Ryman Hospitality Properties Inc (RHP) 2013 Q4 法說會逐字稿

Welcome to the Ryman Hospitality Properties fourth-quarter 2013 earnings conference call. Hosting the call today from Ryman Hospitality Properties are Mr. Colin Reed, Chairman and Chief Executive Officer; Mr. Mark Fioravanti, Executive Vice President and Chief Financial Officer; Mr. Patrick Chaffin, Senior Vice President of Asset Management; and Mr. Scott Lynn, Senior Vice President and General Counsel.

This call will be available for a digital replay. The number is 800-585-8367 and the conference ID number is 35050806. At this time all participants have been placed on listen-only mode.

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

Good morning. Thank you for joining us.

This call may contain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995 including statements about the Company's expected future financial performance. Any statements we make today that are not statements of historical fact may be deemed to be forward-looking statements. Words such as believes, expects or similar ones are intended to identify these statements which may be affected by many factors including those listed in the Company's SEC filing and in today's earnings release.

As a result, the Company's actual results may differ materially from the results we discuss or project today. We will not publicly update any forward-looking statements whether as a result of new information, future events or any other reason.

We will also discuss non-GAAP financial measures today. We reconcile each non-GAAP measure to the most comparable GAAP financial measure in an exhibit to today's earnings release. I will now turn the call over to Colin.

Thanks, Scott. Good morning, everyone and thank you for joining us on the call today.

I will begin by looking back over the fourth quarter and discussing the events that drove our hotel revenue and profitability results which capped a very challenging year for our hotel business. Then I will provide you an update on our collective efforts with Marriott, our manager, to move past the transition challenges that characterized this past year.

Most importantly I will talk about the encouraging trends we are seeing in our hotel business as we enter 2014. I would also like to share with you the positive momentum we are seeing in our attractions business and my perception of the drivers behind it as well as the long-term implications for our Company.

Now let's discuss the fourth quarter. As you can see from our results, the fourth quarter did not finish as we had initially expected but I think it is very important for you to understand the events that occurred during the quarter that drove our performance.

When we last spoke with you the quarter was shaping up nicely. October and November group performance was solid and was primarily being driven by strong group performance and growth in banquets. Revenue growth outside the room is always an encouraging sign that group business is strengthening.

In addition, we saw improvements in attrition and cancellation levels and a solid group sales production and it was clear that momentum was building in the group segment of our business. Furthermore, transient performance was shaping up nicely heading into the holidays. Those of you who have followed our Company for some time know that our hotels rely primarily on regional transient business on weekends during the holiday season.

Despite the fact that Thanksgiving fell later in the year than normal and left fewer days for transient travel, our unique holiday attractions were performing well within our expectations. All signs were pointing to a decent quarter, one that will perform within our guidance range, as evidenced by cumulative revPAR for October and November, which reflected growth of 3.1% over 2012 and cumulative total revPAR for these months represented an encouraging 8.5% growth over 2012.

However, our momentum came to a halt as of December 5, as a severe winter ice storm struck. The storm arrived at the start of a historical big holiday transient weekend for our hotels.

Our hotel in Dallas was heavily impacted and our hotels in Nashville and DC were impacted to a lesser extent. All in all we estimate the impact of these storms to our hotels at approximately $3 million in revenue and approximately $2 million of adjusted EBITDA.

Our December profitability results were also negatively impacted by another unique development, which was the tremendous group sales production. Sales incentive expense during December exceeded our expectations by roughly $2 million; however, this expense should not be perceived purely as a negative.

The sales incentive expense was much higher than we had planned because group sales production at the end of the year significantly exceeded our expectations. We booked over 772,000 group room nights in the fourth quarter, much of it occurring in late December, which is pretty typical and driving a more than 20% increase over the fourth quarter of 2012.

And just put this in perspective, 770,000 room nights is sort of an average total revenue per available room translates into about $0.25 billion of contracted business in the fourth quarter. On a net room night basis we booked over 637,000 group room nights in the quarter, more than 37% increase from the fourth quarter of 2012. Clearly, it goes without saying that we will always be willing to accept additional sales incentive expenses with production numbers like the ones we produced in the fourth quarter.

