Ryman (NYSE:RHP) Hospitality Properties (NYSE: RHP) has reported robust financial results for the first quarter of 2024, with significant achievements in its hospitality and entertainment segments. The company experienced record first-quarter results in same-store hospitality Average Daily Rate (ADR), revenue, and adjusted Earnings Before Interest, Taxes, Depreciation, Amortization, and Rent or Restructuring costs (EBITDAre), along with high banquet and audiovisual revenues.
Despite facing weather-related and construction disruptions, Ryman Hospitality remains optimistic about its group segment, reiterating its full-year guidance. The company also highlighted its strong balance sheet, recent financing activities, and liquidity, as well as its plans for future investment and expansion.
Key Takeaways
- Ryman Hospitality achieved record first-quarter same-store hospitality ADR, revenue, and adjusted EBITDAre.
- The entertainment business set a new first-quarter record for adjusted EBITDAre.
- Challenges included weather and construction disruptions.
- The company completed a $1 billion private placement of unsecured senior notes and repriced its corporate term loan.
- Ryman Hospitality expects mid-single-digit same-store hospitality RevPAR growth and high single-digit total RevPAR growth in Q2 2024.
- The net leverage ratio was 4.3x, within the targeted range.
- Free cash flow of $500 million to $550 million is projected for 2024, supporting dividends and capital investments.
- The company plans significant investments in both its hospitality and entertainment segments.
- Strong group performance and catering bookings are expected for Q2 and Q3, with a historic April performance.
- Room additions and enhancements are planned for the resort, with successful cross-brand bookings.
Company Outlook
- Ryman Hospitality maintains full-year guidance with significant visibility into future bookings.
- A strong recurring revenue stream is expected, with multiple investment opportunities.
- The company anticipates investing approximately $290 million to $360 million in hospitality and $70 million to $80 million in entertainment in 2024.
Bearish Highlights
- Weather and construction disruptions posed challenges in the first quarter.
- Transient demand is normalizing in certain markets, requiring strategic focus on rate and group business.
- Adjustments to Q2 and Q3 outlooks account for continued softness in transient business.
Bullish Highlights
- Ryman Hospitality reports the second-highest same-store hospitality banquet and AV revenue.
- Strong performance in April, with expectations for it to be the best April in company history.
- Positive performance and expectations for rotational business at Gaylord Pacific.
Misses
- The company experienced lower room nights in Q1 due to funnel clearing in the previous quarter.
- No material changes in consumer behavior in the entertainment business have been observed.
Q&A Highlights
- Colin Reed confirmed mid to high-single digit rate growth for T+1, T+2, and T+3 on net bookings.
- The company is attracting premium association and corporate groups, with corporate showing strength.
- No changes in the booking window or resistance to growing group rate have been reported.
- Ryman Hospitality is on track to meet internal expectations for the year, with positive short-term metrics.
Ryman Hospitality Properties ' robust performance in the first quarter of 2024 sets a positive tone for the remainder of the year. With a strong balance sheet, strategic investments, and a focus on group bookings, the company is well-positioned to navigate market challenges and capitalize on growth opportunities. The company's commitment to returning value to shareholders through dividends and its proactive approach to managing its portfolio demonstrate a forward-looking strategy aimed at long-term success.
InvestingPro Insights
Ryman Hospitality Properties (NYSE: RHP) has demonstrated a strong start to 2024, with their financial results reflecting a company on the rise. To provide a deeper understanding of Ryman's potential and financial health, here are some key metrics and insights from InvestingPro:
InvestingPro Data:
- With a Market Cap of $6.23 billion, Ryman Hospitality showcases its significant presence in the hospitality sector.
- The company's P/E Ratio stands at 21.14, which adjusts to a slightly lower 20.65 when considering the last twelve months as of Q1 2024, indicating a reasonable valuation relative to earnings.
- Ryman's Revenue Growth for the last twelve months as of Q1 2024 was a solid 10.09%, demonstrating their ability to expand their top-line figures in a competitive market.
InvestingPro Tips:
- Ryman Hospitality is trading at a low P/E ratio relative to its near-term earnings growth, which could signal an undervalued stock to potential investors.
- Analysts predict the company will be profitable this year, which aligns with the profitable performance over the last twelve months, reinforcing investor confidence in the company's ability to maintain its positive earnings trajectory.
