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Red Lion Reports a $4.5 million Net Loss for the 1st Qtr 2008,
System Wide Occupancy 51.2% Down from Prior Year 53.6%
Hotel Operating Statistics

RevPAR for owned and leased hotels up 3.9% in Quarter

SPOKANE, Wash., May 7, 2008 - Red Lion Hotels Corporation (NYSE:RLH) today announced its results for the first quarter ended March 31, 2008, showing continued growth in RevPAR and EBITDA from continuing operations. 

President and Chief Executive Officer Anupam Narayan, commenting on the first quarter results, said, "We were pleased to deliver solid RevPAR growth at our owned and leased hotels that outpaced the competitors in our markets. To accomplish this in the face of a challenging economy and a quarter in which Easter was historically early demonstrates the strength of our Red Lion brand strategy. 

Further, the increase in our RevPAR helped grow our hotel operating margin. While we are appropriately cautious concerning the economy and our sector, we believe we are tracking well to our 2008 guidance."

Mr. Narayan continued, "With our experienced leadership team and our strong balance sheet, we are delivering both on operations and on our growth strategy of acquiring key hotel assets in strategic western hub cities in the U.S."

Subsequent Events
On May 7, 2008, Red Lion announced that it had entered into an agreement to acquire the fee simple interest in the Radisson Hotel Denver Southeast -- a 478 room hotel -- for $25.3 million. The acquisition is expected to close in the second quarter of 2008, subject to usual closing conditions. The property will be branded as a Red Lion hotel upon closing and will continue to operate while the company makes approximately $8 million in renovations, primarily to guest rooms and public spaces.

First Quarter Results
Red Lion's total revenue during the first quarter was $39.6 million, up 0.6% from the prior-year period. Revenue from hotels was $35.2 million, up 2.5% from the first quarter of 2007, driven by the increase in RevPAR at owned and leased hotels. Hotel direct operating margin increased by 204 basis points to 14.9%. First quarter of 2008 results included no revenue from the Red Lion Hotel Sacramento, compared to three months of revenue in the prior-year period. In addition, first quarter of 2008 contained three months of revenue from the Anaheim hotel purchased in October 2007, which was not in the prior-year period results. On a comparable property basis, hotel revenue increased 4.0%.

The 3.9% RevPAR increase for owned and leased hotels in the first quarter of 2008 was driven by a 3.3% increase in ADR and a 30 basis point increase in occupancy. System-wide, RevPAR fell 0.7% on a quarter-on-quarter basis, with a 240 basis point decrease in occupancy more than offsetting a 3.9% increase in ADR. The system-wide results were negatively impacted by rooms out of service for renovation at a number of franchised hotels.

Franchise and management revenue was $0.3 million, down from the prior-year period due to fewer franchisees in the system and because of the receipt of a $0.2 million franchise termination fee in the prior period. Entertainment revenue was $3.2 million, a decrease of $0.1 million from the same quarter in 2007.

EBITDA from continuing operations for the first quarter 2008 before the 2008 Special Item was $3.2 million, an increase of 4.4% from the first quarter of 2007. The Special Item is comprised of a $3.7 million separation charge in the quarter incurred in connection with the retirement of former President and CEO Arthur Coffey. Net loss from continuing operations excluding this separation charge was $2.2 million - a decrease of $0.2 million from the prior-year period. Loss per fully diluted share from continuing operations excluding the separation charge was $0.12, versus a loss of $0.10 per fully diluted share in the first quarter of 2007.

Outlook for 2008

While we are watchful on the health of the economy, we are maintaining our 2008 guidance as follows:
  -- 2008 RevPAR growth for company owned and leased hotels in the range of 3-6%.
  -- 2008 direct hotel operating margins to improve between 50 and 100 basis points from 2007.
  -- EBITDA from continuing operations to be in the range of $34 to $36 million, up 3 to 9% from the previous year.

Red Lion's 2008 EBITDA guidance does not include the impact of the $3.7 million Special Item for separation costs or the impact of the expected Denver acquisition.

Red Lion System Update
The company is currently in the process of renovating guest rooms at its new Anaheim hotel which was acquired in October 2007. We expect to brand the hotel as a Red Lion in 2008 and to complete all renovations in the first part of 2009.
  As previously announced:
  -- In January 2008, the franchised property Red Lion Baton Rouge (132
     rooms) joined the system.
  -- In January 2008, our management agreement with the Grove Hotel in
     Boise, Idaho expired.
  -- In April 2008, our franchise agreements with two small properties at a
     ski resort in Sandpoint, Idaho (82 rooms and 50 rooms, respectively)
     expired and were not renewed.
  -- In April 2008, our franchise agreement with the 169-room Red Lion Hotel
     Denver Downtown at Invesco Field expired and was not renewed.

