Ryman Hospitality Properties Inc (RHP) 2009 Q4 法說會逐字稿

Welcome to the Gaylord Entertainment Company's fourth quarter 2009 earnings conference call.

Hosting the call today from Gaylord Entertainment are Mr. Colin Reed, Chairman and Chief Executive Officer; Mr. David Kloeppel, President and Chief Operating Officer; and Mr. Mark Fioravanti, Senior Vice President and Chief Financial Officer. They are also joined by Mr. Carter Todd, Executive Vice President and General Counsel. This call will be available for digital replay, the number is 1 (800) 642-1687 and the conference ID number is 506-47687.

At this time all participants have been placed on a listen-only mode and the floor will be opened for your questions following the presentation.

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

Thank you and good morning. My name is Carter Todd. I'm the General Counsel for Gaylord Entertainment Company. Thank you for joining us today on our fourth quarter 2009 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 factor among others set forth in Gaylord Entertainment filings with the Securities and Exchange Commission and in our fourth quarter 2009 earnings release. And 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 a result of new information, future events or otherwise.

I would 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 would like to turn the call over to our Chairman and Chief Executive Officer, Colin Reed.

Thanks, Colin, and good morning and welcome, everyone.

Thank you for joining us today to discuss Gaylord Entertainment's fourth quarter and full year 2009 results. As usual I will begin our call with an overview of our business and our results for the fourth quarter and also the full year for 2009. I will also touch upon what we are seeing in our niche of the market and how these thoughts are guiding our views of 2010. Then our President and Chief Operating Officer, Dave Kloeppel, will provide additional color on our operating performance. And finally, our Chief Financial Officer, Mark Fioravanti, will conclude the prepared remarks by providing some more detail on our financial results for the quarter and discuss the full year forecast for 2010. We will then open up the call to your questions.

Well this was another decent quarter for our business and caps off a year of solid performance for our Company. Against a backdrop of an extremely challenging economy, I feel we executed with precision and focus and furthermore we executed relatively well to the industry. Now that's not to say we didn't feel the pain that so many companies and individuals have felt over this last 12 months. However, when you look back at our year, both from a financial and operational perspective, it's clear that our model worked as designed and our stars rose to meet the challenges of the economy and I'm very proud of that. Any time a business is forced to deal with the realities of a tremendously tough market you get a rare unobstructed look at the fundamental strengths and weaknesses of a company and where improvements can be made for the future. We learned a lot about our business and I'm pleased with how it has responded to the turbulence our industry has experienced thus far.

Our model conditions to provide a level of predictability unlike any other in our industry. As an example our full year 2009 performance came in just under the top end of the guidance we established at the end of the first quarter of 2009. You didn't hear us keep modifying guidance downward as the economy worsened. This level of performance re-enforced our conviction that we operate a unique business model and that the actions we took strengthened our brand in many ways. I believe we are a much better Company today than we were 24 months ago and ready to rise to the opportunities that will surely come before us. To highlight this point let me share with you a couple of examples. As the recession began to unfold and groups canceled or tightened their spending, the contracts that we had locked in years before produced attrition and cancellation fees that helped protect our profitability throughout 2009.

However, as attrition and cancellation levels slowly began to stabilize in the third quarter of 2009 we were still able to deliver CCF margins. Why? First, we have a loyal base of customers willing to pay a premium for our product. As evidenced our RevPAR performance was well above industry averages in the fourth quarter and the full year. Second, we have never lost focus on our ultimate goal, providing our customer was high quality all under one roof experience. Now while some companies were cutting back on customer experience, we continued to find ways to enhance it in order to preserve the tremendous brand equity we have been able to build. So while we were deploying $45 million of annualized cost cuts in the first half of the year, our stars were working tirelessly to ensure that the impact to the customer was minimal. Customers recognized our efforts and their response has being very positive.

In fact in 2009, we not only held our customer satisfaction scores at category leading levels but improved them. All these efforts, attrition and cancellation fee collection, cost cuts and the dedication of our stars, collectively worked together to drive a solid CCF margin at our same-store hotels of approximately 30% for the fourth quarter and 27.6% for the full year of 2009. Against full year same-store revenue declines of approximately 14%, we were very pleased with our margin performance. We are also pleased to see the positive trends that continue to materialize in our business. As I mentioned earlier we began to see early signs of stabilization during the third quarter as attrition and cancellation levels returned to more typical levels. Well we are pleased to report that this trend continued again in the fourth quarter.

In addition to the drop in the attrition and cancellation levels, it's also worth noting that our average group room rate booked in 2009 for 2010 has been slightly better than the average room rate realized in 2009. This is a sign that the travel and convention spending levels is stabilizing. And I also - - and also aligns with the encouraging views we have been hearing anecdotally from the meeting planners that the market is slowly moving towards a potential recovery. We were also encouraged by the Gaylord National's performance both in the fourth quarter and for the full year. This property continues to gain momentum as it grows its revenue base and tightens its operational efficiencies. We are confident that this property will continue to deliver even greater success moving forward, providing of course, it ever stops snowing up there.