For readers looking to dive deeper into Ryman Hospitality's performance and future outlook, InvestingPro offers additional insights, including tips on how the company's liquid assets compare to short-term obligations and its trading multiples. With a total of 5 additional InvestingPro Tips available, interested investors can explore a more comprehensive analysis at https://www.investing.com/pro/RHP.
Don't forget to use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, providing access to exclusive data and insights that can inform your investment decisions.
Full transcript - Ryman Hospitality Properties (RHP) Q1 2024:
Operator: Welcome to Ryman Hospitality Properties First Quarter 2024 Earnings Conference Call. Hosting the call today from Ryman Hospitality Properties are Mr. Colin Reed, Executive Chairman; Mr. Mark Fioravanti, President and Chief Executive Officer; Ms. Jennifer Hutcheson, Chief Financial Officer; Mr. Patrick Chaffin, Chief Operating Officer; and Mr. Patrick Moore, Chief Executive Officer of Opry Entertainment Group. This call will be available for digital replay. The number is 800-839-7414 with no conference ID required. At this time, all participants have been placed on a listen only mode. It's now my pleasure to turn the floor over to Ms. Jennifer Hutcheson. Ma'am, you may begin.
Jennifer Hutcheson: 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 facts may be deemed to 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, further events or any other reason. We will also discuss non-GAAP financial measures today. We reconcile each non-GAAP measure to the most directly comparable GAAP measure in exhibits to today's release. I will now turn the call over to Colin.
Colin Reed: Thank you, Jen, and good afternoon, everyone. Let me start this afternoon's discussion about our first quarter results by first reminding you what an incredible first quarter we had in ‘19, in 2023. Last year's first quarter was the best first quarter for same store hospitality ADR, revenue and adjusted EBITDAre. and same store hospitality banquet, and AV revenue was the highest on record of any quarter. Production was also strong with record first quarter gross group, ADR booked for all future years. On the entertainment side of our business, we also achieved record first quarter revenue and adjusted EBITDAre. Now, against that strong backdrop in the first quarter of ‘24, we achieved some very compelling results. Yet again, we set first quarter records for same store hospitality ADR, traveled and gross group ADR booked for all future periods, same store, hospitality, banquet, and AV revenue was the second highest on record behind only last year's first quarter and several properties set monthly catering records in February, including Gayl Palms and JW Hill Country. Equally impressive, our entertainment business set a new first quarter record for adjusted EBITDAre. Despite significant weather and construction disruption during the quarter. The first quarter was not without his challenges and Mark will speak to challenges and Mark will speak to the impact of Easter timing shift and some transient softness. We saw in our same store hospitality portfolio results in a minute, but we also have dealt with quite a lot of construction disruption across our portfolio. As an example, the Gaylord Palms, we are reconfiguring -- completely reconfiguring our lobby and at the Rockies we're almost finished completely transforming the Great Lodge. Our entertainment business is also under a large transformation with the public spaces at the W Hotel completely under construction, and also, of course, the wild horse is shut as we transform it to a category 10. As you know from our Investor Day, we are being quite bold with our capital plans as we believe that the transformation of our physical assets will support the very good growth we anticipate over the next few years. But what will become clear as Mark and Jen speak, is the fact that our primary focus, the group segment, remains very robust. For more than 20 years, our management team has executed a differentiated strategy that delivers long-term customer satisfaction with a particular focus on group customers. We built and continue to enhance an industry leading portfolio of hotels to serve that customer. And our service model continues to drive high customer loyalty, the byproduct of which being retention. As a result, we have significant visibility into future bookings and meaningful recurring revenue stream, strong pricing power and multiple high return investment opportunities to sustain our growth trajectory. On top of all of that, we own an incredibly valuable entertainment business built on some of the most iconic brands in the music industry, but also we believe will demonstrate very strong growth over the period ahead. I've said this before; our business is not based on hope. Our strategy is grounded on things we know well and can control extensive knowledge of our customers and delivering what our customers want, thus driving quality. This is ever -- as ever in our first quarter results. Now, with that, let me turn over to Mark to give you some color on the detail.
