Ryman Hospitality Properties, Inc. annual report, FY2022

Business Context and Reporting Period

Ryman Hospitality Properties, Inc. filed its Form 10-K for the fiscal year ended December 31, 2022; the filing is not a standalone fourth-quarter report. Ryman operates as a REIT focused on group-oriented destination hotels and entertainment assets. Hospitality represented approximately 85% of 2022 revenue and Entertainment approximately 15%.

The portfolio included five Gaylord Hotels resorts totaling 9,917 rooms, the Inn at Opryland, the AC Hotel, and a 70% controlling interest in Opry Entertainment Group (OEG). Marriott manages the principal hotels and several attractions. Block 21, a mixed-use Austin property including the W Austin and ACL Live, was acquired on May 31, 2022.

Financial Performance and Key Metrics

Metric	2022	2021	Change
Total revenue	$1.806 billion	$939.4 million	92.3% increase
Operating income	$327.2 million	$(58.7) million	Improved by $385.8 million
Net income	$134.9 million	$(194.8) million	Returned to profitability
Net income available to common stockholders	$129.0 million	$(177.0) million	Returned to profitability
Diluted EPS	$2.33	$(3.21)	Improved by $5.54
Operating margin	18.1%	(6.2)%	Improved materially
Adjusted EBITDA_re, excluding noncontrolling interest	$540.5 million	$178.4 million	203.2% increase
Adjusted FFO available to common shareholders and unit holders	$363.5 million	$52.0 million	598.7% increase

Hospitality revenue increased 95.5% to $1.538 billion, while Hospitality operating income increased to $310.9 million from a $38.0 million loss. Occupancy increased to 66.2% from 39.5%, ADR increased 7.0% to $236.86, RevPAR increased 79.0% to $156.71, and Total RevPAR increased 93.3% to $404.69. Outside-the-room spending increased 105.9%, and cancelled room nights declined 47.7%.

Entertainment revenue increased 75.4% to $268.0 million, and Entertainment operating income increased to $61.0 million from $20.4 million. Results include Block 21 beginning May 31, 2022 and exclude a $11.0 million equity-method loss from Circle.

Cash flow from operating activities was $419.9 million, compared with $111.3 million in 2021. Capital expenditures were $89.5 million, including Gaylord Rockies enhancements, Gaylord National food and beverage improvements, Ole Red development and maintenance projects. Net cash used in investing activities was $189.3 million.

At December 31, 2022, unrestricted cash was $334.2 million and restricted cash was $110.1 million. Available borrowing capacity was $754.6 million, consisting of $689.6 million under the corporate revolver and $65.0 million under the OEG revolver; no amounts were outstanding under either revolver.

Total debt and finance lease obligations were $2.863 billion, compared with $2.937 billion at December 31, 2021. Major balances included the $800.0 million Gaylord Rockies term loan, $700.0 million of senior notes due 2027, $600.0 million of senior notes due 2029, $371.3 million Term Loan B, $299.3 million OEG Term Loan and $134.6 million Block 21 CMBS debt. Interest expense increased to $148.4 million from $125.3 million, and the weighted-average borrowing rate increased to 5.0% from 4.4%.

Material Changes Versus the Prior Comparable Period

Business levels recovered substantially from COVID-19 disruption. All assets were open and fully operational during 2022, while Gaylord National remained closed during the first half of 2021.
Ryman sold a 30% interest in OEG to an Atairos affiliate for approximately $296.0 million and retained a 70% controlling interest. Net proceeds of approximately $285.9 million, together with OEG debt proceeds, were used primarily to repay the former $300.0 million Term Loan A and reduce revolver borrowings.
Ryman acquired Block 21 for an adjusted purchase price of $255.0 million, including assumed mortgage debt of approximately $136.0 million. The purchase price allocation remained preliminary at filing.
Marriott base management fees increased to $35.1 million from $17.6 million and incentive fees increased to $13.5 million from $0.3 million, reflecting higher operating volumes.
Ryman reinstated its cash dividend in September 2022 after suspending regular dividends during the pandemic. Total 2022 dividends were $0.35 per share, or approximately $19.4 million.
Total equity improved to $95.9 million from a $22.4 million deficit, although $311.9 million of noncontrolling interest related to OEG was classified as mezzanine equity.

Guidance, Outlook, Risks and Unusual Items

Management expects 2023 capital expenditures of approximately $225 million to $275 million, primarily for Gaylord Rockies enhancements, Ole Red Las Vegas, Block 21 improvements and ongoing maintenance. Ryman also expects to contribute up to $12.2 million to Circle through December 31, 2023.

Management stated that cash on hand, operating cash flow and available revolver capacity should fund operating expenses, interest, lease obligations, declared dividends and planned capital expenditures. The company reported no debt covenant defaults at year-end and stated that it expects to refinance debt before maturities, including extension options. The filing does not provide a formal revenue or earnings forecast.

Significant near-term refinancing exposure exists: the $800.0 million Gaylord Rockies term loan matures in July 2023 subject to extension options, the $371.3 million Term Loan B matures in May 2024, and the $134.6 million Block 21 CMBS loan matures in January 2026.
Block 21 remained in a lender-defined Trigger Period at year-end. Excess property cash is restricted from distribution while the Trigger Period continues, although the condition is not a default.
Interest-rate risk remains material. Approximately $1.2 billion of variable-rate debt was indexed to LIBOR at year-end, and certain interest-rate swaps expire in 2023. A 100-basis-point increase in Adjusted Term SOFR would increase annual interest expense by approximately $2.0 million on the unhedged portion of the OEG Term Loan.
Inflation, labor shortages, wage increases, food and energy costs, rising interest rates, economic downturns and renewed COVID-19 disruption could pressure margins and demand.
The company is highly concentrated in group-oriented hospitality and relies heavily on Marriott for property management, operating decisions, staffing and reporting of hotel results.
Gaylord National bond receivables had a $38.0 million credit-loss reserve, with a $67.6 million net carrying value at year-end. The Series B bond was fully reserved. Valuation depends on long-term projections of hotel and property tax revenues through 2037 and was identified as the critical audit matter.
The Block 21 acquisition was excluded from management’s and the auditor’s internal-control assessment under permitted SEC rules; Block 21 represented 6.8% of total assets and 2.0% of 2022 revenue.
The company recorded $38.8 million of income tax expense, primarily related to taxable REIT subsidiary operations and deferred tax items, despite its REIT status.

Ernst & Young issued unqualified opinions on the consolidated financial statements and internal control over financial reporting. Management stated that disclosure controls and internal control over financial reporting were effective as of December 31, 2022, subject to the Block 21 exclusion noted above.

Investor Verification Checklist

Verify the refinancing plan and extension or repayment terms for the Gaylord Rockies term loan and other 2023-2024 maturities.
Assess covenant headroom, borrowing-base availability and restrictions on dividends under the corporate credit agreement.
Reconcile reported liquidity to unrestricted cash, restricted cash, revolver availability and cash trapped at Block 21 or other subsidiaries.
Monitor occupancy, ADR, group room nights, cancellation activity and Total RevPAR as indicators of sustained post-pandemic recovery.
Evaluate whether labor, inflation and interest-cost increases are outpacing pricing and revenue growth.
Review the final Block 21 purchase price allocation, operating contribution and resolution of its Trigger Period.
Review OEG’s put rights, purchase options and potential future cash or stock obligations to the Atairos affiliate.
Assess the assumptions supporting the $38.0 million credit-loss reserve on Gaylord National bonds.
Confirm the amount and timing of 2023 dividends relative to REIT taxable income, cash flow and debt covenants.