REPORT FROM THE U.S.—Goodbye Gaylord Entertainment Company. Hello Ryman Hospitality Properties.
Gaylord Entertainment Company’s shareholders on Tuesday cleared the way for Gaylord to convert to a real-estate investment trust by gaining support of approximately 74% of outstanding shares during a special shareholder’s meeting.
The new entity, Ryman, will begin trading under the symbol “RHP” on the New York Stock Exchange effective 1 October. Also on that date, Marriott International—which acquired the Gaylord brand and the rights to manage the company’s hotels as part of a $210-million cash transaction in May when the REIT conversion also was announced—will begin managing the hotels.
The road to REIT status was a contentious one for Gaylord, with two of its largest shareholders saying the company would be better off being sold. In August, TRT Holdings, Gaylord’s biggest shareholder with approximately 20% of the company’s shares and a vocal critic of Gaylord’s plan, agreed to vote in favor of the deal in exchange for selling 5 million shares back to Gaylord at $37 a share. TRT also agreed to not purchase additional company shares or seek representation on Gaylord’s board for three years.
No such deal was in the offing for Gabelli Funds, which also wanted to see a sale of the company. Mario Gabelli, chairman and CEO of Gamco Investors, of which Gabelli Funds is a part, said the vote went as he expected.
“We still believe spinning it off is the best play,” he said in a voicemail message. “There’s a lot of money that is low-hanging fruit with this asset.”
It’s unclear if Gabelli Funds, which owns approximately 15% of Gaylord’s shares, will sell its position following the deal. Gabelli was traveling Wednesday morning and unavailable for further comment prior to deadline.
Gaylord executives did not return messages for comment prior to deadline.
In a statement, Marriott spokesman Thomas O. Marder expressed the pleasure Marriott executives feel with the vote’s outcome. “We’re delighted and look forward to closing the transaction and operating the Gaylord Hotels beginning October 1.”
Analyst’s view
Ryman might have a difficult road ahead of it, at least initially, according to Christopher E. Jones, an analyst who follows Gaylord for Telsey Advisory Group.
“I think they’re a very, very concentrated operator at this point,” he said. “That’s something that will weigh on them initially.”
Jones expects Ryman to begin raising capital soon in an effort to diversify the markets in which it has a presence, as its properties are located in hotel markets that have been up and down of late. The company’s hotels are in the markets of Washington, D.C.; Nashville, Tennessee; Kissimmee, Florida; and in the Dallas/Fort Worth area.
“I would expect Gaylord to be definitely on the prowl for assets as quickly as possible,” Jones said. Gaylord executives have previously said the company will look for group-oriented hotels in urban and resort markets.
San Diego and Scottsdale, Arizona, could be markets in which Ryman could buy hotels, Jones added.
Ryman’s executive structure
In a news release, Gaylord said Ryman will be led by current chairman and CEO Colin Reed. The management team also will include:
• Mark Fioravanti, executive VP and CFO;
• Carter Todd, executive VP and general counsel;
• Patrick Chaffin, senior VP of asset management;
• Bennett Westbrook, senior VP of investments, design and construction; and
• Steve Buchanan, senior VP of media and entertainment.
As a result of the restructuring, “several” members of the former Gaylord team will be leaving the company, according to the release. Among them is David Kloeppel, Gaylord’s president and COO.
“The board and I would like to sincerely thank Dave, who in his 11 years at Gaylord as chief financial officer and then president and chief operating officer, was a driving force behind many of the operational and strategic initiatives that helped us strengthen our group business and expand our transient and leisure offerings. We wish Dave the best of luck in his future endeavors,” Reed said in the news release.
Also, two board directors representing TRT Holdings are resigning effective 1 October.
REIT outlook
Though the pace of hotel transactions has been slow this year, Jones said Ryman appears to be well-positioned to transact. He said the company’s balance sheet is strong.
“I don’t see any reason why they would be any less of a viable purchaser,” Jones said.
Also, while deal flow has been slow, the quality of assets changing hands has improved. Still, Ryman will have to pay for that quality, Jones said.
“(Revenue per available room) has been going up, so there won’t be firesales,” he said.