Ryman Hospitality Properties Inc (RHP) 2005 Q4 法說會逐字稿

Welcome to the Gaylord Entertainment Company fourth quarter 2005 earnings conference call. Hosting the call today from Gaylord entertainment is Mr. Colin Reid, Chairman and Chief Executive Officer, and Mr. David Kloeppel, Chief Financial Officer. They're also joined by Mr. Key Foster, Vice President of Treasury and Investor Relations, and Mr. Carter Todd, Senior Vice President and Counsel.

This call will be available for digital replay. The number is 973-341-3080, and the pin number is 6939442.

[OPERATOR INSTRUCTIONS].

It is now my pleasure to turn the floor over to Mr. Carter Todd. Sir, you may begin.

Good morning. My name is Carter Todd, and I'm the General Counsel and Senior Vice President for Gaylord Entertainment Company. Thank you for joining us today on our fourth quarter 2005 earnings call.

You should be aware that this conference call may contain forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, including statements, among others, regarding Gaylord Entertainment's expected financial performance. For this purpose, any statements made during this call that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, words such as believes, anticipates, plans, expects, and similar expressions are intended to identify forward-looking statements. You are hereby cautioned that these statements may be affected by the important factors among others set forth in Gaylord Entertainment's filings with the Securities and Exchange Commission and in our fourth quarter 2005 earnings release.

And consequently actual operations and results may differ materially from the results discussed or projected in the forward-looking statements. Forward-looking statements contained in this conference call and in the press release we issued earlier this morning are effective only today February 14th, 2006. Gaylord Entertainment undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events, or otherwise. I'd also like to remind you that in our call today we will discus certain non-GAAP financial measures and a reconciliation of those non-GAAP financial measures to the most directly comparable GAAP financial measures has been provided as an exhibit to our earnings release and is also available on our website under the investor relations section.

At this time I'd like to turn the call over to our Chief Executive Officer and Chairman, Colin Reed.

Thanks, Carter. Good morning, everyone and welcome to our fourth quarter conference call.

This was a very strong year for Gaylord Entertainment from both the financial and operating performance basis. In 2005, all of our brands made significant progress towards achieving their long-term goals. I'm pleased to say that we delivered a 35% growth in consolidated cash flow for 2005. All the more impressive as it comes on top of the very strong 2004. Gaylord Hotels was the engine behind this growth, exceeding both CCF and revenue guidance highlighted by double digit RevPAR and total RevPAR growth in the fourth quarter of 2005.

Individual results at our three convention center properties were outstanding, and we've made more progress on the national project, Gaylord National Project where there has been an exceptional response in advance bookings and custom interest. In fact, we intend to expand this project by adding 500 rooms to capitalize on the high demand, contingent on receiving an additional economic incentive package from our partners in Prince George's county.

And finally, we took the first steps towards adding a fifth destination to our convention center business with the signing of an exclusive right to negotiate a world class hotel and convention center south of San Diego in Chula Vista. We continue to invest substantially in ResortQuest, and in 2006 we should see these investments begin to pay off, and as many of you know we recently launched our new website, which allows users to enjoy a truly interactive and user friendly experience in the 24/7 access to our listings of nearly 16,400 luxury market units.

In addition, we streamlined this business, exiting on profitable or slower growth destinations and refocusing our marketing and operational dollars in areas with great growth potential. We're still the only national brand in the rental management business, and remain firm in our belief that this business can and will be a solid contributor to our bottom line in 2006. And as many of you know our Grand Ole Opry brand continued to illustrate its extraordinary reputation and clout during its 80th anniversary celebration, which continued in New York with a special show at Carnegie hall.

Over the next few minutes I'll review each of these topics and Dave Kloeppel, our Chief Financial Officer, will discuss the operating and financial performance of the company and provide guidance. And as usual, we will then open the call for questions.

I will start with a discussion of the hospitality business. Before I dive into the lump numbers, let me take just a moment to discuss our strategy and outlook from my vantage point. Our strategic goals for our hospitality brands are progressing nicely, and we remain on target to open a property every two or so years with the objective of having a network of outstanding convention hotels in seven to ten markets around the country. As we grow our hotel business, we will remain true to our principles that have fueled our brand. The high standards of service, intimate knowledge of our customer, and all housed within a great product.

Going forward, our hard work growing this branch, distinctiveness, and position in the hospitality industry have placed our company at the forefront of a dynamic market sector and on a firm path to profitable growth.

Our hospitality consolidated cash flow results were 40.7 million in the fourth quarter. An increase of 22.6% over the prior year quarter. Total RevPAR continued to outpace RevPAR for the 7th consecutive quarter, demonstrating our success at attracting high value customers who have higher outside the room spending tendencies. Hospitality RevPAR came in at $116.29, up 12.5%, while total RevPAR was $295.54, posting an very impressive 21.9% increase. ADR increased 5.6%, which reflects reasonable price increases as demand grows, and we upgrade our customers.

