Earnings Call Transcript - RHP Q4 2022

Operator, Operator

Welcome to Ryman Hospitality Properties Fourth Quarter 2022 Earnings Conference Call. Hosting the call today are Colin Reed, Executive Chairman; Mark Fioravanti, President and Chief Executive Officer; Jennifer Hutcheson, Chief Financial Officer; and Patrick Chaffin, Chief Operating Officer. This call will be available for digital replay at (800) 839-9881 with no conference ID required. I will now turn the floor over to Jennifer Hutcheson.

Jennifer Hutcheson, CFO

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 metrics 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.

Colin Reed, Executive Chairman

Thank you, Jen, and good morning, everyone. Well, the fourth quarter was an appropriate exclamation point to close out an extraordinary year for our company. I don't think in all of my years in this industry, I've seen anything like the last 12 months, going from just under 33 percent occupancy and $1.85 of total RevPAR in January of '22 during the worst of the Omicron wave and yet ending the year in December with just over 73 percent occupancy and a whopping $612 of total RevPAR. I really believe the results of this past quarter and our ability to recover so quickly from the last stage of the pandemic highlights the exceptional nature of our assets and our strategy compared to the wider industry. Of course, we've always talked about these attributes since well before the pandemic, about our dedication to studying and understanding our core group customer and delivering the highest quality experiences to our guests. About our rotational system for world-class assets in top markets, which makes that customers' planning decisions so much easier by booking multiyear, multisite meetings all at once. About our belief in investing significant capital into expanding and upgrading our assets against the backdrop of very limited new supply. And about our strategy, to induce our own transient demand with innovative and compelling programs around the calendar. By 2019, we were just starting to really reap the dividends literally and figuratively of this strategy. As our newest property, the Gaylord Rockies just opened that year with an unheard of 1.2 million room nights on the books and generated over $85 million of adjusted EBITDA in its first full year of operation. And the other cylinders of our hotels were firing as well with the opening of SoundWaves and the expansion of the Texan and groundbreaking underway at the Palms. And of course, our Entertainment business was riding high on the back of Nashville's exponential growth. We found ourselves at the end of '19 sitting on then record performances across so many metrics. And we felt like we were just getting started as we geared up in February for what, by all signs, was going to be a bonanza of a year on the heels of these investments. But within weeks, it all came to a halt. And the last three years since then have been a whirlwind. But now here we are, three years and three COVID waves later, at last prepared to give you all a complete set of annual guidance once again. And what we are planning for 2023 is already well beyond those figures we'd anticipated back in early 2020. Our lower group customers are back in droves and spending healthily on property, thanks greatly to our emphasis on rebooking over fee collection during these start days. Our assets themselves are transformed compared to this time in 2020, thanks to our commitment to invest capital. This includes the 300 new rooms at the Palms, the beautifully renovated rooms at the National, and a host of new ballrooms, meeting spaces, event launch pavilions and atriums either complete or now underway across the portfolio. And not to mention the entirely reconcepted food and beverage outlets with innovative new socialization and gathering opportunities for groups, new technologies in place, new staffing models in many areas of our hotels. The list goes on. And our entertainment business is equally transformed. We have opened already in Orlando, broken ground already in Las Vegas, closed the acquisition of Block 21, which brings Austin's iconic ACL Live at the Moody Theater into the fold. And to cap it all off in June, we sold 30 percent of the Entertainment business to the impressive team at Atairos, bringing NBCUniversal into the temp and valuing the business at over $1.4 billion. It's not a stretch by any means to say that our entire company has not simply recovered from the pandemic but has undergone a complete transformation and with our new understandings of our customers, both group and measure and all of the levers available to us now and in the future through our ongoing investments. And looking at the tremendous book of business we have on the books for all future years, I believe we're capable of delivering exceptional results well into the post-pandemic era. As Mark and Jen will report, notwithstanding the significant impact of Omicron in the first quarter, almost all measurements in 2022 were a record for us. And as you will see from our guidance in '23, more records are likely to follow. Needless to say, I'm truly excited for this next chapter of our company. And it is a perfect moment for Mark to take over for me in the CEO role as I move to Executive Chairman. So I'll now let you now turn over to Mark to let him give you more details of the quarter and our results and how we're thinking about the coming year.