Also during the fourth quarter some of you know that we initiated and accelerated a room renovation program at our Texas hotel. The acceleration took approximately one-third of the room inventory out of service during December. The negative impact to our financial results year over year was clearly, was nearly $4 million in revenue and approximately $2 million in adjusted EBITDA.

One other issue occurred, which relates to the complexity of these hotels, namely package sales. As part of the transition, reservations were transferred out of the hotels to Marriott's res centers. The fourth quarter, in the fourth quarter, we saw a decline of about 14,000 holiday package sales and our operator is reviewing the process modifications necessary to ensure that this is isolated to 2013.

So while the quarter started out very strong and demonstrated some encouraging group and transient trends, as we head into 2014 the unique revenue and profitability events of December challenged our ability to deliver results within our guidance. Nonetheless, we were very pleased with the extremely strong group sales production and believe the business is well positioned for a stronger 2014.

Now I want to provide you with an update on discussions with Marriott on the transition-related issues. You are all familiar with the transition challenges that we have faced this last year and the disruption that has resulted. Marriott recognizes that this has been a massive conversion effort and things haven't gone perfectly but they continue to move up the learning curve with these unique hotels and clearly things are headed in the right direction.

That said, I don't want to spend too much time rehashing history so instead let me quickly describe the three areas we continue to work with Marriott to address and resolve and we are beginning to see some evidence of real progress. The first area is the 1,000 room night group segment. As we discussed last quarter, we work with Marriott to drive better production in this category through a mix of sales incentives for sales managers and the creation of hunters dedicated solely to securing and converting leads in this category.

Given the long lead time associated with these types of groups we expect to see the majority of the impact in terms of actual bookings from their implementation in the second half of 2014 and early 2015. That said, since identifying the issue with lead volumes for this particular segment and recommending changes to our manager on how the business is sourced, we have seen double-digit percentage increases in lead volumes for this important group segment.

In fact, during the fourth quarter our lead volume for this segment increased by 25% over the same period in 2012. This is very encouraging.

The second area we've been addressing with Marriott is the regional sales office sales strategy. As stellar as our fourth-quarter bookings were, they masked the fact that the regional sales offices are still not yet producing room nights to the level that were being produced in 2012. Consequently, we continue to work with Marriott on further modifications to their sales approach with the goal that each of these offices are meeting or exceeding historical pre-conversion production levels.

We have worked together with them regarding new structures. And I am confident this sector of our business is moving to where we want it to be.

So let me address the remaining area of discussion, which is where we are focusing most of our efforts with our manager and I would say at the very highest levels of their organization. The issue is the expected synergies and cost allocations coming into our business, two issues that probably overlap with each other.

As you all know, we have not been happy with the cost structure and the margins at our hotels and we have not yet realized the synergies that we expected. The guidance we delivered this morning is based on the operating plan we have received from Marriott. We believe the cost structure of our business is yet to benefit from between $7 million to $10 million of synergies that were projected at the time of signing the deal and we are working with Marriott to agree upon a definitive solution to this issue and we have targeted a date of March 31 to conclude this plan.

Naturally, we will keep you abreast of these discussions as they conclude. Let me switch gears, something we've been very excited about this quarter and really throughout the past year, which has been the performance of our attractions business here in Nashville.

Once again this quarter posted strong revenue growth with an increase of more than 11% bringing 2013 full-year revenue growth for the business to nearly 8% with full-year adjusted EBITDA growth of 7.2%. Adjusted EBITDA was impacted by a $500,000 unbudgeted marketing expense in the fourth quarter to further promote the successful TV show, Nashville, that heavily features our Nashville-based assets.

The city of Nashville is in the middle of quite an extraordinary metamorphosis from a southern town with a large influence in country music to an important player in global entertainment. Nashville is the only true authentic multi-genre music destination in America with bands, songwriters and music support businesses moving here every day. Music City, as Nashville is known, is being discovered daily by consumers all across the world because of the proliferation of mobile technology and a desire by consumers for a unique entertainment content.

The TV show Nashville I reference just a minute ago is now syndicated into over 50 countries. And in a recent survey undertaken in this market it was discovered that one in five tourists visiting Nashville were motivated to do so as a result of the show.

