Good afternoon, everybody. I'm R.J. Milligan with Raymond James Equity Research, and we're very happy to have Ryman Hospitality Properties. We're going to start out with Mark Fioravanti, the CEO, who's going to run through the overview of the company, and then we're going to open it up to Q&A, and hopefully it's as interactive as possible. With that, I'm going to turn it over to Mark. Thanks for being here.
Thank you, R.J. Hey, good afternoon, everybody. I am joined today by Jennifer Hutcheson, our Chief Financial Officer, and Sarah Martin, who runs IR for us. Thanks for being here. As R.J. said, I'm gonna just a quick flip through a quick overview, and then we can get to questions. For those of you who don't know anything about Ryman Hospitality, we are a hospitality-based REIT, and we are focused on the large group meeting segment. This is a significantly different business model than most of our peers. We have a single brand and a single manager, and we have relationships with customers across all of our hotels, and we'll talk a little bit about the importance of that as we go through this presentation.
Just a couple of things that we like about the group business is, number one, it's a very sticky customer base. About 66% of our customers are retention customers, so we see them multiple years, either at the same property or rotate them, market to market, year by year. Because of the nature of the group business, the contractual nature of it, and the size of the group business, we have very long booking windows. Our average booking window is over three years, so we have terrific visibility into our business and how that book of business is building, out as far as 10 or 12 years.
As we approach a year, we'll enter a year typically with about 50 points of occupancy already on the books in contract form, and we did that in 2026 as well. The nature of our assets, because they're everything under one roof, we capture a outsized share of the customer's wallet. We generate about 1.5x the room revenue outside the room for every $1 of room rate, which gives us a tremendous advantage, and we ultimately flow that through and generate about 70% more EBITDA per available room than our peers. It's a terrific business model. Tremendous competitive advantages given the scale of these and the difficulty to build them.
Between these advantages and the way that we allocate capital, we have generated industry-leading AFFO per share growth as well as dividend per share growth. We're very proud of those facts. Finally, we'll talk about this just for a minute at the end, we also own and operate an entertainment business within a REIT, in a taxable REIT subsidiary. It's, that is a very fast-growing business with some terrific brands in the country music space, we are very excited about the potential of that business longer term. Just a quick snapshot of our portfolio. We have seven large hotels, about 12,000 rooms.
Five of the 10, we have five of the 10 largest non-gaming hotels in the U.S., and you can see the geographic distribution there. We're in some really terrific markets, both in terms of being top meetings markets, but also, very strong, markets from an economic perspective, whether that's Nashville, Orlando, Dallas, San Antonio, Phoenix, or Denver. Really, terrific distribution in our hotel business. As I said, we've, through capital allocation, and the unique nature of our model, we have, we've done a very nice job, our management team, of generating returns for shareholders.
You can see that since we converted from a C Corp to a REIT, on January 1st of 2013, we've delivered significant shareholder returns and a significant premium relative to both the REIT index as well as our peers. From an AFFO per share growth rate, we've generated about a 7.6% CAGR on AFFO per share, and we've grown our dividend about 7.3%. In all cases, significantly outperforming our peer set, depending on how you want to measure them. Just a moment on the group meetings segment itself. It's a large, diverse customer segment. It's about 19% of total room nights in the hotel business.
You can see there on the right, while we're the largest group participant of our peer set, we have a very, very modest share of the market. It's a large market, and it's a market that continually grows. It's grown over the last 15-20 years, you know, 1%-2% a year, fairly consistently. Just a breakdown of our business that we service. About 70% of our business is group. The remaining 30% is leisure transient. We do not serve business transient consumers. If you break down that group business, that 70%, a little over half of it is corporate. The remainder is association and SMERF business.
What you'll typically find is that associations, they book closer in, and they're higher premium groups. Associations and SMERF groups are larger groups and therefore book farther in advance, but they average out to about three years, our weighted average booking window. A lot of visibility into the portfolio and into future business. You can see there, on that last donut, about 70% of our business is 600 rooms on peak. The peak night of the event, we have over 600 rooms in-house. These are large groups. Typically, they're large annual meetings, large sales meetings, strategy meetings, et c. They're very sticky meetings.
They have less likelihood of canceling in a downturn because these are to discuss strategy, to launch new products, to train on new pharmaceuticals, et c. These are key meetings for these various organizations, and so they're less likely to cancel. When they do cancel, we have contractual attrition and cancellation fees that we do collect. If you look back at the last probably the two most significant downturns, the financial crisis in 2009, we collected about $43 million worth of fees. During the pandemic, we captured just a little over $180 million in attrition and cancellation fees. Those fees help buffer our profitability in a downturn. As I said, about a third of our business is leisure.
