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 Gaylord Entertainment Company
Investor Presentation
June 2012
Exhibit 99.1 |
 Gaylord Entertainment Co.
FORWARD LOOKING
STATEMENTS AND IMPORTANT DISCLOSURES
This slide presentation contains “forward-looking statements”
concerning the Gaylord Entertainment
Company’s (the “Company”) goals, beliefs, expectations, strategies,
objectives, plans, future operating results and underlying assumptions, and
other statements that are not necessarily based on historical facts. 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:
risks and uncertainties associated with economic conditions affecting the
hospitality business generally; the failure
to
receive,
on
a
timely
basis
or
otherwise,
the
required
approvals
by
the
Company’s
stockholders or the private letter ruling from the IRS; the Company’s expectation
to elect and qualify for REIT status and the timing and effect of that election;
the Company’s ability to remain qualified as a REIT; the form, timing and
amount of the special earnings and profits distribution; the Company’s and
Marriott ’s ability to consummate the sale; operating costs and business
disruption may be greater than expected; and the Company’s ability to
realize cost savings and revenue enhancements from the proposed REIT conversion.
Other factors that could cause operating and financial results to differ are
described in the filings made from time to time by the Company with the Securities and
Exchange Commission (the “SEC”). The Company does not undertake any
obligation to release publicly any revisions
to
forward-looking
statements
made
by
it
to
reflect
events
or
circumstances
occurring
after
the date hereof or the occurrence of unanticipated events.
2 |
 Gaylord Entertainment Co.
ADDITIONAL INFORMATION AND WHERE TO FIND IT
The Company expects to restructure its operations in connection with the proposed REIT
conversion and as part of this restructuring it intends to file with the SEC a
proxy statement/prospectus and other documents regarding the proposed REIT
conversion. STOCKHOLDERS ARE URGED TO READ THE PROXY STATEMENT/PROSPECTUS
REGARDING THE PROPOSED REIT CONVERSION AND ANY OTHER RELEVANT DOCUMENTS
CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME
AVAILABLE
BECAUSE
THEY
WILL
CONTAIN
IMPORTANT
INFORMATION
ABOUT
THE
PROPOSED REIT CONVERSION. The final proxy statement/prospectus will be mailed to the
Company’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 the Company by going to the Company’s
Investor Relations website page at www.gaylordentertainment.com or by sending a written
request
to
the
Company’s
Secretary
at
Gaylord
Entertainment
Company, One Gaylord Drive, Nashville,
Tennessee 37214, or by calling the Secretary at (615) 316-6000.
3 |
 Gaylord Entertainment Co.
INTERESTS OF PARTICIPANTS
The Company and its directors and executive officers may be deemed to be participants
in the solicitation of proxies from the stockholders of the Company in
connection with the proposed REIT conversion. Information regarding the
Company’s directors and executive officers is set forth in the
Company’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/prospectus to be filed
by the Company with the SEC when it becomes available.
4 |
 Gaylord Entertainment Co.
SITUATION OVERVIEW
5
Gaylord
Entertainment
(“Gaylord”
or
the
“Company”)
is
a
hospitality
lodging
company
with
a
unique
focus
on
the
large
group
meetings/convention
sector
On May 31, Gaylord announced its plans to sell the management company and brand for its
hotel business for $210 million to Marriott International ("Marriott")
and subsequently reorganize as a REIT
Gaylord will be the only publicly traded REIT focused on group-oriented destination
hotel assets located in urban and resort markets
Conversion to a tax-efficient REIT structure will allow Gaylord to more effectively
allocate capital and grow its asset base
Working with Marriott, a world-class lodging operator, will deliver significant
revenue and cost synergies through new customer flows and economies of scale, an
expansive frequent traveler program and a leading capability in managing group
business |
 Gaylord Entertainment Co.
REIT CONVERSION TIMELINE
6
Gaylord intends to declare REIT status effective January 1, 2013
May 31
Announcement
of sale of
management
contracts to
Marriott
International
June
File proxy
statement /
prospectus
with the SEC
August
Shareholder
vote to
approve
transaction
October
Marriott to
commence
management
of hotel assets
November
Ex-dividend
date for
earnings and
profits purge
January
Conversion
from C-
corporation to
REIT
November
2011
Board
initiated
review of
strategic
alternatives
Gaylord Entertainment Co. |
 INVESTMENT HIGHLIGHTS High quality
purpose-built
assets
Unique business
model
Improving lodging
fundamentals
Solid organic and
external growth
strategy
Flexible capital
structure
Significant
synergies from
partnership with
Marriott
New Co REIT
7
Gaylord Entertainment Co. |
 Gaylord Entertainment Co.