On a national level, because of the Travel Promotion Act and Visa modifications by the State Department due in large part to the stellar work of the United States Travel Association, international tourism to the US will undoubtedly increase over the next few years and the city of Nashville will be a major beneficiary. With our city and state government's commitment to tourism, the opportunities are endless and this will be extraordinarily beneficial for our businesses in this market.

We are looking at a number of options to grow this segment and this very exciting segment of our business and we will have a lot more to say about this over the coming months. So with all of these changes and trends emerging what does this mean for our business in 2014 and beyond?

From a hotel perspective we entered 2014 with 4.8% more group room nights on the books than we did entering 2013. Our group mix for these bookings is also more favorable with a 10% increase in corporate group room nights, which bodes well for total revPAR. In addition, we saw group cancellations decline materially from about 17,400 in the fourth quarter of 2012 to 5,300 room nights in the same period of 2013, a 70% decrease.

Attrition rates for groups that traveled in the fourth quarter also declined year-over-year. In the fourth-quarter 2013 attrition rates were 10.7%, a contracted room block compared to 12.5% for the same period last year.

Both the decline in cancellation and attrition rates are encouraging signs as we enter 2014. These trends coupled with the business we already have on the books gives us comfort that our group business is entering 2014 with some momentum.

Many of you expressed your concerns to us that the new supply that is either opening or has opened in Nashville and Washington could cannibalize room nights for our hotels in these markets. We pointed out so many times that these new convention center hotels have been chasing group business for as long as three years while these buildings were under construction.

But to give you more comfort out of the 772,000 room nights booked in the fourth quarter, 275,000 of those room nights were for Gaylord Opryland, 209,000 were for Gaylord National. These are very strong production numbers and underscore the uniqueness of these two hotels and particularly what is going on in Nashville.

Another area that we continue to remain excited about is the growth in our transient business. While we don't expect to necessarily see transient growth in 2014 at the same levels that we saw in 2013, we do expect to see more incremental growth with a heavy focus on growing rate. All of this has been factored into our 2014 guidance projections and of course set based on the hotels budget we received from our operator.

Our Opry and attractions business is also projected to grow further in 2014 and this is reflected in our guidance. And our corporate costs will be well within the range we discussed when we converted to a REIT with the full synergies we projected being harvested.

One other tidbit before I hand over to Mark. We have seen the positive momentum that I just talked about in our group business carry over to the first part of this year as January has exceeded our planned expectations in terms of revenue and profitability and February revenues are also trending favorable to plan.

I want to draw your attention also to our first-quarter 2014 dividend our Board of Directors declared today. We announced this morning that our quarterly dividend will increase by 10% to $0.55 per share for the first quarter, which given our current stock price would deliver a 5%-plus yield to our shareholders. Mark?

Thank you, Colin. Good morning, everyone.

I'll spend a few minutes quickly reviewing the financial highlights for the quarter, touch on the balance sheet and then quickly review the 2014 guidance. For the fourth quarter, Ryman Hospitality Properties' total revenue was flat at $266.1 million compared to the total revenue in the prior year quarter. For the full-year 2013 total revenue decreased 3.2% to $954.6 million compared to total revenue for the full-year 2012 of $986.6 million.

During the quarter, the Company generated net income available to common shareholders of $30.2 million, or $0.48 per fully diluted share. This includes the impact of $800,000 in pretax expenses related to the Company's conversion to a real estate investment trust.

For the full-year 2013 net income available to common shareholders was $118.4 million, or $2.22 per fully diluted share. The impact for the full year of reconversion cost was $22.2 million.

For the quarter, the Company generated adjusted EBITDA of $69.5 million and $59.9 million in adjusted funds from operation, or AFFO per fully diluted share of $0.94. AFFO excluding REIT conversion cost was $58.1 million in the quarter, or $0.93 per fully diluted share.

For the full year, the Company generated adjusted EBITDA of $248.3 million and $174.8 million in AFFO, or AFFO per fully diluted share of $2.78. AFFO excluding reconversion costs for the full-year 2013 was $190.2 million compared to $129.8 million for the full-year 2012, or $3.03 per fully diluted share.

It is important to remember that the GAAP fully diluted share calculations do not consider the anti-dilutive effects of the Company's purchase call options associated with our convertible notes. As a reminder, the dilution mechanics for the convertible notes, purchase call and sold warrants is available in the investor toolkit section of our website.

