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Welcome to Ryman Properties Second Quarter 2026 Earnings Conference Call. Hosting the call today from Ryman Hospitality Properties are Mr. Colin Reed, Executive Chairman; Mr. Mark Fioravanti, President and Chief Executive Officer; Ms. Jennifer Hutcheson, Chief Financial Officer; Mr. Patrick Chaffin, Chief Operating Officer; and Mr. Patrick Moore, Chief Executive Officer, Opry Entertainment Group. This call will be available for digital replay. The number is (800) 757-4770, with no conference ID required. The operator will now provide instructions. It is now my pleasure to turn the floor over to Ms. Jennifer Hutcheson. Ma'am, you may begin.
Good morning. Thank you for joining us today. This call may contain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995, including statements about the company's expected financial performance. Any statements we make today that are not statements of historical fact may be deemed to be forward-looking statements. Words such as believes or expects are 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 GAAP measure in exhibits to today's release. I'll now turn it over to Colin.
Thank you, Jen, and good morning, everyone. We are pleased to have delivered another standout performance this quarter, but more importantly, we're encouraged by what it says about the strength and resilience of our business model. While the broader economic environment remains dynamic, we continue to see customers prioritize the kind of experience our portfolio is designed to deliver. This quarter reinforced several themes we have discussed consistently over the years. First, the demand for high-quality group meetings experiences remains healthy. Second, our strategy of attracting higher-value customers across all segments continues to gain traction. And third, the investments we're making across the portfolio are strengthening the competitive position and long-term earnings power of our assets. Importantly, these themes build on one another in ways that strengthen our business over time. Our scale and differentiated offerings allow us to attract premium business and deepen customer relationships, which in turn drives stronger spending trends and greater visibility into future demand. That visibility then helps us allocate capital with confidence. In turn, we continue to reinvest in our assets and businesses in ways that further enhance our competitive advantages and create long-term shareholder value. To take one example, last month, we celebrated an important milestone at Gaylord Opryland with a topping off ceremony for the meeting space expansion project, marking the completion of the expansion structural framework. When completed, this investment will enhance Opryland's ability to attract more premium groups and further strengthen its already differentiated competitive position. Gaylord Opryland is a remarkable asset, and a large part of the resort next year will be 50 years old. But today, it is, quite frankly, the most successful non-gaming resort in the nation. Twenty-five years ago, when Mark and I turned up at this hotel, it generated about $57 million of EBITDA with virtually the same room count as it has today. Through periods of financial crisis, floods, COVID and the like, we've built a successful group rotational strategy, enhanced the leisure aspects of this hotel through things like SoundWaves and holiday programming. And this year, we estimate Opryland will cross $200 million of adjusted EBITDAre. This is quite a transformation and underscores the power of our strategy. The same philosophy guides our approach to our newly acquired JW Marriott hotels. These are exceptional assets in attractive destinations, and we continue to see opportunities to create additional value through thoughtful capital investment, portfolio synergies and increased customer rotation across the portfolio. While we remain early in that journey, the progress we are seeing continues to reinforce our confidence in this original thesis. And finally, our entertainment business also continues to demonstrate the value of the platform that we have built. The strength of our brands, venues and customer relationships create opportunities to grow across multiple businesses, geographies and customer touch points, reinforcing the strategic value of the platform as a whole. We built a great business. I'm very proud of what we've accomplished with our entertainment business and its impact on the city of Nashville. I feel very confident that country music, Nashville visitation and our great businesses will continue to grow. Last weekend, I traveled to London to be with Luke Combs when he sold out Wembley Stadium for three consecutive nights, each night attracting 85,000 fans. This is on top of sold-out concerts in Edinburgh and Dublin. This has never been done before and reflects the revolution that is taking place in country music. In time, these new fans will be finding their way to the U.S. and to the city of Nashville, thus growing the underlying value of our business. Now on that front, as we've initially disclosed in June, our Board, advised by Morgan Stanley, continues to evaluate possible new investors or partners in OEG with the goal of providing the business with greater independence while creating value for our shareholders. The ongoing discussions are with select potential investors whom the Board believes may meet our criteria for partnership with OEG. The company has not entered into any agreements with respect to a potential investment by a third party in OEG, and there can be no assurances that any definitive agreement will ultimately be reached. Our focus remains on pursuing a path we believe will preserve OEG's legacy while positioning the business for continued growth and enabling us to continue as a stakeholder. As we look ahead, we are very excited about the long-term trajectory of both businesses. While we remain mindful of the broader macroeconomic backdrop, the underlying demand we see in our businesses remains healthy. The strategies we've been executing are producing the outcomes we expected and the investments we've made across the portfolio are enhancing both the quality of our assets and the future growth opportunities. We remain on track to achieve the 2027 financial targets we set out in early 2024, and we look forward to updating you on our continued progress. With that, I'll turn the call over to Mark to discuss the quarter and the operating trends in greater detail.
