RYMAN HOSPITALITY PROPERTIES INC 
By Expects to Nominate Four Directors at Gaylord's Upcoming Annual Meeting of Shareholders
The full text of TRT Holdings' letter follows:
January 15, 2009
Dear Fellow Shareholders of Gaylord Entertainment Co.:
TRT Holdings, Inc. ("TRT") owns 6,131,930 shares, or 14.99%, of the
common capital stock of Gaylord Entertainment Co. ("Gaylord"). TRT
is the largest shareholder in Gaylord.
We are a closely and privately held, diversified holding company
with over $1 billion in annual revenues from operating businesses
in the hospitality, energy, retail and fitness industries. Through
our ownership of Omni Hotels, we have significant experience in
hotel and hospitality management and the ownership of hotel real
estate. Omni Hotels has 40 upper upscale hotels with over 14,700
hotel rooms, more than 12,000 employees and has won numerous
awards for customer service. Being a closely and privately
held company, we are especially focused on managing our business
to create value for shareholders.
In November 2008, we approached the senior management of Gaylord to
discuss ideas on how TRT might become more involved at the Board
level and assist Gaylord in creating value for its shareholders.
Given our status as the largest shareholder and our expertise in the
hospitality industry, we were disappointed that Gaylord management
chose to rebuff our overture and quickly issue a press release
publicly dismissing our efforts rather than joining us in a
genuine search for ways to maximize shareholder value. Gaylord
claimed our proposals were "not in the best interests of all
Gaylord shareholders." As a result, we feel we have no choice
but to take our message directly to shareholders.
We believe that we can assist the Board and management team in their
efforts to create value for all Gaylord shareholders. TRT's focus
would be to bring: (1) a disciplined business approach, (2)
accountability to shareholders, and (3) a fresh perspective based on
our considerable industry experience. We believe that Gaylord's
management and Board of Directors have failed to adequately deliver
in these areas.
Based on our many years of owning and managing operating businesses,
most particularly in the hospitality industry, we are convinced that
Gaylord has lost its way and we therefore believe it is time for a
change at the company. For this reason, as well as to further the
objectives described above, we expect to nominate four directors to
stand for election at Gaylord's upcoming annual meeting.
FAILURE TO OPERATE THE BUSINESS WITH DISCIPLINE
-- Poor Financial Performance Relative to Peer Group. We believe
Gaylord's financial performance is poor. When compared against
an eleven member hospitality peer group for the twelve months
ended September 30, 2008, Gaylord ranked the absolute worst in
the following important performance metrics: return on assets,
return on capital, and EBIT margin. Gaylord's EBITDA margin
was second to last among the members of the group. In
addition, Gaylord's results for the following measures fell
below the peer group median: gross margin, SG&A margin and
return on equity. The peer group consists of Marriott
International, Inc. (MAR), Starwood Hotels & Resorts Worldwide
Inc. (HOT), Host Hotels & Resorts Inc. (HST), Wyndham
Worldwide Corporation (WYN), Choice Hotels International Inc.
(CHH), Strategic Hotels & Resorts, Inc. (BEE), FelCor Lodging
Trust Inc. (FCH), Ashford Hospitality Trust Inc. (AHT),
LaSalle Hotel Properties (LHO), Sunstone Hotel Investors Inc.
(SHO), and Morgans Hotel Group Co. (MHGC). Based on TRT's
experience in operating the privately held Omni Hotel chain,
we believe there is room to significantly improve Gaylord's
operating performance.
-- Excessive Overhead. We believe that spending on corporate
overhead at Gaylord is too high given the scope of its
operations. Gaylord has corporate overhead in excess of $50
million to operate five hotels with approximately 8,000 hotel
rooms. By comparison, Omni Hotels manages to operate 38
hotels with approximately 14,400 hotel rooms on corporate
overhead of less than $26 million. Based on our experience
in the hospitality industry, we are very confident that
Gaylord's corporate overhead could be significantly
reduced.
-- Corporate Waste. While many actions of the management team
appear wasteful, in our view, the poster child for Gaylord's
excess is its operation of a $15 million Gulfstream G150
private jet, which it acquired at the end of 2006. With
only three hotels located outside of its corporate
headquarters in Nashville - and all close to major airports -
the purchase and operation of this aircraft seems to us to be
anything but "in the best interests of all Gaylord
shareholders." Examination of the aircraft's flight log over
the past two years reveals that the plane is often used to fly
back and forth to locations in Mississippi and Florida, where
Gaylord's CEO maintains a personal farm and a vacation home.
The jet has been used at least 36 times for this purpose and
this represents more than 25% of the total use of the plane
(see Exhibit A attached, and also note the early Friday, or
even Thursday, departure times for these trips). In addition
to this frequent personal use, Gaylord is using the aircraft
for what appear to be questionable purposes to places such
as Alaska, South Dakota, Brazil and Talladega (on race day).
After two years of owning the aircraft, Gaylord decided last
month to block public access to the flight logs. This appears
to be a decision to consciously avoid transparency in
connection with the use of the plane.
-- The Gaylord National. There were significant cost overruns on,
and we believe poor execution of, the construction and opening
of the Gaylord National in Washington D.C. Gaylord originally
announced a total budget of $530 million for the National
project; however, the final project cost was approximately
$1.1 billion. Although additional rooms were added to the
hotel, the total cost per room exceeded the original budget by
approximately 55%. The original budgeted cost per room was
$353,000, compared to the final cost per room of approximately
$550,000. In addition, the grossly over-budget project was still
plagued with multiple problems upon opening.