Now let me talk about advanced bookings. We have been closely monitoring the pace and quality of our advanced bookings. And we are pleased to report that we've added another 450,000 net room nights during the fourth quarter alone. And ended the year with over 1 million net new room nights booked during the year for all future periods. Additionally, our fourth quarter 2009 room night production reflected an 8.7% improvement over the fourth quarter of 2008. And served as further evidence that the efforts of our stars and the redeployment of our sales team early in 2009 has reaped benefits for our Company both in the fourth quarter and for the full year. While we ended the quarter with occupancy on the books down approximately four points to 52% brand-wide occupancy we had on the books at the end of 2008, it's important to keep in mind that we lost over three points of annualized occupancy and cancellations alone during the first half of 2009. Baring a double dip in the economy, we do not expect 2010 to yield the same level of cancellations and attritions that we saw in 2009.

Now I would like to talk a little bit about the outlook for 2010. While I will provide our overall thinking, I will let Mark walk you through the specific numbers. Now as you might tell from the tone of our call in today's press release, we are very pleased with where our Company currently sits. We've outperformed our industry across the board in terms of minimizing revenue and margin declines, our future bookings are improving, attrition and cancellation levels are declining and our relationship with our customers are as strong today as they ever have been. From a capabilities perspective our systems are more focused today and we have a better sales and marketing approach than we did a year ago. Overall, we are very well positioned to take advantage of an improving economy.

But this optimism is somewhat discounted in our overall guidance. Given the fragility of the broad US and world economic recovery, we believe it is prudent to assume a rather slow industry recovery in the short to mid-term. As a result, our assumptions are the top-line revenue demand will likely be flat to slightly up in 2010. Additionally, we are anticipating some level of cost increases in 2010 in areas such as health care and compensation which will directly impact our ability to drive incremental profitability on a fairly flat revenue base. We will continue to pursue opportunities to drive top-line revenue while remaining committed to operating our business as effectively as possible. Dave will provide some additional color on these efforts in a moment.

Now let me talk quickly about growth. Over the last couple of months I've heard from a couple of our large shareholders and several analysts speculation that we are about to engage in the acquisition of distressed assets using the capital we raised in the third quarter of 2009. I want to be very clear that we are not going to move on any deal on a distressed asset or otherwise simply because we have liquidity to do so. While we will as always watch the market to ensure that we do not miss any opportunities that are out there, we will only consider such opportunities if they clearly strengthen our core brand and of course provide substantial benefits to our share holders.

Now with that what I would like to do is turn the call over to Dave.

Thanks, Colin.

As Colin said, we are quite pleased with how our business performed in the fourth quarter and throughout 2009. The fact that we were able to deliver solid GPS margins and that we are heading into 2010 with strong bookings numbers despite what remains as a challenging operating environment, is a reflection of the hard work over the course of the year by our stars and the aggressive actions we took of the business. I would like to briefly touch on a few examples that were crucial for us this year from an operational perspective and also talk a bit about the changes we made in terms of sales and marketing and how we believe these will help our business moving forward. Then I will discuss what we are anticipating heading into 2010. As Colin mentioned, while attrition and cancellation fees provide a measure of profitability protection for our bottom line in 2010, our effort to reduce cost and drive efficiency was key for us in 2009. We knew that the economic environment was going to force us to make some changes, so after taking a hard look at our SG&A operations in late 2008, [we proposed a] phased plan of initiatives to streamline our business and reduce our costs. Some of these reductions were related to guest volumes and will undoubtedly return as occupancies recover.

However, we are very proud of the fact that many of these reductions were systemic and can be sustained permanently. To give you a few examples, we began deploying a common procurement system across our hotels which will enable us to better optimize our brand buying power. In addition, we renegotiated with most of our outsource vendors in order to receive contract pricing amendments. We also centralized our call center functionality of the Gaylord National and the Gaylord Opryland properties into one location, and continue to examine additional opportunities within this space. While our efforts in the first half of 2009 produced approximately $45 million of annualized cost savings, we have continued to analyze our business for additional opportunities in order to remain flexible and have the ability to move quickly as the market remained unpredictable.

As we told you in the past, another critical initiative we executed in 2009 was related to our sales organization. When we began to see the large increase in corporate group cancellations and attrition as the environment deteriorated at the end of 2008, we made the decision heading into 2009 to refocus our sales team on short-term bookings. This strategy allowed us to offset to a degree the impact of the group room nights that we lost due to attrition and cancellations. As Colin mentioned, we booked 1.04 million room nights, net room nights, for all future years during the course of 2009 and added 453,000 of those in the fourth quarter alone. This includes the bookings that were added in the year for the year that were crucial in helping offset a portion of the elevated attrition and cancellation levels we experienced.