Thanks, Colin, and good morning, everyone. I'll provide more color on our operating performance and business momentum before discussing our outlook for the remainder of the year. As Colin mentioned, our same-store hospitality business delivered results ahead of our expectations coming into the quarter. Same-store RevPAR and total RevPAR growth exceeded our expectations by approximately 2.5 points each, while adjusted EBITDAre outperformed by approximately $7 million. The RevPAR beat was comprised of equal parts group and leisure outperformance, which, together with strong group catering contribution, drove the total RevPAR beat. The adjusted EBITDAre outperformance was primarily top line driven, supported by continued strong operating discipline. Let me provide some additional details on each customer segment. In our group business, similar to the first quarter, the portfolio continued to benefit from strong in-the-month-for-the-month trends, including ADR upside and stronger catering contribution relative to our expectations. Group ADR increased 7.5% year-over-year, approximately 3 percentage points better than our expectations, driven by stronger-than-expected mix of higher-rated premium group customers. Rate growth was broad-based across all segments, led by SMERF, which includes social, military, educational, religious and fraternal groups. As we've discussed, the objective of our premium group strategy is to attract higher-rated business across all group segments, and this quarter provides a clear example of that strategy translating into stronger pricing performance. Catering contribution per group room night, a proxy for spending per attendee, increased nearly 13% year-over-year, approximately 6.5 percentage points better than our expectations. The outperformance was driven primarily by stronger spending by corporate groups at Gaylord Palms and association groups at JW Hill Country. The group catering results at Gaylord Palms provide another compelling example of our premium group strategy at work. Higher-rated corporate group room nights increased 31%, driving a 63% increase in catering contribution per group room night. This shift towards higher-value business produced the highest second quarter catering contribution in the property's history. Together, these dynamics reinforce our confidence that our premium group strategy is translating into higher rated business, stronger customer spending and enhanced revenue productivity. In our leisure business, ADR was the primary driver of year-over-year growth as strong group business on the books and room renovation activity at Gaylord Texan and JW Hill Country constrained leisure room availability. Relative to our expectations, nearly all of the upside was driven by performance at the Texan, which benefited from market-wide World Cup-related rate compression. As a byproduct of these trends, several properties delivered record performance during the quarter. Gaylord Palms, Gaylord Rockies and Gaylord National each achieved record second quarter revenue and the Palms also delivered record second quarter adjusted EBITDAre. In addition, the same-store portfolio outperformed its competitive set during the quarter, bringing the trailing 12-month average RevPAR index at the end of June to nearly 130% of fair share, an increase of 6 points year-over-year. Our forward-looking business indicators also continue to trend positively. During the second quarter, we booked more than 768,000 same-store gross group room nights for all future periods, up 6.7% year-over-year. ADR on those bookings reached a new quarterly record of approximately $310, an increase of 8.6% year-over-year and 2.3% above the prior record. Net group room nights booked for all future periods also increased year-over-year, reflecting healthy underlying demand net of normalized attrition and cancellation activity. Corporate customers continue to account for more than half of the room nights booked during the quarter, consistent with our group strategy. As of the end of July, same-store group rooms revenue on the books for all future periods was up 8.8% from the same time last year, representing a 120 basis point sequential improvement from the end of March. ADR on the books for all future periods continues to pace in the mid-single-digit range, while room nights on the books are higher than they've ever been at this point in the year, even excluding the addition of the JW Hill Country in 2023. Looking ahead to 2027 and 2028, we remain focused on growing the corporate group base as part of our premium group strategy. And as of the end of July, group rooms revenue on the books for 2027 is 3.2% higher than the same time last year for 2026, while 2028 is down just 50 basis points. For both periods, the year-over-year dollar increase in revenue on the books has improved since the end of March. Importantly, ADR pace in both years, which we view as the most durable component of revenue pace, continues to trend in the mid-single-digit range. We remain confident in our ability to deliver the production required to achieve our 2027 goals, supported by near-record corporate lead volumes, a healthy late-stage pipeline and favorable pattern availability. I'll now turn to the JW Desert Ridge, which delivered another terrific quarter. Group business performed in line with our expectations and was the primary driver of