Our all-inclusive properties sell more than just a room, and we're seeking customer who are taking advantage of our vast outside of the room offerings. In addition to focusing on our in-house convention center guests, we have made great strides in attracting local and community residents for our many attractions. For example, award winning restaurants like Ama Lur at the Texan or Old Hickory Steakhouse at the Palms have been highly successful at appealing to local resident who have come increasing numbers.

Now let's discuss bookings. Net definite bookings posted a solid growth in the fourth quarter, increasing 6.4% over the extremely strong fourth quarter production levels in 2004. Overall advance bookings, excluding Washington were 597,000 room nights booked in the fourth quarter bringing the 2005 full year same store net definite room nights to 1.41 million, just shy of the record breaking numbers achieved in 2004.

Investors and other previous listeners will remember that the attention we give to bookings and especially to the tentative prospects currently in our pipeline as an indicator of future strength. Our pipeline for the hospitality segment grew by 21% over levels achieved in the fourth quarter of 2004, reaching a total of 4.2 million room nights by the end of the fourth quarter of 2005. Traditionally, the fourth quarter is the most significant quarter for bookings, and this year was no different with 42% of the annual bookings achieved this quarter.

Based on the current pipeline of bookings, the expectations of 2006 appear very favorable. Even after Gaylord Hotels exceeded booking guidance in 2005 with the 1.41 room night that we booked. Our rotational booking number is closely watched -- is a closely watched statistic for our business because it is a key indicator of our success at attracting repeat customers and rotating them through our network of profiters. For the fourth quarter of 2005, our rotational bookings were very strong at 47.5% on a trailing 12 months basis. This number has steadily trended upwards as we've entered new markets, and more than any other statistic, it reveals the strength of our hotel business.

Okay. Let's talk about the specific properties. Overall, this was a great quarter for Gaylord Opry Land, bolstered by the return of the Radio City Rockettes. While we're extremely happy to see We recognize that this type of growth will be tough to beat in 2006.

Let me talk about this type of growth. The Gaylord Opry Land fourth quarter occupancy increased to 82% based on the strategy of our entertainment offerings. Correspondingly CCF increased 19.7% over the prior quarter to 20.2 million. Total RevPAR and RevPAR both increased at double digit rates, with total RevPAR accelerating 33.1% over last quarter to $293.66, and RevPAR advancing 13% to $120.60. ADR climbed in tandem with occupancy to grow 2.6% to $150.43.

Gaylord Palms posted a solid performance in the fourth quarter, with higher revenues up 5.8% to $39.8 million. The marginally higher CCF up 3.7% to $8.5 million. Both RevPAR and total RevPAR improved at a healthy 5.7% and 5.8%, respectively to $117.57 and $307.36. 2005 has been a strong year for the palms as RevPAR and total RevPAR have climbed steadily, illustrating the strength and important position of our Orlando property within our network. CCF increased 9.7% for the year, and we expect that in 2006 we'll continue to see the Palms progress and remain a centerpiece of our expanding hotel network.

For the Gaylord Texan, RevPAR and total RevPAR increased dramatically in the fourth quarter due to our holiday season entertainment offerings and improved operating efficiencies from having completed a full year of operations. RevPAR in the quarter increased 19.2% to $117.30. And total RevPAR was up 21.6% to $332.01. CCF increased 46.5% to $11 million in the fourth quarter of '05, resulting in a CCF margin of 23.8%, a 404 basis point increase over the fourth quarter of 2004. Total RevPAR reflected the Gaylord Texan's leading position in the Dallas Fort Worth market as a dining and entertainment powerhouse.

Food and beverage areas remain strong, demonstrating our progress within dining options such as the Texas Station, the River Walk Cafe, which are based on our successful restaurants concepts at Opry Land and the Palms. And, by the way, we'll be opening the Glass Cactus, a nightclub, in early September, and this will also, I think, bolster our revenues for '06.

And Ice had a very strong debut performance at the Texan. In fact, all three of our hotels, let me say that again. In all three of our hotels we had a great success with Ice, which brought in over 6.8 million in revenues for the hospitality segment. The success of this unique Gaylord offering demonstrates the independence of our properties, and their ability to develop a successful concept at one location and then replicate the model across our other markets.

Now, let me just take a moment to talk about our stars. And remember this is what we call our employees. Because none of that success will be possible without this passionate group. We believe that our people functions are critical to our company because we cannot success as a hotel concern unless all of our employees are on board with our service culture. The strength of our human resource efforts is incredible significance to our profitability, and is both key to our strong performance in '05 and the foundation for our growth as a brand going forward.

The average convention guests at our hotels has anywhere from 50 to 100 employee interactions in a typical three to four-day stay. One bad interaction can equal a bad convention or stay. Because of the nature of our business, our culture has to be very strong and produce great employees that are excited to come to work every day and serve our customers. We nurture our employees like no other. And I can tell you, this is a great organization to work for. Employee surveys reveal that Gaylord employees feel two to three times better at a Gaylord Hotel when compared to our competitors. And, as a result, our overall star satisfaction levels remain well above the average for the industry.

