Welcome to Ryman Hospitality Properties’ First Quarter 2016 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, Senior 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 86270847. At this time, all participants have been placed on listen-only mode. 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 publicly update any forward-looking statements, whether as a result of new information, future events, or any other reason. We’ll 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 the company’s Chief Executive Officer and Chairman, Colin Reed.

Thanks, Scott. Hello, everyone, and thank you for joining us on the call today. As an aside, we’re going to have to check that music. At our Investor Day in March, we went into great detail for all of you how we’re thinking about the strategy and outlook for our business in the months and years ahead. So with that in mind, we’ll keep the prepared comments relatively brief and leave more time for questions this morning. As such, I’ll give you a high level overview of our actual results for the first quarter, including forward sales, then touch on how we’re thinking about the rest of the year, which I would say, looks pretty good. Then I’ll pass it off to Mark to discuss the financials. Now, for those of you who attended our Investor Day, you will no doubt recall how we described our expectations for each quarter of this year, based upon the really solid book of group business we have for 2016. And to remind you, what we said was the first quarter will be flat to last year. The second and third quarters would be our strongest quarters, given that the fourth quarter skews more towards transient, we anticipated to show modest year-over-year growth. Our first quarter, in fact, came in where we expected to be. Compared to our own internal operating plan, our hotel business was up very slightly in terms of revenue, due to a few groups underperforming, as well as the impact of winter storm Jonas that disrupted travel for groups traveling from the Northeast. However, this minor shortfall was offset by a good margin management and the performance of our Entertainment business. And our – on a consolidated basis, adjusted EBITDA was about $100,000 better than our internal plan. So we…

Thank you, Colin. Good morning, everyone. In the first quarter, the company generated total revenue of $261.5 million, up 3.3% from the prior year quarter, and net income available to common shareholders of $26.3 million, or $0.51 per fully diluted share. As Colin outlined in his opening comments, our first quarter results include the negative impact of Easter holiday shift and the impact of winter storm Jonas. With these events in mind, the company generated $73.4 million in adjusted EBITDA, which was essentially flat in the prior year first quarter and adjusted EBITDA margin decreased to 110 basis points. For the quarter, the company generated $56.6 million in AFFO, or $1.10 per fully diluted share. Turning to the Hospitality segment results, the hotel has finished the quarter on a same-store basis with RevPAR essentially flat, down 40 basis points, as compared to the prior year first quarter, while strong outside-the-room spend in group banquets and catering increased total RevPAR by 1.4%. Attrition and cancellation fees collected during the quarter totaled $3.4 million. We continue to monitor all of our groups that cancel or try, and have determined that there are not any discernible patterns or trends that would give us cause for concern. Consolidated hospitality adjusted EBITDA increased 0.7% to $76.3 million, generating an adjusted EBITDA margin of 31.3%. During the quarter, the Entertainment segment revenue increased 3.7% to $17.3 million in the segment’s, first quarter adjusted EBITDA decreased 25.9% to $2.8 million. As Colin mentioned, the decrease in adjusted EBITDA was within our expectations and with the result of the accelerated renovation work with the Wildhorse Saloon and growth investments we’re making in the Entertainment business. Corporate and other adjusted EBITDA totaled a loss of $5.7 million in the first quarter, compared to a loss of $5.8 million in…

Thanks, Mark. I think what we’ll do is, we’ll hold any closing remarks. And Maria will open up the phone lines to questions.

Thank you. [Operator Instructions] Our first question comes from the line of Chris Woronka of Deutsche Bank.

Hey, good morning, guys. I appreciate before looking data points. And I think that book of business looks pretty encouraging. I want to ask, if you’re seeing any change in the nature of the groups, or the – I guess, I would call it whether it’s from an industry perspective, or from a geographic perspective, how do you guys kind of view the overall quality and nature of those future group? Thanks.

Well, the bookings of recent – we’ve done a corporate business. And also Patrick, if I remember the – that data type that you gave me yesterday is also skewing to larger groups, was seeing a lot of groups over the 1,000-person size groups, which is really great for us, because there’s very few places in the nation that kind of accommodate those groups.