As we look to 2010. We are encouraged by both the improvement and the pace of bookings and the positive trends we saw groups exhibit in the fourth quarter of 2009. Meeting planners began to add attendees back to their meetings instead of reducing their room blocks and groups are once again picking up additional banquet events and other outside the room offerings. These trends give us confidence that the momentum for 2010 top-line revenue could begin to move performance positive once again. As we enter 2010 with 48.4 points of occupancy on the books, only a 3.7% decrease from last year. But as Colin already mentioned, it's important to note that we lost over 3% through cancellations in the first half of 2009. For this reason we are pleased with our on the books room night position as we enter 2010, especially since the rate book in 2009 for 2010 is slightly better than the rate we actualized in 2009, as Colin has already mentioned.

The focus shift toward short-term bookings was a chief factor in securing these solid numbers. We're also pleased with our current position for 2011 and beyond. For 2011, we currently have almost 36 points of occupancy on the books and we have another 20, almost 29 points of occupancy on the books for 2012. And these levels are consistent with our pre-recession historical averages. We also made some important personnel moves within our sales organization. We named Kemp Gallineau, Senior Vice President and Chief Sales Officer for Gaylord Hotels effective as of the beginning of 2010. Kemp was previously a Senior Vice President and General Manager at the Gaylord Palms,and he will be the Company's nation sales office, as well as direct-to-sales leadership at each Gaylord property. Kemp possesses a strong operational background as well as in-depth knowledge of our brand and properties and has proven himself to be a very talented leader. We are confident he will able to take our sales team to the next level and are excited at what he will bring to the table as we continue to grow our brand.

Kemp was succeeded at the Gaylord Palms by Johann Krieger who was previously Vice President and Hotel Manager of the property. Johann has been critical to the success of the Palms over the years and is a part of the heart and soul of that property. And we are thrilled that his team will continue to benefit from his deep understanding of our operations, our remarkable service perspective, customer engagement and dedication to our culture and our family of stars. As part of our efforts throughout the year to refine our marketing tactics while reducing our costs, we centralized our marketing team. This move has enabled us to optimize our advertising and promotional spend, and has allowed us to leverage expertise on both group and transient fronts to drive incremental room nights across the brand. We are also in the process of modifying the look and feel of our current website which will provide a more efficient user-friendly experience for the customer and will drive more branded web bookings. The new site was launched in late January of this year and has greatly enhanced the online experience for our customers and is expected to drive a much larger portion of our online revenue through our own branded channel.

As an excellent example of how our enhanced marketing capabilities are helping to drive our business, this occurred in the fourth quarter. Each holiday season our annual Ice Event provides experience unlike any other for families to enjoy at each of our properties. Is also an important revenue driver for our business. This year we faced the challenge of many families cutting back on spending during the holiday season and leaving this kind of entertainment out of the budget due to the economy. However, despite the challenges we saw we produced 21.7% increase in Ice admissions across our same-store properties as over 590,000 guests paid to experience Ice in the fourth quarter. And as you recall that tends to happen from Thanksgiving through to New Year's day. When compared to the fourth quarter of 2008, this was a 27.1% increase in same-store Ice total revenues. This was accomplished through a more focused and effective PR efforts and through the refinement of our offerings at each of our properties.

At Gaylord National Ice was in its first year of operation and we were very pleased with the interest it generated, selling over 173,000 admissions. These results were due in large part to our marketing and PR efforts. The inaugural year for this event is traditionally the most challenging for the property, and with the challenging weather conditions that we saw in late December that made travel in and around Washington, DC very difficult this past holiday season. We are very pleased with the momentum that Ice established in 2009. As you all have seen in the weather forecast, weather continues to be a factor for National, where abnormally high levels of snowfall have plagued the DC market as recently as this past weekend and are expected again today and tomorrow.

Now turning to guest satisfaction. As you all know this is a key measure for us when gauging the success of our business. You will recall that we measure our guest satisfaction by percentage of "Top Box" scores. This is a very strict interpretation of satisfaction levels and reflects the satisfaction of our most loyal guests. Driving this level of satisfaction is necessary to build confidence in our brand and ensure that meeting planners and groups return to our properties. We are quite pleased that despite the difficult environment in which aggressive cost management we undertook was and is still ongoing, our same-store scores for the year improved by 50 basis points year-over-year. We saw the same positive (inaudible) at Gaylord National. This demonstrates the depth of our ongoing commitment to guest satisfaction despite the economic challenges that have been prevalent this year.

As Colin has already mentioned, as we look to 2010 and consider how we think the environment will impact our top-line, we think the top-line will remain flat to slightly up. We also anticipate some additional costs coming into our business, including an uptick in benefits expenses, resulting from the increasing cost of health care and the full year impacts of our completed and ratified union contract with Union National. Additionally, we intend to give our workforce a merit increase in 2010, a benefit that we cut in 2009 in an effort to reduce cost. So though we will continue to seek new ways to run our business as efficiently as possible, we anticipate 2010 to be another challenging year.

With that let me turn it over to Mark for the financials.

Thank you, Dave.

