Welcome to Ryman Hospitality Properties Second Quarter 2022 Earnings Conference Call. Hosting the call today for Ryman Hospitality Properties are Mr. Colin Reed, Chairman and Chief Executive Officer; Mr. Mark Fioravanti, President; Ms. Jennifer Hutcheson, Chief Financial Officer; Mr. Patrick Chaffin, Chief Operating Officer. This call will be available for digital replay. The number is 800 839-1246 with no conference ID required. At this time, all participants have been placed on a listen-only mode. It is now my pleasure to turn the floor over to Ms. Jennifer Hutcheson. Ma'am, 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 facts 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 exhibit to today's release. I'll now turn the call over to Colin.

Thank you, Jen and good morning, everyone. The second quarter was another remarkable quarter for our company and the hospitality business in particular. The momentum we generated in our hospitality business during the first quarter has rebounded from the low point of the Omicron wave in January, carrying through to several new record performances in the second quarter. And we did some of these in absence for you. The second quarter was our best quarter ever in the history of the Gaylord brand for trend in ADR. At 283, this was an increase of 31% over the second quarter of both '19 and '21. The second quarter was also a record all-time for us for both total revenue and total adjusted EBITDAre for our hospitality segment. And those records were not by a narrow margin. Second quarter adjusted EBITDA was a total of 22 million higher than the next best quarter, and our adjusted EBITDAre margin was also an all-time record at 125 basis points above the next best quarter. Regarding our core production, this second quarter saw the higher ADR on new definite booking for all future years of $243. On a monthly basis, we also saw a few records within the quarter. For example, April was the single best most profitable month for adjusted EBITDAre for the Gaylord hotel brand and the second highest margin month on record. And at the individual hotel level, the Gaylord roughly gained the distinction of serving the single highest occupancy month on record for any Gaylord hotel when it reached 92.4% for the month of June. From just about every angle you look, our results this quarter were a testament to our capital allocation strategy and the actions that we've taken over the last several years to meet the challenge of the pandemic head on and to position our hotel business to thrive in the eventual recovery. These steps included gaining and retaining over 80% of our sales force leaving as the hotels were closed and working hand-in-hand with our core customers and meeting planners to rebook their business. We also continued critical capital investments into expansions, room and meeting space upgrades, configurations, and other amenities. We streamlined our operating models for improved efficiency to better phase with our rising wages and other inflationary costs. And we reimagined our approach to leisure programming, finding new ways to attract premium leisure business around our traditional group business. All this work was manifested in the second quarter in these figures that I just shared with you, and I couldn't be more pleased with the job that our team and the Marriott teams and our hotels put forth to produce these results. This is a good moment to remind everyone that this indeed was still, in essence, a recovery quarter for us despite all of these records. We accomplished this performance with five fewer occupancy points in the quarter than in the second quarter of '19 our last pre-pandemic year. This tells us we have more opportunity ahead to build on this success as occupancy planning gets back to pre-pandemic levels and we continue to set outside to new records in the years to come, particularly in an environment where new supply growth remains limited, and our on-the-books pace for group rooms revenue in the years ahead exceeds pre-pandemic levels. Now, I know what some of you folks are thinking about, so let's address it head-on before I go into any more detail about the quarter and our outlook. Now some of you are thinking, well, these records are nice, but that's a few weeks ago and don’t you know there's a big recession coming, inflation is out of control and so on. And I think that reflects some misunderstanding around our business and the current backdrop compared to past economic cycles. As I just noted, our hospitality business is still in a recovery period. The desire and the demand to meet amongst the majority of our customers remains high and pent-up. Many of our customers have not held their annual meeting, events critical to their mission and even financial health in many cases for literally over two years. It's also a very different set of circumstances when we were going into the 2009 period and the great financial crisis was unfolding. What we're hearing from our customers right now, and Patrick can go into that a little bit more, is that they are proceeding with their plans. Certainly, they read the news too and a few have noted that they are keeping an eye on the equity markets and macroeconomic data. But right now, on a net basis, the need and the pressure to resume meetings is winning out. And that is evidenced for example in recent production. In the second quarter, we booked 600,000 group rooms, group room nights, which was only 8% below the second quarter of '19. And as I mentioned at the top of the call, ADR on these new bookings was at an