Welcome to Ryman Hospitality Properties Fourth 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, 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 4544935. 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

Thanks, Scott. Good morning, everyone and thank you for joining us. Well, another record year is in the books for our company, as we exited 2018 with a flourish, opening two of the most exciting investments in our history in December. The Gaylord Rockies and SoundWaves at Opryland. We started the year on a similar note by opening the Gaylord Texan expansion in May and beginning work on our Gaylord Palms expansion. And of course, it was an equally exciting year for our Entertainment segment as we opened Ole Red Nashville and announced two more Ole Reds in Gatlinburg and Orlando. And by the way, as all of this was going on, we set yet another record for full year revenue and adjusted EBITDA for our company, while also booking record fourth quarter rooms production for our hotels. And the most exciting thing is, there is a lots more to come and 2019 and 2020 are shaping up really well. But first let's talk about the fourth quarter for a moment. Now we told you in November that we expected low single-digit RevPAR and total RevPAR growth in Q4 for our Hospitality segment and we came up a bit shy of that with RevPAR up 0.03% and total RevPAR slightly down at 0.7%. Now this shortfall was not group driven. Group remains in great shape and we'll talk about that in a short while when we get to our bookings performance. Instead, it was the less predictable portion in our business which is the leisure transient segment over the holidays, primarily in December that came up a tad short of our expectations. Now you will recall that the nation ran into a rather abrupt stock market decline in December. From the markets close on Monday, December 3, through Christmas Eve,…

Thanks, Colin. Good morning everyone. In the fourth quarter of 2018, the Company generated total revenue of $360.6 million, up 4.5% from the prior year. For full year 2018, total revenues increased 7.6% to $1.28 billion. Net income available to common shareholders increased 120% in the fourth quarter to $159.2 million and increased 50% for the full year to $264.7 million. The large increase in net income is the result of a $131 million gain the company recognized in the fourth quarter of 2018 on our purchase of increased interest in the Gaylord Rockies. This purchase effectively mark-to-market our previous equity investment in the joint venture at the nearly established valuation for the completed hotel. This gain appears in the income from joint ventures line where it is partially offset by the small operating losses at Gaylord Rockies that occurred prior to our majority acquisition. This gain was also partially offset by impairment charges, which were primarily associated with the write-off of our remaining investment in Opry City Stage. Now moving on to our non-GAAP metrics, the company generated $108.7 million of adjusted EBITDA on a consolidated basis in the fourth quarter, a 2.3% increase over last year. This translated to an adjusted EBITDA margin decline of 70 basis points in the fourth quarter. In the Hospitality segment, fourth quarter adjusted EBITDA flow-through was impacted by a year-over-year decline of approximately $700,000 in Gaylord National bond interest and a year-over-year decline of approximately $800,000 in attrition and cancellation revenue, which have been favorable last year due to the timing of receipts of two large cancellation fees. The balance of the margin headwind and hospitality was higher sales commissions given the terrific production in the quarter. The year-over-year increase in incentive management fee and increased labor cost due to wage increases…

Thanks, Mark. With a lot of detail there with all of the projects, we've got going on the changes to the reporting standards with EBITDAre, and of course, dealing with the full year and guidance. So let's open up the -- Larry, if you could, let's open up the call for any questions and move this along.

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

Hey, good morning, guys. And congratulations on the successful opening of the Rockies and also the SoundWaves. I wanted to ask you as it pertaining to the Rockies, I know you've given us a lot of data about how many new to the brand groups that hotel is bringing in. Have you seen any uptick in those new to the brand groups booking at the other hotels in the portfolio?

Chris, this is Colin. Yes, we're pretty excited about what we're seeing here in Colorado. Pat, you want to get into the detail on this?

Absolutely. Good morning. Chris. Yes, as you've mentioned in the past, we've talked about how many our new acquisitions to the brand via the Rockies property. It's about 40% over the course of the days that we've been booking in. Of those about 60% of those are multi-year rotational groups. So a very large chunk of those are rotating in either from other Gaylord properties or coming into Rockies and then rotating into the other hotels, so this 60% is slightly higher. We're actually a little bit above 60% right now. It's a slightly higher than the other hotels. So we're getting a good influx of folks who were first coming to Rockies and then choosing to go to our other hotels as well.

And I know Patrick this weekend, we have -- we've got invites out, I think to that 500 meeting planners for this grand opening and we expect several hundred to be there to see this hotel, which is -- it's pretty good.

Yes. No I appreciate the color. And just another one for you. Colin, now that you've got SoundWaves opened in Nashville. Do you think that property is kind of strategically complete? Or do you give thought to maybe adding some other I think you've talked in the past about maybe a little bit of alternate hotel product on site?