RevPAR and total RevPAR growth compared to last year. Consistent with our strategy to remix demand at the hotel, group mix increased nearly 13 points year-over-year, which drove growth in catering revenue. The higher mix of group business also compressed leisure inventory, supporting stronger-than-expected leisure ADR in every month of the quarter. As a result, the hotel meaningfully outperformed its competitive set during the quarter with its RevPAR index share increasing 18 points year-over-year. These results demonstrate that our JW Marriott portfolio strategy is working. The synergies we've identified during the acquisition process are driving stronger operating performance and competitive share gains at what was already a highly competitive asset. And looking ahead, group rooms revenue pace for these properties is quite strong, reinforcing our confidence in both the strategy and the opportunity ahead. Now turning to entertainment. The second quarter results here were also terrific. Adjusted EBITDAre increased nearly 30% year-over-year to a new quarterly record, driven by strong execution across our recent growth investments. Southern Entertainment's two largest festivals finished ahead of expectations, supported by strong lineups, healthy consumer spending and disciplined execution. Our artist-centered venues, Ole Red and Category 10, also performed well. In fact, in June, Category 10 Nashville generated the highest revenue month ever of any Ole Red or Category 10 venue in the portfolio. These results reinforce our confidence in the growth opportunities coming online over the next 18 months. Finally, I want to spend a few minutes on our outlook. As we noted in the press release, we raised the midpoints of our guidance ranges for same-store hospitality and the JW Desert Ridge. At the midpoint, the $10 million increase to same-store hospitality adjusted EBITDAre incorporates the $7 million second quarter beat and a $3 million increase to our outlook for the back half of the year, driven entirely by a stronger group base. The $1 million increase to the JW Desert Ridge reflects only the second quarter beat as seasonality for that hotel is heavily weighted to the first half of the year. As you think about our outlook for the second half, I'd highlight a few points. First, while we continue to monitor uncertainty around interest rates, inflation and the broader economic conditions, to date we've not seen a meaningful impact on demand trends, customer behavior or future booking activity. As a result, our outlook assumes a relatively stable operating environment and is based on the visibility we have today, including what's currently on the books and continued normalized attrition and cancellation trends. Second, we continue to expect roughly flat same-store leisure rooms revenue performance, which primarily reflects limited rooms availability for leisure guests due to the stronger group base. Third, we've maintained a conservative outlook for ICE given our limited visibility into ticket sales and the fact that much of the season's success is determined during the final two weeks of the year. That said, Marriott announced this year's themes a few weeks ago and early customer reception to three new themes, Home Alone, Harry Potter and The Nightmare Before Christmas, has been encouraging. Lastly, I'll make a few comments on seasonality. The midpoint of our same-store RevPAR guidance assumes low to mid-single-digit growth in the third quarter and mid-single-digit growth in the fourth quarter. The sequential acceleration from Q3 to Q4 reflects stronger group occupancy growth in the fourth quarter and greater rooms availability at the Texan following the planned completion of rooms renovations in August. The midpoint of our total revenue guidance assumes low to mid-single-digit growth in each of the remaining quarters with stronger growth in the third quarter. We continue to expect total RevPAR growth to outpace RevPAR growth in the third quarter and RevPAR growth to outpace total RevPAR growth in the fourth quarter. The fourth quarter dynamic primarily reflects lower expectations for attrition and cancellation fees, the natural outcome of a more favorable group environment and a more difficult comparison at Gaylord National due to record catering contribution last year and some modest disruption associated with a planned light-touch meeting space renovation. We continue to expect third quarter to deliver the strongest adjusted EBITDAre margin growth of the year. And for the entertainment business, we continue to expect adjusted EBITDAre to be more heavily weighted to the fourth quarter. Stepping back, the message from this quarter is straightforward. Group demand remains resilient and meetings attendance and customer spending trends continue to generate near-term upside. The investments we've made over the last several years to enhance our assets and our customer value proposition are enabling us to capture that upside and outperform our competitive sets. And our JW Marriott portfolio strategy is delivering on its thesis. Taken together, these trends reinforce our confidence in our outlook for the balance of 2026 and the 2027 financial targets we've set a few years ago and the longer-term earnings growth potential of the portfolio. Now I'll turn it over to Jennifer to discuss our balance sheet and capital allocation.