As I have done in the past I will review the consolidated financial performance of our business during the quarter and the year and then take you through some financial highlights from each of our properties. Finally, I will provide our guidance for full year 2010. On a consolidated basis Gaylord Entertainment performed in line with our expectations delivering revenue for the quarter of $249.4 million, a decline of only 0.05% when compared to the fourth quarter of 2008. Our fourth quarter of consolidated CCF performance was $53.9 million reflected an 11.3% increase over the prior year. While consolidated revenue for the full year declined 5.6%, to $879.1 million as a result of the challenging economic climate, full year consolidated CCF was $189.5 million, reflecting a 30 basis point improvement in margin when compared to 2008. As Colin discussed this was once again a challenging quarter for the industry. Even as the trends towards stabilization continued, fourth quarter RevPAR declined 10.4% for the upper upscale segment and 13.1% for the upscale lodging segment according to Smith Travel Research.

It's notable that once again our hotels outperformed the industry during the quarter with a RevPAR decline of 2.7% and a total RevPAR decline of only 0.8%. For the full year RevPAR and total RevPAR declined 10% and 9.9%, respectively, driven by a 6.4 % decline in occupancy and $2.13 reduction in ADR. Outside the room spend declined as corporate group guests continue to watch costs throughout the year. Gaylord Hotels generated CCF of $62.1 million during the quarter compared to $58 million in 2008. Our strong CCF performance was driven by the diligent collection of attrition and cancellation fees coupled with the continued aggressive management of our costs. On a marginal decline in revenue these efforts resulted in a 26.9% hotel CCF margin in the quarter, an increase of 200 basis points when compared to the fourth quarter 2008. For the year, Gaylord Hotels CCF decreased 3.9% to $221 million with a CCF margin of 27.1%. Our same-store hotels generated CCF of $52.5 million during the quarter, compared to $49.6 million in 2008, resulting in a margin of 30.1%. Up 270 basis points compared to last year.

For the full year our same-store hotels CCF decreased 18.3%, to $160.7 million with a margin of 27.6%. We again saw same-store in the year, for the year cancellations improved significantly in the fourth quarter totaling only 6,278 room nights, compared to 15,332 room nights in the same period of 2008, and 14,375 room nights in the third quarter of 2009. Same-store attrition in the fourth quarter was 10.6%, which showed improvement from 14.1% in the same period of last year. Full year same-store in the year, for the year cancellations totaled approximately 116,735 room nights, compared 74,673 room nights in the prior year. And same-store attrition for the year increased to 13%, compared to 11.5% in 2008. During the fourth quarter we continue to benefit from the successful collection of attrition and cancellation fees. During the quarter we collected approximately $1.8 million in attrition and $5.8 million in cancellation fees for the brand. For the full year attrition and cancellation fee collection totaled $27.7 million, compared to $14.5 million in the prior year.

Now let me quickly walk you through the performance of our individual properties starting with the Opryland in Nashville. At Opryland occupancy for the quarter increased 1.8%, compared to prior year quarter and decreased 9.4 points for the full year. Meanwhile ADR declined 9.2% in the fourth quarter, and only 4.6% for the full year versus 2008. These facts resulted in quarterly RevPAR of $116.72 and full year RevPAR of $99.74, down 7.1%, and 16.4%, respectively. The property generated revenue of $82.7 million in the fourth quarter, a 4.2% decrease compared to the prior year quarter. Full year 2009 revenue of $247.1 million represented a 16.7% decrease compared to 2008. Despite the revenue decreases, the property delivered consolidated cash flow of $25.3 million in the fourth quarter, up 5.4% to the prior year quarter. CCF margin for the quarter increased 280 basis points over the prior year quarter to 30.6%.

At the Palms, occupancy was down 4.6 points for quarter, and 10.3 points for the full year relative to 2008 driven primarily by attrition. ADR was up 2% for the quarter due to strong group rates in November, and down 1.3% for the full year. Quarterly RevPAR actualized at $115.47 and full year RevPAR was $118.01, down 4.4% and 14.4% compared to prior year periods. The property generated $41.7 million of revenue in the quarter and $152.7 million for the year, down 3% and 13%, respectively. Fourth quarter CCF increased 2.8% to $111.1 million and full year consolidated cash flow decrease 15% to $44.7 million. Continued focus on cost management to property resulted in the solid CCF margin of 26.7% during the fourth quarter, a 150 basis point increase compared to the prior year quarter. For the full year CCF margin decreased 70 basis points, to 28.4%.

As for the Texan, occupancy was up 2.1 percentage points for the fourth quarter, but down 5.7 points for the full year. ADR declined 11.6% during the quarter, and dropped 7.7% for the year. Consequently, RevPAR decrease 8.8% in the quarter to $109.37, and 15% for the full year to $109.49. The properties delivered revenue of $47.9 million in the quarter, a decrease of 3.4% from the prior year quarter. For the full year, revenue decreased $171.4 million, from $192.7 million in 2008. Despite these revenue declines, CCF increased 10.3% to $15 million in the fourth quarter, versus $13.6 million in the prior year quarter. For the full year, CCF decreased 9.1% to $51.3 million. Strong margin management to property yields at 31.3%, CCF margin in the quarter, a 390 basis point increase over the prior year, and a 29.9% full year consolidated cash flow margin which represents a 60- - basis point increase relative to 2008.