It's primarily regional drive-in. It does have some stickiness in a downturn. Oftentimes, people will select a staycation with us versus doing a larger family vacation when things are tight. We've invested capital into this part of our business over the last five or six years, pool products, holiday products, et c., to drive incremental and higher-rated leisure business. We see most of this business in the summer and in the holiday period. It bolsters when groups aren't traveling. It's how we are able to drive occupancies in the mid to high 70s across these large hotels. It is a shorter booking window, and it is, these are trips that aren't easily substitutable with other forms of vacation either because of the type of infrastructure that we've built.
For example, we have a $90 million water park in Nashville or because of the unique programming that we put in our hotels during the holidays. We have a program called ICE!, which is a large holiday program where we bring artisans in from China who carve a couple million pounds of ice at each of our hotels. This past year, we put a record 1.5 million people through that event. Just a couple of points to differentiate our business model. As we talked about, this focused segmentation on the group customer, very important. Our assets are purpose-built, all large with at least 450,000-500,000 sq ft of meeting space. There are very few options for large meetings in terms of choices beyond our hotels.
The I guess the exception to that would be Las Vegas, but a significant portion of our customer base does not wanna take groups to Las Vegas because of just some of the natural characteristics of that market. As I said, we have attractive distribution. Then we do have a very unique owner-operator alignment in that all of our hotels are Marriott branded and Marriott managed. We view that as a incredible strength because we can manage customers across our portfolio. When you have the natural rotation of large groups that we capture in these multi-year contracts, having alignment across properties with the owner and having alignment across properties with the operators is very, very important, and we think that that's a unique strength of our business.
As I mentioned, in terms of retention, we retain 66% of our customers, and you can see on the right there that over half are multi-year, either single property or a multi-year rotational customers. While we've purchased a couple hotels in the last few years, two JWs, one in San Antonio and one in Phoenix, we've primarily been a builder of these hotels and then enhancing these hotels. We've deployed a tremendous amount of capital over the last five or six years into high return projects, enhancing these hotels based on the feedback we get from our customers. They not only drive very high unlevered rates of return because you're leveraging all of the infrastructure that exists in that hotel. We also have as nearly perfect information as you can for an investment like this.
You know, we talk with these customers. We understand what they're looking for, what they're missing. We know what our lead volumes, our turndowns are, the reason for the turndowns. It helps us tremendously in terms of determining what's the right capital to deploy into the, into each market, how that incremental asset will be used, and what the returns will be. What we typically do, because of the nature of our portfolio, is we will roll out a new product like a sports bar, for example, in an asset. If it performs well, then we will roll that through the rest of the portfolio. It's a terrific way to generate high levels of return with significantly less investment risk.
As it says there, we target a mid-teens unlevered return on these new projects. Just a couple that we have currently underway. We are finishing right now a large sports bar at Opryland, 550 seats. That's about a $40 million investment. Opryland is a hotel that we're investing in to raise the quality level, to drive higher quality corporate groups. It also is a hotel that has that lacks food and beverage capacity given its business levels. We see that in the food and beverage per room spent versus our other hotels. We think there's a real opportunity to drive incremental performance in that hotel with this sports bar. We're also in the process of building a 110,000 sq ft meeting space expansion.
It is, it's carpeted breakout space. Again, it's geared towards the premium corporate guest that we are remixing this hotel with. That's $131 million. That will open in 2027. As I mentioned earlier, we purchased the JW Marriott Desert Ridge last June, and we are in the process of integrating that hotel into our portfolio, as well as doing a modest meeting space expansion there, converting some existing office space, about 5,000 sq ft, into again, a carpeted breakout space for premium groups. A few that have come online recently, where we've had a great deal of success, are our Rockies property in Denver.
We added about 685 net new seats to food and beverage there, and took a significant amount of space that was not sellable and made it sellable. We've seen a significant improvement in food and beverage capture in that hotel. That hotel so far is exceeding its pro forma. During the pandemic, we had begun to expand the Gaylord Palms. We continued that project through the pandemic and opened it in 2000, 2001. We just completed a full rooms and lobby renovation at the Palms. That hotel here in Orlando looks like a brand-new hotel. It's a terrific product and is performing extremely well.
