© 2024 Alpha Spread Limited. All Rights Reserved.
www.alphaspread.com is not operated by a broker, a dealer, or a registered investment adviser. Under no circumstances does any information posted on www.alphaspread.com represent a recommendation to buy or sell a security. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The information on this site is in no way guaranteed for completeness, accuracy or in any other way. In no event shall Alpha Spread Limited be liable to any member, guest or third party for any damages of any kind arising out of the use of any content or other material published or available on www.alphaspread.com, or relating to the use of, or inability to use, www.alphaspread.com or any content, including, without limitation, any investment losses, lost profits, lost opportunity, special, incidental, indirect, consequential or punitive damages. Past performance is a poor indicator of future performance.
You don't have any saved screeners yet
Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
[00:00:01] Welcome to Ryman Hospitality Properties, third quarter Twenty twenty earnings conference call hosting the call today for Ryman Hospitality properties are Mr. Colin Reed, chairman and Chief Executive Officer. Mr. Mark Fioravanti , President and Chief Financial Officer. And Mr. Patrick Chaffin Chief Operating Officer. And Mr. Scott Bailey, President, Opry Entertainment Group. This call will be available for digital replay. The number is eight hundred five eight five eight three six seven and the conference I.D. number is five six seven eight eight four three. At this time, all participants have been placed on listen only mode. It is now my pleasure to turn the floor over to Mr. Mark Fioravanti. Sir, you may begin.
[00:00:50] Thank you, Maria. Good morning, everyone. Thanks for joining us today. We apologize for being a few minutes late. We had some technical challenges with our dial in, but it is twenty twenty, so I wouldn't expect anything less for this year. So this call may contain forward looking statements as defined in the Private Security Litigation Reform Act of 1995, including statements about the company's expected financial performance. Any statements we made today that are not statements of historical fact may be deemed to be forward looking statements, words such as believes or expects or intended to identify these statements, which may be affected by many factors, including those listed in the company's SEC filings. And in today's release, the company's actual results may differ materially from the results we discuss or project today. We will not update any forward looking statements whether as a result of new information, future events or any other reason. We will also discuss non-GAAP financial measures. Today, we reconcile each non-GAAP measure to the most comparable gabb measure in exhibit to today's release, and I'll now turn the call over to Colin.
[00:01:58] Thank you, Mark. And good morning, everyone. Well, I never imagined I would start off an earnings call sounding optimistic after a quarter in which we reported 35 million of negative adjusted EBITDA EPS. But that is just how strange this year has been. The third quarter was our first full quarter of operation since reopening for about five Gaylord Hotels. And we observe many green shoots and encouraging sequential trends in this business as we move through the last three months. And the same can be said for our entertainment business. I'd like to highlight many of these because I believe the data from our third quarter performance provides solid evidence of the strong position our company is in as we get closer each day to a vaccine and therapy and therapeutic resolution to the covid-19 pandemic, none of us can say precisely when that day will occur. But if we assume, as most experts do, that a viable vaccine is possible around the end of this year or the beginning of twenty one, with some additional time to achieve widespread distribution, then we can paint a very good picture for you of how we expect our business to perform over the next 12 to 18 months. What's more, regardless of the exact timing of that inflection, I can assure you that the longer term in 2012 and beyond, our business is poised to emerge from this period in an even better position than before covid-19.
[00:03:32] And I'll discuss the unique attributes of our business and the broader trends in our industry and the economy that gives us the confidence to suggest that. So let's look at the progress we made in the third quarter. For starters, we considerably improved our adjusted EBITDA EPS sequentially compared to the second quarter of this year when we were essentially fully shut down by, in fact, 30 million dollars. Our adjusted EBITDA are a loss in the quarter of thirty five point three million, combined with our average monthly interest, expense and debt service of nine and nine point five million and about four point four million in maintenance. Capital expenditures in the quarter represents a cash burn of about twenty two point seven million per month during the quarter. This is below our forecast of twenty five million per month, which we provided in early September, which was itself below the 20 to 30 million range we estimated in our second quarter call in early August. The primary drivers of this steady improvement in cash burn are the positive trends we've seen in our hotels, both from a revenue and expense perspective since we reopened for our Consolidated Hotel segment. Third quarter occupancy was fourteen point six percent, with ADR down only three point eight percent, compared to the third quarter of last year. Now, if we exclude the national, which remain closed in the third quarter and our two small overflow hotels, the combined occupancy rate from initial reopening through September 30 for just the four Gaylord Hotels has been eighteen point one percent that an average daily rate of one hundred and eighty four dollars.
[00:05:23] This combination of occupancy rates and solid outside of the room spend we have seen is comfortably above the levels necessary to justify the reopening decision and has been primarily driven by the amount of leisure transient demand we've been able to induce throughout the summer and early fall. And we continue to see this in October, which has performed better than we'd expect expected especially. In light of the current increases in covid-19 cases in the news globally, naturally, this has been as optimistic as we head into the holiday season, which is typically our strongest period Polizia transition and in which we believe we have a compelling program programing slate this year. We began with our Halloween program and now we're moving into our Thanksgiving and Christmas displays, which will be headlined by our first ever I love Christmas movies event that will occur around Thanksgiving through year end. This program replaces the exhibit we have typically hosted and instead gives us gives our guests an opportunity to immerse themselves in 13 scenes from classic Warner Brothers Christmas films such as Elf, Polar Express and Christmas Vacation. We've been selling tickets since October 1st and been pleased with the response, including both ticket and room night packages drilling down a little bit.
