Ryman Hospitality Properties, Inc. Q4 FY2024 Earnings Call

Welcome to the Ryman Hospitality Properties fourth 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, Opera Entertainment Group. This call will be available for digital replay. The number will be 800-723-1517 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 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 the exhibit to today's release. I will now turn the call over to Colin.

Thanks, Jen, and good morning, everyone, and thank you for joining us today. You saw from our earnings release last night, our fourth quarter results and consequently our full year results were marginally below the guidance ranges we provided in November, primarily due to factors that impacted our same-store hospitality portfolio in the last two weeks of December. This was a little disappointing, but we were extremely delighted with the bookings production, which we see as an endorsement of our long-term product transformation. Mark is going to talk about the quarter in more detail in a moment. But before that, I want to take a step back and remind you all of the strategic rationale for our multiyear transformational capital program. As we articulated during our Investor Day last year, we believe we've developed a strategy that gives us a unique advantage over other hospitality REITs. As a consequence, we're committed to the long-term positioning of hotel assets to capture more of the extremely valuable premium group customer base. One of the key differentiators of our business model is the ability to drive at least mid-teens unlevered returns on incremental growth investments in our portfolio. It is clear from our results over the last several years that these investments drive returns for our shareholders. We have more opportunities in front of us than ever before. In our hospitality business, we're making significant investments in Gaylord Opryland and Gaylord Rockies to attract this incrementally high-rated corporate group business and induce higher outside-of-the-room spending by expanding food and beverage capacity and sellable space. We have completed the lobby and rooms renovation of the Gaylord Palms, which is now essentially a brand new product. In fact, Mark and I were there yesterday with our board, and I have to tell you it is, without question, the best piece of work I think we've done as a company; it really is tremendous. In 2025, we will embark on renovating the rooms at the Gaylord Texan. In our entertainment business, our major construction projects are just back online, and the country music and lifestyle category is stronger than ever. Category Ten, the venue we designed under our brand partner, opened its doors in early November, followed by a new rooftop that opened just this week. The transformational rooms and public space renovation at the W Austin Hotel was completed at the end of last year. Furthermore, last month, we made a strategic investment in a leading independent music festival business, Southern Entertainment, which creates a scalable platform for live music experiences more broadly and enables us to connect with even more country music fans. We're excited about the brand activation opportunity behind Opry 100, which we think will pay dividends in the years to come. No questions. Some of these investments are disruptive in the near term. However, we remain awfully encouraged by the pace of bookings and the way the meeting community is responding to our capital plans, thus resulting in a record number of group room nights on the books for all future years in our hotel business. The enthusiasm for the country lifestyle segment in the US and globally is tremendous. Our customers are embracing our investments, reinforcing our conviction in our long-term strategy. Now finally, let's not overlook the incredible results we were able to deliver in the full year of 2024. Despite the disruption I just mentioned, consolidated revenue growth of 8%, consolidated adjusted EBITDAre growth of 10%, and adjusted funds from operations or AFFO growth of 12%. One last comment I would make for those of you who attended our Investor Day last year, that I referenced just a couple of minutes ago, you may recall we projected out a few years to show you what we thought was possible as we transform our physical assets. We said at the time that we felt our consolidated strategy could yield adjusted EBITDAre in the range of $900 million to $1 billion in 2027. Now as we sit here today, despite the political upheaval that we're all witnessing, high interest rates, and high inflation rates, we believe that our strategies and capital projects have us well on track to achieving the goals we set out a year ago. The future has never been brighter. We appreciate your ongoing support. With that, I'll turn it over to Mark to talk you through the quarter.