And finally turning to the National, occupancy for the quarter increased 6.9 points compared to 2008 reaching 61.2%, in total 64.4% for the full year. Although ADR dropped 0.6% in the quarter compared to prior year, the property actualized full year ADR of $206.86, up 2% for the full year. RevPAR increased 12.1% in the fourth quarter to $125.64, while full year 2009 RevPAR was $133.16 up 6.7%. The property generated revenue of $56.8 million for the fourth quarter, up 9.8% versus last year, and actualized $231.3 million of revenue for the full year. Consolidated cash flow increased 15% to $9.7 million in the fourth quarter, and totaled $60.3 million for the year. And National increased its fourth quarter CCF margin to 17%, up 70 basis points for all of 2008. Improved operational efficiencies throughout the year resulted in a full year CCF margin of 26%. Rounding out the operating segments, the operating attractions produced $3.2 million of CCF in the fourth quarter, to $12.5 million for the full year.

Turning quickly to the balance sheet. As of the end of the year the Company had long-term debt outstanding including the current portion of approximately $1.18 billion in unrestricted and restricted cash of $181.2 million. At the end of the fourth quarter, $300 million of borrowings were undrawn under the Company's $1 billion credit facility and the lending banks had issued $9.8 million in letters of credit which left $290.2 million of availability under the credit facility. Our balance sheet provided us with significant flexibility with adequate liquidity and no significant near-term maturities. Additionally, other than maintenance Cap Ex, we have no significant capital commitments in 2010. Therefore, if we need our guidance we anticipate generating substantial free cash flow once again in 2010.

Looking ahead for the full year 2010, we're anticipating Gaylord Hotels RevPAR to range from a decline of 2% to an increase of 1%. We anticipate Gaylord Hotels total RevPAR to range from a decline of 1% to an increase of 2%. We are also providing Gaylord Hotels CCF guidance of $210 million to $226 million. Please note that with full year comparisons now possible for the Gaylord National, we will no longer break out our guidance into same-store in Gaylord National segments. For the operating attraction segments we are placing CCF guidance at $10 million to $12 million, and for our corporate and other segment, we are guiding a CCF performance of a loss of $44 million to $41 million. As such we expect our 2010 consolidated CCF performance to be in the range of $176 million to $197 million.

With that I will turn the call back over to Colin for any closing remarks.

Let's open it up for questions. I think we've taken sufficient time explaining where we are.

Operator Instructions).

Your first question comes from Jeffrey Donnelly of Wells Fargo.

Good morning, guys. How you doing? Actually, first question for Mark. It's really more of an apples-to-apples comparison for the CCF on the hotels. Be sure I'm getting this right. For 2009, do we add only the $3.4 million of severance cost back to the $221 million you reported? Again, about a $225 million CCF for 2009 to get that to compare to your guidance of 210 to 226? Sort of CCF for just the hotels and sort of flattish to down 7%? Sound about right?

Yes. For apples-to-apples you have to add that to approximately the severance cost. That's correct.

Would you allocate that to the hotel business as well, I guess is my question as opposed to - -

Portions of the reverence would be. The proxy expense would not be. Proxy would stay at corporate.

And then in driving the hospitality CCF guidance for 2010, can you drill down for us I guess and give us some assumptions on what you are making for growth and expenses per occupied room this coming year?

On a per occupied room night basis?

Or even just overall. I'm curious how guys are thinking about that.

Generally, Jeff, if we start talking about per occupied room basis that starts to give you a sense of where our - - where we think occupancy and rate might be which we don't break out. But generally from an expense perspective, as we went through plans for 2010 headcount levels were kept in terms of administrative, staff, or kept at the same levels as we saw in 2009. We will be seeing increases in expenses for things like health care. Health care costs I think generally are expected to be up double-digits in 2010. We're no different from that one. And then we are adding things back for 2010 that we held back in 2009. I mentioned in my comments that we are adding a merit increase for our stars this year which we held back in 2009. And that's about - - we're targeting plus or minus 2% for a merit increase for the stars. And then in addition to those items there are other kind of general cost increases. One of them is, as I also mentioned in my comments, the impact from a full year of our now ratified union agreement at the National.

And I'm actually going to dovetail my next question. If I make those kind of similar types of adjustments that I made earlier in the hospitality business but just for the corporate segment. I think you reported $44 million in 2009, but if you exclude the roughly $2 million for the proxy and about $3.5 million for severance. For 2009 you're more of an adjusted CCF of $38.5 million, but this coming year you are looking for 41 to 44, it's about a 10% increase. Is that where we are seeing that increase, in the merit increase and the health care costs, or is that really flowing more through the hotel P&L versus the corporate?

Well, you will have merit costs which will flow through both. Obviously, it will have a greater impact in the hotel business because of the number of stars in those segments relative to the corporate segment. You also though have a budget full ICP accrual which would impact the corporate as well as the properties. But that impact would be greater at the corporate level on a percentage basis.