[00:06:49] Our occupancy levels have been led by the Gaylord Texan, which achieved over twenty seven points in the third quarter. That is an average of four hundred and eighty six rooms sold per day. And included in that, we were pleased to host almost eight thousand one hundred group room nights in the quarter at the Texan as well. In fact, the Texan turned in an operating profit in the third quarter with a positive adjusted EBITDA R.E. of three hundred forty five thousand dollars. And that figure is after two point four million of expenses that were quite clearly devoted specifically to covid-19 mitigation, which includes severance, furlough benefits and specific material supplies. The Texas the Texan was followed by the Gaylord Rockies, which achieved only nineteen, which achieved over nineteen points of occupancy in the third quarter. The Rockies had a modest loss in terms of adjusted EBITDA, but if you also exclude the approximate one and a half million dollars of similar direct covid-19 related expenses, this property would have also been in the black by about 200000. Another way to look at this performance is this After excluding covid-19 costs, our hotel portfolio generated a pro forma operating loss of only three million dollars per month on an occupancy of just 15 percent during the third quarter.
[00:08:22] Now, this is really a remarkable and chief achievement for the the operating and asset management teams of our company, both in terms of scaling our expenses quickly in response to the sudden demand shock, as well as on the revenue side, quickly pivoting to optimize drive to Lesia demand in the absence of meaningful group business. It really confirms the reopening of these four hotels was absolutely the correct decision. And we we plan to continue to build on this momentum. I should add that we are accumulating valuable lessons from this experience that we will carry forward with us. Well, after this pandemic is over, another bright spot for our hotels was was with regard to cancelation and attrition fees where we were able to collect close to seven million in the third quarter. This is an area of our business where we've been very conservative in setting expectations. And I've often emphasized how we are prioritizing bookings and preserving customer relationships over media collection of full contractual fees. Now that we're open, what we've been able to do in many of our customer conversations is to strike a great balance between collecting some partial cancelation fees upfront in exchange for a rebooking. And that has been a win win for us and for the customer. This brings me to yet another green shoots in our hotel business, and that is our sales activity and the on the books pace for the short and long term.
[00:10:00] In the third quarter, our gross new bookings totaled 660 9000 room nights, which is which was a decline from the third quarter of last year of only a little over 22000 room nights. Now, of course, a substantial amount, about seventy seven percent of these new room nights were those bookings of covid related cancelations, which I just mentioned. But nevertheless, these are real downstream bookings. In fact, as of October the 30th, we've rebooked now over fifty four percent of all carbon related cancelations today. Frankly, I do not know of another company in our space with this type of performance and is above our aspirational goal of fifty percent, which we set at the outside of the. Outset of the pandemic back in mid-March, back to our third quarter sales, what is remarkable is that the flip side of that 77 percent means that twenty three percent, almost one quarter of ourselves activity in the last three months were entirely new future bookings meeting planners right now are experiencing something they've never experienced in their careers with essentially every city convention center closed in, every large group canceled in the near future. These folks are so distracted and I find it remarkable that we have their attention to the extent that we do so.
[00:11:29] While certainly the pace of new bookings has slowed as meeting planners, not surprisingly, await more clarity on the next 12 months or so, there remains an encouraging level of activity in some of the outer years that is 22 and beyond, where planners and customers feel they have more visibility and still still comfortable making longer term plans.
[00:11:54] The net net bottom line of our cancelation rebooking is the new bookings. Is that is that as of September 30th, we still have over 38 points of occupancy on our books for net next year, Twenty twenty one. Of course, this is below where we would typically be standing with two months left to go before the start of the new year, which is normally in the range of 45 to 50 points or so. But under the current circumstances, this is a substantial book of business which is mostly concentrated in the second through the fourth quarters of next year. We believe this bodes quite well should a vaccine arrive by the year end of the year, by the end of the end of this year, with potential for widespread distribution to be achieved by the midpoint of next year in a best case scenario with a timely vaccine approval and distribution that hastens people's sense of return to normal, our current book would imply that the second half of next year could look pretty close to normal. Again, I'll emphasize that this is under a timely vaccine scenario, which of course is out of our control, but appears to be one reasonable possibility, according to the experts. Furthermore, if you look past next year, we have thirty nine point seven points of net occupancy on the books for 2022, which is in fact slightly ahead of last year's pace when we had thirty nine point two per cent points of occupancy on the books for T plus two or twenty one or twenty twenty one at that time. This means that today when we look past the next 14 months, we are still looking at a healthy, normal book of business in the long term, as long as this environment not does not drag on for another year or so. Now, this is the point where you're probably wondering what what what about the future?
[00:13:56] Won't your industry be permanently changed as a result of covid-19? We've had many conversations with investors recently and meeting planners, and obviously this is the question that needs very clear clarification. They say it's great that you still have this book of business, but what about the nature of group travel itself after covid-19? Won't it be replaced by Zoome or the like or one corporation simply stop traveling? So let's talk a little more about the big picture trends in the years ahead and why we believe we will emerge in an even better position, just as we have after shocks like September 11th, the financial crisis or the great flood of Nashville. We've always talked about the special attributes of our group business that makes it so distinct from other forms of travel, both leisure and transient, both leisure transient and business transient.