Thanks, Colin, and good morning, everyone. I'm going to focus my remarks on the fourth quarter and then I'll hand it over to Jennifer to discuss our guidance for 2025 as well as our review of our financial position. For the fourth quarter, consolidated revenue increased 2% compared to last year. Consolidated adjusted EBITDAre increased 1% and AFFO increased 4%. As Colin mentioned, these results were below our expectations and the expectations implied by the full-year guidance ranges. Leisure demand, primarily at Gaylord Texan and to a lesser extent Gaylord Opryland, did not materialize as expected during the peak holiday period in the last two weeks of December. Historically, our holiday transient business is highly concentrated and those last two weeks account for nearly 40% of leisure room nights in the fourth quarter and nearly 40% of total leisure admissions. Additionally, the booking window is very short with approximately 60% of sales within seven days of travel. When compared to last year, fourth-quarter leisure room nights at the Gaylord Texan were down 19%, and at Gaylord Opryland were down 6%. Most of this decline occurred during those last two weeks. Our forecast anticipated some year-over-year softness in those markets as we know our older ice themes like Rudolph historically underperform our newer themes like the Polar Express. But ultimately, we were surprised by the magnitude of the underperformance, which we attribute to some combination of consumer price sensitivity, normalization of post-COVID demand relative to 2023, and general macroeconomic uncertainty. The shortfall drove the majority of the variance to the midpoint of our prior guidance range for adjusted EBITDAre for same-store hospitality. Now let me share several bright spots in what was a strong quarter. The same-store hospitality business generated fourth-quarter revenue of approximately $496 million, the second-best quarter ever and second only to the fourth quarter of last year. ADR increased approximately 2% compared to last year to $260, a new quarterly record, with growth in both group and leisure rate. As has been the case all year long, banquet and AV revenue in the quarter was strong, up approximately 5% compared to last year, with higher contribution per group room night. Both Gaylord Rockies and Gaylord National achieved milestones in the fourth quarter. Rockies delivered record revenue in the month of December, driven by strong ice performance and the positive reception to the completely transformed Grand Lodge and our new food and beverage offerings. Gaylord National achieved adjusted EBITDAre margin expansion of 60 basis points despite wage increases associated with its recently negotiated collective bargaining agreement that went into effect in early November. As a result, the property delivered record full-year adjusted EBITDAre surpassing the prior year record. The JW Hill Country was another bright spot in the fourth quarter, delivering RevPAR and total RevPAR growth of 14% and 27% respectively, driven by a successful live programming debut. Consistent with our investment thesis, ICE induced incremental leisure demand in a previously low occupancy period for the hotel. In the fourth quarter, leisure room nights were up 29% year over year and revenue and total RevPAR index share as measured by STR relative to its regional competitive set increased 9 and 32 points respectively. While profitability was modestly below our expectations due to increased marketing costs associated with our first year of ICE programming, adjusted EBITDAre increased 13% year over year. We continue to be very bullish on the long-term potential of holiday programming at this asset. Fourth-quarter bookings production was the standout for the fourth quarter and the full year. In the fourth quarter, the sales team booked a record 1.3 million same-store gross group room nights for all future years, surpassing the prior year record by approximately 5% at a fourth-quarter record ADR of $284. Fourth-quarter room night production comprised 44% of full-year bookings. For the full year, the sales team booked 2.9 million same-store gross group room nights for all future years at a record ADR of $282. As a result, projected same-store gross group rooms revenue for all future years was also a record. For the JW Hill Country, the sales team booked 79,000 gross group room nights in the fourth quarter for all future years, an increase of approximately 57% year over year and 214,000 gross group room nights in the full year for all future years. As of December 31st, same-store group rooms revenue on the books for 2025, 2026, and 2027 were up 3%, 11%, and 10% respectively compared to the same time last year for 2024, 2025, and 2026. ADR on the books were 4%, 6%, and 6.5% ahead of the same time last year for the same periods. Occupancy on the books was 50 points, 44 points, and 37 points, again for the same periods. As a reminder, we strive to enter a year with approximately 50 points of occupancy on the books. Within that context, we're right where we want to be coming into 2025. Going forward, we intend to discuss bookings production and group business on the books on a total portfolio basis inclusive of the JW Hill Country. As of December 31st, group pace for the total portfolio is largely consistent with that of the same-store portfolio. Turning now to our entertainment business. In the fourth quarter, OEG reported record revenue of $98 million, an increase of approximately 12% year over year. Adjusted EBITDAre increased approximately 6% as profitability was impacted by construction disruption. Performance was led by Old Red Las Vegas, which continues to exceed our expectations. With the major capital investments in this business nearly complete, our Opry 100 programming underway, and our expansion into the music festivals business through our recent investment in Southern Entertainment, OEG is poised to deliver meaningful growth in 2025 and beyond. Before I turn it over to Jennifer to discuss our guidance for 2025, I want to take a moment to reflect on the progress to date against the 2027 outlook we outlined at our investor day last year. Critical to achieving that outlook is the successful execution of our capital investment program which we believe will continue to enhance our competitive advantage and drive incremental premium group demand over time. Also critical to that success is our ability to manage disruption throughout the construction period. To that end, we've continued to make improvements to our design and construction processes and we have increased investment in our design and construction resources and capabilities. Setting aside the labor market challenges we encountered in Orlando, our team has delivered our major projects at Gaylord Rockies and Gaylord Opryland on time, on budget, and within our expectations for disruption. Looking ahead to 2025, early indications from the meeting space expansion project at Gaylord Opryland and the roof renovation project at Gaylord Texan suggest we're trending favorably. In summary, we remain focused on delivering the asset improvements that will enable us to meet the 2027 outlook outlined at our Investor Day last year. While modestly more disruptive in the near term than originally anticipated, the positive reception from our meeting planners that is showing up in our future bookings gives us confidence that this is the right thing for us to do for the business long term. Now let me turn it over to Jennifer to discuss our outlook for 2025, our balance sheet, and liquidity position.

