Red Lion Hotels Corporation
May 6, 2009
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Red Lion Reports First Quarter 2009 Results Maintains Margins in Tough Operating Environment

SPOKANE, WA, May 6, 2009 - Red Lion Hotels Corporation (NYSE: RLH) today announced its results for the first quarter ended March 31, 2009. Summary results for the three-month period follow:

In addition, key hotel operating metrics, on a comparable basis, and reported hotel operating margins for the first quarter ended March 31, 2009 and March 31, 2008 are highlighted below for owned and leased hotels:

Commenting on the first quarter results, President and Chief Executive Officer Anupam Narayan said, "We are very pleased with our results for the quarter. In the face of a decline in revenue, our hotel direct operating margin was essentially flat, which speaks to the strength and dedication of our operating teams and the impact of our cost reduction initiatives. We remain on track to reduce expenses in 2009 by $10 to $12 million."

Narayan continued, "We achieved our first quarter profitability targets and, as we head into our busy season, we continue to pursue a number of aggressive sales and marketing initiatives to attract more corporate, group, meetings and niche business. While we remain cautious about the near-term outlook and plan to tread carefully over the next several quarters, we are encouraged by some of the more recent positive long-term economic indicators. We are also happy that we have no near-term debt maturities and that in our seasonally slowest first quarter, we were able to fund all of our cash needs through operating cash flow and cash on hand."

First Quarter Results

Red Lion's total revenue during the first quarter of 2009 was $34.3 million, compared to $39.6 million for the prior-year period. Revenue from hotels was $30.8 million, down 12.6% from the first quarter of 2008, primarily due to the weak economic and industry environment.

On a comparable basis, ADR declined 4.0%, while occupancy fell 660 basis points, resulting in a decline in RevPAR of 15.9%. Despite the lower revenues, hotel direct operating margin for the quarter was 14.3% -- only 60 basis points lower than the prior-year period. System-wide RevPAR (which includes franchised hotels) on a comparable basis for the quarter decreased 12.7%, caused by a 520 basis point decrease in occupancy and a 3.0% decrease in ADR.

Franchise and management revenue was $0.3 million, or $0.1 million lower than the prior-year period due to a lower number of franchisees in the system. Entertainment revenue was $2.5 million, a decrease of $0.7 million compared to the same quarter in 2008.

EBITDA for the first quarter of 2009 was $2.2 million, compared to $3.2 million for the first quarter of 2008 before a one-time expense for separation costs. The company's net loss was $2.9 million, compared to a net loss of $2.2 million for the prior-year period before the one-time expense for separation costs. Loss per share was $0.16, compared to a loss of $0.12 per share for the first quarter of 2008 before the one-time expense for separation costs.

System Updates

Renovations at the 310-room Anaheim hotel have been fully completed and the hotel had its formal grand opening on April 16. The hotel has been well received by the local community, and by travel providers and guests. The property serves as a new generation Red Lion, creating giant billboard exposure in a key market, which should help heighten consumer exposure to the brand.

As previously announced, during the first quarter of 2009, a franchise agreement for the Red Lion Hotel and Casino Winnemucca expired and was not renewed.

Liquidity and Balance Sheet

As of March 31, 2009, the company had approximately $8.5 million in cash and cash equivalents, and outstanding debt of $149.4 million. The debt balance is comprised of $36.0 million outstanding under the company's variable rate credit facility, $13.7 million under a variable rate note with a bank, $30.8 million of publicly traded unsecured debt in the form of deeply subordinated trust preferred securities and a total of $68.9 million in 13 fixed-rate notes collateralized by individual properties. The company's first term debt maturity is in 2011 in the aggregate amount of $22.2 million. Only the credit facility and the variable rate bank note have restrictive financial covenants, which the company is in compliance with as of March 31, 2009.

Capital expenditures in the first quarter of 2009 were $7.9 million. The company continues to expect total capital expenditures in 2009 to be approximately $20 million - including investments in the Denver and Anaheim hotels. These capital expenditures will be spread throughout 2009 and adjusted if necessary. Capital expenditures for 2009, excluding the investments in the Denver and Anaheim hotels, are still expected to be approximately $10 million.

Outlook for 2009

The current economic environment remains difficult and industry expectations suggest continued RevPAR declines in the second quarter of 2009 as market comparisons continue to be challenging. In the second half of 2009, we expect RevPAR declines to abate as comparisons with the second half of 2008 become more favorable. Given this outlook and based on currently available information, the company is reaffirming the following broad guidance for 2009:

Conference Call Information

The company will hold a conference call at 11:00 a.m. Pacific Time (2:00 p.m. Eastern Time) on May 7, 2009, to discuss the results for interested investors, analysts and portfolio managers. Management on the call will include President and CEO Anupam Narayan and Chief Financial Officer Anthony Dombrowik.

To participate in the conference call, please dial the following number ten minutes prior to the scheduled time: (800) 230-1092. International callers should dial (612) 332-0637.

This conference call will also be webcast live at http://www.redlion.com in the Investor Relations section of the website. To listen to the live call, please go to the Red Lion website at least fifteen minutes prior to the start of the call to register, download and install any necessary audio software. For those unable to participate during the live broadcast, a replay will be available at 1:30 p.m. PDT on May 7, 2009, through June 7, 2009 at (800) 475-6701 or (320) 365-3844 (International) access code - 997896. 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 upscale and midscale hotels under its Red Lion® brand. As of March 31, 2009, the RLH hotel network was comprised of 46 hotels located in nine states and one Canadian province, with 8,805 rooms and 436,355 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 www.redlion.com.

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, 2008 and in other documents filed by the company with the Securities and Exchange Commission.

Contact:
Red Lion Hotels Corporation
Julie Langenheim, Investor Relations Manager
(509) 777-6322

Investor Relations:
ICR Inc.
William Schmitt
(203) 682-8200