Ryman Hospitality Properties Inc (RHP) 2008 Q1 法說會逐字稿

Welcome to the Gaylord Entertainment Co.'s First Quarter 2008 Earnings Conference Call. Hosting the call today from Gaylord Entertainment are Mr. Colin Reed, Chairman and Chief Executive Officer, and Mr. David Kloeppel, Chief Financial Officer. They're also joined by Mr. Mark Fioravanti, Senior Vice President and Treasurer, and Mr. Carter Todd, Senior Vice President and General Counsel.

This call will be available for digital replay. The number is 800.642.1687, and the PIN number is 43967668. (OPERATOR INSTRUCTIONS).

It is now my pleasure to turn the floor over to Mr. 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 Co. Thank you for joining us today on our first quarter 2008 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 future 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 first quarter 2008 earnings release. Consequently, actual operations and results may differ materially from the results discussed or projected in the forward-looking statements. Gaylord Entertainment undertakes no obligation to update publicly any forward-looking statements, whether as the result of new information, future events, or otherwise.

I'd also like to remind you that, in our call today, we will discuss 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 Chairman and Chief Executive Officer, Colin Reed.

Carter, thank you. Good morning. I'm happy to welcome everyone to our first quarter's 2008 conference call.

As always, I will begin by offering some commentary on our business and the hospitality industry, and then Dave Kloeppel, our Chief Financial Officer, will provide more color on the specific performance of our properties and our outlook moving forward. We will conclude the call by answering any questions that you may have.

By now I'm sure you've all seen this morning's earnings release. While you can see that our results are in line with our expectations and consistent with what we announced a few weeks ago, they only tell half the story and don't fully explain how busy we've been during the last few months. We've been happily consumed with many mission-critical initiatives - the opening of the Gaylord National outside Washington, D.C.; moving forward on several expansion programs at our existing properties; and our continued efforts to enhance the experience of our customers at each of our properties. And I'll get into these subjects more in a moment.

And, while I would prefer not to begin our discussion of the first quarter on a low or somber note, I would be remiss if I didn't reference the current state of the economy and what we're seeing relative to our business and our industry. As we all know, consumer confidence across the U.S. is being affected by the daily prognostications in the media that we're in a recession. You can't pick up a newspaper without reading about the difficult economic headwinds the economy is facing. This is a direct offshoot from the housing/mortgage meltdown that has generated so much pressure on the economy. And most observers believe that the current downturn and fears about spending will negatively impact the hospitality and leisure marketplace in 2008. While we remain very confident in our strategies and how our unique business model cushions us from being seriously impacted, we are well aware of the fact that Gaylord may not be completely immune to these broader economic conditions. We have seen the pressures weighing on the entire macro environment affect our competition, and we are carefully watching how consumers' spending levels will impact our business over time.

That said, we had a pretty decent first quarter, and some of you may ask - How is this possible? My answer remains much the same this quarter to what we have described before, namely our unique business model is not weighted to the transient and leisure customer. You've heard me discuss the benefits and opportunities created by our differentiated strategy. And, if you'll humor me, I'd like to take the time to remind you of them once again to help preempt similar questions that we got three months ago as to why we're not slashing guidance.

Our core business, the meetings and convention groups that regularly fill our hotels, remains solid. The large majority of our business comes from these groups that book years in advance. And when they're on the books in contract form, these groups tend to travel, stay in our hotels, utilize our meeting rooms, and eat in our restaurants.

So why does this difference matter? Catering to groups has many benefits, but it's especially advantageous in this economic environment. While other big-box hotels are struggling to fill rooms with transient guests, we've already secured the vast majority of our occupancy. As we told you on the last call, we came into the year with approximately 70% of our expected occupied rooms on the books. Advanced bookings in the quarter, a key indicator of the future health of our business, were also very strong. In fact, on a same-store basis, it was the second-best first quarterly performance on record, with more than 250,000 future room nights booked during the first three months of this year. Moreover, advanced bookings at the National improved just over 270% over the first quarter of 2007. Needless to say, we're pleased with these performances.

So what allows us to perform well despite a deteriorating market condition? Our relative overall positioning is just better than those with whom we compete. We possess superior product, and our service levels are the best in the sector. Gaylord properties and the experiences they offer have several key differentiators that separate us from the other hospitality companies. It all comes down to striving for perfection in every aspect of the guest experience. We build and maintain the greatest properties with world-class accommodations and smartly designed, meeting-friendly layouts and then hire the very best people to complete the package. Each quarter we watch our efforts in these areas translate directly into meeting planners' increased loyalty and confidence in our brand. Our customer satisfaction rates continue to get better, and we consistently attract high-quality, high-margin groups with strong outside-of-the-room spend.

