People are going on vacation in the highest numbers since before the pandemic and consumer spending has increased dramatically. However, business and group travel still haven't started to make a significant comeback. In this Fool Live video clip, recorded on June 14, Fool.com contributors Matt Frankel, CFP, and Toby Bordelon discuss why Ryman Hospitality Properties (RHP 1.10%) could be a big winner when these types of travel finally get back to normal levels.
Matt Frankel: My next one is because I'm the banks and real estate guy, my next one is a real estate company called Ryman Hospitality Properties. You might not know the Ryman name unless you live in Nashville. This is the company that owns the Ryman Auditorium and the Grand Ole Opry. They have some outperformance venues. But the biggest business is hotels. They own five gigantic hotels, all operated under the Gaylord brand name. If you live in the DC area, you might know Gaylord National Harbor. Their flagship one is in Nashville, the Gaylord Opryland. There's one in Central Florida called the Gaylord Palms. There's one in Denver, and there's another, I'm drawing a blank there, I think in Texas. There's five of those. The thing to know about the Gaylord's, they are all convention hotels. They are five out of the six largest hotels in America by meeting space outside of the casino industry. This was not a great hotel business to be in in 2020. There were no group events happening. I went to CES in January 2020 and I think that was the last convention that existed. Even now, conventions really aren't picking up in large numbers just yet. We've seen travel demand pick up. We've all talked about that. I mean, out of the five stocks you've heard about so far, travel demand was talked about in at least three of them. But most of the travel we're seeing so far is leisure in nature. It's important that there is two travel worlds, there's Leisure and business. Leisure we're seeing pick up. That has not helped Ryman that much. They've done a good job of pivoting their properties toward Leisure Travel somewhat. For example, the one in Central Florida is right near Disney World. They were able to sell that to people going to Disney (DIS -0.11%) World to some degree. That was their highest occupied property in the first quarter, it was under 25% occupied. One of their properties, the Gaylord National in D.C., was so hard hit at the beginning of the pandemic and would've done so little business. They decided it was better to just close, and it's still closed today. It's been closed for over a year. They decided to go ahead and do a large scale renovation of the rooms and just leave it closed through this July. Really hard hit business. A lot of hotels we have seen coming back, the Gaylord has not, but there is light at the end of the tunnel. They've seen very few cancellations for the second half of this year. Ryman has rebooked over 1 million canceled room nights as they were canceled during the pandemic, about two-thirds of the total that were canceled are being rebooked and squeezed into future years. The future looks really good, 2022 is tracking better than 2019 date at a year before. In other words, 2022 could actually be stronger for Ryman's convention business than 2019 was pre-pandemic. This is a business that is just, picture the group travel industry like a spring. In 2020, you spend all the time stretching the spring back and now it's really ready to explode. I think that's what we're going to see. Not necessarily, I think by the end of the summer, we're going to really see that start to come back, 2022 is going to be a monster year for the group travel business.
Toby Bordelon: Thanks, Matt. I think you answered this to some degree, but I just want to focus in on it. When you say convention travel, business travel, Vegas pumps my mind. Because I guess a lot of like Ryman, the Vegas resorts, they get a lot of their revenue from business travelers, by the image in my hair and head of just people going to have fun, a lot of it is those conventions. What do you think? Do you really think these big conventions are coming back soon in the same way we had in before, or if not, what's Ryman's place in that world? What's their place in the world where maybe more people are working remotely or doing flex work? Well, what is their future look like?
Frankel: Two points. One I think that most conventions in Vegas happen to give people an excuse to go to Vegas, not necessarily because they really want to be there. No one wants to have a meeting in Vegas, they want to go to Vegas, have a meeting, then do other stuff. Usually, when I'm in Vegas, it's for a meeting. But number two, you mentioned remote work and that's a really good point. What Ryman CEO explained, that's actually really interesting. He said a remote workplace actually creates more of a need for occasionally gathering together in large groups and going to conventions and actually having some interaction. Because I can tell you, as someone who goes to conferences in Vegas three or four times a year, in normal times, there is value to that. Someone who works from home normally, there is a lot of value to being in a room with a couple of thousand other professionals and doing some networking and stuff like that every so often, even if you prefer to work at home. The transition to remote work, it looks like remote work isn't going to happen after the pandemic in the numbers that people originally thought it would, but it's still going to be more than it was before. That could actually create more of a need for these group events and things like that. Don't necessarily think it's going to hurt the group industry, it could actually have the exact opposite effect.