Ryman Hospitality Properties Inc (RHP) 2010 Q2 法說會逐字稿

Welcome to the Gaylord Entertainment Company second quarter 2010 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 800-642-1687 or 706-645-9291, and the conference ID number is 88290282. At this time all participants have been placed on a listen-only mode, and the floor will be open for your questions following the presentation. It is now my pleasure to turn the floor over to Mr. Carter Todd, sir, you may begin.

Good morning. My name is Carter Todd and I am the General Counsel for Gaylord Entertainment Company. Thank you for joining us today on our second quarter 2010 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, 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. 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 & Exchange Commission, and in our second quarter 2010 earnings release.

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 measure 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 current call over to our Chairman and Chief Executive Officer, Colin Reed.

Thank you, Carter. Good morning and welcome, everyone. As many of you were recently in Nashville for our Investor Day, I will be brief in my remarks about what is going on in Nashville, and then provide an overview of the rest of our business and results for the quarter. Then our President, Dave Kloeppel, will offer some color around our sales and marketing activities, and then our Chief Financial Officer, Mark Fioravanti will conclude our prepared remarks by providing detail on our financial results for the quarter, and touch on guidance for the rest of 2010, and then we will open the call up for questions.

As all of you know, flooding we experienced here in Nashville during first week of May created a uniquely challenging quarter for our business. Everyone from our STARS to our management teams was asked to go above and beyond the normal call of duty in the face of some very difficult circumstances. And they responded quickly, efficiently and without complaint. They continued to work tirelessly to restore our properties in Nashville, and to make them even better than before the flood. As a result I am pleased to report that we are currently on schedule to reopen the Opry House in early October and Gaylord Opryland in mid-November.

Our restoration budget is also currently tracking well within the guidelines we have previously disclosed, and Mark will provide more detail on the impact of these costs to the quarter in a couple of minutes from now. So where are our buildings, where are we in our building efforts? The mediation and demolition work is complete, and the rebuilding and construction phase is well underway. The electrical switch gear has been either refurbished or replaced, and permanent power has been restored to our campus power house. As I have told you before, getting the permanent power and air back on was one of the toughest hurdles we had to overcome, due to the nature of the flood damage.

At the Grand Ole Opry house our construction teams are currently in the process of installing the wood flooring of the stage. Drywall has also been hung in the backstage areas, and painting has begun. The historic Opry House is quickly being returned to its previous glory, and the excitement is growing around its Grand Reopening later in the year.

At Gaylord Opryland we have also completed construction on the breakout meeting space that was affected by the flood, and have begun to install carpet and vinyl wall coverings in these area. The framing and drywall is underway in the lobby, restaurant venues, and the hotel rooms, and orders have been placed for long-lead time items, such as millwork, kitchen equipment, carpet, and furniture. What looked like a disaster area in May, now looks more like a nearly complete hotel resort. So we feel good about our progress, and are confident that when we reopen Gaylord Opryland, both our group customers and our leisure customers will be very excited about the enhancements and upgrades we have made.

In the first four months of the year, Gaylord Opryland was enjoying a strong performance with RevPAR, total RevPAR, and CCF all up significantly year-over-year. Throughout this rebuilding process we have been hearing from our customers that they are very excited about the improvements we are making, and excited about coming back to Nashville to stay with us as soon as possible. Now our customers demonstrated their sentiment in the second quarter by booking over 45,000 advance group room nights at Gaylord Opryland for 2011 alone, a substantial increase in production over the comparable period in the second quarter of 2009. And I would add at a very attractive average room rate. So we are confident that when Gaylord Opryland opens in November, it will be embraced by our loyal customers and quickly re-establish its reputation as one of the top five group resorts in the nation.

Now turning to our other results for the quarter at our other properties, although we have been highly focused on the rebuilding and reopening of our Nashville properties, we did not lose sight of the rest of our business. As you can see from the results we released this morning, our Hotel brand continues to perform at a very decent level. Specifically adjusted Gaylord Hotels which excludes Opryland but includes The Radisson, posted solid revenue growth as group occupancy continued to improve driving both the RevPAR and total RevPAR increase year-over-year. This is a sign that customers are beginning to spend again, and that we are continuing to see the hospitality environment improve.

