Ryman Hospitality Properties, Inc. (NYSE:RHP) today announced plans for a $120 million expansion of Gaylord Texan Resort and Convention Center in Grapevine, Texas.
The expansion will add 300 guest rooms to the resort’s current 1,511 room inventory and will add 86,000 square feet of carpeted meeting space, bringing the total meeting space to approximately 490,000 square feet. Once the expansion is complete, Gaylord Texan will become the second largest non-gaming convention center hotel in the United States as measured by total self-contained exhibit and meeting space, behind Gaylord Opryland Resort and Convention Center and ahead of Gaylord National Resort and Convention Center.
Colin Reed, chairman and chief executive officer of Ryman Hospitality Properties, said, “For the past 12 months, we have talked about the strength in our business and the large group segment as a whole, where we are seeing increased demand for rooms and meeting space across our portfolio. At the same time that we are seeing this increased demand, we are also seeing almost no new competitive supply of this scale under construction for the foreseeable future, outside of the Gaylord Hotels brand. We view this expansion as a perfect opportunity to cement our unique position in the large group meetings market with a very efficient use of the company’s capital.”
The meeting space addition includes a new 30,000-square-foot ballroom, 30,000 square feet of breakout space and approximately 26,000 square feet of carpeted pre-function space. Construction is expected to begin in the fourth quarter of this year and be completed during the second quarter of 2018. The project also includes a $5 million expansion of the property’s resort pool complex, which is expected to be complete for the 2016 summer season.
In addition to the expansion, the Company announced preliminary company-wide bookings and Hospitality Segment performance metrics highlights for fourth quarter and full year 2015:
- Gross room nights booked in fourth quarter 2015 increased 12.3 percent, compared to fourth quarter 2014, to approximately 977,000 room nights, which is the best-ever quarter and December sales production in Company history.
- Gross bookings for full year 2015 increased nearly 3 percent to 2,337,000, compared to full year 2014, which is the best production year in Company history.
- RevPAR increased 9.1 percent for fourth quarter 2015, compared to fourth quarter 2014, and full year 2015 RevPAR increased 3.7 percent compared to 2014.1
- Total RevPAR increased 5.7 percent for fourth quarter 2015 compared to fourth quarter 2014, while Total RevPAR for full year 2015 increased 3.5 percent compared to 2014.1
Reed continued, “Our preliminary full year and fourth quarter 2015 bookings and hospitality metrics are consistent with our expectations and once again demonstrate the power of our unique group-centric model, which provides us with the visibility to make strategic capital decisions that maximize value for our shareholders.
We decided to preview these results along with our announcement because they further support our belief that the timing has never been better for an expansion at Gaylord Texan. The Texan has witnessed strong growth over the past several years, and this expansion will allow us to meet significant existing customer demand for additional high-quality meeting space while also enabling us to market the Texan to a new group of prospects that have not been able to come to Grapevine due to their space requirements.”
The expansion will be tightly integrated into the existing resort and will benefit from its immense infrastructure and extensive amenities. The project’s 300 hotel rooms and accompanying 286 square feet of carpeted meeting space per key has a preliminary total cost per key of $383,000 and will be funded with cash on hand and borrowings under the Company’s revolving credit facility. In addition, the City of Grapevine has agreed to rebate $1 million of the hotel’s rooms tax annually for a ten-year period upon the completion of the expansion, for a total of $10 million in city incentives.
Reed continued, “Our company has always enjoyed a strong relationship with the City of Grapevine and its leaders, who shared in our vision for Gaylord Texan from day one. We appreciate Mayor Tate and the City Council’s support on this important step forward for the Texan and the city of Grapevine.”
William D. Tate, Mayor of Grapevine, Texas, said, “This investment at Gaylord Texan is also a continued investment in Grapevine and its citizens. We look forward to its completion and the additional visitors we will welcome to our great city as a result.”
In 2007, the Company announced plans to expand Gaylord Texan; however, these plans were put on hold due to the economic downturn that occurred in 2008. These plans were fundamentally different from the current planned expansion, and as a result, the Company expects that it will recognize in fourth quarter 2015 non-cash expense of approximately $16.3 million associated with the write-off of accrued development costs with respect to the previously planned expansion. The non-cash charge will not affect fourth quarter or full-year Adjusted EBITDA or AFFO. Subject to our usual closing and audit procedures for our financial results for the three months and full year ended December 31, 2015, the Company believes that its Adjusted EBITDA and AFFO will be within the range of guidance previously disclosed on November 3, 2015. For a definition of Adjusted EBITDA and AFFO, see our press release dated November 3, 2015.
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