Ryman Hospitality Properties, Inc. (RHP) Earnings Call Transcript & Summary

Welcome to Citi's 2026 Global Property CEO Conference. I'm Nick Joseph here with Smedes Rose with Citi Research. We're pleased to have with us Ryman Hospitality Properties. This session is for Citi clients only and disclosures have been made available at the corporate access desk. To ask a question, you can raise your hand or go to liveqa.com and enter code GPC26 to submit any questions. Mark, we'll turn it over to you to introduce the company and team, provide any opening remarks, tell the audience the top reasons that investors should buy your stock today, and then we'll get into Q&A.

Thanks. Good morning, everyone. Thanks for having us today. Joining me today is Jennifer Hutcheson, our Chief Financial Officer; and Sarah Martin, who runs our IR operations. For those of you who aren't familiar with Ryman Hospitality, we are a group-focused high barrier to entry lodging REIT, and we're built around a unique portfolio of large, irreplaceable group-oriented assets. We also own a rapidly growing entertainment business that owns some of the most iconic brands and venues in the country music space. I think what makes us unique is that our hotels are large. They're all under one roof, destinations for groups and leisure customers. And that focus on group, about 70% of our business being the group segment, it gives us strong visibility into the future business because of the long booking windows associated with groups. And it also gives us a level of stability because those groups are under contract. And when they either attrite or cancel, we collect fees. So in significant downturns or economic -- difficult economic times, our profitability is bolstered by that fee collection. We also have a growth profile that our peers don't have through capital allocation. These large assets, this platform that we operate as really a single business allows us to deploy capital at high returns to do enhancements and expansions of these existing assets, which -- when you leverage that infrastructure, you get very high returns on invested capital. And you also reduce the risk because we have so much information as a result -- as it relates to what our guests are looking for and what that property needs to continue to drive profitability. Lastly, we outlined a multiyear growth strategy in 2024 that we're executing. That execution continues. And we have the balance sheet to continue to deploy capital into these businesses. We have moderate leverage at 4.3x, we've got strong liquidity. We have over $1.4 billion of liquidity, and we have no maturities until 2028. So company is in really good shape. We've carried some strong momentum into 2026 coming off the fourth quarter with -- in terms of business on the books, lead volumes, what we're seeing in terms of meeting planner sentiment. So we're very, very optimistic about how we'll perform in 2026. In terms of three reasons that you should own the stock, first and foremost, we are a highly differentiated model within -- in the REIT space. We're the only ones focused on the group segment. And you benefit in terms of stability and visibility because of that. We have a very clear and effective capital allocation strategy that delivers and has delivered durable and accretive growth. And we have a long tenured management team that has a clear track record of creating shareholder value. The majority of our management team has been with us for anywhere from 18 to 23 years. It's the team that built and operated these hotels prior to converting to a REIT in 2013. And since that time, in 2013, whether it's total shareholder return, whether it's AFFO per share growth or whether it's dividend per share growth, we've delivered the highest growth rates of our peer set and in most periods in cases above the REIT index generally. So best-in-class assets with durable and accretive growth and then a consistent track record of value creation, I would say, are the three reasons why you should own the stock.

Okay. Great. Thanks. I wanted to start out with maybe talking a little bit about -- I mean, you obviously like, in line with everyone else, you recently reported fourth quarter and your outlook for the year. So your RevPAR guidance is 1.5% to 3.5%, essentially in line with what we saw from most of the lodging REITs, low single digits. And I guess, I wanted to ask you first, just given the visibility that you have, and I think you said 50% of the occupancy points are on the books. So there are certain higher rate. It seems like to get to the low end of that range, you would have to see negative RevPAR through the balance of the year, but correct me if I'm wrong and just kind of maybe talk about getting to the low end and the high end of that range.

Yes. So we're entering the year with about 50 points of occupancy on the books. Group rooms revenue on the books is about 6% ahead of where we were entering 2025. So very well positioned for the year. The real issue for us is that we seem to be living in a very volatile world. And so, as we talked about on our earnings call, what we try to reflect in our guidance is just some of the uncertainty associated with the environment that we're in. When we look at our internal metrics, the things that we look at as it relates to group and how group may or may not perform. We don't -- our dashboard right now is all green. It's not showing -- it's not flashing yellow or red anywhere in terms of business on the books, lead volumes, what we're seeing in terms of outside-the-room spending, attrition and cancellation rates. All those factors are positive. What we're trying to factor in is, a little bit of what we saw last year when we had Liberation Day in April, which really took some of the momentum out of the market. We saw some meeting planners pull back and then we recovered in the fourth quarter and saw a very good performance and had an overall good year. But frankly, I think that the guidance that we provided just tries to reflect that uncertainty in a range of outcomes that...

