Ryman Hospitality Properties Inc (RHP) 2010 Q3 法說會逐字稿

Welcome to the Gaylord Entertainment Company's third 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, Mr. Mark Fioravanti, Chief Financial Officer and 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 17895354. 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.

Thank you, 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 third 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're hereby cautioned that these statements may be affected by the important factors among others set forth in Gaylord Entertainment's filings with the Securities and Exchange Commission and in our third 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 measures to the most directly comparable GAAP financial measures has been provided as an exhibit to our earnings release and is also available on our website under the Investor Relations section. At this time, I'd like to turn the call over to our Chairman and Chief Executive Officer, Colin Reed.

Thank you, Carter, good morning and welcome, everyone. And thank you for joining us today to discuss our third quarter results. As usual, I'm going to start off by giving you an overview of our business and results for the quarter, followed by an update on our efforts to combat the Nashville flood. I will also provide a sense of how we're thinking about the rest of '10 and then, of course, 2011. Then our President, Dave Kloeppel, will offer some color around our sales and marketing activities and our Chief Financial Officer, Mark Fioravanti, will conclude our prepared remarks by providing detail on our financial results for the quarter and discuss our guidance for '11. And then we'll open the call to your questions.

Now let me start by reminding you that throughout 2008 and 2009 our Company outperformed the competition because of the unique nature of our business model. This was especially true in 2009 when RevPAR declines for the upper upscale segment averaged approximately 18%, even as our model minimized our RevPAR declines only 7%. And so, in the third quarter of '09, as many of our competitors were still struggling through the depths of the recession, our business performed relatively well. Now the third quarter of '10 was no different, and I'm pleased to share with you that we posted solid results again this quarter and outperformed the upper upscale segment, despite the more difficult comps for us over the third quarter of '09.

Our revenue growth of 11% beat the upper upscale segment RevPAR performance in the third quarter of '10 by 240 basis points. Stepping back a bit further, if you compare our performance in the third quarter of '10 against our performance of the third quarter of '08, i.e., before our business had seen any material impact from the recession, our performance reflects how resilient our model has been over the past 24 months.

Total revenue for Gaylord Palms was relatively flat for 2008 but CCF margin has grown by nearly 3 percentage points in the third quarter of '10, when compared to the third quarter of '08. Total revenue of Gaylord Texan declined by only 5 percentage points, but CCF margin grew by nearly 5 percentage points in the third quarter of '10 when compared to the third quarter of '08. And last, total revenue of Gaylord National grew by over 20%, and CCF margin grew by over 8 percentage points in the third quarter of '10 when compared to the third quarter of '08. Our relative performance over these past two tough economic years, it's good to keep in mind as we discuss the quarter and the future.

Our revenue performance and sales activity continue to reflect our belief that the group sector of the lodging industry is in okay shape and beginning to slowly recover. Revenue-wise, for us the first half of '10 was characterized by gradual recovery and occupancy. And the third quarter was no exception, as occupancy at the adjusted Gaylord Hotel properties, to remind you which excludes Gaylord Opryland but includes the Radisson, grew by over 8 percentage points when compared to the third quarter of '09. Our cycles have demonstrated that recovering occupancy is followed by a recovery in rate and we remain hopeful that 2011 will be characterized by a gradual recovery in rate.

Occupancy for the adjusted Gaylord Hotels, and again just to remind you, excludes Opryland but includes the Radisson, was up significantly year-over-year this quarter helping to drive the 11% RevPAR increase, I just discussed. In addition, outside of the room spending at our properties increased by about 21% which contributed to total RevPAR growth of 15.1%. The outside of the room increases is particularly encouraging, since it accounts for a large portion of our revenue and may signal that the group and transient leisure customers are becoming a little more confident in their spending habits.

As I referenced a couple of minutes ago, from a bottom line perspective, the work we did to cut costs and to drive efficiencies into our operations in 2008 and '09 continues to pay dividends for our Company. Adjusted Gaylord Hotels CCF was up 22%, from last year, and that CCF margin increased about 160 basis points, despite the fact that attrition and cancellation fees declined approximately 60% from the third quarter of last year. This attrition and cancellation fee decrease is one, of course, we're happy to see.

Shifting over to advance group bookings for a moment, we delivered another solid quarter of room night production for our business. Year-to-date 2010 has been a good year for us, in terms of securing future business and excluding Gaylord Opryland, we booked over 1 million gross room nights thus far. That is even better than the first three quarters of 2008 for these properties, prior to any impact from this recession that we've been living through.

Lead volumes in the first three quarters of '10 have paced an average of 7% ahead of the comparable period in 2009, and we expect the growth in leads in bookings to continue into the fourth quarter. In the third quarter of 2010 alone, we booked almost 434,000 gross advanced room nights. This level was not quite as high as our exceptional third quarter of last year when we booked almost 500,000 room nights, but I'd like to point out that the third quarter is normally a slower periods for bookings. It's also worth noting that our production in the third quarter of '10 did not include any in the year for the year bookings we would have had at Gaylord Opryland, if the property had not been closed.

Furthermore, the average daily rate of which these future bookings were contracted for, is higher than the rate at which future room nights were being contracted for in the third quarter of 2009. This again, is a positive sign that rate may be in the very earliest stages of improving. So, while pricing remains somewhat pressured, in the short-term, we are cautiously optimistic that the rate environment will begin to strengthen as we move into 2011.

