Welcome to Ryman Hospitality Properties’ Second 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 43150451. 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.

Hi, everyone and thanks for joining us on the call today. I will begin my remarks by touching on the strong results we had for the second quarter, particularly as compared to the hospitality industry overall; I will then share some thoughts on what we’re seeing on the broader economic environment and particularly how it relates to Ryman and what this means for the rest of ‘16 and beyond; and then I’ll turn the call over to Mark to discuss some of the financials. So let’s touch on the second quarter which as you will see, was very good. During the second quarter, our hotels posted 78% of occupancy across the brand and given the dominance of group, we’re pleased with this level of performance. This occupancy performance was in spite of the fact that we had over 8,600 rooms out of service for renovation at Gaylord Opryland during the quarter, which equates to approximately 1.2 points of occupancy. We were also very pleased with how our hotels performed from a top-line perspective. We saw same-store RevPAR growth of nearly 6% across the brand and same-store total RevPAR growth of 6.4%. Stating the obvious, this RevPAR growth materially exceeded the industry averages for the quarter. From a profitability perspective, the hotels grew same-store adjusted EBITDA by 7.4% to $90.3 million and expanded margins by 100 basis points to nearly 35% for the quarter which we are very pleased with. Now we’ve said for years that our goal is to get these hotels operating at or about 80 points of occupancy and generate adjusted EBITDA of 35%. And when these large assets run at these levels, they generate large volumes of cash. Now as we mentioned on the prior earnings call, our flow through is impacted by the incentive mansion fees…

Thank you, Colin. Good morning, everyone. In the second quarter, the company generated total consolidated revenue of $296.2 million, up 8.1% from the prior year quarter, and net income available to common shareholders of $51.3 million, or $1 per fully diluted share. The company grew profitability by 8% in the quarter generating $99.1 million in adjusted EBITDA. Adjusted EBITDA margin in the quarter was flat at 33.4%. for the quarter, the company generated $81.6 million in AFFO, or $1.59 per fully diluted share, a per share increase of 8.9% when compared to the second quarter of last year. Turning to the Hospitality segment results, the hotels finished the quarter on a same-store basis with RevPAR growth of 5.9% as compared to the prior year second quarter, while strong outside-the-room spend in group food and beverage increased total RevPAR by 6.4%. Attrition and cancellation fees collected during the quarter totaled $1.8 million. During the quarter, in the year for the year cancelations increased by approximately 6,700 room nights, driven by the 7,000 room night financial services group for August as Colin mentioned earlier. As Colin mentioned, the $1.9 million cancelation fee that has already been collected will be booked in the third quarter. This cancelation has an approximately 40 basis points impact on our full year RevPAR growth and is reflected in our updated guidance ranges which Colin shared a moment ago. Consolidated hospitality adjusted EBITDA grew 7.6% to $91.5 million, generating an adjusted EBITDA margin of 34.9%. During the second quarter, our entertainment segment revenue increased over 20% to $33.9 million and the segment’s second quarter adjusted EBITDA increased 13.5% to $13.2 million. Corporate and other adjusted EBITDA totaled a loss of $5.7 million in the second quarter, compared to a loss of $5 million in the second quarter of last year. Moving on to the balance sheet, as of June 30, we had total debt of approximately $1.49 billion. Net of unamortized deferred financing costs and unrestricted cash of $50.7 million, net debt outstanding was $1.44 billion, including $373.9 million of borrowings drawn under our credit facility leaving $321.6 million of availability. On July 15, the company paid its second quarter 2016 cash dividends of $0.75 per share. It’s our current plan to distribute total 2016 annual dividend of approximately $3 per share in cash in quarterly payments in October and January for 2017. Any further dividend is subject to the Board’s determinations of the amount and timing of the distribution. Let me close by saying that the quarter was a solid one for our company and we’re all very proud of how our business performed, particularly against the uncertain economic and political environments that we are all facing today. We remain bullish on our outlook for the remainder of the year and are confident with both our hospitality and entertainment businesses are durable and uniquely well positioned for many years to come. And with that, I’ll turn it over to Colin for any closing remarks.