So it sounds like from what you're saying 1.5% would be disappointing relative to what you're seeing now and your expectations and what's on the books. But I mean, no one's faulting you for having conservatism. It just seems like 1.5% would be hard to get to given what you know so far.

I think based on the controllables and what we know so far, we would not anticipate that. But the range that we provided is our guidance, and we'll update that when we get later in the year and as the year unfolds and we see how some of the things that are occurring in the environment, how it shakes out. But to your point, there's no real benefit to being Herculean in your guidance in February, frankly.

No, absolutely not. I just feel like a big point, a selling point at Ryman is that, you have better visibility relative to peers. So when you come out with a RevPAR outlook that's in line with peers, I just sort of wanted to explore it a little bit more. But I mean, everything you're saying makes sense. We have a question?

We do have a question that's come into LiveQA. How are you finding the progress of the multiyear growth strategy compared to your expectations thus far?

Generally, we're on track in terms of timing, in terms of budgets. In terms of those projects that are up and running. Results have been consistent with or better than what our expectations were. I would say that the one -- if you look back at what we laid out in 2024, the one, I think, significant project that we are -- that we had anticipated being underway at this point that's not is an expansion of the Gaylord Rockies. We're working with local government there on a number of initiatives prior to starting that project. And as we said on the call, we anticipate that, that process will draw to a close fairly quickly, and that we'll begin that project at some point here in the near future.

So when you look at the update that you gave -- or the outlook that you provided, I think the range was $900 million of EBITDA at the low end and $1 billion at the high end. And I think that included the Rockies rooms or rooms expansion being in there. So what would you say adjusted that range should be if people were going to kind of maybe look at that now? And I think that was obviously before you bought the JW Desert Ridge as well.

Yes. It kind of depends on -- it depends on kind of what's in and what's out. To your point, we had anticipated we would have that.

Let's put the Desert Ridge aside because you've already said what the EBITDA is going to be there. So just taking out the rooms, what do you think that $900 million to $1 billion should be adjusted to?

I think that without Desert Ridge, we will be comfortably in the lower half of that range. I think if you include Desert Ridge, you're now in the upper half of that range, is the way that I would characterize it.

Okay. And then on the Rockies, I mean, when you built that, you talked a lot about getting some, I think, sort of, I guess, you call it tax incentive financing. Just kind of remind us what your agreement with the local authorities is? And is that kind of what's holding up your rooms expansion there?

So, our current incentive package is on the original 85 acres where the hotel is developed. We also own 130 acres of undeveloped land around it. But on that 85 acres, we collect the majority of our real estate taxes, occupancy taxes in a portion of the sales taxes. And depending on the tax stream, that incentive was anywhere from about 25 to 30 years. So it's a meaningful incentive package. The issue that we're wrestling with right now is around property tax valuations in where those valuations are in that local jurisdiction. And so we've been working on that issue. So hopefully, we'll have that resolved fairly quickly and be able to move forward with the project.

And what sort of the capital allocation roughly to build rooms at Rockies?

So this expansion will be 450 rooms and an indoor expanded water amenity similar to SoundWaves and Nashville. The cost for the rooms expansion and the water park would be about $300 million. You'll recall, Smedes, that we did a significant amount of work on this property over the last 2 years to enhance and expand the food and beverage offerings there in the seat count. So from a meeting space and seat count perspective, we have the infrastructure to support that room's addition. So the leverage that we'll get from that room count should be quite good in terms of operating leverage.

Okay. And then just kind of what target -- what kind of returns would you target on that $300 million roughly?

Mid-teens unlevered.

Okay. One of the things I wanted to ask you about I know you're over 70% group. But I think some years ago, you tried to improve your leisure kind of amenities and target that audience a little more. I sort of -- how is that going in terms of the segmentation to leisure? And then maybe you could just touch on, you had a much better 4Q '25 holiday programming season relative to the prior year. Any kind of lessons learned there in terms of bringing folks in? Because obviously, it was quite successful this year.