all-time record, 15% higher than the second quarter of '19 and 14% higher than the second quarter of last year. And by the way, our production for July again showed a pretty strong segment at play. So, we are seeing solid interest from our customers. And our core book of business, as a result, remains in excellent shape. As of June 30, we had 43.9 points of net occupancy, net group occupancy on the books for 2023. This is 1.2 points higher than we had at the same time last year looking ahead to '22, I mean only 0.07 points less than we had in '18 for '19. And that is despite 3% more room inventory than the Gaylord Palms expansion in the denominator today compared to this point in 2018. But more importantly, we must factor in the rate growth we've seen over the last couple of years in that production. Our net group ADR on the books for next year is 3.8% higher than our T1 position at this time last year and 10% higher than our T1 position in '18. In total, we had on June 30, 6.6% more group revenue on the books for next year compared to this time in '21, and 11.5% more than we have at the midpoint of '18 looking into '19. So, bottom line, we feel great about where we stand right now and about our business and the fundamentals behind it regardless of the economic backdrop that we can't control. And perhaps this is a good time to note that we also collected $15 million in cancellation attrition fees in the second quarter, putting our running total to over $110 million since the start of the pandemic. Now of course, we would like to see that this number trended down month-to-month in the quarter as we move further away from the Omicron impact. And we'd like to see this continue downwards as the group recovery continues. But these fees are an important feature of how we design our business to weather tough times. I want to remind you of this as long as I'm addressing concerns about recessionary risks. And Mark will discuss some additional color by each property and suffice it to say we were very pleased with our hospitality business this quarter, and it almost makes you forget that it was only six months ago where we were at 32 points of occupancy for the month of January. We're hearing now, even after the bite that the Omicron wave took out of our first quarter, giving full-year guidance of adjusted guidance and for EBITDAre to this segment that is still in par with 2019 levels, which I'll let Jennifer walk through in more detail. Turning to entertainment, the most exciting news was the execution of the acquisition of Block 21 in the quarter and the subsequent placing of our strategic investment with Atairos and NBCUniversal, which valued the new combined Opry entertainment group on Block 21 at just over $1.4 million. On a segment basis, our entertainment business delivered $22 million of adjusted EBITDAre in the second quarter, which, while it ended up being towards the lower end of our guidance, nevertheless was a record quarter for this segment as well, both as reported and on a same-store basis. Compared to our initial expectations, a few factors contributed to the result not being an even bigger record, and one is the slight delay in closing Block 21 versus our original timetable, which not only impacts the contributions at Block 21 for the second quarter but also means we will get a bit later start on the many growth initiatives we have planned for this asset, some of which will now be felt more in '23 instead of later this year as we originally had planned for. Turning to our Grand Ole Opry business, we've seen a slight recovery than expected in the customer segment that we call tour and travel, or what is more easily described as organized bus service to buy tickets as part of package itineraries. Also at the Opry, we've experienced some reduced availability of top drawing artists in Nashville during the summer, as many of them have accelerated their pent-up national and international touring activity due to the faster recovery during June. While that's certainly great news for the artists and the millions of country lifestyle consumers visiting their shows, it does take away some availability for us to showcase them at home as often as we would like here in Nashville. And finally, there's been widespread softness in the advertising market which is down from top-line revenue and several joint ventures. Even in Circle ratings and shared nice increases around our original content and bench costs have followed the plan that we had in place. This complements the fact that is why we brought our guidance for this segment down a bit to reflect their impact for the full year, but we are still expecting a record year for profitability for this business. When you compare what we've achieved in the second quarter to the same time in 2019 on a same-store basis, our core entertainment portfolio delivered no less than a 35% adjusted EBITDAre growth compared to pre-pandemic levels. Now, our focus is solidly on getting to work implementing exciting plans for Block 21 and the ACL Live Theater under our ownership. We are also clear to commence construction on a whole level Las Vegas location right in the heart of the strip, which we expect to complete in the early fall of next year. We are now actively engaged with our partners from Atairos and NBCUniversal on a roadmap and strategic initiatives across the business on which we look forward to sharing more as we move forward together. I'll pause here to hand over to Mark for a little bit detailed information on the hotel business and then to Jennifer to update our balance sheet.

