- Marriott International to manage hotels under Gaylord brand name -
NASHVILLE, Tenn.--(BUSINESS WIRE)--May. 31, 2012--
Gaylord Entertainment Co. (NYSE: GET) today announced that it has agreed
to sell the Gaylord Hotels brand and the rights to manage its four
hotels to Marriott International, Inc. (NYSE: MAR) for $210 million in
cash. Following consummation of the sale, Gaylord will continue to own
its hotel properties and other businesses and will reorganize and elect
to be treated as a real estate investment trust (REIT) effective January
1, 2013. The Company will be the only lodging REIT focused primarily on
group-oriented destination hotels in urban and resort markets.
The transaction announced today is the result of a comprehensive review
of strategic options to maximize long-term value for shareholders. In
concluding to pursue this option, the Board of Directors and management
team focused on three elements: the cash received in connection with the
sale of the brand and management rights, the opportunity to realize
substantial cost savings and revenue enhancements due to Marriott’s
scale and reach in the hospitality market, and the Company’s positioning
as a well capitalized REIT focused on group-oriented destination hotels
in urban and resort markets.
Colin V. Reed, Chairman and Chief Executive Officer stated, “We are
pleased to be announcing today a transaction that we believe allows
shareholders the potential to realize maximum long-term value for their
shares in Gaylord Entertainment. Our months-long review of various
options led us to the conclusion that the REIT structure represents the
best pathway to realize the long-term value of our business and to
position the Gaylord brand for continued growth.
“The REIT structure allows us to benefit from a more efficient tax
structure, and establish a platform to grow our distinct asset base
through organic growth of our existing portfolio and, in time, through
strategic acquisitions. Moreover, we believe that by working with
Marriott International, our shareholders will benefit from significant
property efficiencies and corporate overhead reductions, as well as
revenue synergies which include Marriott’s ability to attract and market
to large group customers. Based on our analysis to date, we anticipate
annualized cost synergies, net of management fees, will total
approximately $33 to $40 million. In addition, we believe we will have a
unique competitive position in the hospitality REIT marketplace with a
well capitalized balance sheet and a relatively predictable FFO (funds
from operations) stream.”
Upon consummation of the transaction, Gaylord Hotels will join the
Marriott portfolio of brands. Terms of the management agreement call for
Marriott to manage the four one-of-a-kind properties under the Gaylord
Hotels flag. Marriott will receive a management contract with an initial
35 year term, 2% base management fee, and an incentive fee linked to
improvement in hotel profitability.
Reed continued, “We are thrilled to be aligning with Marriott, an
organization that consistently receives the industry’s highest praise
among group customers and meeting planners. With their expansive sales
force and unique benefits such as the Marriott Rewards program, we also
expect that they will be able to drive additional transient demand at
our properties. This relationship ensures that the commitment to a
distinctive guest experience that is the hallmark of the Gaylord brand
will continue in force. Importantly, Marriott shares our belief that
employees are our greatest asset, a trademark of our business and a
driving force behind our accomplishments to date.”
Gaylord recently commissioned a survey of over 400 meeting planners to
evaluate hotel company managers in the meetings business. Marriott
International ranked as the undisputed top brand in terms of loyalty
programs, pricing structure, meeting space, sales process,
accommodations, and destinations.
Arne Sorenson, Marriott International president and chief executive
officer, said, “We’re delighted to be able to make this announcement
today, and look forward to adding the Gaylord brand to our portfolio. We
have long admired Gaylord, both for the hotels they have created and for
their superb job in hosting major meetings and events. We also have
great respect for Gaylord's commitment to their people. We will continue
to focus on building careers for Gaylord's "STARS", whom we will welcome
to the Marriott family. Working with the Gaylord brand, the existing
four hotels and a Gaylord team that provides outstanding customer
service, we are convinced there is tremendous upside potential for
growing hotel revenues and profits and developing careers."