Yes, holiday period was quite good in the fourth quarter of this year, really off of what was a little bit of a disappointing '24. We made some changes based on the consumer research that we did post the '24 holiday season and really made some changes to the timing of our marketing, how we packaged -- how we package the offerings and then how we price the offerings, which drove some earlier bookings, which allowed us to build some compression. And ultimately, as you mentioned, we served a record 1.5 million customers through that ticketed event ICE!. In terms of the focus on leisure and investment, that's -- that focus really has been across our business. We did some work pre-COVID that we called internally this notion of enhancing the project, our portfolio overall with the idea of growing our average rate, attracting higher quality not only group customers but leisure customers. And that's a big part of our whole strategy around the capital deployment, whether it's in carpeted breakout space, whether it's in food and beverage or other amenities like pool product. It's to drive value and so ultimately, to drive rate. And if you look at how our business has performed over the last 4 or 5 years, we've seen a very strong growth in our average rate. We're attracting more premium groups and more premium leisure guests.

So, the segmentation is not changing that much. It's just charging more for the 30% or so, that's leisure.

Right. We're still 70% -- about 70-30 in terms of group leisure. But we have been able to increase our rates because we're delivering greater value to the customer.

Okay. Okay. I mean, we had a question come in that was touched on leisure, but I guess the part that I didn't ask is, has adding the JWs and the water parks change the terminal mix going forward. I'm not sure what the terminal mix is, but...

I assume you're talking about the mix of group leisure.

Yes. I guess. I mean, having the two JWs in the portfolio has set up your leisure segmentation at all.

I mean, marginally, because they're about 60% group as opposed to 70%. So -- but relative to the size of the portfolio, it won't move the weighted average significantly.

And just in terms of your footprint, I mean, I felt like -- and maybe I overinterpreted this. But it's sort of -- it seemed like you alluded on the call of maybe potentially adding another JW Marriott to the mix over time, because you have the sort of subset of like higher-end groups. JW is a higher-end hotel relative to a Gaylord. Could you just talk about that? Do you feel like you need to...

Yes, I mean, I don't know that we need to. I think it's desirable over time to continue to grow distribution if we're -- if we're finding the right asset for the portfolio that's consistent with our strategy, and we can acquire that at a price that makes sense for our shareholders. Certainly, we would look at that. You won't see us go out and push into other segments or different product types. We've been -- we have been, and we'll continue to be very focused on that large group customer. And preferably, for it to be a Marriott-managed product so that we can integrate it into the portfolio and try to capture some of the synergies that come both operationally as well as from a consumer perspective with the rotation of groups.

Okay. Question came in. The question is, does the 2026 RevPAR guide include renovation headwinds? If so, could you please quantify the impact?

It does. And it's essentially consistent with what we had in 2025. I don't know if you have any other comments you want to make as it relates to that in guidance?

No, I think that's exactly right, and that's why we were not explicit necessarily in the guidance that was in the release was because it was comparable to 2025. So not a meaningful call out from a year-over-year change standpoint.

Okay. I wanted to ask you, I mean, I don't think there's a lot of competition or new competition in this space. Not a lot of people are building hotel -- big hotels. But the Chula Vista, Gaylord did open. And then in the Glendale area. So Phoenix, there is the -- I'm not sure if I'm pronouncing it right, but it's VAI or V-A-I, large hotel. I don't think it's directly competitive for you, but it is a large property. Could you just talk a little bit about what, if anything, you've seen from the Chula Vista, Gaylord and from the new asset in Phoenix?

Sure. I think, broadly speaking, having an additional unit of another Gaylord with -- to add to what's currently a fairly limited distribution of the Gaylord Hotels brand is additive. So when we saw that open last year, we were excited to be able to attract and have a location that's more Westward that could be more accessible to folks who are west of our most western location, the Gaylord Rockies. And so the thought there is groups, people who had not previously been aware of the Gaylord Hotels brand could experience the Gaylord Pacific in the California location come in at arguably a higher ADR given that market and then rotate into our hotels. So we're supportive in general. There are, of course, brand standards that we support to make sure that the product is consistent and that meeting planners have a good experience. And I think what we've seen around that is there have been a few rooms that have been introduced into our portfolio as a result of that. So I think on the group side, it's played out as we might have thought. The reception from meeting planners from what we hear has been good in terms of their experience on site, and we'll continue to see how it performs.

So it sounds like it's been a net positive for you, opening up the Gaylord.

It has been. And I think it'll -- that will continue to grow as the they introduce customers to the Gaylord brand and those customers then begin to rotate. We saw that whether it was opening the Texan or the National or the Rockies, each time we've grown distribution. We've seen new customers come into the brand and then ultimately rotate. And if they enter it in a higher-rated market like San Diego, they rotate at a higher rate. So, when we look at those customers who have entered the brand thus far through Gaylord Pacific, we look at that multiyear contract, they rotated about a 9% higher rate than our typical rotational customers. So that -- again, that same phenomenon we've seen historically has continued to hold with the Pacific opening.