Thanks, Colin. Good morning, everyone. As Colin has noted, this was an excellent quarter for our hotel business with several all-time records achieved. Let me just take a moment to comment on the profit level on some of the specific drivers of the performance. While Gaylord Rockies led the brand in occupancy for the quarter at 76.6%, Opryland, the Palms, and the Texan all had similarly strong performances with occupancies of about 74%. The Palms and Texan finished with occupancy levels at two different points compared to second quarter 2019 levels. I would note that the Palms occupancy performance includes 300 additional rooms, a 21% increase in that property's available rooms. The Rockies' occupancy was up 8 points from 2019, and the hotel has not been stabilized. Our Opryland trailed 2019 performance by six points; it's important to note that Opryland had a tough comp as occupancy in the second quarter 2019 was seen at 81%. All four hotels had excellent ADR growth over the second quarter of 2019, ranging from 15.6% for Rockies up to 22% at the Texan, which in each case was notably led by the transient segment. For the second quarter of 2019, the Rockies transient ADR grew 46.5%, the Palms 39.9%, Opryland is 37%, and the Texan at 36.5%. Group ADR also performed well, going on average an 11.5% across the four hotels. All four hotels delivered very good outside the room spend for groups in-house, with other RevPAR at the Texan at 9.3%, the Palms 22.5%, Rockies 26.7%, while compared to the second quarter of 2019. Opryland delivered another RevPAR up 1.2% as a mixture from corporate to association room nights led to more margin throughout in outside the room spending. Additionally, Opryland was the only property to experience a decline in attrition and cancellation revenue as Opryland received several large cancellations peak in the second quarter of 2019 to well above historic norms. The combination of strong leisure ADR both outside the room group revenue including attrition and cancellation fees fell on top of our operational improvements, sharing strong flow-through of incremental revenue at the Palms, Rockies, and Texan, leading to a 49.7% flow-through at Palms to 65.3% at the Texan when compared to 2019. Opryland's margin and flow-through versus 2019 were challenged by the group mix and the declining fee collections. I want to comment on the National because what we saw on the financial performance there was quite encouraging for us as the D.C. market continues to recover. In effect, this hotel's overall margin flow-through is clearly seeing positive impacts from our capital investment and the operational improvements we have undertaken during the extended COVID shutdown. While the National's occupancy trailed this second quarter of 2019 by 17 points, I would note that like Opryland, the hotel faced some very tough 2019 comp of 81.4% occupancy. Despite this reduction in occupancy, the National's adjusted EBITDAre margin was only down 2% compared to the same period. In fact, if you exclude the interest we receive on our Gaylord National bond, margins at the hotel level were in fact comparable to 2019 levels, down only 60 basis points despite 17 fewer points of occupancy. This tells us the new staffing model and investments we've made in F&B re-concepting are beginning to pay dividends. Specifically, food and beverage was $2.5 million lower in the second quarter of 2019 due to the reduced occupancy while our food and beverage profit was up $1 million. This is really good news, and it's much of the hard work that we've done to address the challenges at the National over the last two years. In terms of what we're seeing in the labor market and staffing levels, we did see year-over-year rate inflation in the quarter an average of 19% across the portfolio. These increases have been offset by rate in pricing increases, improvements in hours per occupied room and efficiencies in our property leadership structure. We feel comfortable with our current staffing levels, and also our targets were our practice prior to the pandemic, where we had difficulty filling roles with contract labor. So, overall we feel good about our ability to continue to navigate pressures in the labor market while remaining a prudent player in creating a culture to retain the best people and by giving them a great value to our guests so they return time and time again. Now, let me turn it over to Jennifer to provide the balance sheet and liquidity update as well as our period guidance.