Also in April 2008, we terminated our franchise agreement with the 117-room Seattle South - Boeing Field property for non-performance. 

With these changes, the company had 18 franchised hotels in the Red Lion system at the end of April 2008.

All franchised hotels were required to meet Red Lion's elevated brand standards by the end of 2007. The majority of hotels met the standards by the end of 2007, while a few are in the process of completing renovations. We are monitoring their work and could terminate additional hotels for noncompliance if their progress is not satisfactory.

Liquidity and Balance Sheet

As of March 31, 2008, the company had $11.6 million in cash and cash equivalents, and interest bearing debt obligations of $113.5 million -- all of which are at fixed interest rates. The company continues to maintain a $50 million line of credit, which remains unused as of March 31 and is available to fund future acquisitions or other investments as market conditions warrant. We expect to use some of the credit line to complete the anticipated acquisition of the Denver hotel.

For the remainder of 2008, the company is projecting capital expenditures of $13.7 million for ongoing maintenance, hotel improvement and Anaheim renovation costs. These figures exclude any estimates for work on the expected acquisition of the Denver hotel.

Red Lion Hotels Corporation
Consolidated Statements of Operations
($ in thousands, except footnotes)

                              Three months ended March 31,
                                     2008        2007      $ Change % Change

    Hotels                         $35,235     $34,381        $854     2.5%
    Franchise and management           335         789        (454)  -57.5%
    Entertainment                    3,211       3,347        (136)   -4.1%
    Other                              778         787          (9)   -1.1%

    Total revenues                  39,559      39,304         255     0.6%

  Operating expenses:
    Hotels                          30,000      29,974          26     0.1%
    Franchise and management            73         263        (190)  -72.2%
    Entertainment                    3,060       2,855         205     7.2%
    Other                              538         483          55    11.4%
    Depreciation and amortization    4,394       4,020         374     9.3%
    Hotel facility and land lease    1,786       1,714          72     4.2%
    Gain on asset dispositions, net   (107)       (190)         83    43.7%
    Undistributed corporate
     expenses                        5,082       1,450       3,632   250.5%

    Total expenses                  44,826      40,569       4,257    10.5%

  Operating loss                    (5,267)     (1,265)     (4,002) -316.4%

  Other income (expense):
    Interest expense                (2,279)     (2,242)        (37)   -1.7%
    Minority interest in
     partnerships, net                  17          12           5    41.7%
    Other income, net                  412         309         103    33.3%

  Loss from continuing operations
   before income taxes              (7,117)     (3,186)     (3,931) -123.4%

  Income tax benefit                (2,607)     (1,206)     (1,401) -116.2%

  Net loss from continuing
   operations                       (4,510)     (1,980)     (2,530) -127.8%

  Discontinued operations:
    Loss from operations of
     discontinued business units,
     net of income tax benefit of
     $8                                  -         (14)         14   100.0%
    Net loss on disposal of
     discontinued business units,
     net of income tax benefit of
     $6                                  -         (12)         12  -100.0%
  Loss from discontinued operations      -         (26)         26   100.0%

  Net loss                         $(4,510)    $(2,006)    $(2,504) -124.8%

  Loss per share - basic and
   diluted: (1)

       Net loss from continuing
        operations                  $(0.25)     $(0.10)     $(0.15)
       Loss from discontinued
        operations                       -           -           -
       Net loss                     $(0.25)     $(0.10)     $(0.15)

  Weighted average shares - basic
   and diluted                      18,231      19,148

  EBITDA  (2)                        $(444)     $3,034     $(3,478) -114.6%
  EBITDA as a percentage of
   revenues (3)                      -1.1%        7.6%

  EBITDA from continuing
   operations (2)                   $(444)      $3,076    $(3,520)  -114.4%
  EBITDA from continuing
   operations (3) as a percentage
   of revenues                       -1.1%        7.8%

  (1) For the three months ended March 31, 2008 and 2007, all of the
      1,324,540 and 1,159,080 options to purchase common shares outstanding
      as of those dates, respectively, were considered anti-dilutive due to
      the loss for the period.  Likewise, all of the 44,837 and 142,663
      convertible operating partnership ("OP") units, respectively, were
      considered anti-dilutive, as were the 41,938 and 25,803 units of
      unissued restricted stock outstanding.