Mark, I’ll hold any closing remarks so we can spend a little bit more time on the Q&A. So Laurie, let’s open the phones up to see whether anyone has any questions. Thank you.

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

Hey, good morning guys and Colin appreciate all the color on the segmentation that you went over. Just want to ask on the in terms of the composition of your groups, do you see any changes on the horizon in terms of corporate versus association as we move later through the cycle or if the corporate softness persists, do you think there’s going to be a shift in the composition of those groups?

Chris, I can only talk about historical trends because we’re not seeing – in our sales production for the quarters, sales production from the previous quarter, stuff we have on the books. I think 2017 is doing slightly to association and corporate but not meaningful. In ‘18 it’s the opposite, more corporate. And I just don’t think we’re seeing any change in the behavior of the meeting planner who’s dealing with large corporate groups for ‘17, ‘18, and ‘19. Now we all know that that issue that you’ve just raised was a big time issue in our industry in ‘08 and ‘09 as we experienced the financial crisis, we saw the corporate organizations move to the sidelines. And fortunately for company like us through ‘09 and ‘10, we had a really strong book of association business that really sort of anesthetized the drop in profitability for our company. We materially outperformed the industry through that period of time. And one of the things that we’ve been encouraging our operator Marriot and the sales leadership over the last two to three years, this is one of the reasons why we insisted on putting back in place what we call our Seal Team 6, the group of folks that are looking for 1,000 room plus groups, because we wanted to make sure that our association production -- long-term association production, the stuff that we’re booking three, four years out was happening. And fortunately, we put that group back in place and volumes have gone up particularly in the 1,000 room plus and I think we have a pretty good solid book of – a good solid book of association business out three, four, five years from now. But in answer to your question, I don’t think Patrick, jump in here.

I mean there’s always the temptation to get a little carried away with driving rate with the corporate groups in the short-term, but we have made sure to Colin’s point, that we have put a substantial amount of association and smurf business on the books to protect us such that if we do see a downturn in the economy, there’s some certainty that we’re seeing in the short-term continues that we have taken all the appropriate set to protect ourselves but we have not seen the material shift as of yet as far as composition looking out.

And Chris the reason we went into painstaking detail on what is happening in our business is that we want everyone to understand that the issue as we see it today is this short-term corporate small 10 to 300 group which tends to be the more discretionary group rather than the big annual conventions and the farmers and the annual association meetings. They tend to be a little bit more discretionary and that’s the only area that we’ve seen some softening here over the last couple of months which seems consistent with everything else we’ve read from all of the other hotel companies that reported here over the last week.

Okay, very good. And just a follow up, wanted to ask about little bit about capital allocation. You guys have a very competitive above average dividend and you are producing a lot of cash flow, how do you think about may be additional share repurchase versus where do you want to be on leverage as we move on?

Well, Mark you can jump in here, number one, we believe we can run – our leverage levels are 4.5 times there or thereabouts and this is with the healthy book of capital what we’re in the process of deploying for Texas expansions and all of the other things that we talked about I don’t need to go through it. We’ve got a fairly healthy book of capital we’re expanding on projects or generating 16% to 18% returns for us and we think this is a very good use of capital. The other thing I will say to you is that we have possibly $75 million of availability on our stock buyback authorization that our Board approved. And as the shares move around, the stock moves around, we will keep our eye on it and we will look at opportunities when we see material weakness in our stock price and we are operating today at an industry in choppy waters and I’m sure, the worse – chopping. But we -- the way I would say this is we really do believe in a long-term of this company. We think we’ve got magical assets, particularly our entertainment business is growing really, really well. We as you say, we pay a $3 dividend, this hasn’t been goosed to try and secure investors into our business, this is what we have to pay and the outlook for our company over the next two to three years looks very, very good. And so we will look at bps in trading and use the availability when we think it’s appropriate.

Okay. Very good. Thanks, Colin.

Thanks, buddy.