I'm also pleased to mention that these groups often exceed the minimums for rooms and food and beverage from their contracts. As we have reported in certain previous quarters, occasionally a group or groups may not pick up as expected for varying reasons. But, in the first quarter, pickup was within our normal range. More importantly, Gaylord's standing as the leader in this space allows us to command premium rates and maintain strong occupancy levels. With a focus on cost control and prudent property management, we can then translate this revenue into solid CCF performance. And on that subject, we're quite proud of the substantial increase in CCF this quarter for both the hospitality sector and Gaylord Entertainment Co., which Dave will discuss momentarily.

Central to our superior customer satisfaction levels are the performance of our STARS. Remember, we call our employees STARS. These types of financial results simply would not be possible without our STARS and the service-based culture we have. These stellar individuals are each personally responsible for our success as a brand. Thanks to their dedication and consistent hard work, meeting planners know that their guests will be well taken care of during any event.

Now, we're thrilled to have welcomed approximately 1,500 new STARS to the Gaylord family this quarter with the addition of the Gaylord National to our portfolio. For those of you who haven't yet had the opportunity to tour the facility during a visit or at last weekend's grand opening festivities, I invite you to take a trip to Prince George's County as soon as you can. You will be very impressed. We have focused on opening the National for quite a while and were pleased to welcome our first guests on schedule at the very end of last month.

Now, I cannot stress how difficult it is to open a hotel as large and as complex as the Gaylord National. In fact, casino hotels aside, the Gaylord National is the second-largest hotel, when you just mention room count, to ever be opened at one time in the entire nation. But, when you take into consideration the size of our convention facility, it is absolutely correct to say that our project is the largest non-gaming hotel, convention center, and resort ever to be opened at one time in this country's history.

Many of you who follow us know we experienced several unforeseen hiccups at the opening. Nevertheless, overall initial feedback from our customers has been extremely positive. Unfortunately, the late delivery of rooms caused by tidiness in the construction process created some compression in the installation process and caused inexcusable inconvenience to our guests in the first few days of operation. We're aggressively engaged with our general contractor to ensure that there is adequate remedy to this situation. Nevertheless, the overall feedback from meeting planners who have visited the Gaylord National since the beginning of April has been extremely positive, and our performance for the first month of operation is quite encouraging. And I think Dave is just going to give you some information on that in a minute.

With all that said, our enthusiasm about the long-term prospects for the property have not waned a bit since opening. We're still very confident this property will be known throughout the region as the very best meeting hotels, period. Again, our STARS prove crucial to our success. And thanks to their efforts, guests and the National are now enjoying customer service experiences more in line with our exceedingly high standards. We will continue perfecting our operating model over the next few quarters, but let me assure you that the National is already the leading meeting and convention property in the region, with substantially more meeting space and guest rooms than any other Washington, D.C. area hotel and a facility that is remarkable, to say the least. We're confident in the success of this property and the value it will create for our shareholders.

Now let me talk about growth but approach it from a slightly different perspective. Over the last 20 years or so, I've been fortunate to have been involved with Mike Rose, the ex-chairman and CEO of Holiday Corp. and Harrah's in the conceptualization and execution of multiple large, very successful hotel and gaming brands. The strategy conceptualization was consistent from brand to brand; that is, make sure the sector is deep and growing, know what your customer wants, build the capabilities, install a people-centric culture, and execute much better than your competition. Seven years ago at Gaylord this model was introduced. And, since this time, we have created a distinctive brand that our customers distinguish as superior to those with whom we compete.

Our strategy is robust and is generating decent, growing returns on capital. But, just like in the early and late '90s, external events crop up that had to be incorporated into the brand strategies. Now, what has happened in the financial market since December of '07 is extraordinary and unprecedented, and my sense is the dislocation is far from done. Experience tells me that, in times like these, we must modify the pace of execution of our strategy to ensure our long-term quest becomes a reality. Consequently, until the credit market shows some sign of recovery, we're going to be prudent on how we spend our capital. You'll hear from Dave in a minute about guidance for the rest of the year. But, happily, because of our strategy, it will conclude, we feel confident about our cash flows. Also, those of you who follow us, you know that we have very decent bank lines with hundreds of millions of dollars available. And, furthermore, we have no refinancing needs until 2010.

