Ryman Hospitality Properties, known for their sprawling Gaylord resorts and iconic Nashville entertainment venues, delivered a solid first quarter performance. Despite facing headwinds like Easter timing shifts and transient softness, the company set new records for same-store hospitality ADR and maintained robust group segment performance.

But beneath the surface of these impressive numbers, a fascinating detail emerged in the Q1 2024 earnings call transcript - a detail that hints at a hidden strength Ryman might not be explicitly showcasing, but one that could have significant implications for their future performance.

The Power of Catering Revenue

What's this "secret weapon"? It's the burgeoning power of their catering revenue. While this metric is often overshadowed by more prominent figures like RevPAR, a closer examination of the transcript reveals a compelling narrative of sustained growth, record-breaking achievements, and the potential for even greater contributions to Ryman's bottom line.

The transcript doesn't shy away from highlighting the resilience of outside-the-room spend. In fact, Q1 2024 marked the second-best quarterly performance ever for same-store hospitality banquet and AV revenue, trailing only the record-setting Q1 2023. It's a trend that doesn't appear to be slowing down.

"Patrick Moore, Ryman's COO, enthusiastically stated that the company is "projecting to set a new full-year record for group room nights traveled in 2024, surpassing the prior record in 2019." (Source: Q1 2024 Earnings Call Transcript)"

This surge in group bookings, combined with the positive trend of increasing banquet and AV contribution per group room night traveled, points towards a powerful synergy: more groups are coming to Ryman resorts, and they're spending more than ever on property.

This isn't just a passing phenomenon either. The transcript reveals that April 2024 continued this impressive streak. Gaylord Opryland, the flagship property, achieved an all-time high monthly catering revenue, and several other properties celebrated similar successes in February, including Gaylord Palms and JW Hill Country.(Source: Q1 2024 Earnings Call Transcript)

The Potential Impact

The potential here is enormous. Consider this: a 10% increase in catering revenue across Ryman's same-store portfolio, based on their projected full-year group room nights traveled, could potentially contribute tens of millions of dollars in additional revenue. That's a significant boost to profitability.

So why isn't Ryman shouting about this from the rooftops? Perhaps they're wisely choosing to underpromise and overdeliver. Maybe they're being cautious amidst a backdrop of economic uncertainty and transient softness. Or perhaps they recognize that the full impact of their strategic investments in F&B offerings and event spaces will take time to fully materialize.

Hypothesis: A Conservative Estimate

Let's assume that Ryman's same-store portfolio achieves a conservative 5% year-over-year increase in catering revenue for the full year 2024. This translates to roughly $15.6 million in additional revenue, based on their 2023 same-store banquet and AV revenue.

Now, assuming a conservative 30% EBITDA margin on catering revenue, this 5% increase could result in an estimated $4.7 million increase in same-store adjusted EBITDAre.

While this may appear modest compared to Ryman's overall projected adjusted EBITDAre for 2024, it underscores the significant potential of this often-overlooked revenue stream. And as group bookings continue to climb and per-guest spend trends upwards, catering revenue could become an increasingly crucial driver of profitability for Ryman in the years to come.

Visualizing the Trend

Let's visualize the potential impact of catering revenue growth on Ryman's same-store adjusted EBITDAre. We'll use a hypothetical scenario based on the conservative 5% year-over-year increase.

The following chart is a hypothetical representation of the projected growth in same-store adjusted EBITDAre from catering based on a 5% year-over-year increase.

Conclusion

Catering revenue is quietly becoming a powerhouse for Ryman Hospitality. Their focus on attracting high-quality groups, coupled with a growing appetite for on-property experiences and enhanced F&B offerings, is creating a lucrative dynamic that could propel the company to even greater heights.

"Fun Fact: Did you know that the Grand Ole Opry, owned by Ryman Hospitality, has been broadcasting continuously for nearly a century? That's right, since 1925, the Opry has been showcasing country music's biggest stars and launching the careers of countless legends. Talk about staying power!"