Our total RevPAR results were even more encouraging when you take into account that our attrition and cancellation fee revenue declined by almost $4 million year-over-year. Of course, we welcome the continued decline in attrition and cancellation fees as it is a clear indication of the returning health of the group's segment. Excluding the effect of attrition and cancellation fees, outside of the room revenue increased by over 9% over the second quarter of 2009. This is a positive indicator for us, as outside the room spending accounts for about 60% of our total revenue.

We were also particularly encouraged by the continued growth of gross advanced bookings of all of our hotels including Gaylord Opryland. Gross bookings were up significantly year-over-year for the third consecutive quarter, as we booked more than 535,000 gross advanced group room nights for our four hotels. We now have over $4.8 million net advanced group room nights on the books for all future periods across all of our hotels, including Gaylord Opryland.

While rate continues to be a challenge for the whole industry, we are seeing a strengthening price environment in the mid-term. Given this mid-term strength we are taking a calculated approach in our future pricing and we are making every effort to maximize our top line revenue potential in the years ahead. And I think Dave is going to give you a lot more color on the sales side in a second.

Now I would like to shift focus to discuss our performance at the Gaylord National. Given the environment, we are very pleased with how this property is maturing. During the second quarter, the National drove a strong year-over-year RevPAR increase of approximately 12%, and a total RevPAR increase of 7%. The property also saw year-over-year increases in occupancy, revenue, and CCF. We continue to experience solid growth in the National, with group sales up nearly 13%, and transient sales up over 9% year-to-date. As the National Harbor development evolves and the economy strengthens, we believe that we will see continued strong performance from this property.

With the rebuild of Gaylord Opryland well under way, many of you have begun asking about our plans for growth. So I think that I should walk you through how we are thinking about it currently. We categorize growth in three buckets, organic, which revolves around how we drive additional revenue and profitability from our existing assets with little incremental capital, second, expansion and enhancements of our existing assets, and third, new unit growth through acquisitions and ground up development. I am very optimistic, and I know Dave and Mark feel the same way about the next several years and here is why.

First from a macro perspective, we expect to see a general strengthening in the US economy over the next several years. We expect to see the economy improving over the next several years. And we also expect to see business travel recover as well. In the market in which we currently operate, the supply/demand dynamics should be good for us. So the backdrop looks very decent.

Now as you all know we have performed pretty well over the last economic downturn because of the strength of our model, and the relationship we have with our customers. And given the costs that we eliminated from our business during this time and the improvements we have made in our sales processes, both group and transient, it is clear to us we will be a better Company coming out of this downturn. Furthermore, as I discussed a few minutes ago as our customers continue to book with us at very healthy levels. And given the advanced bookings we have in place, if the recovery is real and material, our Hotel business will see very good growth over the next few years, irrespective of whether or not we expand and/or add new supply.

And to explicitly comment on expansions and/or new supply, let me reiterate what I said at our recent Investor Day. Our focus right now as you can imagine is primarily on the restoration of our Nashville assets, and the fundamental improvement of our other hotel assets outside of Nashville. Therefore, until this chapter is complete, and we see a substantial improvement in the economy, expansions and new distribution is on the back burner.

But as I mentioned at our recent investor day, several municipalities and local community leaders have looked at the huge economic development we have created in other communities, particularly in Washington, and have come to us to say that they recognize the benefits a Gaylord Hotel can bring and would like to incentivize us to bring a property to their area. This is certainly something we're listening to, however, we are not going to move on any potential investment, unless the timing is right, and the investment meets or exceeds our strict financial group criteria. So let me turn the call over to Dave, to give you a little bit more color on the sales and marketing side of our business. David.

Thanks, Colin. And good morning everyone. Let me first say that I am very pleased with our performance in the quarter, particularly with the positive trends we continue to see in our booking phase. Our team has put forth a tremendous effort, and the impact is clear in our results. I want to start by helping you understand where our sales currently stand as it relates to our advanced group bookings. And I am going to go into a little bit deeper depth of the information than Colin did in his comments, to give you a good sense of where our current pace stands.

As Colin did already mention, we had another successful quarter in terms of advanced net group bookings. As of the end of the second quarter, adjusted Gaylord Hotels, which remember excludes Opryland but includes the Radisson, had 51.7 points of group occupancy on the books for the remaining six months of 2010. This is 3 percentage points ahead of where we were at the end of the second quarter 2009 for the remaining six months of 2009.