Now let me turn the focus briefly to our efforts in Nashville this last quarter. And, as you all know, since the flooding of Gaylord Opryland and many of our other Nashville assets in May, we have been working diligently through the remediation and restoration process to return our assets to operation as quickly and as efficiently as possible. This has been a challenging period for our business, but I'm exceptionally proud of how our team has performed. On September 28, the historic Grand Ole Opry House successfully reopened, needless to say, we're pleased to have the Opry returned to its permanent home and we're confident that this will provide a boost to our attractions segment.

On November 15, we will reopen our flagship hotel Gaylord Opryland, on time, and well within the budget projections we laid out in early June. On November 18, 19, and 20, we'll be holding a three-day grand reopening event at Gaylord Opryland. Then this will be a wonderful and joyous occasion and will bring together, literally, hundreds of meeting planners throughout the nation and many other guest to witness firsthand what has been accomplished at this property over the past six months.

We know that the opportunity to fully experience the rebuilt and enhanced Gaylord Opryland, will serve to generate a new level of excitement around this property and our brand. We're also confident that from a performance perspective this asset will hit the ground running and as a result, 2011 will be a good year for this property.

We've talked to you before about the importance we place on our STARS and our people first culture. That we have built throughout this brand of ours. We've also -- we have always believed that the strength of our culture drives our results, but it proved invaluable to us through the recession and has made it possible for us to return a flood ravaged 3000 room hotel to business in just over six months.

I can honestly say, that if it was not for our STARS and our leaders, and their commitment to the Company and the spirit of resilience they have demonstrated we would not have been able to accomplish the herculean tasks that are almost behind us. I'll have multiple opportunities to thank our STARS and the management team in the coming weeks, but I may as well start now by saying, thank you for your time, your passion, and your incredible work through this ordeal. You're an awesome team.

In summary, the reopening of Gaylord Opryland in two weeks. Occupancy and bookings up for the year. And margins continuing to strengthen. We're encouraged by the prospects for our business heading into the fourth quarter and into 2011.

Now, before I hand over to David, let me quickly touch on two other subjects, first growth and then guidance. So growth. As I articulated in our earnings call in August, we characterize growth in basically three buckets. The first is organic, which revolves around how we drive additional revenue and profitability from our existing assets with minimum capital investment. The second, is the expansion and enhancement of our existing assets. And the third, new unit growth through acquisition or ground-up development.

Our immediate focus remains on driving organic growth at our existing properties. The assets we own are really quite exceptional and have a lot of room for growth. We're excited about the prospects for good revenue and profitability growth over the next few years as the economy recovers, and little new competitive supply, we believe, will be built in the markets we're in.

But as I've mentioned at Investor Conference's and in discussions with a number of you, several municipalities and local community leaders have looked at the enormous economic benefit that we have brought to communities where we operate and are coming to us to say that they recognize the benefit a Gaylord Hotel and Convention Center can bring, and would like to incentivize us to build a property in their area. Candidly, as overall growth in communities has ground to a standstill due to the recession, the interest in us has been increasing and the incentive is becoming more attractive. So, this is certainly something we're paying attention to and working on, and we'll update you when we have something concrete to report.

Finally, guidance. Talking to our investors it would seem the focus now is squarely on 2011. And we've provided to you guidance that shows decent growth on all fronts, and Mark will share the detail in a moment. In short, we're positioned well, more rooms booked now for next year than at the same time last year, for this year. More leads, better marketing programs, better operating margins and hopefully, in a strengthening rate environment.

The hard thing for us to get our arms around is this crazy economy and to establish an accurate gauge on the mood of the consumer, be they corporations, associations or individuals. The domestic economy seems fragile and the political gridlock is concerning. So, right now our stance for next year, is one of caution, not optimism, and this is reflected in our operating plans and guidance.

So, in conclusion, we've been able to overcome the dual challenges of the global recession and a significant natural disaster for four main reasons. The strong internal culture we've built, our unique group-oriented business model, a quality management team and a wonderful workforce that is extremely focused, and the support of our loyal customers. These characteristics define and differentiate our brand and support our belief that the next few years will be an exciting time for companies that have demonstrated they can succeed in good times as well as bad. Companies like ours. And now, with that, I'd like to turn it over to David.

Thanks Colin. And let me start by saying I'm very pleased with our results for the quarter, particularly with the positive trends we continue to see in bookings. Our team, once again, put forth a terrific effort and the impact shows in our results. Now let me provide some detail on where our sales currently stand in terms of advance group bookings.

For the first three quarters of 2010 we booked over 692,000 net advance group room nights, across our hotels. This includes the impact of the flood cancellations at Gaylord Opryland and reflects an 18% increase over our net production in the first three quarters of 2009.

And as of September 30, we have over 4.8 million net room nights booked for all future years. Looking at 2011, for Gaylord Hotels, including Gaylord Opryland, as of the end of the third quarter we had 45.6 percentage points of net group occupancy on the books for 2011. This is 1.5 percentage points ahead of where we stood in 2009 for net advanced group bookings in 2010. For 2012, for Gaylord Hotels, including Gaylord Opryland, we currently have 33.6 percentage points of net group occupancy on the books for 2012. This is approximately 200 basis points ahead of where we stood in 2009 for bookings for 2011.

These results demonstrate that our decision to redeploy our sales team early in 2009 is still paying dividends for our Company, as group demand begins to recover. As Colin already mentioned, the room rate at which we have contracted future room nights during the third quarter shows encouraging growth over the rate at which we were contracting future room nights in the third quarter of 2009. While we continue to experience short-term rate pressure in markets like Orlando, where a large infusion of new group supply have exacerbated the economic headwind. We believe that our future of bookings indicate that this pressure will begin to dissipate, as we move through the remainder of this year and into 2011.

