NASHVILLE, Tenn.--May. 31, 2012 -- Gaylord Entertainment Co. (NYSE: GET) today
announced that it has agreed to sell the Gaylord Hotels brand and the
rights to manage its four hotels to Marriott International, Inc. (NYSE: MAR) for $210
million in cash. Following consummation of the sale, Gaylord
will continue to own its hotel properties and other businesses and will
reorganize and elect to be treated as a real estate investment trust
(REIT) effective January 1, 2013. The Company will be
the only lodging REIT focused primarily on group-oriented destination
hotels in urban and resort markets.
The transaction announced today is the result of a
comprehensive review of strategic options to maximize long-term value
for shareholders. In concluding to pursue this option, the Board of
Directors and management team focused on three elements: the cash
received in connection with the sale of the brand and management
rights, the opportunity to realize substantial cost savings and revenue
enhancements due to Marriott’s scale and reach in the hospitality
market, and the Company’s positioning as a well capitalized REIT
focused on group-oriented destination hotels in urban and resort
markets.
Colin V. Reed, Chairman and Chief Executive
Officer stated, “We are pleased to be announcing today a transaction
that we believe allows shareholders the potential to realize maximum
long-term value for their shares in Gaylord Entertainment. Our months-long review
of various options led us to the conclusion that the REIT structure
represents the best pathway to realize the long-term value of our
business and to position the Gaylord brand for continued growth.
“The REIT structure allows us to benefit from a more efficient
tax structure, and establish a platform to grow our distinct asset base
through organic growth of our existing portfolio and, in time, through
strategic acquisitions. Moreover, we believe that by working with Marriott International, our
shareholders will benefit from significant property efficiencies and
corporate overhead reductions, as well as revenue synergies which
include Marriott’s ability to attract and market to large group
customers. Based on our analysis to date, we anticipate annualized cost
synergies, net of management fees, will total approximately $33
to $40 million. In addition, we believe we will have a unique
competitive position in the hospitality REIT marketplace with a well
capitalized balance sheet and a relatively predictable FFO (funds from
operations) stream.”
Upon consummation of the transaction, Gaylord Hotels will join
the Marriott portfolio
of brands. Terms of the management agreement call for Marriott to manage the four
one-of-a-kind properties under the Gaylord Hotels flag. Marriott will receive a
management contract with an initial 35 year term, 2% base management
fee, and an incentive fee linked to improvement in hotel profitability.
Reed continued, “We are thrilled to be aligning with Marriott, an organization
that consistently receives the industry’s highest praise among group
customers and meeting planners. With their expansive sales force and
unique benefits such as the Marriott Rewards program, we also expect
that they will be able to drive additional transient demand at our
properties. This relationship ensures that the commitment to a
distinctive guest experience that is the hallmark of the Gaylord brand
will continue in force. Importantly, Marriott shares our belief that employees are
our greatest asset, a trademark of our business and a driving force
behind our accomplishments to date.”
Gaylord recently commissioned a survey of over 400 meeting
planners to evaluate hotel company managers in the meetings business. Marriott International
ranked as the undisputed top brand in terms of loyalty programs,
pricing structure, meeting space, sales process, accommodations, and
destinations.
Arne Sorenson, Marriott International president and chief
executive officer, said, “We’re delighted to be able to make this
announcement today, and look forward to adding the Gaylord brand to our
portfolio. We have long admired Gaylord, both for the hotels they have
created and for their superb job in hosting major meetings and events.
We also have great respect for Gaylord's commitment to their people. We
will continue to focus on building careers for Gaylord's "STARS", whom
we will welcome to the Marriott
family. Working with the Gaylord brand, the existing four hotels and a
Gaylord team that provides outstanding customer service, we are
convinced there is tremendous upside potential for growing hotel
revenues and profits and developing careers."