Now, having said that, our decision regarding La Cantera was a direct result of the reality of the environment we're in. It's not a strategy change or us somehow abandoning growth; it's a temporary suspension that will allow us to play another day and/or deploy some of that capital into the purchase of what we consider to be a very undervalued stock. After our pre-earnings announcement in which we discussed the first quarter and our decision regarding La Cantera, I took the time to read most of the analyst reports that were published. The tone of those reports were pretty wide, from - "It's a shame about La Cantera. It would have afforded good growth." - to - "I wish this Company would concentrate on its balance sheet." The point is - You could make a case for both extremes, but our taxable execution will be somewhere in the middle.

We will do the necessary work to get our expansions ready for construction, and we'll start each expansion when we believe the time is right. Also, we will be conservative as to where we spend additional capital pursuing other development deals over the next 6 to 12 months. We will also be cautious to only spend money on areas that build the future capabilities of the brand, but we will not abandon practices that are critical to the brand. Navigating a sloppy environment is part of the responsibilities of management, and experience tells me that executing well through this period will make us a better business when the environment changes.

As we look forward to the rest of 2008, because we've been able to achieve our targets for this quarter and because we continue to deliver strong results across all of the metrics that define our business, we're confident in our guidance and, more importantly, confident in how our business will perform over the next several years.

With that, I'd like to turn the call over to Dave, who'll go through the details of our financial results.

Thank you, Colin. It has been a very busy and exciting quarter for us here at Gaylord Entertainment. We opened the Gaylord National property, brought the La Cantera transaction to a satisfactory conclusion, and continued to make good progress on several development projects. Additionally, despite the general softer economic environment, we were able to deliver financial results that were in line with our expectations and budget.

Solid average daily rate growth and advanced booking levels, locking in more than 70% of our revenues for '08 at the beginning of the year, translate into the increases in RevPAR and total RevPAR for the quarter.

Overall, the first quarter highlights why Gaylord is unique relative to others in the sector. While many hospitality businesses have reported signs of weakening domestic performance, our group meeting and convention business model has continued to perform well. We've said time after time that our business would prove to be more resilient in an economic downturn, and this quarter's results have shown that to be true.

This quarter, we set records for advanced bookings at the Gaylord Opryland property and at the Gaylord National, and our bookings pipeline gives us confidence that full-year 2008 sales will be solid.

Also, outside-the-room spending levels were robust, both in terms of the contractual and discretionary spend of our guests. Banquet and (inaudible) increased across the brand, as did the average check, suggesting that both meeting planners and their attendees are still taking advantage of our extensive outside-the-room offerings. In fact, if you look at spend per occupied room at our properties, it increased by 6.2% in Q1 of '08 over Q1 of '07.

In addition, the systems we have in place to track our group and association travel behavior are in place and are working. Our property managers work closely with groups traveling to our hotels in the near future to accurately forecast attendance levels at events and open any excess inventory to transient and leisure guests.

While attrition increased approximately 5% this quarter, there was limited financial impact, as our yield management practices had anticipated this modest decline in attendance. This is one reason we were able to grow transient room nights in the quarter by 11.1%. While these results are encouraging, we remain mindful that transient business is still our biggest risk for the peak summer and fourth quarter holiday seasons.

Before I get into the highlights from each of our properties, let me first provide you with some of our perspective on the economic environment of the hospitality industry. Our analysis of peers' financial performance shows that group business is still growing across the industry, albeit at a slower pace than in 2007. I should note that companies in some specific markets, namely Las Vegas, are reporting softness in their group performance. However, from our standpoint with group demand intact and limited new supply coming online, we remain confident with our full-year same-store guidance for 2008 and continue to have a positive outlook for '09 and beyond. As we sit here today, we have realized or have on the books over 80% of our expected occupancy for all of 2008, and that gives us good comfort with our 2008 guidance.

With that, let's take some time to discuss the financial highlights from each of our properties. In an effort to save more time for Q&A, I'll discuss only the more critical metrics and leave you to read the full financial results on your own.

At Opryland, an increase in ADR, the continued success of outside-the-room offerings, and strong banquet services drove the 14.6% increase in the property's revenue and contributed to an 11.9% increase in total RevPAR. Additionally, a continued focus on cost management contributed to a 78% increase in consolidated cash flow during the quarter, which resulted in a 1,040 basis point increase in CCF margin. If you eliminate the effect of the $2.9 million lease buyout cost that impacted the first quarter of last year, the CCF margin for the hotel increased by 590 basis points. We should also note that the now-complete room renovation program at Opryland took 5,170 room nights out of available inventory in the first quarter.

