Ryman Hospitality Properties, Inc 2026 Q2 Earnings Call

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'll 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 exhibits to today's release. I'll now turn it over to Colin.

Thank you, Jen. Good morning, everyone. We are pleased to have delivered another standout performance this quarter. More importantly, we're encouraged by what it says about the strength and resilience of our business model. While the broader economic environment remains dynamic, we continue to see customers prioritize the kind of experience our portfolio is designed to deliver. This quarter reinforced several themes we have discussed consistently over the years. First, the demand for high-quality group meetings experiences remains healthy. Second, our strategy of attracting higher value customers across all segments continues to gain traction. Third, the investments we're making across the portfolio are strengthening the competitive position and long-term earnings power of our assets. Importantly, these themes build on one another in ways that strengthen our business over time.

Our scale and differentiated offerings allow us to attract premium business and deepen customer relationships, which in turn drives stronger spending trends and greater visibility into future demand. That visibility then helps us allocate capital with confidence. In turn, we continue to reinvest in our assets and businesses in ways that further enhance our competitive advantages and create long-term shareholder value. To take one example, last month, we celebrated an important milestone at Gaylord Opryland with a topping off ceremony for the meeting space expansion project, marking the completion of the expansion structural framework. When completed, this investment will enhance Opryland's ability to attract more premium groups and further strengthen its already differentiated competitive position. Gaylord Opryland is a remarkable asset, and a large part of the resort next year will be 50 years old. Today it is quite frankly, the most successful non-gaming resort in the nation.

25 years ago, when Mark and I turned up at this hotel, it generated about $57 million of EBITDA with virtually the same room count as it has today. Through periods of financial crisis, floods, COVID, and the like, we've built a successful group rotational strategy, enhanced the leisure aspects of this hotel through things like SoundWaves and holiday program. This year, we estimate Opryland will cross $200 million Adjusted EBITDAre. This is quite a transformation and underscores the power of our strategy. The same philosophy guides our approach to our newly acquired JW Marriott hotels. These are exceptional assets in attractive destinations, and we continue to see opportunities to create additional value through thoughtful capital investment, portfolio synergies, and increased customer rotation across the portfolio. While we remain early in that journey, the progress we're seeing continues to reinforce our confidence in this original thesis.

Finally, our entertainment business also continues to demonstrate the value of the platform that we have built. The strength of our brands, venues, customer relationships, create opportunities to grow across multiple businesses, geographies, and customer touchpoints, reinforcing the strategic value of the platform as a whole. We built a great business, and I'm very proud of what we've accomplished with our entertainment business and its impact on the city of Nashville, and I feel very, very confident that country music, Nashville visitation, and our great businesses will continue to grow. Last weekend, I traveled over to London to be with Luke Combs when he sold out Wembley Stadium for three consecutive nights, each night attracting 85,000 fans. This is on top of sold-out concerts in Edinburgh and Dublin. This has never been done before and reflects a revolution that is taking place in country music.

In time, these new fans will be finding their way to the U.S. and to the city of Nashville, thus growing the underlying value of our business. On that front, as we've initially disclosed in June, our board, advised by Morgan Stanley, continues to evaluate possible new investors or partners in OEG, with the goal of providing the business with greater independence while creating value for our shareholders. The ongoing discussions are with select potential investors whom the board believes may meet our criteria for partnership with OEG. The company has not entered into any agreements with respect to a potential investment by a third party in OEG, and there can be no assurances that any definitive agreement will ultimately be reached.

Our focus remains on pursuing a path we believe will preserve OEG's legacy while positioning the business for continued growth and enabling us to continue as a stakeholder. We look ahead, we are very excited about the long-term trajectory of both businesses. We remain mindful of the broader macroeconomic backdrop, the underlying demand we see in our businesses remain healthy. The strategies we've been executing are producing the outcomes we expected, and the investments we've made across the portfolio are enhancing both the quality of our assets and the future growth opportunities. We remain on track to achieve the 2027 financial targets we set out in early 2024, and we look forward to updating you on our continued progress. With that, I'll turn the call over to Mark to discuss the quarter and the operating trends in greater detail.