One last question. Switch gears. You guys are certainly a bit more optimistic on your prospects and culture of demand in 2010. I guess what segment of your business are you seeing or expecting the greatest incremental revenue? Is it out of the trade associations or more corporate events? And specifically, is it out of I guess within that - - is it an expectation for higher spend per guest or meeting attendance or just simply, more meetings? Are you able to frame it for us to see more optimism?

It's all of the above. Jeff, morning, Colin. It's - - we are seeing more group bookings, both corporate and association. But the association that we are predicting for 2010. They are already on the books. We - - in group room revenue we did in 2009 approximately $260 million of group revenue. And we have 250 - - what is it, David? $254 million on the books right now, something like that in revenue for 2010. And so we've got a lot of business already conducted on the books.

We are seeing a lot more activity on the, not a lot more - - more activity on the corporate side. We're not making major assumptions of spending per delegate increasing. We are holding back in our assumptions recently consistent with what we've seen in 2009. And - - frankly, all of our transient delivery systems we have today are a lot stronger than what we had two years ago. We launched a new website here in the last ten days that we think is the best in the industry. So we are reasonably optimistic that we are going to see more traffic in this year that we are in right now.

And, Jeff, the trends that we saw in the fourth quarter that we commented on in the script. One, is attrition continued to come down in the fourth quarter, - - is11.7% in the fourth quarter, versus about 14.5% in the fourth quarter of last year. So we continue to see attrition shrinking. And that still is an elevated level compared to historical levels. But if we continue to see that sequential improvement, or even hold the levels that we saw in the fourth quarter, that is generally a positive sign for the industry. So as a result of having more travelers we are generating not only the room revenue from those travelers but also the per delegate spend that Colin mentioned from those travelers. The other thing that we've seen is in the last several months, we've seen the corporate segment start to pick up in terms of lead generation for short and medium term meetings. So that lead volume kind of goes to are we going to be able to book more meetings in the year, for the year in 2010 and 2011 for 2010 and 2011. And, generally, that is a positive sign because it leads generally six months later, within six months, starts to turn into real bookings.

Let me be clear on that number I gave you. We did about $261 million in group revenue for 2009. We have on the books pretty well cleansed I would say $248.5. So that's where we are.

That's helpful. Thank you.

Thank you.

Your next question comes from Chris Woronka of Deutsche Bank.

Good morning, guys. You had a pretty impressive sequential increase in the net future bookings this quarter, in the fourth quarter I should say. Could you share how it trended throughout the quarter and maybe whether that's the momentum that continued into the first quarter?

Chris, Chris. I don't know what phone you are speaking on but we were having a very hard time hearing the question. Jeff came through pretty clear. I don't know whether you are on a cell phone somewhere, but we're having a hard time deciphering your question.

Let me try again if that's any better.

Much better.

Okay, you guys had a pretty impressive sequential increase in the net future bookings in the fourth quarter. Can you maybe share with us how that trended throughout the quarter and tell us if some of that momentum continued into January and February?

Well, let me give you as much information as I think we want to share. We started off the quarter pretty good in October. And we had a bunch of preliminary [intentatives]. They were rising throughout the quarter. We had a fairly decent November, but December was pretty surprising to us. We had a very strong December.

Now one thing that we always watch is that when we have a very strong December, have we ripped the guts out of January and February. And one thing that I suppose we can share, but we will not be sharing this information in this level of detail perspectively, is that in 2000 - - Mark, you are going to have to help me with this, I'm doing it from memory. In 2009, we booked gross room nights about 54,000 in January, gross room nights and we netted minus 6 because of the cancellation waive. In 2010, in January we booked 104,000 room nights and we booked net about 82,000 to 84,000 room nights. So we saw a substantial increase in January, over January of 2009. So I think that gives you probably more detail than you asked for.

Yes, that's very helpful. And, Colin, just one more. You said eventually you would kind of give your perspective on Las Vegas. And - - we've heard from several hotel operators out on the West Coast that the promotional environment in Las Vegas is stealing some of their core business. Do you think that's kind of indigenous just to the West Coast? And does that change your desire to kind of get into a West Coast market at some point?

Look, you know how we feel about the West Coast. West Coast being sort of Arizona West. The answer is we would like to be West Coast at some point in time because our customers want to be West Coast. In fact, we will have the benefit of some very lengthy detailed research that we should get back here in the next two to three weeks where we've really gone back and talked to the meeting planner across the nation as to propensity about markets like Las Vegas and the West Coast and that will help reinforce or cool our passion about the West Coast. But - - it's something that we are going to continue to focus on.

But you know what? My view with Vegas and we should be here talking about our Company. My view with Vegas is that time is our friend here, not our enemy, because I really don't see any major shift in consumer behavior over the next 12 months. Home prices are going to stay flopping around the bottom. People won't be able to refinance their homes and take capital out and go spend it in Vegas. Bank lending is not where it was two years ago. Unemployment is in dire straits, and personal debt is pretty high and the interest rate environments are only going one way. So as I think about the probability of stressing a market like Las Vegas and some of these West Coast markets, my view is for the over-leveraged under-performers, things are only going to get worse before they get better. So we believe time is our friend here, not our enemy.