Thanks, Mark. Our outlook for 2025 is in a stable macro environment consistent with current trends. For the hospitality segment, inclusive of the JW Hill Country, we expect RevPAR growth of 2.25% to 4.75%. We expect total RevPAR growth of 1.75% to 4.25% and adjusted EBITDAre of $675 to $715 million. These ranges reflect the estimated impact of construction disruption, including a 250 to 350 basis point impact to RevPAR, 200 to 300 basis point impact to total RevPAR, and a $30 million to $35 million impact to adjusted EBITDAre. The increase in our profitability disruption estimate compared to 2024 is primarily due to the larger scope of renovation for the Opryland meeting space during 2025. Our outlook for total RevPAR growth also reflects modestly lower outside-the-room spending levels from group relative to 2024 due to a higher mix of association business on the books in 2025 compared to 2024. This is a natural outcome from time to time, given the size of booking patterns of association meetings. Normalizing for the impact of disruption in both years, the midpoint of the range assumes modest growth in both group and leisure RevPAR relative to 2024. The low end of the range reflects additional conservatism around leisure demand, as well as some conservatism around government-related group business, and the high end of the range reflects potential upside from leisure across the portfolio. For the entertainment segment, we expect adjusted EBITDA of $110 to $120 million. The range reflects the ramp-up of our recent investments in Block 21 and a range of modest first-year outcomes for Southern Entertainment. We are not assuming material growth in the Grand Ole Opry in 2025 due to investments we're making as part of the Opry 100 brand activation. Taken together, we expect consolidated adjusted EBITDAre of $749 to $801 million, AFFO to common shareholders and unitholders of $510 million to $555 million, and AFFO per diluted share of $8.24 to $8.86. Let me remind you of a couple of modeling items. First, we expect the timing of the Easter holiday to shift business out of the second quarter of 2025 and into the first quarter. We're still booking groups into these patterns, but we estimate the magnitude of the shift could be a 250 to 350 basis point benefit to total hospitality RevPAR growth in the first quarter. Second, we remind you of the Tennessee franchise tax refunds related to prior years. We recognized this as a one-time benefit in the second quarter of 2024. The impact to the hospitality business at that time was approximately $5.6 million and the impact to the entertainment business was approximately $3.4 million. Third, results for Southern Entertainment will be consolidated in our financial results and as I noted earlier, our adjusted EBITDAre range for the entertainment segment does reflect a modest contribution from Southern Entertainment. Finally, note that we've included an additional schedule to the guidance calculations for AFFO per diluted share accounting for the theoretical conversion of the OEG put rights. Now turning to our balance sheet. We ended the year with $478 million of unrestricted cash on hand; our $700 million revolving credit facility was undrawn. OEG's $80 million revolving credit facility had a balance of $21 million outstanding. Taken together, our total available liquidity was approximately $1.2 billion net of approximately $4 million of outstanding letters of credit. We retained an additional $99 million of restricted cash available for FS&E and other maintenance projects. In December, we repriced our corporate term loan B, reducing the applicable interest rate margin by 25 basis points. At the end of the quarter, our net leverage ratio based on total consolidated debt to adjusted EBITDAre was 3.9 times. We continue to have the flexibility and liquidity to support our capital allocation priorities and the continued growth of our business. To that end, we're pleased to announce the declaration of our first-quarter dividend of $1.15 payable on April 15th, 2025, to shareholders of record as of March 31st, 2025. It remains our intention to continue to pay 100% of our REIT taxable income through dividends. Finally, as Mark noted, 2025 is another pivotal year on the capital investment front. In 2024, we invested $408 million in our business. In 2025, we expect to invest capital of approximately $400 million to $500 million primarily at Gaylord Opryland and Gaylord Texan. We provided much more detail on the capital projects we've announced in our earnings release. So with that, operator, let's open it up for questions.