Thanks, Colin. Good morning, everyone. I'll provide more color on our operating performance and business momentum before discussing our outlook for the remainder of the year. As Colin mentioned, our same-store hospitality business delivered results ahead of our expectations coming into the quarter. Same-store RevPAR and total RevPAR growth exceeded our expectations by approximately 2.5 points each, while Adjusted EBITDAre outperformed by approximately $7 million. The RevPAR beat was comprised of equal parts group and leisure outperformance, which together with strong group catering contribution, drove the total RevPAR beat. The Adjusted EBITDAre outperformance was primarily top-line driven, supported by continued strong operating discipline. Let me provide some additional details on each customer segment. In our group business, similar to the first quarter, the portfolio continued to benefit from strong in-the-month, for-the-month trends, including ADR upside and stronger catering contribution relative to our expectations.

Group ADR increased 7.5% year-over-year, approximately three percentage points better than our expectations, driven by stronger than expected mix of higher-rated premium group customers. Rate growth was broad-based across all segments led by SMERF, which includes social, military, educational, religious, and fraternal groups. As we've discussed, the objective of our premium group strategy is to attract higher-rated business across all group segments. This quarter provides a clear example of that strategy translating into stronger pricing performance. Catering contribution per group room night, a proxy for spending per attendee, increased nearly 13% year-over-year, approximately 6.5 percentage points better than our expectations. The outperformance was driven primarily by stronger spending by corporate groups at Gaylord Palms and association groups at JW Hill Country. The group catering results at Gaylord Palms provide another compelling example of our premium group strategy at work.

Higher-rated corporate group room nights increased 31%, driving a 63% increase in catering contribution per group room night. This shift towards higher value business produced the highest second quarter catering contribution in the property's history. Together, these dynamics reinforce our confidence that our premium group strategy is translating into higher-rated business, stronger customer spending, and enhanced revenue productivity. In our leisure business, ADR was the primary driver of year-over-year growth. The strong group business on the books and room renovation activity at Gaylord Texan and JW Hill Country constrained leisure room availability. Relative to our expectations, nearly all the upside was driven by performance at the Texan, which benefited from market-wide World Cup related rate compression. As a byproduct of these trends, several properties delivered record performance during the quarter.

Gaylord Palms, Gaylord Rockies, and Gaylord National each achieved record second quarter revenue. The Palms also delivered record second quarter Adjusted EBITDAre. In addition, the same-store portfolio outperformed its competitive set during the quarter, bringing the trailing 12-month average RevPAR index at the end of June to nearly 130% of fair share, an increase of six points year-over-year. Our forward-looking business indicators also continue to trend positively. During the second quarter, we booked more than 768,000 same-store gross group room nights for all future periods, up 6.7% year-over-year. ADR on those bookings reached a new quarterly record of approximately $310, an increase of 8.6% year-over-year and 2.3% above the prior record. Net group rooms, room nights booked for all future periods also increased year-over-year, reflecting healthy underlying demand net of normalized attrition and cancellation activity.

Corporate customers continue to account for more than half of the room nights booked during the quarter, consistent with our group strategy. As of the end of July, same-store group rooms revenue on the books for all future periods was up 8.8% from the same time last year, representing 120 basis points sequential improvement from the end of March. ADR on the books for all future periods continues to pace in the mid-single digit range, while room nights on the books are higher than they've ever been at this point in the year, even excluding the addition of the JW Hill Country in 2023. Looking ahead to 2027 and 2028, we remain focused on growing the corporate group base as part of our premium group strategy.

As of the end of July, group rooms revenue on the books for 2027 is 3.2% higher than the same time last year for 2026, while 2028 is down just 50 basis points. For both periods, the year-over-year dollar increase in revenue on the books has improved since the end of March. Importantly, ADR pace in both years, which we view as the most durable component of revenue pace, continues to trend in the mid-single digit range. We remain confident in our ability to deliver the production required to achieve our 2027 goals, supported by near record corporate lead volumes, a healthy late-stage pipeline, and favorable pattern availability. I'll now turn to the JW Desert Ridge, which delivered another terrific quarter. Group business performed in line with our expectations and was the primary driver of RevPAR and total RevPAR growth compared to last year.