Yes, Chris, I would agree what Colin said. Another thing I would add to it is, we really haven’t seen any discernible negative behavior in anyway in anyway from groups. And we have seen some growth to Colin’s point and a number of corporate segments, tech being one of them. So with a lot of the uncertainty and volatility out there, we have been watching closely. We’ve talked to every group, if there’s any kind of attrition or cancellation and quite honestly there’s just really no discernible trend that will give us cause to feel that the remainder of our years in danger.

And just to Chris repeat an often – a question that we often get asked. We have very little oil-related business on the books, and we have very little government related business on the book. So we’re not sitting here like some of the big banks who are dominant in that sector. We’re not sitting here, looking at potential smoking guns here.

Okay. That’s great. And then, Colin, I want to ask you about the Rockies, and we’re still a couple of years away from opening. But I know you guys think long-term, your options to buy that later, what are some of the things that you do now from a balance sheet perspective to kind of leave yourselves that flexibility when the time comes?

Well, our balance sheets in really good shape. We – our leverage levels are somewhere between 4 and 4.5 and that’s where they’ll be. Obviously this business, we expect it to open up operating very solidly. And our partners, of course, love them to death. I think this business is going to create a ton of money for them. So there will be this discussion around the performance of that business when it opens, but what we will do is maintain our leverage levels at around that 4, 4.5. So we won’t stop doing deals between now and then in anticipating of doing that deal. That deal will float on its own merits. And we – if you will recall, when you came to the Analyst Day, we showed a slide right at the end of the Analyst Day that said, if we just do the things that we have on the hopper, these things in our control right now in our hotel business. Our business in 2020 will look very, very different to the way our business looks today. And we had ranges of EBITDA in that $450 million-ish range. We had leverage levels, Mark, I’m trying to do this from memory, it’s sort of like 2.8 times.

Okay.

And what we said is, we had somewhere between $600 million and $1 billion of potential capacity on our balance sheet by doing the things that we’re doing today. So this company is going to be in great shape, providing, we don’t have another cataclysmic event a la 2009. But if we a – an event like 2009, as you all know, this company performs dramatically differently from the rest of the industry, which will give us an opportunity to buy assets that have – that will be depressed, if we see, God forbid another 2009. So we’re in really good shape as a company.

Okay. Very good. Thanks, guys.

Thank you.

Our next question comes from the line of Shaun Kelley of Bank of America.

Hey, good morning, guys. Colin, I wanted to dig in. I think you made in the prepared remarks a comment about an incentive management fee accrual for your relationship with Marriott. And obviously that’s a new structure to, or relatively new structure to Gaylord. So, could you just help us understand that a little bit more? I imagine there are some specifics you don’t want to get into. But could you help us understand a little bit about how that feature is structured? And it’s sort of like, what high watermarks we should look to and is it -- how it will trend out across the year? That would be helpful.

Yes. Now look, we’re not – we’re not in anyway not willing to be transparent on this. We can be very transparent. These agreements, the management agreements were all publicly disclosed agreements. We have known as priority that Marriott has to deliver once we get above that in any given year. There is an incentive management fee that kicks in. That – we paid a minimal incentive management fee in 2015, even with those record results. It’s the way we structured this contract. But in 2016 with our anticipated level of EBITDA, we have probably, I don’t know $5 million, $5.5 million-ish incentive fee simply, because the level of profitability this year is going to kick in. And so what we do as a business is, we look at the likelihood of the performance. And because we are, because unlike most of our compatriots in the hospitality REIT land that are transient dominated that don’t have as much visibility on the second quarter and third quarter as we do. We’re now pretty confident that the – this incentive management fee is going to earned. So that’s why in discussions with our accountants we said, we should take that. We should take a part of that charge in the first quarter and that’s how it works. Mark, did I miss anything?

No, I mean, essentially we accrue over the course of the year.

Yes.

For our anticipated incentive fee obligation that you’re in.

Yes.