Mark Fioravanti: Thanks Colin. Good afternoon, everyone. I'll start with some segment highlights from the quarter. First focusing on our hospitality portfolio, which continues to see strong group performance then I'll take you through the results of our entertainment business, which benefited from growth in our old red brand. And finally, I'll review our guidance before handing it over to Jennifer to discuss our balance sheet, recent financing activities, liquidity and capital expenditures outlook. Our same store hospitality results reflected the impact of the Easter shift in a challenging comparison to the first quarter of 2023, as Colin detailed at the outset. Accordingly compared to the first quarter of ‘23, same store hospitality RevPAR in total RevPAR declined 4.6% and 4.1% respectively, and adjusted EBITD, our margin declined 210 basis points. Despite a strong start in the first half of the quarter, the second half came in modestly below our expectations due to some transient softness in the Nashville, Orlando and Denver markets. In fact, all the markets in which our Gaylord hotels operate experience challenging year-over-year comparisons and four of the five markets in which our Gaylord hotels operate experienced RevPAR declines. These trends reflect the normalization of transient demand. Despite the tough comp, there were plenty of bright spots in the quarter. First, our rate strategy is working. The first quarter of 2024 was the best first quarter performance best first quarter performance ever for same store hospitality ADR eclipsing the prior best ever first quarter performance in 2023. Both group and transient rate increased year-over-year. Second, outside the room spend remains resilient. This quarter marked the second best quarterly performance ever for same store hospitality Banquet Navy revenue trailing only the first quarter of last year. Banquet Navy contribution per group room night travel increased year-over-year. A positive leading indicator that our value proposition and the capital investments we've made are compelling and groups are continuing to spend on property. These trends continued into April with Gaylord, Opryland achieving all time high monthly catering revenue across the same store portfolio. Together, our rate strategy outcomes and continue robust outside the room spend have translated into higher RevPAR and total RevPAR index premiums versus our comp spend. In the first quarter of 2024, our Gaylord Hotels portfolio, RevPAR Index and total RevPAR Index increased 9% and 13% respectively relative to pre-pandemic levels. Third, the results at JW Hill Country performed in line with our expectations demonstrating the value of our early integration efforts. We estimate first quarter RevPAR and total RevPAR increased approximately 26% and 28% from the same period in 2023 respectively, which we believe was driven primarily by increased group occupancy and strong outside the room spend, as group catering contribution per group room night in the first quarter of 2024 improved approximately 22% from the same period in 2023. GOP margin for the first quarter of 2024 was 45.4% approximately 500 basis points higher than the same period in 2023. And finally, our group focus provides visibility for our portfolio, which gives us confidence to reiterate our full year guidance. As of March 31st, same store group room nights on the books for the rest of the year were up 2.4% compared to the same period last year for the rest of 2023 and we're projecting to set a new full year record for group room nights traveled in 2024, surpassing the prior record in 2019. In addition, same store group room’s revenue on the books for the rest of the year was up 8.4% compared to the same period last year for the rest of 2023. As a result, we're reiterating our full year guidance ranges for same store hospitality, RevPAR and total RevPAR growth, and same store hospitality and JW Hill Country adjusted EBITDAre. Turning now to same store production. In the first quarter of 2024, we booked nearly 288,000 gross group room nights for all future years. At first quarter record ADR of $265. Group room night production was down sequentially in year-over-year due to our record performance in the fourth quarter of 2023. Recall, in the fourth quarter of 2023, we booked a record 1.2 million growth group room nights for all future years, which was an increase of 19% compared to the fourth quarter of 2022. Therefore, having closed a large portion of the late-stage funnel in the fourth quarter, our focus in the first quarter was on replenishing the sales funnel. Lead volumes now sit at record high levels giving us confidence in the continued strength of the group segment in our positioning. We continue to be encouraged by production results at JW Hill Country. In the first quarter of 2024, we booked nearly 42,000 gross group broom nights for all future years at an ADR of $315. Turning to the entertainment segment, another bright spot in the quarter, this business delivered a record first quarter adjusted EBITDAre of $15.5 million, up 8.3% despite the impact of severe winter weather in Nashville and construction disruption at the W Austin and the WildHorse Saloon. Our old red brand performed well in our newest venue. Old red Las Vegas, which opened in mid-January, is off to an encouraging start. Our entertainment business continues to perform in line with our expectations, and as a result, we're reiterating our entertainment adjusted EBITDAre guidance. Turning to our consolidated outlook for 2024, we're also reiterating our full year guidance range for corporate and other and consolidated adjusted EBITDAre. We're raising our full year guidance ranges for adjusted funds from operations or AFFO by $7 million to $489.8 million to $535.5 million, and