Mark Fioravanti, CEO

Thanks, Colin. Good morning, everyone. The fourth quarter was a terrific quarter for us as our most leisure-focused quarter, we were really looking forward to having our Signature ICE! show back after a two-year hiatus due to COVID and travel restrictions on our master carvers from China. And we're happy to report this year's ICE! show surpassed our expectations, selling 1.2 million tickets or 115,000 more than the last time we presented ICE! in December of 2019. The renewed attraction of ICE! helped increase transient room nights above the fourth quarter of 2019, and transient ADR in the quarter was $317, a 43 percent increase over the fourth quarter of 2019. That's a record for the Gaylord brand, surpassing the third quarter of 2022 by $29. On top of this holiday strength, group performed well with group room nights traveling only 2.5 percent below the fourth quarter of 2019 levels, more than offset by group ADR up almost 10 percent over the same period. While our reported total occupancy was three points below the fourth quarter of 2019, when you consider the new 300 rooms at the Palms we added in 2020, our total room nights traveled were only 1 percent less than the fourth quarter of 2019. Hospitality margin in the fourth quarter was 31.1 percent, which was 30 basis points less than our fourth quarter of 2019 but was flat to that period when excluding the decline in interest income on the Gaylord National bonds. This is despite inflationary pressures we're all aware of in the broader economy and an average wage rate increase of 24 percent across the portfolio compared to 2019. At the bottom line, our Hospitality segment delivered $150.1 million of adjusted EBITDAre, which put the full-year profitability of the segment $12.7 million above the high end of our last upwardly revised guidance range for 2022. The quarter was an all-time record for both total revenue and total adjusted EBITDAre for our Hotel segment in the month of December set a single-month record for both metrics as well. And what should be the last earnings call in which we use 2019 as a full-year comparison, 2022 finished up 7.8 percent in hospitality revenue and 6.3 percent in hospitality adjusted EBITDAre compared to that last pre-pandemic year, even with the material impact of Omicron in the first quarter. So just a tremendous holiday season to close out what proved to be a great recovery year throughout 2022. In terms of production, we booked over 1 million gross group room nights in the quarter, a 4.4 percent increase over the fourth quarter of 2021 and the average ADR of $254 on new bookings was 11 percent higher than the fourth quarter of '21 and 13.3 percent higher than the fourth quarter of 2019. New group room revenue booked in the quarter and in the month of December alone were both new quarterly and monthly sales records for the Gaylord brand. This level of production sets us up well for 2023 and beyond. On December 31, we entered this year with 49.8 percent net group occupancy points on the books for 2023, 4 points more than we entered 2022 and an ADR of $222, or 5 percent higher than the start of 2022. This equates to over $53 million or 14.5 percent more net group rooms revenue on our books to start this year than we had 12 months ago to start 2022. You will see in our guidance, which we are bringing back in full according to our past practice, that we translate this into an expectation for RevPAR growth this year of 9 percent to 12 percent and total RevPAR growth of 6.5 percent to 9.5 percent over full year 2022. In terms of profitability, while we expect inflation will remain elevated and higher margin attrition and cancellation fees will return to more normalized run rates, the transformation of our business, which Colin described, including efficiencies across management ranks, staffing models, technology, and food and beverage outlet strategy, among others, is expected to deliver stable to modestly improved margins compared to 2022, or an adjusted EBITDA range for the year of $550 million to $580 million in our Hospitality