Absolutely. At this time, our first question from Ari Klein with BMO Capital Markets. Please go ahead. Your line is open.

Thank you, Ben. And good morning. Maybe can you talk a little bit about the renovations planned beyond the current one and what the timing of some of those could look like? And then maybe related to that, are the renovation headwinds that we're seeing in 2025 likely to be the peak?

Actually, do you want to do that?

Sure. Good morning. We are already substantially through some work at Gaylord Opryland around the present. The ballroom itself is complete, and now we're working through some of the associated spaces around it. That will be completed in June of this year. We have begun work on the space expansion at Gaylord Opryland that will continue through into 2027. So that work has just begun, and that has been comprehended in what Jennifer already shared. We're continuing work on the sports bar, events lawn, and group pavilion in the Magnolia Courtyard at Gaylord Opryland. That will be completed either right at the end of this year or in the first quarter of 2026. We're just watching the weather to determine how that impact will play out. Then we'll begin the renovation of our room product at Gaylord Texan in the second quarter of this year. We'll complete that roughly in the second quarter of next year.

And just on the headwinds that we're seeing in 2025, is that a peak level you think or just given some of the longer-term plans, maybe that increases?

I would say that from a disruption perspective, what we've communicated thus far is that we think it's comparable to what we saw in 2024. There's a lot more volume going through in 2025, but we don't expect us to face some of the same headwinds that we saw at the Gaylord Palms room renovation in 2024. So more volume, but about the same amount of disruption year over year.

Okay. And then just on the higher mix of association business in 2025 impacting out-of-room spend. Curious what that mix looks like in the group bookings in 2026 and 2027. And if maybe we see that trend kind of revert in those years.

We are moving towards a higher mix of corporate in 2026. Obviously, we still have a lot of business to book into that period of time. But we do see a higher mix of corporate in 2026 based on what's on the books right now. I would point out though that even with the higher mix of association in 2025, our rate on the books from a group perspective is very, very healthy and shows solid growth. Generally speaking, corporate has better spend outside the room and has a higher premium, but we're doing a better and better job of attracting the most premium association groups. So I'm very encouraged by what's on the books and how we'll see that play out this year.

Just one thing back on disruption. As it relates to the Opryland meeting space expansion, this first phase this year is the most disruptive as the demolition occurs. So as we roll into 2026, as that project will continue, it will be less disruptive to ongoing business because you'll have less noise interrupting groups.