  (2) The definition of "EBITDA" and how that measure relates to net loss is
      discussed further in this release under Non-GAAP Financial Measures.

  (3) The calculation of EBITDA as a percentage of revenues is based upon
      total operating revenues, from both continuing and discontinued
      operations, of $39,559,000 and $39,887,000 for the three months ended
      March 31, 2008 and 2007, respectively.  EBITDA from continuing
      operations as a percentage of revenues is based upon the operating
      results of continuing business units as presented in the financial

                       Red Lion Hotels Corporation
                       Consolidated Balance Sheets
                   ($ in thousands, except share data)

                                       March 31,       December 31,
                                         2008              2007
   Current assets:
    Cash and cash equivalents          $11,628           $15,044
    Restricted cash                      4,113             4,439
    Accounts receivable, net            10,257            10,330
    Inventories                          1,320             1,416
    Prepaid expenses and other           5,511             3,352
      Total current assets              32,829            34,581

   Property and equipment, net         259,436           260,574
   Goodwill                             28,042            28,042
   Intangible assets, net               11,452            11,582
   Other assets, net                     8,250             9,730

      Total assets                    $340,009          $344,509

   Current liabilities:
    Accounts payable                    $4,054            $4,189
    Accrued payroll and related
     benefits                            5,666             6,166
    Accrued interest payable               353               356
    Advance deposits                       859               345
    Other accrued expenses              10,727            10,419
    Long-term debt, due within one
     year                                5,660             5,547
      Total current liabilities         27,319            27,022

   Long-term debt, due after one year   77,021            77,673
   Deferred income                       8,996             9,169
   Deferred income taxes                17,119            17,294
   Minority interest in partnerships        14                31
   Debentures due Red Lion Hotels
    Capital Trust                       30,825            30,825
      Total liabilities                161,294           162,014

  Stockholders' equity:
   Preferred stock - 5,000,000 shares
    authorized;  $0.01 par value; no
    shares issued or outstanding           -                 -
   Common stock - 50,000,000 shares
    authorized; $0.01 par value;
    18,228,271 and 18,312,756 shares
    issued and outstanding                 182               183
   Additional paid-in capital, common
    stock                              141,284           140,553
   Retained earnings                    37,249            41,759
      Total stockholders' equity       178,715           182,495

      Total liabilities and
       stockholders' equity           $340,009          $344,509

                       Red Lion Hotels Corporation
                   Consolidated Statement of Cash Flows
                             ($ in thousands)

                                       Three months ended March 31,
                                         2008               2007
  Operating activities:
   Net loss                            $(4,510)          $(2,006)
   Adjustments to reconcile
    net loss to net cash
    used in operating activities:
       Depreciation and amortization     4,394              4,028
       Gain on disposition of property,
        equipment and other assets, net   (107)              (190)
       Deferred income tax provision      (175)               (12)
       Minority interest in
        partnerships                       (17)               (12)
       Equity in investments                 9                  9
       Imputed interest expense             55                 52
       Compensation expense related
        to stock issuance                1,581                217
       Provision for (collection of)
        doubtful accounts                 (121)               (13)
       Change in current assets and
          Restricted cash                  326             (1,296)
          Accounts receivable              203               (414)
          Inventories                       96                 30
          Prepaid expenses and other    (2,159)              (726)
          Accounts payable                (135)            (1,242)
          Accrued payroll and related
           benefits                       (500)            (1,705)
          Accrued interest payable          (3)               (58)
          Other accrued expenses and
           advance deposits                766              1,396
       Net cash used in operating
        activities                        (297)            (1,942)

  Investing activities:
   Purchases of property and equipment  (2,968)            (5,160)
   Non-current restricted cash for
    sublease tenant improvements           805                -
   Proceeds from short-term liquid
    investments                            -                7,635
   Advances to Red Lion Hotels Capital
    Trust                                  (27)               (17)
   Other, net                              516                (41)

      Net cash (used in) provided by
       investing activities             (1,674)             2,417

  Financing activities:
   Repayment of long-term debt            (594)              (572)
   Common Stock Redeemed                  (922)               -
   Proceeds from issuance of common
    stock under employee stock
    purchase plan                           71                 88
   Proceeds from stock option
    exercises                              -                  379

      Net cash used in financing
       activities                       (1,445)              (105)

  Net cash in discontinued
   operations                              -                  (32)

  Change in cash and cash
   Net (decrease) increase in cash
    and cash equivalents                (3,416)               338
   Cash and cash equivalents at
    beginning of period                 15,044             13,262

   Cash and cash equivalents at
    end of period                      $11,628            $13,600