Gaylord will continue to own and operate the Grand Ole Opry, Ryman
Auditorium and other attractions as taxable REIT
subsidiaries. Nothing will change at these iconic assets of the Nashville
community, and Gaylord is fully committed to maintaining the legacy of
these historic attractions. As a REIT, the Company will adjust its
investment approach on the Aurora, Colorado hotel and
convention center project. The Company will no longer view large scale
development as a means for growth and will not proceed with the Colorado project in the
form previously anticipated. The Company will re-examine how the
project could be completed with minimal financial commitment by Gaylord
during the development phase. This examination will be undertaken with
investor expectations at the forefront and the Company will keep
investors informed as the process evolves. By year-end, the Company
plans to issue its shareholders a special, one-time taxable dividend of
its undistributed earnings and profits, after receiving a private
letter ruling from the Internal Revenue Service (IRS).
Based on its preliminary analysis, the Company estimates the amount of
the earnings and profits distribution to total approximately $415
to $450 million. Gaylord intends to pay 80 percent of the
dividend in shares of Gaylord common stock and 20 percent in cash. The
Company expects to incur approximately $55 million in
one-time conversion, transaction and severance expense. The sale of the
management company and the brand to Marriott International is subject to closing
conditions, including the approval by Gaylord’s shareholders of
proposals that will facilitate becoming a REIT, lender consent to
amendments to Gaylord’s credit facility, and other customary conditions
and regulatory approvals. Gaylord expects to hold a special meeting of
stockholders in the third quarter of 2012 for the purpose of voting on
shareholder proposals that will facilitate becoming a REIT, amendments
to its Certificate of Incorporation or other restructuring. Gaylord
will file a proxy statement or other filings with the Securities
and Exchange Commission, which will describe the proposals and
the REIT conversion.
Gaylord’s four properties include Gaylord Opryland
Resort and Convention Center in Nashville, Tennessee;
Gaylord Texan Resort and Convention Center in Grapevine, Texas
(Dallas-Ft.
Worth); Gaylord Palms Resort and Convention Center in Kissimmee, Florida
(Orlando);
and Gaylord National Resort and Convention Center in Prince George’s
County, Maryland
(Washington, D.C.).
Outlook
Reed concluded, “We continue to see positive outside-the-room
spending and advance bookings trends in our business from both our
group and leisure transient guests. We believe that the cost management
initiatives we have put in place to date will continue to drive solid
margin performance, and that the strengthening we have seen in group
behavior will create additional revenue and profitability opportunities
for us in the remainder of 2012. While we are not updating full year
2012 guidance to reflect the transition which we anticipate will occur
early in the fourth quarter, our expectations for the performance of
the business have not changed. Therefore, we will update our guidance
to reflect the impact of the transaction as we draw closer to the
anticipated date of transition.”
Conference Call
Management will hold a conference call to discuss this
announcement at 10:00 a.m. ET today. Management will be
joined on this call by Mr. Arne Sorenson, President
and Chief Executive Officer of Marriott
International, Inc. This call is being web cast by CCBN and can
be accessed at Gaylord
Entertainment's Investor Relations Web site at http://ir.gaylordentertainment.com.
The web cast is also being distributed over CCBN's Investor
Distribution Network to both institutional and individual investors.
Individual investors can listen to the call through CCBN's individual
investor center or by visiting any of the investor sites in CCBN's
Individual Investor Network. Institutional investors can access the
call via CCBN's password-protected event management site, StreetEvents (www.streetevents.com).
About Gaylord Entertainment
Gaylord Entertainment
(NYSE: GET), a leading hospitality and entertainment company based in Nashville, Tenn.,
owns and operates Gaylord Hotels (www.gaylordhotels.com),
its network of upscale, meetings-focused resorts, and the Grand Ole
Opry (www.opry.com),
the weekly showcase of country music’s finest performers for more than
85 consecutive years. The Company's entertainment brands and properties
include the Radisson Hotel Opryland, Ryman
Auditorium, General Jackson Showboat,
Gaylord Springs Golf Links, Wildhorse Saloon, and WSM-AM.
For more information about the Company, visit www.GaylordEntertainment.com.