Thank you, Mark. In the second quarter, the Company generated total revenue of $470.2 million and net income to common shareholders of $50.3 million, equating to $0.91 for fully diluted share. The Company closed its acquisition of Block 21 for $255 million in the quarter, including contract price adjustments and the assumption of $136 million of CMBS. Subsequently, we are seeing appropriate of $296 million on the sale, 30% of our Opry Entertainment Group to the care. As well as the recapitalization of OEG with a new $300 million term loan. We do see proceeds to retire our $300 million Term Loan A and other borrowings under our corporate and volume credit facility. We've left the Company with an undrawn revolver, a new undrawn $65 million revolver at OEG, and $179 million of unrestricted cash at quarter end for total liquidity of $934 million excluding $10 million of lines of credit. With total net debt at $2.68 billion and trailing 12-month adjusted EBITDAre at $408 million. This puts our current net leverage at approximately 6.6 times. Based on the midpoint of our guidance range, which I'll cover next, we would expect to end here at approximately five times, which is close to the upper end of our preferred range. Based on the strong performance of our hotel portfolio in the second quarter and the item impacting our entertainment business that Colin described, we have to provide our full-year guidance, and we are also now issuing third quarter guidance. For third quarter 2022, we expect our hospitality business to deliver between $125 million to $130 million of adjusted EBITDAre, and our consolidated company to produce $137 million to $146 million of adjusted EBITDAre. For the full year 2022, we expect our hospitality segment to deliver $475 million to $490 million of adjusted EBITDAre. I will point out that this represents an increase of $32 million at the midpoint compared to the $15 million, of which the second quarter exceeded our previous guidance. And perhaps most notable at the midpoint of $482.5 million, this was our hospitality segment right at 2019 performance. Which is remarkable when you recall what Omicron did to the first quarter of this year just a few months ago. For the entertainment segment, we expect full-year adjusted EBITDAre includes Block 21 to be in the range of $72 million to $80 million. Within the reduction of $8 million, while the midpoint reflecting the factors that Colin described earlier. Lastly, for our corporate segment, we expect a full-year adjusted EBITDAre loss to be in the range of $32 million to $33 million, and the midpoint of which is $5 million more than our prior guidance. This change is primarily due to the to traffic corners of our hotel segment moving up their crew for higher and benefiting compensation this year. The net change on a consolidated basis is to increase the midpoint of our full-year adjusted EBITDAre guidance by $19 million up to a range of $514 million to $538 million and close to $16 million of our consolidated 2019 results at the midpoint. With that, I'll turn it back over to Colin.

Thanks, Jen. Katie, let's open up the lines for questions.

Thank you. Our first question will come from Dori Kesten with Wells Fargo. Your line is now open.

Thanks. Good morning, everyone. I have a few questions on the outlook. How much is assumed in Q3 and Q4 for cancellation and attrition fees?

Hey Dori, it's Patrick. We would expect to see a decline in the second half of the year in our attrition cancellation fees somewhere in the $10 million to $20 million range for the second half of the year is probably where we're going to end up.

Okay. And was the reduction in the entertainment outlook, was that solely due to the later-than-expected closing of Block 21 and adjustments that you had, I guess we're not able to put in place, or was there anything else that was driving that?