Gaylord will continue to own and operate the Grand Ole Opry, Ryman
Auditorium and other attractions as taxable REIT subsidiaries. Nothing
will change at these iconic assets of the Nashville community, and
Gaylord is fully committed to maintaining the legacy of these historic
attractions. As a REIT, the Company will adjust its investment approach
on the Aurora, Colorado hotel and convention center project. The Company
will no longer view large scale development as a means for growth and
will not proceed with the Colorado project in the form previously
anticipated. The Company will re-examine how the project could be
completed with minimal financial commitment by Gaylord during the
development phase. This examination will be undertaken with investor
expectations at the forefront and the Company will keep investors
informed as the process evolves. By year-end, the Company plans to issue
its shareholders a special, one-time taxable dividend of its
undistributed earnings and profits, after receiving a private letter
ruling from the Internal Revenue Service (IRS). Based on its preliminary
analysis, the Company estimates the amount of the earnings and profits
distribution to total approximately $415 to $450 million. Gaylord
intends to pay 80 percent of the dividend in shares of Gaylord common
stock and 20 percent in cash. The Company expects to incur approximately
$55 million in one-time conversion, transaction and severance expense.
The sale of the management company and the brand to Marriott
International is subject to closing conditions, including the approval
by Gaylord’s shareholders of proposals that will facilitate becoming a
REIT, lender consent to amendments to Gaylord’s credit facility, and
other customary conditions and regulatory approvals. Gaylord expects to
hold a special meeting of stockholders in the third quarter of 2012 for
the purpose of voting on shareholder proposals that will facilitate
becoming a REIT, amendments to its Certificate of Incorporation or other
restructuring. Gaylord will file a proxy statement or other filings with
the Securities and Exchange Commission, which will describe the
proposals and the REIT conversion.
Gaylord’s four properties include Gaylord Opryland Resort and Convention
Center in Nashville, Tennessee; Gaylord Texan Resort and Convention
Center in Grapevine, Texas (Dallas-Ft. Worth); Gaylord Palms Resort and
Convention Center in Kissimmee, Florida (Orlando); and Gaylord National
Resort and Convention Center in Prince George’s County, Maryland
(Washington, D.C.).
Outlook
Reed concluded, “We continue to see positive outside-the-room spending
and advance bookings trends in our business from both our group and
leisure transient guests. We believe that the cost management
initiatives we have put in place to date will continue to drive solid
margin performance, and that the strengthening we have seen in group
behavior will create additional revenue and profitability opportunities
for us in the remainder of 2012. While we are not updating full year
2012 guidance to reflect the transition which we anticipate will occur
early in the fourth quarter, our expectations for the performance of the
business have not changed. Therefore, we will update our guidance to
reflect the impact of the transaction as we draw closer to the
anticipated date of transition.”
Conference Call
Management will hold a conference call to discuss this announcement at
10:00 a.m. ET today. Management will be joined on this call by Mr. Arne
Sorenson, President and Chief Executive Officer of Marriott
International, Inc. This call is being web cast by CCBN and can be
accessed at Gaylord Entertainment's Investor Relations Web site at http://ir.gaylordentertainment.com.
The web cast is also being distributed over CCBN's Investor Distribution
Network to both institutional and individual investors. Individual
investors can listen to the call through CCBN's individual investor
center or by visiting any of the investor sites in CCBN's Individual
Investor Network. Institutional investors can access the call via CCBN's
password-protected event management site, StreetEvents (www.streetevents.com).
About Gaylord Entertainment
Gaylord Entertainment (NYSE: GET), a leading hospitality and
entertainment company based in Nashville, Tenn., owns and operates
Gaylord Hotels (www.gaylordhotels.com),
its network of upscale, meetings-focused resorts, and the Grand Ole Opry
(www.opry.com),
the weekly showcase of country music’s finest performers for more than
85 consecutive years. The Company's entertainment brands and properties
include the Radisson Hotel Opryland, Ryman Auditorium, General Jackson
Showboat, Gaylord Springs Golf Links, Wildhorse Saloon, and WSM-AM. For
more information about the Company, visit www.GaylordEntertainment.com.