Turning to the hospitality segment results, in the fourth quarter revPAR remained flat at $123.39. Full-year revPAR decreased 2% to $120.89 and total revPAR in the fourth quarter of 2013 decreased 0.9 percentage points from 2012 to $331.26.

Total revPAR for the full-year 2013 decreased 3.8% to $297.22 compared to hospitality, retail adjusted total revPAR for the full-year 2012. Attrition in cancellation fees collected during the quarter totaled $3.4 million, up $1.5 million from the same period last year. Attrition in cancellation fees for the full year totaled $8.5 million, up from $6.4 million last year.

Compared to the prior-year quarter, hospitality segment adjusted EBITDA increased 1.3% to $67.5 million. Hospitality adjusted EBITDA margin increased 0.6 percentage points to 27.4%.

For the full year hospitality segment adjusted EBITDA decreased 12.4% to $245 million and hospitality adjusted EBITDA margin declined by 2.7 percentage points to 27.9%. The Opry and attractions segment revenue rose to $19.3 million in the fourth quarter, up 11.3% from the prior year. Adjusted EBITDA declined 2% to $4.2 million in the fourth quarter of 2013 from $4.3 million in the prior-year quarter, as a consequence of an exceptional $500,000 cost from marketing associated with the Nashville television show.

Full-year 2013 revenues increased 7.8% to $76 million while adjusted EBITDA increased 7.2% to $20.1 million over the full-year 2012. Corporate and other segment adjusted EBITDA totaled a loss of $2.3 million in the fourth quarter compared to a loss of $8.2 million in the prior-year quarter.

During the quarter, the cash-based deferred compensation plan for our Board of Directors was terminated and replaced with a new compensation plan based on restricted stock unit awards. The result of this plan change positively impacted adjusted EBITDA for the fourth quarter and the full-year 2013. Excluding the impact of this plan change on our financial statements corporate and other segment adjusted EBITDA would have been a loss of $5.7 million in the fourth quarter and $20.1 million for the full year.

The improvement in corporate and other adjusted EBITDA when compared to the prior year is directly related to the transition of the Company to a real estate investment trust and the resulting cost savings. During the fourth quarter of 2013, the Company incurred $800,000 of costs associated with the conversion compared to $44.2 million in the fourth quarter of 2012. For the full-year 2013 the Company incurred $22.2 million of conversion costs compared to $102 million in the prior year.

We believe that all reconversion costs are complete and do not anticipate incurring any additional REIT conversion costs in 2014. Moving on to the balance sheet, as of December 31 we had long-term debt outstanding of approximately $1.15 billion and unrestricted cash of $61.6 million. Additionally, $509.5 million of borrowings were drawn under the Company's $1 billion credit facility and lending banks issued $6 million in letters of credit, which left $484.5 million of availability for borrowing under the credit facility.

Regarding our dividend, the Company paid its fourth-quarter cash dividend of $0.50 per share of common stock on January 15 to stockholders of record on December 27 of 2013. Including the fourth-quarter cash dividend payment the Company paid out a total of $2 per share of common stock for the full-year 2013.

Today the Company declared its first-quarter 2014 cash dividend of $0.55 per share of common stock payable on April 14, 2014, to stockholders of record on March 28, 2014. This dividend represents a 10% increase over the cash dividends paid to our common shareholders for 2013 and a yield of 5.2% based on yesterday's closing price of $42.10.

As we have discussed before, it is our philosophy to pay out a meaningful dividend to our common shareholders that is sustainable and will continue to grow over time with our business. This type of dividend represents one of if not the highest dividend yield in the hospitality REIT sector.

It is the Company's current plan to distribute total annual dividends of approximately $2.20 per share in cash in equal quarter payments in April, July, October and January subject to our Board's future determinations and the timing thereof. Now turning to guidance, for the year we expect hospitality revPAR to increase 4% to 6% and hospitality total revPAR to increase 5% to 7%. Based on these ranges the Company expects the hospitality segment to generate $265 million to $281 million of adjusted EBITDA including an estimated $12 million of interest income from the Gaylord National bonds and the impact of 32,276 room nights out of service due to the room renovation program at the Texan.

