Ryman Hospitality's Q1 Surge and 2025 Outlook: Strong FFO Growth Amid Headwinds

Ryman Hospitality Properties (NYSE: RHP) delivered a robust first-quarter 2025 performance, with adjusted funds from operations (AFFO) per share soaring 27.6% year-over-year to $2.08, while revenue rose 11.2% to $587.3 million. Despite macroeconomic uncertainties and short-term demand softness, the company reaffirmed its full-year 2025 AFFO guidance of $510–555 million, highlighting its resilience and operational discipline.

Q1 2025: A Testament to Resilience

Ryman’s Q1 results underscored the strength of its group-centric business model. Hospitality segment revenue grew 7.9% to $497.7 million, driven by record RevPAR growth of 10.2%. Meanwhile, the Entertainment segment surged 33.9% to $89.6 million, fueled by investments in ventures like the W Austin Hotel at Block 21 and Ole Red Las Vegas.

Profitability metrics shone brightly: consolidated net income jumped 47.4% to $63.0 million, while operating margins expanded to 19.8% and Adjusted EBITDAre margins rose to 31.6%. These improvements reflect cost management excellence, with Ryman absorbing construction disruptions—such as renovations at Gaylord Opryland and Texan—while maintaining margins.

Guidance Reaffirmed Amid Mixed Signals

Despite lowering its full-year Hospitality RevPAR growth forecast to 2.5% (down from 3.5%) due to weak “in-the-year-for-the-year” (ITYFTY) group bookings, Ryman reaffirmed its AFFO guidance. The midpoint of $532.5 million ($8.55 per diluted share) remains intact, supported by:
1. Long-Term Demand Strength: Over 363,000 Gross Definite Room Nights booked for 2026–2027 at a record ADR of $284.
2. Cost Discipline: Proactive expense controls offset construction-related drags (250–350 basis points on RevPAR and $30–$35 million in operating income costs).
3. Diversification: Entertainment segment growth and strategic investments (e.g., Category 10 and the 10-year Ascend Amphitheater contract) provide non-hospitality revenue streams.

Risks and Considerations

• Macroeconomic Uncertainty: ITYFTY cancellations surged 74.6%, signaling near-term demand volatility.
• Construction Disruptions: Renovations will continue to pressure RevPAR in 2025, though they support long-term asset value.
• Dividend Sustainability: Ryman maintained its $1.15 quarterly dividend, supported by $413.9 million in unrestricted cash and $763 million in borrowing capacity.

Why Investors Should Pay Attention

Ryman’s reaffirmed guidance and Q1 outperformance suggest a company navigating challenges while prioritizing profitability. Key data points:
- AFFO Growth: 27.6% YoY in Q1, with a 2025 midpoint implying ~8.5% annualized growth from 2024’s $494 million.
- Balance Sheet Strength: Liquidity of ~$1.177 billion (cash + credit) provides flexibility for capital projects and dividends.
- Long-Term Vision: Investments in entertainment and multiyear renovations position Ryman to capitalize on post-pandemic demand recovery.

Conclusion: A Steady Hand in Volatile Markets

Ryman Hospitality’s ability to reaffirm its 2025 AFFO guidance amid macroeconomic headwinds and construction disruptions speaks to its operational rigor and diversified portfolio. While short-term RevPAR growth has been tempered, the company’s long-term bookings, margin expansions, and balance sheet strength position it as a defensive play in the hospitality sector.

Investors should note:
- Valuation: RHP’s current P/FFO ratio (~12x midpoint guidance) is reasonable given its dividend yield (~3.2%) and growth trajectory.
- Catalysts: 2026–2027 bookings at record ADRs and entertainment segment expansion could drive upside.

In a market wary of economic uncertainty, Ryman’s reaffirmed guidance and resilient Q1 results make it a compelling choice for investors seeking stability in a volatile sector.

Ryman’s focus on cost discipline and long-term demand underscores its potential to outperform peers in the coming years, even as near-term hurdles persist.