Now, turning to the Palms, the decrease in ADR at the Palms was largely the result of the shift of association business in the quarter and is largely attributable to when the Easter holiday fell this year. As you all know, Easter is the time of year when group travel weakens and transient demand in Orlando picks up. Consequently, during nearly a week of the month of March, we traded normally high-rated associated business for transient customers. Total RevPAR increased by 3.6% driven by an increase in occupancy and the popularity of our dining and entertainment offerings, especially our newly introduced Sora sushi bar at the Palms. First quarter CCF increased to $20 million, and CCF margin expanded by 30 basis points to 36.3%.

Now, moving on to the Texan, RevPAR at the Texan was flat for the quarter, largely due to the increase in ADR being offset by the decrease in occupancy. A shift to lower spend groups, primarily related to the Easter holiday and additional expenses for our outside-the-room offerings contributed to the slight decrease in total RevPAR. CCF declined by 3.6%, resulting in a 90 basis point decrease in CCF margin compared to 2007. We do not believe that the first quarter performance of the Texan is an indicator of the performance for the rest of the year at the Texan, I should note. Consequently, we still consider our previous guidance for same-store RevPAR and total RevPAR and CCF to be comfortable guidance.

As Colin mentioned earlier, we remain very enthusiastic in regards to both the near-term and long-term performance of the newly opened Gaylord National. With the first month of operation, opening bumps and all, behind us, we look forward to showcasing this incredible property to both our customers and our shareholders. We should note that the National ran approximately 70% occupancy for its first month and is really now firing on all cylinders. We look forward to hosting many of you participating on this call today at our annual investor and analyst day, which we intend to hold at the National on June 18.

Now, moving on to other development initiatives, as we previously announced, we terminated the agreement to acquire the La Cantera resort. We believe that this was the right decision and will allow us to focus on the growth initiatives we currently have in place. As such, we took a one-time charge of approximately $12 million this quarter. In the current economic environment, we have to commit capital resources to the opportunities that provide for the best risk-adjusted returns for our shareholders, and, in the final analysis, the La Cantera deal simply was not the appropriate investment for us at this time. Preserving that capital allows us to focus our efforts and resources on the investments most attractive to us, namely our expansions and our stock.

Now, moving on to guidance for 2008, the solid growth in RevPAR, total RevPAR, and ADR, along with the continued increases in advanced bookings we achieved this quarter, give us the confidence to reaffirm same-store guidance levels that we set during our previous conference call. Guidance for the Gaylord National has been trimmed from $50 million to $60 million to $45 million to $55 million, as a result of a more challenging opening than we had anticipated. That being said, as Colin said, has said before, and as I have said on this call, we remain extremely bullish about the prospects for the Gaylord National, and we think the property is spectacular.

As Colin said, with the opening of the National and the completion of the Opryland room renovations, we're close to operating 8,000 rooms across our brand. As we approach this milestone, we remain focused on providing the unique industry-leading Gaylord experience to every person who comes into contact with a Gaylord property. With the strategies we've outlined to pursue avenues of growth, we will continue to enhance our industry leadership, and we remain enthusiastic about the prospects for Gaylord through 2008 and beyond.

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

Thanks, Dave. Before we turn over to question and answers, let me just make an observation. Some of you-- When Dave was going through the script, he talked about 80% of our business on the books. And you may have heard a whisper from our General Counsel, who said - "Wasn't that 70%?" Let me just be very clear as to what David and I said, because they were different. What I said is that, coming into this year, we had 70 points of occupancy on the books, which is factual and the case. What Dave said was that, as of the end of the first quarter, we had 80% of our total goal for the rest of the year already on the books. And it's at a different period of time. That can be explained by the very good first quarter bookings that we had this year. So we're very, very comfortable about the rest of this year.

So, Melissa, we'll open up the call for questions.

Thank you. (OPERATOR INSTRUCTIONS). Our first question is coming from Chris Woronka with Deutsche Bank. Please go ahead.

A couple of questions. One is - On the National, can you just kind of confirm that those issues you had in the first couple days have not impacted the future bookings pace there? And then I'll come back with another one.