The comment I would make here probably is going to come back to bite me. But I suspect with what is taking place in this Nashville market, airport expanding, more flights coming in, more people from all across the globe wanting to come here for music. My sense is that when people really start to see the SoundWaves and this hotel I -- last night I was -- this is just anecdotal I was with the head of British Air for the U.S -- head of sales for the U.S. and he was saying to me how stunned he was when he walked into Opryland for the first time and saw this hotel. And I think we're going to see a lot more of that. So my view is that probably in the next 12 to 18 months, we'll be talking about more hotel product in and around this hotel to fulfill I think the demand curve that we're going to be seeing here.

Okay, very good. Thanks guys.

Thank you.

Your next question comes from the line of Smedes Rose of Citi.

Hi, thanks. I was wondering just on the Rockies a little bit more. Maybe you could talk about kind of the -- your -- the initial opening in kind of how that went overall sounds like it's pretty successful, but what you're doing kind of on the transient side of the business as well?

Yes. So I would say to you Smedes, good morning. We'll probably be seeing you next week. I would say to you that as we sit here today looking back on what occurred in the 18th of December and subsequently, this is probably been our best opening over the last 10 years. And I think, we genuinely are very happy with the way it's gone. We've got a good management team in place. Mark has done a really good job here and everything is moving along as we expected. And I think this hotel -- it's quite an extraordinary this hotel I feel in the first quarter -- this first quarter of 2019 is going to make a bunch of money. And this is very unusual for a big group hotel like this. The management team seems to have its arms around, the cost structure of this hotel. And the big unknown for us a year ago was how would leisure perform. And I know there have been discussions about because of the tremendous amount of success we've had on group, should we put more hotel product here, should we increase the size of this hotel from 1500 rooms. And what we have been saying to our partner and I think publicly when we've been asked this question is we wanted to see how leisure performs. And so with that as a backdrop Patrick why don't you give Smedes a little bit more color on where we are in leisure?

Absolutely! Good morning Smedes. Yeah just to echo what Colin has already said the team has done a phenomenal job and we've been very encouraged by what we've seen on the transient side. Just to give you some numbers, in December alone, we did about 4800 room nights in terms of transient versus an expectation of about 2500. So a really strong result in the very first stub period which again was from December 18 through December 31. And again that's a soft opening period that we used to really work out any kinks that might use us in the hotels, so that we can make sure that when our group guests arrive on January 7 which is when they started coming the hotel was operating smoothly and efficiently. That continued again into January. January we did about 5000 transient room nights versus an expectation of about 3000. We have been yielding up on transient rate and we are encouraged by what we've seen thus far, so a good soft opening, good transient response. Again on the group side as Colin has already talked about we opened with 1.2 million room nights on the books. So on the group side things are going very well. We've had a couple of Full House groups in-house already and feedback has been very positive.

Great, thanks. And then I was just wondering, Mark you mentioned that your guidance includes wage increases for the year. What exactly -- what sort of percentage are you just assuming across the portfolio?

It varies by property.

Right. But across the portfolio?

Yes. Across the portfolio, it's going to run probably about 4%.

Great. Right. Thank you, guys.

Thanks, Smedes.

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

Good morning, folks. So, Colin I've got three or four and hopefully we can do them very quickly. But any pre-opening cost for the Rockies in this weekends event in your -- embedded in your G&A?

In G&A at corporate no only the cost of us -- you know the cost of, I don't know how many people from corporate probably 10 people Patrick that's it going? But the hotel had planned this event two years ago. So the performer that we have on Saturday night and the meeting planners in the rooms and the food and beverage that's all embedded in the pre-opening budgets that we had put in place.

Okay. Looks like Lincoln Property is set to kick off some development on your land in Nashville. Can you talk about your participation and maybe your investment in the development of that 900-plus acres?

Not 900-plus acres. We've got a 100 -- somewhere between 100 and 120, 900-plus units. Yes.

Yes.

So what we've been really patient on this land here, Bill, because we've been watching what has been taking place here in Nashville from a development growth perspective. And as you know, we were one of the three sites that got material Amazon development here. And so we've been patient because we believe this land to be valuable. So the way this works the -- I think, Phase one is about a 10-acre development. What we have done is we've rolled our -- actually we're selling our real estate Phase one to Lincoln, but we are also extending part of that money on infrastructure roadway systems within this land. And we will determine on Phase two and Phase three and Phase four whether we roll our real estate into the investment depending upon what the investment is. So we think if we were to sell the real estate for the price that we -- the first 10 acres has sort of gone for -- this is about $50 million -- $45 million $50 million real estate harvest for us. But our sense is what we want to make sure happens here Bill, the Phase one is going to be apartments, the Phase two will be the way this thing is we've got it laid out with Lincoln, it's going to be office buildings and stuff like that. What we want to make sure is what goes on that land is it will contribute to the continued growth of Opryland.