As it relates to 2011 for Gaylord Hotels, including Gaylord Opryland, because remember Opryland will be back in service, we currently have 41.9 points of net group occupancy on the books for 2011. This is 1.7 percentage points ahead of where we stood this time last year for 2010.

As we look at 2012 for Gaylord Hotels, again including Gaylord Opryland, we currently have 32.1 points of group occupancy on the books for 2012. This is about 0.5 of a point ahead of where we stood in 2009 for 2011 occupancy. So therefore as you can see, despite our focus on Opryland during the weeks following the May 2nd and May 3rd flood, the sales team has been tremendously successful in driving future business in this past quarter. And to highlight the team's focus and the team's success in the second quarter, we booked 3.5 points of occupancy for the brand for 2011 stays in the second quarter. So while we were moving 300,000 room nights out of Opryland that got misplaced, we also were able to book 3.5 points of new occupancy for 2011. So a tremendous performance for the sales team. We are very pleased with these results, and we are very confident that our decision to redeploy our sales team as we did in early 2009, is paying dividends for our Company as group demand begins to recover.

Additionally, similar to what we shared with you on our last call in February, 2011 on the books net room rates are better than our anticipated rate performance for 2010, and our 2012 on the books net room rate is better than those rates that are on the books for 2011. So we are seeing a nice, steady improvement in rates as this economy and as business travel continues to improve. While we continue to experience short-term rate pressure in markets like Orlando, we believe that our forward bookings indicate that this pressure will begin to dissipate as we move through this year and into 2011. Overall we are comfortable with our current position as it stands for advanced group bookings, and we are working to continue the positive bookings momentum we have seen in the past few months. We believe that the low level of oncoming supply that is currently projected in the next few years, will enable us to push rate as demand continues to build.

Additionally we have continued to enhance our understanding of the customers that we serve, and our recent research indicates that 85% of our group revenue is generated by customers in high growth industries, that are expected to outperform GDP in the next several years. As a result, we believe we are well-positioned to take full advantage of the lodging recovery that appears to have begun. I want to spend a couple of moments to talk about transient business as well. We are continuing our efforts to grow our transient business even as group demand begins to recover. As we have said in the past, a few points of transient occupancy growth can be highly accretive to our business, especially given the low level of capital investment that is typically required.

As an example, this summer our creative team at the Gaylord Texan developed an Alice in Wonderland summer attraction that required minimal capital, but has generated a tremendous amount of buzz, and a substantial return for us so far. These types of initiatives, and in this case we have seen the entire hotel as an Alice in Wonderland adventure, enable us to expand the appeal of our destinations for regional transient guests who are seeking unique experiences. Our Wonderland adventure at the Texan is only the beginning of these concepts, and we plan to introduce additional seasonal programs and leisure packages, that will continue to draw more transient guests to our hotels.

In addition the launch of our new Website in January of this year continues to generate interest and drive incremental revenue for the brand. Since its launch Website traffic has increased 15% over the comparable period of 2009, revenue generated per visitor to the site has increased 48% versus 2009, and total web revenue has increased 66%. Our success with the enhanced Website coupled with our efforts to develop and grow our customer relationship management capabilities, is enabling us to effectively target existing and potential new brand customers, with compelling leisure packages and programming.

For example, the development of our customer relationship management platform is enabling us to target specific customers with packages that have been tailored to their interests. This strategy is working as we have seen a significant rise in our year-to-date transient conversions and a 4 point year-to-date increase in revenue generated by these types of leisure packages.

And from a physical asset perspective, we are currently developing a resort pool at the Gaylord Texan, complete with a lazy river, with zip lines, and plenty of function space for large groups, and we are also exploring several opportunities to grow outside of the room spend. For example we are reconcepting our food and beverage outlets at both Gaylord Texan and Gaylord Opryland, in order to keep our offerings fresh and exciting in the minds of our customers. Though from a leisure perspective we believe this will be another solid year for our brand.

So let me turn it over to Mark now for some highlights on the financials.

Thank you, Dave. Impacted by the flooding of our Nashville-based assets, Gaylord Entertainment consolidated revenue for the second quarter of 2010 was $183.9 million, a 15.4% decline from the second quarter of 2009. The Company generated a loss from a continued operations of $26 million, or $0.55 per diluted share, in the second quarter of 2010, including $6.2 million in pre-opening expenses associated with our efforts to reopen the Nashville properties, and an $81.3 million pre-tax casualty loss, associated with the flood damage at the Company's Nashville campus.