Taxable REIT subsidiary
Ryman Auditorium
Grand Ole Opry
General Jackson
Wildhorse Saloon
Gaylord Springs Golf Course
8
RADISSON
NASHVILLE
Gaylord Entertainment Co.
303 rooms
(to
be
managed
by
independent-3
Party Operator)
Gaylord
a Delaware REIT
G A Y L O R D
O P R Y L A N D
G A Y L O R D
P A L M S
G A Y L O R D
T E X A N
G A Y L O R D
N A T I O N A L
Year Completed
1977
2002
2004
2008
Location
Nashville, TN
Kissimmee, FL
Dallas, TX
Washington, D.C.
Rooms
2,882
1,406
1,511
1,996
Meeting Space
640,000 sq ft
400,000 sq ft
400,000 sq ft
470,000 sq ft
Atriums
9 acres
4 acres
4 acres
2 acres
F&B Outlets
17
9
11
10
Retail Outlets
25
9
7
5
rd
OVERVIEW OF
CURRENT
ASSETS |
 Gaylord Entertainment Co.
9
Gaylord Entertainment Co.
EXTENSIVE
MEETING
SPACE
AND
ELEGANTT
BANQUETING
OFFERINGS |
 Gaylord Entertainment Co.
TASTEFULLY DECORATED
ROOMS PROVIDE WARMTH AND COMFORT
10 |
 Gaylord Entertainment Co.
ENTERTAINING ENVIRONMENTS FOR MEETING AND NETWORKING 11
|
 Gaylord Entertainment Co.
BEST-IN-CLASS
LODGING REIT 12
Total RevPAR
2
Second
highest
Total
RevPAR
in
the
sector,
reflecting
ability
to
capture a
greater share of guest spending
$305
ADR
4
ADR is reflective of high quality assets and will further benefit from the addition
of Marriott as an operator
$167
EBITDA /
Available Rooms
3
Highest EBITDA/available room relative to other lodging REITs
$25,374
Debt /
EBITDA
5
Well capitalized with a strong balance sheet and lower leverage than the
majority of lodging REITs
4.5x
Interest
Coverage
6
Among the strongest interest coverage relative to other lodging REITs
6.0x
Rooms
Considerable number of rooms places the Company in the middle one-third of
the
comparable
set
as
measured
by
total
number
of
guest
rooms
1
8,098
Note: Lodging REITs include HST, HPT, AHT, RLJ, FCH, SHO, DRH, LHO, HT, INN, BEE, PEB,
CHSP and CLDT.
Room count includes pro rata share of consolidated and unconsolidated rooms. Based on 2011
total revenue and 2011 estimated available rooms derived from Company reported RevPAR.
Based on 2011 estimated available rooms derived from Company reported RevPAR and 2011
EBITDA. For
full year period ending 2011.
Based on debt as of Q1 2012 and 2012E EBITDA. Gaylord 2012E EBITDA per high end of
consolidated EBITDA guidance and excludes one-time transactions costs and
synergies.
Based on LTM EBITDA and LTM net cash interest expense as of Q1 2012. Sources: Company
projections, Company filings, Wall Street Research and Capital IQ
1
2
3
4
5
6 |
 Gaylord Entertainment Co.
Gaylord's track record as an owner and operator of group-focused convention hotels
will provide the REIT with unique asset management capabilities
13
Deep insights and knowledge
of meeting planner
preferences
Understanding of preferred
group destinations based on
extensive research and
experience
Strengths and weaknesses
of operators at specific
markets and properties
Superior ability to underwrite
asset performance and
allocate capital
THE GAYLORD
ADVANTAGE |
 Gaylord Entertainment Co.