The Opry and attractions segment is expected to generate $20 million to $22 million of adjusted EBITDA and the corporate other segment is expected to generate a $21 million to $23 million loss for a total consolidated adjusted EBITDA of $262 million to $282 million. The Company expects to generate AFFO of $177 million to $199 million and AFFO per basic share outstanding of $3.50 to $3.93.

A detailed reconciliation from net income to adjusted EBITDA and AFFO is included as a supplement schedule to the release. And with that I will turn it over to Colin for any closing remarks.

Mark, thank you. A ton of information here. Rather than us talk more so let's open the line, Jackie, up for questions, please.

(Operator Instructions). Amit Kapoor, Gabelli & Co.

Colin, in light of the positive outlook for 2014 can you refresh for us your capital allocation priorities? And then I have a second question.

Yes, sure. In terms of capital allocation, you have seen the guidance in terms of AFFO. You can compute the multiple on our current stock price.

We will be using for the foreseeable future free cash flow to return capital to the shareholders either through dividends or stock buyback or early redemption of the converts. That's the way we are going to be focused on capital.

Thank you. Multiple companies have talked about positively about the transaction market getting deeper and potentially private equity and (inaudible) funds being more interested in assets. Can you give us your perspective on the asset transaction market and where you multiple trending?

A lot of stuff crosses our desks and it seems like quality real estate is priced particularly in the upper upscale and the luxury category and the resort category seems priced right up there, and I don't see anything changing on that because there is not a ton of new supply in this sector. That I think is a critical factor and I do believe the upper upscale luxury side and resort side of the business will have some pricing power here if our politicians in Washington can ever come together and layout a vision for economic soundness.

And I do believe the next three to four years will be good, which I believe will translate into higher levels of profitability for these particular classes of assets which I think will be positive from the pricing perspective. So that's how I see it.

Thank you.

Jeffrey Donnelly, Wells Fargo.

Maybe just two or three questions and building on Amit's last one. Colin, your core shareholder isn't the typical, I will call it core REIT investor, who might typically reward a little leverage capitalization structure, so how do you think about any increasing financial leverage to either increase your common distribution further, or use capital for external growth in the next year or two?

Well, Jeff, you may be right that the common REIT shareholder likes a little bit more leverage in a business. If you look at the sort of midpoint of our guidance for next year, this year, we sort of see our leverage ratios going from the low 4%s to the mid to high 3%s as this year trends, as this year progresses.

And what we have said consistently is that over leveraging, putting too much leverage on a company particularly the hotel business, which can be reasonably volatile in bad times, as evidenced by what we all witnessed in 2008 and 2009, you've got to have some degree of prudence around leverage. I think this is the way we think about it here and the way our Board thinks about it.

So what we have conveyed to the rating agencies is that we really want to keep our leverage at 4.5 times or less. But we would be prepared to stretch if we saw something, an opportunity, to create value for shareholders like a material dip in our stock price that allowed us to go in and do something. But we are not going to push it much more than 4.5 times. I just think it is irresponsible.

And then, switching gears, I think the folks at SMG, the convention center manager, they have talked about more corporate austerity on group event budgets and lower event attendance and group spend at sort of a higher cost to attract those events. If that's the case do you feel that's a secular or cyclical change in the industry or is that something that is maybe more unique to convention center facilities than more hotel-based meeting facilities?

I think you have just answered the question. I think that the convention center business, the city convention center business, is very different to our business.

The convention center business there is far too much supply competing for these low cost, low budget, or big huge conventions that businesses like ours can't accommodate. And they are sort of like an arms race. Cities all over America are trying to figure out how they raise money to lure and incent these low rated businesses.

And these low rated businesses do not want to pay $200, $250 night for rooms. So what is going on is that they have a little bit of a different approach to, those customers have a little bit of a different approach to the consumer that we are seeing who is willing to pay $200 a night and eat and reward their employees. So I think it is isolated to this stage from what everything we see I think it is isolated to the city convention business.

Hey, Jeff, this is Patrick. Just to build on what Colin has a ready said, we saw evidence of that pretty strongly in the first part of the fourth quarter in October and November. As Colin mentioned earlier, we had revPAR growth over those two months about 3.1%, but total revPAR growth of about 8.5%.

So we saw some good expansion in outside the room spend primarily in banqueting spend. And so we believe that that is carrying over into 2014. So based on the evidence of how folks are spending in-house, it doesn't necessarily ring true with what you heard from the others.