[00:14:56] We have always emphasized the supply side of the equation as well. We don't see any of these key advantages dissipating as a result of covid-19. In fact, we see them becoming more entrenched. Now, let's talk about disruption first, for example, Zoome and the idea of virtual meetings or the related work from home trend. Now, while some of a life is a wonderful, wonderful tools for the work for workforce collaboration and small team meetings, or for a salesperson to check in with a client, it cannot replace a 500 or 1000 person Keano networking conference or an incentive reward trip for 200 of the company's best salespeople, or the manufacturing company that wants to showcase its new line of products to hundreds of dealers. And professional association members don't typically pay thousands of dollars for the privilege of attending a virtual conference. Nor will the vendors and exhibitors who want to sell their profit to sell to those professionals pay to pitch their products and services if they can't set up physical booths in an exit in an exhibit hall to capture foot traffic. Indeed, four association groups, their annual meetings and conferences are typically their number one driver of revenue to support their mission and often their very existence. So we don't see technology disrupting this business in a meaningful way. And as a reminder, associations and other corporate groups comprise about one half of our corporate of our group business in a given year for corporate customers who may institute more work from home arrangements for their day to day operations. We believe human nature dictates the more employees are distributed at home, the greater their desire and incentive to occasionally gather and network in a safe environment with their colleagues once they no longer interact daily.
[00:16:57] I'm a big believer in the power of corporate culture culture and when folks are working remotely, it's so hard to develop a distinct industry leading culture. Therefore, I believe that if companies do become more work from home over time, the good companies will always bring their people together from time to time. Now I'm going to break from my script here and show you a quick story. Last December, we held our annual board meeting, a December board meeting at our Colorado Colorado Hotel. Mark and I was walking the convention and exhibition space and there was a large tech company meeting there, about 500 people. Well, guess what? This company was one of the virtual meeting businesses that have become a household name in this country since covid. And that is what our hotels with the industry leading meeting space per room are a custom custom designed to permit companies like that to do come together, build culture, talk strategy and celebrate. Finally, even if one insists that there must be some disruption from technology to at least the smallest groups, I would note that the smallest slice of our group business, that is meetings of less than 100 room nights on peak only account for 10 percent of our group business. In short, we believe the fundamental motive, the motive, motivations for why groups meet will not materially change in the post-Cold War world.
[00:18:28] And on the supply side, the entrenchment of our advantages is even clearer. Supply growth in large 1000 plus room convention hotels with vast meeting space has been limited for several years now due to a number of structural and economic factors that we have often talked about. These include include deep, fewer deep pocketed financial sponsors with long enough time horizons willing to take on development risk than in past in decades past, and the reduced availability in municipal incentives which often are required, often required to make the economics of new construction work. And there's simply nothing about covid-19 that we see leading to improvements in supply. Indeed, we believe you're more likely to see marginally competitive supply come out of the industry as some of the old vertical large group hotels that need a ton of capital in more dense urban downtowns, which lack the volume of meeting and outdoor space of our assets, become less attractive to groups in the immediate post-Soviet era imposed in the post-Cold War world industry leading meeting space for room at horizontal footprint. Our open air atrium is all under one roof. Experience that requires little use of public transport, trade, transportation or travel beyond the control confines of hotels becomes quite becomes a quite a compelling offering as long as covid remains in the memories of customers. So we see a very bright future for our hotels. Now, let me quickly touch on our entertainment business as there's a lot, lot, lot happening there.
[00:20:20] The discussion has to start with the old red brand where our reopened restaurants have been performing really well under the circumstances. That includes the ongoing capacity constraints here in Nashville over Gatlinburg has been the real standout here, approaching Perrigo with levels of performance lately, with revenues down 22 percent in the quarter, but only 13 percent in the most recent month of September. Meanwhile, adjusted EBITDA are in the quarter was up 68 percent over last year the quarter and was within 20 percent of our pre covered plan heading into this year. So we're really encouraged by this and believe that that as the tourism markets recover in Nashville and and Orlando, these locations will play catch up with Gartenberg as well.
[00:21:08] Turning to our music venue, the venues, we're very excited just after we were very excited just after the quarter ended to begin phasing in live audiences once again at the grant at the Grand Ole Opry show, which we've been live streaming throughout this pandemic. As a consequence of our collaboration with Metro Nashville Health Department and the city's covid-19 Task Force, we were able to welcome 6500 ticketed guests to witness the ninety fifth anniversary show on October 3rd. Since that time, because of the rigorous safety protocols we put in place, we've been permitted to move the audience from 500 to 800 and now to 1100, which represents about a 25 percent capacity. While audiences will continue to be limited in the foreseeable future, we plan to continue in November and December with shows on Friday and Saturday, though we may add more shows at a later date and increase the audience size as we work along alongside Metro health authorities to ensure proper safety precautions. And one very interesting thing that we've noticed about these ticket sales when we reintroduce live audiences at the Opry is that a large percentage of them were purchased outside of Tennessee on essentially a week's notice and from locations that would be considered flying distance such as Washington State. We believe this is a very powerful indicator of the pent up demand among our target consumers and confirmation of the new customers we're able to convert and bring into our brand through our extended digital reach and streaming products, which we'll talk about in a second.
