the 3rd Qtr Compared to Last Year 3rd Qtr Loss of $3.2 million;
Occupancy Slips to 69.3% versus 70.8% in 3rd Qtr Prior Year
Hotel Operating Statistics
|NASHVILLE, Tenn. - Oct. 27, 2005 -- Gaylord Entertainment Co. (NYSE:
GET) today reported its financial results for the third quarter of 2005.
For the third quarter ended September 30, 2005:
Reed continued, "The operating environment for ResortQuest remains challenging, especially given the impact of the severe hurricane season, but we remain convinced that ResortQuest will be a stronger brand in the long run and will be poised to deliver returns that will benefit our company and shareholders as a result of the brand capabilities we are developing."
Segment Operating Results
Key components of the company's hospitality segment performance in the third quarter of 2005 include:
At the property level, Gaylord Palms posted a solid performance in the third quarter of 2005 achieving higher revenues, up 7.2 percent to $31.2 million, and higher CCF, up 18.7 percent to $4.6 million. ADR increased 13.6 percent to $157.10 compared to $138.28 in the prior-year quarter, while occupancy was down slightly to 61.0 percent compared to 62.6 percent a year ago. The significant increase in ADR contributed to strong RevPAR growth of 10.6 percent, which ended the quarter at $95.79 compared to $86.60 in the prior-year quarter. Total RevPAR increased 7.2 percent to $240.85 in the third quarter of 2005 versus $224.69 in the prior-year quarter. CCF margin increased by 140 basis points to 14.7 percent compared to the third quarter of 2004.
Gaylord Opryland achieved an ADR increase of 7.3 percent to $140.40 in the third quarter of 2005, while occupancy was down 0.7 percentage points to 71.9 percent primarily as a result of lower group occupancy and lower transient pick-up. Opryland's operating statistics exclude approximately 16,001 room nights that were out of service as a result of the hotel's room renovation program. Gaylord Opryland generated RevPAR of $101.01 in the third quarter of 2005 versus $95.07 in the prior-year period, an increase of 6.2 percent. Total RevPAR grew 12.9 percent to $213.08 in the third quarter of 2005 compared to $188.67 in the prior-year quarter, due to an increase in food and beverage and other ancillary revenues. CCF fell to $9.0 million versus $10.9 million in the third quarter 2004. CCF margin declined to 17.0 percent in the third quarter of 2005. The hotel's third quarter margin performance was negatively impacted by a significant investment in marketing and service programs related to ASAE's annual convention. Opryland's financial performance in the third quarter was also affected by the continuation of a multi-year room refurbishment program which will continue through 2007.
For the Gaylord Texan, RevPAR and Total RevPAR increased in the third quarter of 2005 versus the prior-year quarter due to a better mix of higher-quality groups. Occupancy decreased 3.6 percentage points in the third quarter of 2005 to 72.1 percent while ADR increased 15.6 percent from the prior-year period to $150.58. RevPAR increased 10.1 percent to $108.51 from $98.60 in the third quarter of 2004. Total RevPAR at the Gaylord Texan was $261.94 in the third quarter of 2005, an increase of 11.0 percent from $236.00 in the prior-year quarter. CCF increased 95.6 percent to $7.5 million from $3.9 million in the third quarter of 2004, resulting in a CCF margin of 20.7 percent, a 900 basis point increase over the third quarter of 2004. Gaylord Texan's strong third quarter results reflect continued maturing of the hotel, as it maintains its leading position in the Dallas-Fort Worth market.
Construction continues to progress on our newest project, the Gaylord National, with advanced bookings exceeding expectations. Gaylord National booked an additional 135,000 nights in the third quarter of 2005, bringing the total net definite production for the property to approximately 363,000 room nights on the books. By way of comparison, the Texan had 708,000 room nights on the books at the time of its opening in April 2004.
"We are thrilled with the advance bookings being generated for the Gaylord
National," said Reed. "We are currently in the process of revising construction
cost estimates for National, following recent uncertainty in the marketplace
about the near term and longer term impact of hurricanes Katrina and Rita
on development costs. We feel comfortable, however, that given the strength
and quality of our advance bookings, our return thresholds remain intact
and we continue to believe that National will create superior value for
ResortQuest third quarter 2005 revenues increased 12.2 percent to $66.0 million compared to $58.8 million in third quarter of 2004. Third quarter 2005 operating income was $4.8 million compared to operating income of $7.4 million in the third quarter of 2004. ResortQuest CCF decreased to $9.2 million for the period versus $10.5 million in the third quarter of 2004. Third quarter 2005 RevPAR increased to $108.51, or 2.1 percent over the third quarter of 2004. ADR increased 2.8 percent to $187.63 from $182.49 in the third quarter of 2004, while occupancy decreased to 57.8 percent compared to 58.2 percent in the prior-year quarter.
As described in Gaylord's second quarter 2005 earnings call, the 2005 hurricane season was expected to have an adverse effect on results for the third quarter. In particular, hurricane Dennis, which made landfall in Northwest Florida in early July, severely disrupted travel to the Southeast during a peak demand period resulting in a large number of cancellations in affected markets. Given a seasonal ramp-up of staffing levels tied to servicing the greater number of vacationers during the summer months, an unexpected shortfall in demand contributed to a significant decline in profitability in Florida's seasonally strong profit generating markets. While the total extent of the damage to our inventory and business interruption due to hurricane Dennis is in the process of being assessed, Gaylord Entertainment has filed a business interruption claim with its insurers. The company believes that its comprehensive insurance coverage should be sufficient to cover the loss of business due to hurricane Dennis. Additionally, ResortQuest anticipates achieving resolution in the coming months of its business interruption claim related to the loss of business caused by the 2004 hurricane season.