Chris, on Saturday night when we did our grand opening on Friday and Saturday, we had about 250 of the nation's top meeting planners into the hotel. And, also, I have during the course of the last two to three weeks, spoken with most of the meeting planners that held large conventions in the early part of April. And I will tell you to a person, every meeting planner that stayed with us during the first part of April said - We're sorry that the rooms' compression caused for us to have to walk some people in the first week. The other two issues that were widely described were issues that everybody realized were outside of our control. And these meeting planners were very, very, very happy with the overall quality of this hotel, the performance of our people, and most of them have signed to come back to us. Now, on Saturday night, I spent a long period of time walking with these meeting planners that came in from all over the country, and I can tell you the comments that I got and the e-mails I've subsequently received are incredibly exciting. These people are saying - We've never seen a convention hotel looking like this. There certainly is nothing like this in Washington or on the eastern seaboard. So all I can tell you is what I am being told by the customer is that these people are going to come, and they're going to book. And I think you're going to be seeing that through the course of this year with bookings that we expect to secure on this hotel.

Okay. Great. And then the second one is - Can you just talk a little bit about the forward pace for the future years? You mentioned the 263,000-- Obviously, it's still a very strong number for the first quarter, but I think some folks are looking at it relative to other quarters. What are some of the factors that influence that? And maybe just kind of give us a 30,000-foot overview of how those could play out and what, if any, issues kind of impacted it this quarter relative to 1Q--

Let me just start this, and then I'm going to throw it over to you. The rooms that we actually signed in contract form-- We've signed 262,000 for the same store, and we signed about 140,000 for National in this first quarter. And the same-store was slightly down on the same-store for '07, which was the very best first quarter we've ever had in our Company's history. And what we did in this quarter in '08 was the second-best quarter we've ever had in our Company's history. But the-- in our brand's history - the six years or seven years now that this brand has been in operation.

But the other part of the equation that we don't spend a lot of time talking about but we spend a lot of time focused on are the preliminary and tentative buckets of contracts that we are in various forms negotiating on at a point in time. And, David, I think it's fair to say that, as of the end of the first quarter, our preliminary and tentatives for every single hotel in the system are extraordinary in terms of total.

Yes. That's right. And, Chris, as we sit here today looking at 2009 pace, we're comfortable with 2009 pace. It's running at or above the levels of pace for 2008, so that's a good, healthy pace for future periods. As Colin said, bookings for this quarter on a same-store basis of 262,000 are the second-best we've ever recorded, which, while it looks like a negative comparison, that gives you a sense of how strong first quarter last year was because, again, this was the second-best we've ever done. So we feel comfortable with how the bookings are looking for future periods. And, so far, we're only a little way into the second quarter, but second quarter bookings are good and solid as well.

Okay. Very good. Thanks.

Thank you. Your next question is coming from David Katz with Oppenheimer. Please go ahead.

Just a question. I noticed that you repurchased some shares in the quarter. And, if you could walk us through some of the logic to do that rather than, let's say, pay down some debt-- And I know there's probably some dollars and sense analysis in there and perhaps market perception, just given the way the Street is reacting to leverage in general these days.

Well, David, let me-- I don't want to sound argumentative here, but, honestly, it's nice-- When you say the Street reacts to leverage, there are certain sell-side analysts that write their report that way, but there are others that castigated us for not going ahead with La Cantera. So it's like a tale of two cities. What we have to do as a management team and what we have to do on behalf of our shareholders is do what we think is right. And I can tell you I've operated through three major recessions in 20 years in this country since I've lived in America. And I'll tell you the same thing happens every time. Reports get written. There are a few what I will call fickle shareholders that run for the hills. And you see margins in the hospitality industry in the six months before a recession occurs start compressing from the 11 or 12 multiples down into the 8s. And that's exactly what has happened here. But I'll tell you, six months or nine months after the recession bottoms and starts to pull away, you start to see multiples expanding again. And I'll tell you I personally believe, and I know David feels the same way-- our Board feels the same way-- there's a very real probability that we won't see these types of valuations for these quality of assets with these quality of cash flows in the future. And it seems illogical to us when we have very, very decent predictability over our cash flows and very decent coverage levels on our debt-- It seems illogical to us to repay debt that we're paying about 4.3% for on a floating rate. I beg your pardon - this floating rate debt that we've now effectively fixed. To repay debt at 4.3% when we can buy our equity back-- you know. And these assets are currently somewhere-- Depending upon which analyst report you read, some are trading at somewhere between 8 and 9 times at historical-- It makes no sense to us. So we're going to continue to do this prudently because we think it's in the long-term best interest of our shareholders.