14
Significant brand and
marketing scale
Preferred operator by
meeting planners
Marriott Rewards
program
Ability to drive visitation
Dominant large group distribution with 66 convention hotels managed worldwide
Network hotels command 112% RevPAR index premium over competitive set
#1
ranked
preferred
brand
for
booking
large
meetings
requiring
200
–
2,000
rooms
#1 ranked operator for satisfying all large meeting needs
38 million members worldwide
11.2 million members reside within 300 miles of a Gaylord hotel
2,960 sales associates across eight U.S. markets
Sources: Marriott International presentation, Company projections, and Company
research Significant recurring cost
savings
$19-$24 million gross property level cost and procurement reductions anticipated
annually (net of management fees)
WHY MARRIOTT? |
 Gaylord Entertainment Co.
15
Unique revenue mix and
visibility
1
Assets custom built to serve meeting planners, resulting in a unique customer mix
that provides unmatched visibility and protection
78% group and 22% transient customers
Average group booking window of over 2 ½
years
Significant non-room
revenue
2
"All under one roof”
offerings capture a greater share of meeting attendee spending
Approximately
60%
of
our
revenue
reflects
“outside
the
room”
spend
Contractual model
Contractual model and group focus worked as designed and delivered high margin
revenue that partially offset declines in RevPAR during the recession
Attrition and cancellation fee collections peaked in 2009 and have steadily
decreased as the market continues to recover
1
Group business mix data represents occupied rooms for Gaylord Hotels based on full year
2011; booking window per historical averages. 2
Revenue profile numbers are based on full year 2011 for all hotels (includes Opryland,
Palms, Texan, National and Radisson). Source: Company research, Company
presentation Approximately 70% of outside the room spend is related to food and
beverage offerings
UNIQUE BUSINESS
MODEL The addition of
Marriott will further improve the quality of the group business mix |
 Gaylord Entertainment Co.
Contractual nature of advance group bookings provides a measure of top-line
protection during periods of economic volatility –
as a result, Gaylord’s group-focused model outperformed during the
downturn Additional upside exists beyond prior peak as Gaylord National continues
to ramp up and as a result of recent investments in leisure offerings
16
Note: Adjusted Gaylord Hotels includes Palms, Texan, National and Radisson. Upper
Upscale segment numbers per Smith Travel Research. Relative RevPAR
Performance Base Year = 2008
82.4
87.6
93.3
93.1
96.8
99.6
70
75
80
85
90
95
100
2008
2009
2010
2011
Upper Upscale
Adjusted Gaylord Hotels
UNIQUE
MODEL
OUTPERFORMED
DURING
THE
RECESSION |
 GROUP SEGMENT IS POSITIONED FOR RECOVERY
Lodging fundamentals suffered more
severe declines during the downturn vs.
other sectors
–
Expected to recover at a stronger rate
over the next few years
Group ADR has lagged the transient
ADR recovery and presents a greater
opportunity for upside at this point in the
cycle
Occupancy is expected to return to peak
2007 levels in 2012 giving operators
pricing power to drive rate growth
Rate growth is expected to drive strong
RevPAR gains until supply growth
accelerates in 2015
17
Group ADR vs. Transient ADR
(Year-Over-Year Growth)
Source: Smith Travel Research; reflects Upper Upscale segment across all U.S.
markets Gaylord Entertainment Co. |
 Gaylord Entertainment Co.
Pursue “low-hanging-fruit”
growth opportunities which include expansion opportunities at existing assets
Recent capital investments present a high-return, compelling opportunity for
organic growth Marriott
synergies
provide
an
opportunity
to
further
enhance
the
returns
on
these
investments
The
pipeline
of
potential
investment
opportunities
is
robust
and
attractive
SIGNIFICANT
ORGANIC GROWTH OPPORTUNITIES
18
~$25 million
Investment at Gaylord Palms
for a Sports Bar & 2 Pools
$13 million
Resort pool at Gaylord Texan
Recent Investments
Robust Pipeline
Texan room expansion
Opryland room expansion
Palms room expansion
Dollywood joint venture
(adjacent to Opryland)
Resort pool at National |
 Gaylord Entertainment Co.