Star satisfaction numbers correlate directly with positive customer experiences, proving our company's philosophy that an engaged and happy work force translates into positive impressions to every convention attendee. And results in repeat visitations to our properties. Our stars are extraordinary people, and they are the main drivers of our financial results that continue to outpace our hospitality peer group.

Now let's talk about development. Construction on the Gaylord National continue to proceed, and we are very excited about its great potential and the addition of another property to our network. Advance bookings are a key measure of how successful it will be, and in nationals case, have substantially outpaced previous booking pace compared to our other hotels, the Texan and the Palms.

For the fourth quarter of 2005, the National booked an additional 184,000 room nights. A 63.4% increase over the prior year quarter, resulting in a total of 547,000 room nights booked for our newest property. Now by way of comparison, when we owned the Texan, we had 708,000 room nights on the books. Said another way, the pace of bookings at the National is tracking at six times that of the Palms and five times that of the Texan.

So the implications? In January, we discussed with the leadership of Prince George's county the possibility of us adding an additional 500 rooms to the National, bringing the total room count to 2,000. With a total of approximately 425 to 430,000 square feet of meeting space. Subsequently, upon management's recommendation, our board of directors has considered and improved the expansion, subject to us receiving an additional economic package from Prince George's county. The county executive leadership has told us that such an expansion makes economic sense because of the additional taxes that would flow to them and the new jobs that development will create. And as such, we are hopeful to hear from them in the next few weeks that our our tax incentives have been recommended county council and improved.

If the expansion moves forward, construction will still be scheduled to be completed on time. We're excited to expand the National's room count at it's inception when it will not interfere with the hotel's daily operations.

High constructions costs and rising commodity prices continue to be an issue. With crude oil hitting a 23-year high, the lingering effects of hurricane Katrina and coupled with the other heated Washington, D.C. construction market are also being felt. While these factors are increasing our construction costs in D.C., and Dave will discus there in a minute, they will not interfere with our timetable, and we expect to open the National in March of 2008, as previously announced. Our preliminary estimates tell us that this hotel will be a win for us and the community, based on the strong demand from our convention customers and its location near downtown Washington in a market that is really flourished in recent years.

Now to San Diego. We remain excited about the potential to bing our brand to San Diego market and to satisfy customers' demand for a west coast location. The strong and growing reputation of our brand is providing opportunities to grow the business further. As we are contacted by different markets that lack a world class convention facility and that see our results in Orlando and Dallas.

And now let me talk about ResortQuest. The fourth quarter continued to be a restructuring and building time for ResortQuest. Our recent divestiture, which we talked about on the call last quarter, have progressed and give us confidence that our focus on markets, where we have sizable share, will yield the best results. We believe this brand is poised show real progress in 2006, based on our careful retooling of the business.

Unfortunately weather issues continue to hamper ResortQuest turnarounds, but we've taken steps to alleviate hurricane and other weather related risks by modifying our advance deposit policy and introducing a new travel insurance program, which I'll discuss in one second. Barring a third year of unrelenting storms, we feel that our hard work will be seen through a year of steady growth.

ResortQuest's fourth quarter revenues grew by 23% to 41.4 million, while CCF fell by 7.8% to a loss of 7.5 million. The principal driver of CCF variance in the fourth quarter of '05 versus the prior year was off-season off-writing losses at businesses we acquired in 2005, including Whistler Hiltonhead and Aspen. ResortQuest RevPAR increased 1.2% to 53.68 in the fourth quarter. ADR increased 7.1% to 129.35 while occupancy decreased slightly in the period to 41.5%.

We're excited about the rollout of our new website, which was launched in early February. This new website raises our brand's awareness in a fragmented vacation rental market. The website now puts more robust information in the hands of our customers in a more organized way, allowing them to make decisions more easily and efficiency. The process is simpler and builds trust with the vacation renter. Highlights include access to over 16,000 vacation rentals, including homes, condos and villas in America's to resort destinations. Our website is the gateway for many first-time customers, and we feel this is a substantial upgrade, which allow old and new customers to experience greater options when they customize their vacation plans. Of course the website will benefit the homeowners, as well, by ultimately driving more business to the ResortQuest system.

As we strive to bring out the full potential of this brand we have made several other decisions this quarter that we feel are important to mention. Given the negative impact on the storms on our homeowners and vacationers, ResortQuest decided to take specific steps to mitigate the risk for homeowners, customers, and the company. Hurricanes not only cause damage to properties, but also cause vacations to cancel or postpone their plans before and after the storms hit, despite the fact that the units may not have been directly impacted.

As such, we have launched an insurance program aimed at both the homeowner and the renter. We've launched Travel Guard Vacation Protection Insurance, a company wide travel insurance program. Simply put, this insurance package will refund renters in the event of a hurricane, insure homeowners against the loss due to the travel disruptions, even if the rental unit is not damaged, and also guarantees ResortQuest revenues for 60 days surrounding a hurricane, should vacation plans be interrupted.