And…

And as I said to Arne Sorenson about a month ago when he came to Nashville and visited, I said, Arne, our goal is to pay you $50 million to $50 million a year in incentive fee, so that’s what we’d like to do. And because we all know that, if we do that we’re making a ton of money in this company, so we like incentive fees.

That’s helpful. And then, I mean, have you guys calculated, I don’t know if it’s possible, but relative to the guidance how much of a drag on margin performance you think the IMF will be this year?

Well, that our – we budget for that fee and that fee is calculated in our guidance and that’s why and we talked about that…

On the Investor Day, yes, we did. We talked about that. We said the – we’re showing good margin growth on our guidance, and we said, that margin growth is being tampered by about $5 million additional incentive fee.

Got it. Okay, thank you. And then, the last question would just be – just a clarification really. Q2, I believe you said that April was up 9.5%, and did you say for the entire second quarter you’re looking at high single-digit RevPAR?

Yes, that’s right. And we’ve got a very good book of – I think, Patrick, we’ve got a very good group bookings for June this year. But our third quarter looks particularly strong with about 40,000 additional room nights there or thereabouts in the third quarter over the third quarter last year. So we’re as we sit here today we think, we’re going to be double-digit RevPAR growth in the third quarter.

Yes. And so to Collins point, the group RevPAR that’s already on the books year-over-year increase is reflective of the guidance he gave around RevPAR expectations for Q2 and Q3. So it’s not based on hopes or dreams, it’s really based on what we already have on the books and expect to do on the transient side.

Great. Thank you guys very much.

Thanks, Shaun.

Our next question comes from the line of Jeff Donnelly of Wells Fargo.

Good morning guys. I just want to circle back to the Rockies. One of the challenges, I think, you guys faced when building the National in DC were, I guess, I would say, containing costs to ensure your returns came out as you expected. Can you compare or contrast that project – the Rockies project to National for us? So just talk about how you’re going to try and protect your cost basis and the investment return there from just the usual development risks?

That was a spirited conversation, Jeff, good morning, Colin. That was a spirited conversation we had with our Board, as you can imagine. We had it when we first discussed the Rockies project with them about four years ago, and we had it obviously several quarters back. The way this is being done is very, very different. We – what we were doing in Washington when that – when the whole world was on fire, we were building and if you recall, we modified the project in the middle of the project. We went from 1,500-room hotel to a 2,000-room hotel. And we built the hotel in an all union environment in Washington when that market was on fire. So what was happening and we did not have a GMP, a guaranteed maximum price on this project. And that’s what happened in Washington. And there was a shortage of trades, and it was, as I say, got built all union. And by contrast what has happened here is, the detailed – as the – as this litigation has been ongoing for three, four years. Now our partners did all of the detailed design work on this project, had it all nailed down to the quality of the light fittings and went out and bid this project to two main contractors, I think one contractor was actually Colorado based and we have a GMP on this project. Now what we have done separately and aside is that the way we’ve negotiated our investment in this deal is that we’ve also shifted the burden to the project manager who is RIDA one of our partners. We’ve shifted the burden to both RIDA and Ares to cover any over spends up to a specific sum of money. So this project is like apples-and-oranges, and so I’m pretty confident that we’re not going to see and particularly with the environment that we’re in right now where you’re not seeing thousands and thousands of new projects across the country, I’m pretty confident that that this projects is going to come in us and around where we thought it were coming, so that’s the answer.

And that’s helpful. And just one other question and maybe it’s little specific, but a lot of your competitors were sort of reeling a little bit or could be reeling a little bit next year, because Moscone Center in San Francisco was going to be – going under renovation and it’s going to disrupt a lot of citywide events, which I know is little apples-and-oranges maybe for the business that you target. But I was curious if the Gaylord product could potentially be a net beneficiary of some of that disruption or if you are seeing that at all in any of your bookings if you think about 2017 and 2018.

Well, I think we’re probably seeing very little of that and we already have a very strong solid book of business on the books for 2017. And I suspect that the convention center in San Francisco is known for a long time that they are doing their work. What is exciting to us is, is the business that we’re seeing literally month by month this year for 2018, 2019, 2020 that would not have gone to San Francisco in a city convention center. So I’m not sure we’re seeing any benefit from that Patrick.