Well, the delay in Block 21 and its integration is a portion of that. As the business has revamped from COVID, we've seen some impact from the tour and travel business as Colin mentioned. It's impacting Opry's tenants as well as our daytime tour business at the Opry and the Ryman. Colin also mentioned the scrunched availability of artists with the artist touring post-pandemic; that increased schedule has reduced availability for some of the A-list artists at the Opry House. We have also seen some softness particularly in Orlando as it relates to our Ole Red there and that location near the convention center, convention traffic there is running a bit below pre-pandemic levels. So, that combined with the tragedy that occurred in Icon Park a few months ago is having some implications for that location because we are located in Icon Park as well. All of those issues are really contributing to how we view the entertainment business for the rest of the year. I would say though that that business has performed extremely well and as Colin shared on the call in the first half, as you look at the second half, if you look at the acquired second half EBITDA growth versus '19 at the midpoint, we are projecting 55% growth over 2019 levels in terms of profitability for that business in second half. So, it's a terrific year for that business.

Let me add to this, Mark. We try always to be extremely transparent with you folks being analysts and investors. You all know we went through this process last year where we sat down with 10 interested companies that wanted to partner with us on this business. We built materials to build the plan based upon the way we felt 2022 was going to play out. What has basically happened is the Omicron wave that hit us in the middle of winter December, January, February, was not frankly something that we planned for, and it had a marginal impact on consumer behavior. This is a timing issue. This is not a fundamental change in the business trajectory, this is a timing issue. The buzzing business will be back. The group large city-wide convention business in the Orlando market will be back. The artists that have been locked out for two years are now going to take a breather and come back to Nashville. The other part of all of this that I'd really love is that all of these artists, all over the country and internationally playing, have created new fans that we can then turn around and bring back to Nashville. So, this is a timing issue. The fundamental change to our hotel business is so exciting because we have re-weighted our hotel business over the last one to two years. This is why we are seeing leisure rate. People are now prepared to pay the rates we are putting before them for the fabulous array of offerings we have in our hotels. On the group side, it is just getting stronger by the day. Our July group room night production was very healthy at about 110,000 room nights produced and Patrick, what was that rate going for over '19?

Over '19, our July production was up about $58 or about 29.8%.

So, the entertainment business, this issue is a timing issue. And Block 21, we really look forward to getting the hotel rate down, sitting down and planning the movie theater renovation. What we will do is a timing issue but we're very excited about the underlying trajectory of this company. That was a long-winded answer to a very short question, but I felt like I had to give it to you.

And that's fine. Is it fair to say that you summarize all that as compared to three months ago? Your outlook for the hospitality business next year, and I guess your internal outlook has improved, and perhaps the entertainment outlook is unchanged, at least for next year? It's perhaps timing issues.

I think our view of the entertainment business next year hasn’t changed for next year, given some of this delay and recovery. I think our business next year is going to be very good and we're having many different discussions. We have our friends from Atairos here Wednesday evening and Thursday, and we've got many interesting ideas on how to improve this business and drive further. So, I'm pretty excited about it for 2023.

Hi, thanks. I had a couple of questions, but the first one maybe just kind of as we think about the outlook for the rest of the year. Can you just help to think about what sort of the effective tax rate would be, at least while it's up to our forecast for the tax really higher in the quarter? Have you just trying to think about that going forward?

