UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission file number
(Exact Name of Registrant as Specified in its Charter)
| ||
(State or Other Jurisdiction of | (I.R.S. Employer | |
Incorporation or Organization) | Identification No.) |
(Address of Principal Executive Offices)
(Zip Code)
(
(Registrant’s Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange on | ||||
Title of Each Class | Trading Symbol(s) | Which Registered | ||
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Class |
| Outstanding as of April 30, 2024 |
Common Stock, par value $.01 | |
RYMAN HOSPITALITY PROPERTIES, INC.
FORM 10-Q
For the Quarter Ended March 31, 2024
INDEX
2
PART I – FINANCIAL INFORMATION
ITEM 1. – FINANCIAL STATEMENTS.
RYMAN HOSPITALITY PROPERTIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
| March 31, |
| December 31, | |||
2024 | 2023 | |||||
ASSETS: |
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Property and equipment, net | $ | | $ | | ||
Cash and cash equivalents - unrestricted |
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Cash and cash equivalents - restricted |
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Notes receivable, net |
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Trade receivables, net |
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Deferred income tax assets, net |
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Prepaid expenses and other assets |
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Intangible assets, net | | | ||||
Total assets | $ | | $ | | ||
LIABILITIES AND EQUITY: |
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Debt and finance lease obligations | $ | | $ | | ||
Accounts payable and accrued liabilities |
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Distributions payable |
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Deferred management rights proceeds |
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Operating lease liabilities |
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Other liabilities |
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Total liabilities | | | ||||
Commitments and contingencies |
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Noncontrolling interest in consolidated joint venture | | | ||||
Equity: | ||||||
Preferred stock, $ |
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Common stock, $ |
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Additional paid-in capital |
| |
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Treasury stock of |
| ( |
| ( | ||
Distributions in excess of retained earnings |
| ( |
| ( | ||
Accumulated other comprehensive loss |
| ( |
| ( | ||
Total stockholders' equity |
| |
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Noncontrolling interest in Operating Partnership | | | ||||
Total equity | | | ||||
Total liabilities and equity | $ | | $ | | ||
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
RYMAN HOSPITALITY PROPERTIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME
(Unaudited)
(In thousands, except per share data)
Three Months Ended | |||||||
March 31, | |||||||
| 2024 |
| 2023 |
| |||
Revenues: |
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Rooms | $ | | $ | | |||
Food and beverage |
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Other hotel revenue |
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Entertainment |
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Total revenues |
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Operating expenses: |
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Rooms |
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Food and beverage |
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Other hotel expenses |
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Management fees, net |
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Total hotel operating expenses |
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Entertainment |
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Corporate |
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Preopening costs |
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Gain on sale of assets | ( | — | |||||
Depreciation and amortization | | | |||||
Total operating expenses |
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Operating income |
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Interest expense |
| ( |
| ( | |||
Interest income |
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Loss on extinguishment of debt | ( | — | |||||
Income (loss) from unconsolidated joint ventures |
| |
| ( | |||
Other gains and (losses), net |
| |
| ( | |||
Income before income taxes |
| |
| | |||
Provision for income taxes |
| ( |
| ( | |||
Net income | | | |||||
Net loss attributable to noncontrolling interest in consolidated joint venture | | | |||||
Net income attributable to noncontrolling interest in Operating Partnership | ( | ( | |||||
Net income available to common stockholders | $ | | $ | | |||
Basic income per share available to common stockholders | $ | | $ | | |||
Diluted income per share available to common stockholders | $ | | $ | | |||
Comprehensive income, net of taxes | $ | | $ | | |||
Comprehensive loss, net of taxes, attributable to noncontrolling interest in consolidated joint venture | | | |||||
Comprehensive income, net of taxes, attributable to noncontrolling interest in Operating Partnership | ( | ( | |||||
Comprehensive income, net of taxes, available to common stockholders | $ | | $ | | |||
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
RYMAN HOSPITALITY PROPERTIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
Three Months Ended | |||||||
March 31, | |||||||
| 2024 |
| 2023 |
| |||
Cash Flows from Operating Activities: |
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|
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Net income | $ | | $ | | |||
Amounts to reconcile net income to net cash flows provided by operating activities: |
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Provision (benefit) for deferred income taxes |
| ( | | ||||
Depreciation and amortization |
| | | ||||
Amortization of deferred financing costs |
| | | ||||
(Income) loss from unconsolidated joint ventures | ( | | |||||
Stock-based compensation expense |
| | | ||||
Changes in: |
| ||||||
Trade receivables |
| ( | ( | ||||
Accounts payable and accrued liabilities |
| ( | ( | ||||
Other assets and liabilities |
| ( | ( | ||||
Net cash flows provided by operating activities |
| |
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Cash Flows from Investing Activities: |
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Purchases of property and equipment |
| ( | ( | ||||
Collection of notes receivable | — | | |||||
Investment in Circle |
| — | ( | ||||
Other investing activities, net |
| | ( | ||||
Net cash flows used in investing activities |
| ( |
| ( | |||
Cash Flows from Financing Activities: |
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| |||
Repayments under term loan B |
| ( | ( | ||||
Net borrowings under OEG revolving credit facility | | | |||||
Repayments under OEG term loan | ( | ( | |||||
Repayments under Block 21 CMBS loan | ( | ( | |||||
Repayments under Gaylord Rockies term loan | ( | — | |||||
Issuance of senior notes | | — | |||||
Deferred financing costs paid |
| ( | — | ||||
Payment of distributions |
| ( | ( | ||||
Payment of tax withholdings for share-based compensation |
| ( | ( | ||||
Other financing activities, net |
| ( | ( | ||||
Net cash flows used in financing activities |
| ( |
| ( | |||
Net change in cash, cash equivalents, and restricted cash |
| ( |
| ( | |||
Cash, cash equivalents, and restricted cash, beginning of period |
| |
| | |||
Cash, cash equivalents, and restricted cash, end of period | $ | | $ | | |||
Reconciliation of cash, cash equivalents, and restricted cash to balance sheet: | |||||||
Cash and cash equivalents - unrestricted | $ | | $ | | |||
Cash and cash equivalents - restricted | |
| | ||||
Cash, cash equivalents, and restricted cash, end of period | $ | | $ | | |||
The accompanying notes are an integral part of these condensed consolidated financial statements.
5
RYMAN HOSPITALITY PROPERTIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
AND NONCONTROLLING INTEREST
(Unaudited)
(In thousands)
|
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| Distributions |
| Accumulated |
|
| Noncontrolling |
|
| Noncontrolling | |||||||||||||||
| Additional | in Excess of | Other | Total | Interest in | Interest in | |||||||||||||||||||||
| Common | Paid-in | Treasury | Retained | Comprehensive | Stockholders' | Operating | Total | Consolidated | ||||||||||||||||||
Stock | Capital | Stock | Earnings | Loss | Equity | Partnership | Equity | Joint Venture | |||||||||||||||||||
BALANCE, December 31, 2023 | $ | | $ | | $ | ( | $ | ( | $ | ( | $ | | $ | | $ | | $ | | |||||||||
Net income (loss) |
| — |
| — |
| — |
| |
| — |
| |
| |
| |
| ( | |||||||||
Adjustment of noncontrolling interest to redemption value | — | ( | — | — | — | ( | — | ( | | ||||||||||||||||||
Other comprehensive income, net of income taxes |
| — |
| — |
| — |
| — |
| |
| |
| — |
| |
| — | |||||||||
Dividends and distributions declared ($ |
| — |
| | — | ( |
| — |
| ( |
| ( |
| ( |
| — | |||||||||||
Restricted stock units and stock options surrendered |
| | ( |
| — |
| — |
| — |
| ( |
| — |
| ( |
| — | ||||||||||
Equity-based compensation expense |
| — |
| |
| — |
| — |
| — |
| |
| — |
| |
| — | |||||||||
BALANCE, March 31, 2024 | $ | | $ | | $ | ( | $ | ( | $ | ( | $ | | $ | | $ | | $ | | |||||||||
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| Distributions |
| Accumulated |
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| Noncontrolling |
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| Noncontrolling | |||||||||||||||
| Additional | in Excess of | Other | Total | Interest in | Interest in | |||||||||||||||||||||
| Common | Paid-in | Treasury | Retained | Comprehensive | Stockholders' | Operating | Total | Consolidated | ||||||||||||||||||
Stock | Capital | Stock | Earnings | Loss | Equity | Partnership | Equity | Joint Venture | |||||||||||||||||||
BALANCE, December 31, 2022 | $ | | $ | | $ | ( | $ | ( | $ | ( | $ | | $ | | $ | | $ | | |||||||||
Net income (loss) |
| — |
| — |
| — |
| |
| — |
| |
| |
| |
| ( | |||||||||
Adjustment of noncontrolling interest to redemption value | — | ( | — | — | — | ( | — | ( | | ||||||||||||||||||
Other comprehensive loss, net of income taxes |
| — |
| — |
| — |
| — |
| ( |
| ( |
| — |
| ( |
| — | |||||||||
Dividends and distributions declared ($ |
| — |
| |
| — |
| ( |
| — |
| ( |
| ( |
| ( |
| — | |||||||||
Restricted stock units and stock options surrendered |
| |
| ( |
| — |
| — |
| — |
| ( |
| — |
| ( |
| — | |||||||||
Equity-based compensation expense |
| — |
| |
| — |
| — |
| — |
| |
| — |
| |
| — | |||||||||
BALANCE, March 31, 2023 | $ | | $ | | $ | ( | $ | ( | $ | ( | $ | | $ | | $ | | $ | | |||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
6
RYMAN HOSPITALITY PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION:
On January 1, 2013, Ryman Hospitality Properties, Inc. (“Ryman”) and its subsidiaries (collectively with Ryman, the “Company”) began operating as a real estate investment trust (“REIT”) for federal income tax purposes, specializing in group-oriented, destination hotel assets in urban and resort markets. The Company’s owned assets include a network of upscale, meetings-focused resorts that are managed by Marriott International, Inc. (“Marriott”) under the Gaylord Hotels brand. These five resorts, which the Company refers to as the Gaylord Hotels properties, consist of the Gaylord Opryland Resort & Convention Center in Nashville, Tennessee (“Gaylord Opryland”), the Gaylord Palms Resort & Convention Center near Orlando, Florida (“Gaylord Palms”), the Gaylord Texan Resort & Convention Center near Dallas, Texas (“Gaylord Texan”), the Gaylord National Resort & Convention Center near Washington D.C. (“Gaylord National”), and the Gaylord Rockies Resort & Convention Center near Denver, Colorado (“Gaylord Rockies”). The Company’s other owned hotel assets managed by Marriott include the Inn at Opryland, an overflow hotel adjacent to Gaylord Opryland, the AC Hotel at National Harbor, Washington D.C. (“AC Hotel”), an overflow hotel adjacent to Gaylord National, and effective June 30, 2023, the JW Marriott San Antonio Hill Country Resort & Spa (“JW Marriott Hill Country”).
The Company also owns a controlling
The Company consolidates the assets, liabilities and results of operations of OEG in the accompanying condensed consolidated financial statements. The portion of OEG that the Company does not own is recorded as noncontrolling interest in consolidated joint venture, which is classified as mezzanine equity in the accompanying condensed consolidated balance sheet, and any adjustment necessary to reflect the noncontrolling interest at its redemption value is shown in the accompanying condensed consolidated statement of equity and noncontrolling interest. See Note 3, “Income Per Share,” for further disclosure.
The condensed consolidated financial statements include the accounts of Ryman and its subsidiaries and have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted from this report pursuant to such rules and regulations. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. In the opinion of management, all adjustments necessary for a fair statement of the results of operations for the interim periods have been included. All adjustments are of a normal, recurring nature. The results of operations for such interim periods are not necessarily indicative of the results for the full year because of seasonal and short-term variations.
The Company principally operates, through its subsidiaries and its property managers, as applicable, in the following business segments: Hospitality, Entertainment, and Corporate and Other.
Newly Issued Accounting Standards
In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-07, “Improvements to Reportable Segment Disclosures,” requiring public entities to provide disclosures of significant segment expenses and other segment items, as well as to provide in interim periods all disclosures about a reportable segment’s profit or loss and assets that are currently required annually. The guidance is applied
7
retrospectively and will be effective for the Company for fiscal year 2024 and for interim periods beginning in fiscal year 2025. The Company is currently evaluating the impact of this ASU but does not anticipate this adoption to have a material impact on the Company’s financial statements.
In December 2023, the FASB issued ASU No. 2023-09, “Improvements to Income Tax Disclosures,” requiring public entities to provide additional information in the rate reconciliation, to disclose annually income taxes paid disaggregated by federal, state and foreign taxes and to disaggregate the information by jurisdiction based on a quantitative threshold. The guidance is applied prospectively, but with the option to apply retrospectively, and will be effective for the Company for fiscal year 2025. The Company is currently evaluating the impact of this ASU but does not anticipate this adoption to have a material impact on the Company’s financial statements.
2. REVENUES:
Revenues from occupied hotel rooms are recognized over time as the daily hotel stay is provided to hotel groups and guests. Revenues from concessions, food and beverage sales, and group meeting services are recognized over the period or at the point in time those goods or services are delivered to the hotel group or guest. Revenues from ancillary services at the Company’s hotels, such as spa, parking, and transportation services, are generally recognized at the time the goods or services are provided. Cancellation fees and attrition fees, which are charged to groups when they do not fulfill the minimum number of room nights or minimum food and beverage spending requirements originally contracted for, are generally recognized as revenue in the period the Company determines it is probable that a significant reversal in the amount of revenue recognized will not occur, which is typically the period these fees are collected. The Company generally recognizes revenues from the Entertainment segment at the point in time that services are provided or goods are delivered or shipped to the customer, as applicable. Cash received from advanced ticket sales is deferred and recognized as revenue at the time of the event. Entertainment segment revenues from licenses of content are recognized at the point in time the content is delivered to the licensee and the licensee can use and benefit from the content. Almost all of the Company’s revenues are either cash-based or, for meeting and convention groups who meet the Company’s credit criteria, billed and collected on a short-term receivables basis. The Company is required to collect certain taxes from customers on behalf of government agencies and remit these to the applicable governmental entity on a periodic basis. These taxes are collected from customers at the time of purchase but are not included in revenue. The Company records a liability upon collection of such taxes from the customer and relieves the liability when payments are remitted to the applicable governmental agency.
The Company’s revenues disaggregated by major source are as follows (in thousands):
Three Months Ended | ||||||
March 31, | ||||||
| 2024 |
| 2023 | |||
Hotel group rooms | $ | | $ | | ||
Hotel transient rooms |
| |
|
| | |
Hotel food and beverage - banquets |
| |
|
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Hotel food and beverage - outlets |
| |
|
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Hotel other |
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|
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Entertainment admissions/ticketing |
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Entertainment food and beverage |
| | | |||
Entertainment retail and other |
| | | |||
Total revenues |
| $ | |
| $ | |
8
The Company’s Hospitality segment revenues disaggregated by location are as follows (in thousands):
Three Months Ended | ||||||
March 31, | ||||||
| 2024 |
| 2023 | |||
Gaylord Opryland |
| $ | | $ | | |
Gaylord Palms |
| |
| | ||
Gaylord Texan |
| |
| | ||
Gaylord National |
| |
| | ||
Gaylord Rockies | | | ||||
JW Marriott Hill Country | | — | ||||
AC Hotel |
| |
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Inn at Opryland and other |
| |
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Total Hospitality segment revenues | $ | | $ | | ||
The majority of the Company’s Entertainment segment revenues are concentrated in Nashville, Tennessee and Austin, Texas.
