Bear of the Day: Ryman Hospitality (RHP)
Ryman Hospitality Properties, Inc. (RHP) is navigating its way through the pandemic as hotels and entertainment venues are slow to reopen. This Zacks Rank #5 (Strong Sell) is expected to see earnings fall 142% in 2020.
Ryman Hospitality Properties is a lodging and hospitality REIT that specializes in upscale convention center resorts and country music entertainment experiences, mostly in Nashville.
It's core holdings include 5 of the top 10 largest non-gaming convention center hotels in the United States which operate under the Gaylord Hotels brand and are managed by Marriott International.
Those hotels include the Gaylord Opryland Resort & Convention Center, Gaylord Palms Resort & Convention Center, Gaylord Texan Resort & Convention Center and the Gaylord National Resort & Convention Center.
It also is the majority owner and managing member of the joint venture that owns Gaylord Rockies Resort & Convention Center.
It has a total of 10,110 rooms and more than 2.7 million square feet of total indoor and outdoor meeting space.
The entertainment segment includes the Grand Ole Opry, Ryman Auditorium, WSM 650 AM and Ole Red and Circle, a country lifestyle media network it owns in a joint venture with Gray Television.
Nashville Reopened on Oct 1
On Sep 24, Ryman issued a business update as Nashville was set to move into the Phase 3 of its reopening plan.
Beginning on Oct 1, Nashville permitted conventions and other group events to expand to a capacity of up to 500 people.
This would enable Gaylord Opryland to host more convention and group customers.
As of Oct 1, its four operating Gaylord HOtels could conduct meetings as follows:
1. Gaylord Opryland: group events of up to 500 persons.
2. Gaylord Palms: group events of any size.
3. Gaylord Texan: group events at 50% of state capacity.
4. Gaylord Rockies: group events of up to 100 people.
The Phase 3 in Nashville also meant that the Grand Ole Opry House and the Ryman Auditorium could reopen for performances and concerts up to 500 people.
Recovery Is Happening
At the JP Morgan Gaming, Lodging, Restaurant & Leisure Management Access Forum on Sep 14, 2020, Ryman gave an update on what it was seeing in its business.
In September, it had 4 hotels open. Only the Gaylord National remained closed.
It was seeing an occupancy range around 30%, up from 20% earlier in the summer.
The company was also happy with what it was seeing in the spend outside the room, as its hotels have multiple restaurants and sports bars.
Ryman estimated a monthly cash burn rate of between $22 million and $24 million. It has seen a recovery in the cash burn from the bottom, which was in the second quarter.
Ryman hosts a lot of conventions and group meetings as its largest hotel has 2800 rooms.
While they are seeing cancellations through the first quarter of 2021, 46% of the cancellations have been rebooked into later periods.
Estimates Still on the Decline
The analysts are still bearish about 2020 as one analyst has lowered their estimate in the last week which has pushed the Zacks Consensus Estimate down to a loss of $2.92 from a loss of $2.37 just 30 days ago.
That's a decline of 142.6% compared to 2019 where the company made $6.86.
Analysts expect a rebound in 2021 but they've gotten more bearish about next year recently as well.
One estimate has been cut in the last 30 days pushing the Zacks Consensus down to $0.35 from $0.62 just a month before.
Shares Still Down Big in 2020
Ryman shares plunged when the coronavirus pandemic first hit in March and have mostly stayed depressed.
They're still down 52.9% year-to-date.
When there's a vaccine and business travel picks up, these hospitality companies will see strong improvement.
But right now, the analysts are still bearish on the near term.
For investors looking for ways to play the recovery in the hospitality industry, Ryman is one to keep on the short list as the travel industry improves and the Zacks Rank improves.
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