Ryman Hospitality Properties: Here's Why This Hotel REIT Is Worth Owning

Ryman Hospitality Properties (RHP 0.09%) is certainly hurting this year. At a time when conventions, conferences, and other large events are just not happening, it's not a great time to own group-focused hotel properties. However, there could still be a very bright future for this company, and in this Nov. 5, 2020 Fool Live video clip, Millionacres REIT analyst Matt Frankel, CFP and Millionacres editor Deidre Woollard discuss the recent results and why investors should look beyond the pandemic. 

Matt Frankel: Moving on to our next one, which is Ryman Hospitality Properties, ticker symbol is RHP. If you've ever been to a Gaylord Hotel, this is their parent company. Unlike Empire State, Ryman is not profitable. Ryman's hotels are specifically oriented toward conventions, conferences, other large group of events. The one in DC hosts the big ICE exhibit every year, just to name one thing. The DC one is actually still closed. They're using this opportunity to renovate it a little bit. It's not a great hotel just for leisure travelers, so they decided to keep that one closed. The other four are open. But for Q3, they were less than 50 percent occupied. That's better than zero, and Ryman's obviously decided that that's enough that it's worth keeping them open for, but this is not a profitable company right now. They're burning through about $23 million a month. They have that to burn through. They have over 700 million in liquidity, so they're not in the danger zone or anything like that, which is why their stock actually has not done that bad since start of the pandemic. They also own some entertainment venues. They get their name from the Ryman Auditorium in Nashville. They also own the Grand Ole Opry, which had been experimenting with some very, very lightly attended live shows recently, and just got the go-ahead to bump that up to 25 percent capacity. That could be a positive going forward. But for now, they are hemorrhaging money, but they've rebooked successfully over a million canceled room nights for subsequent years. Deidre, I'll let you take this because you actually tweeted out a comment by Ryman's CEO about the future of conferences and conventions, if you remember that one.

Deidre Woollard: Yeah. Colin Reed was talking about how he feels like the Work From Home movement actually benefits Ryman a little bit because they're already seeing some companies hold their retreats at the properties and that that's going to continue. If people are a distributed workforce, they will need to get together from time to time, and what better place to do it than at a Ryman property. They're beautiful places to be, so it's a treat for the workers and there's plenty of room. So he really sees that as something that's going to be something people will be looking at going forward.

Matt Frankel: I'm glad you mentioned just how beautiful and iconic these hotels are. They are very valuable assets. They're really one of a kind. I don't know the DC hotel market that well, but I haven't found anything that compares to the Gaylord National Harbor yet in terms of just awe factor when you walk in the door. Conferences are not going to go anywhere. If anything, the pandemic could provide a nice little tailwind, because like I said, in-person work is collaborative, it's good for team-building, it's more productive. We're on Zoom (ZM 1.57%) right now, I love Zoom, but there's value to being in-person. When this is over, I hope to be doing a show like this with Deidre from our studio at Fool HQ. But having said that, people want to be in-person. For Ryman's quarter, I was pretty impressed with their rebooking rate. I'm optimistic about them starting to open their entertainment venues a little bit, and we'll see if holiday travel benefits them at all. I will say they've done a very good job of temporarily pivoting for leisure travel, especially at their properties that are located in touristy areas. They're real close to Disney (DIS -0.04%) World, for example. That's been their highest occupancy. I want to say it was close to 30 percent for the third quarter, which is pretty impressive. Ryman's got a big hotel. These are a lot of rooms to sell, so to temporarily pivot like that is impressive. We'll see if the holiday season boosts them, but I'd give them a B or a C as well for the quarter, just because they really haven't shown us anything yet. The fourth quarter is when they're really going to start to potentially show us something. What grade would you give Ryman in this quarter, Deidre?

Deidre Woollard: I'd say a B minus. The other thing I'm interested in is what they're doing with their entertainment network. It's called Circle, their entertainment network that they're starting to build. I think that's interesting. There's just a couple of things about Ryman. It's a hotel brand for sure, but it's also trying these other things, so it's got just a little bit more than just a pure hotel play to it.

Matt Frankel: Yeah. I'm glad you mentioned Circle. They're actually using that to monetize some of these socially distanced concerts that generally wouldn't be profitable, but now they can live stream them and make a little bit of money. Again, I'm glad we could both agree. A B, B minus, C maybe.