Thanks, Mark. We ended the quarter with $366 million of unrestricted cash on hand. In addition, we held $32 million of restricted cash available for FF&E and other maintenance projects. Both our corporate and OEG revolving credit facilities were undrawn, resulting in total available liquidity of nearly $1.3 billion. At the end of the quarter, our net leverage ratio based on total consolidated net debt to adjusted EBITDAre was 4.2x. We continue to believe our liquidity position and leverage profile provide meaningful flexibility to fund our capital plans, support our dividend requirements and execute our long-term strategy. Regarding capital expenditures, we now expect to spend approximately $400 million to $500 million in 2026, an increase of about $50 million at the midpoint. This increase reflects improved visibility into the timing of project cash flows as well as the decision to accelerate certain projects previously planned for 2027. These include façade work at JW Hill Country, where we have decided to complete concurrently with the rooms renovation ongoing there to minimize disruption, along with water amenity improvements at Gaylord Texan. The overall scope of our multiyear capital plan remains unchanged, and the projects we have underway remain on time and on budget. Regarding our dividend, it remains our intention to continue to distribute a minimum of 100% of our REIT taxable income through dividends over time. And finally, as it relates to OEG, while our strategic discussions remain ongoing, Atairos' four-year anniversary IPO put right is currently unexercisable. With that, operator, let's open it up for questions.
分析師問答
And we'll take our first question from Dan Politzer with JPMorgan.
I wanted to touch on one of the big themes this earnings season, which has just been owner fees and relations with some of the brands. Certainly there's been a lot in the press, and I'm sure you've been listening in on other calls. Where do you think you stand in terms of the relationship with Marriott and some of the other brands? And how do you think about management fees and royalty rates as it relates to your properties going forward?
Well, I mean, we can certainly speak to Marriott; I really don't have any view on the other brands. Overall, our relationship with Marriott is quite good. We have a very positive relationship. I think that on most issues, we're fairly aligned. Obviously, like all owners, we're always focused on fee revenue, cost structure and how we drive the most profitability from our properties in our portfolio. But broadly speaking, our relationship is good, and I think that we're fairly well aligned with Marriott on objectives for our business.
We'll move next to Smedes Rose with Citi.
I wanted to just ask you a little bit about the potential sale of OEG. My question is really why now in terms of timing. You've obviously talked about it for a while. You've also been connected in the press with a large potential deployment of proceeds. I'm wondering, are those things related? How are you thinking about what you would do with the money if you were able to dispose of OEG?
Bennett, I'll start, and I'll pass it off to my colleague, Mark. In terms of OEG, the reason we proceeded down the path of having conversations with multiple groups is that we were very clear in the earlier press release: we had received a lot of unsolicited inbound calls because of what is going on in live entertainment and music globally. This is a very attractive time to be an investor in product like this. We chose to sit down and have discussions with groups that have knocked on our door. There was a Bloomberg article back in June that referenced that we were doing this, and we put out disclosures at the time and told people what we were up to. So we've been going down this path simply because these organizations wanted to sit with us and talk to us about investing in this business and helping us grow it. I think we've been really clear all along that our goal here is to stay part of this business because we have very clear views about its long-term potential. As I said in my prepared remarks, at this stage, we haven't entered into any agreement with any of the organizations with whom we're in communication. At any time we have something more concrete to say, we will disclose it and let you all know. In terms of the recent article linking us to a particular asset, I'm not going to comment on that. But what I will say is that the conversations we've been having about OEG are not in any way related to the growth of our hotel business. These two businesses have separate strategies, and we have sufficient capital to seed both businesses in the way that we think they should be seeded. These two speculations are completely unrelated and unlinked. Mark, anything you'd like to add?