Okay. And then how about this new property that opened in Glendale?

It's really not competitive. It's kind of a leisure oriented. I think they've got a big -- they've got a big like surfing wave pool, and their concept is to have this large hotel that kind of surrounds a concert venue. So, if you go to bed early, I would stay somewhere else.

Okay. I wanted to go back, you mentioned you're investing across the portfolio. I think it's about $1 billion program, putting aside the Gaylord Rockies, which I realize the timing is kind of unclear. But how are you thinking about what percent you should be seeing incremental returns on that investment versus like new car bidding or something, which probably doesn't get a particular an ROIC, if you will?

I mean, we've said that we target at least mid-teens unlevered returns on any growth projects. And as far as the multiyear investment capital plan goes, we've initiated all of the projects we've talked about with the exception of the Gaylord Rockies, as Mark has just talked about earlier.

So it's mid-teens on the entire $1 billion investment you're thinking?

There are some components of it that some would argue could be maintenance, i.e., we've done some room renovations as part of that. The Gaylord Texan rooms are underway right now and should wrap up midyear, and then we'll be picking up the renovation of the San Antonio Hill Country rooms after the Valero open this year.

And then one thing you mentioned on the call, I think Colin mentioned, I think he's paraphrasing, it's like we have such a small percent of this group business. Could you talk about how -- what do you think your percent your share of group business in the U.S. is? And how do you go about driving incremental share, bringing new, I guess, higher-paying groups into the mix, which I think is part of your strategy?

Sure. We actually put out a deck earlier this week in advance of these conversations we're having with all of you and put out some data to put a finer point on that. And we've estimated that the group meetings business is around 240 million room nights in the U.S. And so we're 1% of that, it's very small. And the other point that we would make in describing our piece of that is that we are focused on a particular type of group meeting. There are obviously a large variety. When you look at the 243 million, there are citywides that travel to convention centers, and there are much smaller groups. We're focused on what we feel is a very profitable segment of group meetings, which is those 600-plus on-peak group room nights, half of our group room nights being corporate focused with a lot of our capital allocation right now towards investments that will continue to drive, hopefully, more premium corporate group types.

When you look at the STAR data, you can -- and it's actually in that presentation, I think, you look at our market share premiums, we've grown most dramatically since pre-pandemic. And if you look at our revenue and profitability, we've grown that dramatically as well. And most of that growth has come through, again, growing rate by investing in these properties and changing the value proposition for meeting planners and consumers. We're not back to pre-pandemic occupancy levels across the brand. So we see a real opportunity to continue to drive our occupancy as we continue to make this mix shift into these higher rated customer segments. And so there's a significant incremental profitability opportunity for us there just on a same-store basis.

I don't know if you have this handy, but when you talk about 240 million group room nights in the U.S., do you have a sense of what percentage of that is in Las Vegas?

I don't have that data right in front of me, but clearly, Las Vegas is a top meetings market.

Okay. Because that's not really -- you're not really competing with that market. I think that was always like a point that you guys tried to make, like there's a certain number of group meeting people that don't want to have meetings in Las Vegas. Is that still part of your...

I think, that's fair. I mean, I think there are groups who have an opinion and a perspective on all markets about where they would want to go and where not to go. I think, Vegas has very specific attributes that probably don't appeal to a lot of the groups that want to travel to our properties, right? The gaming element being one. And -- but our product size-wise does obviously put us in a, I guess, a sourcing conversation for certain size groups.

One of the topics we're kind of exploring with every company is the deployment of AI and how you at Ryman are thinking about either efficiencies or other opportunities internally to use AI?

Yes. So depending on the business, on the hotel side, obviously, we are tied to Marriott's activities in the platform and the strategy that they're developing. For our hotels specifically within that context, some of the areas, I think, where we're most interested in are doing some work is really around the sales process. How we think about pricing and yielding and managing these longer booking windows, if you think about we're committing contractually to business, on average, 3 years in advance, but in many cases, 8, 10 years in advance. So as you think about manipulating large amounts of data and trying to do predictive modeling, it's an area where AI, we think can help us dramatically. And then obviously, there's a lot of interest in how AI can help us on the labor front in terms of these larger operations, like I think most of our peers are interested as well. On the entertainment side, we're doing quite a bit of work really around things like marketing, customer acquisition, how we think about dynamic pricing in terms of live entertainment and venues and then operational efficiencies as well. But we're really just getting started.

Is that mostly buying off the shelf? Is it building, partnering? How are you thinking about the actual deployment of it?