segment. At the midpoint of $565 million, this represents over 10 percent growth from 2022. I'll remind you that the first quarter of this year will be by far the strongest in terms of percentage growth in RevPAR and total RevPAR simply due to the Omicron impact in the first quarter of 2022, creating a materially lower comp in the remaining three quarters. From an adjusted EBITDA perspective, we anticipate quarterly contributions similar to 2019 on a percentage basis. Looking further, beyond 2023, we see a similar favorable setup for our Hospitality business for the foreseeable future. As of December 31, once again, we have 9.6 percent, 6.8 percent and 3 percent more net group rooms revenue on our books for T+2 through T+4, respectively, for 2024, '25, and '26 than we did one year ago. And as we continue to add new production at increasingly healthy ADRs, such as we did in the fourth quarter, we expect to see our rooms revenue pace for future years pull further ahead. We believe our 2023 guidance and our on-the-book position for our Hospitality segment for future years plainly evidences Colin's opening remarks about the transformation of our business from pre to post pandemic and the relative performance capability of our assets against the broader industry. But to emphasize it, we believe these levels of operating and sales performance are made possible by our unique strategy and its attributes of strong customer loyalty, broad customer exposure with very little concentration in any one industry, high-quality purpose-built assets, fortified by high-return recent capital investments, and all of this in some of the most attractive, rapidly growing markets in the U.S. Note that three of our five markets, Orlando, Nashville and Dallas, were in the top 7 large metro areas for population growth over the last five years and also in the top five for job growth in 2022. Denver was not far behind them as well in the top 25 for both metrics. It's no surprise then that all four of these markets, Dallas, Orlando, Nashville, and Denver, were in the top 9 for hotel occupancy recovery in 2022 compared to 2019 according to STAR. Against this backdrop of limited new supply growth in rapidly expanding markets, we see ample opportunities for our capital deployment strategy ahead of us. This includes over $69 million being spent right now to create an expansive indoor-outdoor group pavilion and to completely reimagine the Grand Lodge Atrium at the Gaylord Rockies, increasing the volume of premium sellable group space and expanding food and beverage outlet selection capacity. And we see many more opportunities at the Rockies and elsewhere in the portfolio for additional rooms expansions, SoundWaves-style water experiences and more to continue differentiating our hotels, drive return group business and attract high-spending leisure guests. Turning to our Entertainment segment, the fourth quarter performance of our same-store assets compared to '19 was equally impressive as our hotels. Same-store revenue for the segment was up 35 percent, and same-store adjusted EBITDAre was up 62 percent compared to the fourth quarter of 2019. On a consolidated basis, including Block 21, which we acquired midyear, adjusted EBITDAre of $26.1 million placed the full year results for Entertainment just above the midpoint of our most recent guidance range. For 2023, we're looking forward to a full year contribution from the ACL Live at the Moody Theater and other Block 21 assets. We have a slate of value-enhancing investments lined up in Austin for both the theater and the W Austin Hotel. We expect the acquisition plus steady growth in Nashville and across the Ole Red brand to help drive 2023 adjusted EBITDAre for this business to a range of $87 million to $97 million for 2023. At the midpoint of $92 million, this is a full $30 million more than this business generated in 2019, but truly a significant transformation on par with our hotel segment. Now let me turn it over to Jennifer to update you on our balance sheet, liquidity, dividend, and our consolidated guidance range.