Now, let me take a moment to discuss the impact of the transferred room nights from Gaylord Opryland to our other properties. As you may recall, we successfully transferred over 40,000 room nights to other Gaylord Hotels from Gaylord Opryland, while the property had been closed for repair. In total, these transferred room nights generated approximately $16.5 million in revenue for the brand and approximately $7.8 million in CCF.

However, many of these dates that were filled by these transferred room nights, would have been filled without the benefit of the transfers from Gaylord Opryland. So, we estimate that the incremental impact of those rooms was approximately $5.8 million of revenue and approximately $1.7 million of CCF.

This is all -- this is the estimate of what was incremental to our pre-flood forecast. It's important to note that the profitability margin on these transferred room nights was lower than normal. For groups that were transferred as a result of the flood, we honored the original rates from Gaylord Opryland, which in some cases were below market value and invested additional expenses supporting these guests who were displaced by the flood. Overall, the CCF impact of these room nights was modest, which only underscores the strength of our pipeline at our properties.

We're continuing to be creative in our efforts to grow our transient business as well, even as group demand recovers. After we've said in the past, a few points of transient occupancy growth can be highly accretive, especially given the low level of capital investment that's required. As I mentioned last quarter, the Alice in Wonderland summer attraction that our team developed at the Gaylord Texan, generated a substantial return and required very little capital. And based on the success of this program, we're looking at creating packages around similar types of seasonal leisure offerings, which will drive more of this kind of transient business to our hotels.

This is especially beneficial since it's generally higher rated package business and can be offered to leisure customers without affecting group customers. December is traditionally a strong month for our transient business, given our holiday attractions, and we anticipate that trend to continue this quarter when we will be adding a new attraction called, Snow, at Gaylord Opryland, Gaylord Texan, and Gaylord Palms which will build on our already successful ice program.

As Colin alluded to, from a physical asset perspective, we're making further progress on a resort pool at the Gaylord Texan complete with a lazy river, zip lines and plenty of function space for large groups to gather. This will also increase the property's appeal as a family destination.

We are also moving forward with plans to refresh our room product and select outside the room offerings at the Gaylord Palms and expect to complete this work sometime in late 2011. Given the increase in group room supply in this market over the past 18 months, this renovation at the Palms will certainly enhance the competitive positioning of that property.

And finally, I just want to take a moment to add to Colin's comments regarding the work of our STARS and our leaders in Nashville over the past several months. Under unbelievably difficult conditions and pressure, they've done a simply tremendous job. We're also very pleased that we were able to welcome back approximately, nearly 80% of the STARS that we were forced to let go in June, which was a brutally difficult decision to make and we're thrilled to have them all back. And we're also thrilled with the excitement and enthusiasm they're showing for being back at the property. And with that, I'll turn the call back over to Mark for financial.

Thanks, Dave. Good morning everyone. I'd like to spend a few minutes this morning reviewing some of the financial highlights of the quarter, touch on the balance sheet, and then review our guidance for 2011. Obviously, our consolidated results in the quarter were significantly impacted by the continued closure of Gaylord Opryland, which makes consolidated Company year-over-year comparisons somewhat difficult. But on a consolidated basis, Gaylord Entertainment revenue for the third quarter of 2010 was $158.3 million, a 20.3% decline from the third quarter of last year. During the quarter, the Company generated a loss from continuing operations of $31.8 million or $0.67 per diluted share. Company-wide CCF was $21.9 million for the quarter, down 46.8% compared to $41.1 million in the same period last year.

As Colin indicated, we once again had solid revenue and profitability growth for the adjusted Gaylord Hotel segment. Driven by an 8.5 percentage point increase in occupancy, and improving outside the room spending, adjusted Gaylord Hotels RevPAR increased 11% and total RevPAR increased 15.1% during the quarter. Adjusted Gaylord Hotels in the year for the year cancellations increased marginally but attrition rates continued to show year-over-year improvement decreasing to 12%, compared to 14.7% for the same period in 2009.

During the quarter, we continued to benefits of the successful collection of attrition and cancellation fees, collecting approximately $1.6 million in fees across the segment. The adjusted Gaylord Hotel segment produced $39.3 million dollars in consolidated cash flow in the quarter, a 22.3% increase compared to $32.1 million in the same period last year. Overall, CCF margin increased 160 basis points, to 26.8%. As it relates to Corporate and other, consolidated cash flow in the third quarter of 2010 decreased $4.9 million to a loss of $14.1 million, including approximately $2.5 million in expense, associated with it amendments to the Company's long-term incentive plan.

Turning to Nashville for a moment. In terms of the cost of the Nashville restoration efforts, our loss from continuing operations in the third quarter, including an expense of $6 million in casualty loss, in addition to $25.5 million in preopening costs associated with the Nashville assets. The casualty loss expense included a non-cash impairment of $1.2 million related to the write-off of flood damaged assets, $2.9 million in site remediation expenses and $1.1 million in non-capitalized repairs. Because the non-cash impairment charge and preopening expenses are excluded from the calculation of CCF, the impact of CCF from casualty loss in the third quarter was a loss of $4.8 million.

