for 2nd Qtr 2005, Improving from Loss of $22.6
million from Prior Year 2nd Quarter
Total RevPAR Increased 15.1% to $266.08
Hotel Operating Statistics
|NASHVILLE, Tenn - July 28, 2005-- Gaylord Entertainment Co. (NYSE:
GET) today reported its financial results for the second quarter of 2005.
For the second quarter ended June 30, 2005:
Segment Operating Results
Key components of the company's hospitality segment performance in the second quarter of 2005 include:
At the property level, Gaylord Palms posted a strong performance this quarter in CCF growth driven by a significant increase in ADR. ADR was up 6.5 percent to $173.26 compared to $162.61 in the prior-year quarter. Occupancy was slightly down to 76.5 percent compared to 77.3 percent a year ago. The significant increase in ADR coupled with a marginal occupancy decrease resulted in strong RevPAR growth of 5.5 percent to $132.60 in the second quarter of 2005 from $125.71 in the prior-year quarter. A solid increase in food and beverage spending from group attendees drove a 14.3 percent increase in Total RevPAR to $345.76 in the second quarter of 2005 versus $302.56 in the prior-year quarter. CCF increased 27.6 percent to $13.4 million compared to $10.5 million in the prior-year quarter, resulting in a CCF margin of 30.2 percent, a 3.1 percentage point increase over the second quarter of 2004.
The Gaylord Opryland generated RevPAR of $108.69 in the second quarter of 2005 versus $109.03 in the prior-year period, a marginal decrease of 0.3 percent. RevPAR decreased due to an ADR decline of 1.2 percent to $141.24 in the second quarter of 2005 compared to $143.00 in the prior-year quarter. Occupancy increased by 0.8 percentage points to 77.0 percent. Total RevPAR grew 6.2 percent to $226.38 in the second quarter of 2005 compared to $213.20 in the prior-year quarter, due to an increase in food and beverage and other ancillary revenues. CCF was in line with last year's results at $15.9 million versus $16.1 million in the second quarter 2004. CCF margin declined 1.8 percentage points to 26.9 percent in the second quarter of 2005. Gaylord Opryland's financial performance in the second quarter was impacted by the commencement in May 2005 of a multi-year room refurbishment program, which removed 120 rooms from available inventory. This refurbishment program is expected to be completed by December 2007.
For the Gaylord Texan, RevPAR and Total RevPAR increased significantly in the second quarter of 2005 versus the prior-year quarter due to increased occupancy and a better mix of higher quality groups. Occupancy increased 11.7 percentage points in the second quarter of 2005 to 75.7 percent with ADR increasing 18.6 percent from the prior-year period to $161.01. RevPAR increased 40.2 percent to $121.84 from $86.91 in the second quarter of 2004. Total RevPAR at the Gaylord Texan was $305.34 in the second quarter of 2005, an increase of 32.7 percent from $230.16 in the prior-year quarter. CCF increased to $10.7 million from $3.2 million in the second quarter of 2005, resulting in a CCF margin of 25.5 percent, a 15.4 percentage point increase over the second quarter of 2004.
"Our success with the Texan, as it entered its second year of operation, has further demonstrated the strength of our rotational strategy," said Reed. "In addition, the Gaylord Hotels brand, which represents the highest standards of performance and customer service, continues to strengthen with each new property. This success gives us the confidence to pursue additional opportunities to expand our network of meetings-focused hotels."
"While our same-store advance bookings are lower than the record levels achieved in 2004, we remain on track to accomplish our 1.3 to 1.4 million room night guidance," continued Reed. "Also, construction of the Gaylord National, our Washington, D.C. area hotel, continues to progress with advance bookings exceeding our expectations. Excitement is clearly building among our meeting planners and our customer base for its scheduled opening in the first quarter of 2008."
ResortQuest second quarter 2005 revenues were $62.3 million compared to $57.2 million in second quarter 2004. Second quarter 2005 operating loss was $1.4 million compared to operating income of $1.0 million in the second quarter 2004.
ResortQuest CCF decreased to $1.6 million for the period versus $4.9 million in the second quarter of 2004. Second quarter 2005 results included increased reinvestment in brand-building initiatives, such as technology, marketing and organizational improvements. In addition, the timing of the Easter holiday period, a strong vacation travel period, shifted from the second quarter 2004 to the first quarter 2005 making comparisons less favorable.
"As we have said before, the turnaround of ResortQuest continues to make progress," said Reed. "The second quarter saw the company make substantial investments in human capital, in technology infrastructure, and in marketing initiatives to propel the brand forward."
Second quarter 2005 RevPAR increased to $80.04, or 3.1 percent over second quarter 2004. ADR increased 8.6 percent to $162.47 from $149.59 in the second quarter of 2004, while occupancy decreased 2.6 percentage points to 49.3 percent.
ResortQuest had 18,798 units under exclusive management at the end of the second quarter of 2005.
By the end of the second quarter, over 90 percent of ResortQuest units damaged in last summer's Florida hurricanes had been returned to service.