3. INCOME PER SHARE:
The computation of basic and diluted earnings per common share is as follows (in thousands, except per share data):
Three Months Ended | |||||||
March 31, | |||||||
| 2024 |
| 2023 | ||||
Numerator: | |||||||
Net income available to common stockholders | $ | | $ | | |||
Net loss attributable to noncontrolling interest in consolidated joint venture |
| ( | ( | ||||
Net income available to common stockholders - if-converted method | $ | | $ | | |||
|
| ||||||
Denominator: | |||||||
Weighted average shares outstanding - basic | | | |||||
Effect of dilutive stock-based compensation | | | |||||
Effect of dilutive put rights |
| |
| | |||
Weighted average shares outstanding - diluted |
| |
| | |||
Basic income per share available to common stockholders | $ | | $ | | |||
Diluted income per share available to common stockholders | $ | | $ | | |||
As more fully discussed in Note 1 to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, although currently not exercisable, the minority investor of OEG has certain put rights (the “OEG Put Rights”) to require the Company to purchase the minority investor’s equity interest in OEG, which the Company may pay in cash or Company stock at the Company’s option. The Company calculated potential dilution for the OEG Put Rights based on the if-converted method, which assumes the OEG Put Rights were
9
converted on the first day of the period or the date of issuance and the minority investor’s noncontrolling equity interest was redeemed in exchange for shares of the Company’s common stock.
The operating partnership units (“OP Units”) held by the noncontrolling interest holders in RHP Hotel Properties, LP (the “Operating Partnership”) have been excluded from the denominator of the diluted income per share calculation for the three months ended March 31, 2024 and 2023 as there would be no effect on the calculation of diluted income per share because the income attributable to the OP Units held by the noncontrolling interest holders would also be added to derive net income available to common stockholders.
4. ACCUMULATED OTHER COMPREHENSIVE LOSS:
The Company’s balance in accumulated other comprehensive loss is comprised of amounts related to the Company’s frozen noncontributory defined benefit pension plan, interest rate derivatives designated as cash flow hedges related to the Company’s outstanding debt as discussed in Note 7, “Debt,” and amounts related to an other-than-temporary impairment of a held-to-maturity investment that existed prior to 2020 with respect to the notes receivable discussed in Note 6, “Notes Receivable,” to the condensed consolidated financial statements included herein.
Changes in accumulated other comprehensive loss by component for the three months ended March 31, 2024 and 2023 consisted of the following (in thousands):
Other-Than- | ||||||||||||
Minimum | Temporary | |||||||||||
Pension | Impairment of | Interest Rate | ||||||||||
| Liability |
| Investment |
| Derivatives |
| Total | |||||
Balance, December 31, 2023 | $ | ( | $ | ( | $ | ( | $ | ( | ||||
Gains arising during period | — | — | | | ||||||||
Amounts reclassified from accumulated other comprehensive loss | ( |
| |
| ( |
| ( | |||||
Income tax benefit | |
| — |
| — |
| | |||||
Net other comprehensive income (loss) |
| ( |
| |
| |
| | ||||
Balance, March 31, 2024 | $ | ( | $ | ( | $ | | $ | ( | ||||
Other-Than- | ||||||||||||
Minimum | Temporary | |||||||||||
Pension | Impairment of | Interest Rate | ||||||||||
| Liability |
| Investment |
| Derivatives |
| Total | |||||
Balance, December 31, 2022 | $ | ( | $ | ( | $ | | $ | ( | ||||
Losses arising during period | — | — | ( | ( | ||||||||
Amounts reclassified from accumulated other comprehensive loss |
| ( |
| |
| ( |
| ( | ||||
Net other comprehensive income (loss) |
| ( |
| |
| ( |
| ( | ||||
Balance, March 31, 2023 | $ | ( | $ | ( | $ | | $ | ( | ||||
5. PROPERTY AND EQUIPMENT:
Property and equipment at March 31, 2024 and December 31, 2023 is recorded at cost, with the exception of right-of-use finance lease assets and the initial value assigned to assets acquired in an acquisition, and summarized as follows (in thousands):
March 31, | December 31, | |||||
| 2024 |
| 2023 | |||
Land and land improvements | $ | | $ | | ||
Buildings |
| |
| | ||
Furniture, fixtures and equipment |
| |
| | ||
Right-of-use finance lease assets | | | ||||
Construction-in-progress |
| |
| | ||
| |
| | |||
Accumulated depreciation and amortization |
| ( |
| ( | ||
Property and equipment, net | $ | | $ | | ||
10
6. NOTES RECEIVABLE:
As further discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, in connection with the development of Gaylord National, the Company holds two issuances of governmental bonds (“Series A bond” and “Series B bond”) with a total carrying value and approximate fair value of $
The Company has the intent and ability to hold these bonds to maturity. The Company’s quarterly assessment of credit losses considers the estimate of projected tax revenues that will service the bonds over their remaining terms. These tax revenue projections are updated each quarter to reflect updated industry projections as to future anticipated operations of the hotel. As a result of reduced tax revenue projections over the life of the bonds as well as certain cumulative priority payments due to others, the Series B bond is fully reserved. The Series A bond is of higher priority than other tranches which fall between the Company’s two issuances.
During the three months ended March 31, 2024 and 2023, the Company recorded interest income of $
7. DEBT:
The Company’s debt and finance lease obligations at March 31, 2024 and December 31, 2023 consisted of (in thousands):
March 31, | December 31, | |||||
| 2024 |
| 2023 | |||
$ | $ | — | $ | — | ||
$ |
| |
| | ||
$ |
| |
| | ||
$ |
| |
| | ||
$ |
| |
| | ||
$ |
| |
| — | ||
$ |
| — |
| | ||
$ |
| |
| | ||
$ |
| |
| | ||
Block 21 CMBS Loan, interest at | | | ||||
Finance lease obligations | | | ||||
Unamortized deferred financing costs | ( | ( | ||||
Unamortized discounts and premiums, net | ( | ( | ||||
Total debt | $ | | $ | | ||
Amounts due within one year of the balance sheet date consist of the amortization payments for the $
At March 31, 2024, there were no defaults under the covenants related to the Company’s outstanding debt.
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$
On March 28, 2024, the Operating Partnership and RHP Finance Corporation (collectively, the “issuing subsidiaries”) completed the private placement of $
The $
The $
The net proceeds from the issuance of the $
The $
Previous $
In July 2019, Aurora Convention Center Hotel, LLC and Aurora Convention Center Hotel Lessee, LLC, the entities that comprise Gaylord Rockies, entered into a Second Amended and Restated Loan Agreement (the “Gaylord Rockies Loan”) with Wells Fargo Bank, National Association, as administrative agent. The Gaylord Rockies Loan consisted of an $
On March 28, 2024, the Company paid off the Gaylord Rockies Loan with proceeds from the $
Term Loan B
On April 12, 2024, the Company entered into an Incremental Tranche B Term Loan Agreement (the “Incremental Agreement”), which supplements the Company’s credit agreement. The Incremental Agreement reduces the applicable
12
interest rate margins for the loans advanced under the refinanced Term Loan B. The applicable interest rate margins for the refinanced Term Loan B under the Incremental Agreement are (i)
Interest Rate Derivatives
The Company has entered into or previously entered into interest rate swaps to manage interest rate risk associated with the previous Gaylord Rockies $
For derivatives designated as and that qualify as cash flow hedges of interest rate risk, the gain or loss on the derivative is recorded in accumulated other comprehensive loss and subsequently reclassified to interest expense in the same period during which the hedged transaction affects earnings. These amounts reported in accumulated other comprehensive loss will be reclassified to interest expense as interest payments are made on the related variable-rate debt. The Company estimates that $
In March 2024, as discussed above, the Company paid off the Gaylord Rockies Loan and subsequently terminated the associated interest rate swap. The Company received approximately $
The estimated fair value of the Company’s derivative financial instruments at March 31, 2024 and December 31, 2023 is as follows (in thousands):
Estimated Fair Value | |||||||||||||||||
Asset (Liability) Balance | |||||||||||||||||
Strike | Notional | March 31, | December 31, | ||||||||||||||
Hedged Debt | Type | Rate | Index | Maturity Date | Amount | 2024 | 2023 | ||||||||||
Gaylord Rockies Term Loan | Interest Rate Swap | Daily SOFR | | - | ( | ||||||||||||
OEG Term Loan | Interest Rate Swap | 3-month SOFR | | | ( | ||||||||||||
$ | | $ | ( | ||||||||||||||
Derivative financial instruments in an asset position are included in prepaid expenses and other assets, and those in a liability position are included in other liabilities in the accompanying condensed consolidated balance sheets.
The effect of the Company’s derivative financial instruments on the accompanying condensed consolidated statements of operations for the respective periods is as follows (in thousands):
Amount of Gain (Loss) | Amount of Gain (Loss) | ||||||||||||||||
Recognized in OCI | Reclassified from Accumulated | ||||||||||||||||
on Derivatives | Location of Gain (Loss) | OCI into Income (Expense) | |||||||||||||||
Three Months Ended | Reclassified from | Three Months Ended | |||||||||||||||
March 31, | Accumulated OCI | March 31, | |||||||||||||||
2024 | 2023 |
| into Income (Expense) |
| 2024 | 2023 |
| ||||||||||
Derivatives in Cash Flow Hedging Relationships: |
| ||||||||||||||||
Interest rate swaps | $ | | $ | ( | Interest expense | $ | | $ | | ||||||||
Total derivatives | $ | | $ | ( | $ | | $ | | |||||||||
Reclassifications from accumulated other comprehensive loss for interest rate swaps are shown in the table above and included in interest expense. Total consolidated interest expense for the three months ended March 31, 2024 and 2023 was $
13
As of March 31, 2024, the Company has not posted any collateral related to these agreements and was not in breach of any agreement provisions. In addition, the Company has an agreement with its derivative counterparty that contains a provision whereby the Company could be declared in default on its derivative obligations if repayment of the underlying indebtedness is accelerated by the lender due to the Company’s default on the indebtedness.
8. DEFERRED MANAGEMENT RIGHTS PROCEEDS:
On October 1, 2012, the Company consummated its agreement to sell the Gaylord Hotels brand and rights to manage the Gaylord Hotels properties (the “Management Rights”) to Marriott for $
9. LEASES:
The Company is a lessee of a
The terms of the Gaylord Palms lease include variable lease payments based upon net revenues at Gaylord Palms, and certain other of the Company’s leases include rental payments adjusted periodically for inflation. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.
As the discount rate implicit in the Company’s operating leases is not readily determinable, the Company applies judgments related to the determination of the discount rates used to calculate the lease liability as required by Accounting Standards Codification Topic 842, “Leases”. The Company calculates its incremental borrowing rates by utilizing judgments and estimates regarding the Company’s secured borrowing rates, market credit rating, comparable bond yield curve, and adjustments to market yield curves to determine a securitized rate.
The Company’s lease costs for the three months ended March 31, 2024 and 2023 are as follows (in thousands):
Three Months Ended | |||||||
March 31, | |||||||
2024 | 2023 | ||||||
Operating lease cost | $ | | $ | | |||
Finance lease cost: | |||||||
Amortization of right-of-use assets |
| |
| | |||
Interest on lease liabilities |
| |
| | |||
Net lease cost | $ | | $ | | |||
14
Future minimum lease payments under non-cancelable leases at March 31, 2024 are as follows (in thousands):
|
| Operating |
| Finance | ||
| Leases | Leases | ||||
Year 1 | $ | | $ | | ||
Year 2 |
| |
| | ||
Year 3 |
| |
| | ||
Year 4 |
| |
| — | ||
Year 5 |
| |
| — | ||
Years thereafter |
| |
| — | ||
Total future minimum lease payments |
| |
| | ||
Less amount representing interest |
| ( | ( | |||
Total present value of minimum payments | $ | | $ | | ||
The remaining lease term and discount rate for the Company’s leases are as follows:
Weighted-average remaining lease term: | ||
Operating leases | years | |
Finance leases | years | |
Weighted-average discount rate: | ||
Operating leases | | % |
Finance leases | | % |
10. STOCK PLANS:
During the three months ended March 31, 2024, the Company granted
Compensation expense for the Company’s stock-based compensation plans was $
11. INCOME TAXES:
The Company elected to be taxed as a REIT effective January 1, 2013, pursuant to the U.S. Internal Revenue Code of 1986, as amended. As a REIT, generally the Company is not subject to federal corporate income taxes on ordinary taxable income and capital gains income from real estate investments that it distributes to its stockholders. The Company continues to be required to pay federal and state corporate income taxes on earnings of its taxable REIT subsidiaries (“TRSs”).
For the three months ended March 31, 2024 and 2023, the Company recorded an income tax provision of $
At March 31, 2024 and December 31, 2023, the Company had
12. COMMITMENTS AND CONTINGENCIES:
In connection with the purchase of Block 21, the Company provided limited guarantees to the Block 21 lenders under the Block 21 CMBS Loan via a guaranty agreement, a guaranty of completion agreement and an environmental indemnity.
The Company has entered into employment agreements with certain officers, which provide for severance payments upon certain events, including certain terminations in connection with a change of control.
15
On April 9, 2024, the Company received service of process in a lawsuit naming the Company and a subsidiary as co-defendants with Marriott, as the manager, and multiple contractors in a personal injury lawsuit filed by individual plaintiffs in Colorado state court. The lawsuit relates to a May 2023 incident at the Gaylord Rockies indoor pool amenity involving the collapse of HVAC equipment. The complaint requests an unspecified amount of damages related to alleged injuries to two guests. The Company intends to vigorously defend the lawsuit and believes it has strong defenses. The lawsuit is in its early stages so the Company cannot predict its likely outcome or estimate the range of possible loss, but the Company does not believe that the outcome will have a material impact on the Company’s financial position.
In addition, the Company, in the ordinary course of business, is involved in certain legal actions and claims on a variety of matters. It is the opinion of management that such contingencies will not have a material effect on the financial statements of the Company.
13. EQUITY
Dividends
On
Noncontrolling Interest in the Operating Partnership
The Company consolidates the Operating Partnership, which is a majority-owned limited partnership that has a noncontrolling interest. The outstanding OP Units held by the noncontrolling limited partners are redeemable for cash, or if the Company so elects, in shares of the Company’s common stock on a
14. FAIR VALUE MEASUREMENTS:
The Company uses a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.
The investments held by the Company in connection with its deferred compensation plan consist of mutual funds traded in an active market. The Company determined the fair value of these mutual funds based on the net asset value per unit of the funds or the portfolio, which is based upon quoted market prices in an active market. Therefore, the Company has categorized these investments as Level 1.
The Company’s interest rate swaps consist of over-the-counter swap contracts, which are not traded on a public exchange. The Company determines the fair value of these swap contracts based on a widely accepted valuation methodology of netting the discounted future fixed cash flows and the discounted expected variable cash flows, using interest rates derived from observable market interest rate curves and volatilities, with appropriate adjustments for any significant impact of non-performance risk of the parties to the swap contracts. Therefore, these swap contracts have been classified as Level 2.
The Company has consistently applied the above valuation techniques in all periods presented and believes it has obtained the most accurate information available for each type of instrument.