Moving on to a few balance sheet items, at the end of the quarter we had long-term debt outstanding of approximately $1.16 billion, unrestricted cash of $135.9 million and $291.4 million dollars of availability under our credit facility. In addition, I am pleased to report that in early October we received a $36.5 million federal tax refund, associated with the flood damage incurred in Nashville. The actual refund was approximately $6 million more than our previously disclosed estimate. We have no significant near-term debt maturities and plenty of room in our financial covenants. And our primary capital commitment for the rest of 2010 will continue to be the reopening of Gaylord Opryland.

Now turning to guidance. We are reaffirming our 2010 full year consolidated company CCF guidance of $140 million to $158 million. And looking ahead to 2011, based on the trends we're seeing in our overall environment in our business, we expect RevPAR for the adjusted Gaylord Hotel segment to increase 7.5% to 9.5% and total RevPAR to increase 6.5% to 8.5% year-over-year. We expect full year CCF guidance for the segment to be $178 million to $185 million. This includes the impact of approximately 40,000 room nights out of service, due to the rooms renovation planned at Gaylord Palms during the 2011 calendar year.

For full-year 2011 we expect RevPAR at Gaylord Opryland increased by 13% to 15% and total RevPAR to increase by 9% to 11%. As a reminder, the RevPAR and total RevPAR growth guidance for Gaylord Opryland is calculated based on 2010 partial year results due to the closure associated with the May floods. We expect Gaylord Opryland to generate consolidated cash flow of $73 million to $77 million. The Opry attractions to generate CCF of $12 million to $14 million. And Corporate and other, to generate CCF loss of $46 million to $48 million, for total consolidated Company CCF guidance of $215 million to $230 million for the full year. With that, I'll turn the call back over to Colin for any closing remarks.

Mark, thank you. Well, it's been an interesting year for our Company and we're almost there, in terms of the Opryland reopening, and we're all very, very excited about this and we hope that many of you will get to see this asset sometime over the next month or two months. It will truly be spectacular when we open this hotel, in a couple of weeks. So, let's open it up for questions, please.

Thank you.

(Operator Instructions)

Your first question comes from David Katz of Jefferies.

Hello, morning all.

David.

Good morning.

I wanted to ask about the Opryland, I guess when we walked into today's release just thinking about what your guidance might look like. Truth is, you're coming out just a little bit better than what we were expecting for 2011. And more specifically, if I'm modeling this correctly using your RevPAR assumptions, it seems as though the profitability level is actually higher than it was over recent history. Can you talk about what you might be assuming in there, or building in there, or efficiencies in the hotel that might lead to that? And then I have one other quick one.

Are you talking explicitly Opryland?

Yes.

Okay, well, why don't I give it a set to that and David, you may want to chime in here. First of all, this flood was -- it was deeply concerning for us in the first 2 to 3 weeks of when it occurred. But then, as we started to get into the bowels of this business we realized there were some opportunities here to actually improve the efficiencies of this hotel, prospectively. In '11, '12, and future.

For instance, we've -- just one example, we've been able to buy -- doing the laundry, completely redoing the laundry, take a lot of operating costs out of laundry, that frankly, was old and reasonably inefficient. The powerhouse, we've been able to put in pretty high quality new systems and we believe that's going to have, David, I think, a marked improvement in the amount of energy we actually consume and so that's embedded into the utility side of the business. We went through '08 and '09 modifying the business fairly substantially to eliminate cost in many parts of that hotel. But, with it being shot, it's given us the opportunity to improve it even more so. For instance, we've eliminated one restaurant and there were multiple efficiencies that we've been able to find as we opened this hotel. So, David have I missed anything?

No, I don't think so. I think, we feel confident about, and Colin, I think, addressed very effectively the operating efficiencies that are built in to Opryland, thanks to some of the capital investments and thanks to some of the processes for engineering that we went through there. But in addition, the revenue side of the equation looks quite solid at Opryland so we feel good about the bookings we have on books, we feel good about the feedback we've gotten from meeting planners who have toured the property and seen the effect of the changes in their interest level in booking. So, we think, we're going to see a nice lift in ADR, we're going to see a nice looking occupancy and that combined with the efficiencies is going to get us to a nearly record profitability 12 months after the place being flooded.

Yes. And the hotel will operate in early 70's occupancy next year, so our goal now is to, and this is one of the reasons we're doing this big grand opening event, we're bringing in literally, right now we've got over 300 of the nation's top meeting planners, we hope with their contracts and pens in their hands coming in on the 18, 19, and 20. And so, we anticipate building occupancy here over the next 2 to 3 years and candidly, we expect to do the same on the leisure -- on the group side, obviously, with the meeting planners but on the leisure side too, with some of the programs that David Kloeppel just referenced. David, we're pretty optimistic about what's going to happen here to this hotel over the next two to three years.

Okay, and if they forget their pens you can have them sign it in blood. The National had some unusual statistics for the quarter. The occupancy looked like it was unusually high, and frankly, the rate was a bit lower than what we were expecting. Can you just talk about what went on in there?

Yes, D.K. do you want to handle that?

David, a lot of what is making the National a bit askew is the impact of the flood rooms, that were transferred from Opryland. I mentioned in my comments that the effect of those and they were distributed unevenly across the different properties. The National ended up with a couple of very large groups that were summertime, low rated groups at Opryland and we honored those same prices at the National. So, if you'd look at the rooms that they -- transferred to the National they were $120, $80 group rooms which, obviously, is well below the market rate for Washington DC. So, it did have an effect on the revenue statistics for the National.

