Gaylord Entertainment shares continue to fall

NEW YORK - Shares of Gaylord Entertainment Co. continued to drop sharply on Thursday, one day after the hotel and entertainment company reported that its third-quarter losses more than doubled from a year earlier and that trends in the fourth quarter look weak.

Gaylord shares dropped $1.63, or 9.8 percent, to $14.94 after touching an all-time low of $13.54 earlier in the session. The stock has traded between $15.29 and $66.96 during the past 52 weeks.

On Wednesday, Gaylord said its revenue per available room at properties open more than a year fell 3.1 percent as occupancy dropped. Revenue per available room, or revpar, is a key gauge of a hotel company's performance.

Gaylord Chairman and Chief Executive Colin V. Reed also said trends for the company's fourth-quarter transient bookings have deteriorated over the past several weeks. For the full year, Gaylord now expects revpar to be flat or decline 1 percent, down from the growth of 1 to 3 percent predicted earlier.

Oppenheimer & Co. analyst David Katz noted that the company relies more heavily on transient business in its fourth quarter, because group meetings are generally not booked around the holidays. Gaylord's chain of resorts and convention centers relies on long-term group bookings for much of its business.

Katz maintained the Nashville-based company's "Outperform" rating. "We believe the key risk for the stock in the near term is whether the new guidance is conservative enough, given the limited visibility," he said. "Over the long term, we believe the inherent asset value and compelling business model will be realized."

Friedman, Billings, Ramsey analyst C. Patrick Scholes was less optimistic, maintaining a "Market Perform" rating on the stock. He said the company may have trouble bouncing back from the downturn in 2010 and 2011, because it will be locked into long-term group contracts booked during the current weak environment.

Scholes also said the company's new property outside Washington, the Gaylord National Resort and Convention Center, has disappointed so far.

On Tuesday, Gaylord said Phillip Coffey will take over as general manager of the property. Coffey most recently served as general manager of Marriott's Orlando World Center Resort.

Scholes said that reduced cash flow projections and the leadership change leads him to "suspect there may be greater issues at this property than are being discussed by management during the conference call."

Deutsche Bank analyst Chris Woronka blamed some of the property's under-performance on seasonality issues and a delay in the opening of surrounding National Harbor attractions. He maintained a "Buy" rating on the stock but said he expects "somewhat uneven results" from the property during the next several quarters.

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