16
The Company’s assets and liabilities measured at fair value on a recurring basis at March 31, 2024 and December 31, 2023, were as follows (in thousands):
|
| Markets for |
| Observable |
| Unobservable | ||||||
March 31, | Identical Assets | Inputs | Inputs | |||||||||
2024 | (Level 1) | (Level 2) | (Level 3) | |||||||||
Deferred compensation plan investments | $ | | $ | | $ | — | $ | — | ||||
Variable to fixed interest rate swaps | | — | | — | ||||||||
Total assets measured at fair value | $ | | $ | | $ | | $ | — | ||||
|
| Markets for |
| Observable |
| Unobservable | ||||||
December 31, | Identical Assets | Inputs | Inputs | |||||||||
2023 | (Level 1) | (Level 2) | (Level 3) | |||||||||
Deferred compensation plan investments | $ | | $ | | $ | — | $ | — | ||||
Total assets measured at fair value | $ | | $ | | $ | — | $ | — | ||||
Variable to fixed interest rate swaps | $ | | $ | — | $ | | $ | — | ||||
Total liabilities measured at fair value | $ | | $ | — | $ | | $ | — | ||||
The remainder of the assets and liabilities held by the Company at March 31, 2024 are not required to be recorded at fair value, and financial assets and liabilities approximate fair value, except as described below.
The Company has outstanding $
The Company has outstanding $
15. FINANCIAL REPORTING BY BUSINESS SEGMENTS:
The Company’s operations are organized into
| ● | Hospitality, which includes the Gaylord Hotels properties, JW Marriott Hill Country (effective June 30, 2023), the Inn at Opryland and the AC Hotel; |
| ● | Entertainment, which includes the OEG business, specifically the Grand Ole Opry, the Ryman Auditorium, WSM-AM, Ole Red, Category 10 and Block 21; and |
| ● | Corporate and Other, which includes the Company’s corporate expenses. |
17
The following information is derived directly from the segments’ internal financial reports used for corporate management purposes (amounts in thousands):
Three Months Ended | |||||||
March 31, | |||||||
| 2024 |
| 2023 |
| |||
Revenues: |
|
|
|
|
| ||
Hospitality | $ | | $ | | |||
Entertainment |
| |
| | |||
Corporate and Other |
| — |
| — | |||
Total | $ | | $ | | |||
Depreciation and amortization: |
|
|
|
| |||
Hospitality | $ | | $ | | |||
Entertainment |
| |
| | |||
Corporate and Other |
| |
| | |||
Total | $ | | $ | | |||
Operating income (loss): |
|
|
|
| |||
Hospitality | $ | | $ | | |||
Entertainment |
| |
| | |||
Corporate and Other |
| ( |
| ( | |||
Preopening costs |
| ( |
| ( | |||
Gain on sale of assets | | — | |||||
Total operating income |
| |
| | |||
Interest expense |
| ( |
| ( | |||
Interest income |
| |
| | |||
Loss on extinguishment of debt | ( | — | |||||
Income (loss) from unconsolidated joint ventures |
| |
| ( | |||
Other gains and (losses), net |
| |
| ( | |||
Income before income taxes | $ | | $ | | |||
| March 31, |
| December 31, | |||
2024 | 2023 | |||||
Total assets: |
|
|
|
| ||
Hospitality | $ | | $ | | ||
Entertainment |
| |
| | ||
Corporate and Other |
| |
| | ||
Total assets | $ | | $ | | ||
18
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Ryman Hospitality Properties, Inc. (“Ryman”) is a Delaware corporation that conducts its operations so as to maintain its qualification as a real estate investment trust (“REIT”) for federal income tax purposes. The Company (as defined below) conducts its business through an umbrella partnership REIT, in which all of its assets are held by, and operations are conducted through, RHP Hotel Properties, LP, a subsidiary operating partnership (the “Operating Partnership”). RHP Finance Corporation, a Delaware corporation (“Finco”), was formed as a wholly-owned subsidiary of the Operating Partnership for the sole purpose of being a co-issuer of debt securities with the Operating Partnership. Neither Ryman nor Finco has any material assets, other than Ryman’s investment in the Operating Partnership and the Operating Partnership’s subsidiaries. Neither the Operating Partnership nor Finco has any business, operations, financial results or other material information, other than the business, operations, financial results and other material information described in this Quarterly Report on Form 10-Q and Ryman’s other reports, documents or other information filed with the Securities and Exchange Commission (the “SEC”) pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”). In this report, we use the terms the “Company,” “we” or “our” to refer to Ryman Hospitality Properties, Inc. and its subsidiaries unless the context indicates otherwise.
The following discussion and analysis should be read in conjunction with our unaudited condensed consolidated financial statements and related notes included elsewhere in this report and our audited consolidated financial statements and related notes for the year ended December 31, 2023, included in our Annual Report on Form 10-K that was filed with the SEC on February 23, 2024.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q contains “forward-looking statements” intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements concern our goals, beliefs, expectations, strategies, objectives, plans, future operating results and underlying assumptions, and other statements that are not necessarily based on historical facts. Without limitation, you can identify these statements by the fact that they do not relate strictly to historical or current facts, and these statements may contain words such as “may,” “will,” “could,” “should,” “might,” “projects,” “expects,” “believes,” “anticipates,” “intends,” “plans,” “continue,” “estimate,” or “pursue,” or the negative or other variations thereof or comparable terms. In particular, they include statements relating to, among other things, future actions, strategies, future performance, the outcome of contingencies such as legal proceedings and future financial results. These also include statements regarding (i) the future performance of our business, anticipated business levels and our anticipated financial results during future periods, and other business or operational issues; (ii) the effect of our election to be taxed as a REIT and maintain REIT status for federal income tax purposes; (iii) the holding of our non-qualifying REIT assets in one or more taxable REIT subsidiaries (“TRSs”); (iv) our dividend policy, including the frequency and amount of any dividend we may pay; (v) our strategic goals and potential growth opportunities, including future expansion of the geographic diversity of our existing asset portfolio through acquisitions and investment in joint ventures; (vi) Marriott International, Inc.’s (“Marriott”) ability to effectively manage our hotels and other properties; (vii) our anticipated capital expenditures and investments; (viii) the potential operating and financial restrictions imposed on our activities under existing and future financing agreements including our credit facility and other contractual arrangements with third parties, including management agreements with Marriott; (ix) our ability to borrow available funds under our credit facility; (x) our expectations about successfully amending the agreements governing our indebtedness should the need arise; (xi) the effects of inflation and increased costs on our business and on our customers, including group customers at our hotels; and (xii) any other business or operational matters. We have based these forward-looking statements on our current expectations and projections about future events.
We caution the reader that forward-looking statements involve risks and uncertainties that cannot be predicted or quantified, and, consequently, actual results may differ materially from those expressed or implied by such forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements include, among other things, risks and uncertainties associated with economic conditions affecting the hospitality business generally, the geographic concentration of our hotel properties, business levels at our hotels, the effects of inflation on our business, including the effects on costs of labor and supplies and effects on group customers at our hotels and customers in our OEG businesses, our ability to remain qualified as a REIT, our ability to execute our
19
strategic goals as a REIT, our ability to generate cash flows to support dividends, future board determinations regarding the timing and amount of dividends and changes to the dividend policy, our ability to borrow funds pursuant to our credit agreements and to refinance indebtedness and/or to successfully amend the agreements governing our indebtedness in the future, changes in interest rates, and those factors described elsewhere in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, 2023 or described from time to time in our other reports filed with the SEC.
Any forward-looking statement made in this Quarterly Report on Form 10-Q speaks only as of the date on which the statement is made. New risks and uncertainties arise from time to time, and it is impossible for us to predict these events or how they may affect us. We have no duty to, and do not intend to, update or revise the forward-looking statements we make in this Quarterly Report on Form 10-Q, except as may be required by law.
Overview
We operate as a REIT for federal income tax purposes, specializing in group-oriented, destination hotel assets in urban and resort markets. Our core holdings include a network of five upscale, meetings-focused resorts totaling 9,917 rooms that are managed by Marriott under the Gaylord Hotels brand. These five resorts, which we refer to as our Gaylord Hotels properties, consist of the Gaylord Opryland Resort & Convention Center in Nashville, Tennessee (“Gaylord Opryland”), the Gaylord Palms Resort & Convention Center near Orlando, Florida (“Gaylord Palms”), the Gaylord Texan Resort & Convention Center near Dallas, Texas (“Gaylord Texan”), the Gaylord National Resort & Convention Center near Washington D.C. (“Gaylord National”), and the Gaylord Rockies Resort & Convention Center near Denver, Colorado (“Gaylord Rockies”). Our other owned hotel assets managed by Marriott include the Inn at Opryland, an overflow hotel adjacent to Gaylord Opryland, the AC Hotel at National Harbor, Washington D.C. (“AC Hotel”), an overflow hotel adjacent to Gaylord National, and effective June 30, 2023, the JW Marriott San Antonio Hill Country Resort & Spa (“JW Marriott Hill Country”).
Each of our award-winning Gaylord Hotels properties incorporates not only high quality lodging, but also at least 400,000 square feet of meeting, convention and exhibition space, superb food and beverage options and retail and spa facilities within a single self-contained property. As a result, our Gaylord Hotels properties provide a convenient and entertaining environment for convention guests. Our Gaylord Hotels properties focus on the large group meetings market in the United States.
We also own a controlling 70% equity interest in a business comprised of a number of entertainment and media assets, known as the Opry Entertainment Group (“OEG”), which we report as our Entertainment segment. These assets include the Grand Ole Opry, the legendary weekly showcase of country music’s finest performers for 98 years; the Ryman Auditorium, the storied live music venue and former home of the Grand Ole Opry located in downtown Nashville; WSM-AM, the Opry’s radio home; Ole Red, a brand of Blake Shelton-themed bar, music venue and event spaces; Category 10, a Luke Combs-themed bar, music venue and event space currently under construction; and Block 21, a mixed-use entertainment, lodging, office, and retail complex located in Austin, Texas (“Block 21”).
See “Cautionary Note Regarding Forward-Looking Statements” in this Item 2 and Item 1A, “Risk Factors,” in Part II of this Quarterly Report on Form 10-Q and Item 1A, “Risk Factors,” in our Annual Report on Form 10-K for the year ended December 31, 2023 for important information regarding forward-looking statements made in this report and risks and uncertainties we face.
Issuance of $1 Billion 6.50% Senior Notes due 2032
In March 2024, the Operating Partnership and Finco completed the private placement of $1.0 billion in aggregate principal amount of 6.50% senior notes due 2032 (the “$1 Billion 6.50% Senior Notes”), which are guaranteed by the Company and its subsidiaries that guarantee our credit agreement.
The net proceeds from the issuance of the $1 Billion 6.50% Senior Notes totaled approximately $983 million, after deducting the initial purchasers’ discounts, commissions and offering expenses. We used a portion of these net proceeds to prepay the indebtedness outstanding under our previous Gaylord Rockies $800.0 million term loan and used the remaining proceeds, together with cash on hand, to repay $200.0 million under our $500.0 million term loan B.
20
Dividend Policy
Our board of directors has approved a dividend policy pursuant to which we will make minimum dividends of 100% of REIT taxable income annually, subject to the board of directors’ future determinations as to the amount of any distributions and the timing thereof. The dividend policy may be altered at any time by our board of directors (as otherwise permitted by our credit agreement) and certain provisions of our agreements governing our other indebtedness may prohibit us from paying dividends in accordance with any policy we may adopt.
Our Long-Term Strategic Plan
Our goal is to be the nation’s premier hospitality REIT for group-oriented meeting hotel assets in urban and resort markets.
Existing Hotel Property Design. Our Gaylord Hotels properties focus on the large group meetings market in the United States and incorporate meeting and exhibition space, signature guest rooms, food and beverage offerings, fitness and spa facilities and other attractions within a large hotel property so attendees’ needs are met in one location. We believe this strategy creates a better experience for both meeting planners and guests and has led to our current Gaylord Hotels properties claiming a place among the leading convention hotels in the country.
Expansion of Hotel Asset Portfolio. Part of our long-term growth strategy includes acquisitions or developments of other hotels, particularly in the group meetings sector of the hospitality industry, either alone or through joint ventures or alliances with one or more third parties. We will consider attractive investment opportunities which meet our acquisition parameters, specifically, group-oriented large hotels and overflow hotels with existing or potential leisure appeal. We are generally interested in highly accessible upper-upscale or luxury assets with over 400 hotel rooms in urban and resort group destination markets. We also consider assets that possess significant meeting space or present a repositioning opportunity and/or would significantly benefit from capital investment in additional rooms or meeting space. We are consistently considering acquisitions that would expand the geographic diversity of our existing asset portfolio. To this end, we purchased JW Marriott Hill Country in June 2023.
Continued Investment in Our Existing Properties. We continuously evaluate and invest in our current portfolio and consider enhancements or expansions as part of our long-term strategic plan. In 2021, we completed the $158 million expansion of Gaylord Palms, and we also completed the renovation of all of the guestrooms at Gaylord National. In 2022, we completed a re-concepting of the food and beverage options at Gaylord National and began a $98 million multi-year interior and exterior enhancement project at Gaylord Rockies to better position the property for our group customers. In early 2024, we identified over $1 billion in capital investment opportunities across our entire hotel portfolio, comprised of projects that we anticipate completing in phases through 2027.
Leverage Brand Name Awareness. We believe the Grand Ole Opry is one of the most recognized entertainment brands in the United States. We promote the Grand Ole Opry name through various media, including our WSM-AM radio station, the Internet and television, and through performances by the Grand Ole Opry’s members, many of whom are renowned country music artists. As such, we have alliances in place with multiple distribution partners in an effort to foster brand extension. We believe that licensing our brand for products may provide an opportunity to increase revenues and cash flow with relatively little capital investment. We are continuously exploring additional products, such as television specials and retail products, through which we can capitalize on our brand affinity and awareness. To this end, we have invested in six Ole Red locations, purchased Block 21, and in April 2023 announced a partnership with Luke Combs for Category 10, an entertainment venue concept expected to have a phased opening beginning later in 2024. Further, in 2022, we completed a strategic transaction to sell a minority interest in OEG to an affiliate of Atairos Group, Inc. and its strategic partner NBCUniversal Media, LLC, who we believe will be able to help us expand the distribution of our OEG brands.
Short-Term Capital Allocation. Our short-term capital allocation strategy is focused on returning capital to stockholders through the payment of dividends, in addition to investing in our assets and operations. Our dividend policy provides that we will make minimum dividends of 100% of REIT taxable income annually, subject to the board of directors’ future determinations as to the amount of any distributions and the timing thereof.