Got it. And my last question, again I apologize, I was jumping back and forth a bit. Mark, I know you were talking about capital spending. Would you mind just quickly repeating that comment about what you've spent so far, and what the CapEx outlook looks like for this year and for next, to the degree that you can?

In terms of capital spend for the quarter, we spent about $88 million total, in the third quarter. We will, in the fourth quarter, we will probably be in the $140 million to $150 million range. So, CapEx for 2010 is probably going to be in the $250 to $260 million range.

Okay. Anything we can talk about for next year?

I think '11, we are probably going to be with maintenance capital, the Palms refurb, we have a PIP that we'll undertake at the Radisson. We're going to --

-- Some carryover for next year --

-- And we've got some carryover, so total CapEx is probably going to be in the $70 million to $80 million range.

Okay. Thank you very much.

Thanks, David.

Your next question comes from Chris Woronka of Deutsche Bank.

Hello. Good morning guys. Mark, or I guess Dave, could you just clarify, I know you mentioned you had some support costs relating to maybe relocating those -- some of those displaced guests at Opryland. Can you tell us how that, where those show up in the -- do those show up through the CCF lines of various properties or how do those get allocated?

Yes. Those tend to show up through the CCF line at the various properties and they come in the form of either, we'll honor the contracted rate, I mentioned those $120 rooms at the National, so we'll honor the rate and maybe provide them a concession within the food and beverage line. Or we'll offer them, offer to compensate them for some of their take down and set up costs within their convention exhibit hall set up and that would show up in the gross margin line. So, they're kind of filtered all throughout the income statement, but certainly, above the CCF lines.

Okay. And does any of that carryover to '11? Did you guys -- did anyone who was displaced book into '11, and then maybe some kind of residual expense catch up or is that pretty much captured?

No, there's no residual into 2011.

Okay, great. And then Colin, just on your comments on the growth opportunities can you just give us a little color on your thinking, in terms of, if incentives do get a little bit more favorable for what you guys are trying to do? Is it still necessary for you to have a capital partner, or could you see a scenario where you do something on your own?

Chris, the decision making on that will, I think, be based upon the glide slope of incentives, so the higher the incentive the more likely we want to do it on our own because the higher the return. And so, what I'd like to do is we -- say this, that we still very much like the notion of having capital partners, we like doing, we like the idea of doing multiple deals, not one big one every three to four years. But, clearly, we're -- there's quite a decent amount of activity from communities right now coming and talking to us and what we're seeing is these level of incentives are substantially different than what we've been historically used to. And so, this is very interesting stuff for us, and more to follow.

Okay. Very good. And then just on your -- on the data point that you've got 4.8 million nights booked for future years. Given the occupancy range as you gave us for what's on the books for '11 and '12, that gets you to about half of that 4.8 million, can you just give us just a general sense of where the -- how the remaining 2.4 million are spread, '13, '14, '15? Is it pretty even or is it front-loaded? Or --

Well, it's just it is more, you see more in '12 then you see and '13 and '14, and more in '13 than you see in '14 and '15. But once you get past about '15, it's pretty evenly spread. Look, the good news for us is we anticipate booking probably over, pushing 2 million -- over 2 million room nights this year and our goal for next year is a similar volume. And frankly, with the amount of leads we are seeing and the loyalty that we have with our customers, this is not something that we think is a big stretch for us.

Chris, we'll have about 25 points of occupancy on the books for '13, and then it just tails off from there.

Okay, great. And then just one final one. I know you said about the rates for next year, I think that's encouraging. How did the -- how are some of the rate escalators looking on your multi-year contracts? Both in terms of the room rate and maybe the out of room spend? Is that kind of returning to the year-over-year percentage increases you would have booked in, say '05, '06, '07?

Yes. I want to be cautious how we answer this question because I don't want to talk about our pricing strategy so Marriott, Starwood and Hyatt can hear what we're saying. But, I would say that, generally speaking, pricing pressure exists in the short-term. Meaning 2011, but still persists in some of the markets, that pressure seems to be reduced significantly as you get into the 2012, '13, '14 bookings years. And we have priced our inventory in a way that we think gets us adequate value for locking in inventory in 2013, in today's economy. So, we want to make sure were not giving away 2013 at today's prices, we're giving away 2013, at what we think is appropriate value.

And Chris, just to make sure that you understand that this is not something that we're pulling out of a hat. That decision, that David just referenced, is not something we pull out of a hat. We've had some help from outside experts that have looked back historically over the last thirty years within the market that we are in. What has happened, in terms of pricing recovery, in those markets coming out of a recession, given the supply dynamics in those markets? We have all of that data and that gives us some reasonably strong optimism around -- that once this crazy economy gets fixed, there will be fairly strong pricing recovery in the markets we are in.

The other thing that we have done, and I'm not going to tell you how we've done it, but we have established what we think our competitors are pricing '12, '13, '14 at. And we've taken both those two processes into consideration as we have set our rates for '12, '13 and '14 and candidly, we've been reasonably aggressive internally on pricing for '12, '13 and '14. And again we haven't made these decisions by just pulling something out of a hat, there is a lot of science behind this.

And Chris, let me add one more thing, because I think what you're trying to get to what is the rate growth picture look like for beyond 2011? And I think we've talked about, historically, that we've really refocused our sales force to focus on the shorter-term during this difficult economic environment. So, we didn't lock up too much long-term inventory at prices that meeting planners think is a buyers market. To that end, if you look at our production year-to-date across the properties, compared to last year, we've booked about 40% of our production this year, that we've done this year on a net basis for room nights traveling in 2010 and 2011. So this year, next year, if you look at what we've done historically, that's typically more 26%, 27% of our business. So, we've over indexed selling short-term to leave availability long-term, to be able to sell as the economy.