I would agree and I would tell you that one of the factors that plays into our expected performance for 2017 Jeff, is the fact that we have a pretty large renovation that will be occurring at Gaylord Opryland in our delta section which will be the last major renovation hurdle that we have for that hotel. So we’ll have roughly a 1,000 rooms out over the course of the year getting renovated. Then the other mitigating factor is and why we’re seeing somewhat flattish room nights on the books for 2017 right now. Is the fact that there’s a little bit more of a challenging citywide convention calendar in Orlando in DC for next year? So I would say that we’re pleased with where we stand right now, but I would not say that we’ve seen any significant impact from Moscone being shutdown or renovated.

That’s helpful. Actually in this one more I mean more kind of in this interesting time where you guys are seeing strong group business, but the corporate trend in the world’s been fairly sluggish, some people will say that’s very typical towards the end of the cycle or group sort of hold on better than the corporate transient world. But it does feel a little different this time. I guess how are you guys thinking about that sort of disconnect between those two channels? And are there any signals that maybe the prior cycles are giving you that that you can be or you are looking for in your own business and how you manage the business. But do you find that for example, your customers tend to be a little less willing to commit to events that are many years out, if they’re less certain about things or just I think people are wondering if the corporate transient trend ultimately catch up to the group side of the business or if group is more of a sort of a longer-term indicator and corporate transient in this sort of little more reactive with the current economic environment?

Well, first of all let’s be clear what has happened across the 25 top corporate market transient markets across the United States. It’s has been tremendous pricing that increase in pricing going on right across these markets. And you’ve seen historically over the last five, six, seven years very strong RevPar growth. So you got compression in occupancies and rates have been going up and its natural, the consumers get a little weird. But our business is a very different business. These groups want to meet and we’re seeing more and more group demand particularly in the thousand room plus number of groups. But the contrast to previous cycles, Jeff, as you well know, is this very, very little new supply coming in facilities that can accommodate the group business. And so, I think that’s one of the reasons why there’s a little bit of a disconnect, where certain of the analyst community so to say, all the world is coming to an end, the cycle is coming to an end, but have a hard time understanding why our group business is pretty good. Corporate profits are not being smashed. Corporate profits are pretty good. Company’s balance sheets are in really good shape. People are meeting, and our business is, we’ve seen that consistently over the last 12 months. We’ve added 350,000 group room nights to our future inventory over the last 12 months. And everything we look at, the first quarter bookings up on last year, Aril, up on last year. And I think there’s just naturally because of what’s going on in these markets, the top 25 markets, there’s going to be a little bit of a hesitancy to book hotel rights of $350 where you were paying. If you look at Nashville as an example, if you look at what has gone on in this market, you will see huge increases in pricing by the hotels in this market because of the demand. And there just naturally becomes a pause. But I think our business looks really, really good over the next – over the next two to three years.

Great, that’s helpful. Thank you, Colin.

Thank you.

Our next question comes from the line of Bill Crow of Raymond James.

Hey, good morning, guys. Colin, could you clarify for me if the Aurora advance bookings are included in your total advance bookings?

NO, I was very clear in the prepared remarks, William, that is not the case.

Okay, that’s what I thought, I just wanted to make sure.

Our first quarter up 20% net and April up 45,000-ish room nights excludes Aurora, which is really good news.

And when will you start to include Aurora in your advance bookings numbers you have?

We won’t do that until that hotel is one-year old.

Okay, great.

One year operating old.

Okay. And the fact that Aurora has, as you expected been able to capitalize on the rotational aspect of groups. Has that left any holes in your existing portfolio that are significant or we should be aware of?