Okay. Appreciate it. One more question for me. And I apologize if I missed this earlier, but your fourth quarter was obviously softer and your forecast for the fourth quarter of 2019 is flattish. Is this indicative of the challenges that Marriott is having in getting up the leisure and transient guests and is it showing maybe the age of ICE!? Or is there -- what's going on that the fourth quarter is just struggling to go in here?

Well, this fourth quarter was very unusual, because if you recall, we did cover this in our remarks, Bill. But the fourth quarter from the beginning of December to the Christmas Eve, the market was off, the stock market was off 15.5% nearly 16%. And if you look at the data in the Orlando market, the Orlando market all across that market was up materially. We actually -- it was the Orlando hotel that drove the minor discrepancy, and let's not over blow this, the difference between what we thought was going to happen and what happened was a relatively minor. But it was in that Orlando market and a little bit around one of the programs that ICE! -- not ICE!, one of the programs here in Nashville which was this SERC project -- SERC program which was, Patrick, I think the second or third year.

Right.

And that came in, I don't know, 15,000 less seats sold than before. And so, we're looking of what we do to change all of that. But our guidance -- when we do guidance for this first quarter, we always tend to be flattish for the fourth quarter simply because so much of that fourth quarter revolves around the leisure customer. And so, I don't think I would read into anything about ICE! not being successful. We actually had some good ICE! numbers this year, right, Patrick?

Yeah. In fact, just to add to that. ICE! actually outperformed this year versus last year, so there was a year-over-year improvement. Yes, we are always looking for things to enhance the value proposition for transient guests coming to the properties to experience ICE! and the other offerings and we'll continue to that as we going to 2019. To Colin's point this was our second year of theater show SERC that occurred here in Nashville. It will not repeat again in 2019. We'll have new show, so we expect some lift from that as a result. And the other thing I would tell you is remember that our October, November and December are operating at very historic highs. I mean, 77%, 78% occupancy for the quarter. So pretty tough comps for them, but then a little bit of softness that we saw here in this fourth quarter on the transient side.

Bill, just repeating, we grew our market share in all four markets. So this was not a specific brand issue.

Yeah, it is not a Marriott issue or ICE! getting tardy. But again, Bill, hate to say this, but fourth quarter is one of the most profitable quarters and …

Right.

… it is -- and it shifts from group to leisure. So, we always to tend to be, looking 12 months out, we always tend to look at the fourth quarter on a relatively flat basis.

Yeah. That's helpful. I was more concerned about the 2019 fourth quarter guidance and that just occurred 2018 fourth quarter. That's helpful. Thank you. That's it for me.

Thank you.

Your next question comes from the line of Patrick Scholes of SunTrust.

Good morning.

Good morning, Patrick.

A couple various questions here for you. In January, have you seen any lingering impact from the government shutdown on your DC property?

No.

No? Okay. Second is concerning renovation disruptions at your two properties this year. Are you able to quantify that at all as far as either EBITDA impact or RevPAR impact?

Yeah, Pat, you want to take that?

Yeah. Hi, good morning, Patrick. So, we have the Magnolia corridor renovation at Gaylord Opryland that will have about 32,000 rooms out of service. We have a light renovation sort of an interim renovation going on at Gaylord National we're just putting some new TVs and new mattresses in until we come back and do the full renovation which will not start until 2020. So, from Gaylord Opryland's impact, it's primarily going to be around the transient side of the business, as our design and construction teams worked real closely to ensure that they do minimal displacement to groups. And I will tell you actually we're going to shutdown the renovation at one point to make sure that we accommodate very strong group demand in certain periods of the year. So, we think that the displacement is going to be minimal.

Okay. Thank you for the color on that. And then one last question sort of a -- from a high level, and keeping in mind we're -- we represent Wall Street so we're never satisfied. My point being Colorado seems to be growing quite nicely. What's next? What's the next big project anything going on with Chula Vista, or where else are you thinking?