[00:22:56] Turning to Ryman in the third quarter with six. Pilot piloted live at the RAIMUND Pay Per View concert series, this was a run of six weekly Friday night concerts through September the 18th, beginning in week four of the series. We will also we also introduced a limited in venue audience of one hundred and twenty five people, which grew each week, each subsequent week, committing us to host up to 375 by week six. And currently we're permitted now to conduct these shows at a twenty five per cent capacity, or approximately 590 guests. This hybrid of live audience plus pay per view model proves successful during its initial run, delivering on our goals for profitability from streaming purchases, live ticket sales and sponsorships while generating a high degree of favorable media exposure and artists feedback. We're excited to build on this model as a promising path through the pen, through the pandemic period. And we have more shows lined up in the fourth quarter. In the meantime, our fans across the country are increasingly finding us online and over the air, not only through those live at the Opry and the Grand Ole Opry live streams, but also through the content we deliver direct to consumers through our new linear TV television network and video on demand channel. So our broadcast of our lives, which are carried by circle and over 80 network affiliates, achieve and achieve an average rating of two point two per show through the twenty five weeks ended September 19. We've seen so-called social media following and engagement grow steadily along alongside these viewership numbers, and we added new distribution partners for the network in the third quarter.
[00:24:52] Fans can now access through our network affiliates, satellite, cable and as of September, the smart TV platforms of Roku, Visio, Samsung and Comcast. Some of these additional video on demand platforms reach over eighty nine million monthly average consumers and Circle is off to a hot start on them. With over 20 million minutes of viewing time to date since launch, live TV streams have exceeded 40 million in over 100 countries since the second week of March. And the Opry like consistently ranks number one on the polestar, live streaming charts across all genres, generous, not just countries. And all of these streaming interactions will drive demand to our businesses. Once we get our lives back and we're excited about the future, we encourage you to visit circle access dot com and check it out for yourselves. So in conclusion, while there's no sugarcoating that, this is an extraordinarily tough time for our businesses and for our customers, our employees and our communities in which we do business, covid-19, in a weird way, is giving us the opportunity to rethink and reengineer our businesses. So so when these crazy times are behind us, we will emerge stronger than we were when this pandemic hit seven months ago. So that's a lot of data. I wanted to give you a lot of information on what's going on in our businesses. And now let me turn it over to mark the fact.
[00:26:28] Colin, let me first remind investors that we've posted a brief supplemental investor presentation on our website. I encourage you to review the data in that document alongside our remarks on this call. In our earnings release in the third quarter, the company generated total revenue of seventy point two dollars million, which was a fifty five point six million dollar increase sequentially from the second quarter for the most when most of our assets were closed, net loss to common shareholders was one hundred and seventeen point seven dollars million, or loss of two dollars and 14 cents per fully diluted share, which is a fifty five point eight dollars million sequential improvement over the second quarter. Our third quarter results include a seven point eight dollars million non-cash charge, as we reported, a credit loss related to the Gaylord national bonds, to the continued closure and reduced revenue projections for that hotel. On an ongoing basis, the companies consolidated, adjusted EBITDA already was negative thirty five point three dollars million, representing a sequential improvement of approximately 30 million dollars in the second quarter and adjusted funds from operations available to common shareholders was a negative sixty point three dollars million, or a loss of a dollar nine per fully diluted share, which improved thirty point four dollars million sequentially. Our cash interest expense for the third quarter was twenty seven point one dollars million, and we amortized one point twenty five dollars million of our term loan B principal. So our debt service was twenty eight point four million dollars in the quarter, or about nine point five million dollars per month.
[00:28:02] This is consistent with the second quarter and in line with the estimates we provided in our investor update. We also spent approximately four point four dollars million on essential maintenance capital, it was not funded by our efforts in reserve. Together, these three components are adjusted, even dollar tree loss, our debt service and are not fancy maintenance capital expenditures, puts our approximate monthly cash burn for the third quarter at twenty two point seven dollars million. This is over two million dollars better than we anticipated in our investor update in early September. In mind, nine million dollars per month, better than our burn rate in the second quarter. In addition, we spent approximately twenty one million dollars towards the completion of the Gaylord Palms expansion, leaving thirty seven million dollars remaining to spend on that project, including our construction contingency. We continue to minimize all other capital expenditures, with the exception of the Rooms renovation of the Gaylord National, which is ongoing while the hotel is closed, this renovation, like all of our past room renovations, is being funded separately by our raffone reserve, which carries its own restricted balance of 40 million dollars as of the quarter end rather than from unrestricted liquidity. As of September 30th, our unrestricted cash on hand was fifty two point two dollars million, which, combined with our available capacity in a revolving credit facility of six hundred and sixty five million dollars, provides total available liquidity of seven hundred and twenty three million dollars. From this, we would deduct the thirty seven million dollars we have earmarked to spend to complete the Gaylord Palms as well as twenty six and a half million dollars that we spent on our semiannual interest payments for our senior notes subsequent to the quarter.
[00:29:49] And in October, this payment covered the prior six months accrued interest that was already counted in our cash burn for those earlier months. This is pro forma available liquidity going forward from September 30th of six hundred and fifty three point seven dollars million that are currently forecast the cash burn rate for the fourth quarter of twenty two to twenty four million dollars. This implies just over twenty eight months of available liquidity. If we continue to run at our current levels of performance with no vaccine, no improvement in group travel or other change in status. We have no near-term maturities and our covenant wavers are in place for the first quarter of twenty twenty one with modified annual annualized calculations thereafter. We have an excellent relationship with our long standing bank group, and if we need additional covenant relief beyond this period, we're confident we can obtain an. So we continue to be in a strong position to weather the current situation for an extended period if needed. So we believe and inflection for our industry will come sooner for the reasons Carlin outlined, starting with the consensus scientific view of a viable vaccine rollout late this year or early next year. And with that, I'll turn it back to college for any closing remarks.