Hi Smedes, this is Jennifer. We didn’t have a reconciliation for adjusted EBITDA and some supplemental schedules for our earnings release that shows you on line for that combined total tax provision for what we're projecting for the year just kind of the reconciliation for full-year guidance. It sounds like that number is a little bit higher than what we're typically seeing in the past. Unfortunately, one byproduct of having your hotel business do so well is the higher income tax bill that comes with that. The other thing that impacted that estimate has come from both timing and the rapid lap of this recovery kind of limiting your ability to manage your taxes within a particular given year. We have had a fair amount of NOLs that have built up over the years, and we've been steadily utilizing those, and those will start to wind down. And then, unfortunately, we created new NOLs and have been in recent tax situations where we are now getting close to the levels that can be applied and getting near. Although they can carry forward indefinitely now to the upside, yes, that's a little bit of a timing issue. So, it’s a little bit of an anomaly in 2022, and we may continue in the future to speak relative to historical periods where we believe lies more of our NOL higher than this pre-pandemic level taxes. But probably a little more stabilized level than what you’re seeing in 2022 compared to the historical periods. We think 2023 is going to be more favorable than 2022. We’re continuing to watch that. Obviously, we have a lot to book here in the next six months. And so we’ll be watching that closely with our sales team. From a leisure perspective, the accounts point, I'd note just what we did in the past seven days, our ADR on the leisure transient side was an all-time high at $305 across the brand over the past seven days. So we continue each week to see either as solid as the week prior or setting new records. So from a leisure perspective, we’re very encouraged. Obviously, it won’t last forever, but we are making sure that we continue to make improvements and enhancements in the hotels so we can continue to improve the value proposition long term so that even as rates may start to slow from a growth perspective, we have reasons to continue moving our pricing, or at least hold.

Great color. Thanks for that, Patrick, and then just as the follow-up, for thinking about this level of demand into next year. Can you help us think about the cost environment? Mark gave some detail on this in his prepared remarks, but just help us think about the bridge of sort of how much cumulative inflation we should be thinking about? It’s a fancy way of saying, are margins sustainable as we think about kind of the remaining two quarters this quarter, and the remaining two quarters of this year heading into next? Or do we need to be thinking about pressures there as it relates to the inflation side as a partial offset to the growth you’re seeing on the top line?

Yes, obviously stuff that we spend a lot of time thinking about, and certainly in our hotel business, having very extensive discussions with our friends from Marriott. We took an initiative last year, basically with Marriott, to say we’ve got to re-engineer the organization of these massive hotels that employ anywhere from 1,250 to 1,750 people. We’ve been able to do that, particularly on the labor side. Mark, you want to talk a little bit about what we’ve been able to accomplish on the labor side and what we believe the impacts of that would be for next year.

Yes. As Colin said, we worked with Marriott to restructure leadership, which is really supervisors above, and where we’re currently tracking in the second quarter, our total leadership headcount across the portfolio is down a couple hundred, about 15%. So there’s some efficiencies created there that also creates opportunities for those leaders to have an increased span of control. So as you think about leaders growing their careers and developing their skills, it creates, I think, a higher quality leadership that moves up through the ranks. So we have a decline in management costs. If you look at the second quarter, our hours per occupied room were down about 10%. So we’re seeing more efficiency there. Our wage rate is up about 19%. When you look at the wage margin for the second quarter it actually improved by 50 basis points. So all of these efficiencies coupled with some of the pricing strengthening we’ve seen certainly leads us to believe that the margins that we’re seeing are sustainable. In fact, we believe they will expand as we move through this year and next year.

Thanks. Good morning. Congrats on the quarter. The transient segment is clearly been quite strong for you with the record ADRs as talked about. Perhaps may want to retain a greater exposure to the segment moving forward than the 20% of demand historically. But as we’re facing some macro headwinds and fears of recession, could you give some commentary on whether you think trying to lean more into the future of group bookings, which may be more sticky, or the thought to continue to push the leisure demand kind of as much as you can while you can.