The casualty loss expense includes the following items, Noncash impairment of approximately $41.5 million, related to the write-off of flood-damaged assets, approximately $18.8 million in continuing costs, related to businesses impacted by the flood, $14.9 million in site remediation expenses, $3 million in non-capitalized repairs, and $3.2 million of other flood-related casualty loss expenses. These expenses are partially offset by $50 million in insurance proceeds which were booked in the second quarter.

Gaylord Entertainment consolidated cash flow was $55.4 million for the quarter, down 1.4%, compared to $56.2 million in the same period last year. Because the noncash impairment charge and pre-opening expenses are excluded from the calculation of consolidated cash flow, but the insurance proceeds are included, the impact to CCF from casualty loss in the second quarter was a benefit of $10.4 million.

Adjusted Gaylord Hotels, which as a reminder excludes Gaylord Opryland but includes the Radisson Hotel here in Nashville, generated CCF of $48.1 million in the second quarter, a 4.2% increase compared to $46.2 million in the same period last year. Driven by a 5.4 point increase in occupancy in elevated outside the room spending, adjusted Gaylord Hotels RevPAR increased 5.1% and total RevPAR increased 4.5% during the quarter.

You may have seen larger year-over-year increases among other lodging companies this quarter, so it is important to note that on average the industry had a much easier prior year comparison than Gaylord Hotels. Adjusted Gaylord Hotels RevPAR and total RevPAR in the second quarter of 2009 decreased 8.5% and 9.6% respectively compared to the second quarter of 2008. By comparison, according to Smith Travel Research's hotel review report, for the second quarter of 2009, RevPAR for the upper upscale segment decreased 21.6%, and the upscale segment declined 20.8% compared to the same period of 2008.

During the second quarter, we continued to benefit from the successful collection of attrition and cancellation fees though these fees were down significantly from previous sequential quarters, as Colin mentioned earlier. We collected approximately $2.2 million in attrition and cancellation fees across the adjusted Gaylord Hotel segment, compared to $6.1 million in the same period of 2009. Adjusted Gaylord Hotels in the year for the year cancellations continue to improve in the second quarter of 2010, totaling 12,432 room nights.

Attrition in the quarter decreased 12.5% compared to 20% for the same period in 2009. Even as attrition and cancellation fees collected continue to decline as occupancy has begun to recover, our adjusted Gaylord Hotels maintained a solid CCF margin of 31.6%, compared to 31.8% during the same period in 2009. Our results reflect the systemic changes that we have made to reduce costs late in 2008, throughout 2009, and our continued commitment to aggressively manage our costs in 2010.

Turning specifically to Gaylord Opryland, in April the only full-month of the quarter when the hotel was opened, Gaylord Opryland generated revenue of $20.3 million. April RevPAR was up 15.5%, and total RevPAR increased 13.3% compared to the same month in the prior year. CCF for the property increased 31.2% to $5.9 million, compared to $4.5 million in April of 2009. Clearly as Colin mentioned, April was a very strong-month for the Gaylord Opryland property.

Now quickly to our balance sheet at the end of the second quarter the Company has outstanding debt of $1.154 billion, including the current portion, and unrestricted and restricted cash of $184.5 million. In addition, the Company had $291.4 million of availability under its credit facility. We have no significant near-term maturities and plenty of room in our financial covenants. Our primary capital commitment for the remainder of 2010 will be the rebuilding and reopening of Gaylord Opryland and the Grand Ole Opry House.

In terms of our outlook and guidance for the year, given the occupancy increases we have seen thus far, improving outside the room spend, and our booking pace, we believe it is appropriate to raised guidance we provided for the Gaylord Palms, National, and Texan during our initial post-flood investor call on May 7. For the full year 2010, we now expect RevPAR for those properties to increase by 3% to 4.5% and total RevPAR to increase 4% to 5.5% year-over-year. In line with these increases we are also raising our full year CCF guidance for the Palms, National and Texan from $160 million to $168 million.