Jennifer Hutcheson, CFO

Thank you, Mark. In the fourth quarter, the company generated total revenue of $568.9 million, and net income to common shareholders was $58.1 million or $1.03 per fully diluted share. Now once again, that our fully diluted share count in the quarter going forward will continue to reflect the put rights held by Atairos as part of their Opera Entertainment Group investment. Even though these rights are not yet exercisable, we will also have the option to settle any rights exercise in cash. Any exercise of the put rights would also result in Atairos 30 percent ownership in Ole Red reverting back to Ryman, so just keep this in mind when estimating future per-share amounts. Total consolidated adjusted EBITDAre for the fourth quarter of $168.1 million put our consolidated full-year results over $17 million above the high end of our most recent guidance. For 2023, in addition to the operating segment guidance provided by Mark, we are estimating for our Corporate segment an adjusted EBITDAre loss of $29 million to $32 million, which would be just slightly better than 2022 at the midpoint. This yields a total fully consolidated adjusted EBITDAre guidance range for the year of $605 million to $648 million, a 12.7 percent increase at the midpoint over 2022 and a 22.7 percent increase over 2019. We're estimating that adjusted funds from operations or AFFO for 2023 will be in the range of $392.5 million to $424 million. At the midpoint, this represents a growth of 12.3 percent over 2022 and 14.5 percent over 2019, and reflects the increased interest cost of our current debt portfolio compared to 2019, as well as the pro-rata reduction in AFFO attributable to Atairos minority interest in Ole Red. Turning to the balance sheet, we ended the quarter with $334.2 million of unrestricted cash on hand and our $700 million revolving credit facility remained undrawn. Together with the undrawn $65 million revolving credit facility at Opera Entertainment Group, this yields almost $1.1 billion of available liquidity after deducting $10 million of outstanding letters of credit. We retained an additional $119 million of restricted cash available for certain FF&E projects and other designated uses. On a trailing 12-month basis, our net leverage ratio of total consolidated net debt to adjusted EBITDAre stood at 4.6x, and based on the midpoint of our guidance, we anticipate we will end the year at approximately 4.1x, which is below our year-end 2019 leverage and comfortably within our target range. We are pleased to declare a quarterly dividend this month of $0.75 per share, which is a substantial increase from our December declaration of $0.25 paid in January. That December declaration was targeted to achieve our goal of paying a minimum of 100 percent of REIT taxable income attributable to 2022. And our intention with the current declaration of $0.75 and subsequent dividends we made declare this year will remain to pay a minimum of 100 percent of REIT taxable income. Finally, in terms of interest rate exposure, as of quarter end, approximately 90 percent of our outstanding debt was at fixed rates, either directly or with the benefit of swaps, although we do have two swaps expiring in 2023 on both the Gaylord Rockies term loan and our corporate term loan B. We will address the Rockies maturity this year, our only maturity in 2023, which carries three one-year extension options that are fully available to us. We were pleased to have officially exited the cash fee status of that loan based on the strong performance of the Gaylord Rockies property post-pandemic. So our balance sheet and liquidity are in excellent shape to support all of our investment activity that Mark outlined, while also sustaining a meaningful dividend once again. And with that, I will turn it back over to Colin.

Colin Reed, Executive Chairman

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

Dori Kesten, Analyst

Thanks. Good morning. Can you walk through your expectations for cancellation and attrition fees this year? And just how it relates to your guidance. I'm just looking at the difference between RevPAR, total RevPAR and then the 25 basis points of margin expansion.

Colin Reed, Executive Chairman

Okay. Dori, thank you. Patrick, you going to handle that?

Patrick Chaffin, COO

Sure. Last year, as you probably are aware, we generated about $57 million in collective cancellation and attrition fees. We would expect this year to be in the, I don't know, $20 million to $25 million range. So a substantial reduction. We still have a few COVID cancellations that we're clearing out through the pipeline. But for the most part, we will be returning back to a more normal level of attrition and cancellation as we move through this year.

Dori Kesten, Analyst

Okay. And what's your current view on an eventual expansion of the Rockies? Are we able to get some guidance on potential timing or the cost of that?

Mark Fioravanti, CEO

Yes, Dori, that's an opportunity we are considering. As I mentioned earlier, we are currently implementing several enhancements, including adding more meeting space and completely reimagining the Grand Lodge, which will include a significant amount of buyout space for groups and additional food and beverage options. Once we complete that project, we will have the capacity to expand our rooms, and when we do, we will have the necessary food and beverage and meeting space to accommodate those additional rooms.

Colin Reed, Executive Chairman

Yes. The other thing I would say, Dori, is that the last six months, we've been with our finger on the pulse looking at lead volumes by these hotels. And I would say that we, as a company, have been pretty excited about what we're seeing on lead volumes and particularly at the Rockies. I suspect that sometime during 2023, we should be talking more positively about rooms expansion there simply because this is a fantastic market. We have, by far, the best convention hotel sitting in the middle of the country next to that airport. And we're very excited about the prospects for that hotel. So we're just going to monitor the next few months for more communication on this subject.

Dori Kesten, Analyst

Okay. Great. Thanks.

Bill Crow, Analyst

Hi, good morning. Congratulations on the quarter and the year. I want to follow up on Dori's question regarding cancellation and attrition fees. The guidance for $20 million to $25 million in 2023 should be considered largely front-end loaded as you continue to address cancellations from a year or a year and a half ago. Additionally, as we review your guidance for the year, we recognize that the first quarter is relatively easy due to Omicron last year. Are you suggesting that the second half of the year may be flat from a RevPAR perspective, or possibly even slightly down compared to last year?

Colin Reed, Executive Chairman

Do you want to take it that?