And I don't think, Pat, we are seeing we are seeing any material change in the forward bookings where we do the food and beverage minimums. We're not seeing secular shifts in the minimums on that.

No, and in fact our fourth quarter was really highlighted by the tremendous amount of growth in corporate bookings. And those are historically where we see a lot of outside-the-room spend, and so far that has rung true.

The mix for 2014 is favorable for us as it relates to corporate.

That's right, our on-the-books position we have about 60,000 more room nights of corporate bookings already on the books going into the year.

Jeff, you said you had three questions?

Yes, that action dovetails on my last question. I was just curious as it relates to the 2014 guidance you folks gave, where do you see the potential for upside to that guidance? Is it in the year over year, in the year, for the year group demand itself, is it sort of the corporate leisure transient demand, sort of the mix, or is it in margin?

Well, first of all, you have to understand given what went on in 2013 we want to make sure that our guidance is not Herculean in 2014. But I would say to you the things -- the areas we believe there are opportunities are first in leisure pricing, the assumptions in our plan for leisure pricing growth are not aggressive.

And I think also with the commitment of our manager we are going to continue to look for ways to eliminate cost and those programs that are under review are not currently baked into the plan. So I think the opportunity as this year progresses is in the pricing side and I think on the cost containment and cost reduction side.

Okay. Thanks, guys.

Bill Crow, Raymond James.

Let me pick up where Jeff left off there, which was some discussion of guidance. If you could just help us think about the first quarter.

I know you said that January was above your expectations, significant weather interruptions, the inauguration a year ago, the renovation in Dallas, just help us think about where maybe your expectations are for the first quarter so we can break this cycle that is kind of emerged of quarterly volatility.

Clearly we don't have inaugurations this year. But what we're doing when we communicated with you, we've communicated guidance for the year and we have communicated -- and that guidance for the year for our hotel business is based upon the budget, the month-by-month, quarter-by-quarter budget, and what we're telling you is the budget we are running ahead of our budget.

We haven't talked about how we are trending against last year. And I think at this stage we are not going to give you, Bill, guidance for the first quarter but what we are seeing are encouraging trends against our plan.

Just to add to that, from a renovation perspective, obviously in December we accelerated the renovation to take advantage of that moment in time but we have worked really hard with the property to make sure that the renovation scheduled this year does not infringe upon really good group demand patterns. So we think that we are going to be able to minimize the amount of disruption to the business as a result.

From a weather perspective, again, we are not going to give quarterly guidance, as Colin said, but I would tell you that the weather event that we saw in Washington a couple of weeks ago, we actually had a large group in-house and they really couldn't go anywhere. So it actually worked to our advantage, so not quite the disruption that maybe --

You don't want to get the snowstorm a day before you got a big check in. They got there and then we had the snowstorm.

Okay. That's helpful.

One of the variances this quarter, fourth quarter, was the sales commissions and you pointed out that that is a positive. Is there a clawback on that due to cancellations and attritions?

I think there is partly a clawback but what you have got to remember, Bill, is that we have got sales contracts in place for these room nights. So if the customer decides that they are going to cancel there are cancellation payments that we get, which I think are materially more than the commission payments that we've paid.

Okay. And then finally for me, Colin, as you look at the cost synergies that you were expecting at the onset of the transaction and those that are still left to be realized, how much of it got taken off the table where you guys just realized that it was a great idea but it can't be implemented or there were changes, something happened, and how much is still out there left to achieve, I guess, if you could think about it in those terms?

Yes, so let me see how I can answer this question. Clearly when you make fundamental changes to the business, the likes of which we did where we handed a business over to Marriott and they took out all of the systems because we just abandoned all the systems that we had built over and an 8-, 10-year period of time and they put all their systems in, you have a pretty good sense, reasonably good sense on the areas that you can eliminate cost.

And there were four or five areas that we have sort of undershot in terms of where we are compared to where we thought we would be. And we have had extraordinary, an extensive amount of dialogue with Marriott because look, the way we have structured his contract, Bill, was that these guys really make a decent return on their investment in the Gaylord Hotels brand when they get into the incentive fee.

So we are all driven with the same objective, which is driving profitability in these businesses. It may not come from the same reservoir of things that we identified a year and a half ago.