Less connecting of the building.

Appreciate the color. Thank you.

Thanks, Ari.

We'll take our next question from Smedes Rose with Citi. Please go ahead. Your line is open.

Hi. Thank you. I wanted to ask you a little bit about your labor and wage costs. Maybe how much did they increase in 2024 and how much are you baking in for 2025?

This is Patrick. Good morning. We saw wages specifically year over year increase about 3.3% and we're baking in about the same amount, but we did incorporate the full-year impact of our collective bargaining agreement with Gaylord National and the union there. So we take that into account, but a 3% to 4% expense increase is what we're expecting on the wage and labor front.

And they should be the same in our entertainment business too.

We took big increases back in 2023.

We did. I mean, to Colin's point, we're up at the end of 2024 about 3.4% in the hotel business in terms of wages. The most important thing is our wage margin has remained flat. So we're very proud of our ability to manage productivity levels to offset the increase in wages.

Thanks. And I just wanted to ask you, you've talked about record bookings on all future room nights, etc. Any sort of change in the profile of who's booking? Are you seeing pick-ups in associations or trade shows? Or is it a typical mix? Any color you can provide there?

Part of this investment thesis that we've embarked on is our ability to remix hotels like Gaylord Opryland towards a higher mix of the premium corporate business. I'm really proud of what the Opryland team has been doing. In terms of what they booked in the fourth quarter and throughout 2024, Opryland achieved the highest growth in ADR of any of our hotels. They are doing a great job of remixing that hotel towards a higher level of corporate. We will always need association business, and we highly value it. In fact, in the DC market, we're trying to get a little bit more association in place because that market has seen some challenges for the past few years. Our way of offsetting that is securing more association business long-term. Across the brand, we have been seeing a higher mix towards corporate and a lot of that is a result of the investments we've been making that make it more palatable for those groups to come to us. But regardless of the segment, we're moving to higher-rated groups.

Absolutely. Yes.

We've intentionally walked away from a few groups in order to achieve those higher rates. We've said this is the investment thesis and this is the product we have. If you can't afford it, we understand that. Some groups have gone elsewhere, and then they come back and say they will pay the higher rate to continue to enjoy this experience.

And groups that have been with us for twenty years.

Alright. Thank you. Appreciate it.

Thanks, Mitch.

We'll take our next question from Duane Fenningworth with Evercore ISI. Please go ahead. Your line is open.

Hey. Thank you. Good morning. Just wondering with respect to the ice results at Texan and Opryland, is that typically a local market demand or is that drive-to leisure? Do you think there was a trend change in those local markets or is this more about the ice programming, and do you think that could evolve next year?

Well, it is more local, very short drive-in demand. What's unique about the Christmas leisure guest is that it is a much shorter length of stay than our summer guest. But they spend two times the amount on property. So it is a short-duration, higher-cost activity for the leisure guest. What we saw this year was that admissions were flat in terms of attending ice. But we saw a decrease in the overnight stay. So it looks like it was potentially the lower-rated customer trading down an overnight stay to just a day visit.

But we're doing some work around that now to try to understand exactly what the behavior was as it relates to those customers. I want to just add something here because I've read a few reports this morning that sort of highlight our results as leisure weakness. I want to put this in perspective. In 2019, these five of our big hotels in 2019 did just under $150 million in revenue in December. Last year, 2023, did about $200 million. It was up 34% from 2019 to 2023, basically all leisure business. In 2024, we did about $192 million, slightly below last year. These are spectacular numbers. ICE is one component of it. Over the years, we've built light shows. We've done dinner shows. We have kids' areas. We have massive indoor pool complexes. That drives this leisure business. This is very, very strong business. The weakest of these five hotels did about a million dollars a day in revenue in the month of December, and Opryland with 2,880 rooms did $1.75 million a day in leisure business in the month of December. So our leisure business is not weak. Our leisure business is very strong in the month of December. It's just that it wasn't quite as strong as we thought it was going to be. And that will happen in the last couple of weeks. We will get to the bottom of that. Is it pricing? Is the consumer a little fatigued? My guess is maybe a little bit of both. We will figure that out. But our leisure business is very strong.