This press release contains “forward-looking statements”
concerning the Company’s goals, beliefs, expectations, strategies,
objectives, plans, future operating results and underlying assumptions,
and other statements that are not necessarily based on historical
facts. Examples of these statements include, but are not limited to,
statements regarding the closing of the Marriott sale transaction and the fulfillment
of conditions to the closing, our expectation to elect REIT status, the
timing and effect of that election, the form, timing and amount of the
special E&P distribution, our expectation regarding the declaration
of regular quarterly distributions, the amount of conversion and other
costs relating to the transactions, the amounts of revenue and cost
synergies and other business or operational issues. Important factors
that could cause actual results to differ materially from those in the
forward-looking statements include, among other things, the following
risks and uncertainties: the failure to receive, on a timely basis or
otherwise, the required approvals by Gaylord’s stockholders or the
private letter ruling from the IRS; our expectation to
elect and qualify for REIT status, the timing and effect of that
election; our ability to remain qualified as a REIT; the form, timing
and amount of the special E&P distribution; Gaylord’s and Marriott
International’s ability to consummate the sale; operating costs and
business disruption may be greater than expected; and our ability to
realize cost savings and revenue enhancements from the REIT conversion.
About Marriott International
Marriott
International, Inc. (NYSE: MAR) is a leading lodging company
based in Bethesda,
Maryland, USA with more than 3,700 properties in 73
countries and territories and reported revenues of over $12
billion in fiscal year 2011. The company operates and
franchises hotels and licenses vacation ownership resorts under 17
brands, including Marriott
Hotels & Resorts, The Ritz-Carlton, JW
Marriott, Bulgari, EDITION, Renaissance,
Autograph Collection, AC Hotels by Marriott, Courtyard,
Fairfield Inn & Suites, SpringHill Suites,
Residence Inn, TownePlace Suites,
Marriott Executive Apartments, Marriott
Vacation Club, Grand Residences by Marriott, and The
Ritz-Carlton Destination Club. There are approximately
300,000 employees at headquarters, managed and franchised properties. Marriott is consistently
recognized as a top employer and for its superior business operations,
which it conducts based on five core values: put people first, pursue
excellence, embrace change, act with integrity, and serve our world.
For more information or reservations, please visit our website at www.marriott.com,
and for the latest company news, visit www.marriottnewscenter.com.
Additional Information and Where to
Find It
Gaylord expects to restructure its operations in connection
with the proposed REIT conversion and as part of this restructuring it
intends to prepare a proxy statement to be filed with the Securities
and Exchange Commission (the “SEC”). Gaylord plans to file with
the SEC other documents regarding the REIT conversion.
STOCKHOLDERS ARE URGED TO READ THE PROXY STATEMENT REGARDING THE REIT
CONVERSION AND ANY OTHER RELEVANT DOCUMENTS CAREFULLY AND IN THEIR
ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION ABOUT THE REIT CONVERSION. The final proxy statement will
be mailed to the Gaylord’s stockholders. You may obtain copies of all
documents filed with the SEC concerning the proposed
transaction, free of charge, at the SEC’s website at www.sec.gov.
In addition, stockholders may obtain free copies of the documents filed
with the SEC by Gaylord by going to Gaylord’s Investor
Relations website page at www.gaylordentertainment.com
or by sending a written request to Gaylord’s Secretary at Gaylord Entertainment Company,
One Gaylord Drive, Nashville, Tennessee
37214, or by calling the Secretary at (615) 316-6000.
Interests of Participants
Gaylord and its directors and executive officers may be deemed
to be participants in the solicitation of proxies from the stockholders
of Gaylord in connection with the REIT conversion. Information
regarding Gaylord’s directors and executive officers is set forth in
Gaylord’s proxy statement for its 2012 annual meeting of stockholders
and its Annual Report on Form 10-K for the fiscal year ended December
31, 2011, which were filed with the SEC on April
3, 2012 and February 24, 2012, respectively.
Additional information regarding persons who may be deemed to be
participants in the solicitation of proxies in respect of the proposed
REIT conversion will be contained in the proxy statement to be filed by
Gaylord with the SEC when it becomes available.