for AFFO per share by $0.11 to $7.69 to $8.33 to reflect the net interest expense savings associated with our refinancing transactions, which Jennifer will discuss in a moment. Note that the fully diluted share account used in our AFFO per share calculation reflects the put rights held by Atairos as part of their operating entertainment group investment. And although those rights are not exercisable and we retain the option to settle any exercise of those rights in cash, any exercise of the foot rights would also result in Atairos's 30% ownership in OEG reverting back to Ryman. To provide some color on the second quarter, we now expect mid-single-digit same store hospitality RevPAR growth year-over-year, which assumes continued transient normalization in the second quarter. We continue to expect high single digit year-over-year growth and same store hospitality total RevPAR, along with year over year adjusted EBITDAre margin expansion, driven by group strength and robust out of room spend. As Colin discussed at the outset, we remain incredibly well positioned. We have significant visibility into future bookings, a meaningful recurring revenue stream, strong pricing power, and ample high return investment opportunities available to us. The investments we're making though disruptive in 2024 will sustain our long-term growth trajectory. And importantly, we can fund this growth plus our dividend from our balance sheet and free cash flow generation. And following the refinancing transactions we undertook in March, our balance sheet has never been better positioned. So to that end, I'll turn it over to Jennifer to discuss our balance sheet, liquidity and capital.
Jennifer Hutcheson: Thanks Mark. We ended the first quarter with $455 million of unrestricted cash on hand and our $700 million revolving credit facility was undrawn. OEG's $65 million revolving credit facility had a balance of $22 million outstanding. Taken together, our total available liquidity was approximately $1.2 billion net of approximately $4.3 million of outstanding letters of credit. We retained an additional $82 million of restricted cash available for FF&E and other maintenance projects. During the quarter, we took advantage of favorable market conditions and undertook transactions to address our nearest term maturity to lower our weighted average interest rate and further unencumber our asset base. In March, we completed the private placement of $1 billion of aggregate principal amount of 6.5% unsecured senior notes due 2032. The proceeds of which were used to repay the Gaylord Rocky secured term loan in full, along with $200 million of the corporate term loan term loan B. The transaction was very well received by the market and was upsized from $800 million to $1 billion in part to satisfy the strong demand for our securities. In addition, in April, we repriced the remaining outstanding corporate term loan B from, SOFR plus 275 basis points to SOFR plus 225 basis points. As a result, we are raising our full year guidance for AFFO and AFFO per share as Mark outlined. Acknowledging the actions we have taken to strengthen the balance sheet, as well as the merits of our group focused business model. S&P ratings upgraded our corporate credit rating from B2B plus, while maintaining a positive outlook. And Fitch ratings revised our outlook from stable to positive. Our net leverage ratio at the end of the quarter based on total consolidated net debt to adjusted EBITDAre was 4.3x within our targeted 4x to 4.5x range. On a pro-forma basis, assuming a full year contribution of adjusted EBITDAre from the JW Hill Country, our net leverage ratio was 4.1x. In 2024, we continued to expect to generate free cash flow before payment of dividends and capital expenditures of $500 million to $550 million, which together with our unrestricted cash reserves and funds available in our FF&E escrow accounts, will be more than sufficient to fund our dividend and capital investment priorities. Regarding our dividend, it remains our intention to continue to pay a 100% of our retaxable income through dividends. Regarding our capital investment priorities, in 2024, we continue to expect to invest approximately $290 million to $360 million in our hospitality business and $70 million to $80 million in our entertainment business. On our last earnings call, we detailed the major projects, so today; I'll provide some highlights on our progress year-to-date. At the Gaylord Rockies, the first phase of the Grand Lodge repositioning, including embers, the new lobby bar is now open. Remaining work includes repositioning of several additional F&B outlets in the lobby, which are scheduled to open later this year in the fourth quarter. Construction of the new group pavilion at Gaylord Rockies is also progressing quickly and is expected to open in June with both of these projects ahead of schedule and on budget. At the Gaylord Palms, renovation of the lobby and remaining 14, 16 rooms is underway and we expect this work to be completed by the end of the year. At Gaylord Opryland transformation of the Governor's ballroom and pre-function space is set to begin in June. Construction schedule there will be managed to limit disruption. At Block 21, the W Austin Rooms and Public Space renovation is underway and we expect to complete this work by the end of the year. And finally, the transformation of the Wild Ore Saloon in downtown Nashville to category trend continues, and we expect that venue to reopen in phases beginning in the third quarter. As our projections demonstrate our balance sheet and liquidity position continues to be in excellent shape to support the capital deployment opportunities available to us and the continued growth of our business. And with that, let's it open it up for questions.