Lastly, the JW Hill Country, that's the sister property to Desert Ridge. That's in San Antonio, Texas. We bought that in mid 2023. We will start a rooms renovation there this summer. That hotel has performed extremely well thus far. Long term, we will likely expand that hotel along with the. They're currently doing a large expansion to the San Antonio Airport, which will open in 2028 or 2029, which will significantly increase airlift into that market. We'll look to probably expand that hotel to accommodate larger groups when that airport opens.
Just looking ahead, we are right now we have, we're at an all-time high in terms of room nights and revenue on the books for all future years. We entered this year about 6% ahead of where we entered 2025. 2026 is set up well. If you look out T2, T3, and beyond, you know, we're driving, you know, mid-single digit increases in terms of revenue on the books as well as mid-single digit ADRs. We've been able to drive future rooms rates through the capital investments that we've made so that we're not just raising rates, we're delivering value to the customer. When we can show them that incremental value, we can command that higher rate.
Obviously, you know, a dollar of room rate flows through at, you know, at a very high margin to the bottom line. You know, the other thing that's been going on for the last five or six, seven years, certainly post-COVID, is our ability to drive share. We've dramatically increased our fair share versus our comp sets across our different our different markets. This just shows you the aggregate fair share from STR. This is RevPAR index, and we're, you know, almost at 130% of fair share, and we've moved that dramatically over the years. 15 points, we're actually 15 points higher than pre-COVID. A lot of progress there with these assets.
I mentioned this a moment ago, just quickly for those of you who aren't familiar with Opry Entertainment Group, we call it OEG. This represents about 15% of our revenue and 15% of our profitability. It's a joint venture. We have a minority partner and a private equity firm called Atairos, which is affiliated with Comcast NBCUniversal. We own and operate this business in a taxable REIT subsidiary. We arguably own some of the probably most important brands in country music, including the Grand Ole Opry as well as the Ryman Auditorium. This is a business that's grown considerably over the last five or six years. The long-term plan here is to separate this business from the REIT.
It's a business that the company has owned for many, many years, certainly prior to our conversion to a REIT. Strategically, having this business inside a lodging REIT doesn't make a lot of sense. It makes more sense for it to be on its own to attract capital and investors. We think that ultimately leads to a higher valuation both for this business and for our hotel business. That's the long-term thesis and our objective. In the meantime, we've been very aggressively and accretively growing this business through acquisitions as well as new builds with new concepts with a number of country artists, including Blake Shelton and Luke Combs. We last year through an acquisition, we entered the festivals business.
In the last four months or so, we have entered the amphitheater business. We've won two RFPs to manage amphitheaters, one in downtown Nashville and one in Simpsonville, South Carolina. This is a business that is not only taking advantage of what's happening in country music and live entertainment in general, but we've also put our foot on the accelerator to aggressively scale this business and get it to the point where it can be a standalone company. Finally, I'll just close with, you know, from a balance sheet perspective, we are in a terrific shape. We're at about 4.3 x net leverage. We just refi'd last week $700 million of bonds, so we have no maturities until 2028. Plenty of liquidity.
We've got about $1.4 billion of liquidity, including our revolver. Terrific balance sheet. We're in terrific shape, and the business is performing extremely well. R.J., with that, do you wanna use the last 10?
Sure. Thank you.
Get some questions in?
We'll start and see if there's any questions right off the bat. I just have a couple general business questions. Mark, you talked about the difficulty to build these assets. Can you talk about the competition? What other assets are you competing with? The difficulty in building these assets, where does that leave you for acquisition opportunities? I think in the slide deck, it said there's about five to 10 assets that you guys would look at. Can you talk about the difficulty in building these assets, what your competition looks like, the possibility that that competition set increases, but then also on the flip side, your ability to go out there and continue to grow the portfolio?
I mean, it's a two-edged sword in terms of development because they're extremely hard to grow through ground-up development. The reason for that is that, number one, just the size of the equity check you have to write. You know, these are at least $1 billion a piece when you build these scale or hotels ground up. Typically, they require a government subsidy to make your returns work 'cause you're essentially building a private convention center. Finding a community that's willing to do that, finding an owner who's willing to take that level of risk, it limits dramatically the number of new build opportunities.
Like I said, that's a double-edged sword because it makes it harder for us to grow in that manner. It's a positive because, you know, we own five of the 10 largest, and for anyone to come in and take share is challenging with new product. With the investments we're making with rooms and other amenities, pool products, etc. , we're widening that moat to make it harder and harder for people to compete with us. Our competition, depending on the hotel, is at least regional. In Opryland's case, it's a national competitive set. You know, we compete. That's a hotel with almost 2,900 rooms, 800,000 sq ft of meeting space, nine acres of atrium under glass. It really competes with Las Vegas in many ways.