That's all fair, and it was not intended to be a leading question. [What I've heard of the Street], it's a great way to take myself out of the argument. However, one of the-- There certainly is, I think it's fair to say, an appetite for sort of more growth projects entering your pipeline, and that would certainly beg the discussion of how do we go ahead and fund some of these things or how do we pay for it? And so one argument might be reducing debt levels rather than buying back stock might make it easier to go ahead and do those things. And the sort of enhancement of your equity, either way, might be similar. I don't know if that was exactly a question but more a rebuttal. But I think it's an appropriate topic for all of us to consider.

Yes. And what we do is we do literally every (technical difficulty). Mark Fioravanti is sitting here, who's our Treasurer and heads our planning, and we do source and uses. We predict our cash flows. We do all of this every two to three weeks. We believe we're really on top of our cash flows on our business. And we believe we can do the two expansions that we've announced and do this stock buyback. But, unless the financing markets seriously change, we couldn't have done all of that and La Cantera and expand La Cantera, because La Cantera would have only really worked for us once we had expanded that property. So we are working very, very hard behind the scenes to figure out a capital structure that will allow us to grow this business in the way we believe this brand has now afforded us the opportunity to grow, because we are getting calls from people - cities - to come build one of these incredible businesses in their backyard. And we're trying to figure out how-- the appropriate capital structure to do this. But I can tell you our stock trading at 8.5 or whatever-- You can read your analyst's report, and you can see the valuation that this Company is trading at as a multiple of cash flow. It's obscene. And we don't like that, and we're trying to-- We're going to work hard to fix that problem as well. This is not a-- There's no silver bullet here. We've got to figure out how the long-term capitalization of this Company and how we can take advantage of these growth opportunities. But the stock price at this time is crazy.

And, David, directly to your question, or to your rebuttal, I suppose, about people would like to see more growth, $20 million of repurchasing stock is not going to change whether or not we can build Chula Vista. So the way we're managing the capital structure of the Company and then managing the investing of the Company's capital resources is-- Number one, we have a lot of confidence in what our cash flows will be in '08 and '09 and beyond because we have a different business model than others. That affords us a comfort level that maybe others don't have with a slightly higher level of leverage than others are comfortable with. So, consequently, we have a different way of thinking about our debt versus other people thinking about their debt. As we look at our capital resources, number one, do we have enough liquidity? Yes. We have enough liquidity to handle the two announced expansions. Those expansions-- We'll begin spend in '09 and beyond, not during 2008. Once we look at us having sufficient liquidity for those expansions, which are high-return investment projects, the question is what other investment alternatives available to us currently that are attractive? And the most attractive one of those currently is our stock. A $20 million buyback or, frankly, the current authorization of an $80 million buyback, again, doesn't change whether or not we're going to be able to do something like Chula Vista.

Great. Thanks very much.

Thank you. Your next question is coming from Bill Crow with Raymond James. Please go ahead.

I have a couple of questions. But, since you just mentioned Chula Vista, I'll give you a chance to give us an update on where that might stand.

We've made a lot of good progress with the port authority and the city in terms of our agreements, and we're having-- how shall I say it?-- discussions with the both non-union and union branches to try and resolve, really, I think, the only remaining issue of substance subject to the permitting process in that market, which is how we deal with organized labor in southern California. And it's probably prudent for us not to go too deep into where we are in those negotiations because I just think it doesn't serve the process very well to try and sort of publicly negotiate those discussions. But we are having-- We're not in an entrenched, no one's talking to either side mode. We're not in that mode. We are communicating. And I'm still optimistic, at the end of the day, logic will prevail here.

And, Bill, just to be clear and make sure everybody understands the timetable on that, the next milestone really should be a filing by the port authority and the city of Chula Vista that begins the environmental approval process. And we would expect that to be some time in the summertime or maybe early third quarter. And, from there, the [hotel commission] picks it up and starts to do its approval process. So, just to make sure you understand timing, that's the next milestone, and that begins the clock ticking on the entitlement process.

All right. Terrific. Going back to the pace and the 260,000-odd rooms you did in the first quarter - that relates to the 1.3 million- to 1.4 million-room guidance that you left unchanged. That's correct?

That's correct.

So how should we think about the pickup in that, given the economic environment? Is there some seasonality to what we should expect? Are you anticipating that forward bookings are going to pick up as the economy starts to stabilize later in the year? What is your thinking there?