21
Our Operations
Our ongoing operations are organized into three principal business segments:
| ● | Hospitality, consisting of our Gaylord Hotels properties, JW Marriott Hill Country (effective June 30, 2023), the Inn at Opryland and the AC Hotel. |
| ● | Entertainment, consisting of the Grand Ole Opry, the Ryman Auditorium, WSM-AM, Ole Red, Category 10, Block 21, and our other Nashville-based attractions. |
| ● | Corporate and Other, consisting of our corporate expenses. |
For the three months ended March 31, 2024 and 2023, our total revenues were divided among these business segments as follows:
Three Months Ended | ||||||
March 31, | ||||||
Segment |
| 2024 |
| 2023 |
|
|
Hospitality |
| 87 | % | 86 | % |
|
Entertainment |
| 13 | % | 14 | % |
|
Corporate and Other |
| 0 | % | 0 | % |
|
Key Performance Indicators
The operating results of our Hospitality segment are highly dependent on the volume of customers at our hotels and the quality of the customer mix at our hotels, which are managed by Marriott. These factors impact the price that Marriott can charge for our hotel rooms and other amenities, such as food and beverage and meeting space. The following key performance indicators are commonly used in the hospitality industry and are used by management to evaluate hotel performance and allocate capital expenditures:
| ● | hotel occupancy – a volume indicator calculated by dividing total rooms sold by total rooms available; |
| ● | average daily rate (“ADR”) – a price indicator calculated by dividing room revenue by the number of rooms sold; |
| ● | revenue per available room (“RevPAR”) – a summary measure of hotel results calculated by dividing room revenue by room nights available to guests for the period; |
| ● | total revenue per available room (“Total RevPAR”) – a summary measure of hotel results calculated by dividing the sum of room, food and beverage and other ancillary service revenue by room nights available to guests for the period; and |
| ● | net definite group room nights booked – a volume indicator which represents the total number of definite group bookings for future room nights at our hotels confirmed during the applicable period, net of cancellations. |
We also use certain “non-GAAP financial measures,” which are measures of our historical performance that are not calculated and presented in accordance with generally accepted accounting principles in the United States (“GAAP”), within the meaning of applicable SEC rules. These measures include:
| ● | Earnings Before Interest Expense, Income Taxes, Depreciation and Amortization for Real Estate (“EBITDAre”), Adjusted EBITDAre and Adjusted EBITDAre, Excluding Noncontrolling Interest in Consolidated Joint Venture, and |
| ● | Funds From Operations (“FFO”) available to common stockholders and unit holders and Adjusted FFO available to common stockholders and unit holders. |
22
See “Non-GAAP Financial Measures” below for further discussion.
The results of operations of our Hospitality segment are affected by the number and type of group meetings and conventions scheduled to attend our hotels in a given period. A variety of factors can affect the results of any interim period, including the nature and quality of the group meetings and conventions attending our hotels during such period, which meetings and conventions (and applicable room rates) have often been contracted for several years in advance, seasonality, the level of attrition our hotels experience, and the level of transient business at our hotels during such period. Increases in costs, including labor costs, costs of food and other supplies, and energy costs can negatively affect our results, particularly during an inflationary economic environment. We rely on Marriott, as the manager of our hotels, to manage these factors and to offset any identified shortfalls in occupancy.
Selected Financial Information
The following table contains our unaudited selected summary financial data for the three months ended March 31, 2024 and 2023. The table also shows the percentage relationships to total revenues and, in the case of segment operating income, its relationship to segment revenues (in thousands, except percentages).
Unaudited | |||||||||||||
Three Months Ended March 31, | |||||||||||||
|
| 2024 |
| % |
| 2023 |
| % |
| ||||
Income Statement Data: |
|
|
|
|
|
| |||||||
REVENUES: |
|
|
|
|
|
| |||||||
Rooms | $ | 173,633 | 32.9 | % | $ | 161,251 | 32.8 | % | |||||
Food and beverage |
| 235,083 |
| 44.5 | % |
| 215,804 |
| 43.9 | % | |||
Other hotel revenue |
| 52,754 |
| 10.0 | % |
| 47,384 |
| 9.6 | % | |||
Entertainment |
| 66,875 |
| 12.7 | % |
| 67,280 |
| 13.7 | % | |||
Total revenues |
| 528,345 |
| 100.0 | % |
| 491,719 |
| 100.0 | % | |||
OPERATING EXPENSES: |
|
|
|
|
|
|
|
| |||||
Rooms |
| 44,101 |
| 8.3 | % |
| 42,059 |
| 8.6 | % | |||
Food and beverage |
| 128,179 |
| 24.3 | % |
| 115,181 |
| 23.4 | % | |||
Other hotel expenses |
| 118,813 |
| 22.5 | % |
| 103,059 |
| 21.0 | % | |||
Hotel management fees, net |
| 17,962 |
| 3.4 | % |
| 15,195 |
| 3.1 | % | |||
Entertainment |
| 52,587 |
| 10.0 | % |
| 51,434 |
| 10.5 | % | |||
Corporate |
| 11,954 |
| 2.3 | % |
| 10,594 |
| 2.2 | % | |||
Preopening costs |
| 1,436 |
| 0.3 | % |
| 190 |
| 0.0 | % | |||
Gain on sale of assets | (270) | (0.1) | % | — | — | % | |||||||
Depreciation and amortization: |
|
|
|
|
|
| |||||||
Hospitality |
| 50,230 |
| 9.5 | % |
| 42,875 |
| 8.7 | % | |||
Entertainment |
| 6,740 |
| 1.3 | % |
| 5,265 |
| 1.1 | % | |||
Corporate and Other |
| 232 |
| 0.0 | % |
| 217 |
| 0.0 | % | |||
Total depreciation and amortization |
| 57,202 |
| 10.8 | % |
| 48,357 |
| 9.8 | % | |||
Total operating expenses |
| 431,964 |
| 81.8 | % |
| 386,069 |
| 78.5 | % | |||
OPERATING INCOME (LOSS): |
|
|
|
|
|
|
|
| |||||
Hospitality |
| 102,185 |
| 22.1 | % |
| 106,070 |
| 25.0 | % | |||
Entertainment |
| 7,548 |
| 11.3 | % |
| 10,581 |
| 15.7 | % | |||
Corporate and Other |
| (12,186) |
| (A) |
| (10,811) |
| (A) | |||||
Preopening costs |
| (1,436) |
| (0.3) | % |
| (190) |
| (0.0) | % | |||
Gain on sale of assets | 270 | 0.1 | % | — | — | % | |||||||
Total operating income |
| 96,381 |
| 18.2 | % |
| 105,650 |
| 21.5 | % | |||
Interest expense |
| (60,443) |
| (A) |
| (42,528) |
| (A) | |||||
Interest income |
| 7,522 |
| (A) |
| 2,547 |
| (A) | |||||
Loss on extinguishment of debt |
| (522) |
| (A) |
| — |
| (A) | |||||
Income (loss) from unconsolidated joint ventures |
| 32 |
| (A) |
| (2,806) |
| (A) | |||||
Other gains and (losses), net |
| 321 |
| (A) |
| (236) |
| (A) | |||||
Provision for income taxes |
| (530) |
| (A) |
| (1,633) |
| (A) | |||||
Net income | 42,761 |
| (A) | 60,994 |
| (A) | |||||||
Net loss attributable to noncontrolling interest in consolidated joint venture | 579 | (A) | 763 | (A) | |||||||||
Net income attributable to noncontrolling interest in the Operating Partnership |
| (284) |
| (A) |
| (437) |
| (A) | |||||
Net income available to common stockholders | $ | 43,056 | (A) | $ | 61,320 | (A) | |||||||
| (A) | These amounts have not been shown as a percentage of revenue because they have no relationship to revenue. |
23
Summary Financial Results
Results of Operations
The following table summarizes our financial results for the three months ended March 31, 2024 and 2023 (in thousands, except percentages and per share data):
Three Months Ended | ||||||||||
March 31, | ||||||||||
% | ||||||||||
|
| 2024 |
| 2023 |
| Change |
|
| ||
Total revenues | $ | 528,345 |
| $ | 491,719 |
| 7.4 | % | ||
Total operating expenses |
| 431,964 |
|
| 386,069 |
| 11.9 | % | ||
Operating income |
| 96,381 |
|
| 105,650 |
| (8.8) | % | ||
Net income |
| 42,761 |
|
| 60,994 |
| (29.9) | % | ||
Net income available to common stockholders | 43,056 | 61,320 | (29.8) | % | ||||||
Net income available to common stockholders per share - diluted |
| 0.67 |
|
| 1.02 |
| (34.3) | % | ||
Total Revenues
The increase in our total revenues for the three months ended March 31, 2024, as compared to the same period in 2023, is attributable to an increase in our Hospitality segment of $37.0 million due to the acquisition of JW Marriott Hill Country on June 30, 2023, partially offset by a decrease in our Entertainment segment of $0.4 million, as presented in the tables below.
Total Operating Expenses
The increase in our total operating expenses for the three months ended March 31, 2024, as compared to the same period in 2023, is primarily the result of an increase in our Hospitality segment of $33.6 million and an increase in depreciation expense of $8.8 million, each primarily due to the acquisition of JW Marriott Hill Country on June 30, 2023, as presented in the tables below.
Net Income
Our $18.2 million decrease in net income for the three months ended March 31, 2024, as compared to the same period in 2023, was primarily due to the changes in our revenues and operating expenses reflected above, and a $17.9 million increase in interest expense in the 2024 period, as compared to the 2023 period, as described more fully below.
Factors and Trends Contributing to Performance and Current Environment
Important factors and trends contributing to our performance during the three months ended March 31, 2024, compared to the three months ended March 31, 2023, were:
| ● | The addition of JW Marriott Hill Country, including $49.9 million in revenues; the property averaged $198.40 in RevPAR and $547.72 in Total RevPAR. |
| ● | A decrease in same-store (Hospitality segment excluding JW Marriott Hill Country) group rooms traveled in the 2024 period of 4.6%, as compared to the 2023 period, as the Easter holiday shift from April in the previous year to March in the current year negatively impacted group business in the 2024 period. |
| ● | An increase in same-store ADR of 2.9% in the 2024 period, as compared to the 2023 period, reflective of our continued pricing strategy. |
| ● | A same-store decrease of 2.7% in outside-the-room spending at our hotels in the 2024 period, as compared to the 2023 period, primarily as a result of the Easter holiday shift. |
24
| ● | A same-store decrease of 39.4% in net definite group room nights booked at our hotels in the 2024 period, as compared to the 2023 period, primarily due to timing, as the fourth quarter of 2023 was the highest booking quarter on record. |
| ● | Same-store in-the-year-for-the-year cancelled room nights at our hotels decreased 62.2% in the 2024 period, as compared to the 2023 period. |
| ● | A same-store decrease in transient room nights traveled in the 2024 period of 12.6%, as compared to the 2023 period, as we experienced some softness in transient demand in the latter half of the quarter in several of our markets. |
| ● | An increase in Entertainment revenue in the 2024 period, as compared to the 2023 period, related to Ole Red Las Vegas, which opened in January 2024, offset primarily by a decrease related to the closure of the Wildhorse Saloon as it is being rebranded as Category 10 and a decrease at the W Austin Hotel primarily as a result of the disruption caused by the ongoing construction enhancements at the property. |
Other important factors and trends for the three months ended, and as of, March 31, 2024 include:
| ● | On a same-store basis, group room nights on the books for all future years at our hotels at March 31, 2024 are 3.2% ahead of those on the books at the same point in 2023. In addition, the ADR on those group nights on the books at March 31, 2024 is 6.2% higher than the same point in 2023. |
| ● | Our strong revenues in recent periods have partially mitigated increasing costs in the current inflationary environment, which include increased interest rates, which drove higher interest expense on our higher debt levels, as well as increased wages, insurance and other costs, which are expected to continue in the current inflationary environment. |
25
Operating Results – Detailed Segment Financial Information
Hospitality Segment
Total Segment Results. The following presents the financial results of our Hospitality segment for the three months ended March 31, 2024 and 2023 (in thousands, except percentages and performance metrics):
Three Months Ended | ||||||||||
March 31, | ||||||||||
% | ||||||||||
| 2024 | 2023 |
| Change |
|
| ||||
Revenues: |
|
|
|
|
|
|
| |||
Rooms | $ | 173,633 | $ | 161,251 |
| 7.7 | % | |||
Food and beverage |
| 235,083 |
| 215,804 |
| 8.9 | % | |||
Other hotel revenue |
| 52,754 |
| 47,384 |
| 11.3 | % | |||
Total hospitality revenue |
| 461,470 |
| 424,439 |
| 8.7 | % | |||
Hospitality operating expenses: |
|
|
|
|
| |||||
Rooms |
| 44,101 |
| 42,059 |
| 4.9 | % | |||
Food and beverage |
| 128,179 |
| 115,181 |
| 11.3 | % | |||
Other hotel expenses |
| 118,813 |
| 103,059 |
| 15.3 | % | |||
Management fees, net |
| 17,962 |
| 15,195 |
| 18.2 | % | |||
Depreciation and amortization |
| 50,230 |
| 42,875 |
| 17.2 | % | |||
Total Hospitality operating expenses |
| 359,285 |
| 318,369 |
| 12.9 | % | |||
Hospitality operating income | $ | 102,185 | $ | 106,070 |
| (3.7) | % | |||
Hospitality performance metrics |
|
|
|
|
| |||||
Occupancy |
| 66.7 | % |
| 72.3 | % | (5.6) | pts | ||
ADR | $ | 250.48 | $ | 237.95 |
| 5.3 | % | |||
RevPAR (1) | $ | 167.17 | $ | 172.08 |
| (2.9) | % | |||
Total RevPAR (2) | $ | 444.29 | $ | 452.94 |
| (1.9) | % | |||
Net Definite Group Room Nights Booked |
| 189,583 |
| 250,318 |
| (24.3) | % | |||
Same-store Hospitality performance metrics (3): |
|
|
|
|
| |||||
Occupancy |
| 67.0 | % |
| 72.3 | % | (5.3) | pts | ||
ADR | $ | 244.85 | $ | 237.95 |
| 2.9 | % | |||
RevPAR (1) | $ | 164.16 | $ | 172.08 |
| (4.6) | % | |||
Total RevPAR (2) | $ | 434.33 | $ | 452.94 |
| (4.1) | % | |||
Net Definite Group Room Nights Booked |
| 151,676 |
| 250,318 |
| (39.4) | % | |||
| (1) | We calculate Hospitality RevPAR by dividing room revenue by room nights available to guests for the period. Hospitality RevPAR is not comparable to similarly titled measures such as revenues. |
| (2) | We calculate Hospitality Total RevPAR by dividing the sum of room, food and beverage, and other ancillary services revenue (which equals Hospitality segment revenue) by room nights available to guests for the period. Hospitality Total RevPAR is not comparable to similarly titled measures such as revenues. |
| (3) | Same-store Hospitality segment metrics do not include JW Marriott Hill Country, which we purchased on June 30, 2023. |
The increase in total Hospitality segment revenue in the three months ended March 31, 2024, as compared to the same period in 2023, is primarily due to the addition of $49.9 million in revenue from JW Marriott Hill Country, which we purchased on June 30, 2023, partially offset by decreases of $8.0 million and $4.5 million at Gaylord Opryland and Gaylord National, respectively, as presented in the tables below.
Total Hospitality segment revenues in the three months ended March 31, 2024 include $8.5 million in attrition and cancellation fee revenue, a decrease of $1.3 million in attrition and cancellation fees from the 2023 period.
26
The percentage of group versus transient business based on rooms sold for our Hospitality segment for the periods presented was approximately as follows:
Three Months Ended | ||||||
March 31, | ||||||
| 2024 |
| 2023 |
|
| |
Group |
| 80 | % | 79 | % |
|
Transient |
| 20 | % | 21 | % |
|
Rooms expenses increased in the three months ended March 31, 2024, as compared to the same period in 2023, primarily due to JW Marriott Hill Country, which we purchased on June 30, 2023, partially offset by decreases at Gaylord National, Gaylord Rockies and Gaylord Opryland due to decreased volume, as presented in the tables below.
The increase in food and beverage expenses in the three months ended March 31, 2024, as compared to the same period in 2023, is primarily due to JW Marriott Hill Country, as presented in the tables below.