No, I would just add, Bennett, any transaction we did would have to comply with REIT rules, which would include receiving proceeds over a period of years as part of that compliance. Given the tax basis that we have in the entertainment business, we would likely dividend the proceeds from any transaction, if one were to occur.
We'll move next to Aryeh Klein with BMO.
Maybe somewhat related to Smedes' question on a potential acquisition. You did highlight the JW portfolio strategy in your remarks. What have you been seeing on that front from a cross-group selling or rotational standpoint? And what do you see as the benefits of owning multiple JWs?
Aryeh, thanks for your question. We continue to be very pleased with the rotational strategy that's developing with the JWs that we own. Life to date, since we put an above-property dedicated team into lead generation, we've booked about 129,000 multiyear rotational group room nights. That's with two resources dedicated to these two JWs, and we continue to see additional growth and expansion in that opportunity. We're seeing more and more rotation between those two JWs, and we're seeing more and more overlap into the Gaylords. So we're very pleased with how that's developing and the results that we're seeing on those 129,000 room nights.
We'll take our next question from Patrick Scholes with Truist Securities.
With Marriott rolling out the ITR, what percentage of your hotels do you believe would qualify for that?
We're still working through the details on that. Our above-property team at Marriott is still trying to compile and understand what they think the impact will be. That's something that's newer to us, and we'll be coming back with more information. At this time, they're not comfortable saying what they think that impact would be.
We'll move next to Chris Woronka with Deutsche Bank.
Very nice quarter. I was hoping you might spend a minute talking about the different buckets of your group business going forward — associations, corporate and whatever other buckets you might include. The question is really where you see the biggest pricing opportunity. I think we know that there isn't a lot of big new supply being built. You've talked in the past about seeing more strength in pricing going forward. Which segment or bucket has more opportunity based on where their prices are today or pulling forward the booking curve?
We've been strategically shifting the business over the past couple of years toward higher-rated group business, and it's paying off. Patrick, do you want to add?
That's a great question, Chris. I'm actually very excited about it. We are trying to mix toward higher-rated corporate room nights, and you're seeing that in our results and production. For the rest of this year, we're probably up about three points in corporate room nights on the books versus the same time last year. Our corporate leads continue to see great growth. But in the second quarter, we saw rate growth across all segments, not just corporate — association and SMERF as well. What's happening is we're investing in the assets to enhance the value proposition. We're identifying lower-rated groups that maybe we need to either move up the pricing scale for or part ways with, and then we're targeting new groups to bring into the system, which is producing strong results. In the second quarter, there was tremendous growth in SMERF room nights booked, but at a much higher rate than we've ever seen in the past — the rate was actually up over 200% for that cohort. So we're moving everybody up the scale, and that's a result of targeted identification of new groups and investment into the hotels. You've seen results at Palms and Rockies from those investments. There's a lot of investment going on at Opryland right now; we've hosted a number of events with meeting planners at that hotel recently, and the excitement level is very high. People see what we're doing and want to get into Opryland to experience the new offerings. So we're seeing growth across the board, continuing to identify new groups, especially on the corporate side, to remix the hotels, and we're having great results.
And when you look at our performance relative to the competition market by market, we're growing our share. This strategy is not being replicated by many competitors because they don't have the physical assets to attract this higher-rated group business. Mark referenced that with what has been accomplished with the JWs.
We talked about that in our prepared remarks in terms of growth of our market share.
We'll move next to David Katz with Jefferies.
I wanted to get a sense for your appetite, inclination, general feelings or any updates on potential hospitality acquisitions. We're hearing some things in the market and wondered what your appetite and inclination is?