Patrick Chaffin, COO

Yes. So on the first question, you were asking about how we expect attrition and cancellation to flow across the year. Honestly, given the length of time that it takes to communicate on these issues, I would expect it to be pretty evenly laid out across the year. So if we said $25 million, it should be $5 million a quarter, roughly $20 million, $4 million a quarter. The second question was around the second half of the year. Mark, did you want to take that or do you want me to?

Mark Fioravanti, CEO

Yes, Bill, as you move through the year, you’ll notice that the comparisons to 2019 become increasingly tighter. In the fourth quarter of 2022, we essentially matched the number of room nights we had in 2019, indicating a return to more normalized levels. Therefore, as you progress through the year, the guidance suggests that these comparisons will continue to become tighter.

Bill Crow, Analyst

Yes. And then I have one more question. Colin, you mentioned your insights on demand. I'm curious if you've noticed anything in forward booking activity that might indicate some of the macro concerns and recent layoffs, particularly regarding corporate meetings.

Colin Reed, Executive Chairman

Yes. We really haven't seen that in our lead volumes. Patrick will just take them.

Patrick Chaffin, COO

Yes, I would say that when the tech sector started to see some challenges, I think everyone kind of took a pause and got a little nervous, but I think they've realized that what's going on in tech is not necessarily the macro situation as much as some hangover from COVID and some of the actions taken by tech during that period of time. I would say that just even the past four or five weeks, we've seen meeting planners start to relax a little bit. And they're still a little gun-shy, but the lead volumes look very promising for the year, and we feel that recessionary fears are abating a bit among meeting planners.

Bill Crow, Analyst

Great. I'll yield the floor. Thank you.

Patrick Scholes, Analyst

Great. Good morning, everyone. How are you thinking about wage and benefit cost increases this year? And related to that, just overall operating cost increases year-over-year. Thank you.

Colin Reed, Executive Chairman

Do you want to take it, Pat?

Patrick Chaffin, COO

Yes. We expect to see continued challenges related to average wage rate increases, anticipating an increase in the range of 5 percent to 6 percent as we progress through 2023. This projection is not as high as what we've experienced in the last two years, but we're preparing for these ongoing challenges. If the actual increases are lower than what we are planning for, that would be beneficial. However, we want to be realistic and acknowledge that it's been a tough couple of years in terms of wage rates.

Mark Fioravanti, CEO

One thing I want to mention about margins is that our guidance indicates we're expecting some modest improvements this year. While wage rates and inflation are putting pressure on margins, we are also seeing strong growth in average daily rates, especially with transient business. We've successfully raised food and beverage prices and achieved some productivity gains. Even though wage rates have increased, the wage margin remains flat compared to 2019. As we've discussed on prior calls, Patrick and his team have been working closely with Marriott to reconsider staffing levels at these hotels, focusing particularly on management. Currently, we have about 12 percent fewer supervisory roles in our hotels post-COVID compared to before the pandemic. There are several positive factors that help mitigate the impact of rising wage rates.

Patrick Chaffin, COO

Yes. And I would only add that longer-term, we're spending a lot of time looking at technology and understanding how we can deploy additional technology opportunities in the hotels to further increase our productivity as well as guest satisfaction and bring our overall costs down.

Patrick Scholes, Analyst

Okay. I do have just two follow-up questions. Number one, how is the National looking for this year given that D.C. has been certainly a slower market to recover? And then number two, any further thoughts about becoming, should we say, involved with the Chula Vista project?

Colin Reed, Executive Chairman

Patrick, National, we are pleased with the renovation work we've done there, the reengineering of the food and beverage facilities that has allowed us to eliminate costs in that hotel. And we're generally very happy with the trajectory of that hotel. And we're actually seeing good lead volume too for Washington. What have I missed on that?

Patrick Chaffin, COO

No, you haven't missed anything. I would agree completely. Gaylord National, not quite back to the level of room nights on the books that it saw in 2019, but moving back to that level quickly. The D.C. market has been a little more challenged. I think we've been a bright spot in that market, and to Colin's comments a moment ago, we've taken the opportunity over the past few years to address some structural cost issues that are really yielding themselves nicely. If you look at food and beverage performance and how it compares to prior year and 2019, you can see that there's definitely some bottom line margin improvements that are occurring at that hotel, especially in food and beverage. And so we continue moving it up from an occupancy perspective, but rate has been a bright spot there, and we feel actually very good about where National is heading.