Additionally, given our confidence in the reopening of the Grand Ole Opry House on October 1, and Gaylord Opryland on November 15, we are providing CCF guidance for our Nashville area assets. For full year 2010 we expect Gaylord Opryland to generate consolidated cash flow of $20 million to $25 million, the Radisson to generate consolidated cash flow of $1 to $2 million, the Opry and attractions segment to generate CCF of $5 million to $7 million, and Corporate and Other to generate a CCF loss of $44 million to $46 million. For total CCF guidance of $140 million to $158 million for the year. This guidance does not include any impact on CCF from casualty loss. With that, I will turn the call back to Colin for any closing remarks.

Alright, Mark. Thank you, Dave. Thank you. So folks we will now open up the phone lines for questions. Carissa?

Thank you. (Operator Instructions). Our first question comes from Chris Woronka of Deutsche.

Hey, good morning, guys. I wondered if you could just touch upon the impact, and I am sorry if I missed it at the beginning, but the impact of the displaced Opryland nights at your other properties at the Palms and the Texan and the National? Just kind of what the net/net impact was there maybe from a RevPAR and CCF standpoint? Thanks.

Yes, Chris, thanks for the question. Good morning to you. We have not specifically separated out the impact of the Opryland room nights into the other hotels. Generally the impact was slightly positive but not tremendously positive.

And the reason for that is, for instance, when we moved room nights from Opryland to the National, as an example, we honored the room rate that Opryland would have offered them, or had offered them. So consequently we got occupancy at the National, but we sacrificed room rates for a period of occupancy that we otherwise could have filled with higher room rates. So there was a mixed bag of groups that were positive to the other hotels and certain groups that were also negative to the other hotels, but net/net we think it had a relatively small impact on the overall quarter.

Chris, we will get you that information, but as you remember hopefully from the day you came to visit with us, is about 45,000 total room nights that were shifted from Opryland to the three hotels. And they weren't overly weighted to one. They were approximately evenly split. Texas being the least, National and Palms getting the lion's share of that. But it spread throughout all of the way through the end of October. And I am afraid we don't have that explicit, but it is as Dave said negligible. We will get you that information and get that circulated.

Okay, great. And is it possible to quantify even directionally if you think about Opryland next year, and you think about having all of the renovated rooms back and the suites redone, what kind of impact, and are you kind of benchmarking that versus where the property was in 2009 or 2008? Just getting a sense on how you guys are kind of internally thinking about next year at Opryland with these changes?

Well, I think we can both weigh in on this one. Look, I think our view is that as David said, we have got a pretty good book of business at Opryland for next year. We are seeing a lot of folks that want back into Opryland of next year. We are looking at making sure that we charge a price that is reflective of the new and enhanced state of Opryland for next year. We don't expect to be adding back a lot of costs that we eliminated out of that business in early 2009 during the course of next year. So from a 30,000-foot perspective that translates to a decent year for Opryland next year. You want to add anything to that, David?

Yes, Chris, I would also add that if you think about how the renovations will play into the future of Opryland, we will see some of the benefit in 2011, because we are booking now occupancy and rooms into what will be a renovated hotel, remembering though that we have north of 40 points of occupancy on the books already for that hotel. We will see a bigger impact in 2012, because we have more available demand to book into when we are now selling a renovated and enhanced resort. (Overlapping speakers) We will see some of the cost benefits from some of the investments that we made in 2011 around energy efficiency, and some of the other investments we made to drive a bit more efficiency. So we will see those in 2011, but we won't see the full revenue impact until 2012.

Great and one final one on the National, is it fair to assume that to the degree you did transfer a little bit of business from Opryland during the second quarter that might have slightly impacted kind of the total spend? Should we expect that the total spend of people who are going to be in Nashville to went to DC, or maybe is a little bit less? So as we think about going forward, there is probably a little bit more total RevPAR potential in Washington, when you get back to your normal book of business? Is that generally accurate?

Yes. I think what you are going to see, and I don't have these numbers at my fingertips. But as I think about what we are looking to accomplish in this third quarter in Washington, I think the lion's share of Washington's, the room nights that it benefited from Opryland, the lion's share of that will go into the third quarter. Because we are looking at a very decent quarter-over-quarter in Washington.

But the thing that is encouraging us in Washington, and if you recall we shared earlier some more information on the 550,000 room nights we booked in the second quarter. We booked a lot of room nights in Washington. And we are pretty excited about the opportunity there. Because the Washington numbers, which are pretty good from a cash flow perspective, have been impacted by increased union expenses, and a decline in attrition fee year-over-year, and still nonetheless we are seeing decent growth. And we expect that momentum to continue into 2011 and 2012. We are pretty excited about what we are seeing in that hotel.