You know, there's just not. If you look at, I'm not aware of any new hotel supply with more than 100,000 sq ft of meeting space that's under development right now. The, you know, when we do get one, we see it coming four or five years in advance just given the size and scale. We like the setup. Limited competition. You know, there is an, there's a narrow number of acquisition targets we're interested in, but that's okay. You know, we're still, you know, Right now, we're contemplating another 450 rooms at the Rockies. We're contemplating another 300 rooms in Texas. You know, we can grow our hotel portfolio materially without adding geographic distribution.
We like the position that we're in.
Maybe you could just give us, maybe a one or two-minute overview on the Desert Ridge acquisition. What was attractive to you guys, and, what have been sort of some of the early successes that you guys seen?
You know, we closed on that mid-year last year. It is a terrific asset in, you know, the. Our box, our strategic boxes, it really checks all of them. You know, it's 950 rooms. It's about 60% group, 40% leisure. Large pool product, has two golf courses, 250,000 sq ft of meeting space, great food and beverage. That hotel was in very good physical condition. Just, we bought it from Trinity. They just put $100 million in that asset. It's an asset that. It's in the Phoenix, Scottsdale market, which is a, you know, it's a top 10 meetings market in the U.S.
It really checked everything that we're looking for. In fact, we had tried to buy that hotel 2 x prior, over the last 10 or 12 years. We just weren't successful in those other endeavors. It is exactly the type of hotel that we're looking for. It's, like I said, it's the sister property to Hill Country, which is 1,050 and in a very similar layout, in terms of amenities, golf course, meeting space, etc . We are, as I said, Desert Ridge is in terrific physical condition. They had about 5,000 sq ft of empty timeshare sales offices that were vacant. We're converting that to breakout space right now. That'll be open here, I think, in April.
We don't have Other than some maintenance CapEx and a few things like that, we don't have a lot of plans right now for that hotel. We'll do some master planning and think about what does that hotel look like in five and 10 years. We're, in terms of acquisitions, we're really focused right now on Hill Country with the rooms renovation there. We're gonna do some work on the lobby there. That's a hotel that needed some capital. We are, we're looking at some new events lawns at Hill Country, as well as we'll have the second year of ICE! That's the other investment we're making at Desert Ridge I failed to mention. We are, we'll launch our Christmas programming there this year.
We've got about a $4 million-$5 million investment to make to bring ICE!, that ICE! programming to that hotel.
Great. We have time for just one or two questions. Sure.
Can you talk a little bit about maintenance CapEx because your portfolio has changed, considerably over the last couple of years? Maybe just, you know, it's been, kind of it's been $150 million for a long time. It's gone up to about $350 million-$400 million since the deck from every year. If you could just help us understand maintenance CapEx role for folder.
I'll just repeat the question.
Sure.
The question was about maintenance CapEx, and it's grown over time as the portfolio's grown. Just what's the outlook and requirements for CapEx going forward?
You have seen us with the higher total CapEx spend the last couple of years. It's been very intentional because we've identified all of these high return opportunities. We outlined it at a January investor day presentation, which I know a few people here have seen. What we talked about over a four-year period, being able to deploy capital within our existing portfolio using the customer data we have, leveraging the infrastructure, just like Mark was outlining, particularly at Opryland, with all of the projects that we have going on there, finishing up the work at the Gaylord Rockies atrium, completing work renovating the Gaylord Palms. We're underway with renovating the Gaylord Texan rooms. That will wrap up this year, then we'll, as Mark mentioned, renovate the rooms at the JW Marriott Hill Country.
All of that is kind of culminating in a rate of CapEx spend last year that was $358 million, and we're on track to be on par with that this year. Again, really exciting to get all of those new growth projects above and beyond maintenance online so that we can continue to generate the RevPAR and ADR growth that we outline, I think is possible.
We have a 5% FF&E reserve, which is really kind of the pure maintenance. That's where your rooms renovations and that come out of. On top of that, we probably have another. I would suspect over time, it probably averages between a half and another 100 base, maybe 100 basis points of owner-funded maintenance that doesn't fall within that FF&E reserve. You know, I would tell you over time, it's 5.5, 6 points of maintenance CapEx.
Great. That concludes our time, but we will have a breakout session immediately following this. Thank you guys so much for being here, and thank you all for being here.