                       Red Lion Hotels Corporation
                       Additional Hotel Statistics

    System-wide Hotels as of March 31, 2008
                                       Meeting Space
                          Hotels  Rooms  (sq. ft.)
    Red Lion Owned and
     Leased Hotels           30   5,456  279,684
    Other Leased Hotel (1)    1     310    5,000
    Red Lion Franchised
     Hotels (6)              22   3,500  156,956
    Total                    53   9,266  441,640
    Total Red Lion Hotels    52   8,956  436,640

    Comparable Hotel
     Statistics (2)
                          Three months ended          Three months ended
                            March 31, 2008              March 31, 2007
                         Average                   Average
                        Occupancy         RevPAR  Occupancy          RevPAR
                          (3)    ADR (4)   (5)      (3)     ADR (4)    (5)

    Owned and Leased
     Hotels               52.8%  $85.00   $44.91    52.5%   $82.27   $43.23
    Franchised Hotels     47.9%  $73.51   $35.22    55.7%   $70.92    39.50
    Total System Wide     51.2%  $81.44   $41.69    53.6%   $78.35    41.99

    Change from prior
     comparative period:

    Owned and Leased
     Hotels                 0.3    3.3%     3.9%
    Franchised Hotels      (7.8)   3.7%   -10.8%
    Total System Wide      (2.4)   3.9%    -0.7%

  (1) Represents a hotel acquired in the fourth quarter of 2007 that is
      being repositioned as a Red Lion, although until that time has been
      flagged as an independent.

  (2) Includes all hotels owned, leased and franchised, presented on a
      comparable basis for hotel statistics.

  (3) Average occupancy represents total paid rooms divided by total
      available rooms.  Total available rooms represents the number of rooms
      available multiplied by the number of days in the reported period and
      includes rooms taken out of service for renovation.

  (4) Average daily rate ("ADR") represents total room revenues divided by
      the total number of paid rooms occupied by hotel guests.

  (5) Revenue per available room ("RevPAR") represents total room and
      related revenues divided by total available rooms.

  (6) In April 2008, franchise agreements with three hotels expired and were
      not renewed.  In addition, we terminated a franchise agreement another
      hotel for non-performance.  This reduces the total number of
      franchised hotels in the system to 18, and the total hotels in the
      system to 49 as of the date of this release.

                       Red Lion Hotels Corporation
                   Reconciliation of EBITDA to Net Loss
                             ($ in thousands)

   The following is a reconciliation of EBITDA and EBITDA from continuing
    operations to net loss for the periods presented:

                                      Three months ended March 31,
                                           2008         2007
   EBITDA from continuing operations        $(444)      $3,076
     Income tax benefit - continuing
      operations                            2,607        1,206
     Interest expense - continuing
      operations                           (2,279)      (2,242)
     Depreciation and amortization -
      continuing operations                (4,394)      (4,020)
   Net loss from continuing operations     (4,510)      (1,980)
   Loss from discontinued operations          -            (26)
   Net loss                               $(4,510)     $(2,006)

   EBITDA                                   $(444)      $3,034
     Income tax benefit                     2,607        1,220
     Interest expense                      (2,279)      (2,231)
     Depreciation and amortization         (4,394)      (4,029)
   Net loss                               $(4,510)     $(2,006)

                       NON-GAAP FINANCIAL MEASURES

EBITDA is defined as net income (loss) before interest, taxes, depreciation and amortization. EBITDA is considered a non-GAAP financial measurement. We believe it is a useful financial performance measure for us and for our shareholders and is a complement to net income (loss) and other financial performance measures provided in accordance with generally accepted accounting principles in the United States ("GAAP"). EBITDA from continuing operations is calculated in the same manner, but excludes the operating results of business units identified as discontinued under GAAP.
We use EBITDA to measure the financial performance of our owned and leased hotels because it excludes interest, taxes, depreciation and amortization, which bear little or no relationship to operating performance. By excluding interest expense, EBITDA measures our financial performance irrespective of our capital structure or how we finance our properties and operations. We generally pay federal and state income taxes on a consolidated basis, taking into account how the applicable taxing laws apply to our company in the aggregate. By excluding taxes on income, we believe EBITDA provides a basis for measuring the financial performance of our operations excluding factors that our hotels and other operations cannot control. By excluding depreciation and amortization expense, which can vary from hotel to hotel based on historical cost and other factors unrelated to the hotels' financial performance, EBITDA measures the financial performance of our hotels without regard to their historical cost. For all of these reasons, we believe that EBITDA provides us and investors with information that is relevant and useful in evaluating our business.
However, because EBITDA excludes depreciation and amortization, it does not measure the capital we require to maintain or preserve our long-lived assets. In addition, because EBITDA does not reflect interest expense, it does not take into account the total amount of interest we pay on outstanding debt nor does it show trends in interest costs due to changes in our borrowings or changes in interest rates. EBITDA, as defined by us, may not be comparable to EBITDA as reported by other companies that do not define EBITDA exactly as we define the term. Because we use EBITDA to evaluate our financial performance, we reconcile all EBITDA measures to net income (loss), which is the most comparable financial measure calculated and presented in accordance with GAAP. EBITDA does not represent cash generated from operating activities determined in accordance with GAAP, and should not be considered as an alternative to operating income (loss) or net income (loss) determined in accordance with GAAP as an indicator of performance or as an alternative to cash flows from operating activities as an indicator of liquidity.
                       Disclosure of Special Items