Look, we’ve tried to convince you guys for as long as we’ve been talking that what happens when we put a new hotel in place. That hotel becomes an exporter of room nights to the system, as well as an importer of room nights to the system. And what happens is that when you add a new hotel, we always see a lift in the number of customers that we’re doing business with. So what is very, very – the answer to the question is, we book more room nights in the first quarter into the existing hotels. And in April, we book more room nights into the existing hotels with Aurora in the system. But we also booked a ton of hotel room nights in Aurora with touching customers that we didn’t touch before, and that will give us the ability to say to those customers, if you want to book Aurora, here is when you can book Aurora. We’ve got the space available, but by the way, you can also come to Texas, you can also come to wherever. And that’s what – that’s the difference of our model compared to any other organization that does business in the hotel business – in the room business in this country, and it’s a very, very compelling business model that we have.

I appreciate that, yes.

Hey Bill, this is Patrick. Just to expand on what Colin saying, essentially our strategy is two pronged. Number one, to go heavily after the West Coast groups that are new to the brand and acquire a whole new breed of customer into the brand with the addition of Rockies to the brand. And the second is to go after the existing group customers, but ensure that it’s an existing customer with a new meeting being added to the rotation. So that we’re not cannibalizing from the existing rotation, but they were adding a new meeting to the rotation from an existing group. And so those are the two prongs of the strategy that we’re really focused on.

That’s help, Patrick. Thank you. One last question from me, as you look at 2017 and the solid group bookings, how does it stack up going property to property? What is doing the best as you look ahead? What’s struggling a little bit?

Yes.

Yes, so as I mentioned Opryland is a little more challenges, because they have more room night out of service.

Right.

And then Palms looks pretty good.

It’s not a demand issue let me…

We’re not in demand issue.

It’s a patent issue.

That’s right. Palms looks good, even though there is a little bit more challenging citywide convention calendar in that market 417. And then Texan the National are pretty much on par with where we expect them to be. So Opryland simply, because of the renovation has a little bit more of an uphill climb, but the other three properties look pretty good.

And no unusual ramp expected, because the election and the inauguration.

Now I mean we pickup, I mean the honest truth is we’ve been operating for several years with inaugurations and we pick up some banquet business for various groups, but the impact of the rooms revenue was really not that significant.

I’m actually more excited about the January weekend casino business.

That’s right.

In DC than and the Washington inauguration gatherings.

Great. All right, I appreciate it. Thanks guys.

Thanks, Bill.

Our final question comes from the line of Harry Curtis of Nomura.

Hey, good morning. Just as a quick follow-up specific to National Harbor, when you said that you thought it was on par with your expectations, as far as forward bookings for National Harbor for next year, does it look like it is a net positive versus 2016, negative, or neutral?

So, Harry this is Patrick. Essentially, it changes from month-to-month based on what groups you’re booking. Where we stand right now is essentially it’s flat to 2016 and so from that perspective we are pretty much on par with where we expect to be.

Okay, and then – just to clarify, because I think I might have missed a comment, Colin, you said that 2018 was well ahead, but in 2017, did you say that it was essentially inline with 2016?

2016 is going to be a record year for us and 2017 is pacing consistent with where 2016 was pacing a year ago, okay. And so we are comfortable, because it will enable us to shift our now salespeople’s focus on filling the patents for 2017, 2018 is trending four occupancy points ahead over where we were last year for 2017, okay. So we’ve altogether when you add what we did in April and you look at where we were in the March we got about 400,000-ish more thousand more room nights on the books at the end of April for future years than we did this time last year at the end of April for future years. This inventory continues to grow for us and this is very exciting and that’s one of the things Harry that’s leading us to some of these capacity modifications of these hotels that we’re doing.

Very good, thank you and we look forward to seeing you in two weeks.

Yes, we look forward to being there. Thanks very much and thanks for being on the call this morning.

And that was our final question. I’ll now turn the floor back over to Mr. Colin Reed for any additional or closing remarks.

Maria, thank you very much. I well again want to thank everybody for joining us this morning. We are very interesting business in the sense that we’re not a quarter-to-quarter business. We are long-term business and we really are very excited as a company about the future and look forward to spending more time with our investors here over the next few months. So, thank you for joining us.

Thank you ladies and gentlemen. This does conclude today’s call. You may now disconnect.