We did some primary research with the ice consumers. We did see more economic sensitivity. As a result, we experimented with yielding strategies. We did not see a dramatic improvement in volume sold as a result of lowering price so we returned to our prior pricing. Our takeaway is there's a lot of uncertainty and sensitivity, and folks were making decisions to spend less among some of the lower-tier value consumers. It wasn't that we had priced out of their capability or what they were interested in buying into; they were just being more cautious this season.

Thank you. That's helpful context. And then just with respect to the group bookings and your momentum with corporates, any particular industries that stick out? Thanks for taking the questions.

We are very interested in financial and tech and are doubling our efforts to go after some of that. But we've seen growth across a lot of industries, so I wouldn't say beyond those two that there's anything that really stands out.

Thank you.

We'll take our next question from Dori Kesten with Wells Fargo. Please go ahead. Your line is open.

Thanks. Good morning. After the Opryland meeting space expansion announcement, are there more announcements like this in the background that you're considering? Or is the CapEx plan that you laid out at the Day through 2027 pretty baked in at this point?

Maybe. The way we think about this is we don't wake up and decide we need to expand a hotel. We look at the demand characteristics of each of our physical assets. We look at things like turndowns, all of the activity among the meeting planning community. Here's the good news: we are building a lot of forward demand into this business. If that forward demand continues to accelerate, there will probably be additional rooms expansions and meeting space expansions we will have to contemplate. We've said many times before, when we bought Hill Country, we did not buy it to keep it as approximately a thousand-room hotel ten years from now. We believe in inducing demand into that market and at some point in time, we will pull the trigger. This is an exciting time for the company because we are building really strong forward demand because of the unique capabilities of our hotels. I think this will give us the opportunity to deploy more capital at high rates of return over the years to come.

I think it's fair to say that enhancements are not all created equal in terms of construction disruption. Adding rooms is less disruptive than renovating all of your meeting space because out-of-inventory you obviously can't sell to the group. We look at every hotel in terms of how to drive incremental profitability, be that through additional rooms, renovations, or new food and beverage options, and then consider the disruption as part of the returns analysis based on the type of project.

One of the beauties of the new space expansion at Gaylord Opryland is once that's open and you have brand-new space, it allows you to take what would have been seen as disruption in the past and absorb it into that new space when you need to renovate other ballrooms. There's an agenda to get this built as quickly as possible so that we can avoid creating additional disruption when we need to do other renovations at that hotel.

The only other project that was on the page we've talked about in recent years in addition to what's been mentioned is the Rockies expansion. I think that's always been in the background and is part of the long-term view, but there are still a few things to work through on the design and other issues. We're probably nearer today to that one than we were twelve to eighteen months ago simply because of what we've been able to accomplish with the complete beautification of that Grand Lodge, the food and beverage, and the impact that those investments have had.

We've just got some administrative and political issues to work through there.

But it's fair to say though that with the Rockies expansion, that's relatively not disruptive just given that the cost structure and how it connects to the building?

That's very fair because you're talking about a building that has only one connection point to the main building.

Okay. Got it. Thank you.

Thank you. We'll take our next question from Chris Darling with Green Street. Please go ahead. Your line is open.

Thank you. Good morning. A couple questions on Gaylord National. First, what's your expectation for performance in 2025? And then secondly, how reliant is that property on the local DC market in terms of demand generation? Just wondering if there's any risk maybe with some of the government efficiency initiatives and how that may or may not impact that property going forward.

We don't generally provide guidance at the property level, but I can give some directional color. Forward bookings at Gaylord National for this year, next year, and the year after look pretty good.

We are concerned with what's going on from a government perspective, and we've been trying to pivot away from that business as much as possible. I would say we have minimal exposure as we move through 2025. We've already reviewed what's on the books and are trying to mix it towards a higher level of association business because we do think there's some short-term demand generation challenges in that market.