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

Good morning, guys. This is actually Dany Asad on for Shaun. I’m actually going to follow up on Chris’s earlier questions. So Colin, when you were talking about the softness on the year for the year, just frame it for us, how much of can you give us like a -- how much of the overall mix in the year for the year, coming into any given quarter? And is that business negative on a year-over-year basis or is it just simply just growing less quickly overall?

Well let me do it on a 60,000 foot first of all, we go into a year typically with about 50 points of occupancy on the books which is very different to any of the other REITs. 50 points of occupancy on the books, we tend to do somewhere in the 15%-18% occupancy points in leisure which skewed really more towards traditional leisure rather than corporate leisure. And then, the balance of the business about 10 points of occupancy tends to be in the year for the year group business. That actually, that’s the way, Patrick Chaffin that’s the way it works. So do you want to just go a little bit more granular with Dan here and talk about the reach that we have going into a quarter on the in the year for the year more corporate business?

Yeah, absolutely. To frame it up to your question a little bit earlier, if you look at it, we haven’t seen corporate grow this year at the frenzying pace that we saw in 2015. But if you look at, the definite that we’ve put on the books in the year, for the year versus ‘15 and ‘14, it still shows growth over ‘14 just not at the same levels that we saw in ‘15. And so, we’re not saying that it’s a full stop, we’re just saying that it’s not growing at the same rate that we saw in ‘15. Now to your point as far as how much business do we have left to book in the year, for the year, I mean if you look at the remainder of our year where we stand right now, we’re looking at 1 to 2 points of occupancy remain, a very small percentage or 1.3% of our total room nights for the year. So, it’s not that it is a tremendous amount left to book, it’s just that that last few points really help us determine to what extent we can grow in individual quarter.

On average, our 10 to 300 production on a month by month basis, when we were running these hotels back in ‘10 and ‘11 go back to ‘09, we were producing in the 23,000 to 25,000 room nights a month in the 10 to 300 range. We had a problem when we first converted to a REIT and we made some corrections with our operator and those numbers sort of dropped back down to the 15,000 a month. What we’ve seen I think Patrick over the last couple of months is the numbers declining by few thousand production coming out of the regional sales offices, and that’s what’s given us a cause for a little bit – that’s what causes the [indiscernible]. The third quarter end of the month in October and November which is really the only time when we get group production because we shift heavily to this festive season. But as Pat said, we’re still getting a lot of good bookings coming in but it’s not just in the same rate that we got last year. So it just caused us a little bit of a force year.

Got it. No, that’s very, very helpful. Thank you. And may be just as a follow up, are you seeing that trend across the entire portfolio evenly or are there any specific markets or properties that this is just a little bit more obvious to you?

I think we’ve seen it…

Across the board.

Yeah it has been pretty even for us across the board, across all four of our markets.

Yeah, we’re not seeing different production levels out of each regional sales office. I think that’s fair.

Got it, got it. All right. Thank you very much. That’s all for me.

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

Hi, good morning, guys. Sounds like you’ve been busy. Just may be to continue the group booking question I’m just curious, recognizing your comments on 2017 and 2018 bookings have been encouraging historically speaking, do you find it the 12% to 13% attrition rate in group in that rise in – cancelations has again I guess historically for a – of deceleration in bookings or any kind of realized revenues or is that not fairly kind of correlate to your experience?

Well what we saw Jeff if you go back and read the scripts what we saw in L.A was attrition rates climbing into the high double digit and we saw cancelations accelerating. And these cancelations were as a consequence of company saying we’re just not coming because we’re trying to save money. This is why we give you the, data we give you or try to, the cancelations that we have seen or the canceled, or the de-cancelation that we saw in the second quarter for the third quarter was not as a result of this economy, was a result of a merger between two companies. And running attrition rates of 12% it is not for shadowing doom and gloom. And the other thing that we saw in ‘08 was a decline in production levels of the long-term business particularly in the corporate sector, we haven’t seen that. And I know in your report you wrote this morning, we beat last second quarter on an easy comp, but 600,000 gross room nights in the second quarter is hell of a lot of room nights. And you got to remember we had a healthy beat in the first quarter and a tremendous beat in the fourth quarter of fourth quarter of last year. This is why we got 350,000 more group room nights there or thereabout on the books for future years than we did at the same time last year. So, I don’t think we’re seeing -- the way we analyze our business, we’re not seeing the world falling in here, world falling apart like 2’08.