VALUE
ENHANCING ACQUISITIONS
We intend to broaden the geographic diversity of our portfolio through
acquisitions Acquisition opportunities will be pursued only if our cost of
capital is competitive and accretive to shareholders
–
The REIT will seek to purchase below replacement cost and apply its group expertise in
yielding attractive returns on group-oriented, resort assets
The following parameters will be used to target acquisition opportunities:
–
Group-oriented
large
hotels
and
“overflow”
hotels
with
existing
or
potential
leisure
appeal
•
Upper-Upscale assets with over 400 hotel rooms in top group destination
markets •
Highly accessible assets located in urban and resort markets
•
Possess or are located near convention centers
–
Present a repositioning opportunity and/or would significantly benefit from capital
investment in additional rooms or meeting space
Existing property brand flag will no longer be a constraint to acquisitive growth
19 |
 ESTIMATED REIT VALUE
CREATION – THREE COMPONENTS
20
In addition to the cost savings highlighted above, Gaylord expects revenue synergies
from a combination of: o
Marriott’s strong relationships with meeting planners and group customers
o
Access to Marriott Rewards program members
Gaylord Entertainment Co.
1
Represents taxes associated with up-front payment net of the Company’s
remaining Net Operating Losses (NOLs). 2
Based
on
estimated
earnings
and
profits
purge
$415
-
$450
million
resulting
from
REIT
conversion,
with
20%
being
funded
with
cash
and
80%
funded
with
stock.
3
Property level cost savings include estimated cost and procurement synergies; savings
shown are net of management fees. 4
Corporate savings shown are net of management fees. |
 BALANCE SHEET AND LIQUIDITY
Company has no maturities until the third quarter of 2014 and has ample liquidity
Gaylord
has
less
leverage
than
the
majority
of
lodging
REITs
(4.5x
vs.
lodging
REIT
average
5.4x)
Gaylord
will
have
adequate
interest
coverage
relative
to
other
lodging
REITs
(6.0x
vs.
lodging
REIT
average
3.4x)
21
B3/B+
Corporate Family Rating
Caa2/B
Senior Unsecured Rating
$340 million
Revolver capacity
Debt Maturity Schedule
US$ in millions
1
Based on debt as of Q1 2012 and 2012E EBITDA per high end of Gaylord Entertainment
consolidated EBITDA guidance. 2
Based on LTM EBITDA and LTM net cash interest expense as of Q1 2012.
3
Subject
to
compliance
with
terms
of
Notes
indentures
for
6.75%
Unsecured
Notes.
4
Source:
Company
filings
As of
March 31, 2012
1
2
Gaylord Entertainment Co.
3
$400.0
$185.0
$360.0
$152.2
2012
2013
2014
2015
2016
2017
Term Loan (L+225)
Revolver (L+225)
3.75% Convertible Notes
6.75% Unsecured Notes |
 Gaylord Entertainment Co.
REIT – DIVIDEND POLICY
22
On January 1, 2013, Gaylord Entertainment will declare its status as a Real Estate
Investment Trust
–
As
required
by
the
IRS,
the
REIT
will
distribute
at
least
90%
of
its
taxable
income
to
shareholders
through
an
annual
dividend
–
Distributions
greater
than
90%
of
taxable
income
will
be
at
the
discretion
of
the
REIT’s
Board
of
Directors
and
will
be
based
on
the
level
of
cash
flow
generated
and
the
liquidity
needs
of
the
business |
 INVESTMENT HIGHLIGHTS
23
New Co REIT
Flexible capital
structure
High quality
purpose-built
assets
Significant
synergies from
partnership with
Marriott
Improving lodging
fundamentals
Solid organic and
external growth
strategy
Gaylord Entertainment Co.
Unique business
model |
 RECONCILIATION OF NON-GAAP FINANCIAL METRICS |
 Gaylord Entertainment Co.
25
Reconciliation of Non-GAAP Financial Metrics
RECONCILIATION OF NON-GAAP
FINANCIAL METRICS
Source:
Company
filings
$ in thousands
Full Year
TTM
Gaylord Entertainment Company
2011
as of 3/31/12
Net income (loss)
$10,177
$18,162
(Income) loss from discontinued operations, net of taxes
(109)
(126)
Provision (benefit) for income taxes
7,420
12,856
Other (gains) and losses, net
916
725
Income from unconsolidated companies
(1,086)
(913)
Interest expense, net
62,213
55,785
Operating income (loss)
$79,531
$86,489
Depreciation & amortization
125,289
128,666
EBITDA
$204,820
$215,155
Full Year
Gaylord Entertainment Company
2012 Guidance
Estimated operating income (loss)
$118,450
Estimated depreciation & amortization
122,400
Estimated EBITDA
$240,850
Note: Full Year 2012 Guidance shown is the high end of the range. |