Welcome to Ryman Hospitality Properties Third Quarter 2018 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, Executive Vice President of Asset Management; and Mr. Scott Lynn, Executive Vice President, General Counsel and Corporate Secretary. This call will be available for digital replay. The number is 800-585-8367, and the conference ID number is 3459129. 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 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 an exhibit to today's release. I will now turn the call over to Colin.

Good morning, everyone, and thank you for joining us on the call today. FYI, travel schedules necessitate Mark being at another location this morning. And so, he is going to be dealing with his piece remotely. First of all, I want to thank you for all of you who attended our Investor Day recently here in Nashville. It was an enjoyable and productive event certainly from our perspective. Now, those of you who have been following us for some time, have long heard us say that the third quarter of 2018 will be our slowest quarter this year from a RevPAR perspective. We long anticipated and guided for a slight decline year-over-year in RevPAR in this quarter. The culprit was one very large group cancellation late last year that was scheduled to travel in this year's third quarter. This was not a macro-related cancellation, but a large and loyal customer that was undergoing a short-term reorganization process and postponed their A team meeting, but has already made plans to resume travel with us again in future years. And yet, despite this gap and despite Hurricane Florence's arrival, which costs us an estimated 2,300 room nights and a little under $1 million in revenue, mostly at the National, the third quarter turned out to be our best third quarter on record. Even though we had a very slight decrease in RevPAR for the third quarter, what's really important in our world is total RevPAR. And when you look at the very strong banqueting performance from our customers and a higher mix of corporate customers than Q3 2017, the net result was 4.7% total RevPAR growth, which exceeded our own internal projections. And to top things off, our hospitality adjusted EBITDA margin came in very nicely, up 110 basis points over last…

Well, thanks, Colin. Good morning, everyone. In the third quarter, the company generated total revenue of $292.2 million, up 10.4% from the third quarter of 2017, driven primarily by strong outside-the-room spending from our group customers in our Hospitality segment as well as the basket of the first full quarter of operation of Ole Red Nashville in our Entertainment segment. Net income available to common shareholders of $22.6 million or $0.44 per fully diluted share was down $1.3 million or $0.02 per share due to the $4.5 million non-cash impairment charge related to our decision to temporarily suspend operations at Opry City Stage. Adjusted EBITDA of $84.7 million represented an increase of 12.1% or $9 million compared to the third quarter of 2017. In terms of AFFO, the company produced $63.4 million, a 13.3% increase over the third quarter of 2017 or $1.23 on a fully diluted per share basis. Moving specifically to our hotel segment both attrition and in year for the year cancellations in the third quarter of 2018 improved. Attrition fell over 300 basis points to 12.2%, the cancellations were lower by over 5,400 room nights. We continue to see no patterns or trends in our attrition and cancellation data that would indicate any concern, despite the recent stock market volatility and election noise. Hospitality adjusted EBITDA in the quarter grew 12.6% to $78 million as a result of strong outside-the-room spending and very good margin performance, up 110 basis points. As for our Entertainment segment, revenues for the second quarter increased 22% to $43 million. And segment adjusted EBITDA in the third quarter decreased $700,000 to $12 million. Growth in our same-store Nashville asset plus the contribution of Ole Red drove the top line, while the losses incurred by the Opry City Stage prior to our…

Thank you, Mark. Now, I think what we'll do is we'll open the - Maria, we will open up the call for questions. And Patrick and we'll talk about a couple of things, the SoundWaves and the full book of business. So, Maria, let's open it up, please.

The floor is now open for questions. [Operator Instructions] Our first question comes from the line of Chris Woronka of Deutsche Bank.

Hey, good morning, guys. You made some really nice progress and have some good momentum on the out-of-room spend. I was just curious, can you talk a little bit about how much of that is maybe favorable mix and how much of it is maybe pricing increases? And how you feel about it looking forward?

You know, most of it is mix. Pat, do you want to take that question for Chris?

Absolutely. Good morning, Chris. This is Patrick. To your point, it is primarily the result of favorable mix. As you look at the quarter for us, we did benefit from the increase of corporate group room nights. It increased about 17,000. We did have a decrease in some of our Association and SMERF groups. But that improvement in the mix is what drove the majority of our improvement outside the room. We continue to move pricing as the opportunity arises, but that's really not what drove the growth that we saw in Q3.