We feel there is some real value here for our customers because, given the scale of our network, our Travel Guard plan will charge approximately 25% less than the industry average. Additionally, we have created a relocation benefit plan, which will leverage our network of properties in those situations, so guests can be transferred to another ResortQuest property, should their vacation be interrupted due weather conditions. The relocation benefit plan is significant in that it allows ResortQuest to utilize its breadth and depth of inventory so that guests can feasibly transfer their vacations from one location to another in the event their vacation is cancelled and they need to change vacation dates.

None of our competitors can match the geographical diversity and protection coverage of ResortQuest, and our new insurance and property protection guarantees that differentiates us, and the competition will become even clearer over this next 12 months.

In conjunction with the travel insurance program, we're updating our deposit and cancellation policies. Not only do these policies benefit our guests, but they offer additional protection for our homeowners and condos, while safe-guarding their rental revenue. These changes come after listening to consumer and guest feedback and evaluating competitive practices.

Dave will provide more color on ResortQuest, but now let me turn quickly to our attractions business and particularly the Grand Ole Opry. The 80th anniversary of the Opry, celebrated in 2005, shows just how strong this institution still is and presented many opportunities to solidify its position as American icon [inaudible] in our history. We're excited about our previously announced agreement with Great American Country, which will extend GAC's current forecasting rights of their most watched show, the Grand Ole Opry live to reach now over 39 million households. GAC is a great partner for the Opry and one of the nation's fastest growing television networks.

Before I hand over to Dave, I'll walk you through the financial vault, touch on a couple of management changes we announced earlier today. I'm very pleased to announce that John Caparella has been promoted to Chief Operating Officer and Executive Vice President of Gaylord of Hotels. John has been with us since 2000, running the Palms and has done an outstanding job. We've also hired Rich [Meredith] to be our Chief Information Officer. Rich joins us from Smart DM, which he was co-founder and CEO. Rich will be critical to the successful deployment of technology, supporting our customer management, brand integration, and customer information systems efforts.

Now, that was a lengthy update, but there's many things that have been going on, and now what I'll do is hand over to Dave to talk about the financials.

Thanks Colin.

I'll spend a few minutes describing the major drivers of our financial results for each business unit for the fourth quarter, and then I'll talk about our previously released guidance for 2006.

As Colin described in his comments, our fourth quarter results demonstrated continued strength in our hospitality segment. Gaylord Hotels generated very solid growth over last year's fourth quarter results, due to both strong group demands and strong holiday entertainment offerings. At the segment, we posted revenue growth of 20.6% to $164.1 million, and CCF growth of 22.6% to $40.7 million. While RevPAR grew 12.5% to $116.29 in the fourth quarter of 2005, total RevPAR grew an impressive 21.9% to $295.54.

We continue to emphasize the total yield of our hotels and our results for the fourth quarter continue to validate our success in this area. Total RevPAR growth surpassed RevPAR growth for the seventh consecutive quarter. RevPAR growth was driven by a good balance between rate and occupancy, as our average daily rate increased 5.6% and occupancy increased by 4.5 occupancy points.

Gaylord Opry Land and the Gaylord Texan were the major contributors to these strong results. Opry Land drove total RevPAR growth of 33.1% to $293.66, mainly through the reintroduction of the Radio City Rockettes to the property's country Christmas program and very strong corporate group demands. I should note that the Opry Land's results exclude 5,056 room nights that were out of service, due to the multi-year room renovation program we have set to continue through 2007.

Moving to the Gaylord Texan, the Texan posted a total RevPAR increase of 21.6% to $332.01. And an even more impressive CCF increase of 46.5% to $11 million. The Texan capitalized on strong group and transient demands produced through the introduction of Ice to the property's holiday entertainment lineup, driving a 12.4% increase in ADR.

For those of you who are relatively new to Gaylord, we create leisure programming around the holiday season to buttress what is the seasonal low for large group activity. Ice is one such element we provide at each property, in which Chinese artisans carve a winter wonderland out of about 2 million pounds of ice. It's a truly spectacular event to which we sold half a million tickets from Thanksgiving to New Year's day this year across our brand.

While Gaylord Hotels posted 22% growth in CCF for the fourth quarter of 2005, with which we are very pleased, our CCF margin increased by only 39 basis points. This relatively modest margin increase is a function of three factors, and let me explain. First, in the fourth quarter of 2004, we accrued a property tax refund $3.1 million that did recur in the fourth quarter of 2005. Second, in the fourth quarter of 2005, we experienced energy costs that were approximately 35% higher than we experienced in 2004. Excluding the effect of these two items, our CCF margin would have increased by 373 basis points, a very strong margin increase, particularly considering that 76% of our revenue growth in the fourth quarter came from outside the room revenues, and that brings us to the third item that affected our margin expansion.