Bill, one thing you need to understand is the-- It's the way the meeting planner tends to book. What typically meeting planners do and associations do, particularly large associations, and, as you know, quite a large chunk of our business gets done with large associations, they work on-- They tend to typically work on a calendar year. So, as you get towards the end of the year, the associations tend to be completing their projects-- completing their agreements as to where they're going to be going four years or five years from now. And so, consistently every year, you'll see with us that we book in the fourth quarter probably twice as much as we book in the first quarter. It's just the way our business works. And, every year, we tend to book somewhere between 500,000 and 600,000 room nights in that fourth quarter. And so we're able to look at the pace - the January pace, the February pace, the March pace, how we're doing in April compared to how we've historically done in April, and how many tentatives we are working with, how many prospects we have working. And there is nothing at this stage that would indicate that our pace of bookings are stressing in any way, shape, or form. We feel pretty confident that that 1.3 million to 1.4 million rooms will be delivered this year.

Okay. Fair enough. And then one final question from me, just so I can get a better picture on what's going on on the real estate front. Could you talk about the joint venture pursuit for La Cantera? What was the--? In the end, what was the deciding factor? Was it lack of access to debt by the venture? Was it assumed return hurdles that couldn't be met? What was it there that ended that transaction?

Dave, you want to--? You spent a couple of months on that.

Yes. Bill, let me take you through that. I would characterize it as the following. We had a lot of discussions with a lot of interest parties. And, in terms of equity capital, there was adequate available equity capital to execute on the transaction. There also was adequate debt capital to execute on the purchase transaction. Ultimately, where we got uncomfortable, in large part, was that we weren't comfortable that the debt capital would be there for the expansion because there was some time that was going to have to pass before the plans were drawn and we were going to go seek that financing. So we kind of boiled it down to, look, is this a project that we want to take a risk on, where we could end up operating a 500-room hotel for a significant period of time because that expansion financing isn't available to us? And we decided that, in this environment, that level of risk and that level of distraction wasn't appropriate for us.

Yes. And it's a 500-room hotel with very little convention space was the biggest problem. And our core competency is around the convention customer.

Fair enough. Thank you, guys. I appreciate your time.

Thank you. Your next question is coming from Kevin Milota with Bear, Stearns. Please go ahead.

I just have a question on the development side. I was wondering if you could give me a timing update on the projects at the Texan and the Opryland and kind of where you are with design and when you expect to start breaking ground there.

Yes. Kevin, thanks. Let me do them differently. Opryland - we have basically completed all of the work necessary to know how we're laying out this project. We know where the room tower expansion is going to go. We know how we're going to do the convention expansion. It's a little difficult at Opryland because there is a risk that, if we don't do Opryland right, we could create a little bit more disruption in that hotel than we are prepared to deal with. So we've been a little bit more deliberate. It's not as obvious at Opryland because of the multitude of opportunities to do this there. But we've now figured out that, and we've now figured out how it all happens. Our people are in the-- Our architects are in the detailed design-- the early parts of the detailed design side of that. We should have, pretty much, most of that done towards the end part of this year, and we will get aggressively bidding this thing, I would think, sometime in the fourth quarter for early next year construction.

Texas is a lot more straightforward. It's-- Where we build the convention expansion is obvious. Where we build the hotel tower is obvious. Very little disruption at that place. Actually, I think, David, we're just about starting the parking garage expansion - the actual construction of that. It's sort of like this month, in the next two to three weeks. We are in the design phase there. The only thing that we are wrestling with is how we lay out and where we lay out a new pool complex that we're going to put into this hotel. And we're debating whether it goes in one location or another. But we should have all of that thrashed through. That's a core of engineers' debate that we're having. But I would hope that the timeline for Texas would be no worse than the timeline I just laid out for Opryland. I would hope that we could maybe, in some parts of that building, be under construction late this year or maybe the early part of next year, at the latest.

And the expectation is to have that finished by 2011?

Yes. The 2011 Superbowl. I think it's '11, or is it '12 Superbowl?

'11. Yes.

'11 Superbowl. Yes. What we've said to the city-- We want the rooms all done, for sure. And the convention space-- We've been having some conversations with the NFL. We'd like to get the convention space done, so that's in our plans. And so we're-- We will probably put our foot on the gas on that one.

Okay. And late 2010 for the Opryland as well?

No.

Is that going to be pushed--?

Opryland is a little bit more complex. We have to stage Opryland because of the disruption issues. And so Opryland will probably be more, I would think, middle of '11 when we're done there.

