Red Lion Hotels Reports Second Quarter 2012 Results

SPOKANE, Wash., Aug. 7, 2012 /PRNewswire/ -- Red Lion Hotels Corporation (NYSE: RLH), a western U.S. based owner and franchisor of midscale hotels, today announced its results for the second quarter ended June 30, 2012. The company reported second quarter revenues of $38.8 million and EBITDA of $5.5 million, each from continuing operations before special items.


  • RevPAR for comparable owned and leased hotels increased 5.4 percent year-over-year
  • Occupancy increased 280 basis points year-over-year driven primarily by increases in the transient and group segments
  • ADR for comparable owned and leased hotels increased 1.0 percent during the quarter
  • Comparable EBITDA from continuing operations before special items increased $0.8 million compared with the second quarter of 2011
  • Subsequent to quarter end, the company announced a new franchise near Palm Springs, California and achieved significant progress on asset sales.

Comparable operating results and data from continuing operations (as disclosed in the table by the same title) for the periods included in this release exclude from hotel operations the results of the Red Lion Hotel on Fifth Avenue in Seattle, which was sold in the second quarter of 2011. Following the sale, this property continues to operate as a franchised hotel and the company is therefore required to report its financial results in continuing operations.

Total revenue from continuing operations reported during the second quarter of 2012 was $38.8 million compared to $42.2 million in the second quarter of 2011. On a comparable basis, hotel revenue increased by $1.6 million and franchise revenues increased by $0.4 million, offset by a decrease in entertainment revenues of $2.3 million. Second quarter net loss from continuing operations was $0.4 million, or $0.02 per share, compared to net income from continuing operations of $19.1 million or $1.00 per diluted share, in the second quarter of 2011. Second quarter of 2011 results include a $33.5 million gain on the sale of Seattle Fifth Avenue, which is classified as a special item for EBITDA purposes. In the second quarter of 2012, comparable EBITDA from continuing operations before special items increased to $5.5 million, compared to $4.7 million in the second quarter of 2011.

"We increased our overall market share driven by strong occupancy growth and improved our RevPAR performance. As a result of our continued occupancy growth, we are well-positioned to increase rates when the midscale segment rebounds. We also generated significant margin improvements in the first half of the year," said President and Chief Executive Officer Jon E. Eliassen.

"In addition, subsequent to quarter-end, we appointed an executive vice president for franchise development, and announced a new hotel franchise agreement in Southern California. We also closed on the sale of one non-core hotel and announced a sale agreement for another. These achievements are part of our continued execution of our strategy to improve the competitive position of our core hotel properties, expand our franchise network and reduce debt to enhance value for all Red Lion Hotels shareholders."

Summary Results

On the basis of comparable continuing operations before special items, key owned and leased hotel operating metrics and total company EBITDA for the three and six months ended June 30, 2012, and June 30, 2011, are highlighted below:

Three months ended June 30,

Six months ended June 30,







RevPAR (revenue per available room)

$ 56.32

$ 53.43


$ 49.26

$ 46.38


ADR (average daily rate)

$ 84.28

$ 83.42


$ 81.29

$ 81.03











Hotels revenue:


$ 26,060

$ 24,724


$ 45,585

$ 42,687


Food and beverage







Other revenue







Total hotels revenue

$ 34,538

$ 32,935


$ 61,453

$ 58,217


Hotel direct operating margin





Comparable EBITDA from continuing operations before special items(1)

$ 5,545

$ 4,697


$ 6,931

$ 4,851


(1)The above excludes an asset impairment which is included in the non-GAAP reconciliation schedule named, "Disclosure of Special Items" contained in this release.

Second Quarter 2012 Results

In the second quarter of 2012, for comparable owned and leased hotels from continuing operations, RevPAR increased 5.4 percent year-over-year driven by a 280 basis point increase in occupancy to 66.8 percent and a 1.0 percent increase in ADR to $84.28. On a comparable basis, EBITDA from continuing operations before special items increased to $5.5 million for the second quarter compared to $4.7 million in the prior year period. The acquisition of the previously leased iStar hotels contributed facility lease savings of $0.6 million in the quarter.

Comparable hotel revenue of $34.5 million was 4.9 percent higher compared to the same period a year ago. Comparable hotel direct operating margin increased to 24.4 percent from 23.1 percent in the same period in 2011 primarily driven by a change in mix of promotional activities targeting the transient segment partially offset by higher reservation and credit card fees related to the increases in occupancy and rooms revenue.

Revenue and profitability in the entertainment segment declined $2.3 million and $0.7 million, respectively. The declines were primarily a result of the mix of entertainment shows produced and fewer shows in the second quarter of 2012 as compared to the prior year period.

Franchise revenue increased to $1.3 million from $0.9 million. Profitability improved year-over-year primarily due to increased rooms revenue at the company's franchised hotels.

