3 min read January 2023 — Colin Reed, the Executive Chairman of Ryman Hospitality Properties, is optimistic for the future of both his company and Nashville. Focusing primarily on tourism and entertainment, he shared with Invest: how his organization is making up losses from COVID, bringing in new ideas and the importance of navigating growth carefully.
How has Ryman Hospitality Properties recovered and grown since the pandemic?
One of the things that we believe in as a company is that every time we hit a crisis, we should look at the glass as half full versus half empty, and figure out how we, as a company, can take advantage of times of disruption, the likes of which we’ve all lived through for the last 30 months. When you look at what we’ve been up to in 2022, it hasn’t been about survival, it’s about how we position ourselves to fundamentally take our company to the next chapter of its life cycle. For us in our hotel business, we’ve deployed through the crisis about half a billion dollars into our businesses and hotels. We’ve bought out our partner in Aurora, we have invested $80 million in our Washington hotel, we’ve invested $150 million in our hotel in Orlando. In addition, all of the three million room nights that we had canceled through COVID, through no fault of our own, we’ve re-booked almost 70% of those room nights for future years.
As we’ve come out of COVID, the first quarter was a bit challenging for us simply because we were still contending with Omicron, so we were getting cancellations. The second quarter was the best second quarter we’ve ever had, and the third quarter was the best quarter we ever had. Compared to 2019, our hotel business was up in profitability 25%. It’s a consequence of the fact that we went on the front foot through COVID, and decided how to make our business better.
When we got into the second and third quarters of this year for the entertainment business, we announced that we brought in a partner called Atairos. Atairos is a private equity firm based out of New York, but 100% of its money comes from Comcast NBCUniversal. Atarios took on a 30% position in our entertainment business. We’ve been spending a lot of time with these folks over the last two, three months looking at ways in which they can help turbocharge our entertainment business. In addition to that, we went out and we bought a large block of real estate in Austin, Texas. We purchased this because it is the home of the Moody Theater, the home of Austin City Limits. We also acquired W Austin. We intend to put a bunch of capital into that business. We also opened an Ole Red at the Nashville International Airport and we announced that we are building a new Ole Red location in Las Vegas. We have a lot going on, and it’s a very exciting time for our company right now.
What areas of growth are you currently focusing on?
The hotel industry is a very interesting beast. We own five of the top 10 convention resorts in the United States outside of gaming convention resorts. This is a business that we have been growing consistently over the last few years. It’s an industry that when you break it down, and you look at the component parts of it, it’s the large groups, the 1,000 room plus at peak, that have really been growing. Our convention business has been recovering really, really well. What we’re seeing is organizations, certainly over the last nine months of this year, who really want to treat their people well when they get together because their people have been through a pretty difficult time. What we’re seeing is that group demand has climbed in the third quarter.
We always talk about lead volume with Wall Street because it’s an indicator of what’s going to get booked next quarter. At the end of September 2022, we had more room night leads than we did at the same time in 2019. We think the group segment is going to be a very fruitful segment to be focused on over the course of the next few years. We’re looking at where we should add rooms, we’re looking at where we should add more convention space. We opened an indoor waterpark here in Nashville at our Gaylord Opryland Resort & Convention Center called SoundWaves right at the time COVID emerged. It has been extraordinarily successful. Through the latter stages of COVID when people were comfortable leaving their homes, SoundWaves produced a lot of room nights for us because the only way you can get into the park is if you stay in our hotel. Growth is a very interesting segment for us, and I think that business is going to continue to flourish for us.
What separates Nashville from other cities?
The growth in Nashville is meteoric. Nashville possesses a product that, frankly, you can’t find anywhere else in the U.S. We brand ourselves Music City, but this is the music capital of the United States of America. We have all the components of music residing in this town. We have the songwriters, we have the publishers, we have the labels, we have the management companies and we have the artists, so this is a very authentic industry. The growth of the streaming services has changed how we interact with music.
As a city we have to be very careful not to mess this up. What I mean by that is we’ve got to make sure that every consumer this year has a good experience, that they feel safe, they feel secure, that the town is clean, that we have solutions to things like the homeless population that all major cities across the United States of America are working to address right now. The industry is at an inflection point now where we have to sit down and think about how we evolve as a city to make sure that this phenomenon doesn’t explode or implode on us.
What is your outlook for the future of tourism in Nashville?
About nine months ago, I went to see the Mayor and said, “Look, you know, we are at an inflection point, we’ve got to build a strategic plan for hospitality and our entertainment industry.”
We’ve built a subgroup of somewhere between 15 and 20 industry leaders that will oversee the day to day evolution of this strategic plan that we hope to have completed by the end of March 2023. This strategic plan will focus a lot on how this industry will evolve. One of the problems that we have in this industry, across America right now, is the shortage of labor. The interesting thing with workforce development is the lack of affordable housing. The problem is that the demand of consumers has sort of outpaced the infrastructure that we need to handle it.
What are your goals for Ryman Hospitality Properties in the next few years?
In terms of our company, and both aspects of our business, we’ll continue to see really good growth. We have a good balance sheet, not withstanding the fact COVID probably cost us somewhere around $1 billion, but we’ve navigated it because we have a good company and a wonderful workforce, and we are so excited about the next chapter at Ryman. For our hotel business, there is no new supply being built in America that looks like what we do. This region, it is rapidly evolving to be one of the best places on the planet to live and do business. I do believe that Central Tennessee, as well as the state of Tennessee, has a tremendous opportunity ahead of it. I think we’ll continue to see growth, but we have to deal with the impediments that growth brings.
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