Colin Reed, Executive Chairman

The last part of your question is regarding Chula Vista. And Mark, I think our answer to your question is there is nothing has changed since the last time we got asked that question back in December, which is that we, at this stage, have no desire to be an investor in that business.

Patrick Scholes, Analyst

Okay. Thank you for the update.

Colin Reed, Executive Chairman

Thank you, Patrick.

Smedes Rose, Analyst

Hi, thanks. I wanted to just go back a little bit to the group bookings that you have on deck for this year? And maybe just talk a little bit more about the composition of the group? Are you seeing more corporate versus association type business? And is there any kind of piece of the business that's lagging or any kind that is fully recovered in your view?

Patrick Chaffin, COO

Yes. I would say that what we see as far as recovery has been most pronounced in technology, in medical and areas like that. Corporate has come back roaring, and we're very pleased with what we see. From a mix perspective, I'm actually pulling up the actual numbers right now, so give me just a second. But as we look at this next year, we are a little bit more heavily weighted towards our corporate, but it's pretty consistent with what we saw in 2022. We do think that from a...

Colin Reed, Executive Chairman

Consistent with what we saw in '22, you said.

Patrick Chaffin, COO

I'm sorry, consistent with what we saw in 2022. Thank you for correcting me. But I would say that in the year for the year looks very promising from a corporate perspective. So while we have a little bit more in corporate on the books as of right now, we would expect that to continue to improve as we move through 2023.

Mark Fioravanti, CEO

Smedes, the one thing to keep in mind, when you look at the business on the books for '23, about 3/4 of that business was booked pre-2022. And so as we roll forward '23, '24 to '25, you're going to see those older room nights burn off and newer room nights that are at these higher rates come on. And so that will be a nice tailwind for our business from a rate perspective in the group segment.

Smedes Rose, Analyst

Thank you. I apologize if you already mentioned this, but what is the expected capital spending for the year on the major projects, and could you outline the key projects you are working on? You referred to the Rockies?

Jennifer Hutcheson, CFO

Yes. As Mark mentioned, one of the larger projects we have underway right now is at the Rockies, where we have a couple of projects involving a new pavilion and the reimagining of the Grand Lodge, which will create more usable group sellable space along with food and beverage options. Our capital estimate for this year is about $130 million in total, which includes both growth and maintenance, as well as contributions to furniture, fixtures, and equipment reserves that are linked to revenue. As those revenues increase, the reserves will continue to grow as well.

Patrick Chaffin, COO

Yes. I want to emphasize that we are heavily focused on food and beverage, which we see as a significant opportunity for our brand in the future. We are investing in our Old Hickory steakhouses at Gaylord National and Gaylord Palms, and we are renovating spaces such as the Osceola ballroom at Gaylord Palms, which covers 50,000 square feet. Additionally, from an ESG standpoint, we are making a substantial investment in solar panels that will be installed on the convention center at Gaylord National, making it one of the largest projects in the country. We believe this represents a strong commitment to our ESG priorities and our efforts to support the environment in the long term.

Jennifer Hutcheson, CFO

And let me clarify that number. It was off $100 million, it's $230 million when you're including growth so...

Colin Reed, Executive Chairman

Mark, on the entertainment?

Mark Fioravanti, CEO

On the Entertainment side, Smedes, Ole Red Las Vegas is under construction. And then we are renovating the W as well as making some enhancements at the theater in Austin, Texas. So those two projects combined are probably going to be in the $50 million to $60 million range this year.

Smedes Rose, Analyst

Okay. And then just one last question on Ole Red in Las Vegas. Is that the kind of menu you can start preselling events at this point, I guess, to corporations or social stuff? Or is that not how that piece of the business?