Okay. Very good. Thanks, guys.

Thanks, Chris.

Your next question comes from Bill Crow of Raymond James.

Hi. Good morning, guys.

Hi, Bill.

First on Nashville, could you tell me whether there has been any progress or movement on trying to recoup some of the damages from state or federal agencies?

Well, let's take this in two buckets, could we? Number one. The state of Tennessee has been very, very supportive of our Company, and of the people who have been damaged by this extraordinary flood. And various, there have been several bills that have been adopted explicitly to benefit companies like us. And there are other parts of the statute that we feel we can access, to help limit the amount of state taxes we pay over the next 12 months, thus helping our Company.

From a city perspective, the city of Nashville has been also tremendous in their support for our Company. And as you know, we have a second reading of a bill tonight before the City Council, to redirect the 1% of the rooms tax that Opryland generates explicitly to the restoration of the Grand Old Opry House. That will be approximately $1.5 million, growing to maybe a $2 million over a 15-year period. But for each year that is before the City Council.

But in terms of the, I think the question you are getting to is, what are we thinking about in terms of the issues that we have articulated before some of the questions that we have about water releases, and the Army Corps of Engineers role in all of that? You may not be aware, but there was a Senate hearing about 10 days ago, where the Army Corps of Engineers brought their report before the Senate. This is the Federal Senate. And basically said there were a lot of errors here.

We are of course looking at all of this, as are other companies in the greater Nashville area. But that is all I think it will be appropriate for us to say at this stage. It is not appropriate to get into strategies as it relates to potential culpability from state agencies. But we are looking at this. And when we make a decision to do what we think is appropriate for our shareholders, we will of course let you know.

Fair enough. And if we could just look out a little bit to some of the new supply. And you may be more susceptible I guess to than the rest of the industry when you think about convention hotels in Dallas, Nashville, and D.C. Could you just give as you update on those? It looks like at least the Nashville property, I am not sure about Dallas, but it looks like National might be an Omni. And how that plays into your relationship with TRT?

Well, what we have said on the record, if Omni is able to confect a deal in downtown Nashville putting a hotel contiguous to the convention center, I am sure that will be good for Omni, and I am sure that will be good for the city of Nashville. The issue for us in all of these, the ones that you have touched on, is quote how competitive are downtown convention centers to our business? And we compete with downtown convention centers. We have done in Washington, we have done in Orlando since we opened that hotel in 2002.

And candidly, the type of business that goes into these downtown citywide convention centers tends to be low-rated association business. And not the type of customer that we go after. I mean, we have looked at, there are about 20 plus customers that have booked for future years in Nashville, and I think it is about 35 different events they booked just over 300,000 room nights. But it would only be a couple of those groups that would have any interest to us. The majority of these groups are reasonably low rated. And it's the same, by the way, in Dallas.

We don't compete with the Dallas Convention Center. We tend to compete for the large, all under one roof, convention center resorts. And so we don't look at the downtown Convention Center in Nashville as a major competitive threat to our business, nor do we look at the convention centers in Washington, nor in Orlando, that we competed against and Dallas, too, in that vein. Do you want to add anything to that?

No. I think you accurately summarized our views on downtown convention hotels and their competition to us, yes.

As far as having TRT, having the Board representation, is that creating more of an issue with them as potential competitors?

Bill, your question is an extraordinarily good one. And it is not something that I really at this stage want to debate in a public way. I think our Board need to understand the way in which TRT, if indeed they do a deal in Nashville, they have to, our Board need to understand how TRT Omni will compete in this market place. We need to talk to our 14% shareholder and Board member about that, and determine whether there is a conflict of interest or not. So we have got to first and foremost understand whether quote a deal gets done in Nashville or not, before we can engage in those types of discussions.

Fair enough. Appreciate it, guys.

Your next question comes from the Will Marks of JMP Securities.

Thank you. Good morning, Colin, Dave, and Mark. A question on the guidance. I know you specifically say the guidance does not include CCF and casualty loss, so does the guidance for example, the $140 million to $158 million total, include a $55 million CCF from the second quarter? Or $45 million?

It includes $45 million.

It includes $45 million. Okay.