Well, you know, the reality is you guys -- you are accurate. You always comparing us to if you've grown X why aren't you going Y and we understand that. But what I would say to you is that I'm going to take this from the 60,000-foot perspective. Our strategy has been to build something that is differentiated and sustainable. And that's what we've done here with this company and you look at our RevPAR growth for last year in 2018 what we're projecting here for 2019 the stuff on the books. We've got hotels that are one of a kind and what we've been doing with these hotels is building sort of an economic fortress around each one of them. We're going to be opening SoundWaves outdoor come May. We've got the full year this year of Texas. We've got the full year this year of Denver. Denver in 2020 because of the tremendous amount of business it’s got on the books will crank up. I will tell you that we are looking at how we expand that hotel in Denver. We've got an expansion underway with the Palms with more meeting space at the Palms. And then we've got all of this stuff going on in our Entertainment business, but you're not going to go -- you're not going to see us go buy 500-room hotel in a market just to bring a new hotel on. We want to build and we want to own assets that are differentiated and sustainable. And I think the strategy that we've been on here certainly since we created the Gaylord brand has created disproportionately more returns for our shareholders than our competitors and for theirs, and so we're going to be disciplined about this. Will we -- are we looking at Chula Vista with our partner in Denver? The answer is, of course, we are, but this is a long process. Dealing in Southern California is no ride in the park and or walk in the park, whatever the expression is. So, yeah, I mean, we've got a lot of good things going on here and we expect to see really good growth in our company here over the next two to three years. And the other thing I would say to you is we've increased our dividend here now six consecutive years and because of this discipline. So, we've got a good two or three years ahead of us here.

Okay. This all sounds great. Thank you.

Thank you very much.

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

Hi, everyone. Colin and everyone, I think you've covered a lot of the ground. But I had just one specific one. We've heard a little bit about just staffing and wage pressures specifically in Denver, given how tight the labor market is up there and how strong the local economy is? This sort of implied, and I think what you already seeing in your ramp-up, and Colin, I think some of the comments around profitability. But just anything statistically to call out there that has been concerning to you? Or are these all things that are normal growing gains, but at the end of the day you're comfortable with the way the assets are ramping.

Yeah, when you -- Shaun, it's a good question, really good question. When you've got sort of on a national level 3%, 5% whatever the unemployment level is these days, it is difficult. And when you're in these markets that are really high quality growth markets like Nashville, Orlando and the Denver markets, there's good news bad news. The good news is you're in markets that are growing like hell. The bad news is that you are in markets where the amount of people that are moving into these markets to be employed is a little less than the amount of demand there is for jobs in that markets. And so, what we're happy to do is what we've been doing for a long period of time. We are -- We've created a culture in our business that is second to none. But on the other hand and we treat our people, Marriott has done a really good job on this and in our Entertainment business, we are doing a really good job on this. And we are retaining our people, but we're also having to deal with the realities of low employment and hot markets. And so, in Orlando when Disney goes to $15 it announces it's going to $15 an hour of minimum wage, we can't stick our head in the sand. We have to deal with it and that's what we're doing. But the good news is that our forward book-of-business, our rate growth is more than adequate to offset these realities of a low employment nation. And in Denver, you want to talk about Denver Pat just a little bit. It's a good question Shaun you've asked.

Yeah. The challenges of the Denver market is, if you compare it to Dallas where we operate it's a much smaller MSA. So Dallas' worth is roughly 6.8 million people. Rockies is in the aurora Denver, MSA, which is only about 2.8 million. So it's just a smaller area from, which to draw labor force. We've been very pleased as we've talked about in prior calls we've been able to pull some of the best and brightest out of the hospitality industry in that market to staff our hotel with. But the trick is okay we have a higher wage rate there. We have to make sure we drive better rate. And I will tell you that group rate on the books at Denver is the highest across our brand so rest is having success doing that. To Colin's point on Orlando Disney continues to move up, but then Disney is also now taking action to increase rate across their properties, which enables other hotels to do the same and that's what we're moving on as we book future room nights for that hotel. Here in Nashville very popular market. We do think that wages are going to stabilize in 2019 from the pretty dramatic increases we've seen over the past few years. But again all of that demand is helping to drive our future rate. So we're taking action to make sure we offset it with the rates. Nashville is a little bit different because it's a union environment but the reality is we've been dealing with that since we've been open. So the wages there we've been taking its ride each year since we opened.

And Shaun, I can't under-stress or over-stress the importance of the culture that is being created in these businesses. And where we have this stars first in our hotels business and our people first in our entertainment business. And that at the end of the day when people come to work and they feel happy and loved and cared for if everything else is equal they're going to stay with you. And so we've spent so much time as a company trying to build this internal culture that creates this retention of our people.

Thanks for all the color. I’ll look forward to seeing in the next earning.

Good. Thank you. Look forward to seeing you there.

[Operator Instructions] Your next question comes from the line of Chip Oat of Traditional Capital.