Hey, Jeff, this is Patrick and just to expand on Colin’s points, as you’re aware, we always see attrition in the business it’s just a natural function of the group business. If you look back 2013 through 2016, we’ve gone anywhere from 10% to 13% in terms of attrition and as we just reported 12.8% this past second quarter is within that range, we’ve pretty much stayed within that 10% to 13% for the past three or four years.

That’s really helpful. Thank you for the color. And just to may be switch gears on the balance sheet side we were talking about this earlier on the call, Mark how are you thinking about managing the balance sheet for the may be commitment is the wrong word but just for the project in Aurora? I know it’s bit down the road but having that out there, does that lead you to carry lower leverage than you might otherwise, just to maintain some capacity or is it really not factored in at this point?

You mean in terms of potentially buying the remainder portion of it?

Correct.

I mean truthfully Jeff, it really doesn’t factor into the thinking at this point. Obviously if we bought the remaining portion, we’d be buying a significant amount of cash flow, because it would be an operating property and so, we would likely do that if we bought in would be some mix of debt and equity issuance. But you’re probably looking at in the early 2022, 2023, so it’s out a bit. We’re more focused now just thinking about our next maturity stack which is ‘19 and how we want to deal with that and how we do with some of the bonds we have – given where interest rates are.

Okay. And then I guess on a similar line of questioning and this is probably a good problem to have but, is there a size to the entertainment sector that you think you can ultimately grow to where the regular ownership within the REIT structure effectively becomes a problem, we’re just – there’s only hoping that you can have sort of non-compliant businesses. And I’m just wondering is there a time in your mind or a potential in your mind that the entertainment sector can be sort of so large and so successful that it might ultimately have to sort of be separated from the REIT?

Well we love this business and Jeffrey I can’t count the amount of times we’ve had this conversation every time we’re together. But the way we look at it is this, we’ve got lot of projects that are coming at us and we really haven’t done -- we really haven’t talked about – through the eyes of developers the potential to do more projects outside of Nashville and we’re going to start that process in New York City with a press conference that we’re going to hold on the development that we’re doing in Time Square. But, our goal I think is you know and most of our investors who talk to us about this know is that at some point this business has to be unhitched from the real-estate investment trust, it should not be residing in the real-estate investment trust and that’s why we’re working very hard on locking the growth opportunities at this business. And when our bankers tell us that the strategy that we have for growth and the growth curve of this business wants this business standing on its own and that business will trade well because of the growth characteristics of it, then we will unlock it and we will do it. And that’s – right now we’re focused on the growth curve and the activity and when we get there and the market conditions are right, we will absolutely move in that direction.

Certainly in the near-term Jeff, it’s not an issue for us from a compliance perspective. Keep in mind that that business has held in a taxable REIT subsidiary so it doesn’t affect the income tax, it does affect the asset – but given the size of our hotel assets, we have plenty of headroom and a regulatory issue wouldn’t force our hand to have to do something that wasn’t appropriate for the business or for value for shareholders.

Okay, that’s really what I was after, I was just curious. Thank you very much guys.

[Operator Instructions]. Your next question comes from the line of Patrick Scholes of SunTrust.

Hi, good morning. Just a couple questions here, it looks like you collected $1.9 million of attrition fees from this canceled group. What would you’ve estimated the profit if the group was to have arrived as intended, what would you had estimated the profit from the group?

You want to answer that, Pat.

Yes, I would tell you that the cancelation fee that we’ve collected Patrick essentially has covered our profit. We looked at the rooms revenue and the outside the room revenue for that particular group, we had really strong contract in place and I would say that we’re comfortable that, may be the group would have picked a little bit more when they were on property, but by and large, we’ve covered the profitability portion through the cancelation fee.

