Ryman Hospitality Properties: A Unique REIT Play in the Convention Center Space
Ryman Hospitality Properties (RHP) is a real estate investment trust (REIT) that stands out from its peers in the hospitality industry. Instead of focusing primarily on lodging, RHP owns and operates large non-gaming convention centers, including the Gaylord Opryland Resort & Convention Center and the Gaylord Palms Resort & Convention Center. These properties boast high visibility bookings and generate substantial non-lodging revenue, differentiating RHP from typical hotel REITs.
Business Model: Long-Term Conference Bookings and Revenue
RHP’s business model is centered around long-term conference bookings, which provide earnings visibility and help the company avoid online travel agency (OTA) fees. Conferences and events are usually booked months or even years in advance, providing a steady stream of revenue for RHP. Moreover, these bookings typically come with substantial cancellation fees, which adds an additional layer of resilience to the company’s business.
Swift Recovery Post-Pandemic and Strong Long-Term Growth
Despite the challenges posed by the pandemic, RHP has shown impressive resilience. The company’s swift recovery can be attributed to its strong long-term growth prospects. In Q3 2021, RHP reported Adjusted Funds from Operations (AFFO) per share of $0.37, marking a 14% year-over-year increase. Furthermore, the company’s occupancy levels for its convention centers have been steadily improving, reaching 73.8% in Q3 2021, up from 64.9% in Q3 2020.
Low Debt Levels
Adding to RHP’s appeal is its low debt levels. As of Q3 2021, the company’s net debt to adjusted EBITDA ratio was 3.9x, which is below the industry average. This financial strength enables RHP to weather economic downturns and invest in growth opportunities when they arise.
Impact on Individuals
For individual investors, RHP presents an attractive investment opportunity due to its unique business model, strong recovery from the pandemic, and solid growth prospects. Moreover, the company’s low debt levels and steady cash flow provide a degree of stability and income potential. By investing in RHP, investors can gain exposure to the convention center space, which may offer less volatility than traditional hotel REITs.
Impact on the World
On a larger scale, RHP’s success underscores the growing importance of convention centers in the post-pandemic world. As businesses and organizations continue to prioritize in-person events, demand for convention space is expected to rebound strongly. Furthermore, RHP’s business model, which focuses on long-term bookings and non-lodging revenue, could serve as a template for other REITs looking to diversify their portfolios and reduce their reliance on transient lodging demand.
Conclusion
Ryman Hospitality Properties is a compelling investment opportunity for those looking to gain exposure to the convention center space. Its unique business model, swift pandemic recovery, strong long-term growth, and low debt levels make it an attractive option for both income-focused and growth-oriented investors. As the world transitions to a post-pandemic era, the importance of convention centers is only set to grow, making RHP an intriguing play for those seeking to capitalize on this trend.
- Ryman Hospitality Properties (RHP) is a REIT specializing in large non-gaming convention centers.
- Long-term conference bookings provide earnings visibility and avoid OTA fees.
- Substantial cancellation fees enhance resilience.
- Swift pandemic recovery and strong growth prospects.
- Low debt levels provide financial stability.
- Individuals can gain exposure to the convention center space with potential for less volatility.
- RHP’s success underscores the importance of convention centers in the post-pandemic world.
- Business model could serve as a template for other REITs.
