NASHVILLE, Tennessee—A stressful third quarter for employees of Ryman Hospitality Properties’ Gaylord Hotels led to the company’s 0.9% decrease in revenue per available room, said Ryman’s Chairman and CEO Colin Reed during the company’s earnings call on Tuesday.
That stress was a consequence of the company’s conversion to a real estate investment trust and selling its management contracts to Marriott International, Reed said.
“It was difficult simply because many of our employees at the corporate level and at our hotels were faced with a great degree of uncertainty regarding their futures. Many of them wondered if they would still have a place with the new REIT,” he said.
Taking the situation into account, Reed said he is still pleased with how Gaylord Hotels performed during the third quarter.
The company’s executives spent time communicating with his employees and going over who stays and who goes with Marriott, Reed said. By the end of the third quarter Gaylord employees knew who was staying and who was going, eliminating a level of stress within the company. Because of this, Ryman executives do not anticipate having issues with declining performance again going into the fourth quarter, he said.
The entire process has caused a lot of pain for many employees, Reed said, but “what we’ve done is the right thing for our company and the right thing for our shareholders.”
Benefits of the Marriott partnership
One of the key factors in the decision-making process earlier this year as Ryman executives were evaluating potential partners was guest culture, Reed said.
And in that area Marriott stood out. “We’ve certainly seen this culture displayed over the ... last months,” Reed said.
“We are very pleased with how the process has gone so far. Marriott has done very well with maintaining the Gaylord culture,” he added.
Three Gaylord properties—the Palms in Orlando, Florida; the Texan in Dallas; and the National in Washington, D.C.—have already undergone property-management integration into Marriott’s system.
It is still too early to tell how these properties have benefited from the Marriott Rewards program, he said. However, Ryman executives expect that once all Gaylord hotels are converted to the Marriott system they will gain more exposure, leading to an increase in transient roomnights.
The next hotel slated to be integrated into Marriott’s property-management system is the Gaylord Opryland in Nashville, Tennessee, during the first quarter of 2013.
“If you look at … how we do as a company (in comparison to others), we dramatically outperform on the group side, and we underperform on the leisure side,” Reed said.
“We expect that to increase,” he added. “We run about 75 points of occupancy. We think we can move those occupancies more to the 80-point measurement.”
Group demand strategy
It has been difficult for Ryman executives to gauge whether group business is still as vibrant as it was a year ago or even as it was in June, Reed said.
“I don’t think we are seeing, as a company, a decline in interest to hold meetings across our business,” he said. However, what the company did find was a decrease in out-of-room revenues during the third quarter.
“The thing for us is that each group is not created equal,” Reed said.
“You’ve got to make sure you transition to groups that are not space hogs,” he said. Some groups take up more room than others, but don’t spend as much outside of that.
By doing more corporate business, but limiting the amount of space each group uses, theoretically, performance would increase, Reed said.
“We have the ability, if we manage our space well, to increase the group side by 3, 4 or 5 points … over the course of the (next few years),” he said.