[00:31:03] No closing remarks. Mark, thank you very much. Maria will open the floor to questions.
[00:31:10] Thank you. The floor is now open for questions. If you wish to ask a question at this time, star, then the number one on your telephone keypad. If at any point your question has been answered and you wish to remove yourself from the queue, press the pound key. Our first question comes from one of Smedes Rose of City.
[00:31:33] Hi, thanks, Colin. I agree with you and certainly on the longer term outlook for your relative advantages in the group space as it eventually recovers, but I wanted to ask you just kind of in the near term, you know, when you from your last deck to this one, we saw a pretty significant cancelations in the first quarter, I think is about 20 percent decline and ruminates on the books for the first quarter, which I realize is out of your control because the pandemic's still around. But, you know, this very favorable bookings trend. I mean, is it just a matter of people getting to kind of rebook? You know, the longer this thing lasts and they just keep sort of moving down the curve or are they paying penalties in order to rebook? Or maybe it just can provide a little more color around that.
[00:32:28] Yeah, and I'm going to push this over as well. For Patrick to weigh in on this, this is his living and breathing this every single hour of the day. Look, the reality is that when we when we all went into this thing back, it I remember the conference back in March when we really started the first week of March, really started talking about all this with the general consensus was that at that time we didn't know. Everyone thought maybe second, third quarter of this year, you know, this thing would that we would we would be over the hill and moving, moving away, moving back to normalcy. But the reality is this covid-19 is just taking longer to deal with. And and and there's no question that meeting planners are looking have looked aggressively at the first quarter. And the reason they do that, as you understand, Smeets, is that our contracts are set up in a way that if if if they cancel inside of six months, our group contracts are very explicit. If they cancel inside of six months, the penalties that they have a materially higher than if they cancel outside of six months. So we have seen leakage in the first quarter. We haven't seen a ton of leakage in the second, third and fourth quarter.
[00:34:02] And, you know, we are hoping that we get to this inflection point here with a vaccine sometime between now and the year end that will keep our second and third quarters pretty much intact. But, you know, our relationship with the meeting planning community has been very, very good over the last seven months. And we've as you've seen our numbers, we've been able to reboot fifty four percent of the cancer room nights. And I don't expect, you know, any any degradation to our ability to to rebook these room nights. Our relationship is is pretty good now with government restrictions falling away. Although, you know, we've seen in the last week or two, in the last few days some major changes taking place across Europe. Lord knows what happens post-election in this country to restrictions. You know, that will change that will change how we prosecute cancelation and attrition fees over the course of the next over the course of the next three to four months. But I would say, generally speaking, we're optimistic that we're going to see the trends continue in our favor here over the next two to three months. Patrick, you want to weigh in on this?
[00:35:31] Sure. Good morning, Spade's. And it's a very good question. Are we just allowing folks to kick the can down the road? What you saw on the third quarter is an increase in the collection of cancelation fees that we you know, compared to the second quarter. What's going on there that the vast majority of that is for cancelations into Twenty twenty one. And what we are doing is we're no longer just saying, hey, rebooking is fine, but reflecting cash in the short term as well as rebooking. So we recognize it's still a stress environment. But as we move into Twenty twenty one, as we promised we would, we've been putting greater penalties out there for just simply rebooking into the future. But we're having great success. And you saw the seven million dollars collected in the third quarter of this year.
[00:36:13] If you look at, you know, the combination of getting some cash and also getting the rebooking, we're having great success and making sure that's just not going out. You know, 10 years in the future. The majority of those bookings are going into the next three years. We also have a lot of bookings and cash collection discussions that are still in process. It may be hard to believe, but on average, our sales team is having to spend a large amount of time with every single one of these bookings. It's about one hundred individual points of contact that they have to make with that meeting planner to go through the full process of, hey, we have to cancel, let's get a booking out there and let's talk through the cash that we're going to have to pay to you. So meeting planners are feeling that it's getting more and more penalizing to cancel and rebook in Twenty twenty one because they are having to pay the cash. They don't want to. They're waiting until they absolutely have to make the call to do that. And as a result, we're getting a little bit of cash. We're getting the rebooking. There's tremendous value in having those bookings into the next three or four years. And, you know, we we are moving through this process as we get closer and closer to a foursome as you're no longer being in place.
[00:37:23] Thanks. I appreciate that. And then the other thing I just wanted to ask. As we think about cash burn, you, you know, you mentioned some severance and furlough fees in the quarter. What do you see that I guess, going forward? I mean, I guess the severance piece is sort of more one time in nature. So maybe can you sort of break out what you're seeing there?
[00:37:45] Yeah. The you know, we're not going to be replicating the severance pieces, the severance pieces we've done, we've we've eliminated quite a lot of jobs here in our hotel business. Patrick, you have the numbers at your fingertips.
[00:38:04] Yeah. So if you think about the third quarter on average, when we extend out an additional quarter from a benefits perspective to continue providing benefits to the folks, it's about two to three million dollars of expense for the quarter. On the severance side, you know, we incurred six and a half to about seven million dollars in severance in the third quarter of this year. And to the point that we hope that won't be replicated because we hope that this entire pandemic will be coming to an end in the short term. So that's kind of the run rate that we've been seeing.