Okay. Also, just on a relative basis by property, if you'd provide some sort of guidance or say how the different properties are going to come in between the 4.5% to 7% RevPAR guidance for the year--

Yes. Kevin, I'll take that, and I'll give you a sense on kind of directionally, quarterly as well. Opryland should end up middle to high end of the range. Palms should end up in kind of the middle to lower end of the range. And Texan probably in about the middle of the range. That's on RevPAR and total RevPAR. And, generally, directionally, in terms of quarterly, second quarter should probably look reasonably similar to the first quarter. Third and fourth quarter look like they'll be a little bit stronger than first and second quarter were.

Okay. Thanks a lot, guys.

Thank you. Your next question is coming from William Truelove with UBS. Please go ahead.

In terms of the comments about share repurchases versus some of the other development activities, as you mentioned, you feel like the share valuation is-- I guess your word was ridiculous, as well as that it's going to be a near-term phenomenon. So has there been discussions about being much more aggressive near term in, say, the share repurchases and increasing the authorization relative to maybe slowing down other CapEx expenditures, such as the expansion of Opryland, which could have disruptions and what not? Can you give us a sense for how you're looking at those two options? Thanks.

That's a remarkably good question, and it's something that we are in dialog with. We have our Board meeting next week in Washington, Monday and Tuesday. We're going to be talking to our Board about equity values and growth opportunities. And I think I just want to leave it at that right now, but it's top of mind for us. And what we're trying to do is figure out how we take advantage of this moment in time but, at the same time, do not do anything to jeopardize the long-term growth of this Company.

And, Bill, it should be noted that we have a limitation imposed upon us by our high-yield bonds that limits the amount of a share buyback that we can do. And the current authorization is an appropriate level, given the limitations under the bonds. That limitation grows over time, but, for the short term, the current authorization is appropriate, given the bond limitations.

Okay. Great. Thanks.

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

And, Melissa, I think we'll do one more after Will and call it a day. And then, if anyone else has questions, we can take them after this call. You know how to get hold of David, Mark, or myself.

A couple of questions, I think, quick. One is - Should we assume that the strategy of buying smaller hotels, like La Cantera, is on hold for now, given the incredible value of your stock price?

Yes. I think you got that right. What's amazing to me is how few hotel transactions you see being done right through the whole, entire country. The pace of buying and selling hotels-- Last year, I think, in the first quarter, there was almost 200 done. This year, it's like 30 done. The world has changed on us here. And I think we would be in denial if we didn't believe it had.

Okay. Great. And, second, a question on-- I don't think it's been brought up-- but cancellations. Have there been any, and do you expect any? That's usually something that's asked.

Well, our cancellations are always baked into the room numbers that we show. They're net numbers. I mean we always eliminate cancellations from the bookings that we share with you. I look at these every month, and my sense is that these cancellations are not tracking in any abnormal pace just because of this environment. I just think it's sort of normal stuff we're seeing.

Yes. Cancellations actually are running a little bit lower than they were this time last year. So there's nothing that's saying that the economic environment is causing us to see lots and lots of additional cancellations.

Okay. Great. Thanks, guys.

Thank you. Our final question is coming from Nap Overton with Morgan Keegan. Please go ahead.

Most of the questions I had have been answered. But I was just wondering if you could comment on-- Have you seen over the past six to nine months any increase in resistance to pricing for bookings two years out, and what does that price increase look like or what's it feeling like for 2009?

Our salespeople will tell us that they have resistance on pricing with every single contract. It's just the way it is. But, as you know, Nap, we have this internal system called [RevMax], and every one of our contracts are priced against the system that we have-- The specific days that a customer's coming we have a specific pricing grid in this RevMax system. And I don't think we're seeing too much of a deterioration to what we're actually contracting contracts at to what they're set in RevMax. To me, this is really about making sure that our customer sat levels stay up, and customers leave happy, because those customers are customers that don't tend to want to fight over a nickel and a dime. So, long answer, Nap, we're not seeing any compression in our long-term pricing. And, Nap, did you enjoy the hotel?

I did.

Excellent. All right. Melissa, I think, then, that's the final question. Okay. Melissa, I think that's the end of the call. Again, thank you, everyone who's been on the call. And any other questions you may have, you know how to get hold of David, Mark, or myself. And good day to all of you. Thank you.

Thank you. This does conclude today's Gaylord Entertainment Co.'s First Quarter 2008 Earnings Conference Call. You may now disconnect.