Good morning. Thank you. I have 3.5 questions. I guess, you already answered half of one. First is easy, hope we'll see you at REIT week in New York in early June. I think you went there last year and you always draw a good crowd.

Yeah. It's a shame we're doing it where we're doing it. But it's a shame we -- we're not doing it at a world-class hotel. But anyway keep going.

Well, then you guys need to build one there but that’s probably 2025 or at least. The stock is done quite well since literally the day of the recent Amazon announcement about New York City. There's a lot of good things going on in Nashville. So you answered this part of my question about Nashville. Can you see the National Harbor resort picking up some business just because Amazon is putting a lot of people in the Northern Virginia right across the water from you?

I mean, we see over time with Amazon doing what they're doing in that northern Virginia market that is going to be overall good for the underlying economics of that market. It's going to my sense is when a company like Amazon makes a decision to go into a city and this is not -- please don't think I'm getting political here about New York City. One of the great things that we loved about Amazon coming to Nashville is it sends a signal to the planet that Nashville is a relevant city when it comes to one of the great world-class companies on this globe. And I think in Northern Virginia that will catch a lot of people the decision by Amazon will catch a lot of people's attention and I think overall it will be good for the economic well-being of that region. So as a consequent over time that should be good for the National Harbor resort and we're quite pleased with how Nashville -- National Harbor is performing. This will be a good year -- Patrick 2019 will be a good year for this hotel. And we're booking a lot of forward group business into this market. If only our politicians in Washington would get back to work and create a more stabilized environments for the DC area things would be a lot better.

Well I lived there. So I wouldn't count on that. Where I'm going with the question is if we assume good things on the revenue side, are there expansion CapEx things you can do at National Harbor to maximize the profitability on that? Or have you done pretty much what you can do there?

No. So the hotel's occupancy is running somewhere between 70 and 75 points of occupancy. So de facto on any given night, we've got 500 rooms available because we have 2000 rooms’ right? A 75 points of occupancy that's 1500 rooms sold every night. So we have -- as the economic environment improves and that Northern Virginia DC market, we have the ability to grow profitability without doing -- without touching that hotel, but on the other hand, we have a piece of land across the street where if we wanted to we could build another I don't know 200, 300 rooms on that piece of land. But that's not in our plans right now simply because we have -- we want to get that Washington Hotel pushing 80 points of occupancy. But we have the potential to grow the profitability of that hotel fairly materially without doing any structural thing.

Okay. Good. And last question regarding competition it has two parts part of the thesis is that they're not building properties like yours at least not outside Las Vegas. It's is that still the case? Are you really not seeing any new construction? And the second part of the question and it's my last question is Park has stated that they are migrating or want to migrate their business model to the extent that they can towards the large conference business that you do so well. They appear to have three may be four properties in the continental U.S. that could accommodate that business model that push, so clearly they're going to put marketing and advertising muscle behind it. You welcome the competition, but what do you think about that?

Yes. Well on the competition -- on the competitive supply, you're 100% right. There's very, very little large hotels being built in the United States and there's all sorts of reasons for that structural reasons, the big C-corps are out of the business of sponsoring this stuff. And as most of the big developers like us have converted from a C to a REIT, so we don't see a lot of big hotels being built. In terms of Park, look I know the CEO of this company Tom Baltimore, he is a very smart true, fine operator and I like him a lot. And I think that Tom has sort of looked at what we've done created this rotational strategy. And Patrick talked about it when we got a question earlier about rotational business that we picked up by moving into Denver and I suspect Tom is looking at that and thinking about the opportunity. But here's the thing, in this country, in America there's 26000 of these large groups that rotate from market to market. In our five hotels, we want to do somewhere between 70 and 100 of these groups a year, right? So this is a huge market and even if they got their four hotels pristine and beautiful and focused and marketed, it is not overly competitive to us. And so we -- I say to Tom bring it on.

Okay, thank you.

All right. Operator Larry, I think its top of the hour. So I think we’ll close the questions down. And if anyone -- if any folks on the phone have questions they know how to get hold of our Mark or our IR folks. And I know next week I'm going to be with Patrick at the conference with Citibank conference in Fort Lauderdale. Mark is going to go do the Raymond James conference, so we're going to be out in or around our investment community here quite a bit over the next two or three weeks. So we welcome meeting investors face to face and talking about continuation of our strategy. So thank you for being with us this morning and look forward to seeing those of you that are going to Denver this weekend and those of you that are going to be at these investor conferences next week and the week after. Thanks a lot.

Thank you for participating in the Ryman Hospitality Properties fourth quarter 2018 earnings conference call. You may now disconnect.