Okay, that's helpful. And then, Patrick, I'll give you the SoundWaves question. I guess, my angle on it is, kind of, how you internally underwrite, whether it's some of the take rates or the pricing or the bundling that you've been doing? And how much, I guess, conviction do you have that things will come out at least as good or better than you expected for, I guess, for next year?

Yeah, that's a great question. As we look at that, it's going to be a mixture - success for our us at SoundWaves is a mixture of both an increase of occupancy on the transient side as well as an improvement on rate for both group and transient, because what this will enable us to do is drive additional rate as folks see additional destination appeal at Opryland, as well as add on additional days from some of our group customers, and thus, drive the rate as they see an attractive reason to bring their families and stay a little bit longer. As we talk about SoundWaves, let me give you a little bit information, as far as how we feel about it right now. To date, we've sold about 3,300 packages. That equates to room nights, so 3,300 room nights have been sold. We are really just now into the primary booking window, because the primary booking window is about 30 days out. With those 3,300 packages, we sold about 10,700 tickets. And so, that includes both the packages on the transient side as well as some group sales. On the group side, we're very encouraged, because we're really only began to tap the opportunity to sell this to our groups via site business that they're making for the future as well as reaching out to groups and saying, hey, this thing is just about finished, it will be ready for you when you arrive. And so, over the past two or three months, we've began selling that to groups and have been encouraged by the results. 70% of our current bookings are for December, which is slightly ahead of the target that we have for December. The parties that are traveling, about 64% of those are parties of three or more. They're staying for two nights or more. And we are seeing a significant ADR premium versus same time last year, as a lot of those customers are paying retail rate. So, again, on the front of driving ADR, we're encouraged with what we've seen so far.

And those numbers, Chris, you got to remember that we really only opened up the inventory on this thing, in what, early September. And so, we haven't really done any world-class photography yet to showcase this thing, and then the associated marketing that will go with that photography. So people have sort of seen the conceptual drawings. But the marketing is all going to really take place here over the course of the next month, as we do, as I said, the photography. But I can't impress on you at how extraordinarily beautiful this thing is. When I walked it on Friday, all the pools were working, the lazy rivers were working, the flow riders were working. The family party rooms that are below this facility have been put together with technologically a - it's hard to describe it as a games-room, because this thing almost looks like sort of NASA. But it is - we're very excited about it. And I think the early indications have more than met our expectations.

And the only thing that I'll add to build on what Colin had already said is we're encouraged by where the folks that are booking thus far are coming from, about 20% of them are coming from Tennessee. But we see a significant portion coming from destinations outside of our normal 300-mile drive market. So even with the limited exposure, now that we're just really into the primary booking window, we're seeing a lot of interest from places as far as way from New York, California, et cetera. And we even have a few international travelers looking in as well, coming from Great Britain and Canada. So overall, we're very encouraged by what we've seen, thus far.

Yeah, sounds very encouraging. I appreciate all the data points. Thanks, guys.

Thanks.

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

Hey, good morning, guys. I apologize, I was a little bit late to joining. I may have missed this in the upfront prepared remarks, Colin. But could you guys just give us a little bit more color on sort of the puts/takes as it relates to the full-year guidance? I know I caught - I mean, it is - it seems like the headline outside the room spend RevPAR number was probably at the high-end or certainly better than The Street expected, but how of much is this just timing or is there any pull-forward in this? Or is some of this going to flow through to the full year?

Mark, you want to take that or you want me to?

Do you want to go and take a stab at it, and I'm happy to jump in.

Sure. So, we always have a debate at this time of the year about the fourth quarter. And the primary reason for that is that so much of our business in the fourth quarter is leisure. The whole dynamics of our company change in this fourth quarter, as we put in place these programs, these ice exhibitions, the country Christmas. And I will say to you right now what we're seeing is we're seeing good leisure business being booked, our leisure room nights on the books as of the end of October, for November and December are up a few thousand room nights on this time last year. And our group business, we expect to materialize - our group essentially shuts off as we approach Thanksgiving. And I think that our guidance, we've sort of been cautious in our guidance, simply because of the just - the leisure nature of this fourth quarter. And as Mark said, there were two or three things in last year's fourth quarter that boost the level of profitability. We had a very large cancellation fee collection last year that improved profitability. So what we decided to do is keep guidance for the year. I don't think any of the things that occurred in the third quarter was - I think you described it as a pull-forward. The third quarter was the third quarter, we were pleased with the outside-of-the-room spend in that third quarter, and I expect that we're going to have a very decent fourth quarter and our guidance reflects that.