Subsequent Events

On July 31, the company closed on the sale of its Red Lion Colonial Hotel in Helena, Montana for $5.6 million. Upon completion of the sale of the hotel, the company entered into a franchise agreement under which the hotel will continue to operate as a Red Lion.

On August 6, the company announced it has reached a definitive agreement to sell its Red Lion Hotel Denver Southeast for $13.0 million. The sale of this property is anticipated to close by October 31, 2012. Under the agreement, the hotel will not continue to operate as a Red Lion. Accordingly, the financial results of this property have been classified as discontinued operations in the company's statement of operations for all periods presented.

In the past month, the company has signed separate letters of intent to sell the company's commercial mall in Kalispell, Montana and the Red Lion Hotel in Medford, Oregon. Both sales are contingent on completion of mutually acceptable definitive agreements and on each of the prospective buyer's satisfactory completion of due diligence.

Franchise Update

On July 9, the company appointed Ron Burgett as Executive Vice President, Brand Development. His primary responsibility is expanding Red Lion's operations through new franchises. Burgett is also overseeing relationships with the company's franchise owners, including ensuring adherence to Red Lion brand standards and maximizing franchisees' results through Red Lion network benefits.

On July 18, the company announced the signing of a franchise agreement with the owners of a hotel in Cathedral City, California in the Palm Springs area. This 97 room property is expected to convert to a Red Lion Hotel in fall 2012.

Discontinued Operations

Under the sale agreement for the Red Lion Hotel Denver Southeast, the property will not continue to operate as a Red Lion hotel. Accordingly, the operations of this property have been classified as discontinued operations in the company's statement of operations. Also during the second quarter of 2012, based on the company's right to sell its franchised hotel in Sacramento, California to its tenant and on continuing negotiations regarding transaction terms, the company reclassified the real estate and land into assets held for sale. The operating results from the ownership of this real estate and land have appropriately been classified as discontinued operations for all periods presented. The operations of the aforementioned properties are in addition to the operations of the properties in Medford, Oregon and Missoula, Montana which were classified as discontinued operations in the fourth quarter of 2011. This presentation, as required under generally accepted accounting principles ("GAAP"), separately reports the revenue and expenses including any related asset impairment charges, net of income taxes as "net income (loss) from discontinued operations" on the company's statement of operations for all periods presented.

Liquidity and Balance Sheet

As of June 30, 2012, the company had $4.9 million in cash and cash equivalents, and $10.0 million available on its line of credit. As of June 30, 2012, the company had outstanding debt of $99.4 million, of which $30.3 million is classified as current debt. Proceeds from the announced asset sales in the aforementioned Subsequent Events will be primarily used to reduce debt.

Capital expenditures for the six months ended June 30, 2012, totaled $3.0 million.

Assets Held for Sale

As of June 30, 2012, the following were classified as assets held for sale on the balance sheet, the Red Lion Colonial Hotel in Helena, Red Lion Inn Missoula, Red Lion Hotel Denver Southeast, Red Lion Hotel Medford and a hotel property in Sacramento which is leased to a franchise tenant. The company's hotel property in Sacramento was added to this classification in the second quarter of 2012.

Outlook for 2012

The company is reaffirming its RevPAR guidance for 2012, previously provided on February 28, 2012, based on the management team's outlook for the markets in which the company operates and currently available information:

  • Full year 2012 RevPAR for company owned and leased hotels is expected to increase 2 to 4 percent compared to 2011 on an annual basis.
  • The company expects to invest approximately $10.0 million in capital improvements in 2012.

Conference Call Information

The management team of Red Lion Hotels will host a conference call on Aug. 7, 2012, at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time), to discuss financial and operational results for the second quarter of 2012. To access the conference call, domestic participants should dial the following number ten minutes prior to the scheduled start time of the call: (800) 230-1766. International participants should dial (612) 288-0337.

The conference call may also be accessed via live webcast at from the Investor Relations section of the website. To listen to the live webcast, please go to the Red Lion website at least fifteen minutes prior to the start of the call to register and to download and install any necessary audio software. For those unable to participate during the live broadcast, a replay will be available at 4:00 p.m. Pacific Time on Aug. 7, 2012, through Aug. 21, 2012, at (800) 475-6701 or (320) 365-3844 (International) access code – 254894. The replay will also be available shortly after the call on the Red Lion website.

About Red Lion Hotels Corporation:

Red Lion Hotels Corporation is a hospitality and leisure Company primarily engaged in the ownership, operation and franchising of midscale hotels under its Red Lion® brand. As of June 30, 2012, the RLH hotel network was comprised of 47 hotels located in nine states and one Canadian province, with 8,872 rooms and 443,587 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, 2011 and in other documents filed by the Company with the Securities and Exchange Commission.