Okay that's great color, very good. Thanks, guys.

Thanks, Chris.

Your next question comes from Patrick Scholes of FBR Capital Markets.

Hello, good morning. Just two quick questions, can you give us any update at this time on your plans, or where you stand with potentially raising or strengthening the levees? I know it's something you talked about. And then, just a second question here, is there any color you can give us on 2011 booking pace for Orlando? Thank you.

Yes good. Why don't I tackle, Patrick, this is Colin, why don't I tackle the levees, and Dave you may want to do the Orlando. So, we've had a lot of discussions with both the Army Corps of Engineers, the local community, and FEMA about one, a broader plan which would deal with the community. And two, a plan that would deal with protecting Opryland and the Grand Ole Opry House. I would say to you, that the broader discussions that we've been having, looking at the community plan is moving, but moving at a very slow pace. The conversations that we've been having with FEMA and the local authorities about protecting Opryland and the Opry House has been moving at a much more rapid pace. And we've, in fact, got a board meeting tomorrow here in Nashville, and one of the things that we will be updating is our Board on the potential plan for putting a 500 year levee around our particular hotel. And we believe it's doable, we believe FEMA will support it from all the conversations we've had with this agency, who have been really helping -- trying to help us protect our business.

And so, over the course of the next two to three, four months, I think, if we see the broader plan for the community moving at a much quicker pace, we will probably put our shoulders behind that and try and get that one moving. But if it doesn't move quickly, than we're going to move expeditiously on building a 500 year levee to protect our building here in Nashville. Because candidly, Patrick, we're not going to live through this thing again, it's been an awful endurance and so, we will move on that and we've priced it and I think that the full levee for the solution for our building, would be probably in the $7 million to $10 million range and we think that's investment is, obviously, well worth making, if we can't get the broader plan working. So that's where we are on that. David?

Just real quickly, Patrick, in the interim, we've increased our flood insurance coverage for that property to $150 million. We have some additional financial coverage.

We've paid up for it if the heavens open again the way they did. But anyway, David, you want to touch on Orlando?

Yes. Patrick, on Orlando booking pace, where we sit right now, with rooms on the books for 2011, we've got a little over 2 points more occupancy on the books than we had this time last year. And, if you look at production that they've produced year-to-date versus last year, they've already produced more net production in the first three quarters of this year than they produced in all of last year. So, we've seen a nice increase in production, lead time has picked up significantly, and the team has done a tremendous job of converting those room nights.

And I think, David, it would also be fair to say that they had a pretty solid October too, in bookings. (inaudible)

Great. I appreciate the color, thank you.

Thank you.

Your next question comes from Kevin Milota of JPMorgan.

Hello guys. We've still been asking questions about customer mix and where you're seeing groups for '11 and '12, industry-wise coming from? And also, if you could talk a little bit about the cancellations in the quarter versus 3Q '09, it picked up a bit, I was just wondering what's driving that? And then lastly, if you could give some more commentary on pricing for '11, what you're seeing, new bookings bring priced for next year, if you just give some sort of qualitative commentary if you don't want to give exact percentages? Thank you.

Sure. So, customer mix, I think was your first question, where is it coming from? Generally, we're seeing the rebound occurring on the corporate side of the business, associations remained pretty steady throughout the downturn, corporate's are coming back. You know, we are starting to see consumer companies start to come back, we certainly have seen a pickup in healthcare and technology business. And, we're even seeing a little bit of automotive business coming back. So, we're starting to see a fairly broad-based recovery in group business. It was led by those that were more stable through the recession and now we're seeing more consumer oriented companies starting to come back.

Pricing for 2011, I'd say the color there is, I'd repeat what we talked about earlier. The pricing, where there's pressure in the marketplace, it's in the short-term -- more short-term group business. And to some extent the transient business, when you're offering them just a room night. From a transient perspective, we're trying to take an approach of really selling on a basis of packages, because we have so much to offer in our hotels. And package volumes for us, are up significantly and that's helping us drive transient business as well as transient ADR. From a group prospective, 2011 pricing is improving over 2010 pricing, it's not improving to the extent the 2012 pricing is improving over 2010 levels. But, we have seen a turn in the trend of short-term bookings pricing from flat to down to now it's

And cancellations?

And from a cancellation perspective, the cancellation number for the year was -- or is for the quarter, sorry, was about 11,000 room nights versus 8,000 last year. That's a fairly -- in our minds a fairly trivial change in cancellations, especially when compared to 2009, 2008 levels. And then from a revenue perspective, it was a lower end level of cancellations that we saw last year. We have cancellations regularly in our business, a lot of them are event driven cancellations, two companies merge so one of the meetings gets canceled and they do one combined meeting, CEO changes, a head of sales changes those kinds of things occur. So, we don't think those cancellations were economy driven, they were much more event driven during the third quarter.

Okay. And just one last thing here. In terms of meeting planners, is your sense that for new bookings -- are the meeting planners looking to spend more on the F&B component than they have historically, presumably the answer is yes? But, to what extent are they booking higher price points for food and other banqueting revenues and other ancillary revenue?