Okay. Thanks. Very helpful.

Thank you.

Your next question comes from David Katz of Oppenheimer.

Hi, good morning, all.

Good morning, David.

Could we just talk in a little more detail about DC? - - where I think we probably have a similar view to you all as to where that property can wind up, over time. But in the short term, if we could talk about the different drivers, particularly some of the other buildup of the area around the hotel. And as well I know you made some comments about first year of Ice and then some weather and all of that. But if you can help us just plot the course a little bit looking out into the future on that property and what kind of profitability level you think is reasonable within the next let's say four to six quarters. - - that - - anything there would be helpful. And then have I other follow-up.

All right. Shall I spell it, guys?

Sure.

Well, first and foremost the hotel has certain dynamics going in its favor. Number one, customers are leaving the place happy. All of the issues that we dealt with a year and a half ago when we opened the place are well and truly behind us. Our customer satisfaction scores continue to strengthen. I get a lot of folks calling me, people who - - meeting planners that have been there call and talk about what an awesome experience it is. The physical asset is beyond peer in that market.

So if you believe - - our federal government's going to continue to spend money which quite frankly, I would say that is going to happen. And folks still want to visit our nation's capital, my sense is that this business will only go from strength to strength over the next two to three years. And - - our management team there that we have shuffled around and have in place right now, we are very, very comfortable with it. And all of the critical moves we've made are behind us and the business is performing well. National Harbor as a facility continues to strengthen. And - - the condos that were for sale, are selling. New restaurateurs are moving in. And National Harbor is a destination I think is only getting stronger and stronger in the greater Washington, in the greater Washington region. So we are optimistic about the place. And we are seeing meeting planners willing to book and wanting to come back. And so we're not going to be in the predicting the next six quarters of cash flow growth in this market at this stage. But I think it's there it to say that we are optimistic about the future of this hotel.

So if I could just follow that up for one moment. The National Harbor buildup, is it - - I assume it's helping you. Is it really just starting to help you in the quarter? Or maybe there's some way to look at it on a - - what inning are we in of that area helping the hotel. The very early innings?

Yes. David, good morning, it's Dave Kloeppel. I think the thing about National Harbor, we are still very early on in really understanding and probably more so capitalizing on what National Harbor as a destination can mean to the National. If you take a couple of examples from this summer and compare them to what we do in Nashville that's been kind of running leisure business for a long time. And I'm going to focus on leisure for a second and then I'll go back to the group side. But leisure-wise - - we do a lot of entertainment out of our hotels to drive transient packaging opportunity's. Transient packaging opportunities generate a lot of benefits for us because they're offers that groups wouldn't otherwise avail themselves of. So we don't have fence rate structure so it's easier to offer even when you have groups in-house.

And in Opryland it's the best example of that. In the holiday season we will run 75 to 80 points of occupancy in Opryland from Thanksgiving through to Christmas. The National during December so far is running in the mid-30s or mid-40s of occupancy during the month of December, and that's because the destination is just becoming known. But if you look at what we did with Ice this past holiday season where we sold 175,000 tickets and had overwhelming demand that we just couldn't otherwise accommodate. That begins to establish the National as the place to spend the holidays for people within a 50 or 75 or 100 mile radius from the hotel. And so we are building great momentum there. We had the same kind of experience during Fourth of July. Generally, if we can produce the right kind of events in the National Harbor destination, we can generate the demand. What we are really focusing on right now is enhancing those entertainment offerings to drop them into periods of where group demand generally is soft so we can enhance the overall occupancy level in the hotel. On the group side we are functioning very well and that's building as we would have expected it to. As the economy recovers we will see it grow even more so.

In terms of David's question about innings, I will try to do the basic thing here and say this is not the building site it was six to nine months ago. All of the things you are talking about I would say we are in about the fourth. Somewhere like that, fourth, fifth innings of maturation of this hotel. We see a lot of opportunity ahead of us.

Okay. Thank you. And I just want to ask one more quick follow-up if I may about Las Vegas. And I know that it's an issue that the Company, we've certainly talked about it for years. There is an attraction by your customers to the Las Vegas market. And clearly, it would enhance your ability to rotate groups through there. By the same token, I think there is probably some view on the street that would rather not see you spend a boat load of money to get involved in the Las Vegas strip. Is there - - what strategies might you consider that are somewhere in the middle where you might be able to offer deal flow to a strip operator without spending a lot of money and still garner some return off of the value of that deal flow.

We believe that delivery system is very valuable. We touch a lot of big customers. A lot of whom go to Las Vegas and we understand the value of that delivery system. I think you've heard our view of the world for the next two to three years is that we sort of see it as fairly unpredictable. So we are not going to stretch our Company's balance sheet to fulfill short-term goals here. We're just not going to do that. So that's why I went into some level of detail in my prepared remarks talking about we are only going to do things in a very careful, careful way. In terms of how we do it and potentially with whom we do it, we aren't going to get into that speculation right now.

