Feb. 29, 2012--The largest shareholder in Red Lion Hotels, a Seattle investment fund, is again urging the struggling Spokane-based hotel company to put itself up for sale.

Columbia Pacific Opportunity Fund, which owns nearly 29 percent of Red Lion, wrote to Red Lion's board Tuesday to say it's been approached by "several financial and strategic parties" who indicated interest in buying the company or its assets.

The letter, contained in a regulatory filing, asked the board to hire a financial adviser to oversee "a full and transparent sale process."

Columbia Pacific Opportunity Fund is one of five funds run by Columbia Pacific Advisors, an investment advisory firm affiliated with the family of Daniel Baty, the chairman and co-founder of the Emeritus chain of assisted-living centers.

Red Lion has lost money each of the past four years, including a $7.1 million (37 cents per share) loss for 2011 reported Tuesday. Its stock, which has lagged the broad market over the past year, gained 7 cents Tuesday to close at $7.80; all of the gain came in the last few minutes of New York Stock Exchange trading.

Red Lion, which owns or leases 30 hotels and franchises an additional 18, has been trying to adjust its lodging portfolio.

Last summer it sold its 297-room Fifth Avenue hotel in downtown Seattle for $71 million; that property still operates as a Red Lion under a franchise agreement.

The company used the proceeds to buy 10 hotels it had been leasing.

The company also has been trying to sell "noncore" hotels in Denver; Medford, Ore.; and Helena and Missoula, Mont. But Red Lion Chief Executive Jon Eliassen said in an interview that finding qualified buyers has been difficult.

"It's a tough market right now to be marketing hotel properties," Eliassen said. "There are a lot of bank-owned hotel properties in the western United States, and though we've had some interested parties financing isn't always available. It's not something that can be done overnight."

Columbia Pacific had also urged Red Lion to step up its sale efforts in January and November 2011. Both times, it indicated it might itself be a buyer.

Though Eliassen declined to comment specifically on Tuesday's letter, he said he wasn't concerned that the fund might try to replace Red Lion's board of directors.

"I don't think we're that far apart in trying to create long-term shareholder value," he said.

Drew DeSilver: 206-464-3145 or [email protected]

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