Yes, another very good question. Another question that we spend a lot of time thinking about. So, first of all, on the group side, when you think about this core group of consumers that we really focus on, which is the 600-plus, at peak, we have such a small market share of these groups. If we can generate 80 to 100 of those groups per hotel per year, these hotels run at about 80 points of occupancy, and our goal is to absolutely generate that level of sustainable group demand into these hotels. That’s why over COVID, we've sat with our friends at Marriott and said, we want to increase the quality and quantity of group sales bodies that are focused exclusively on our brand. We’ve done that and that’s one of the reasons you’re seeing production levels where they are. We’ve also been looking after these hotels the way we have, the refurbishment of these hotels, we’re able to get this jump in rate that we’ve seen here over the last 12 to 24 months. Now, on the other hand, the leisure side of the business, we’ve become a lot more excited about because we have been able to change the rate structure over the last 24 months by about $50 to $60 per room sold. We’ve also tested the thesis through COVID some waves, and that has done the amount of rooms generated outside of the room spent. So I will tell you this, we spent a lot of time over the last few months thinking about the next things that we do to stimulate the leisure side of this business because we’re not satisfied as a company running these hotels at 80 points of occupancy, 75 to 80 points of occupancy. We want to push that occupancy up and improve the profitability of these hotels. So I don’t think you’re going to see a major change in the percentage of leisure business that we’re doing. But I think you’re going to continue to see us adding amenities, upping rates, and improving profitability. I think we may also put more resources towards the group side. Because our sense is that the way we have treated the meeting planner through COVID, the meeting planning community likes what we were doing. I know that’s again a long-winded answer to a very, but it’s a very complex question. I really do think that we can gain share in group, but I think at the same time, by increasing and improving the amenities, we can also grow leisure room nights too.

When you look at the second quarter, our mix was essentially 75% group and 25% transient. So, it’s pretty consistent with our historic mix. When we look at transient room nights quarter-over-quarter, compared to ‘19 versus ‘22 they’re essentially flat. We are driving better rates on transient through investment, but we’re not artificially needing a transient drive to drive occupancy. It’s really our business coming back to its kind of post-pandemic or pre-pandemic form. We’ve been able to re-price the business.

Yes, and I would say that for the full year, just to expand on Mark’s point, we would expect to be about 70% group and 30% transient. So to both their points, we’re really just trying to grow the overall pie, not shift the mix between the two segments.

That’s all really helpful color. And then just specifically on the Gaylord National. I mean, can you give some commentary on that? It's been a bit of a lag group but did have a nice pickup to 64% occupancy in the second quarter. Just any thoughts you can provide in terms of how you see that trending in the second half of the year and into next year.

Yes. We’re really pleased with how National has continued to recover, as it was close to an additional 16 to 18 months longer than the remainder of the brand. So a little bit more challenged as far as recovering in the DC market has shown some challenges and recovering, but we’re very pleased with where it’s heading. Obviously, that hotel relies a bit more on the group side. But what we’ve been able to accomplish during the shutdown period and since it’s been reopened is to increase the flexibility and operations to refresh the product, both in rooms and food and beverage to upgrade the quality of our management team and to recast the culture there. So we expect to see Gaylord National continuing to recover. I would say our expectations for 2023 is that it will be a very favorable year, and that hotel should be catching back up to its 2019 levels and potentially exceeding them similar to what the rest of the brand has done already this year.

Apologies, I have a couple of questions; feel free to give us short answers. Just clarification with the cancellation inefficiencies. Are they recognized when they’re actually paid, or are they when that occurs in the actual quarter? I’m trying to see what sort of lag we’re dealing with and what kind of anticipation for the third quarter.

Yes, we only recognize the revenue once it’s actually received that may correspond to when the room nights were supposed to travel and they are not. But we only recognize the revenue once it’s received.

So it’s possible you could double book right? You could double that and resell the rooms. Is there some of that what goes on?

Yes, there is. Some groups include rebooking clauses so that if we do book additional rooms, or groups into the pattern that they’ve left open with their cancellation, they get some credit for that. Some groups do not include that in their contract. So there are opportunities to potentially double dip at times.

Patrick, I’m going to stay with you. Just to help me understand whether we should be really excited about the fact that 601,000 rooms that were booked in the second quarter is terrific. The headline 15% up from ‘19 sounds terrific. But if these rooms are all booked for 2024, 2025, I don’t know that that 15% keeps up with inflation. So help us understand about how we feel about that.

