing any pressure for that on 2021 and beyond bookings?

The answer to the question is, Vegas always plays a role, but one of the things that we'd ask you to reflect on is our business is focused on these 500 at peak plus groups and there's 25,000 of those in the U.S., 50% want to go to Vegas, 50% never want to go to Vegas. And these are groups that want all-under-one-roof expense. We need -- Patrick, as a company, we need about 80 of those per hotel per year. So even if Vegas doubles its supply, it's not a competitive threat to our business. And, yes, we read the Win [ph] is going to add how many hundreds of thousands of square feet of meeting space, but our business continues to get stronger and stronger. So it's not an issue for us.

Yes. And this is Patrick, Patrick. And the only thing I would add to it is, the unique attribute of our brand is that we focus on group. We make group #1. We value them above all else. And no matter what amount of space gets added in Vegas, that will never be the case. The group customer will never go there and know that they are #1 in that facility. And so, yes, they will continue to add space, but we truly believe that the brand differentiation of putting that brand customer or that group customers #1 and how they're treated makes a big difference.

Kristi, any other questions?

There are no further questions.

Excellent. Well, all right. Well, look, thank you, everyone, and -- for taking the time this morning. We're very pleased with where our company sits. And If you have any other questions, you can always get hold of Mark, myself or Todd Siefert who runs IR for us. And thank you for joining us this morning.

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