We're not going to comment on any rumors or speculation in the market. Broadly speaking, we have a very focused strategy. If you think about acquisitions, there aren't many targets that fit our criteria. One of the greatest strengths of our portfolio is the competitive environment we operate in: there's no new real product being built, and there's very limited product available. That's one of our greatest strengths.
David, you've followed us for a long time. We've been consistent over the years about what we're not interested in. We don't want to replicate competitors who buy generic large hotels and hope the market performs. We've been clear there are a handful of big, beautiful hotels in certain markets that our customers want to go to. Those are the businesses we track and keep our eyes on. Candidly, that's why we acquired the hotel in San Antonio and the one in Phoenix — properties we'd looked at years ago. We'll continue on that path.
We'll take our next question from Rich Hightower with Barclays.
To circle back on higher-rated group mix and driving ADR, can you parse out the impact of mix versus underlying price increases across the board? And when you say you're stealing share on the group side, which markets, properties or property types are you stealing more share from?
Patrick, do you want to dive into the detail?
If you look at second quarter performance versus 2025 and 2024, we're seeing results across the board where we continue to increase market share. Opryland stood out in the second quarter as a big winner. Gaylord National continued to drive strong results, and across the board we saw properties continue to gain additional share. Regarding pricing and mix, we've been on this mix journey for the past few years and continue to see it move up. What happened in the second quarter was more a result of investment into the hotels and our ability to drive pricing as a result. The mix didn't necessarily change dramatically in the quarter; in fact, bookings in the second quarter skewed more toward SMERF room nights, which historically would be lower-rated business. But we saw higher growth rates in that cohort than we've ever seen before. So the mix has been moving in the right direction, but in Q2 it was more pricing-driven due to investments and excitement at the properties.
One way to attribute the mix shift is the strength in our catering spend as we pick up premium groups. Our strategy is across all segments, and as you move up in each segment you get higher spend outside the room — whether it's SMERF, association or corporate. Corporates generally spend more outside the room than other segments, and that helps drive our catering performance.
We don't want to over-index on corporate such that if there's a macroeconomic downturn we've walked away from association business. For us, it's about marginal changes between segments while maintaining a strong association base, but moving pricing up across all segments. It needs to be a story of both pricing and mix moving forward.
We'll move next to Duane Pfennigwerth with Evercore ISI.
This is Peter on for Duane. One on CapEx: The increase of $50 million this year seems like an acceleration, maybe shifting out of 2027. Is that correct? And if so, does that free up more space next year to undertake additional projects you hadn't yet contemplated?
Yes, Peter, that is completely a shift — an acceleration — as we think about what projects we're undertaking and the most efficient way to accomplish them. You see us consistently make those sequencing decisions. We candidly haven't given guidance around capital for 2027 yet, but our philosophy in determining what's right for the business and how we sequence projects relative to what's on the books will be taken into consideration when we think about capital in 2027.
We'll take our next question from Jay Kornreich with Cantor Fitzgerald.
As we think about bookings, ADR on the books seems to be tracking ahead of RevPAR on the books at this point. Can you unpack that a bit more? What level of ADR upside are you seeing for next year? And should we expect the typical 50 points of occupancy that you start the year with to be how 2027 is shaping up, or any reason occupancy would be higher or lower to start the year than normal?
For what's on the books right now for 2027, we're mid-single digits up on rate, and rate is driving the revenue increase we discussed at 3.2%. We are positioned to be around that roughly 50 points of occupancy to start the year. We're in a good spot. We have near-record corporate lead volume for next year, favorable pattern availability and a better value proposition next year given rooms renovations at Texan and Hill Country and the meeting space at Opryland. We also have a light-touch refresh in the fourth quarter at Gaylord National that will help next year. For Opryland in particular, corporate mix on the books for next year is up 14% year-over-year for 2027, and for 2028 it's high single digits over 2027. So we're seeing strong traction and response from corporate meeting planners to investments we've made.
We'll move next to Jack Armstrong with Wells Fargo.
Can you take us through some of the building blocks on the expense side across labor, utilities or anything else to highlight positive or negative surprises in the second quarter and the trajectory of those items into the back half of the year?
