The owners of two country music icons have renewed their attempt to put both the Grand Ole Opry and "Austin City Limits" under one corporate roof, a year and a half after calling off the union because the pandemic decimated their businesses.
Nashville, Tennessee-based Ryman Hospitality Properties, a real estate investment trust that owns the Opry and several large convention hotels, said it revived plans to buy the property in Austin, Texas, that houses "Austin City Limits," the longest-running music program in television history.
Ryman agreed to a $260 million deal for Block 21 owned by Austin-based Stratus Properties that's expected to close near the end of the year. The price is close to the $275 million deal the REIT ended with Stratus in May 2020. The difference between the deals matches the $15 million nonrefundable deposit Ryman chose to relinquish when ending the deal, though Ryman’s announcement doesn’t say whether that is the reason for the lower price.
With the hotel industry recovering, Ryman is confident the deal will close this time. “Much like Nashville, Austin’s leisure and hospitality industry is recovering and is well-positioned for growth in the years ahead,” Colin Reed, Ryman’s CEO, said in a statement.
Ryman said this deal includes assuming $138 million in debt. The debt was $141 million in May 2020. The REIT said in presentation materials for investors that it is paying 15 times the property’s earnings before interest, taxes, depreciation and amortization.
In addition to being home to "Austin City Limits," Block 21 includes a 251-room W hotel and office space. When the pandemic became official in mid-March 2020, the hotel, like many around the country, saw business plummet.
Ryman temporarily closed its five Gaylord Hotels spread out between Nashville; the Dallas-Fort Worth area; Kissimmee, Florida; Aurora, Colorado; and just outside Washington, D.C., which total 10,000 rooms. Group meetings, the company's primary business, had vanished.
The REIT began to rethink the Block 21 deal in Austin amid the uncertainty in the hotel industry, and the loan processor delayed approval on transferring the loan.
Ryman decided it needed to preserve capital to ride out the pandemic and walked away from the deal.
The hotel industry has improved, though still not to 2019 levels, particularly with group travel. In September, Ryman told investors that group business has been returning, particularly since May of this year.
While group travel catches up, it’s leisure travel that has primarily buoyed business in both Nashville and Austin. Over the past month, Nashville has been at or near the top in occupancy among the top 25 largest tourism markets tracked by STR because of leisure travel.
“Austin is like Nashville, one of those superhot, popular leisure markets,” Kelsey Fenerty, a senior research analyst with hotel industry research firm STR, which is owned by CoStar Group.
For the week that ended Oct. 23, Austin’s hotel occupancy hit 78.2%, according to STR data, a far cry from the 20.9% in the worst week in April 2020. A Formula 1 race in the Austin area helped drive the weekly occupancy, which was just shy of 2019.
Luxury and upper-upscale hotels in Austin, which is where the W hotel ranks, have suffered the most during much of the pandemic, particularly in the early days when group business disappeared. Occupancy bottomed out for the hotels in Austin during the week of April 18, 2020, at 3.2%, Fenerty said. Occupancy in the most recent week topped 73%.