As I previously mentioned the fourth quarter is our seasonal low point for group activity. As a result, the outside the room component of our revenue typically shifts from banquet revenue, which is higher margin business, to activities like ticketed events or restaurants, which are lower margin businesses. Our significantly higher outside the room revenue growth for the fourth quarter of 2005 amplified this effect. Net net, though, all things considered, we're very pleased with our results for the fourth quarter.

Finally moving on to bookings, as Colin mentioned, we had another great year for bookings in Gaylord Hotels. Excluding the National, we booked 1.41 million room nights for all future periods, exceeding the top end of our guidance range. This is clearly indicative that the Gaylord Hotels continues to strengthen and that our rotational booking strategy continues to set us apart from our competition.

As for the National bookings, Colin mentioned that 547,000 room nights on the books today represent a pace that's six times that of the Palms and five times that of the Texan at the same point in their development. Just add one particular perspective. The Palms opened with just over 1 million room nights on the books. The National has over half of that amount already on the books with still over two years to go before opening the doors. We believe this is yet another indication that our brand continues to strengthen among our customer base.

As Colin mentioned we're planning to expand the hotel by an additional 500 rooms, contingent on Prince George's county approving additional economic incentives. We expect the net economic impact to total cost from construction costs, expansion, and economic incentive, excluding the effects of pre-opening costs and capitalized interest to be in the range of 235 to $285 million. While construction costs have increased, so too have advanced bookings and our ADR on those bookings. In returns for the overall projects are still expected to exceed the company's targeted 12% unlevered after tax returns. We're currently evaluating financing alternatives to fund these incremental costs, which may include the issuance of debt or equity securities, the sale of assets, or a combination of thereof.

Now on to the ResortQuest segment. ResortQuest revenues increased 23% to 41.4 million for the fourth quarter of '05. TDR increased 7.1%, while occupancy declined 240 basis points to 41.5%. As a result, RevPAR increased by 1.2%. Occupied room nights increased by 8.7% to approximately 525,000 in the fourth quarter of 2005, and units under exclusive management totaled 16,353 at the end of the fourth quarter. I want to note that all of these operating statistics and financials exclude units out of service, including those out of service due to hurricanes, as well as the markets that are recorded in discontinued operations.

ResortQuest TCF decreased by 7.8% to a loss of 7.5 million for the fourth quarter compared to 7 million for the fourth quarter of '04. The two main drivers of this decrease were the acquisition of -- excuse me, the off-season carrying costs of those acquisitions acquired early in 2005, and second, ResortQuest real estate brokers transaction volume experienced a decline in the fourth quarter of 2005, which created a negative comparison to 2004.

Looking forward to 2006 we expect to reduce our unit count another approximately 750 units in the first quarter, due to the termination of unprofitable management agreements in northwest Florida and other eastern markets, as well as settlements of the legal dispute in Hawaii. We will also focus our attention on cost control efforts during the off-season to reduce losses in the off-season periods and more efficiently run our operations.

As a result of the hurricane disruption we've experienced in 2004 and 5, ResortQuest has engineered an approach that will significantly reduce the impact of hurricanes to renters, homeowners, and to ResortQuest. Colin discussed this new product in his comments, but let me elaborate on the details. We've changed our advance deposit policies to require that 100% of the total cost of each vacation be paid 30 to 60 days prior to the renter's arrival. In addition, all renters now may purchase this travel insurance policy that Colin previously described as part of the reservation package. In the event of a hurricane, rental income for our homeowners and ResortQuest is secured because the renters have paid 100% of the vacation price in advance of the storm getting close to the geography in question.

If the renter has purchased the travel insurance through our partnership with Travel Guard, they will get 100% of their money back in the event of a hurricane. ResortQuest benefits in that 100% of the vacation cost has been paid in advance, which reduces the risk that renters cancel before a storm has a chance to achieve landfall and start the business interruption calculation. We believe this innovation will be particularly valuable for the business and will help differentiate ResortQuest from its competition in the eyes of the homeowner. Moreover, due to our scale, we can offer this product to our customers at a much lower cost than our competition can.

Moving on to the operating attraction segment, revenues were $15.8 million in the fourth quarter of '05, compared to 18.8 million in the fourth quarter of '04. Operating income was about $300,000 in the fourth quarter, compared with 2.3 million in the same period last year. The segment reported CCF of 1.7 million, compared to 3.6 million in the prior year quarter. The major driver of these decreases was reduced performance from corporate magic, our event planning and production business, which suffered from event cancellations in the fourth quarter in 2005.

The corporate [inaudible] segment produced an operating loss of 12.3 million for the fourth quarter of '05, compared to a loss of 11.4 million in the fourth quarter of '04. Segment CCF was a negative 10.5 million, compared to 9.7 million in the prior year quarter.

Now for a quick update on Bass Pro Shops. On December 14th, 2005, the shareholders at Bass Pro, which are Gaylord and the founder, John Morris, contributed their equity interest in Bass Pro to a newly formed company called Bass Pro Group LLC. In addition, Mr. Morris also contributed his equity interest in Tracker Marine LLC, a boat manufacturing company that sells its boats through Bass Pro outlets and Big Cedar LLC, which is a small lodge located near Branson, Missouri. Both of these businesses, Tracker Marine and Big Cedar, were contributed to the new Bass Pro group. Putting these closely related businesses together with a single set of fiduciary goals, creates an operating process for combined businesses, creating synergies for both sets of shareholders.