Colin Reed, Executive Chairman

It's both. In Las Vegas, where the building is located right on The Strip, directly across from the Bellagio, there are 120,000 people passing by daily. This will generate a significant amount of transit business. Additionally, we conduct many corporate buyouts at our Ole Reds. For instance, here in Nashville, we generate about $4.5 million in revenue from corporate buyouts. In Las Vegas, I believe this will be a substantial part of our business. However, it's important to understand that corporate buyouts are just the icing on the cake. Our main goal is to attract those country lifestyle consumers in that market, which is why we've chosen to establish our presence there. I expect it to be extremely successful.

Mark Fioravanti, CEO

Smedes, to your question, we're targeting a November opening in time for the Grand Prix. We already have interest in buyouts related to that event. And then, of course, that's quickly followed by National Rodeo, which is in Las Vegas every December and the Super Bowl is there in February next year. So we're already fielding calls about those types of opportunities from corporations and other organizations.

Smedes Rose, Analyst

Great. Thank you.

Operator, Operator

Thank you. Our next question will come from Chris Woronka with Deutsche Bank. Your line is open.

Chris Woronka, Analyst

Good morning, guys. And congratulations on the quarter and also the year. Had a question as to in the year for the year pick up, mostly on the group side, kind of what's implied in the guidance? And maybe you can give us a refresher on how in the year for the year tracked in '22? And should we assume that that's generally going to be the higher rated kind of smaller corporate group meetings? Thanks.

Patrick Chaffin, COO

Chris, the specific figures there, we can follow up with you on that as far as what we booked last year. But yes, most of your end of year for the year is going to be corporate-focused type business. Every now and then, we get a larger piece of business that is obviously welcome. But usually, there's not pattern availability for it. We are very encouraged based on what we saw in '22, and our in the year for the year lead volumes are very, very encouraging. I think we've got them right here. They're up — at the end of the year, they were up 56 percent. So...

Colin Reed, Executive Chairman

On '21. Yes.

Patrick Chaffin, COO

56 percent over '22. So as we look at in the year for the year lead volumes, we're very encouraged by what we see. And yes, that will usually be smaller groups. But we'll follow up with you with the specific figures around exactly how much we booked last year and what we've built into our guidance for this year.

Chris Woronka, Analyst

Okay. Thanks, Patrick. And then might be a question for Colin. As this entertainment business continues to grow and evolve, I mean, I remember the days when it was just a few assets in Nashville, and Nashville is still very important. But how do we think about the key drivers of the business, Colin? I know you're involved. There's also the Circle TV piece that I think a lot of us sometimes struggle to model it, frankly. So can you give us any thoughts on what the key drivers are outside of some of the just purely leisure assets?

Colin Reed, Executive Chairman

Yes. I'm going to sort of fly up to 65,000 feet on this. The growth opportunities in this business are numerous. We've got so many different things that we're looking at. And we're frankly just getting started with our friends from Atairos and Comcast NBC. So we're going to work hard during the course of this year to identify new avenues of growth. We probably will look at the physical venue side of the business as well as additional growth in the digital distribution of the content we create. I do say, I don't think you're going to see any sort of major changes to the structure of that business this year. But we're very excited about the growth avenue here. And so I would say to our investors that love this part of the business, stay tuned. We’re going to have some fun with this business over the next one to two years.

Patrick Chaffin, COO

Chris, it's Patrick. Let me follow up with you. I was able to kind of pull some numbers quickly. Our expectation is that we'll book around 14 percent to 15 percent of our group room night total for the year in the year for the year. And how that compares to prior year is tough because of Omicron because that's a net number. And if you remember, Omicron was creating so many cancellations. So I'll have to follow back up with you on that, but roughly 14 percent to 15 percent of what we expect to do for the total year in group should be booked in the year for the year.

Chris Woronka, Analyst

Okay, thanks, guys. All very helpful.

Operator, Operator

Thank you. Our next question will come from Jay Kornreich with SMBC. Your line is open.

Jay Kornreich, Analyst

Thanks. Good morning. I guess first, just a follow-up on the Entertainment piece, and you talked about the possibilities of growth and just the year-over-year growth seems to be more potential on that segment than maybe we attribute currently. So I'm just curious, do you outline a potential percent of the overall portfolio you see the entertainment fees getting to or want to get it to versus the roughly 10 percent pre-pandemic?