Okay. And next question here, on RevPAR guidance reduction, was that all entirely from this group canceling or if they had maintained would you guidance have been unchanged for RevPAR?

Yeah, so there is basically few components, one is the cancelation which as we already talked about 40 bp impact to the full year, RevPAR results or projections. But also then just as we’ve been talking about a slowing in the pace of short-term corporate bookings in the year, for the year. And taking into account the slowdown that we saw in that segment in the second quarter, we rolled that through into third quarter and fourth quarter expectations. And so you put the cancelation with the short-term slowing in corporate and that’s how we came up with the revised guidance on RevPAR.

Okay. And then lastly, could you just repeat, I know earlier in the call you said what your equitation for 3Q and 4Q RevPAR was, I just didn’t write them down, quick enough if you could repeat those please?

Yeah, sure. It was what I said in my prepared script was RevPAR third quarter in the 8% to 10% range and because we have 14 I’m doing this for memory, 14 – and plus more group, room nights on the books and that’s after the cancelation. And flat in the fourth quarter where we had a tremendous quarter last year if you may remember Patrick, we had a 9% plus RevPAR growth, very heavy. We had one of the best books of corporate good business last fourth quarter 2015 and this year, we’ve got about, I think it’s about 14,000 as well less room nights on the books for the fourth quarter. And so we’re seeing flat RevPAR growth in the fourth quarter, that’s how we’ve dissected it.

And Patrick, without a doubt, the fourth quarter is additionally impacted by the fact that we have almost 7,000 rooms night out of service to Opryland as we finish up the renovation of the rooms of the cascade section of that hotel. So that additional roughly 7,000 rooms out inhibits our ability to fill some of those patterns.

Okay, good. I mean I have one last question on the attraction segment with the revenue being up 20% year-over-year, just that was mostly that growth rate was mostly from the Wildhorse renovation opening?

Well no, we didn’t open the Wildhorse till early June, middle May, early June.

Okay.

It’s really the Ryman and its retail and its Opry it’s all of the rest.

We’ll see pick up on the backhalf with the expansion of the Wildhorse, the renovation of it.

Thank you, that’s all.

Your next question comes from the line of Chip Oat of Tradition Capital Management.

Good morning guys. Thank you. Colin, my question is regarding possible opportunities for solid acquisitions from Starwood you mentioned that literally in passing at a conference in June. Could you expand upon that at this time?

Well I think I’m trying to do this for memory and being an old guy like I am, my memory doesn’t sort of quite function the way it used to, but I think the question was asked about acquisitions and what I said that given Marriot’s proposed acquisition of Starwood, we believe that there would be some larger group hotels that we would be more receptive to look at now they will be under the stewardship of Marriot’s simply because such a key component of our group booking strategy is what we call the rotation strategy, a group books in one hotel and then we’ll go to a second and a third and a fourth. And so we like the idea of a few of these big group hotels that frankly we’ve passed on in the past being coming on to the Marriot’s stewardship. So if a good Starwood big group hotel in a market that we want to be in comes up, we would now take a real serious look at it.

Okay. So well, maybe I’ll ask that question again in a couple of quarters. Thank you.

Thank you. Thanks for asking the question. Thanks for being on the call this morning.

Thank you. I’ll now turn the call back over to Mr. Colin Reed for any additional or closing remarks.

Okay. Well look, I’d like again to thank everyone for being on the call this morning. We had a good second quarter however you look at it RevPAR wise, booking group, long-term booking wise. Our entertainment business is doing very, very well. We’re very, very excited about the all of the different group – growth projects that we have on the books and very much looking forward to the next one to two years. So, look forward to being with you over the upcoming conference season in September and October. Thank you very much for joining us.

Thank you for participating on the Ryman Hospitality Properties’ second quarter 2016 earnings conference call. You may now disconnect your lines and have a wonderful day.