Because the new entity owns these additional businesses, and is therefore significantly larger than before, Gaylord's stake in the new Bass Pro group has been reduced from 26.6% to 13%. The transaction is expected to be accretive to Gaylord. The restructuring of Bass Pro did not impact direct ignition of Bass Pro equity income by Gaylord in 2005, since Gaylord accounts for its share of Bass Pro equity income one month in arrears. We will continue to account for our stake in Bass Pro using the equity method of accounting, and for the fourth quarter, our equity income from this investment was approximately $300,000.

And now for comments on our guidance. The prospects for Gaylord Hotels continues to be strong. As the brand increasingly resonates among meeting planners. We believe Gaylord Hotels, 2006 operating performance will remain strong as we continue to attract high value customers and drive total RevPAR growth. Gaylord Hotel's 2006 guidance reflects approximately 25,000 room nights out of service, due to room renovations at our Gaylord Opry Land Hotel.

ResortQuest revenue trends for the first quarter of 2006 appear solid, and we expect our investments in operating infrastructure will have a positive effect in 2006. As Colin discussed in his comments, measures have been taken to reduce our exposure to the effects of hurricanes, however, any long lasting impact of the past two years on the Gulf Coast region or any additional unforeseen weather patterns have the potential to negatively affect our business. We also, as I described earlier, expect to reduce our inventory by approximately 750 units in the first quarter for the reasons I covered a few moments ago.

Nevertheless, we are reiterating our guidance for 2006 for the ResortQuest segment of 21 to $26 million. And just to review our guidance briefly, it is unchanged from the guidance we have previously published with consolidated revenues of 924 to 961 million, CCF of 152 to 163 million, advanced bookings at 1.3 to 1.4 million, room nights and growth and RevPAR and total RevPAR of 7 to 9%.

And with that I'll turn the call back over to Colin.

All right, [inaudible].

Analysts and shareholders often complain about under communication. I think we tipped the scales the other way this morning, and we'll open the call for questions.

Thank you. The floor is now opened for questions.

[OPERATOR INSTRUCTIONS].

Our first question is coming from Jeff Donnelly with Wachovia Securities.

Good morning, guys. I actually had two questions to kick it off with. First was on the D.C. National expansion. I recognize you can't say a lot at this juncture, but can you talk about how much of the incremental costs is due to higher costs versus expansion, and what hurdles you need to clear to get the additional incentive from PG county?

Good morning, Jeff. How are you?

Good.

We are, let me take the second step -- the second part of your question first in terms of the next steps. We are in discussions with the county officials in Prince George's county. Any additional economic incentives need to go through an approval process at the county level. We obviously have discussed this with a number of those county officials, but there's a county council approval process that must proceed.

We expect that that will take in the neighborhood of call it eight to 12 weeks. We would expect to have indications by let's call it May or so. That's about the time that the county's proceedings will conclude for the spring session. In terms of the incremental costs, we want to stick with the way we described the overall incremental costs of 235 to 285, because it is net of the economic incentive, and the economic initiatives are still being discussed in terms of the amount and form of those incentives. So in that regard, we're going to stick with the way we described on the call.

Jeff, let me just add to that. The bill, hopefully, will get submitted here to the council process within the next 28 to 35 days, and it then has to wind its way through as soon as that bill has been submitted of course it becomes public, and we can talk about all of the nuances of it.

Okay. And then if I can just ask a follow-up. Just -- I guess I had a couple of questions on the Bass Pro Shops deal, which, Dave I'll try to mash into one so I you don't have to get out your pen, but first I was just curious about the motivation behind the transaction, is this a step toward liquidity for at least Gaylord's interest, and can you help us with your estimate for accretion or maybe even give us some data, maybe what pro forma '05 EBITDA might have been for the combined entity?

I'll do the first part. The rational behind it. Jeff, about two years ago Bass Pro took out one of its partners, the third investor, and did it so by leveraging the company. And what would also was going on here was that there was a lot of sort of intertwining of assets. There's a lot of promotions that Bass Pro and Tracker Marine do together.

And it was just considered the very best thought to bring these businesses together to fundamentally change the balance sheet of the company, which it does, because Tracker produces a lot of cash flow and has basically no debt to it, and also Bass Pro has a very aggressive growth and development schedule, and bringing these companies together was -- made all the sense in the world to us. And we supported that notion. In terms of accretion, we believe this to be very accretive to us. We estimate that our share of net income will be in the 9 to 11 million range in the '06 year.

Great. Thank you.

Thank you. Our next question is coming from David Katz with CIBC World Markets.