Mark Fioravanti, CEO

We don’t view it as linked to hotel growth. Instead, we see it as a unique opportunity with distinct demand and capital drivers. Our long-term goal for this segment is to establish a standalone live entertainment and media business that caters to country lifestyle consumers, supports country music, and engages those consumers through both in-person and virtual experiences. The only connection we make to hotels is regarding how we manage capital deployment and how it aligns with our REIT structure, which does impose some limitations. However, from a growth standpoint, we are not facing those limitations right now.

Jay Kornreich, Analyst

Okay. Thanks for that perspective. And then just another question on the Gaylord Rockies that I guess if you look at the run rate, Q3 this year, it was our top-performing asset 87 percent occupancy, 4Q dropped down to 70%. I'm sure it's more of a group-oriented asset. But just curious if you can kind of run through how you see that run rate in 2023 and the year-over-year growth at that asset?

Colin Reed, Executive Chairman

You want to take that, Patrick?

Patrick Chaffin, COO

Yes, we believe that the Rockies will continue to reach its stable performance level. I expect the hotel occupancy to be in the mid-70s, which aligns with the performance of Gaylord Opryland, Gaylord Palms, and Gaylord Texan. Therefore, 2023 serves as a strong indicator of what the hotel's stabilized performance will look like. Additionally, from a margin standpoint, as a newer hotel that started operating during the pandemic, we have identified further opportunities to enhance its margin performance. Colin and Mark have mentioned some of the investments being made there. While I anticipate it will reach a stabilized level similar to Palms, Texan, and Opryland's performance in 2023, there is still potential for improvement due to the investments in the property.

Colin Reed, Executive Chairman

And as we went into this year, Patrick, room nights on the books, we were pretty happy with where we sit for the Rockies. And that should manifest itself and translate into the performance for 2023.

Patrick Chaffin, COO

Yes, that's correct. To Colin's point, 2023 had more room nights on the books than we did at this time in 2019. So the hotel is built very well for a solid performance in 2023.

Colin Reed, Executive Chairman

Okay. We do one more call and, Chelsea, so if we have another question, we'll take it.

Operator, Operator

And our last question will come from Dany Asad with Bank of America. Your line is open.

Dany Asad, Analyst

Hi, guys. Sorry about that. And good morning, and thank you for sneaking me in. So just a two-parter, my first question is, in your RevPAR outlook of 9 percent to 12 percent. Can you help us parse out how much of it is occupancy growth and how much you're underwriting to come from rate? And then just at a higher level, how do you guys feel about your ability to push rate on group not just for this upcoming year, but if we kind of look out further to '24 and '25 and beyond? Thank you.

Colin Reed, Executive Chairman

Mark noted that much of the rate for this year was established in the previous years. However, we have successfully achieved significant rate growth for the business booked last year, which is expected to result in positive rate growth this year. We are quite optimistic about the developments in 2024, 2025, and 2026. Additionally, we have been actively pursuing rate increases with our partners at Marriott through our sales team. Pat, could you elaborate on that?

Patrick Chaffin, COO

Sure. I mean, just at a very simple level, most of our RevPAR growth in 2023 is based off of occupancy growth versus 2022. To Colin's point, the great growth that we've seen and what we've been able to book on the group side will really start to materialize and manifest for us in larger quantities as you get into '24, '25, and '26. So we've built in some continued transient rate growth. Honestly, every time we build that in, it comes back and surprises us in terms of what we're able to actually achieve. And I would expect the same on the end of year for the year on the group side. But at a very basic level, the majority of our RevPAR growth in 2023 is based off of occupancy recovery.

Mark Fioravanti, CEO

And Dany, as we mentioned earlier, a lot of that is going to happen in the first quarter off of that Omicron comp because we were only about 47 points in the first quarter last year.

Colin Reed, Executive Chairman

Any other questions from you, Dany? Okay. If there are no other questions, I'd like to thank everyone for being on the call this morning. We are very proud of the results that we accomplished as a company last year, and we are very excited about the prospects for '23 and future years. So if you have any follow-up questions, you know how to get hold of us. Thank you very much. Indeed. Operator, we're going to close the lines. Thank you.

Operator, Operator

Yes, sir. Ladies and gentlemen, this does conclude today's call, and we appreciate your participation. Please enjoy the rest of your day.