We're seeing improvements there. We're seeing, the way those improvements tend to show themselves, more often are they'll add a coffee break to a meeting where they didn't have a coffee break, rather than add a plated dinner. But that's okay with us because coffee breaks are a great revenue source for us and a great profit source for us. If you look at our revenues throughout the year, our F&B revenues have been growing at a faster rate than we've seen revenue growth generally. And if you look at outside the room's revenue for the quarter versus last year and you exclude the attrition and cancellation fee noise, since that decreased so much year-over-year, we saw an almost 22% increase in outside the room revenue, quarter three this year versus quarter three last year.

And I know we tend not to talk about the month that -- we've just came off of October but we've seen the same situation in October with the outside of the room spend being reasonably encouraging. That makes the question, I suppose, so why are you guys -- why have you guys guided modest increases in outside of the room total RevPAR next year? And the reason for it is, frankly, we're just -- we're being cautious about this economy. We've got a crazy stalemate in Washington here, and lord knows what's going to happen today. And this is not intended to be a political statement here. But we could see the consumer pulling back a little bit, and we're just -- we're not going to get herculean here at this stage, in our predictions for '11. And so, what we've done is we've baked into our total RevPAR hypothesis the things that our meeting planners have contracted for. And we're not looking at aggressive, additional spends through the course of, of course, of 2011 at this stage. Now, if the economy starts to improve, than that will be good news for us.

Your next question comes from Bill Crow of Raymond James.

Hello. Good morning guys. Just a couple of questions from me. First of all, as I look at your guidance for next year, the real surprise on the upside comes from Opryland. And what I'm trying to get a feel for is how much of that is already on the books from a demands perspective versus how much you anticipate once you reopen? How was your success at leasing -- or at booking meetings for next year while the property was

Okay

Well, I think --

-- Yes. I've got the occupants for next year. So, occupancy for next year on the books is about, a little north of where it was this time last year. It's about a half a percentage point ahead of where it was this time last year. ADR is nicely ahead of where it was this time last year. So, what's on the books already gives us a solid base for 2011.

But we've also seen while the property has been closed, and particularly, the more, as we've made more and more progress and shown meeting planners the improvement that we've made, we've seen our conversion rate of meetings really improve. And, if you look at, for instance, our October production which we haven't really released but of our October production, Opryland was a third of it. And so, we're now closer to opening -- were seeing in September and October as we've gotten the hotel in a condition that it looks like it's ready to reopen again. Meeting planners are seeing it, they're loving it, they're booking it.

Right. That's helpful

And, just out of the production that we did in the third quarter over 50% of it was for '11.

Okay. Got you. And then, if I'm trying to bridge your CCF guidance to EBITDA for next year. Are we done with pre-or reopening costs for Nashville by the time we finish up 2010?

Yes

And then any disruption from the work, the rooms out of service next year in Orlando, in particular? That will not be excluded from operating results, is that fair? That'll be included in CCF and EBITDA?

Those rooms out of service are included in our guidance. We've accounted for having fewer rooms in service at the Palms.

Okay. But, the variance between CCF and EBITDA should not be that material when we think about next year then?

Correct.

Okay. That's what I wanted to get at. Terrific guys, thank you.

Thanks, Bill.

Your next question comes from Jeffrey Donnelly of Wells Fargo.

Hello, good morning guys. Actually, just a few questions, Colin, I wanted to clarify your comments on the levee. Is a broader plan that you referred to mean working with adjacent property owners, like Simon or can you solve the flood issues for your property working only by yourself?

Yes. We can solve them by ourselves but it would be much more effective if the whole of Pennington Bend, which is this expansive real estate that our place, the Opry is on, the Mill Shopping Mall's on, a whole bunch of communities are on, downtown as well. We need to fix the levees in downtown, we've got the Wildhorse got flooded, downtown. And so, just a whole -- the broader plan is really to protect the whole community and we're working diligently with the city and administration of the city to -- and the Corp of Engineers to figure that one out. But, we've also gone down a separate path, which is the protection of our building and if the broader plan is going to take a year or two years, three years to do, than, I think it's highly likely that we'll go ahead with the plan to protect our building.

Helpful. And I think in a response to Chris Woronka you were saying that you were seeing incentives from communities that are just different that what you're used to? I guess, I just want to be clear, does that mean incentives are more than you're used to? Or less?

Well, we wouldn't be having the conversations if they were less.

I just want to be sure.

I don't want to be flippant, but the answer is that the incentives that are -- that have been currently talked about are decent incentives in this environment to attract a Company like us. So, they are more so than we have seen in the past and we are pursuing this stuff.

And, I'm curious what your thoughts are, is that recently I saw an announcement that Omni had reached an agreement to build a new convention center hotel there in Nashville and, obviously, your larger shareholder and Board member, TRT, owned Omni? To me it seems like something of a conflict that's happened, maybe outside of your [curve] a little bit. Just given the significance of Opryland to your Company, has the Board discussed maybe the necessity for changes? They're somehow keeping proprietary information away? I mean, I don't know how you handle that? Can you just -- I think it's an odd circumstance.

Look, I think it's inappropriate for me to get into what that Board discussed and what our Board didn't discuss. But, I would say to you, that the relationship between TRT and our Company since the fateful discussions of last year, grew strong. And I think that there is respect between, certainly between me and Bob Rowling, and Rowling -- I think, Bob and I have a good relationship, we communicate every week and a half, two weeks on stuff, he will call me.