Great. Sorry, Mark.

Just two things I would add, obviously, Shaun, is that we didn't move the midpoint and we picked up the additional stub of the Rockies. But also, we had about $1 million of impact associated with Hurricane Florence. So when you look on a same-store basis and you consider those factors, I think holding the midpoint is a pretty good story for us.

Right, okay. Thank you for that. And then, second question, would just be, kind of, as we look at the - and again, I think you probably just touch on this in your prepared remarks, Colin, as you went through your room night booking statistics. But when we look at just the overall hospitality segment, the trajectory of what you're kind of showing is gross definite room nights and net definite. Those totals are down some in the quarter. I imagine you're up against pretty tough comps, and you're also - you may be more full than where you were last year, but can you just remind us of sort of why decline in the period?

Yeah, so this happens from time to time. And as I said in my prepared remarks, Shaun, and you can go in and listen to them. Q3 of 2016 was the biggest quarter - third quarter we ever booked. And Q3 2017 was only 1,000 room nights less. We come into this year with record room nights on the books and it's just the third quarter. There's a little breather being had here, but still the production is extremely good, 450,000-plus room nights. But what is really exciting for us - and by the way, the other thing I said in the prepared remarks, if you look at our year-to-date bookings this year, they're up on last year, which was a tremendous year in booking. So things are in very good shape. And we expect the fourth quarter to be a good fourth quarter, because of just the overall lead volumes that we are dealing with. But what is incredibly impressive, I think guess, Patrick, just talk about our [T-plus-1 and T-plus-2 - T-plus-0, T-plus-1, T-plus-2] [ph], what we have on the books for 2019 and 2020, which is frankly, tremendous.

Yeah, to build on that, as Colin mentioned, for 2019, where we stand right now. This is looking at the Gaylord Hotels for 2019 and this excludes Gaylord Rockies, we have about 48.4 points of group occupancy on the books, Shaun in that perspective. That is a slight improvement over the same time, where we stood last year heading into 2018. If you look at 2020, we're very encouraged. We have about 41.5 points of group occupancy on the books from a net perspective, which is a five-point improvement over where we stood the same time last year. So we're very good position for both 2019 and 2020. And you hear a lot of rumblings from folks about citywide calendars and the negative impact into 2019. We are very pleased with the fact that we have somewhat insulated ourselves from that, by the very focused and intentional way we're going about selling our group business over the past few years. The only thing I would add to that is, we started selling the Texan expansion in the third quarter 2016. And so, you add a 110,000 room nights of availability into every year going forward, as a result of that. And so, you're obviously going to have a period, where you filling a lot of brand new inventory up, until you reach a point of equilibrium. And so that's impacted the past two, third quarters.

Positively.

Positively, yeah. In addition to that, I would say, we talked a lot about trying to drive rate, given where we are from on the books perspective, the strength of our on the books group room nights. In order to do that, we've been shifting our sales team more towards a short-term focus, because those are the harder room nights to sell given how much we already have on books. And - but that enables us to drive rate, as we see compression occurring. And so we're making a calculated decision that we will have fewer room nights booked in some of these future quarters as we shift towards really driving the short-term and allowing us to drive rate in the short-term as well.

Thank you very much for all the color, guys. I appreciate it.

Thanks, Shaun.

[Operator Instructions] I'm showing no further questions at this time. I'd like to turn the floor back over to our management for any additional or closing remarks.

Okay. Well, that's good. I hope the questions are not a lack of appreciation of the company, but maybe the fact that most of you all attended our Investor Day here a few weeks back. So look, I think it's a good third quarter. We're looking forward to an exciting fourth quarter, and 2019 is shaping up to be really, really good for us. And so a lot of good openings happening here over the next few weeks and look forward to seeing all of you folks, may be some of you over the next two days in San Francisco at REIT Week. So anyway, look forward to seeing you then. Thank you.

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