-- La Cantera. Gaylord squandered $12 million on the aborted La
Cantera transaction in San Antonio, Texas. On November 26, 2007,
Gaylord announced that it had signed a definitive agreement to
buy the Westin La Cantera Resort for $252.5 million. On January
22, 2008, Gaylord announced that it had negotiated a short
extension to the closing date for the transaction in return for
which Gaylord agreed to forfeit a $10 million deposit in the
event the purchase contract was terminated. On April 16, 2008,
less than three months later, Gaylord announced that it had
terminated the contract and lost $12 million on the transaction.
Ask yourself whether knowledgeable, disciplined buyers of
commercial real estate would choose to put at risk large
non-refundable deposits before there is certainty that a
purchase will close.
-- ResortQuest. In 2003, Gaylord acquired ResortQuest
International, Inc., for approximately $200 million. Gaylord's
CEO and another Gaylord director were also former directors of
ResortQuest. We question Gaylord's logic of acquiring
a vacation home rental business and the belief that synergies
could be derived from combining it with Gaylord's hotel
business. Indeed, in what we can only describe as an
admission of failure, about four years later Gaylord sold
ResortQuest at a loss of approximately $55 million. This
misadventure was under the watch of the current management
team and a majority of the current Board.
LACK OF ACCOUNTABILITY TO SHAREHOLDERS
-- Hand Picked Board. While each Board member is a respected and
accomplished individual, we believe the Board has been hand
picked by management and has not held management sufficiently
accountable. A majority of the Board members have a long history
of interconnected relationships with each other through
affiliations with other companies and Boards, specifically,
First Horizon National Corp., ResortQuest International, Inc.,
Harrah's Entertainment, Inc., and Promus Companies, Inc. We
question whether such a close-knit Board can effectively
challenge its friends in management.
-- Separation of Duties. The role of the Chairman of the Board
and Chief Executive Officer should be immediately separated.
We also question whether a Chairman who is CEO has the to
challenge management decisions.
-- Excessive Compensation. We believe that management
compensation is excessive given the limited scope of Gaylord's
operations. Gaylord's CEO made total reported compensation
of $3,874,886 in 2007. The top management is compensated
comparably with much larger and more complex hotel companies.
In its press release dismissing our efforts to help bring value
to the company and its shareholders, Gaylord expressed concerns
over potential conflicts of interest that could arise if
designees of TRT assume an active role on Gaylord's Board due
to TRT's ownership of the Omni Hotels chain. We believe this
concern to be unfounded. We believe it is very common and
very simple to put in place reasonable procedures that would
address the rare instance in which a conflict of interest
might arise at the Board level. Further, aside from the
undersigned, we intend to nominate director candidates who have
no affiliation with Omni Hotels or TRT.
As Gaylord's largest shareholder, our interests are fundamentally
aligned with those of all shareholders. Our motives are not
conspiratorial. We have watched from the sidelines with
mounting alarm as the value of our investment in Gaylord has
declined under the watch of the incumbent Board. Unlike
management, we do not draw rich salaries from Gaylord's
coffers. Instead, like you, we only stand to benefit from
our efforts if we succeed in enhancing shareholder value.
In conclusion, TRT has years of experience in owning, growing
and managing operating businesses, especially in the hospitality
industry. Our focused, disciplined approach to operating in the
hospitality space, coupled with our willingness to hold managers
accountable to the owners of the business, has proven to be a
successful formula for us and we believe it will benefit
Gaylord as well. While we remain disappointed and surprised
that management and the Board refuse to accept the help of a
large shareholder with significant experience in the hospitality
industry, we nevertheless continue to stand firmly committed
to righting the course at Gaylord. It is our intention to
nominate a slate of four highly qualified and experienced
directors to serve on Gaylord's Board in our campaign to
strengthen Gaylord for the benefit of all of its shareholders.
Sincerely,
/s/ Robert B. Rowling
Robert B. Rowling
Chairman of the Board of Directors
TRT Holdings, Inc.
(Exhibit A: http://www.newscom.com/cgi-bin/prnh/20090115/NY59415 )
About TRT Holdings
TRT Holdings is a privately-owned, diversified holding company located in
IMPORTANT INFORMATION
TRT HOLDINGS, INC. AND
INFORMATION RELATING TO THE PARTICIPANTS IN THIS PROXY SOLICITATION IS PROVIDED IN A SCHEDULE 13D THAT WAS FILED BY THE PARTICIPANTS WITH THE SEC ON
Forward-Looking Statements
Some of the statements contained in this press release include forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934, as amended. Forward-looking statements can be identified by the use of words such as "anticipate," "believe," "estimate," "may," "intend," "expect" or other similar expressions. Forward-looking statements involve substantial risks and uncertainties that could cause actual results to differ materially from those in such statements, including, but not limited to, those risks and uncertainties set forth in Item 1A- Risk Factors of Gaylord's Annual Report on Form 10-K for the year ended
Contacts:
Dan Katcher / Annabelle Rinehart
Joele Frank, Wilkinson Brimmer Katcher
(212) 355-4449
SOURCE TRT Holdings