On June 1, 2005, Gaylord Entertainment completed its purchase of the Aston Waikiki Beach Hotel in Honolulu, Hawaii for $107 million. Simultaneously, Gaylord Entertainment completed the sale of an 80.1 percent interest in the hotel to a private real estate fund managed by DB Real Estate Opportunities Group. ResortQuest will continue to manage the hotel under a new 20-year management agreement, and the company will account for its 19.9 percent ownership interest in the hotel under the equity method of accounting.
"The foundation for the brand is taking shape," continued Reed. "In late 2005 and early 2006, we expect to roll out a newly-designed, industry-leading web site and comprehensive enterprise property management system. Once our technology systems have been fully rolled out and the Total Satisfaction Guarantee implemented throughout the business, we expect this brand to emerge and create significant value for our shareholders."
Opry and Attractions
Opry and Attractions segment revenues increased to $18.7 million in
the second quarter of 2005 compared to $16.8 million in the second quarter
of 2004. Opry and Attractions reported operating income of $2.2 million
for the period compared to an operating loss of $0.4 million in the second
quarter of 2004. CCF improved by 51.1 percent to $3.2 million in the second
quarter 2005 from $2.1 million in the prior-year quarter. Revenue and CCF
gains in the second quarter were due to the Opry's solid financial performance
compared to last year. The Opry benefited from an increase in show attendance
and from the continued strategy of broadening the reach of the Opry brand
through increased sponsorship, licensing and merchandising opportunities.
Corporate and Other
Corporate and Other operating loss totaled $10.1 million for the second quarter of 2005, compared to an operating loss of $11.6 million for the second quarter of 2004. Corporate and Other operating losses in the second quarter 2005 and 2004 included non-cash charges of $1.1 million and $1.4 million, respectively. Non-cash charges include items such as depreciation and amortization, and, for the second quarter of 2004, the non-cash portion of the Naming Rights Agreement expense. Corporate and Other CCF improved to a loss of $8.2 million in the second quarter of 2005 compared to a loss of $9.4 million in the second quarter of 2004.
Bass Pro Shops
In the second quarter, Bass Pro restated its previously issued historical financial statements to reflect certain non-cash changes, which resulted primarily from a change in the manner in which Bass Pro accounts for its long-term leases. In response to a February 7, 2005 letter issued by the Office of the Chief Accountant of the Securities and Exchange Commission to the American Institute of Certified Public Accountants, a number of companies (including Bass Pro), primarily in the retail industry, have reviewed their lease accounting practices and restated their historical financial statements to conform with generally accepted accounting principles in the U.S. ("GAAP"). Gaylord Entertainment has reflected its share of Bass Pro's restatement as a one-time adjustment to the company's results for the second quarter 2005, which reduced Gaylord's equity in Bass Pro earnings by $1.7 million. Including this one-time adjustment, Gaylord's equity income from its investment in Bass Pro, for the quarter ended June 30, 2005, was a loss of $1.7 million.
Bass Pro currently operates 26 stores and has stated that it plans to add 16 stores over the next two years.
At June 30, 2005, the company had long-term debt outstanding (including current portion) of $583.1 million and unrestricted and restricted cash and short term investments of $109.2 million. The company also had a $600 million credit facility which remains undrawn, aside from $17.7 million in letters of credit that are currently outstanding under the facility.
The following outlook is based on current information as of July 28, 2005. The company does not expect to update guidance until next quarter's earnings release. However, the company may update its full business outlook or any portion thereof at any time for any reason.
"We are making significant progress in growing our business, both our hospitality and ResortQuest segments, as we continue to work very hard at laying the foundation of the brands that will create value for years to come," said Reed.
"Our hospitality business continues to benefit from increased occupancy
of higher-value customers allowing us to remain on track for another year
of solid growth. However, two factors, one planned and one unplanned, continue
to affect our ResortQuest business. As we previously noted, we will continue
to invest substantially in improving ResortQuest's technology infrastructure
and marketing initiatives. On July 10th, Hurricane Dennis hit northwest
Florida and affected ResortQuest's operations and customer demand during
its peak summer beach season - and also came at a time when the northwest
Florida operations were completing the recovery from an unprecedented 2004
hurricane season. The impact of this rare July hurricane (only the second
hurricane since 1900 to hit northwest Florida in July) has led us to decide
that we should reduce 2005 guidance for consolidated revenues and Consolidated
Cash Flow," concluded Reed.
About Gaylord Entertainment
This press release contains statements as to the company's beliefs and expectations of the outcome of future events that are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995.
|Also See:||The 1,511-room Gaylord Texan Resort Enjoying Too Much Business, Doesn't Have Enough Parking Spaces; Forced to Move Employee Parking Two Miles Away, Building New 9.4 million Parking Garage / February 2005|
|Gaylord Entertainment Co. Narrows 4th Qtr Loss to $8.9 million from $14.5 million a Year Ago; Solid Performance from Both the Gaylord Palms and Gaylord Texan / Hotel Operating Statistics / February 2005|