[00:38:36] But but let me just emphasize and touched on that a little bit in the script. You know, we we've been we've been forced to with this pandemic. We've been forced to make some decisions here that, you know, in the ordinary course of business, we probably wouldn't have made where we've, you know, consolidated and I've talked about this before, where we've consolidated leadership roles. And, you know, it's extraordinary that that, you know, when you when you when you run for hotels at about 18 per cent occupancy and if you eliminate the code that costs, we're almost breakeven. And the reason for it is, is that we've made some, you know, very aggressive decisions on the consolidation of positions with Marriott in these businesses. And I would say, you know, when we when we get over this hill, get through the get through the tunnel, you know, we we want the uniformally, you know, just putting the structures in place that existed in February of this year. And I suspect that we will see improvement in our margins coming out, coming, you know, as we get as we emerge from from from this pandemic. So, you know, we've just got a few more months to deal with this cash burn. But then I think our business will will recover, will recover very quickly. And unlike, you know, the vast majority of the hotel industry, we do have these contracts in place where groups want to come. And, you know, we we had groups in September and October that wanted to come to Opryland willing to actually travel and do this. But we couldn't because we we were under on the MetroHealth restrictions. So I think our business will I think our business will recover pretty quickly. When the consumer has a sense of that. It's safe now to to travel.
[00:40:42] Great. Thank you, guys.
[00:40:43] Thanks, Smedes.
[00:40:47] Our next question comes from one of Shaun Kelley of Bank of America.
[00:40:53] Hi, good morning, everyone. Colin and Patrick, I wanted to stick with the maybe the cancelation fee mechanic first and just just to dig a little deeper. So obviously this quarter you've kind of done a little bit more of a hybrid where you give some, you know, refund and some, you know, some enforcement for the in exchange for the rebooking, I guess, as we move into let throughout the fourth quarter and Q1, does does that pattern stay about the same or do we actually see you move back to more of a traditional model where you'd have, I guess, even more enforcement of cancelation fees? And really what I'm asking is, you know, will you continue to collect more cash as time goes on here or are we going to just continue to strike this balance? And you feel comfortable with what that balance is right now?
[00:41:40] Yeah, so, Sean, this is a very complicated question that you've asked, it sounds simple, but it isn't. And and if I remind you that back in 09, when we we lost about 130, 540000 room nights when companies were just arbitrarily canceling because of the financial crisis we collected that year. Twenty eight million in cancelation fees. The reason we were able to do that is because there was no dispute in the dispute in the in the quality of the contract here. It's a little bit more it's a little bit more difficult because we've got government interfering in the relationship between us and the customer. Government is saying you you know, you can't travel here in Nashville up until, you know, about a month ago, we couldn't hold more than 20 people, group of 20 people under the ordinances that were in place. So the complicated part of all of this is what is going to be the overhang from federal government and state government and metro and the and the different health departments. We we we've we've got restrictions that have been put back in place in the state of Colorado recently. Now we've got a waiver at our hotel, but this is changing our dialog with the consumer. This this the government interference. Now, I suspect what's going to happen here is there will be there will be a vaccine that will arrive at some point. It will be disseminated. It will it will be distributed, not disseminated, distributed. And you will see easing of government restrictions that that will give us a ton more teeth in the negotiation with our with our customers. If a customer comes to us today and says, hey, you know, I feel like I need to cancel because I'm not sure I can get my people together.
[00:43:53] Let's pick a date, June of next year. You know, our argument to that customer is that very likely there's going to be no restrictions in travel in June of next year, therefore, you the cancelation fee. So a lot of this dialog depends on the customers self. They are loyal, frequent. Are they willing to rebook? Some of it will depend on when it is. Some of it will depend on where it is, whether it's Tennessee or whether it's Texas. And that how that's why Patrick was saying that. There is as we've as we've looked at it, customer by customer, there's up to, you know, potentially 100 interactions per customer when a customer cancels a large group with us. It is so complicated. But we are navigating this on a case by case basis. But I expect and I think, Patrick, I'm going to shut up here and let you weigh in on this, but I suspect that we should start seeing an increase in cash cancelation and attrition fee collections because it? S our assumption that the restrictions will ebb over over the next two to three months. And the reason we're able to collect seven million, the most of it was late in the quarter was because restrictions in that third quarter, government restrictions were easing. And the debate we were having with with customers was a little bit more explicit than than it had been earlier where we have these restrictions in place. So it may shut up.
[00:45:34] Yeah. The other thing I would add that I agree 100 percent with what Colin said. You know, as long as we're essentially meeting planners and us are both waiting on a vaccine announcement and four state restrictions to start lifting, when that happens, then these conversations become much easier. Right now, we're still uncertain and there's a lot of unknowns. And so it's a difficult conversation to have. And that's why it takes one touch points or interactions with each customer to make this happen. I would remind you, though, that a lot of the cash we're collecting right now is for 20, 21 cancelations. As I mentioned when we were talking to me a moment ago, the vast majority, roughly about 90 percent of what we collected in Q3 cancelation fees was for 20, 21. So once we have a vaccine announcement and state restrictions start to lift, the conversation becomes much easier and it becomes much more focused on cancelation fee collection. But I would tell you that our hope is that once force majeure is no longer even part of the discussion, cancelations we hope will subside and then we'll have less discussions to even be, you know, even have to have Thomas. Issue around cancelation fees, so our hope is that once these restrictions subside, once the vaccine has been announced, cancelations start to subside and the conversation becomes less and less about even having a cancelation at all. So fee collection will subside with the cancelations.