Operator: [Operator Instructions] We'll take our first question from Chris Woronka with Deutsche Bank (ETR:DBKGn).
Chris Woronka: Maybe we can take a step back and think about the transient Atairos's transient weakness or softness, you mentioned pockets of, is there any common theme to it? I don't know if Colin or Mark, I mean, do you think it's related to price sensitivity or is it just a really a function of tough comp or something else? Just trying to see if it's thematic or just kind of temporary based on the comps and things like that.
Colin Reed: Do you want to take it Mark?
Mark Fioravanti: I would say if you look at how the markets have performed in terms of the top 25. It appears that there's a normalization that's occurring in terms of transient demand. Those markets that recovered quickly from COVID like Nashville, Dallas, Orlando, et cetera. They saw a little bit of softness in the first quarter. If you look at what's happening in places like Boston, Seattle, Chicago, New York City, they've had quite strong performance. So I don't think that it is -- I don't think there's anything that's happening from an economic standpoint where we see weakening of the consumer, those that are travelling are spending outside the room. And so we feel very good about that. I think it's just an issue of consumers making other choices and markets performing a little bit differently than they did through the COVID recovery.
Colin Reed: On the pricing front, Pat, you may want to dive in on this one, but Chris, as a business, we've been very focused on driving rate in our business, both on the group side and on the transit side. And I was talking with Mark earlier this morning, and I was looking at the average daily rate of transient business on a same store basis in this first quarter to pre-COVID-19, which was the best year we ever had. And our rate is up 90 bucks on transient in this period. And so we've been very aggressive on transient pricing, and obviously we've got this whole issue of pricing under a microscope right now to make sure that we haven't pushed it too hard. I don't think we have, Pat; you want to jump in on transient pricing?
Patrick Moore: As Colin already mentioned, we did $292.63 in transient 80 ADR in the first quarter. That's a 2.5% increase over ‘23. Even with some of the softness and normalization going on, we're still driving rate in a very successful manner. To Colin's point, we're up 41% over 2019, so we see this as purely a volume issue. And really just around what Mark was talking about as far as some markets finally catching up to the lead pack that came out of COVID what gives us a lot of encouragement is that group continues to remain very strong. We're 34,000 room nights ahead as far as what's on the books from a group perspective versus same time last year for the remainder of year. And our catering numbers have been very, very encouraging, and that's been a recurring theme for us for the past 24 months and is continuing into 2024. We feel good even though there is a bit of normalization going on in the transient side.
Chris Woronka: That was super helpful with all the color. If I could ask a quick follow-up, but it's on Hill Country and it sounds like things are off to a really good start there. Can you maybe frame for us as you're kind of remixing the business a little bit? What's the cadence of the opportunity in terms of your original underwriting? I mean, will you get further ahead this year or is this more of a multi-year thing? And just maybe a little bit of color there on how you're remixing it. Because it sounds like that's pretty important.
Colin Reed: Let me sort of do the 60,000 foot, and then Patrick, you may want to dive in on exactly what we've discovered and what we're doing because it's is very interesting. But Chris, we've looked at this hotel, at least 3x over the last eight years. And the reason, philosophical reason is we love the San Antonio market. We love Texas, we love the southern part of Texas. When you look at the growth that's going on in this market and you look at the growth that's going on 60 miles away in Austin, it's remarkable. And so, we look at this business with a very long-term sort of lens and we believe over time we can transform this asset, maybe add some more rooms, more meeting space, and essentially transform this hotel to the number two convention resort in the state of Texas. Number two to our number one, the Gaylord, the Gaylord Texan. But as every stone we turn over in this business, we find a little bit of gold dust. And Patrick, you want to give Chris a little bit of some examples of what we've been doing and what we've discovered.