Okay. Thanks, very much.

Thank you.

Your next question comes from Will Marks of JMP Securities.

Thank you. Good morning. First question you made a quantitative comment on novel amounts of CapEx, I believe. Is there anymore quantitative figure you can give us for 2010.

CapEx in 2010 should be in the $50 million to $60 million range.

Okay. And that's total? That's mostly a maintenance budget?

Yes.

And no big projects stand out?

The only one of significance is that we are in the development process right now to build a resort pool in our Texas property. We've had overwhelming summer leisure demand at that property over the last couple of years and the pool that was constructed with the initial buildout of the hotel is not adequate to service those guests. So we are doing some- - a new resort pool there.

But that's modest, right?

Yes.

That's the largest. Everything else is really smaller, maintenance CapEx, that you would typically see for hotels.

And that's all included in the numbers that Mark just gave you.

Yes, okay. All right. On transient I guess versus group, can you give us what the final year of 2009 was? How much of your business was transient?

We did about $64.5 million dollars compared to $261 million on the group side.

And are you - - how are you looking at 2010? Similar levels?

Yes. That mix should remain pretty steady at 80-20. What we did in 2009 was 80-20 and it seems to continue to stay that way.

As you look very far ahead to 2011 and beyond. I know last year you were talking about you were very focused on filling 2009 and 2010, and not booking 2011 at discounted rates. Now you have to be booking 2011 at this point. And how should we be thinking about the rates versus maybe today's rates or last year's rates?

You're right in saying that we didn't go right out and book everything that we possibly could for 2011 at severely discounted rates. We are seeing more rate integrity in the booking process for 2011 and beyond than we saw certainly during the major crisis days of the first half of last year. And we've kind of seen that progressively get a little bit more stable. As I also indicated, we've seen a nice sizable increase in lead generation, lead volumes for group sales for all future years. We think we're going to be in the position to book business into 2011. It's an attractive business, it's more attractive than it would have booked in 2009 or even late 2008. So that's kind of how we're managing. We're trying not to give too much guidance where we think rates are going to go for 2011, because the more we say about that the more our competitors try to price the same as we do.

Okay. Fair enough. Just one last question. Any RevPAR index figures you would like to give or just general thoughts on market share in your various markets?

Generally, we saw an increase in market share in the fourth quarter over fourth quarter of last year. All of our hotels on a total RevPAR basis increased market share. I think our lowest total RevPAR premium was in the 30% range and our highest was in the 80% range and we're number one in all of our markets.

Are you seeing any pressure in Orlando from additional supply there? (Inaudible)

Generally, Orlando is a challenging market because there are a lot of hotels that look somewhat like us. Generally, we've seen a lot of the competitors in that marketplace take business for many, many years in advance that we thought was business that wasn't trading at rates that we thought were reasonable. So we've held back inventory for a lot of future years for that reason because we do expect that market to generally stabilize. We had a big supply shock last year. We have a little bit more supply coming in this year with the Peabody. But after that there is really nothing meaningful on the books. And that should mean good things for the Orlando market given that is the number one or two convention hotel - - destination in the country and one of the best leisure destinations in the country.

Great.

We also had a pretty good fourth quarter booking of situation with the Palms.

One more question. Thank you, Will. One more question and then what we will do is we'll make ourselves available so folks want to call in and speak with either Mark or David or me. You know how to get hold of us. But one more question.

Your final question is coming from Kevin [Melada] of JPMorgan.

Good morning, guys. I was hoping you could give some clarity on the cancellation and attrition fee assumptions for 2010? Do they revert back to the kind of $14.5 million to $15 million levels that you achieved in 2008? And then secondly, when you spoke of potential asset acquisitions going forward. What size are we looking for? Is it kind of in the 700 to 1,000 room levels, or it it much bigger, kind of 1,500 and above. Then also theoretically how do you intend to finance such a purchase if and when it comes available?

Well, let's deal with the latter first. We will let you know when we found one. Okay? Because the question that David - - are we looking at doing this with other folks? We will let you know when we have one. But needless to say any asset that we want to plug in, any asset that we intend to plug in, will fit with our strategy. And number two, will be financed appropriately that does not stretch our balance sheet. In terms of the first question, which was the attrition question. Mark, do you want to take that?

In terms of attrition and cancellation, as we look at 2010, right now what we are budgeting for is returning to levels that are consistent with 2008. Not back to the levels kind of pre 2007. So it's still a little bit elevated over historic levels but not - - but certainly down significantly from where we were at in 2009.

In the peak of nine.

Okay. Many thanks.

Thanks, guys. Well thank you everyone for taking the time. We gave you a lot of detail for starters. It's been a crazy year and we wanted to give you more exposure to our business and know where we are and if you have any further questions and thank you for taking the time today.

It's been a crazy year and we wanted to give you a little bit more exposure to our business. And you know where we are if you have any further questions. And thanks for taking the time today. You may now disconnect.