I wouldn't say there's an overreliance on the local market. There's certainly not a transient perspective; that hotel runs a much higher percentage of group business than our other hotels. We found greater strength driving from the group side. We believe Gaylord National just finished an incredibly strong year in terms of performance, and we'll continue that trend.

Okay. That's all helpful thoughts. Then I have a nuance question. You mentioned you come into this year expecting lower out-of-room spend due to the group mix shift. With that dynamic, what's your ability to manage your expense structure around that? Is there anything to read into about that?

That out-of-room spend is a high-margin piece of our business, but that's been taken into account in the guidance we provided. There are other levers that we pull to try and offset a mix shift from corporate or association. We see the room rate on the books in a very strong position, and our sales teams do an excellent job of, when they're ninety days or thirty days out from a group's arrival, trying to upsell every single group to drive additional spend outside the room. We have a number of levers to offset that and to maintain or grow our margin.

To put this in context, the association mix we're seeing on the books is comparable to what we've seen in prior periods. We had a really strong mix of corporate in 2024 as well, so put all of that in context.

It is not a dramatic shift.

One of the advantages of group business is that forward visibility of activities allows you to staff more appropriately because you know where the group will be. That gives you advantages from a labor scheduling standpoint.

We just hosted a very large association at Gaylord Opryland this past weekend. Preliminary figures show that the group achieved a historic level of attendance, significantly outpacing what they did last year, which was historic. As a result, we saw increases in parking, food and beverage outlets, and catering across the board. Association business generally is not at the same level of premium as corporate, but if we see the kind of performance we saw this weekend, that bodes well for us.

I want to compliment Patrick and his team. We play an active role with our managers. Patrick and his team are literally in these hotels daily, managing with the managers the cost structure of these businesses, which is one reason we've had very good margin results. I want to compliment our asset management team. When we see these mix shifts, we bring them to the attention of the hotel leadership to make sure we're adjusting cost structures so that we do not see dilution in EBITDA margins.

We had 2.1% same-store revenue growth last year and we grew margins 30 basis points. That's because of the daily work Patrick and his team do in managing the cost structures of these businesses.

There are levers that we pull to maintain the margin on the bottom line. We've already taken significant steps to get ahead of any risk we foresee for this year to positively impact the bottom line and help us achieve our goals.

Does that help with...?

Yes, that is very helpful. I appreciate all the color there. Thank you.

Thank you. We'll take our next question from Jay Kornreich with Wedbush Securities. Please go ahead. Your line is open.

Hi. Thanks so much. I wanted to ask about the pace of group revenue on the books for 2026 being up 11%, which I believe you said reflects ADR growth of 4.5%. As we get closer to 2026 and you're able to book into many of the finished CapEx projects and have a rate-driven strategy, do you think there's opportunity to push that 4.5% rate growth even higher?

Yes. Certainly there is. Keep in mind, when you look at where revenue on the books is relative to prior years as we approach the travel date, we're moving towards 50 points of occupancy on the books. So we enter a year, typically, the differential in revenue on the books is going to be purely rate. That's the opportunity: to continue to push that rate higher as we move toward the year. As the booking window shortens, you're also going to book more corporate business, which typically travels at a higher rate.

The hotels are aggressively cutting group room blocks now, which is lowering expectations of how much will travel so they free up more space and rooms to sell into. With that compression, they can sell at higher rates. Revenue management is using that compression to drive more room nights and higher rates.

Appreciate that. That's helpful. Then one more on the entertainment segment. You've made a number of strides over the past year. Any other material investment or expansion plans over the next year or two you could highlight on the entertainment front?

The thing we're most excited about is our investment in Southern Entertainment as another live platform opportunity. It's a relatively light capital-intensity platform and provides access to attractive entertainment destinations and a fan base that complements our existing fan base across Ryman and other properties.