[00:46:58] Very like I again, it's very complicated, but thank you for the detailed answer for both of you. And then just as a as a follow up, you know, I think, Colin, in the prepared remarks, you mentioned that if we look out at the booking pattern, you know, you could have an event because of the way, I guess, some of the bookings are occurring. You know, your second half of twenty one could you know, if vaccine and all these other things played out, you know, could actually look a lot like twenty, nineteen levels? I was just wondering if you could help us with that bridge a little bit more. I think you give, you know, in the flight deck a little clarity around the room. Night declines in, you know, 20 and kind of the second half of twenty one, Q3 and Q4. As we look at those, they look like they're down something like low double digit. But but I guess you also have some rate gains that are there, you know. So could you help us with that that bridge a little bit more? And how exactly that that would work right now?
[00:47:51] Did you want to tackle that one more? If you.
[00:47:53] Yeah. Hey, Sean, if you look at in that slide deck on page seven, we we provide by quarter are on the books net room nights, revenue and occupancy by quarter for next year. And compare it to the last two years. And if you if you compare the second half of twenty one in terms of where we sit now versus where we were in nineteen four twenty, we're down about four million in the third quarter and about nine million in the fourth quarter in terms of revenue. But you know it's, it's, we've got about one hundred and about a hundred and fifty million dollars of rooms revenue on the books right now for that back half. So it's a strong back half right now. When you compare it to historical averages, it's it's it's not very far behind where we were for 19. We're actually ahead in the third quarter four versus where we were in eighteen for nineteen in flat compared to where we were for nineteen in the fourth quarter.
[00:49:05] And if you take on top of that, the improvements that we expect to make in the actual cost structure of these businesses and and just the general sentiment of the Lesia customer, I mean, you know, in the middle of a raging pandemic, these four hotels of ours are essentially down about 18 points of leisure business. And so, you know, if you feel like the back end of next year, people have had the shackles taken off of them and, you know, are now prepared to move around. You know, I know I'm often accused as the eternal optimist, but, you know, the back end of next year could look pretty decent, you know, if all things are equal with this with this pandemic. But certainly there's no dispute about, what, 20, 21 looks 22 looks like.
[00:50:07] Know the numbers in the detail are super, super helpful and really a clarification point would just be, you know, just what's the kind of right timeline for let's call it a rolling cancelation here. So is it let's say that basically on a six month basis is when you start to really see, you know, those negotiations, that discussion point with the meeting planners really picking up, usually there's probably some kind of language in the contract that might get them to a place where it where it forces that conversation. Is that is it kind of T minus six months about the right period that people are working off of? Is it shorter or longer than that? Or just how are you going to seeing that that timing play out?
[00:50:47] Yeah, I'm going to push this over to Patrick because he spends a lot of time on this subject and we talk about it a lot internally to talk about that timeline.
[00:50:59] Yeah. So I guess I would start by saying it really depends on the group because the area of the country they're coming from and the sector or segment of group that they they function. And so it depends on the group. But on average, to your point, at about 180 days or six months prior to their arrival, they ratchet up to the more penalizing level of cancelation fee. So a lot of groups will start reaching out and, you know, there's uncertainty. And so they're feeling the water to try and understand, you know, where where are our heads from an RHP and Gaylard perspective and trying to figure out whether or not they should go ahead and cancel. If if that discussion goes forward, then we will focus more on cancelation fees, obviously, because it is 180 days out. And there's you know, we don't believe force majeure will be in effect 180 days from now. We've seen on average the most the cancelations occur between ninety and one hundred and ten days from arrival. So that's when most folks pull the trigger. So if you think about that, that's why we're seeing a lot of cancelations for twenty 21 first quarter, because we are now in that primary cancelation window for groups who are saying we have to make a decision. So let's go ahead and start the process of talking through cancelation fees and rebooking.
[00:52:13] Very helpful, thank you all. Thanks.
[00:52:18] Our next question comes from one of Bill Crow of Raymond James.
[00:52:23] Hey, good morning, folks. Patrick, any any change in the economics and regroup, rebook business, and is there any sort of kind of trade off between, you know, payment of some sort of cancelation fee plus or rebooking kind of nets? But that's the kind to to zero or even.
[00:52:46] You know, honestly, we've done a lot of work around this to try and understand the value of rebooking and obviously given the cash burn that we're going through right now and the fact that cash is king, it is obviously very important for us to collect some cash. And as you saw in the third quarter, we're doing that. We've been talking about that lot for the past few minutes. But I would tell you, as we look at the rebooking, there's a lot of value for us in the rebooking. We are not just rebooking at the same rate that is canceled, that we're rebooking at an elevated, elevated rate. So ADR is actually growing in the rebooking that we're looking for the future, as well as the fact that we are capturing more than one year on most occasions. So if you're canceling for Twenty twenty one, we're going to rebook you for 23 and 24, maybe even 25. So as we look at the value, the value of that rebooking, if our sales team does their job, which they've definitely been doing, is of great value to us in the future. So cash for now to help us weather the storm, but then the rebooking is hugely valuable to us for the future.
[00:53:47] All right, thank you, Mark. What is your estimate, maybe, maybe it's in the note, the release, but estimate for cancelation and attrition fees in the fourth quarter, basically, essentially, we've assumed kind of a consistent rate of cancelation collections.
[00:54:06] No material increases.
[00:54:08] Ok, well, I just wanted to pick two things off for you. Number one, any update on the national and what you're thinking there? And then, number two, any any concerns that we may see greater unionization around the country over the next four years?