This press release contains “forward-looking statements” concerning the
Company’s goals, beliefs, expectations, strategies, objectives, plans,
future operating results and underlying assumptions, and other
statements that are not necessarily based on historical facts. Examples
of these statements include, but are not limited to, statements
regarding the closing of the Marriott sale transaction and the
fulfillment of conditions to the closing, our expectation to elect REIT
status, the timing and effect of that election, the form, timing and
amount of the special E&P distribution, our expectation regarding the
declaration of regular quarterly distributions, the amount of conversion
and other costs relating to the transactions, the amounts of revenue and
cost synergies and other business or operational issues. Important
factors that could cause actual results to differ materially from those
in the forward-looking statements include, among other things, the
following risks and uncertainties: the failure to receive, on a timely
basis or otherwise, the required approvals by Gaylord’s stockholders or
the private letter ruling from the IRS; our expectation to elect and
qualify for REIT status, the timing and effect of that election; our
ability to remain qualified as a REIT; the form, timing and amount of
the special E&P distribution; Gaylord’s and Marriott International’s
ability to consummate the sale; operating costs and business disruption
may be greater than expected; and our ability to realize cost savings
and revenue enhancements from the REIT conversion.
About Marriott International
Marriott International, Inc. (NYSE: MAR) is a leading lodging company
based in Bethesda, Maryland, USA with more than 3,700 properties in 73
countries and territories and reported revenues of over $12 billion in
fiscal year 2011. The company operates and franchises hotels and
licenses vacation ownership resorts under 17 brands, including Marriott
Hotels & Resorts, The Ritz-Carlton, JW Marriott, Bulgari,
EDITION, Renaissance, Autograph Collection, AC
Hotels by Marriott, Courtyard, Fairfield Inn & Suites, SpringHill
Suites, Residence Inn, TownePlace Suites, Marriott
Executive Apartments, Marriott Vacation Club, Grand
Residences by Marriott, and The Ritz-Carlton Destination Club.
There are approximately 300,000 employees at headquarters, managed and
franchised properties. Marriott is consistently recognized as a top
employer and for its superior business operations, which it conducts
based on five core values: put people first, pursue excellence, embrace
change, act with integrity, and serve our world. For more information or
reservations, please visit our website at www.marriott.com,
and for the latest company news, visit www.marriottnewscenter.com.
Additional Information and Where to Find It
Gaylord expects to restructure its operations in connection with the
proposed REIT conversion and as part of this restructuring it intends to
prepare a proxy statement to be filed with the Securities and Exchange
Commission (the “SEC”). Gaylord plans to file with the SEC other
documents regarding the REIT conversion. STOCKHOLDERS ARE URGED TO READ
THE PROXY STATEMENT REGARDING THE REIT CONVERSION AND ANY OTHER RELEVANT
DOCUMENTS CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE
BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE REIT
CONVERSION. The final proxy statement will be mailed to the Gaylord’s
stockholders. You may obtain copies of all documents filed with the SEC
concerning the proposed transaction, free of charge, at the SEC’s
website at www.sec.gov.
In addition, stockholders may obtain free copies of the documents filed
with the SEC by Gaylord by going to Gaylord’s Investor Relations website
page at www.gaylordentertainment.com
or by sending a written request to Gaylord’s Secretary at Gaylord
Entertainment Company, One Gaylord Drive, Nashville, Tennessee 37214, or
by calling the Secretary at (615) 316-6000.
Interests of Participants
Gaylord and its directors and executive officers may be deemed to be
participants in the solicitation of proxies from the stockholders of
Gaylord in connection with the REIT conversion. Information regarding
Gaylord’s directors and executive officers is set forth in Gaylord’s
proxy statement for its 2012 annual meeting of stockholders and its
Annual Report on Form 10-K for the fiscal year ended December 31, 2011,
which were filed with the SEC on April 3, 2012 and February 24, 2012,
respectively. Additional information regarding persons who may be deemed
to be participants in the solicitation of proxies in respect of the
proposed REIT conversion will be contained in the proxy statement to be
filed by Gaylord with the SEC when it becomes available.
Source: Gaylord Entertainment
Investor Relations:
Gaylord Entertainment
Mark
Fioravanti, 615-316-6588
Executive Vice President and Chief
Financial Officer
mfioravanti@gaylordentertainment.com
or
Patrick
Chaffin, 615-316-6282
Vice President of Strategic Planning and
Investor Relations
pchaffin@gaylordentertainment.com
or
Media:
Gaylord
Entertainment
Brian Abrahamson, (615) 316-6302
Vice President
of Corporate Communications
babrahamson@gaylordentertainment.com
or
Sloane
& Company
Josh Hochberg, (212) 446-1892
jhochberg@sloanepr.com
or
Dan
Zacchei, (212) 446-1882
dzacchei@sloanepr.com