We target a flow-through of about 40%, and we achieved 46% flow-through year-over-year in the second quarter. A lot of that is because of effective labor management. Our average wage rate increased about 3.8% year-over-year, but we held our wage margin essentially flat, so we've improved productivity. We continue to make gains on procurement; Marriott has talked about that, and we're seeing benefits from their efforts. We've also taken on procurement improvements ourselves here at RHP across design and construction and vendor relationships. As our portfolio has expanded, our buying power and scale have improved, and we're able to negotiate favorable procurement contracts. So Q2 benefited from effective labor management and procurement gains. On utilities, we're up and running with our solar array at Gaylord National, which can provide about 25% of the property's electricity needs. So while utilities remain a challenging area, we're moving in the right direction and making investments to reduce those costs over time.
From a guidance standpoint, the assumption at the midpoint is that operating expenses for the same-store hospitality portfolio will be about 3% at the midpoint. That's as good a guide as you'll get on our assumptions, given the points Patrick mentioned.
I've heard some folks talk about the front-loading of collective bargaining agreements. Our CBA contract is only at one hotel, Gaylord National. We think 2026 is in a great position as evidenced by the first half of the year, and we expect that to continue into 2027. So there's not a lot from an expense perspective that's keeping us awake at night.
We'll move next to John DeCree with CBRE.
Looking at implied back half guidance, given the higher ADRs and premium customers in Q2, does your guidance include any of that higher spending level carrying through to the back half of the year? Or do you expect what you saw in Q2 to normalize?
Mark's prepared remarks had a lot of commentary on how we expect the rest of the year to play out. We did have a very good second quarter and we're proud of that. You do see dynamics between the third and fourth quarter in RevPAR and total RevPAR. We've seen strong outperformance outside the room in banquet thus far; we'll see how that plays out, but we have a strong book of group business in the back half of the year. That strong book at the midpoint is shaping how we see the second half playing out and is why we raised our outlook for RevPAR, total RevPAR and adjusted EBITDAre.
One difference between the back half and the front half is that back-half RevPAR growth will be occupancy-driven versus the first half, which was more rate-driven. That's an important dynamic. We still expect nice margin growth in the back half, but that influences flow-through somewhat.
If we have an opportunity to outperform, we're encouraged by the ICE results with the three new themes, which could provide upside. We'll be watching that closely. As everyone knows, transient depends heavily on performance from Thanksgiving through the end of December.
We'll move next to Michael Herring with Green Street.
Going back to the JWs, can you discuss any unforeseen challenges thus far at either the property or market level that you've seen that you think could be avoided with any future opportunities?
I think it's been as expected with a few positive surprises.
The integration efforts have gone very well. Desert Ridge was turnkey with not a lot of capital required. Hill Country has a longer-term master plan and a rooms renovation in progress, but overall the integration has gone very well and we're learning the JW product more every day. We're very pleased with how it's gone.
On Hill Country, part of the thesis was the airport expansion in San Antonio; that expansion will be done in 2028 with 14 additional gates. Part of acquiring San Antonio was getting a group hotel established there as airlift increases to deliver larger groups.
We will take a follow-up from Rich Hightower with Barclays.
When you say you're stealing share or gaining share, are you referencing a defined comp set for each hotel in terms of RevPAR index, strictly speaking? Or are you talking about larger categorical share gains against big group markets where Ryman doesn't have an asset currently? Help me understand the dynamic.
That's a great question. We reference a defined comp set, because our hotels are unique and you need to find hotels of similar size, scale and function. So performance is measured against the comp set for each market. That comp set may include hotels outside a close drive area of the property, but our performance is based on those defined comp sets and we continue to drive improvements versus them.
The caveat that Patrick made is important: we don't compare Opryland against typical Nashville hotels; Opryland has a regional or national comp set because of its unique nature. The same applies to our other hotels.
It does appear that there are no further questions at this time. I'll now hand back to Colin Reed for any additional or closing remarks.
Only comment would be thank you, everyone, for being on this call. Our business is in really good shape, and we look forward to sharing more information with you over the weeks and months ahead. So thank you.
Thank you. This brings us to the end of today's meeting. We appreciate your time and participation. You may now disconnect.