Yes, that’s a great question. The reality is, we’re not to the level that we need to be yet. We are ramping. The sales team is incentivized this year to start pushing group rate, and they started moving in that direction. We’ve seen great results, but to your point, we still have a ways to go. So if you think about it as a C-130, trying to get off the runway, we’ve got them mobilized. They are getting great results, but there’s still a lot of runway to get down before we get the plane fully up in the air. So we would expect to see group rate continue to grow. If a recession does occur, which is not a good thing, it could slow down the inflationary environment, and we end up with a group rate much higher on the books than what actually materializes post-recession.

It’s important also to note, Bill, that when you consider for the year group, transient business, and outside the room spending, the vast majority of our revenue is actually transacted in the year. So we do have the opportunity to move pricing in those areas and combat inflation if it continues to run at a high level. It's important to note that the entertainment side is recovering as well; tours are normalizing. I don’t remember in all the years that we’ve covered you. You’ve talked about touring impacting your ticket sales at the Opry, and I’m just curious whether there are perhaps many downtown options that also have impacted demand.

What happens in a non-pandemic environment is that artists will do, the big artists will do a stadium tour every other year. The not so big artist will do arena tours every other year; that's just the way the cycle works. There are always a few artists that are not out on the road. What has happened here is nobody has been out on the road for the last two years. Everybody now is out on the road. That’s just what's going on here, and it’s just a little bit more of a challenge. But it’s not something that is going to be with us for a long time. I mean, it just is.

Yes, and the other thing I will add is the hotel sees the same thing. We have a lot of tour and travel business that comes through in the fourth quarter that comes to see both the Opry as well as the holiday program in the hotel. It is a little bit older demographic and they’ve been a little bit more hesitant to get back out on the road and travel around. These are the buses that have a little bit older demographic on them. We expect to see them come back, but it will probably be in 2023 before that segment fully recovers. We’ve seen it consistently, both of our hotels as well as we’ve seen at the opera. So, there are many bus operators who had a terrible time through the pandemic. These older folks are not out of driving around America. It’s in the process of recovery. But the point that Mark made in his comments a few minutes ago is that our businesses are tremendously over pre-pandemic levels. This business is going to be really good next year and really good the year after, and we just got a little bit of a timing issue around the edges. It’s the opposite of what's going on in our hotel business.

Hi, guys, really appreciate you squeezing me in at the end there. Colin, this is more of a hypothetical question. I mean, two years ago, we were thinking about what group business is going to look like in the future. And here we are. You’re getting good rates. But the question is, has behavior in groups, as you see a change at all? Maybe it’s a geographic question. Maybe it’s a type of group kind of question. Are you seeing any changes? Or do you want to utilize the group meeting space?

The answer is that there are so many groups that absolutely want to get back to meeting. People have recognized that being locked up in a basement is not ideal for long-term health and viability of businesses. We’re seeing a lot of groups wanting to meet, and that’s just what we’re doing. Patrick, you were at a big sales meeting a couple of weeks ago. You want to just share?

Yes, absolutely. Hey Chris, it’s good to talk to you. I will tell you, we talked about meeting planners or sales teams talk to a lot of folks. In fact, there’s a huge event going on here in Nashville right now. There has been a very consistent message back from meeting planners. They understand there are recessionary fears, we understand the volatility that we’ve seen in the second quarter. But until that materializes and we have to take different actions, we’re going to continue to meet because we are way behind and backlogged in getting our groups together, and it is hurting our businesses. We’ve got to get folks face to face again. What we saw in the second quarter was the amount of volatility in the market, and the amount of uncertainty, and economic fears out there in the second quarter. Yet our groups picked up much better than we were expecting.

I think Katie, we’re done. Appreciate everyone being on the call this morning. If you have any follow-up questions, you know how to get ahold of us. Appreciate everything. Thank you. Have a good day.

Thank you, ladies and gentlemen. This concludes today’s event; you may now disconnect.