Patrick Chaffin: Absolutely. Chris, we've talked about at Investor Day that we manage our portfolio as a single unit and that's what we're starting to get some strength out of -- at JW Hill Country. From a contracts perspective with outside vendors both from resort fee perspective, from a parking perspective, we're starting to drive incremental dollars into this property. And those are the short-term benefits of being part of our portfolio that you'll see in the first 12 to 24 months. To Colin's point, we are already working through the master planning of the resort to add additional rooms, space, and water amenities and have been done a tremendous amount of research in the end of the fourth quarter and through the first quarter around what the JW customer is looking for at this property specifically. We now are actually engaged in additional research to understand what the Gaylord customer needs to see at this property to enhance and refine it for their interests of bringing pieces of business over. To that point, we've already seen some great success with bringing Gaylord customers into the JW brand and vice versa. Since we took the transaction over in June of last year, we've booked about 12,000 room nights into the JW, that were tied to multi-year rotational pieces of business in the Gaylord hotels. Accordingly, we've picked up another 12,000 to 15,000 room nights in the Gaylord brand from those bookings that are going into JW. So we are -- we've generated a substantial amount thus far and are looking for more and more as we refine the property through the master planning process.
Colin Reed: And cost efficiencies too, Patrick?
Patrick Chaffin: Absolutely. Again, because we approach everything from a portfolio perspective, we can drive synergies in that maybe you don't see at other portfolios where they're managed as individual assets.
Operator: Our next question comes from Bill Crow with Raymond James.
Bill Crow: I want to focus just really on the shift from 1Q to 2Q, where you're going from almost down 3% RevPAR growth to up is, I think you said mid-single-digits. How much of that is driven simply by Easter and the holiday shift? We're now starting to hear that maybe April's not so good that the Passover holiday holidays actually impacting April. You've got both March and April impacted by holidays. How much did -- I know it's a multi-part question, same subject, but how much did Hill Country benefit from Easter shift? Any color you can give us on that, or is it just that comps get easier in the second quarter and that really helps you.
Colin Reed: Patrick?
Patrick Moore: Absolutely. To your point, the comp is a little bit easier, Bill. The shift from Easter, which we've talked about is about 13,000 room nights that shifted between the two quarters. There's definitely a benefit there. But I would tell you how April is going for us, we're still working through the preliminary results, but we expect April to be the best April ever in the history of the portfolio. On a same store basis, we expect it to be the second best EBITDA month ever in the history of the portfolio on a same store basis. Catering looks very, very strong and we expect Opryland will probably come in with the best catering performance in any hotel in any single month, in the month of April. The comps are easier, but we are seeing really strong group performance, especially on the catering side. And so, we feel good about where we're heading and helps offset some of that transient normalization that we've seen.
Colin Reed: We're seeing that same catering performance in the third quarter as well as we look ahead.
Patrick Moore: And we have more group room nights on the books for the second quarter and the third quarter than we did same time last year. We think we're really well positioned for these next two quarters. And then fourth quarter is obviously heavily dependent on transient, but our holiday programming allows us to do things that maybe buck the market trends that are normally in place.
Colin Reed: But we've also got good group business on the books for the fourth quarter too, which gives us a lot of confidence about the fourth quarter.
Patrick Moore: About three points of group business higher than we were same time last year.
Bill Crow: If I could just do a follow-up question, and only because Marriott (NASDAQ:MAR) touted the performance of the forward bookings at the Pacific -- the Gaylord Pacific. I'm just curious, are you seeing rotational business kind of exiting some of your properties to now include Pacific? I know we've talked about that in the past but just wanted to revisit that topic.
Colin Reed: You want to check it?