Good morning. Two quick ones. Firstly,on ResortQuest, the new website is up, and it looks very nice. Congratulations there. I just love some color on, A, how that's going so far, since it's up in the first quarter and, second, how do we -- how should we be measuring that? How shall we gauge our expectations as to how much that's going to add to ResortQuest?

David, Colin, good morning. Excellent question. In terms of the website, it's been up a couple of weeks, and frankly, we've had a lot of sort of anecdotal feedback from homeowners and customers, and we would endorse your perception of it, the customers like it, and homeowners, once we get them used to the new array of information we're providing to them and frankly, which is pretty unique in the business, they love it, they love it too. In terms of us dialoging about its impact to the business, what we have to do, I think is find some measurements here, which we will do over the next three to four months before our next earnings call, and try and give you some color in terms of the activity that is being created because of the new search engine capabilities that this website gives us.

And right now, I think it's very, very early for us to start throwing around statistics, but we believe this website is going to be positive to the overall ResortQuest proposition.

And, David, if I could add to Colin's comments, the -- in terms of -- you asked how should we interpret or how shall we kind of temper our expectations around this, and the website got launched on February 7th. It typically takes about 20 to 30 days for the spiders that Google and Yahoo and the rest send out to search webs, it takes them 20 to 30 day to kind of get through and have the effects of a better designed website be fully effective in natural search results, and so there will be some time before we start to see dramatic increases in traffic because of that delay.

We'll be sending out shortly, also some additional marketing collateral to customers, homeowners, and we'll also be running some television spots that really describe ResortQuest and the proposition and direct people to our resortquest.com website. So -- and many of our feeder markets for summer traffic. So we think we'll be able to report some traffic statistics to you in the next quarter, but as Colin said right now, it's a little early to start talking traffic and how the stats have changed.

Okay. And my second question, I'd like to ask Jeff Donnelly's question a little different way. The increase in the scope of the D.C. project, I'll admit it's a little bigger number than I was expecting, and without getting into what we're netting out or what we're expecting from the county, if anything, if we were to take the increase in cost and split that up between construction costs and the additional rooms and the additional space, how would that pie get sliced up?

And the reason I ask, obviously is the rooms and the space are return drivers, where as the cost portion is not. I mean it's really -- just comes out of the return. Can you help us there at all?

David, I think the best way to think about it, we for a number of reasons, want to stick with keeping the description at -- the way we described it as 235 to 285. I think it's fair to say that you, with the knowledge of the lodging industry, could come up with reasonable estimates of what it costs to add to build a basically new 500-room hotel that's got highly finished rooms an additional 30,000 square feet of meeting space. And on a kind of per room basis, you can come up with a pretty reasonable estimate of that. The remainder of the net increase is a result of construction cost increases.

Good enough. Thanks.

Okay.

Thank you. Our next question is coming from Nap Overton with Morgan Keegan.

Good morning.

Hey, nap.

What do you expect your total capital expenditures for 2006 to be? And what portion of that is going to be in the national project in the rooms upgrade at Opry Land.

Nap, the number for '06 is going to be in the 300 to 350 range.

Okay.

But with two -- call it 250 in National. And about 25 in Opry Land.

And the remainder --

The remainder, we've got some in -- we've got about 30 in Texas. We're building a Glass Cactus, as Colin described, and we also earlier this month acquired a 30-acre parcel of land adjacent to the Texan, and the remainer is largely maintenance kind of across the portfolio.

Okay. What kind of room rate increases or banquet, what kind of price increases are you looking at for your current properties, kind of two to three years out now, which would be looking up to 2008 and 9 based on your advance bookings.

Nap, if you look at the advance bookings that we booked in '05 versus those we booked in '04. We pushed about a 6% rate increase, comparing the 1.47 million room nights to the 1.41 we did this year. And so the distribution of room nights generally stays pretty much the same. So that's the price in increase that we're pushing across the brand.

Nap, as we pointed out so many times, our business is a lot different to a Holiday Inn or a Days Inn, where customers come for one night. What tends to happen, we're interested in a couple revenue that we generate from a customer. So we may have a 5% room increase, but as you will see, when you generate 20% total RevPAR increases, that's how we focus the company. He will be prepared to be softer on room increases for particular customers because we know they generate so much outside of the room business.

Uh-huh. Okay. And we're within 18 months now of the ViaCom transaction unwinding. Is it your plan to just allow it to unwind and pay that tax liability?

Only for -- if only for the fact that we don't have -- ever have to describe it again, the answer to that question is yes.

Okay. That will be good. And then just one last detail. The preopening expenses in 2006 are likely to be in what kind of range?

Preopening expense for 2006 in what type of range?

They'll be at the -- about 5 to 7 million

And that's purely National.

That's all National.

Okay. Thanks very much.

Thank you, nap.

Nap, one -- just on terms of your ViaCom question, we do have some NOLs that we have built up that will shield a portion of that tax bill. And I don't know if that's something that you're aware of, but the NOL is in the neighborhood of 60 to 65 thousand?

And so the net tax cash payment would be in the neighborhood of 80 million or so?