Other hotel expenses for the three months ended March 31, 2024 and 2023 consist of the following (in thousands):
Three Months Ended | ||||||||||
March 31, | ||||||||||
% | ||||||||||
| 2024 |
| 2023 |
| Change |
|
| |||
Administrative employment costs | $ | 47,370 | $ | 39,758 |
| 19.1 | % | |||
Utilities |
| 10,927 |
| 9,360 |
| 16.7 | % | |||
Property taxes |
| 10,784 |
| 9,089 |
| 18.6 | % | |||
Other |
| 49,732 |
| 44,852 |
| 10.9 | % | |||
Total other hotel expenses | $ | 118,813 | $ | 103,059 |
| 15.3 | % | |||
Each of the other hotel expense categories above increased in the three months ended March 31, 2024, as compared to the same period in 2023, primarily due to the addition of JW Marriott Hill Country. Administrative employment costs include salaries and benefits for hotel administrative functions, including, among others, senior management, accounting, human resources, sales, conference services, engineering and security. The increase in property taxes during the three months ended March 31, 2024, as compared to the 2023 period, was partially offset by a decrease at Gaylord National due to a settlement of an appeal from prior tax years. The increase in other expenses, which include supplies, advertising, maintenance costs and consulting costs, during the three months ended March 31, 2024, as compared to the same period in 2023, was partially offset by various decreases at Gaylord Opryland and Gaylord National due to decreased business levels.
Each of our management agreements with Marriott requires us to pay Marriott a base management fee based on the gross revenues from the applicable property for each fiscal year or portion thereof. The applicable percentage for our Gaylord Hotels properties, excluding Gaylord Rockies, is approximately 2% of gross revenues, Gaylord Rockies is approximately 3% of gross revenues, and JW Marriott Hill Country is approximately 3.5% of gross revenues. Additionally, we pay Marriott an incentive management fee based on the profitability of our hotels. In the three months ended March 31, 2024 and 2023, we incurred $10.8 million and $9.2 million, respectively, related to base management fees for our Hospitality segment and $8.0 million and $6.7 million, respectively, related to incentive management fees for our Hospitality segment. Management fees are presented throughout this Quarterly Report on Form 10-Q net of the amortization of the deferred management rights proceeds discussed in Note 8, “Deferred Management Rights Proceeds,” to the accompanying condensed consolidated financial statements included herein.
Total Hospitality segment depreciation and amortization expense increased in the three months ended March 31, 2024, as compared to the same period in 2023, primarily due to JW Marriott Hill Country, which we purchased on June 30, 2023.
27
Property-Level Results. The following presents the property-level financial results of our Hospitality segment for the three months ended March 31, 2024 and 2023.
Gaylord Opryland Results. The results of Gaylord Opryland for the three months ended March 31, 2024 and 2023 are as follows (in thousands, except percentages and performance metrics):
Three Months Ended | ||||||||||
March 31, | ||||||||||
% | ||||||||||
| 2024 |
| 2023 |
| Change |
|
| |||
Revenues: |
|
|
|
|
|
|
|
| ||
Rooms | $ | 41,945 |
| $ | 45,331 |
| (7.5) | % | ||
Food and beverage |
| 45,926 |
|
| 50,097 |
| (8.3) | % | ||
Other hotel revenue |
| 15,964 |
|
| 16,378 |
| (2.5) | % | ||
Total revenue |
| 103,835 |
|
| 111,806 |
| (7.1) | % | ||
Operating expenses: |
|
|
|
|
|
|
| |||
Rooms |
| 9,952 | 10,360 |
| (3.9) | % | ||||
Food and beverage |
| 26,143 | 25,989 |
| 0.6 | % | ||||
Other hotel expenses |
| 29,592 | 29,890 |
| (1.0) | % | ||||
Management fees, net |
| 5,190 | 5,318 |
| (2.4) | % | ||||
Depreciation and amortization |
| 8,133 | 8,554 |
| (4.9) | % | ||||
Total operating expenses |
| 79,010 |
|
| 80,111 |
| (1.4) | % | ||
Operating income | $ | 24,825 | $ | 31,695 | (21.7) | % | ||||
Performance metrics: |
|
|
|
|
|
|
| |||
Occupancy |
| 65.1 | % |
| 72.6 | % | (7.5) | pts | ||
ADR | $ | 245.28 |
| $ | 240.19 |
| 2.1 | % | ||
RevPAR | $ | 159.60 |
| $ | 174.40 |
| (8.5) | % | ||
Total RevPAR | $ | 395.10 |
| $ | 430.16 |
| (8.2) | % | ||
Gaylord Palms Results. The results of Gaylord Palms for the three months ended March 31, 2024 and 2023 are as follows (in thousands, except percentages and performance metrics):
Three Months Ended | ||||||||||
March 31, | ||||||||||
% | ||||||||||
| 2024 |
| 2023 |
| Change |
|
| |||
Revenues: |
|
|
|
|
|
|
|
| ||
Rooms | $ | 31,250 |
| $ | 31,664 |
| (1.3) | % | ||
Food and beverage |
| 45,450 |
|
| 43,782 |
| 3.8 | % | ||
Other hotel revenue |
| 8,763 |
|
| 9,100 |
| (3.7) | % | ||
Total revenue |
| 85,463 |
|
| 84,546 |
| 1.1 | % | ||
Operating expenses: |
|
|
|
|
|
|
| |||
Rooms |
| 6,682 | 6,312 |
| 5.9 | % | ||||
Food and beverage |
| 22,887 | 21,188 |
| 8.0 | % | ||||
Other hotel expenses |
| 21,780 | 20,706 |
| 5.2 | % | ||||
Management fees, net |
| 3,237 | 3,096 |
| 4.6 | % | ||||
Depreciation and amortization |
| 5,871 | 5,610 |
| 4.7 | % | ||||
Total operating expenses |
| 60,457 |
|
| 56,912 |
| 6.2 | % | ||
Operating income | $ | 25,006 | $ | 27,634 | (9.5) | % | ||||
Performance metrics: |
|
|
|
|
|
|
| |||
Occupancy |
| 74.6 | % |
| 79.5 | % | (4.9) | pts | ||
ADR | $ | 267.99 |
| $ | 257.66 |
| 4.0 | % | ||
RevPAR | $ | 199.89 |
| $ | 204.78 |
| (2.4) | % | ||
Total RevPAR | $ | 546.66 |
| $ | 546.80 |
| (0.0) | % | ||
28
Gaylord Texan Results. The results of Gaylord Texan for the three months ended March 31, 2024 and 2023 are as follows (in thousands, except percentages and performance metrics):
Three Months Ended | ||||||||||
March 31, | ||||||||||
% | ||||||||||
| 2024 |
| 2023 |
| Change |
|
| |||
Revenues: |
|
|
|
|
|
|
|
| ||
Rooms | $ | 28,978 |
| $ | 29,044 |
| (0.2) | % | ||
Food and beverage |
| 47,544 |
|
| 49,342 |
| (3.6) | % | ||
Other hotel revenue |
| 8,380 |
|
| 8,012 |
| 4.6 | % | ||
Total revenue |
| 84,902 |
|
| 86,398 |
| (1.7) | % | ||
Operating expenses: |
|
|
|
|
|
| ||||
Rooms |
| 6,455 | 6,402 |
| 0.8 | % | ||||
Food and beverage |
| 24,099 | 24,550 |
| (1.8) | % | ||||
Other hotel expenses |
| 18,674 | 18,244 |
| 2.4 | % | ||||
Management fees, net |
| 3,751 | 3,348 |
| 12.0 | % | ||||
Depreciation and amortization |
| 5,891 | 5,766 |
| 2.2 | % | ||||
Total operating expenses |
| 58,870 |
|
| 58,310 |
| 1.0 | % | ||
Operating income | $ | 26,032 | $ | 28,088 | (7.3) | % | ||||
Performance metrics: |
|
|
|
|
|
|
| |||
Occupancy |
| 73.2 | % |
| 77.1 | % | (3.9) | pts | ||
ADR | $ | 239.77 |
| $ | 230.83 |
| 3.9 | % | ||
RevPAR | $ | 175.54 |
| $ | 177.90 |
| (1.3) | % | ||
Total RevPAR | $ | 514.32 |
| $ | 529.21 |
| (2.8) | % | ||
Gaylord National Results. The results of Gaylord National for the three months ended March 31, 2024 and 2023 are as follows (in thousands, except percentages and performance metrics):
Three Months Ended | ||||||||||
March 31, | ||||||||||
% | ||||||||||
| 2024 |
| 2023 |
| Change |
|
| |||
Revenues: |
|
|
|
|
|
|
|
| ||
Rooms | $ | 27,641 |
| $ | 28,999 |
| (4.7) | % | ||
Food and beverage |
| 34,948 |
|
| 36,618 |
| (4.6) | % | ||
Other hotel revenue |
| 5,685 |
|
| 7,155 |
| (20.5) | % | ||
Total revenue |
| 68,274 |
|
| 72,772 |
| (6.2) | % | ||
Operating expenses: |
|
|
|
|
|
|
| |||
Rooms |
| 10,717 | 11,559 |
| (7.3) | % | ||||
Food and beverage |
| 22,142 | 22,503 |
| (1.6) | % | ||||
Other hotel expenses |
| 20,318 | 21,107 |
| (3.7) | % | ||||
Management fees, net |
| 1,473 | 1,254 |
| 17.5 | % | ||||
Depreciation and amortization |
| 8,401 | 8,294 |
| 1.3 | % | ||||
Total operating expenses |
| 63,051 |
|
| 64,717 |
| (2.6) | % | ||
Operating income | $ | 5,223 | $ | 8,055 | (35.2) | % | ||||
Performance metrics: |
|
|
|
|
|
|
| |||
Occupancy |
| 64.4 | % |
| 67.3 | % | (2.9) | pts | ||
ADR | $ | 236.16 |
| $ | 239.70 |
| (1.5) | % | ||
RevPAR | $ | 152.18 |
| $ | 161.43 |
| (5.7) | % | ||
Total RevPAR | $ | 375.88 |
| $ | 405.10 |
| (7.2) | % | ||
29
Gaylord Rockies Results. The results of Gaylord Rockies for the three months ended March 31, 2024 and 2023 are as follows (in thousands, except percentages and performance metrics):
Three Months Ended | ||||||||||
March 31, | ||||||||||
% | ||||||||||
2024 |
| 2023 |
| Change | ||||||
Revenues: | ||||||||||
Rooms | $ | 21,348 | $ | 22,015 | (3.0) | % | ||||
Food and beverage | 35,814 | 35,394 | 1.2 | % | ||||||
Other hotel revenue | 6,660 | 6,638 | 0.3 | % | ||||||
Total revenue | 63,822 | 64,047 | (0.4) | % | ||||||
Operating expenses: | ||||||||||
Rooms | 5,455 | 5,998 | (9.1) | % | ||||||
Food and beverage | 19,975 | 20,281 | (1.5) | % | ||||||
Other hotel expenses | 10,648 | 10,856 | (1.9) | % | ||||||
Management fees, net | 1,906 | 1,999 | (4.7) | % | ||||||
Depreciation and amortization | 13,841 | 14,045 | (1.5) | % | ||||||
Total operating expenses | 51,825 | 53,179 | (2.5) | % | ||||||
Operating income | $ | 11,997 | $ | 10,868 | 10.4 | % | ||||
Performance metrics: | ||||||||||
Occupancy | 64.5 | % | 69.9 | % | (5.4) | pts | ||||
ADR | $ | 242.23 | $ | 233.09 | 3.9 | % | ||||
RevPAR | $ | 156.29 | $ | 162.97 | (4.1) | % | ||||
Total RevPAR | $ | 467.24 | $ | 474.10 | (1.4) | % | ||||
JW Marriott Hill Country Results. We purchased JW Marriott Hill Country on June 30, 2023. The results of JW Marriott Hill Country for the three months ended March 31, 2024 are as follows (in thousands, except percentages and performance metrics):
2024 |
| |||
Revenues: | ||||
Rooms | $ | 18,090 | ||
Food and beverage | 24,658 | |||
Other hotel revenue | 7,193 | |||
Total revenue | 49,941 | |||
Operating expenses: | ||||
Rooms | 3,482 | |||
Food and beverage | 12,201 | |||
Other hotel expenses | 15,632 | |||
Management fees, net | 2,095 | |||
Depreciation and amortization | 7,397 | |||
Total operating expenses | 40,807 | |||
Operating income | $ | 9,134 | ||
Performance metrics: | ||||
Occupancy | 63.6 | % | ||
ADR | $ | 312.19 | ||
RevPAR | $ | 198.40 | ||
Total RevPAR | $ | 547.72 | ||
30
Entertainment Segment
Total Segment Results. The following presents the financial results of our Entertainment segment for the three months ended March 31, 2024 and 2023 (in thousands, except percentages):
Three Months Ended | ||||||||||
March 31, | ||||||||||
% | ||||||||||
| 2024 |
| 2023 |
| Change |
|
| |||
Revenues | $ | 66,875 |
| $ | 67,280 |
| (0.6) | % | ||
Operating expenses |
| 52,587 |
|
| 51,434 |
| 2.2 | % | ||
Depreciation and amortization |
| 6,740 |
|
| 5,265 |
| 28.0 | % | ||
Operating income (1) | $ | 7,548 |
| $ | 10,581 |
| (28.7) | % | ||
| (1) | Entertainment segment operating income does not include preopening costs of $1.4 million and $0.2 million in the three months ended March 31, 2024 and 2023, respectively. See discussion of this item below. |
Revenues decreased slightly in our Entertainment segment in the three months ended March 31, 2024, as compared to the prior year period, as incremental revenue from Ole Red Las Vegas, which opened in January 2024, was offset primarily due to the Wildhorse Saloon being temporarily closed as it is being rebranded as Category 10 and a decrease at the W Austin Hotel primarily as a result of the disruption caused by the ongoing construction enhancements at the property. Entertainment segment operating expenses increased slightly in the 2024 period, as compared to the 2023 period, primarily due to the opening of Ole Red Las Vegas being partially offset by the temporary closure of the Wildhorse Saloon.
Corporate and Other Segment
Total Segment Results. The following presents the financial results of our Corporate and Other segment for the three months ended March 31, 2024 and 2023 (in thousands, except percentages):
Three Months Ended | |||||||||
March 31, | |||||||||
% | |||||||||
2024 |
| 2023 |
| Change |
|
| |||
Operating expenses | $ | 11,954 |
| $ | 10,594 |
| 12.8 | % | |
Depreciation and amortization |
| 232 |
|
| 217 |
| 6.9 | % | |
Operating loss (1) | $ | (12,186) |
| $ | (10,811) |
| (12.7) | % | |
| (1) | Corporate segment operating expenses do not include a gain on sale of assets of $0.3 million in the three months ended March 31, 2024. |
Corporate and Other operating expenses consist primarily of costs associated with senior management salaries and benefits, legal, human resources, accounting, pension, information technology, consulting and other administrative costs. Corporate and Other segment operating expenses increased in the three months ended March 31, 2024, as compared to the prior year period, primarily as a result of an increase in employment expenses associated with the hiring of additional employees and increased wages to support the Company’s growth.
Operating Results – Preopening Costs
Preopening costs during the three months ended March 31, 2024 primarily include costs associated with Category 10, which is expected to begin a phased opening later in 2024. Preopening costs during the three months ended March 31, 2023 primarily include costs associated with Ole Red Las Vegas, which opened in January 2024.
Operating Results – Gain on Sale of Assets
Gain on sale of assets during the three months ended March 31, 2024 includes the sale of miscellaneous corporate assets.