Patrick Moore: Sure. Bill, we have seen some good production coming out of Pacific. It's driven about 82,000 room nights into the Gaylord hotels and multi rotational pieces of business that have been booked in unison with Gaylord Pacific. But what really is going to drive the benefit is not here in the pre-sale period of time. It's going to be after some of these groups that are brand new to the Gaylord brand. Because Pacific is stealing a lot of share from the state of California. When those groups travel to a Gaylord for the first time and have their minds open to what a Gaylord is and how unique it is, then they will start rotating into the other Gaylord around the U.S. It's exactly what we saw at National when we opened it back in 2008. It's what we saw at Gaylord Rockies when we opened it in 2018. And so the best is really yet to come as that property gets opened and starts pushing folks through it and then opening them up to the rest of the brand.
Colin Reed: And they're booking at a higher rate. Most group will rotate at a higher rate.
Patrick Moore: That's correct.
Operator: Our next question comes from Smedes Rose with Citi.
Smedes Rose: I wanted to just ask a little bit about the growth definite room nights and net definite room nights booked in the quarter. I know you noted it was a tough year-over-year comp and acknowledging that the rate that you looked at was record high, but it was still lower than like first quarter ‘19 and ‘18 and ‘17. And I'm just wondering if you could provide just a little more color around how you think that will kind of trend and if it means anything.
Patrick Chaffin: Sure. Hey, Smedes. This is Patrick. I can't underscore how much impact clearing out the funnel in the fourth quarter of 2023 had on the first few months of 2024. The sales team blew it out, did a great job, and have been rebuilding that funnel. We are very encouraged by what we're seeing there. There is two things going on that give us a lot of encouragement and we believe that the team is going to deliver another tremendously strong performance from a sales advanced gross group bookings in 2024. And those two things are, number one, you heard me talk over the past 24 months about the fact that we had really great production in lead volume in T+1 through T+4. And late last year, we started seeing beyond T+4 lead volumes increasing. And we've seen just in the past few months, association leads really coming back very, very strongly. So that allows us to know that we're starting to -- we have more opportunities to place for future years, some of those big associations that serve as the foundation for our book of business. The second thing we saw was in April, a material increase in corporate room nights, which bodes very well for us as we're in the primary booking window for filling up 2025. So we are seeing everything coming together nicely as they're rebuilding that funnel. And while yes, the first quarter was a little bit down versus previous periods, it was expected, our rate continues to be very, very strong that the sales team's doing a great job there and both on association and corporate lead volume, we see a lot of good things coming together for the future.
Patrick Moore: And that's the key to all of this. What is the activity of the meeting planner into our system? And that activity, Patrick is as good as it's ever been right now. And as you just said, we booked what, 40,000 more room nights in April in this last month than we did in April of last year. And lead volumes have jumped again to fairly very, very healthy levels. So we're very excited about what's going on in group right now.
Operator: We'll take our next question from Shaun Kelley with Bank of America (NYSE:BAC).
Shaun Kelley: Just wanted to go back to the transient activity and I know we've kind of hit this. So, my question is just specifically I think in the prepared remarks, you said that you, the assumption now is that continues into Q2. Obviously, it sounds like you've already seen a piece of that perhaps continues through April, but was that correct? And then kind of what does that imply? The assumption is for the balance of the year, specifically Q4 since you alluded to how important transient is for that period. So just help us think about how conservative maybe that outlook is. That'd be helpful.
Patrick Chaffin: Hey Shaun, it's Patrick. Good question. We actually have, we didn't just take what we saw in Q1 and roll it through April and May. We've done our best to project what we think is going on and continue some of that softness and adjust our Q2 and Q3 accordingly. Again, our Q4 has a really strong all three remaining quarters have really strong group business. And our fourth quarter, because of the holiday programming, we're going to continue to watch that because we do believe we can buck the macro trends in each market. So we've adjusted Q2 and Q3 appropriately and still feel that we're in a great position to maintain our guidance. Rate continues to be a huge upside opportunity for us, even though we are seeing some of that normalization on transient.
Shaun Kelley: And then my follow-up here would be it's kind of intriguing to me that you did see it on the rate side and you're definitely not alone. We've heard effectively similar comments from a number of people in the hospitality space, but I'm kind of curious how you didn't see, it doesn't feel like you saw anything on the entertainment side. Could you just talk a little bit about like customer behavior there on entertainment and specifically ticketing, like just any changes on how people were acting and uptake there? I'm sure it moves around given the event schedule that you have and maybe even the comps, but just kind of what did you see from the consumer across entertainment and any concerns or risk factor that what you see in transient could impact outside of the house too?