As part of its strategic plan, in the third quarter ResortQuest made the decision to exit certain markets that were inconsistent with its long-term growth strategy. These markets represent less than 10 percent of ResortQuest's total units under management and have been reported as discontinued operations; if included in ResortQuest's continuing operations, they would produce an operating loss of approximately $1.3 million for the full year 2005. This decision allows ResortQuest to focus its resources on higher opportunity markets and initiatives that will enable the business to aggressively grow and build on its developing brand. ResortQuest is also expected to achieve approximately $2.0 to $4.0 million in additional corporate expense savings and cost avoidance in 2006 as a result of the upcoming divestiture of these non-core markets, and should be positioned to more effectively streamline and focus its marketing initiatives. Operating results for ResortQuest's non-core markets that are being exited are reflected in Gaylord's consolidated financial results as discontinued operations, net of taxes, for all periods presented. Third quarter 2005 loss from discontinued operations of $2.1 million includes pre-tax impairment and restructuring charges totaling $3.2 million. Excluding those units reflected in discontinued operations, ResortQuest had 16,900 units under exclusive management. ResortQuest operating statistics for all periods presented exclude units in discontinued markets and units out of service, which include units damaged by hurricanes.
Third quarter 2005 results were also adversely affected by the ongoing reinvestment in brand-building initiatives, such as technology, marketing and organizational improvements. Progress continues to be made on ResortQuest's technology initiatives with the roll out of the new web site and the new enterprise property management system, ReQuest. Both initiatives should furnish the ResortQuest brand with industry leading capabilities to drive demand and centrally manage the business. The company expects these investments to yield significant value for the business in the near term.
"The ResortQuest business continues to be a focal point for Gaylord, not only because we think people will continue to vacation in this country in ever increasing numbers, but also because we believe more and more second homes are being developed that will require professional management," said Reed. "We are committed to building a solid foundation from which the industry's only nationally recognized brand, ResortQuest, will emerge to dominate this growing industry. By exiting these non-core markets, we will be able to focus on growing strategic markets in which we have both a sizable footprint and the opportunity for further growth."
Opry and Attractions
Opry and Attractions segment revenues increased to $19.7 million in the third quarter of 2005 compared to $18.4 million in the third quarter of 2004. Opry and Attractions reported operating income of $1.6 million for the period compared to an operating income of $1.0 million in the third quarter of 2004. CCF improved by 30.6 percent to $3.0 million in the third quarter 2005 from $2.3 million in the prior-year quarter. Revenue and CCF gains in the third quarter were driven by a strong performance from the Grand Ole Opry.
"The Grand Ole Opry produced a strong quarter financially as we continued to celebrate this wonderful institution's 80th birthday," said Reed. "The legend of the Opry grew during the quarter as we invited Dierks Bentley, one of country music's most accomplished young artists, to join the Opry family. We are delighted with Dierks' induction into the Opry family and know he will help carry on the tradition for the new generation of country music fans."
Corporate and Other
Corporate and Other operating loss totaled $9.0 million for the third quarter of 2005, compared to an operating loss of $9.4 million for the third quarter of 2004. Corporate and Other operating losses in the third quarter of 2005 and 2004 included non-cash charges of $1.0 and $1.4 million, respectively. Non-cash charges include items such as depreciation and amortization, and, for the third quarter of 2004, the non-cash portion of the Naming Rights Agreement expense. Corporate and Other CCF for the third quarter of 2005 was in line with last year with a loss of $7.3 million.
Bass Pro Shops
For the quarter ended September 30, 2005, Gaylord's equity income from its investment in Bass Pro was $2.0 million.
At September 30, 2005, the company had long-term debt outstanding, including current portion, of $581.7 million and unrestricted and restricted cash and short term investments of $71.7 million. The company also had a $600 million credit facility which has $13.5 million in letters of credit currently outstanding.
The following outlook is based on current information as of October
27, 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 believe Gaylord Hotels' operating performance will remain strong through 2005. We remain confident in our existing hospitality segment guidance for 2005, despite higher energy costs which we expect to experience in the fourth quarter. In addition, Gaylord Hotels' visibility of future business remains characteristically very strong, so we expect to achieve high single digit RevPAR growth in 2006. Preliminarily, we expect 2006 CCF margins to improve 100 to 200 basis points over 2005 levels."
"ResortQuest continues to be pressured by hurricane activity in the
Florida region. Based on additional information we now have since our second
quarter earnings release regarding full impact of the 2005 hurricane season
including, most recently, hurricane Wilma, we are reducing our segment
CCF guidance to $10 - $12 million. It is important to note that these figures
do not include any benefit from the business interruption insurance claims
that we have filed in connection with the 2004 and 2005 hurricanes," concluded
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:||Gaylord Entertainment Reports 3rd Qtr Net Loss of $3.2 million; Opening of Gaylord Texan Resort & Convention Center Boosts Revenues / Hotel Operating Statistics / October 2004|
|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|