Leases

12 Months Ended

Dec. 31, 2022

Leases

Leases

6. Leases

The Company is a lessee of a 65.3 acre site in Osceola County, Florida on which Gaylord Palms is located; building or land leases for Ole Red Gatlinburg, Ole Red Orlando, Ole Red Tishomingo, Ole Red Nashville International Airport and Ole Red Las Vegas; and various warehouse, general office and other equipment leases. The Gaylord Palms land lease has a term through 2074, which may be extended through January 2101, at the Company’s discretion. The leases for Ole Red locations range from five to ten years, with renewal options ranging from five to fifty-five years, at the Company’s discretion. Extension options are not considered reasonably assured and thus are not included in the Company’s calculation of its right-of-use assets and liabilities. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

The terms of the Gaylord Palms lease include variable lease payments based upon net revenues at Gaylord Palms and certain other of the Company’s leases include rental payments adjusted periodically for inflation. The Company recorded $3.0 million, $1.8 million and $0.7 million of contingent rental expense related to Gaylord Palms in 2022, 2021 and 2020, respectively.

As the discount rate implicit in the Company’s operating leases is not readily determinable, the Company applied judgments related to the determination of the discount rates used to calculate the lease liability as required by Accounting Standards Codification Topic 842, “Leases”. The Company calculated its incremental borrowing rates by utilizing judgments and estimates regarding the Company’s secured borrowing rates, market credit rating, comparable bond yield curve, and adjustments to market yield curves to determine a securitized rate.

The Company’s lease cost for the years ended December 31 is as follows (in thousands):

	2022		2021		2020
Operating lease cost	$	15,694	$	13,199	$	12,016
Finance lease cost:
Amortization of right-of-use assets		122		146		149
Interest on lease liabilities		33		39		48
Net lease cost	$	15,849	$	13,384	$	12,213

Future minimum lease payments under non-cancelable leases at December 31, 2022 are as follows (in thousands):

	Operating		Finance
	Leases		Leases
Year 1	$	7,357	$	199
Year 2		8,907		46
Year 3		8,907		46
Year 4		9,000		46
Year 5		8,931		46
Years thereafter		565,132		476
Total future minimum lease payments		608,234		859
Less amount representing interest		(482,475)		(174)
Total present value of minimum payments	$	125,759	$	685

The remaining lease term and discount rate for the Company’s leases are as follows:

Weighted-average remaining lease term:
Operating leases	44.2	years
Finance leases	11.9	years
Weighted-average discount rate:
Operating leases	7.0	%
Finance leases	4.0	%