And so we are working very closely with Marriott to identify refinements to existing practices that can lower costs, refinements to new practices that can lower costs and make these hotels more efficient and have a higher margin. And margin is where we were a couple or three years back, and where we were obviously wasn't burdened by things like increased union costs in Washington and management fees.

But I think over the course of the next few months there is a common desire by both operator and owner to get to where we want to be. And I feel very confident that the $7 million to $10 million of what I would say shortfall against where we aspired to be, where Marriott believed we would be a year and a half ago, I believe confidently that we are going to move towards harvesting those synergies but it may take us another one month to two months.

And what I had said in my part of the script, those benefits are not embedded into this guidance. We have got the plan without that guidance, those synergies that we are working on, and as we get to the plans, crystallize them, agree with our owner they are practical and our owner convinces us they are practical, then obviously it will start to show up in the operating performance as we get through the year.

Great. I'll yield the floor. Thanks.

Andrew Didora, Bank of America.

Just kind of wanted to stick on guidance a little bit here. Colin, a little bit surprised on the total revPAR guide exceeding revPAR. I think you are the first hotel company to say that this earnings season and I know comps play a part in this and it seems like from your commentary thus far that mix also gives you the confidence in this guide.

I guess first, is that a fair assessment? And then second, if so, can you give us a sense of on an other revPAR basis what corporate groups typically spend versus lower rated business?

Pat and Mark jump in on this one. The way these budgets are constructed it is not -- typically in a 300, 400 room midscale hotel you work out how many room nights you have got and you then plug it on line for food and beverage, locate your labor cost, and there is your budget. I have simplified it but that's the basics of it.

The way the budgets work in a business like ours, this is the way it was when we operated and I think it is the way it is today with our friends from Marriott, is that we because of the magnitude of one group booking, we build the budget literally day by day, room blocks by room blocks, and look at the historical performance of the groups that are staying. Now I will give you just one statistic, I think we said in the first quarter of last year out of the tremendous room nights we booked 550,000, 83% of those room nights were existing customers of ours.

I think in the fourth quarter, I think it was again about 80% were historical customers of our business. So we have great visibility on the spending patterns of those groups.

And as Mark referenced a little earlier, and I think I referenced it in my script, we have got a positive shift into corporate this year. So the groups are more, and the food and beverage minimums are more prone to spending quality levels of food and beverage, so that is how it is constructed.

But obviously a customer can go through a little bit of a change of heart and that may show up in July of this year for a three-day period when company X comes in. But by and large this is what gives us confidence on the total revPAR side of it, which is a little bit different to what we had seen earlier last year and for most of the year before, but that is how we do it.

All right, great. Thank you for that.

And then my second question, just as it relates to the new Marriott convention center hotel, certainly appreciate your commentary just in terms of expanding upon some of the national bookings in 4Q, I think you said 209,000 rooms. Can you maybe give us a sense of how that number compares to historical levels of quarterly bookings there just to get a sense for any potential impact? Thanks.

The production in the fourth quarter at National compared to historical averages? You've got that data?

Sure. Yes, I've got that right here.

So, in the fourth quarter for all future periods, the National was, and I am talking in net terms, so I won't use the gross numbers, but in net terms about 186,000 room nights were produced in the fourth quarter at National. That compares to about 147,000 this time last year.

In 2012.

In 2012. And two years ago, about 173,000, so clearly a very strong quarter four that hotel.

We have seen some pretty good production out of that hotel maybe even moving in a positive direction compared to the rest of that market. And I know sort of what the question is driving at, is what is the Marriott Marquis, what is the impact on us?

As Colin said, we have been selling against it for several years. We're not in the district so it is not necessarily a head-to-head competitive play against us.

And quite honestly we have a test case here in Nashville as the Music City Center opened and the Omni Hotel downtown opened. And as we have looked across our business and how much we compete directly head-to-head with the downtown Music City Center here in Nashville, it is only about 7% to 10% of our business that we are really going head-to-head on.

So I guess I'd summarize that by, the National had a really good quarter compared to historicals. We feel good about where we are heading compared to with the Marquis opening, and that sort of is proven out by the evidence of what we've seen here in the Nashville market.