[00:54:32] Well, I think so to your first question, the second question are obviously heavily linked, the we are when I say we the the powers of Mariotte are engaged with organized labor, having discussions around work rules and flexibilities that we want to put in place in Washington. And I believe as I get updated on those discussions, I think they are moving in the right direction. So, you know, right now we've said end of the year.
[00:55:07] But, you know, we we're going to continue to look at when it makes the most economic sense to reopen that hotel. So that's what we are. But we're making we're making headway. I think the question I think the question the second part of your question, a lot of it is going to be dependent upon what happens today in the country. You know, there was a very interesting article in The Wall Street Journal a couple of days ago about right to work states and about, you know, if if there is a blue wave in the country, you know, this. Does all that change? Do you see legislation changing all of that? And and I think a lot of it is going to be dependent upon, you know, the political environment within the country. Is organized labor more emboldened or not? And but look, we what we what we have done and I I know you know this bill, because we've we've we've had you in our hotels. You understand the culture of the way we we run these hotels. When I say we Marriott, when we handed our businesses over to Marriott, we had in businesses over with a very distinctive culture. And we're very people centric. And I think businesses like that are going to be harder to unionize than businesses that really don't care so much about their people. So I don't know the answer to your question. I think a lot of it is going to be dependent upon which direction this country goes from a unit, from a from a political perspective. But I do know this, that the things that we do to build culture will help anesthetize any attempt to put organized labor in any of our businesses or.
[00:57:03] Thank you, team.
[00:57:07] Thank you. We'll do one more question, Maria, if there is there if there is someone else and if there isn't, then we will we'll move on with the day.
[00:57:17] Our final question will come from one of Patrick Scholes of Truist.
[00:57:22] Hi, good morning, everyone. It sounds like one group meetings begin to come back some time whenever that is next year, that they may be hybrid event with people in physical attendance and people doing it, attending those meeting virtually. I'm just curious how you think about revenues and logistics from that. Is it possible you can collect any fees from the virtual attendees? And if so, how would that happen? Thank you.
[00:57:53] Well, it's going to be based. Remember the the groups that that we just spent time talking about, the the amount of business that we have on the books the next year, they're all in contract forms. So if the if the if the if the company or the association comes to us and says, you know, it's going to be a little harder in the short term for us to get these people to move, they're going to have to renegotiate these contracts with us. So we'd be ready to renegotiate, renegotiate with them. But, you know, Patrick, it's interesting that there was we we hosted a new piece of business, Texas, at our Texas hotel about a month and a half ago. And it wasn't a piece of business that was on the books great pandemic. It was a piece of business that was in a city convention center. And it was a large manufacturing industrial manufacturing company that produces farm equipment. And and they were going to hold this convention at this convention center. But the convention center arbitrarily shut it shut down and said, you know, we can't hold your convention. They came to us and they they said, well, we would like to do is hold a hybrid at your Texas hotel, because in Texas there was no restriction on the size of meetings. They wanted to bring in three or four hundred people of their of their corporate.
[00:59:26] It's a massive company. If I told you the name, which I'm not going to, you would know it. But they also have, you know, thousands of dealers around the country. And the reason that they were having their convention at a convention center was because they wanted to bring all the dealers in can touch and feel their equipment. And but what was interesting is that the the technology that they used failed them on the first day. And this company came back to us and said, you know, we're never going to do anything quite like this again. So there's two points to this. The first point is, I do believe that there's an opportunity for for a company like us with a beautiful atriums and an amazing space that we have to maybe cannibalize those businesses that are today for five, six thousand, eight thousand people in a city convention center staying in in in, you know, hotels around that convention center. There may be a new piece of business that we could where we could build the hybrid with that with that group inside of one of our businesses. But, you know, I think whether there will be a new revenue streams for the hybrid downstream from customers that we that are our customers today, I think that's going to be individually negotiated as they twist and turn over the next 12 months.
[01:01:06] Hey, Patrick, this is Patrick. I would just add to Colin's point that, you know, if we're streaming video for folks to be able to participate from home, we should be able to monetize the extension of that technology to them and whether that's being a registration fee or something. But I think it's very fair to say that we could potentially have a hybrid model for three to six months or something like that. The thing I would point out, though, is that we should have advance notice from the groups that they're not going to be able to travel with their original contracted group block. So from an attrition perspective, we'll know that they're not going to be able to show up with that number and sell into that. What I would also add to that then is where we're seeing a little bit of a recovery start to occur is in small groups, you know, the 10 to 300 on peak. Those are ideal for filling in the gaps left by larger groups, not being able to travel as many folks into their meeting. So while we may have a hybrid approach for a period of time, as small group continues to recover, we'll be able to sell those groups into some of these gaps that are created. And I think, you know, there's definitely going to be some pent up demand. So the opportunity to potentially fill some of those gaps left by the larger groups.
[01:02:19] So, you know, that was a genuine attempt to answer your question is a complicated question, and but I can tell you, if there are opportunities to capture revenue, we're going to do that.
[01:02:39] Ok, very good. Thank you.
[01:02:42] Thank you. All right, Maria, thank you and everyone, thank you for joining us this morning.
[01:02:47] And if you have any follow up questions of any of us, you know where we are and appreciate your time. And I know we've shared a lot of info with you, but we would like to be transparent here and give you all the details of what we're up to. So thank you for joining us.
[01:03:07] Thank you. Ladies and gentlemen, this does conclude today's conference call. You may now disconnect.