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Non-Operating Results Affecting Net Income
The following table summarizes the other factors which affected our net income for the three months ended March 31, 2024 and 2023 (in thousands, except percentages):
Three Months Ended | |||||||||
March 31, | |||||||||
% | |||||||||
| 2024 |
| 2023 |
| Change |
|
| ||
Interest expense | $ | 60,443 |
| $ | 42,528 |
| 42.1 | % | |
Interest income |
| 7,522 |
|
| 2,547 |
| 195.3 | % | |
Loss on extinguishment of debt | (522) | — | (100.0) | % | |||||
Income (loss) from unconsolidated joint ventures |
| 32 |
|
| (2,806) |
| 101.1 | % | |
Other gains and (losses), net |
| 321 |
|
| (236) |
| 236.0 | % | |
Provision for income taxes |
| (530) |
|
| (1,633) |
| 67.5 | % | |
Interest Expense
Interest expense increased $17.9 million during the three months ended March 31, 2024, as compared to the same period in 2023, due primarily to the May 2023 refinancing and increase of the term loan B and the June 2023 issuance of the $400 Million 7.25% Senior Notes, as well as an increase in interest rates related to our variable-rate debt.
Cash interest expense increased $19.0 million to $58.6 million in the three months ended March 31, 2024, as compared to the same period in 2023. Non-cash interest expense, which includes amortization of deferred financing costs and debt discounts or premiums and is offset by capitalized interest, decreased $1.0 million to $1.8 million in the three months ended March 31, 2024, as compared to the same period in 2023.
Our weighted average interest rate on our borrowings, excluding capitalized interest, but including the impact of interest rate swaps, was 7.2% and 5.9% for the three months ended March 31, 2024 and 2023, respectively.
Interest Income
Interest income for the three months ended March 31, 2024 primarily includes amounts earned on our cash balances, as well as the bonds that were received in connection with the development of Gaylord National, which we hold as notes receivable. See Note 6, “Notes Receivable,” to the accompanying condensed consolidated financial statements included herein for additional discussion of interest income on these bonds.
Loss on Extinguishment of Debt
As a result of the March 2024 repayment of the Gaylord Rockies $800 million term loan, we recognized a loss on extinguishment of debt of $0.5 million in the three months ended March 31, 2024.
Income (Loss) from Unconsolidated Joint Ventures
The loss from unconsolidated joint ventures for the three months ended March 31, 2023 represents our equity method share of losses associated with Circle.
Other Gains and (Losses), net
Other gains and (losses), net for the three months ended March 31, 2024 and 2023 represents various miscellaneous items.
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Provision for Income Taxes
As a REIT, we generally are not subject to federal corporate income taxes on ordinary taxable income and capital gains income from real estate investments that we distribute to our stockholders. We are required to pay federal and state corporate income taxes on earnings of our TRSs.
For the three months ended March 31, 2024 and 2023, we recorded an income tax provision of $0.5 million and $1.6 million, respectively, related to our TRSs. The decrease in the income tax provision for the 2024 period, as compared to the 2023 period, primarily relates to a decrease in income at our TRSs.
Non-GAAP Financial Measures
We present the following non-GAAP financial measures, which we believe are useful to investors as key measures of our operating performance:
EBITDAre, Adjusted EBITDAre and Adjusted EBITDAre, Excluding Noncontrolling Interest in Consolidated Joint Venture Definition
We calculate EBITDAre, which is defined by the National Association of Real Estate Investment Trusts (“NAREIT”) in its September 2017 white paper as net income (calculated in accordance with GAAP) plus interest expense, income tax expense, depreciation and amortization, gains or losses on the disposition of depreciated property (including gains or losses on change in control), impairment write-downs of depreciated property and of investments in unconsolidated affiliates caused by a decrease in the value of depreciated property in the affiliate, and adjustments to reflect the entity’s share of EBITDAre of unconsolidated affiliates.
Adjusted EBITDAre is then calculated as EBITDAre, plus to the extent the following adjustments occurred during the periods presented:
| ● | Preopening costs; |
| ● | Non-cash lease expense; |
| ● | Equity-based compensation expense; |
| ● | Impairment charges that do not meet the NAREIT definition above; |
| ● | Credit losses on held-to-maturity securities; |
| ● | Transaction costs of acquisitions; |
| ● | Interest income on bonds; |
| ● | Loss on extinguishment of debt; |
| ● | Pension settlement charges; |
| ● | Pro rata Adjusted EBITDAre from unconsolidated joint ventures; and |
| ● | Any other adjustments we have identified herein. |
We then exclude the pro rata share of Adjusted EBITDAre related to noncontrolling interests in consolidated joint ventures to calculate Adjusted EBITDAre, Excluding Noncontrolling Interest in Consolidated Joint Venture.
We use EBITDAre, Adjusted EBITDAre and Adjusted EBITDAre, Excluding Noncontrolling Interest in Consolidated Joint Venture to evaluate our operating performance. We believe that the presentation of these non-GAAP financial measures provides useful information to investors regarding our operating performance and debt leverage metrics, and that the presentation of these non-GAAP financial measures, when combined with the primary GAAP presentation of net income, is beneficial to an investor’s complete understanding of our operating performance. We make additional adjustments to EBITDAre when evaluating our performance because we believe that presenting Adjusted EBITDAre and Adjusted EBITDAre, Excluding Noncontrolling Interest in Consolidated Joint Venture provides useful information to investors regarding our operating performance and debt leverage metrics.
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FFO, Adjusted FFO, and Adjusted FFO available to common stockholders and unit holders Definition
We calculate FFO, which definition is clarified by NAREIT in its December 2018 white paper as net income (calculated in accordance with GAAP) excluding depreciation and amortization (excluding amortization of deferred financing costs and debt discounts), gains and losses from the sale of certain real estate assets, gains and losses from a change in control, impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciated real estate held by the entity, income (loss) from consolidated joint ventures attributable to noncontrolling interest, and pro rata adjustments for unconsolidated joint ventures.
To calculate Adjusted FFO available to common stockholders and unit holders, we then exclude, to the extent the following adjustments occurred during the periods presented:
| ● | Right-of-use asset amortization; |
| ● | Impairment charges that do not meet the NAREIT definition above; |
| ● | Write-offs of deferred financing costs; |
| ● | Amortization of debt discounts or premiums and amortization of deferred financing costs; |
| ● | Loss on extinguishment of debt; |
| ● | Non-cash lease expense; |
| ● | Credit loss on held-to-maturity securities; |
| ● | Pension settlement charges; |
| ● | Additional pro rata adjustments from unconsolidated joint ventures; |
| ● | (Gains) losses on other assets; |
| ● | Transaction costs of acquisitions; |
| ● | Deferred income tax expense (benefit); and |
| ● | Any other adjustments we have identified herein. |
FFO available to common stockholders and unit holders and Adjusted FFO available to common stockholders and unit holders exclude the ownership portion of the joint ventures not controlled or owned by the Company.
We believe that the presentation of FFO available to common stockholders and unit holders and Adjusted FFO available to common stockholders and unit holders provides useful information to investors regarding the performance of our ongoing operations because they are a measure of our operations without regard to specified non-cash items such as real estate depreciation and amortization, gain or loss on sale of assets and certain other items, which we believe are not indicative of the performance of our underlying hotel properties. We believe that these items are more representative of our asset base than our ongoing operations. We also use these non-GAAP financial measures as measures in determining our results after considering the impact of our capital structure.
We caution investors that amounts presented in accordance with our definitions of Adjusted EBITDAre, Adjusted EBITDAre, Excluding Noncontrolling Interest, FFO available to common stockholders and unit holders, and Adjusted FFO available to common stockholders and unit holders may not be comparable to similar measures disclosed by other companies, because not all companies calculate these non-GAAP measures in the same manner. These non-GAAP financial measures, and any related per share measures, should not be considered as alternative measures of our Net Income (Loss), operating performance, cash flow or liquidity. These non-GAAP financial measures may include funds that may not be available for our discretionary use due to functional requirements to conserve funds for capital expenditures and property acquisitions and other commitments and uncertainties. Although we believe that these non-GAAP financial measures can enhance an investor’s understanding of our results of operations, these non-GAAP financial measures, when viewed individually, are not necessarily better indicators of any trend as compared to GAAP measures such as Net Income (Loss), Operating Income (Loss), or cash flow from operations.
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The following is a reconciliation of our consolidated GAAP net income to EBITDAre and Adjusted EBITDAre for the three months ended March 31, 2024 and 2023 (in thousands):
Three Months Ended | |||||||
March 31, | |||||||
2024 |
| 2023 | |||||
Net income | $ | 42,761 | $ | 60,994 | |||
Interest expense, net | 52,921 | 39,981 | |||||
Provision for income taxes | 530 | 1,633 | |||||
Depreciation and amortization | 57,202 | 48,357 | |||||
Gain on sale of assets | (270) | — | |||||
Pro rata EBITDAre from unconsolidated joint ventures | 2 | 9 | |||||
EBITDAre | 153,146 | 150,974 | |||||
Preopening costs | 1,436 | 190 | |||||
Non-cash lease expense | 925 | 1,501 | |||||
Equity-based compensation expense | 3,862 | 3,739 | |||||
Interest income on Gaylord National bonds | 1,195 | 1,271 | |||||
Loss on extinguishment of debt | 522 | — | |||||
Pro rata adjusted EBITDAre from unconsolidated joint ventures | (21) | — | |||||
Adjusted EBITDAre | 161,065 | 157,675 | |||||
Adjusted EBITDAre of noncontrolling interest in consolidated joint venture | (4,662) | (4,296) | |||||
Adjusted EBITDAre, excluding noncontrolling interest in consolidated joint venture | $ | 156,403 | $ | 153,379 | |||
The following is a reconciliation of our consolidated GAAP net income to FFO and Adjusted FFO for the three months ended March 31, 2024 and 2023 (in thousands):
Three Months Ended | |||||||
March 31, | |||||||
2024 |
| 2023 | |||||
Net income | $ | 42,761 | $ | 60,994 | |||
Noncontrolling interest in consolidated joint venture | 579 | 763 | |||||
Net income available to common stockholders and unit holders | 43,340 | 61,757 | |||||
Depreciation and amortization | 57,154 | 48,326 | |||||
Adjustments for noncontrolling interest | (2,021) | (1,580) | |||||
Pro rata adjustments from joint ventures | — | 23 | |||||
FFO available to common stockholders and unit holders | 98,473 | 108,526 | |||||
Right-of-use asset amortization | 48 | 31 | |||||
Non-cash lease expense | 925 | 1,501 | |||||
Pro rata adjustments from joint ventures | (21) | — | |||||
Gain on other assets | (270) | — | |||||
Amortization of deferred financing costs | 2,721 | 2,674 | |||||
Amortization of debt discounts and premiums | 649 | 506 | |||||
Loss on extinguishment of debt | 522 | — | |||||
Adjustments for noncontrolling interest | 135 | (412) | |||||
Deferred tax provision (benefit) | (488) | 767 | |||||
Adjusted FFO available to common stockholders and unit holders | $ | 102,694 | $ | 113,593 | |||
Liquidity and Capital Resources
Cash Flows Provided By Operating Activities. Cash flow from operating activities is the principal source of cash used to fund our operating expenses, interest payments on debt, maintenance capital expenditures, and dividends to stockholders. During the three months ended March 31, 2024, our net cash flows provided by operating activities were $7.5 million, primarily reflecting our net income before depreciation expense, amortization expense and other non-cash charges of $106.0 million, partially offset by unfavorable changes in working capital of $98.6 million. The unfavorable changes in working capital primarily resulted from a decrease in accounts payable and accrued liabilities primarily
35
related to compensation, property tax accruals and the payment of liabilities associated with our seasonal holiday programs and an increase in accounts receivable due to a seasonal increase in group business at our hotel properties. These unfavorable changes in working capital were partially offset by an increase in advanced deposits on future hotel stays and advanced ticket purchases at our OEG venues.
During the three months ended March 31, 2023, our net cash flows provided by operating activities were $31.7 million, primarily reflecting our net income before depreciation expense, amortization expense and other non-cash charges of $119.3 million, partially offset by unfavorable changes in working capital of $87.6 million. The unfavorable changes in working capital primarily resulted from a decrease in accounts payable and accrued liabilities primarily related to compensation and property tax accruals and an increase in accounts receivable due to a seasonal increase in group business at our hotel properties, partially offset by an increase in advanced ticket purchases at our OEG venues and increase in advanced deposits on future hotel room stays.
Cash Flows Used In Investing Activities. During the three months ended March 31, 2024, our primary uses of funds for investing activities were purchases of property and equipment, which totaled $79.4 million, and consisted primarily of enhancements at Gaylord Rockies to construct a new events pavilion, enhance the grand lodge and reposition its food and beverage outlets; the completion of Ole Red Las Vegas; a rooms renovation at the W Austin Hotel and common area enhancements at Block 21; the conversion of the Wildhorse Saloon to Category 10; a rooms renovation at Gaylord Palms; and ongoing maintenance capital expenditures for each of our existing properties.
During the three months ended March 31, 2023, our primary use of funds for investing activities were purchases of property and equipment, which totaled $36.8 million, and consisted primarily of enhancements to the offerings at Block 21, the construction of Ole Red Las Vegas, enhancements at Gaylord Rockies to better position the property for our group customers, and ongoing maintenance capital expenditures for each of our existing properties.
Cash Flows Used In Financing Activities. Our cash flows from financing activities primarily reflect the incurrence and repayment of long-term debt and the payment of cash dividends. During the three months ended March 31, 2024, our net cash flows used in financing activities were $81.8 million, primarily reflecting the issuance of the $1 Billion 6.50% Senior Notes, offset by the prepayment of the Gaylord Rockies $800.0 million term loan, the repayment of $201.3 million under our $500.0 million term loan B, the payment of $67.1 million in cash dividends and the payment of $16.8 million in deferred financing costs.
During the three months ended March 31, 2023, our net cash flows used in financing activities were $13.9 million, primarily reflecting the payment of $14.0 million in cash dividends.
Liquidity
At March 31, 2024, we had $465.3 million in unrestricted cash and $738.7 million available for borrowing in the aggregate under our revolving credit facility and the OEG revolving credit facility. During the three months ended March 31, 2024, we issued the $1 Billion 6.50% Senior Notes, repaid the $800.0 million Gaylord Rockies term loan, repaid $201.3 million under our $500.0 million term loan B, incurred capital expenditures of $79.4 million and paid $67.1 million in cash dividends. These changes, as well as the cash flows provided by operations discussed above, were the primary factors in the decrease in our cash balance from December 31, 2023 to March 31, 2024.
We anticipate investing in our operations during the remainder of 2024 by spending between approximately $280 million and $360 million in capital expenditures, which includes projects at Gaylord Rockies to construct a new events pavilion, enhance the grand lodge and reposition its food and beverage outlets; enhancements to meeting spaces at Gaylord Opryland to further appeal to our target group customers; a rooms renovation at the W Austin Hotel and common area enhancements at Block 21; the conversion of the Wildhorse Saloon to Category 10; a rooms renovation at Gaylord Palms; and ongoing maintenance capital for each of our current facilities. Further, our dividend policy provides that we will make minimum dividends of 100% of REIT taxable income annually. Future dividends are subject to our board of directors’ future determinations as to amount and timing. We currently have no debt maturities until January 2026. We believe we will be able to refinance our debt agreements prior to their maturities.
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We believe that our cash on hand and cash flow from operations, together with amounts available for borrowing under each of our revolving credit facility and the OEG revolving credit facility, will be adequate to fund our general short-term commitments, as well as: (i) current operating expenses, (ii) interest expense on long-term debt obligations, (iii) financing lease and operating lease obligations, (iv) declared dividends and (v) the capital expenditures described above. Our ability to draw on our credit facility and the OEG revolving credit facility is subject to the satisfaction of provisions of the credit facility and the OEG revolving credit facility, as applicable.