Andrew, the only thing that I would add to that is that while you have the Marquis opening downtown, the other thing that is happening that is a positive for that hotel is that National Harbor continues to develop as a destination unto itself. The retail mall opened last year, Peterson Companies is under construction now with their Washington Eye which is going to be a large attraction in that market.

Obviously, over the past -- last year, MGM is moving forward with their project. So there is a lot of things that are happening in National Harbor that will contribute to demand for that hotel.

That's really helpful, guys. Appreciate it.

Chris Woronka, Deutsche Bank.

Colin, you talked a little bit about opportunities to maybe grow the attractions business. And maybe if you could give us just a little bit more color on big picture wise what you guys really want to do in terms of promoting Nashville and whether that involves potential acquisition of real estate --

I'm not at this stage I'm not going to be too transparent about this because we've got some things in the works that we really don't want to talk about. But let me say this, say it from this way, Chris.

I don't think it matters which of your brethren on the sell side it is, you all sort of value this business as sort of an arena business, or a regional gaming business at a sort of a 6 to 8 times multiple. The interesting thing about a large part of this business is that it really deals in unique content.

Every night when somebody plays on our stage at the Grand Old Opry, that moment is captured and we have 40 years of that history that is unique. It is not like going and buying a movie from Netflix or Blockbuster or from Comcast. You can see the same movie.

The experience that we have created on that platform is unique to us. So we are seeing a ton of demand into this market, people wanting to play our places and people wanting to visit our places.

And the issue, the opportunity for us is how we distribute and communicate the content outside of the arena, or the outside of the building, that it is playing in. And this is one of the interesting things is what is happening with this Nashville TV show. What is going on is people for the first time all across the planet are being exposed to the genre of music that is really basically controlled in this town and this is a big opportunity.

And so we've got lots of ideas about how we put our business electronically in front of the globe. This is not like pulling a slot machine handle in St. Louis.

This is about distributing content across the platform, across the planet. So this is an interesting business and one we are spending a lot of time on.

Okay. That's helpful.

And then just a couple of quick boring guidance questions. One is, can you guys tell us what maybe level of attrition cancellation fees you think you might get in 2014 relative to 2013?

Yes, we are not budgeting for the same level that we saw in 2013 simply because we did see elevated levels of cancellation primarily in the DC market and the Dallas market. DC, obviously because of the government activity, yes, and then in Texas it was really just more of a unique year where we just had a number of cancellations that were really outside of any of our control. But we are budgeting for a lower level and that's baked into her guidance.

Okay, great. And definitely an impressive pace of bookings in the fourth quarter. Apologize if I missed it somewhere, but can you maybe tell us directionally how those are spread out by year, or something like that?

Yes, in that is actually, I'm glad you brought it up because it is a great story. Over 80% of our bookings in the fourth quarter were for just the next three to four years.

And so we are not getting great bookings performance simply because we are filling 2022 and 2024, we're getting great performance because we are filling 2015, 2016, 2017 and 2018. So as we've already talked about, corporate really led the pack with a good uptick there, good production out of association and spread over the years we really want to see it because it allows us to really start looking to push rate because we're getting the compression on the room nights that we need to do that.

Both leisure and group.

Yes.

Okay. Very good. Thanks, guys.

Patrick Scholes, SunTrust.

Just a quick question for you on what you guided for maintenance capital CapEx. In that maintenance CapEx is that the Gaylord Texan rooms out of service considered maintenance CapEx?

Yes, it is.

Okay, and above and beyond that maintenance CapEx guidance do you expect the non-maintenance CapEx?

Yes, we will have, I would tell you, Patrick, probably $10 million to $15 million of non-maintenance CapEx in the year.

Okay. That is all. Thank you.

And let's do, Jackie, one more question is now we're right at the top of the hour. We do one more question and then folks can call us if they haven't been able to ask a question.

We have no further questions at this time, Mr. Reed.

Awesome. Well, that's good.

Thank you everyone for joining us today and we will be speaking with all of our investors here over the next coming months as I know Mark and Patrick and I have got a ton of investor conferences to do. So we look forward to communicating with all of you and thanks for your time today.

Thank you. This concludes today's Ryman Hospitality Properties fourth-quarter 2013 earnings conference call. You may now disconnect your lines and have a wonderful day.