Tag: RHP

I previously wrote about our country music bet via Ryman Hospitality. Today they closed the transaction to recapitalize the entertainment (country) side of the business, kicking ~$575M up to the hospitality company to de-lever the business. Remember, Covid stopped the convention center hospitality business entirely. While Ryman did a great job navigating it, they had no choice but to take out loans to fund the business while demand recovered painfully slowly.

Today the company is, roughly speaking, back to its fighting weight with room rates well above 2019 levels, a marquee set of convention center real estate primarily focused on the growing parts of the US, and a new partner in the growing entertainment business (and a setup for the eventual spinoff of the business).

While the stock market screens colors and numbers give the impression that the world is ending, remember that there is great work happening behind the scenes and strong companies with good balance sheets separate from the pack.

Disclosure: We own shares of Ryman Hospitality, this is not investment advice. Do your own work.

One investment I made principally in the major Covid drawdown in March of 2020 was in Ryman Hospitality. It’s a hotel company that owns the Gaylord hotels, which are group / convention specific hotels. Discussion of that business is for another day.

Ryman also has incubated a country music focused entertainment business segment which includes live music venues (Ole Reds, Austin City Limits Venue, Grand Ole Opry in Nashville, etc.) and a country music digital streaming business (Circle). The country business is booming as it is already well above 2019 levels of business and just announced a new Ole Red music venue right on the Vegas strip next to Caesar’s Palace.

Here’s a broad view at country music statistics for the US, showing good tailwinds despite what many (read: anyone who doesn’t like country) may think:

Yesterday, Ryman announced that it recapitalized its country music entertainment division with both equity and debt. It sold 30% of the equity for ~$300M and took out a $300M term loan at the entertainment level, ultimately to dividend ~$600M up to the parentco / hospitality business. This valued the business around 17-18x EBITDA.

Ryman lost ~$600-700M in 2020/2021 due to Covid shutting down its business in totality (zero conventions) – so in large part this gets them back to normal with respect to their balance sheet. The buyer was effectively NBCUniversal / Comcast – so it’s a strategic buyer with deep pockets and a strong interest in growing the business.

All in all, I’m happy Ryman is back on its front foot, and continues to own 70% of the business. If they spin off the country business, it’s one I likely will not sell, and perhaps buy more of if the price is right.

Disclosure: We own shares of RHP, this is not investment advice. Do your own work.