Our outstanding principal debt agreements are described below. At March 31, 2024, there were no defaults under the covenants related to our outstanding debt.
Principal Debt Agreements
Credit Facility. On May 18, 2023, we entered into a Credit Agreement (the “Credit Agreement”) among the Company, as a guarantor, the Operating Partnership, as borrower, certain other subsidiaries of the Company party thereto, as guarantors, certain subsidiaries of the Company party thereto, as pledgors, the lenders party thereto and Wells Fargo Bank, National Association, as administrative agent, which replaced the Company’s previous credit facility.
The Credit Agreement provides for a $700.0 million revolving credit facility (the “Revolver”) and a $500.0 million senior secured term loan B (the “Term Loan B”) (which was reduced to $295.0 million on March 28, 2024), as well as an accordion feature that will allow us to increase the facilities following the closing date by an aggregate total of up to $475 million, which may be allocated between the Revolver and the Term Loan B at our option.
Each of the Revolver and the Term Loan B is guaranteed by us, each of our subsidiaries that own the Gaylord Hotels properties, other than Gaylord Rockies, and certain of our other subsidiaries. Each of the Revolver and the Term Loan B is secured by equity pledges of our subsidiaries that are the fee owners of Gaylord Opryland and Gaylord Texan, their respective direct and indirect parent entities, and the equity of Ryman Hotel Operations Holdco, LLC, a wholly owned indirect subsidiary of the Company. Assets and equity of Gaylord Rockies and OEG are not subject to the liens of the Credit Agreement.
In addition, each of the Revolver and Term Loan B contains certain covenants which, among other things, limit the incurrence of additional indebtedness, investments, dividends, transactions with affiliates, asset sales, acquisitions, mergers and consolidations, liens and encumbrances and other matters customarily restricted in such agreements. The material financial covenants, ratios or tests contained in the Credit Agreement are as follows:
| ● | We must maintain a consolidated net leverage ratio of not greater than 6.50x. |
| ● | We must maintain a consolidated fixed charge coverage ratio of not less than 1.50x. |
| ● | Our secured indebtedness must not exceed 30% of consolidated total asset value. |
| ● | Our secured recourse indebtedness must not exceed 10% of consolidated total asset value. |
| ● | Unencumbered leverage ratio must not exceed 55% (with the ability to surge to 60% in connection with a material acquisition). |
| ● | Unencumbered adjusted NOI to unsecured interest expense ratio not to be less than 2.0x. |
If an event of default shall occur and be continuing under the Credit Agreement, the commitments under the Credit Agreement may be terminated and the principal amount outstanding under the Credit Agreement, together with all accrued unpaid interest and other amounts owing in respect thereof, may be declared immediately due and payable.
Revolving Credit Facility. The maturity date of the Revolver is May 18, 2027, with the option to extend the maturity date for a maximum of one additional year through either (i) a single 12-month extension option or (ii) two individual 6-month extensions. Borrowings under the Revolver bear interest at an annual rate equal to, at our option, either (i) Adjusted Term SOFR plus the applicable margin ranging from 1.40% to 2.00%, (ii) Adjusted Daily Simple SOFR plus the applicable margin ranging from 1.40% to 2.00% or (iii) a base rate as set forth in the Credit Agreement plus the
37
applicable margin ranging from 0.40% to 1.00%, with each option dependent upon our funded debt to total asset value ratio (as defined in the Credit Agreement). Principal is payable in full at maturity, and the Revolver was undrawn at closing.
For purposes of the Revolver, Adjusted Term SOFR is calculated as the sum of Term SOFR plus an adjustment of 0.10% (all as more specifically described in the Credit Agreement), subject to a floor of 0.00%. Adjusted Daily Simple SOFR is calculated as the sum of SOFR plus an adjustment of 0.10% (all as more specifically described in the Credit Agreement), subject to a floor of 0.00%.
At March 31, 2024, no amounts were outstanding under the Revolver, and the lending banks had issued $4.3 million of letters of credit under the Credit Agreement, which left $695.7 million of availability under the Revolver (subject to the satisfaction of debt incurrence tests under the indentures governing our $1 Billion 6.50% Senior Notes, our $700 million in aggregate principal amount of senior notes due 2027 (the “$700 Million 4.75% Senior Notes”), our $600 million in aggregate principal amount of senior notes due 2029 (the “$600 Million 4.50% Senior Notes”) and our $400 million in aggregate principal amount of senior notes due 2028 (the “$400 Million 7.25% Senior Notes”), which we met at March 31, 2024).
Term Loan B. The Term Loan B has a maturity date of May 18, 2030. The applicable interest rate margins for borrowings under the Term Loan B are, at our option, either (i) Term SOFR plus 2.75%, (ii) Daily Simple SOFR plus 2.75% or (iii) a base rate as set forth in the Credit Agreement plus 1.75%. At March 31, 2024, the interest rate on the Term Loan B was Term SOFR plus 2.75%. In addition, if for any fiscal year, there is Excess Cash Flow (as defined in the Credit Agreement), an additional principal amount is required. Amounts borrowed under the Term Loan B that are repaid or prepaid may not be reborrowed. At March 31, 2024, $295.0 million in borrowings were outstanding under the Term Loan B. A portion of the proceeds of the Term Loan B were used to repay in full the approximately $370 million balance of our previous term loan B.
On April 12, 2024, we entered into an Incremental Tranche B Term Loan Agreement (the “Incremental Agreement”), which supplements the Credit Agreement. The Incremental Agreement reduces the applicable interest rate margins for the loans advanced under the refinanced Term Loan B. The applicable interest rate margins for the refinanced Term Loan B under the Incremental Agreement are (i) 2.25% for SOFR Loans (as defined in the Credit Agreement) and (ii) 1.25% for base rate loans. The Incremental Agreement did not change the maturity dates under the Credit Agreement or result in any increase in principal indebtedness. In addition, the Incremental Agreement confirms that the annual amortization under the Term Loan B is 1% of the refinanced $295.0 million outstanding principal amount, with the balance due at maturity.
For purposes of the Term Loan B, each of Term SOFR and Daily Simple SOFR are subject to a floor of 0.00%.
$1 Billion 6.50% Senior Notes. On March 28, 2024, the Operating Partnership and Finco (collectively, the “issuing subsidiaries”) completed the private placement of the $1 Billion 6.50% Senior Notes, which are guaranteed by the Company and its subsidiaries that guarantee the Credit Agreement. The $1 Billion 6.50% Senior Notes and guarantees were issued pursuant to an indenture by and among the issuing subsidiaries, the guarantors and U.S. Bank Trust Company, National Association, as trustee. The $1 Billion 6.50% Senior Notes have a maturity date of April 1, 2032 and bear interest at 6.50% per annum, payable semi-annually in cash in arrears on April 1 and October 1 each year, beginning October 1, 2024. The $1 Billion 6.50% Senior Notes are general unsecured and unsubordinated obligations of the issuing subsidiaries and rank equal in right of payment with such subsidiaries’ existing and future senior unsecured indebtedness, including the $700 Million 4.75% Senior Notes, the $600 Million 4.50% Senior Notes and the $400 Million 7.25% Senior Notes, and senior in right of payment to future subordinated indebtedness, if any. The $1 Billion 6.50% Senior Notes are effectively subordinated to the issuing subsidiaries’ secured indebtedness to the extent of the value of the assets securing such indebtedness. The guarantees rank equally in right of payment with the applicable guarantor’s existing and future senior unsecured indebtedness and senior in right of payment to any future subordinated indebtedness of such guarantor. The $1 Billion 6.50% Senior Notes are effectively subordinated to any secured indebtedness of any guarantor to the extent of the value of the assets securing such indebtedness and structurally subordinated to all indebtedness and other obligations of the Operating Partnership’s subsidiaries that do not guarantee the $1 Billion 6.50% Senior Notes.
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The net proceeds from the issuance of the $1 Billion 6.50% Senior Notes totaled approximately $983 million, after deducting the initial purchasers’ discounts, commissions and offering expenses. We used a portion of these net proceeds to prepay the indebtedness outstanding under our previous $800.0 million Gaylord Rockies term loan and used the remaining proceeds, together with cash on hand, to repay $200.0 million under the Term Loan B.
The $1 Billion 6.50% Senior Notes are redeemable before April 1, 2027, in whole or in part, at 100.00%, plus accrued and unpaid interest thereon to, but not including, the redemption date, plus a make-whole premium. The $1 Billion 6.50% Senior Notes will be redeemable, in whole or in part, at any time on or after April 1, 2027 at a redemption price expressed as a percentage of the principal amount thereof, which percentage is 103.250%, 101.625%, and 100.000% beginning on April 1 of 2027, 2028, and 2029, respectively, plus accrued and unpaid interest thereon to, but not including, the redemption date.
$700 Million 4.75% Senior Notes. In September 2019, the Operating Partnership and Finco completed the private placement of $500.0 million in aggregate principal amount of senior notes due 2027 (the “$500 Million 4.75% Senior Notes”), which are guaranteed by the Company and its subsidiaries that guarantee the Credit Agreement. The $500 Million 4.75% Senior Notes and guarantees were issued pursuant to an indenture by and among the issuing subsidiaries and the guarantors and U.S. Bank Trust Company, National Association as trustee. The $500 Million 4.75% Senior Notes have a maturity date of October 15, 2027 and bear interest at 4.75% per annum, payable semi-annually in cash in arrears on April 15 and October 15 each year. The $500 Million 4.75% Senior Notes are general unsecured and unsubordinated obligations of the issuing subsidiaries and rank equal in right of payment with such subsidiaries’ existing and future senior unsecured indebtedness, including the $1 Billion 6.50% Senior Notes, the $600 Million 4.50% Senior Notes and the $400 Million 7.25% Senior Notes, and senior in right of payment to future subordinated indebtedness, if any. The $500 Million 4.75% Senior Notes are effectively subordinated to the issuing subsidiaries’ secured indebtedness to the extent of the value of the assets securing such indebtedness. The guarantees rank equally in right of payment with the applicable guarantor’s existing and future senior unsecured indebtedness and senior in right of payment to any future subordinated indebtedness of such guarantor. The $500 Million 4.75% Senior Notes are effectively subordinated to any secured indebtedness of any guarantor to the extent of the value of the assets securing such indebtedness and structurally subordinated to all indebtedness and other obligations of the Operating Partnership’s subsidiaries that do not guarantee the $500 Million 4.75% Senior Notes.
In October 2019, we completed a tack-on private placement of $200.0 million in aggregate principal amount of 4.75% senior notes due 2027 (the “additional 2027 notes”) at an issue price of 101.250% of their aggregate principal amount plus accrued interest from the September 19, 2019 issue date for the $500 Million 4.75% Senior Notes. The additional 2027 notes and the $500 Million 4.75% Senior Notes constitute a single class of securities (collectively, the “$700 Million 4.75% Senior Notes”). All other terms and conditions of the additional 2027 notes are identical to the $500 Million 4.75% Senior Notes.
The $700 Million 4.75% Senior Notes are currently redeemable, in whole or in part, at a redemption price expressed as a percentage of the principal amount thereof, which percentage is 102.375%, 101.188%, and 100.000% beginning on October 15 of 2023, 2024, and 2025, respectively, plus accrued and unpaid interest thereon to, but not including, the redemption date.
We completed a registered offer to exchange the $700 Million 4.75% Senior Notes for registered notes with substantially identical terms as the $700 Million 4.75% Senior Notes in July 2020.
$600 Million 4.50% Senior Notes. In February 2021, the Operating Partnership and Finco completed the private placement of $600.0 million in aggregate principal amount of 4.50% senior notes due 2029, which are guaranteed by the Company and its subsidiaries that guarantee the Credit Agreement. The $600 Million 4.50% Senior Notes and guarantees were issued pursuant to an indenture by and among the issuing subsidiaries and the guarantors and U.S. Bank Trust Company, National Association as trustee. The $600 Million 4.50% Senior Notes have a maturity date of February 15, 2029 and bear interest at 4.50% per annum, payable semi-annually in cash in arrears on February 15 and August 15 each year. The $600 Million 4.50% Senior Notes are general unsecured and unsubordinated obligations of the issuing subsidiaries and rank equal in right of payment with such subsidiaries’ existing and future senior unsecured indebtedness, including the $1 Billion 6.50% Senior Notes, the $700 Million 4.75% Senior Notes and the $400 Million 7.25% Senior Notes, and senior in right of payment to future subordinated indebtedness, if any. The $600 Million 4.50%
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Senior Notes are effectively subordinated to the issuing subsidiaries’ secured indebtedness to the extent of the value of the assets securing such indebtedness. The guarantees rank equally in right of payment with the applicable guarantor’s existing and future senior unsecured indebtedness and senior in right of payment to any future subordinated indebtedness of such guarantor. The $600 Million 4.50% Senior Notes are effectively subordinated to any secured indebtedness of any guarantor to the extent of the value of the assets securing such indebtedness and structurally subordinated to all indebtedness and other obligations of the Operating Partnership’s subsidiaries that do not guarantee the $600 Million 4.50% Senior Notes.
The $600 Million 4.50% Senior Notes are currently redeemable, in whole or in part, at a redemption price expressed as a percentage of the principal amount thereof, which percentage is 102.250%, 101.500%, 100.750%, and 100.000% beginning on February 15 of 2024, 2025, 2026, and 2027, respectively, plus accrued and unpaid interest thereon to, but not including, the redemption date.
$400 Million 7.25% Senior Notes. On June 22, 2023, the Operating Partnership and Finco completed the private placement of $400.0 million in aggregate principal amount of 7.25% senior notes due 2028, which are guaranteed by the Company and its subsidiaries that guarantee the Credit Agreement. The $400 Million 7.25% Senior Notes and guarantees were issued pursuant to an indenture by and among the issuing subsidiaries, the guarantors and U.S. Bank Trust Company, National Association as trustee. The $400 Million 7.25% Senior Notes have a maturity date of July 15, 2028 and bear interest at 7.25% per annum, payable semi-annually in cash in arrears on January 15 and July 15 each year, beginning on January 15, 2024. The $400 Million 7.25% Senior Notes are general unsecured and unsubordinated obligations of the issuing subsidiaries and rank equal in right of payment with such subsidiaries’ existing and future senior unsecured indebtedness, including the $1 Billion 6.50% Senior Notes, the $700 Million 4.75% Senior Notes and the $600 Million 4.50% Senior Notes, and senior in right of payment to future subordinated indebtedness, if any. The $400 Million 7.25% Senior Notes are effectively subordinated to the issuing subsidiaries’ secured indebtedness to the extent of the value of the assets securing such indebtedness. The guarantees rank equally in right of payment with the applicable guarantor’s existing and future senior unsecured indebtedness and senior in right of payment to any future subordinated indebtedness of such guarantor. The $400 Million 7.25% Senior Notes are effectively subordinated to any secured indebtedness of any guarantor to the extent of the value of the assets securing such indebtedness and structurally subordinated to all indebtedness and other obligations of the Operating Partnership’s subsidiaries that do not guarantee the $400 Million 7.25% Senior Notes.
The $400 Million 7.25% Senior Notes are redeemable before July 15, 2025, in whole or in part, at 100.00%, plus accrued and unpaid interest thereon to, but not including, the redemption date, plus a make-whole premium. The $400 Million 7.25% Senior Notes will be redeemable, in whole or in part, at any time on or after July 15, 2025 at a redemption price expressed as a percentage of the principal amount thereof, which percentage is 103.625%, 101.813% and 100.000% beginning on July 15 of 2025, 2026, and 2027, respectively, plus accrued and unpaid interest thereon to, but not including, the redemption date.