Patrick Moore: What I would say is an aggregate, we haven't seen any material change in consumer behavior for the entertainment business across the board, in part because some of those markets are drive to markets and don't require a room night. But we've seen fairly healthy trends across all of our major venues. We did have the modest disruption for one to two weeks in the Tennessee markets for the five assets that are in Tennessee. But other than that, so far, and first quarter is the smallest quarter of the year, but so far we haven't seen any material changes in behavior.
Operator: And we'll take our next question from Dori Kesten with Wells Fargo (NYSE:WFC).
Dori Kesten: Can you give us a quick update on your T plus one, two, three rate growth on the book?
Colin Reed: It stands at the end of March, you said T plus one, two, and three, is that right?
Dori Kesten: Yes.
Colin Reed: We're in the mid to high-single digits on each of those years on rate growth as far as what's on the books as it stands today. And that's net bookings.
Dori Kesten: Is there anything to note about the makeup of your lead volume that they sit today between corporate association -- or is it rather normalized and just trying to determine what the rate trajectory might look like, when we do start to see your Q2, Q3 gross bookings?
Colin Reed: Like I've mentioned before, we've been watching association waiting for it to come back strong, and it's coming back very strong. And we continue to as we've done for many, many years, focus on getting the most premium, highest rated association groups and then increasing our mix of corporate. And so, corporate has shown great strength here as of late and association's been rebuilding over the past six months or so. It's not abnormal as far as what we see on the books, just a higher volume than we've seen in the past. And so we think from a rate perspective, as we continue to select the highest rated groups and go after the more premium groups and put the investments in place to attract them, it bodes very well for our continued growth in group rate.
Operator: We'll take our next question from Jay Kornreich with Wedbush Securities.
Jay Kornreich: A little bit of a follow up to the last question. As we think about in the year four, the year group book is, can you give just some perspective on how your conversations are going with meeting planners, especially on the corporate side, and are you seeing any changes in the booking window or appetite to get corporate employees together within the year?
Colin Reed: Yes, we have not seen any change in the booking window whatsoever. I'm not sure I caught the first part of your question. Could you repeat that?
Jay Kornreich: In the fourth year?
Colin Reed: In the year fourth year, like I said, we are in a position for the remainder of year. We're about 34,000 room nights ahead as far as what's on the books and our expectations for what we need to book to hit our internal expectations is in line with largely in line with what we did last year. So, we've seen no change in behavior, whether it's on the booking window or resistance to growing group rate. And we continue to see lead volumes improving. So we think all the right factors are in place for us to hit our end of the year fourth year. And thus far this year end the year, fourth year has been very encouraging. In April alone, we outperformed in the year, fourth year and our T+1 was up significantly over where it was same time last year. So, all the short term metrics are pointing in the right direction.
Jay Kornreich: And then just one quick follow up. You gave some comments on the construction efforts on the hospitality and entertainment projects. Just curious, any changes at this point to your initial assumptions, either for ROI, EBITDA displacement or is everything starting out as initially planned?
Jennifer Hutcheson: Yes, we haven't changed the assumptions within our full year guidance, Jay, in terms of what the disruption impact will be from those projects that we outlined. And we said that was about $10 million to $11 million on the hospitality side and $8 million to $10 million on the entertainment side for the full year.
Colin Reed: I will say that the opening of the Grand Lodge, at Gaylord Rockies the first couple of days were really, really encouraging as far as what we're able to capture in food and beverage. So I'm feeling optimistic about our investment there. It looks spectacular and customers and meeting planners are responding very, very strongly in a positive manner.
Operator: Thank you. And it appears that we have no further questions at this time. I'll now turn the program back over to our presenters for any additional or closing remarks.
Colin Reed: No, I think we are done and appreciate everyone's time particularly doing it, the time we've doing holding this call. The time we've done it, we know it's mid-day in central time and 1:00 o’clock in Eastern Time. It's a little bit difficult, but there was a lot of competing calls this morning and we wanted to make sure that we had your attention. So thanks for everyone for being on the call, and if you have any further questions, you know how to get hold of us. Appreciate it.
Operator: That concludes today's teleconference. Thank you for your participation. You may now disconnect.
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