So it excludes the, we are not guiding on any CCF benefit from casualty loss.

Okay. And then the $20 million to $25 million for the Opryland would then be $10 million to $15 million, is that correct?

No. No.

No. Okay.

It would be $20 million to $25 million.

That includes casualty loss, too.

Correct. There is no casualty loss in the guidance that we gave. That will be separate.

I am sorry. Okay. Okay. I didn't hear that right.

Opryland is the period that it has been open through the first two days of May. And then the remaining portion of the year that it will be open in November and December.

Okay. And then you touched on this. So the balance sheet includes a Receivable of $30 million. And remind me how much, is it the $10 million that has been collected, or is it $20 million?

No. That is the receivable for taxes, for federal taxes.

Okay.

We've collected on the insurance proceeds we have collected $20 million, and we are expecting, or I guess we have received the other $30 million.

But outside the quarter, that is in July.

Correct, in July. So we have collected a full $50 million, only $20 million is reflected.

Okay. That is why the $30 million is on the balance sheet as a Receivable?

But I think that 30 million, Mark, you reference is a tax receipt.

I am sorry. I think I have been reading this wrong.

Yes.

Okay. And the final question just on the pre-opening costs, can you explain what that actually refers to? Is that related to construction, there is a huge amount of pre-opening costs that you show in the guidance for Opryland?

The pre-opening costs are the costs to operate and reopen Gaylord Opryland are segmented into two pieces. One is remediation, and then once we completed our remediation mid-June, the ongoing operating costs for Gaylord Opryland to get it reopened fall into pre opening like they would, like it would if we were preparing to open a new hotel. That is how the accounting treatment works.

What is in there, the folks that we have got employed in engineering, horticulture, the management of that hotel, all of the expenses that would be associated with, the electricity charges, all of the real estate taxes, all of the things that would be, the costs that we would include for a hotel that is yet to be opened. That is what is in there, also we have allocated well, actually it is not in the cost to date, because we haven't expended it yet, but we have also put in our total cost that is we have guided you in terms of the budget, we have booked provisions in there for pre-opening events to relaunch the hotel, and stuff like that. So that is a quick answer to a detailed question.

Okay. And I guess I do have one follow-up to that. The guidance that is the total project costs have been $215 million and $225 million. And can you mention and you may have said this but how much you have spent already as of the end of June?

Do you have that handy Mark?

I don't. We will get back to you on that.

Oh, that is fine. That is all from me. Thank you.

Thanks, Buddy.

Your next question comes from Patrick Scholes of FBR Capital.

Hi, good morning. I have two questions for you. The first one, you had mentioned in your press release that during the second quarter group room nights at Opryland for 2011 was up roughly 129% year-over-year. Can you share what that, or do you have what that statistic is for the three other hotels? And then secondly, can you shine some light on what your pace of forward bookings was like during July? Thank you.

Yes. In terms of we segregated out the bookings that we did in the second quarter for 2011 for Opryland only. And I don't have those in front of me. And the reason we did that was because there was a question, Patrick, in the Investor Day as to whether because of the flood was there going to be an overhang here of desirability? Would people want to come and book and would people want to come in the short-term. And that is why we put that information out. The answer is yes. We felt folks want to come, and are booking very, very aggressively.

In terms of July, we booked about the same amount of room nights this July that we did last July, which was in the 70,000 range. But we expect a very good, what typically happens in the booking pattern of a quarter, what typically happens in the group side is the first month is reasonable light, the second-month builds, and the third-month is like every, the third month of the quarter, that is when the meeting planners want to confect their contracts. And that is what exactly happened to us in the second quarter. We booked I think it was 250,000 at the 550,000 room nights in June. So a tremendous June. July then will start off slower. All of this will build, and September will be very strong. And we expect to have a very good production quarter for this third quarter.

Great. Thank you for the color.

Thank you.

(Operator Instructions). Our next question comes from Steven Kent of Goldman Sachs.

Hi, good morning. Could you give us a little bit of color on the types of bookings you are getting especially as you go into 2011? Are they more corporate, are they more associations, and which industries are showing the biggest interest? I think that my sense is that as some of these early industries start to book, you are going to, that might be the surge right now, but there are a whole bunch that are going to start to book later on this year.

