Ryman Hospitality: The Four Gaylord “Babies” That Generate A Billion Dollars

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Ryman Hospitality Properties (NYSE: RHP) is quite unlike any other REIT business. They own four of the ten biggest convention hotels in the United States, which are located in Nashville, Tennessee; Kissimmee, Florida; Grapevine, Texas; and National Harbor, Maryland. Together, these four “babies” represent nearly a billion dollars worth of annual income. Their focus is on providing customers with a premium all-under-a-single-roof experience, especially members of large corporate groups.

Situated in places where there are few external distractions and managed by Marriott International, Gaylord Hotels—the brand name under which Ryman operates—offers more meeting space per available room than do its competitors. Most of Ryman’s revenues come from food and beverages rather than from room fees. In addition, the company operates numerous media and entertainment assets; 93 percent of their total revenue, however, still comes from hospitality.

RankingThe management team believes that Ryman’s competitive advantages are:

  • development-restrict competitors having long lead time and high costs of replacement
  • no foreseen upscale resorts supply
  • high Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) per available room.

With regard to operations, the hospitality segment emanates from a strong first quarter, in which occupancy, average daily rate and RevPav have increased. Adjusted EBITDA and adjusted EBITDA margins have gone up as well. Adjusted FFO per share and dividend per share have increased by 34 and 18 percent respectively.

The events that have scarred Ryman’s recent history have been as big as their hotels. In 2012, the business’s conversion to REIT cost US$102 million, which included $33 million in non-cash impairment charges, $24 million in professional fees and another $31 million in employment, retention and severance costs. The Nashville flood of 2010 resulted in casualty losses and preopening costs of $97.6 million. Both events resulted in huge decreases in FFO, which explains why the FFO on Fast Graphs fluctuates so dramatically, in zigzags.

Fast GraphsTheir strategy has involved expansion through acquisition, targeting upper-upscale assets with more than 400 hotel rooms in urban and resort destination markets. They do not perceive themselves as developing independent, wide-scale convention and resort hotels. Certainly, they have some room for growth through debt as some of Ryman’s leverage metrics have been more conservative than those of its peers.

Despite its irregular performance history, Ryman has had more consistent figures since 2013, especially with FFO and dividends—their dividend yields, at 4.8, are above the median for their sector. Ryman seems to be one of the few companies in the niche of focus on a few assets, though such concentration bothers me. I will continue to look in the hospitality sector before I add this entity to my watchlist.

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Source: Ryman Hospitality, Fast Graphs

Written by Heli Brecailo

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