    As previously announced, the Company's former President and Chief
    Executive Officer retired in February 2008.  In connection with the
    retirement agreement, the Company recorded an expense of $3.7 million in
    separation costs during the first quarter of 2008.  As a result, the
    operations as presented in the accompanying financial statements do not
    reflect a meaningful comparison of continuing operations between
    periods.  The follow table represents a reconciliation of certain
    earnings measures from continuing operations before special items to
    loss from continuing operations after special items.

                         Three months ended March  Three months ended March
                                  31, 2008                 31, 2007
    ($ in thousands
    except per share                       Diluted                  Diluted
    data)                Net Loss  EBITDA    EPS   Net Loss  EBITDA   EPS
                           from     from     from    from     from    from
                          Contin-  Contin-  Contin- Contin- Contin- Contin-
                           uing     uing     uing    uing    uing    uing
                          Operat-  Operat-  Operat- Operat- Operat- Operat-
                           ions     ions     ions    ions    ions    ions

  Amount before special
   item                   $(2,153)  $3,210  $(0.12) $(1,980) $3,076  $(0.10)

    Special items:
       costs (1)           (3,654)  (3,654)  (0.20)     -       -       -
      Income tax
       expense of
       special item
       (2)                  1,297      -      0.07      -       -       -

  Amount per
   statement of
   operations             $(4,510)   $(444) $(0.25) $(1,980) $3,076  $(0.10)

  Change from the
   comparative period:
    Amount before special
     item                   -8.7%     4.4%  -20.7%
    Amount per
     statement of
     operations           -127.8%  -114.4%  150.0%

  (1) Amount as included in the line item "Undistributed corporate expenses"
      on the accompanying consolidated statements of operations.

  (2) Represents taxes on special items at the Company's expected
      incremental tax rate as applicable.

About Red Lion Hotels Corporation:
Red Lion Hotels Corporation is a hospitality and leisure company primarily engaged in the ownership, operation and franchising of upscale and midscale hotels under its Red Lion(R) brand. As of March 31, 2008 the RLH hotel network was comprised of 53 hotels located in nine states and one Canadian province, with 9,266 rooms and 441,640 square feet of meeting space. The company also owns and operates an entertainment and event ticket distribution business. For more information, please visit the company's website at
This press release contains forward-looking statements within the meaning of federal securities law, including statements concerning plans, objectives, goals, strategies, projections of future events or performance and underlying assumptions (many of which are based, in turn, upon further assumptions). The forward-looking statements in this press release are inherently subject to a variety of risks and uncertainties that could cause actual results to differ materially from those expressed. Such risks and uncertainties include, among others, economic cycles; international conflicts; changes in future demand and supply for hotel rooms; competitive conditions in the lodging industry; relationships with franchisees and properties; impact of government regulations; ability to obtain financing; changes in energy, healthcare, insurance and other operating expenses; ability to sell non-core assets; ability to locate lessees for rental property; dependency upon the ability and experience of executive officers and ability to retain or replace such officers as well as other matters discussed in the company's annual report on Form 10-K for the year ended December 31, 2007 and in other documents filed by the company with the Securities and Exchange Commission.


Red Lion Hotels Corporation
Julie Langenheim, Investor Relations Manager of Red Lion Hotels
Corporation, +1-509-777-6322
Web site: 

Also See: Red Lion Hotels Acquiring the Leasehold Interest in the 314 room Radisson Hotel Maingate- Anaheim; Will Spend $10 million on Extensive Renovation / September 2007
Red Lion Hotels Corporation Completes Remodel and Expansion of Red Lion Kalispell Center Hotel / June 2006


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