And frankly, we knew that there was going to be a hotel downtown all along, next to this convention center. What we didn't like the idea of, as you remember from probably some of the press comments that were made, was a city-owned, 100% city-owned hotel. And what we advocated, if there is going to be a hotel built downtown, it needs to have real capital and candidly, this was something that has -- this has been reported on that we looked at. But we could never get over the issue of having two Gaylord's in the same market, of a market of this size.

And so, the Omni folks pursued this and we were aware they were pursuing it, but clearly, the moment they come into the market like this it was a little bit of a conflict. And I think Bob saw that, and that's why he volunteered to step down from our Board of Directors. But, I wouldn't -- I won't characterize these discussions as hostile and acrimonious, it wasn't that way. We remain now friends and communicate and hopefully, we'll find ways to work with Omni when they come into this market to make sure that one plus one equals three, here. Not that we're out cutting each other's

That's helpful. And just the last question, maybe for Dave, is that I think in the release you give us data on the bookings in the quarter for all future periods for Q3. But, I imagine that's pretty volatile on a quarterly basis, are you able to give us that on a year-to-date basis or maybe trailing 12-month basis? I'm just kind of concerned -- or interested in what the growth is over a longer period of time versus the prior

Are you asking for year-to-date net bookings versus same period last year?

Yes.

I mentioned that my script comments.

Sorry, I got on a few minutes late, I must have missed that. I think it was an 18% increase, year-over-year, but, I need to look at that quickly, if you give me one second --

Maybe you can get back to them on that?

Oh, I'll follow-up with you off-line. Great. Thank you.

Your next question comes from Will Marks of JMP Securities.

Thank you. Hello Colin, Dave, Mark. On the full-year guidance why still the wide range for 2010?

Look, here's the reality. If we started to look at, well maybe because we've got additional cost on long-term incentive comp, maybe we should change the Corporate guidance. And then, obviously, the RevPAR that we've accomplished in the third quarter has been very good. We expect a reasonable quarter in the fourth quarter, bearing in mind that more of our business comes from the leisure consumer in the fourth quarter. And then we sat there and said, well maybe what we should do is change the RevPAR guidance for the year? And then, it dawned on us that all of you guys really now are focused on 2011. And so let's just keep the profitability guidance that was in place before, and that's what we did because we know -- we feel very confident that we're going to be coming in within that range. And we just decided that we weren't going to go through the pain of modifying any components of this guidance, at this stage, because we think everybody's focused on next year. That's the simple answer to your question.

Okay, thanks. On the, Mark, your discussion of CapEx. Of the $70 million to $80 million for next year, I think you said some spillover is -- some small portion of that is tied to the Opryland?

Can we not use the term spillover on this call?

It's things like the result fall we wont have it all finished we told you that we're going to spend X amount of money, that's a carryover, we've got (inaudible - multiple voices) maintenance stuff that'll be carryovers.

It's not a material amount.

Okay. And then on -- you talked a lot about the bookings. What I didn't understand on the first page of your press release, is during the third quarter, if you include in the year for the year bookings, numbers were down? What if you exclude those, were they actually up? I'm just wondering what the trend is in terms of booking, was the third quarter's pace, did it accelerate or not?

Third quarter booking pace was below the pace in the first and second quarters.

But that's --

-- Okay. And it's because of the in the year for the year bookings that, at Opryland? Or is --?

Well, it's really two things. Number one, there was still a lot of cleanup that our sales force was doing around moving groups around, from the May flood that persisted until groups traveled in many cases. So, to some extent sales people who would normally be selling Opryland were, to some extent, distracted moving groups around to other properties. Second, in the first couple of months following the flood, selling Opryland was -- we didn't sell anything in the year for the year, obviously, because we typically don't have much availability in the month of November and December, and we were closed the rest of the year. And then finally, as I said earlier in my comments, groups really wanted to see, at Opryland, what the new property was going to look like. So, we really begin to see a significant increase in bookings at Opryland in September and now October. So, the third quarter production was impaired because Opryland in the year for the year business and to some extent groups deferring the buy decision until they saw what Opryland was going to look like.

Okay. Thanks. And one final question on Arizona, is there a number -- amount of costs that have incurred so far and any, if you care to touch on anything regarding timing, size of the project, et cetera?

I think altogether on the -- we've spent about $4 million on Arizona over the 2.5 years or so we've been pursuing it. You know, renderings, and presentations, and this, that, and the other. The greater Phoenix market is not impacted more so than most markets in this downturn. And this development of ours was going to be sitting in the middle of a major, major development that was going to be -- done by a major developer in that Phoenix based and -- because of this recession, I think it's fair to say, that the major development probably won't go ahead as quickly as we anticipated. So, we put the Phoenix Mesa deal on the back burner here, because the -- one, the market has just suffered and two, the development that it would sit in is not proceeding at this stage. And so, we are watching this and will probably watch for the next 12 months and move on to the next deal much quicker probably, because of one, incentives and two, because of where the asset will sit. So, I think that's the fairest characterization of Mesa. I think, well, if you don't have any more questions what I would like to say, if any of the folks on the phone have questions, please feel free to contact either Mark or David or myself. You know where we are. One other thing I would say, is that we've invited all the sales-side analysts and certain buy-side analysts of the buy-side that represent our larger shareholders to this grand opening weekend. If you get the opportunity to come, I urge you to do so, so you can see this asset and also see up close and personal, some of the nation's largest meeting planners and their reaction to what we've been able to accomplish here. I think you'll get a very good understanding of the strength of Opryland and the strength of our relationship with our customers. So, thank you everyone for joining us today and you know where we are if you have any further questions. Thank you very much.

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