And then secondarily, are you starting to hold back some inventory, and say, we are seeing these good trends out here, we are not going to be just filling our rooms for the next two years with just low-rated business, or just any business, more specifically but actually holding back and maybe waiting for some of these better customers to come back into the fold?

Alright, Steve. Colin, good morning to you. Why don't you tackle the first part of the question, Dave?

Sure. Yes, thanks for the question. We are seeing, there are kind of two dynamics, what is happening for the short-term and what is happening for the long-term. The shorter term stuff for the rest of 2010 and all of 2011 we are seeing a significant uptick in corporate business. The smaller association business and smaller kind of committee meetings of the associations and those kind of things, those are picking up to some extent, but corporate is where the majority of the growth is. Major sectors that are picking up more than others, healthcare, technology are two of the bigger ones that tend to be big bookers of our hotels. And we are seeing more of that. We are not a big pharma house necessarily. We tend to not have the availability that pharma needs. But we are seeing of other types of healthcare, healthcare education, those kinds of things, start to make lots of bookings.

From an inventory perspective, Colin, why don't you take what we are doing from an inventory point of view?

Okay. So I am going to give you this at the 60,000-foot. Because I don't want to open Pandora's Box too much on this information. But we have done the following thing over the last three to four months, as we have started to feel the improvement in the industry taking traction. So we have looked at three distinct, different things.

The first thing is, we have looked back over the last 20 years in terms of the markets that we do business in, and how rate has improved in the supply/demand aspects of each of those markets, and how rate has materialized in the uptick of a recession. And so we have mapped that. We have a good sense of what we think is going to happen on rate for the market for the sector that we are in, in each of the markets we do business with.

The second thing that we have done is, and I am not going to tell you how we have done it, but we have also a very good sense of how our competitors are pricing future years. We have done a major piece of work to establish that competitive information. And we have overlaid what we think competitive behavior is to what we think anticipated behavior is. Now this has led us and we touched on it in our prepared remarks here this morning. This has led us to effectively hold back inventory by aggressively pricing, remember we have a very distinct pricing model in this Company.

We have an internal process which we call RevMAX, which effectively prices each patent out five to eight years, okay? Each patent for each hotel in each market five to eight years. And so the way we have effectively held back pricing is we have aggressively priced attractive patents in future years.

And that's what we've been doing here over the course of the last, David, I would say month to month and a half as we have started to see this economy recovering. The other thing that we have done here is we have done a very deep dive on not only our existing customers, but also customers that we have an aspiration to attract them to our business, and understand this theoretical worth literally customer by customer, and part of this analysis, Mark touched on in his prepared remarks this morning, was that when we look at the quality of the customers that are in our database, that are in our bookings, that we have booked for future years, and we have overlaid those customers against the sectors that are the least growing in our economy and the fastest growing in our economy, over 70% of our prospective business is in sectors that it is growing quicker, faster than the gross domestic product of the United States. So what all of this means is this, we expect to see very good pricing dynamics from our customers over the course of the next two to three years, and we expect to see very good yield from the customers that we have already booked for the next two to three years. That is a long answer to a very simple question, but I can't give you a simple answer to it.

That was very helpful. Thank you Colin.

Your final question is a follow-up with Will Marks with JMP Securities.

I thought I would a very big picture question on, can you maybe give me the pros and cons of being a standalone single brand company versus being part of a portfolio of brands?

Will, are you serious asking that question? You really seriously expect us to answer that question on a call like this?

Well, mean, I do expect some feedback.

And you can also second that question with, could Dave and I describe every illicit experience in our past? You will get the same response. We plead the fifth. We are not going to get into that on a call like this. All we know is this, that we have got a brand here that is extremely well-positioned. We talked about our little brand back after 9/11, and about how we outperformed the industry when the industry went into its last freefall, and how we have outperformed the industry during the recession of all recessions. And we have come through this very well. We have got very loyal customers. And this brand is a strong brand and outperforms the vast majority of the people that we compete with. And so the brand is going to be a good brand. And where it ultimately ends up will be determined at a later date.

All right. Thank you.

Thank you.

That was our final question. I will now turn it back to management for closing remarks.

Okay. Carissa, thank you very much, indeed. And folks, thank you very much indeed for being on the call, and taking an interest in the Company. And we are making lots of progress and we look forward to talking with you and seeing you all soon. Thanks very much.

Thank you for participating in today's conference call. You may now disconnect.