8-K: Ryman Hospitality Properties Reports Solid First Quarter Results and Raises Full Year Guidance

Ryman Hospitality Properties reported a net income of $42.8 million for the first quarter of 2024 and increased its full-year guidance.

Summary

• Ryman Hospitality Properties, a lodging REIT, announced its financial results for the first quarter of 2024, ending March 31, 2024.
• The company reported a net income of $42.8 million, or $0.67 per diluted share, and consolidated revenue of $528.3 million, with hospitality revenue contributing $461.5 million.
• Adjusted EBITDAre was $161.1 million, and the company booked over 287,000 gross definite room nights for future years at a record first-quarter average daily rate (ADR) of $265, a 5.6% increase over Q1 2023.
• Ryman prepaid its Rockies Term Loan and repaid $200 million of its corporate Term Loan B, subsequently repricing the Term Loan B to reduce the interest rate margin.
• The company has increased its full-year consolidated net income and adjusted funds from operations guidance due to refinancing activities and strong forward bookings.
• Despite some softness in transient demand in the second half of the quarter, the company remains confident in its long-term growth outlook.
• The company is updating its 2024 business performance outlook based on current information as of May 1, 2024.
• Capital expenditures are estimated to be $360 million to $440 million for the full year.

Sentiment

Score: 6

Explanation: The sentiment is moderately positive due to the increased guidance and strong forward bookings, but tempered by the year-over-year declines in key financial metrics and occupancy rates. The company is showing resilience and strategic financial management, but there are some challenges to overcome.

Positives

• The company achieved record first quarter ADR for future bookings and for the same-store hospitality portfolio.
• Strong banquet and AV contribution per group room night indicates group spending strength.
• Refinancing activities resulted in immediate interest savings in 2024.
• The company has strong forward bookings.
• The JW Marriott Hill Country is showing operational efficiency improvements.
• Ole Red venues performed well, including the new Las Vegas venue.
• The company has increased its full year guidance for net income, funds from operations and adjusted funds from operations.

Negatives

• Operating income decreased by 8.8% compared to Q1 2023.
• Net income decreased by 29.9% compared to Q1 2023.
• Net income available to common stockholders per diluted share decreased by 34.3% compared to Q1 2023.
• Funds From Operations (FFO) available to common stockholders and unit holders decreased by 9.3% compared to Q1 2023.
• Same-store Hospitality revenue decreased by 3.0% compared to Q1 2023.
• Same-store Hospitality operating income decreased by 12.3% compared to Q1 2023.
• Same-store Hospitality Adjusted EBITDAre decreased by 8.7% compared to Q1 2023.
• Occupancy rates decreased across most properties compared to Q1 2023.
• There was some softness in transient demand in several markets in the second half of the quarter.
• The Entertainment segment experienced a 41.2% decrease in operating income compared to Q1 2023.

Risks

• Ongoing renovation disruptions are impacting results.
• The company faces a challenging comparison to the first quarter of 2023, which set several records.
• There is some softness in transient demand in several markets.
• Severe winter weather in Nashville impacted demand at Nashville assets.
• Construction disruption associated with Category 10 and renovation of the W Austin Hotel at Block 21 is ongoing.
• Planned capital investments are estimated to negatively impact same-store Hospitality RevPAR growth by approximately 215 basis points and same-store Hospitality Total RevPAR growth by approximately 160 basis points.
• Disruptions are expected to negatively impact Consolidated Adjusted EBITDAre by $18 million to $21 million.

Future Outlook

The company has increased its full-year guidance for net income, funds from operations, and adjusted funds from operations, reflecting the impact of refinancing activities and strong forward bookings. The company expects disruption from planned capital investments to negatively impact same-store Hospitality RevPAR growth by approximately 215 basis points and same-store Hospitality Total RevPAR growth by approximately 160 basis points. The company expects disruption to result in a negative impact of approximately $18 million to $21 million to Consolidated Adjusted EBITDAre.

Management Comments

• Mark Fioravanti, President and Chief Executive Officer of Ryman Hospitality Properties, said, 'Our first quarter results were solid, even with ongoing renovation disruptions and a challenging comparison to the first quarter of 2023 when we set several first quarter records.'
• Fioravanti also noted, 'Our same-store Hospitality portfolio delivered record first quarter ADR and strong banquet and AV contribution per group room night, which is a positive indicator of group spending and overall segment strength.'
• Fioravanti stated, 'We were particularly pleased to see these results even with the timing of the Easter holiday, which shifted some group demand from the first quarter of 2024 into the second quarter of 2024.'
• Fioravanti mentioned, 'In the second half of the quarter, we did experience some softness in transient demand in several of our markets; however, we remain confident in the long-term growth outlook for the markets in which we operate and our outlook for the remainder of 2024.'
• Fioravanti concluded, 'We took advantage of market conditions to refinance the Gaylord Rockies Term Loan with senior unsecured notes, and in April 2024, we repriced our corporate Term Loan B, which has immediate interest savings in 2024.'

Industry Context

This announcement reflects the ongoing recovery and challenges in the hospitality industry, with Ryman demonstrating resilience through strong group bookings and strategic financial management despite some softness in transient demand. The company's focus on group-oriented, destination hotel assets positions it well in the current market, and the refinancing activities indicate a proactive approach to managing debt and interest expenses.

Comparison to Industry Standards

• Ryman's record ADR for future bookings and same-store portfolio indicates strong pricing power, which is a positive sign compared to industry averages.
• The decrease in occupancy rates across most properties is a concern, as occupancy is a key metric for hotel performance, and this may indicate a need to focus on driving occupancy rates.
• The company's ability to refinance debt and reduce interest rate margins is a positive sign of financial management, which is important in the current economic environment.
• Compared to other REITs in the hospitality sector, Ryman's focus on large convention center resorts and entertainment experiences provides a unique market position, but also exposes it to specific risks related to group bookings and large-scale events.
• Companies like Host Hotels & Resorts (HST) and Park Hotels & Resorts (PK) are also major players in the hospitality REIT space, and Ryman's performance should be benchmarked against their results to assess relative performance.

Stakeholder Impact

• Shareholders will be impacted by the increased full-year guidance and the company's strategic financial moves.
• Employees may be affected by ongoing renovations and operational changes.
• Customers may experience some disruptions due to renovations, but will benefit from the company's focus on improving its properties.
• Suppliers and creditors will be impacted by the company's financial performance and debt management.

Next Steps

• The company will hold a conference call on May 2, 2024, to discuss the results.
• The company will continue to execute its capital investment plans.
• The company will monitor market conditions and adjust its strategies as needed.

Key Dates

Keywords

Ryman Hospitality Properties, REIT, Hospitality, Hotel, EBITDAre, ADR, RevPAR, Occupancy, Net Income, Financial Results, Guidance, Refinancing, Term Loan, Entertainment, Group Bookings