There are a number of things we're working on that we're not prepared to talk about at this time, but there are many opportunities in that business. The challenge is prioritization of what we focus on.

Okay. Understood. Thank you.

Thank you. We'll take our next question from Chris Woronka with Deutsche Bank. Please go ahead. Your line is open.

Hey. Good morning, everyone. Thanks for squeezing me in. If I can go back to the corporate shift: you're making investments partly to attract a higher-rated premium corporate group customer. Is there any way to frame how that ideal premium corporate customer looks versus association or a non-premium corporate group in terms of size, length of stay, rate, or out-of-room spend? If it's smaller, does that make it harder to fill leisure weekend spots or are there more shoulder periods? Any color would be great. Thank you.

Corporate rate is generally higher, although it's hard to put a specific percentage on it. Outside-the-room spend is significantly higher with many corporate groups; we've seen levels of $500 or $600 per person per day in some cases. In terms of size, they're not materially different; there are many large corporate groups that are growing and asking us to grow with them. Three of our top customers are constantly asking about expansions because they have more business they'd like to host with us. So generally it's a higher rate, higher outside-the-room spend, and size is not a significant differentiator because the universe of groups is so large.

The purchase of Hill Country has helped us understand the opportunity with the higher-rated corporate business, because when you compare the rate differential between what is accomplished in that hotel versus our existing hotels, it's quite significant. That is exciting for us.

It's important to recognize we're talking about incremental change at the margin, not a wholesale change. We'll continue to have a substantial book of association business. Our goal is to move the rate across all segments and to attract higher-rated business, whether corporate, association, or SMRF business.

This comes down to increasing our skill and capability in stacking groups with one another so that groups still feel they have a unique experience but we fill the house in a more optimal way.

At the end of the day, we have such a small share of this market, and we're retaining many of our customers. That's what's driving these expansions: to move our share up marginally. This is a very interesting time for us.

Yes.

I really appreciate all that color. Very helpful. Thanks, guys.

Thanks, Mike.

We'll take our next question from John Decree with CBRE. Please go ahead. Your line is open.

Thank you. Good morning all. Maybe just one question. Jennifer, you talked a little bit about some of the conservatism that's built into the low end of the guidance. Curious if you could talk to some of the variables that you think about that might get you to the high end of the guidance and maybe some of that is just leisure and economic variation to expectations, but either some ability to manage disruptions. That's my question. Thank you.

I think you hit on all the areas we identified that could drive potential upside: variability in leisure demand, which we have less visibility into earlier on. On the group side, we know what's on the books, and better performance from the leisure guest can help get us to the top end of the guidance range.

On the construction disruption side, we've made enhancements to our design and construction team over the past eight months and improved processes with vendors and supply chains. We feel confident in our ability to manage disruption going forward, and to the extent we can improve on what we've outlined, that potential upside could help.

Great. Thank you very much. I appreciate it.

Okay. David, I think one more question. We're almost at the top of the hour.

Perfect. Then we'll take our last question from David Katz with Jefferies. Please go ahead. Your line is open.

Thanks very much. Made it in under the wire. I wanted to just get your perspective on competition. Is there any marginal competition in certain markets that may be having some impact? I know your properties are unique, but anything you can point to that may be affecting performance?

Running through the markets, there's nothing new being built that looks like our product. There are individual assets like JWs and some Marriott Marquis properties that are competitive in certain markets, but there's nothing that directly replicates our portfolio coming on.

No, not transforming themselves. There's nothing new coming on.

My comment about change in mix being at the margin: our goal is not to go to 80% or 90% corporate. We're trying to move it four or five points. That type of mix change can improve profit dramatically.

Understood. Appreciate it. Thanks so much.

Thank you, David. Thank you.

Well, David, thank you for presiding over this this morning, and we appreciate our investors and analysts being on this call. If there are any follow-up questions, you know how to get hold of our IR team, Jennifer Hutcheson or Mark. Thank you, and we'll see you soon.

This is the end of today's program. Thank you for your participation, and you may now disconnect.