The net proceeds from the issuance of the $400 Million 7.25% Senior Notes totaled approximately $393 million, after deducting the initial purchasers’ discounts, commissions and offering expenses. We used these proceeds to pay a portion of the purchase price for JW Marriott Hill Country.
Each of the indentures governing the $1 Billion 6.50% Senior Notes, the $700 Million 4.75% Senior Notes, the $600 Million 4.50% Senior Notes and the $400 Million 7.25% Senior Notes contain certain covenants which, among other things and subject to certain exceptions and qualifications, limit the incurrence of additional indebtedness, investments, dividends, transactions with affiliates, asset sales, acquisitions, mergers and consolidations, liens and encumbrances and other matters customarily restricted in such agreements. In addition, if the Company experiences specific kinds of changes of control, the Company must offer to repurchase some or all of the senior notes at 101% of their principal amount, plus accrued and unpaid interest, if any, up to, but excluding, the repurchase date.
Previous $800 Million Gaylord Rockies Term Loan. In July 2019, Aurora Convention Center Hotel, LLC and Aurora Convention Center Hotel Lessee, LLC the entities that comprise Gaylord Rockies, entered into a Second Amended and Restated Loan Agreement (the “Gaylord Rockies Loan”) with Wells Fargo Bank, National Association, as administrative agent. The Gaylord Rockies Loan consisted of an $800.0 million secured term loan facility, with a maturity date of July 2, 2024 with two, one-year extension options remaining, subject to certain requirements in the
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Gaylord Rockies Loan, and bore interest at Adjusted Daily Simple SOFR plus 2.50%. We previously entered into an interest rate swap to fix the SOFR portion of the interest rate at 5.2105% for the fifth year of the loan. We designated this interest rate swap as an effective cash flow hedge.
On March 28, 2024, we paid off the Gaylord Rockies Loan with proceeds from the $1 Billion 6.50% Senior Notes discussed above.
OEG Credit Agreement. In June 2022, OEG Borrower, LLC (“OEG Borrower”) and OEG Finance, LLC (“OEG Finance”), each a wholly owned direct or indirect subsidiary of OEG, entered into a credit agreement (the “OEG Credit Agreement”) among OEG Borrower, as borrower, OEG Finance, certain subsidiaries of OEG Borrower from time to time party thereto as guarantors, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent. The OEG Credit Agreement provides for (i) a senior secured term loan facility in the aggregate principal amount of $300.0 million (the “OEG Term Loan”) and (ii) a senior secured revolving credit facility in an aggregate principal amount not to exceed $65.0 million (the “OEG Revolver”). The OEG Term Loan matures on June 16, 2029 and the OEG Revolver matures on June 16, 2027. The OEG Term Loan bears interest at a rate equal to either, at OEG Borrower’s election, (i) the Alternate Base Rate plus 4.00% or (ii) Adjusted Term SOFR plus 5.00% (all as specifically more described in the OEG Credit Agreement). The OEG Revolver bears interest at a rate equal to either, at OEG Borrower’s election, (i) the Alternate Base Rate plus 3.25% or (ii) Adjusted Term SOFR plus 4.25%, which shall be subject to reduction in the applicable margin based upon OEG’s First Lien Leverage Ratio (all as specifically more described in the OEG Credit Agreement). The OEG Term Loan and OEG Revolver are each secured by substantially all of the assets of OEG Finance and each of its subsidiaries (other than Block 21, as more specifically described in the OEG Credit Agreement) and include customary financial covenants and restrictions. At March 31, 2024, $295.5 million was outstanding under the OEG Term Loan and $22.0 million was outstanding under the OEG Revolver.
Block 21 CMBS Loan. At the closing of the purchase of Block 21 in May 2022, a subsidiary of the Company assumed the $136 million, ten-year, non-recourse term loan secured by a mortgage on Block 21 (the “Block 21 CMBS Loan”). The Block 21 CMBS Loan has a fixed interest rate of 5.58% per annum, payable monthly, matures January 5, 2026, and payments are due monthly based on a 30-year amortization. At March 31, 2024, $131.2 million was outstanding under the Block 21 CMBS Loan.
The Block 21 CMBS Loan contains customary financial covenants and other restrictions, including sponsor net worth and liquidity requirements, and debt service coverage ratio targets that Block 21 must meet in order to avoid a “Trigger Period,” the occurrence of which does not constitute a default. During a Trigger Period, any cash generated in excess of amounts necessary to fund loan obligations, budgeted operating expenses and specified reserves will not be distributed to Block 21. Block 21 was in a Trigger Period as of our purchase date but exited the Trigger Period with first quarter 2023 results.
Additional Debt Limitations. Pursuant to the terms of the management agreements and pooling agreement with Marriott for our Gaylord Hotels properties, excluding Gaylord Rockies, we are subject to certain debt limitations described below.
The management agreements provide for the following limitations on indebtedness encumbering a hotel:
| ● | The aggregate principal balance of all mortgage and mezzanine debt encumbering the hotel shall be no greater than 75% of the fair market value of the hotel; and |
| ● | The ratio of (a) aggregate Operating Profit (as defined in the management agreement) in the 12 months prior to the closing on the mortgage or mezzanine debt to (b) annual debt service for the hotel shall equal or exceed 1.2:1; but is subject to the pooling agreement described below. |
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The pooled limitations on Secured Debt (as defined in the pooling agreement) are as follows:
| ● | The aggregate principal balance of all mortgage and mezzanine debt on Pooled Hotels (as defined in the pooling agreement), shall be no more than 75% of the fair market value of Pooled Hotels. |
| ● | The ratio of (a) aggregate Operating Profit (as defined in the pooling agreement) of Pooled Hotels in the 12 months prior to closing on any mortgage or mezzanine debt to (b) annual debt service for the Pooled Hotels, shall equal or exceed 1.2:1. |
Gaylord Rockies is not a Pooled Hotel for this purpose.
Estimated Interest on Principal Debt Agreements
Based on the stated interest rates on our fixed-rate debt and the rates in effect at March 31, 2024 for our variable-rate debt after considering interest rate swaps, our estimated interest obligations through 2028 are $948.4 million. These estimated obligations are $163.1 million for the remainder of 2024, $216.8 million in 2025, $208.7 million in 2026, $200.4 million in 2027, and $159.3 million in 2028. Variable rates, as well as outstanding principal balances, could change in future periods. See “Principal Debt Agreements” above for a discussion of our outstanding long-term debt. See “Supplemental Cash Flow Information” in Note 1 to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023 for a discussion of the interest we paid during 2023, 2022 and 2021.
Inflation
Inflation has had a more meaningful impact on our business during recent periods than in historical periods. However, favorable occupancy, ADR and outside-the-room spend in our Hospitality segment and business levels in our Entertainment segment in recent periods have reduced the impact of increased operating costs, including increased wages and food and beverage costs, on our financial position and results of operations.
Additionally, increased interest rates have driven higher interest expense on our higher debt levels. In an effort to mitigate the impact of increased interest rates, at March 31, 2024, 85% of our outstanding debt is fixed-rate debt, after considering the impact of interest rate swaps.
We continue to monitor inflationary pressures and may need to consider potential mitigation actions in future periods. A prolonged inflationary environment could adversely affect our operating costs, customer spending and bookings, and our financial results.
Supplemental Guarantor Financial Information
The Company’s $1 Billion 6.50% Senior Notes, the $700 Million 4.75% Senior Notes, $600 Million 4.50% Senior Notes and $400 Million 7.25% Senior Notes were each issued by the Operating Partnership and Finco (collectively, the “Issuers”), and are guaranteed on a senior unsecured basis by the Company (as the parent company), each of the Operating Partnership’s subsidiaries that own the Gaylord Hotels properties, excluding Gaylord Rockies, and certain other of the Company’s subsidiaries, each of which also guarantees the Credit Agreement, as amended (such subsidiary guarantors, together with the Company, the “Guarantors”). The Guarantors are 100% owned by the Operating Partnership or the Company, and the guarantees are full and unconditional and joint and several. The guarantees rank equally in right of payment with each Guarantor’s existing and future senior unsecured indebtedness and senior in right of payment to all future subordinated indebtedness, if any, of such Guarantor. Not all of the Company’s subsidiaries have guaranteed these senior notes, and the guarantees are structurally subordinated to all indebtedness and other obligations of such subsidiaries that have not guaranteed these senior notes.
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The following tables present summarized financial information for the Issuers and the Guarantors on a combined basis. The intercompany balances and transactions between these parties, as well as any investments in or equity in earnings from non-guarantor subsidiaries, have been eliminated (amounts in thousands).
March 31, | |||
| 2024 | ||
Net receivables due from non-guarantor subsidiaries | $ | 790,011 | |
Other assets |
| 2,462,774 | |
Total assets | $ | 3,252,785 | |
Other liabilities | 3,173,282 | ||
Total liabilities | $ | 3,173,282 | |
Total noncontrolling interest | $ | 3,473 | |
Three Months Ended | |||
| March 31, 2024 | ||
Revenues from non-guarantor subsidiaries | $ | 120,881 | |
Operating expenses (excluding expenses to non-guarantor subsidiaries) | 36,813 | ||
Expenses to non-guarantor subsidiaries | 20,456 | ||
Operating income | 63,612 | ||
Interest income from non-guarantor subsidiaries | 619 | ||
Net income | 32,301 | ||
Net income available to common stockholders | 32,596 | ||
Critical Accounting Policies and Estimates
We prepare our condensed consolidated financial statements in conformity with GAAP. Certain of our accounting policies, including those related to impairment of long-lived and other assets, credit losses on financial assets, income taxes, acquisitions and purchase price allocations, and legal contingencies, require that we apply significant judgment in defining the appropriate assumptions for calculating financial estimates. By their nature, these judgments are subject to an inherent degree of uncertainty. Our judgments are based on our historical experience, our observance of trends in the industry, and information available from other outside sources, as appropriate. There can be no assurance that actual results will not differ from our estimates. For a discussion of our critical accounting policies and estimates, please refer to Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Notes to Consolidated Financial Statements” presented in our Annual Report on Form 10-K for the year ended December 31, 2023. There were no newly identified critical accounting policies in the first three months of 2024, nor were there any material changes to the critical accounting policies and estimates discussed in our Annual Report on Form 10-K for the year ended December 31, 2023.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no material changes in our quantitative and qualitative market risks since December 31, 2023. For a discussion of the Company’s exposure to market risk, refer to the Company’s market risk disclosures set forth in Part II, Item 7A. “Quantitative and Qualitative Disclosures About Market Risk” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.
ITEM 4. CONTROLS AND PROCEDURES.
The Company maintains disclosure controls and procedures, as defined in Rule 13a-15(e) promulgated under the Exchange Act, that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. The Company carried out an evaluation under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of
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our disclosure controls and procedures as of the end of the period covered by this report. Based on the evaluation of these disclosure controls and procedures, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report.
There has been no change in our internal control over financial reporting that occurred during the period covered by this report that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART II — OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
The Company is a party to certain litigation in the ordinary course, as described in Note 12, “Commitments and Contingencies,” to our condensed consolidated financial statements included herein and which our management deems will not have a material effect on our financial statements.
ITEM 1A. RISK FACTORS.
There have been no material changes from the risk factors disclosed in Part I, Item 1A, “Risk Factors,” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
Inapplicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Inapplicable.
ITEM 4. MINE SAFETY DISCLOSURES.
Inapplicable.
ITEM 5. OTHER INFORMATION.
During the fiscal quarter ended March 31, 2024, no director or Section 16 officer
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ITEM 6. EXHIBITS.
Exhibit Number |
| Description |
3.1 | ||
3.2 | ||
4.1 | ||
4.2 | ||
22* | ||
31.1* | Certification of Mark Fioravanti pursuant to Section 302 of Sarbanes-Oxley Act of 2002. | |
31.2* | Certification of Jennifer Hutcheson pursuant to Section 302 of Sarbanes-Oxley Act of 2002. | |
32.1** | ||
101* | The following materials from Ryman Hospitality Properties, Inc.’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2024, formatted in Inline XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets (unaudited) at March 31, 2024 and December 31, 2023, (ii) Condensed Consolidated Statements of Operations and Comprehensive Income (unaudited) for the three months ended March 31, 2024 and 2023, (iii) Condensed Consolidated Statements of Cash Flows (unaudited) for the three months ended March 31, 2024 and 2023, (iv) Condensed Consolidated Statements of Equity (unaudited) for the three months ended March 31, 2024 and 2023, and (v) Notes to Condensed Consolidated Financial Statements (unaudited). | |
104* | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
* Filed herewith.
** Furnished herewith.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| RYMAN HOSPITALITY PROPERTIES, INC. | ||
Date: May 2, 2024 | By: | /s/ Mark Fioravanti | |
Mark Fioravanti | |||
President and Chief Executive Officer | |||
By: | /s/ Jennifer Hutcheson | ||
Jennifer Hutcheson | |||
Executive Vice President, Chief Financial | |||
Officer and Chief Accounting Officer | |||
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Exhibit 22
List of Parent and Subsidiary Guarantors
Ryman Hospitality Properties, Inc., a Delaware corporation (the “Company”), as the parent company, serves as guarantor, and each of the below listed subsidiaries of the Company serves as an issuer or guarantor, as applicable, for the Company’s (i) 4.75% Senior Notes due 2027, (ii) 7.25% Senior Notes due 2028, (iii) 4.50% Senior Notes due 2029 and (iv) 6.50% Senior Notes due 2032.
Exact Name of Subsidiary | Jurisdiction of Organization | Type of Obligor |
RHP Hotel Properties, LP | Delaware | Issuer |
RHP Finance Corporation | Delaware | Issuer |
Opryland Hospitality, LLC | Tennessee | Guarantor |
RHP Hotels, LLC | Delaware | Guarantor |
RHP Partner, LLC | Delaware | Guarantor |
RHP Property GP, LP | Florida | Guarantor |
RHP Property GT, LLC | Delaware | Guarantor |
RHP Property GT, LP | Delaware | Guarantor |
RHP Property NH, LLC | Maryland | Guarantor |
RHP Property SA, LLC | Delaware | Guarantor |
EXHIBIT 31.1
CERTIFICATIONS
I, Mark Fioravanti, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q of Ryman Hospitality Properties, Inc.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| 5. | The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
Date: May 2, 2024 | | |
| | |
By: | /s/ Mark Fioravanti | |
Name: Mark Fioravanti | | |
Title: President and Chief Executive Officer | ||
EXHIBIT 31.2
CERTIFICATIONS
I, Jennifer Hutcheson, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Ryman Hospitality Properties, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: May 2, 2024 | | |
| | |
By: | /s/ Jennifer Hutcheson | |
Name: Jennifer Hutcheson | | |
Title: Executive Vice President, Chief Financial Officer | | |
and Chief Accounting Officer
EXHIBIT 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Ryman Hospitality Properties, Inc. (the "Company") on Form 10-Q for the quarter ended March 31, 2024, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), each of the undersigned certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
| By: | /s/ Mark Fioravanti | |
| | Mark Fioravanti | |
| | President and Chief Executive Officer | |
| | May 2, 2024 | |
| | | |
| By: | /s/ Jennifer Hutcheson | |
| | Jennifer Hutcheson | |
| | Executive Vice President, Chief Financial Officer and Chief Accounting Officer | |
| | May 2, 2024 | |
A signed original of this written statement required by Section 906, or other document authenticating, acknowledging or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.