Call it 80 to 90.

Okay. Thanks.

Thank you.

Thank you, our next question is coming from Will Marks with JMP Securities. Please go ahead.

Thank you. Good morning, Colin and David.

Hey, will.

A few quick questions, you've mentioned that National spent 57 million in '05. What's the total that you've spent so far? Or not a whole lot more than that, but --

It's about 70 million.

Okay. And on different, ResortQuest, can you give any more details on what the guidance assumes, a year end number -- year end '06 number of units? Is your range 21million plus assuming any external growth?

Dave, you've got the details there, but to my recollection it's very little.

Correct. Very little external growth, Will, and as we described earlier in the call, we have continued to look at new inventory that we own and make sure we're staying in those units that we make money in and getting out of those that we don't make money in. So we might see a few more trickles of units out of the portfolio, but we don't expect to see very many.

The good news is for this business sort of net revenue of this business is in the sort of 260, 270 range, and the key for us is to make sure that we -- with -- even without growth, and we believe we can grow this business with no change on that philosophical direction, but without growth, if we managed the margins better, and we [inaudible] ourselves away from these huge weather disruptions, this business looks a whole lot different, and that's what we've been focused on.

Okay. That's helpful. A couple other things. The land adjacent to the Texan, reason for purchasing that?

It's 30 acres of land. We're kind of on a peninsula on that property. I know you've been there. So we're on the tip of the peninsula, and we bought the other end of the peninsula, and we own another 21 acres adjacent to that. So we're trying to make sure we can control what happens on the land around our property because the demand on that property is generating is so dramatic, we want to make sure we can control its future.

The other thing is, I'm sort of doing a little bit of a head fake here, is that, as Dave said, with that peninsula we have quite a bit of that land dedicated to both structured and surface parking, and what we thought would be just a great idea would be to swoop and purchase this piece of real estate, it was an opportunity for us, which we did, and it gives us a lot of flexibility to move parking, stop parking off and other parking off, and allows us to have flexibility if we decide that's a business that at some point we need to have more guest bedrooms.

Great. Okay. And then one last thing.

And will, let me just say something. One other statistics that we've occasionally talked about is that last year we booked out tens of thousands of room nights to competitors in that market because we couldn't accommodate them at peek periods. So this business is getting stronger and stronger, and we like the idea of flexibility.

A question just regarding this Tracker Marine and Bass Pro, and I doubt if I could tell anything, but what should we be thinking about in terms of long term year exit? Just a quick glance at this sight, it does seem like Tracker Marine and Bass [inaudible] synergies, but what -- any comment there?

Did you -- I didn't hear the word -- did you say does or doesn't have?

Does. Does have -- sorry. It looks like it does have --

Absolutely. Every Bass Pro store that opens and you know from reading the catalogs how many they have under construction. Every Bass Pro store that opens, Tracker goes into and starts selling boats from, and so this huge overlap here, and tracker is the number one bass boat manufacturer and retailer in the country.

And so this huge synergy here, all this does is just continue to allow us to have the capital to grow this business very aggressively and we like this business because we believe that with the consolidated cash flow in this business, this is a business one way or the other, we will have a payday from, whether it be through dividends or whether it be through -- every analyst sort of preaches to us wouldn't it be great if this went public. The answer is we agree, but we own a minority share in this business. So we're doing everything we can do to both grow value here and prime for cash flow to our company.

Great. Thank you for the follow-up. Appreciate it.

One more question, please, operator and if there are any other questions after that, please feel free to call either David Kloeppel, yours truly, or Key Foster our Investor Relations head. One more question please. Thank you. Our last question is coming from Harry Curtis with JP Morgan.

Hi, guys. Just a quick follow up on that last question. Colin, you mentioned net revenues in the ResortQuest segment of about 260 to 270 million this year. With your guidance, are you projecting much net revenue growth there, or is the EBITDA growth really just cost driven?

Harry, it's a bit of both. I mean, we are being cautious about the impacts of our website in our hypothesis for this year, and there is some assumption of modest growth in the business, but as David said, we have taken quite a few units out here from these unprofitable markets, but we expect the margins of the business to grow through just better managing the cost side of this particular business. I know Harry, that you've been a little cynical about this business, and what I would suggest is that, put modest, just modest growth in there into your models, but we believe this business will start to accomplish what we aspire for it to accomplish this year because there's a lot of good stuff going on in it.

I can't imagine anyone referring to me as cynical.

Well, those are the -- those of us that have known you for 15 years, Harry.

Well, thank you. That's helpful.

Thanks very much indeed, by the way.

Thank you. I'll now turn the floor over to you for any further or closing remarks.

Thank you. That's it. I think we've out-stayed our welcome and appreciate all of our investors and the analysts for taking their time out this morning. The opening piece of it was pretty lengthy, and there's a lot to talk about. We'll cut it down in future quarters and thank everyone and we'll speak to you all soon. Thank you.

Thank you. This does conclude today's teleconference. You may disconnect your lines at this time and have a wonderful day.