NASHVILLE, Tennessee—A decline in advance group roomnights booked during the fourth quarter isn’t necessarily worrying executives at Gaylord Entertainment Company. Rather, they see it as evidence the company’s newfound pricing strategy is working.
Gross advance group bookings during the fourth quarter of 2011 for Gaylord Hotels were down 5% to 734,586 roomnights.
Gaylord previously said the company would be more aggressive in pricing rooms around high-demand times. During a conference call with analysts Tuesday, Colin V. Reed, chairman and CEO of Gaylord, said the strategy might have priced out some potential buyers.
That said, the company remains comfortable with the new strategy, Reed said.
“We’ve locked in higher prices,” he said during the call, which also was webcast. “We are booking business in the (future) periods.”
Gaylord Entertainment Company is seeking Colorado state incentives for the company’s proposed 1,500-room Colorado development.
The rate of group business on the books is showing an increase in the mid-to-high single digits, Reed said. He declined to say over what periods the increase has occurred.
Overall, the company reported adjusted average daily rate of US$177.43 during the fourth quarter, up 8.7% from the same period a year earlier.
Despite the group drop-off, Reed reiterated the company remains committed to its base group business. “This is our foundation,” he said.
Overall, Reed is happy with the booking pace he has seen at the company.
“We’re pretty comfortable with the volume of business we booked during the fourth quarter … Our patterns for this year look really good compared to previous years,” Reed said.
Regarding the company’s development plans, Reed said Gaylord will hear in April whether Colorado state tax incentives have come through for its planned 1,500-room resort in Aurora. City incentives are already in place.
“Several” potential partners have come forward inquiring about taking an equity position in the project, Reed said.
Reed also addressed the 50/50 joint venture with Dollywood for a US$50-million theme park. Gaylord’s portion of the investment will comprise the land for the park (which will be located adjacent the Gaylord Opryland in Tennessee when it opens during the summer of 2014) and less than US$10 million in cash. “Most” of the cash investment will be made next year, Reed said.
Shareholder rights plan
Additionally, Reed summarized the status of its shareholder rights plan, which limits the control any entity can have in Gaylord to 22%. The poison pill was adopted in 2008 after TRT Holdings, the holding company for Omni Hotels & Resorts, acquired a large stake in Gaylord.
An agreement was struck between TRT (which owns a 22% stake in Gaylord), and the company indicates Gaylord must have TRT nominees up for election to the Gaylord board at the upcoming shareholders’ meeting, he said. In return, TRT promises not to bring up any new shareholder measures at the meeting.
TRT also is asked to vote all its shares in favor of existing board members up for vote and to approve, on an advisory basis, executive compensation, according to a 17 January U.S. Securities and Exchange Commission filing.
Gaylord vows to not increase the size of the board to more than 11. The company’s poison pill is scheduled to expire 12 August 2012.