Certainly, on the entertainment side, it's buying off the shelf. With Marriott, we'll -- they're in the process right now, I think, of really developing and executing what their longer-term strategy. I would assume that, that will be some combination of off-the-shelf plus some -- given their scale, some proprietary platforms.

Maybe we can switch to the entertainment business for a moment. First, you have a 35% partner in that space. They have a right to buy up or put back to you the business. Can you just remind us when those options come back into play for them and maybe how your relationship with them is going?

Sure. I think you're talking about our Atairos partners in OEG. They own about 30% of that business today. They do have a right with that respect -- with respect to that 30%. To put it back to us in the event that they call for an IPO of that business and we determine as the majority owner that it's not the right time to pursue that particular transaction and decline to move forward with an IPO. They could put that back to us at a contractual amount that's already, really reported on our balance sheet as their non-controlling interest value. So -- and we would, if that were all to happen, be able to elect whether or not we would settle that put right exercise in cash or shares. And we could also elect the timing of that settlement to occur over 3 years as opposed to immediately. So that's the mechanics of it.

Yes. And I think as it relates to an IPO and the timing of an IPO, I would just -- all I would say is that I think that we are well aligned with Atairos in terms of how we think about that, the timing and what that opportunity could -- may or may not look like.

Don't those rights kind of come in and out when they have a right to buy up or right to put back to you? Or is it always available to them?

So they're right to buy up additional shares above their 30% up to an additional 19% was available to them annually since they came into the investment through last fourth quarter at the end of the year. The timing was a window at the end of the year so that we could provide them the data around our REIT compliance limitations. The value was already contractually set based on a trailing 12 months, profitability, adjusted EBITDA defined metric in that investment agreement. So those windows opened and closed essentially at the end of every calendar year.

Okay. Okay. And in terms of like the big growth drivers there. I know you've got -- you've got the Category 10, right, under construction in Las Vegas. It's near your Ole Red facility, I think, sort of down the street a little bit, right? In the Flamingo, right, that where it's opening. Okay.

It's in front of a Flamingo, where the old Margaritaville was right where the link ties into the strip across from Caesars.

Okay. I mean when is that expected to open?

That will open this fall.

Okay. And are you -- I mean, are you kind of pre-booking? Or how are you thinking about the opening there? I mean, is it going to do a lot of corporate or is it going to...

Yes, it will do -- all of those venues do a significant amount of special events and buyouts. And so we have sales folks that are already working on that.

Okay. And then you announced another venue opening, I think, in Universal Studios, maybe -- is that -- can you just remind us?

Yes, here in Orlando.

What is it?

We're not in Orlando anymore.

We're not in Orlando. Yes, I was in Orlando yesterday. Sorry. Yes, in Orlando. That will open late next year.

Okay. And that's a Category 10 as well?

Correct.

Okay. Okay. And you have one in Nashville.

We do -- it's the former Wildhorse, that was converted.

And just -- so everyone knows, these are kind of in conjunction with Luke Combs, Country Star.

Correct.

Okay.

Country superstar.

Country superstar, yes, sorry. Yes. Are you -- I mean, are those the main drivers of growth? Because you've also made some headway into kind of festivals. I know you're managing some auditoriums, which looks like there's some out-of-pocket going into, but not that much.

Yes. So Category 10 is another brand within kind of this kind of artist-inspired venue category. We also have a concept with Blake Shelton called Ol' Red. And then to your point, Smedes, we bought a controlling interest in the festivals business. And so, we now kind of have established ourselves with a platform in that festivals business that we can now grow in that vertical. And then in the last 4 months or so, we were selected in an RFP to operate the Ascend Amphitheater in Nashville and also in another RFP to operate an amphitheater in Simpsonville, South Carolina. And so that puts us in the amphitheater vertical. And so if you look across the business, what we're doing is that we're establishing growth platforms in these different verticals that service the same customer and then also allow us to, as we grow, leverage things like marketing, sponsorship, ticketing, et cetera, and to build scale.

All right. We're coming down to less than minutes. We do have two final questions I want to ask you. I guess, first, as you think about the public hotel REIT space, do you think there'll be more fewer or the same public companies a year from now?

Should be fewer or they'll be the same.

I need one answer.

The same.

Okay. And then if we think nationwide RevPAR could be 2% in 2027, what do you think same-store EBITDA could be? Nationwide, not for you.

Yes. Not for us, I would say probably flat to slightly down. I think the real story here will end up being mix. I think that quality group hotels, quality luxury hotels will have the -- could have the ability to grow their EBITDA margins despite that lower growth rate, at least that would be my expectation for us.

Thanks for your time this morning.

Thank you.