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RLHC Unveils New Brand Alignment, Reports Q1 Results

SPOKANE, WA—RLHC (Red Lion Hotels Corporation) has evolved its brand portfolio following the acquisition of Vantage Hospitality’s hotel franchising business. In addition, the company has reported first quarter 2017 results.

RLHC will focus its strategy on the following brands: Hotel RL, Red Lion Hotels, Red Lion Inn & Suites, Settle Inn, Signature Inn, GuestHouse, Americas Best Value Inn, Canadas Best Value Inn, and Country Hearth Inn & Suites.

“Our company has undergone a significant transformation over the last six months,” said RLHC President and CEO Greg Mount. “Through our brand realignment, we have ensured that each brand has a unique position in the market, while providing owners with the freedom to move between brands as their business needs and/or market change. We want to make franchising easy.”

In terms of the portfolio, RLHC brands opened hotels in 13 states, including two Hotel RL properties, four Red Lion Inn & Suites, 11 Americas Best Value Inns and one Country Hearth Inn.

Additionally, RLHC executed 34 franchise license agreements in the quarter, 23 of which were changes in the underlying ownership where the owner chose to stay with RLHC showing strong preference for our brands, according to the company. The remaining 11 franchise license agreements were new to the platform and were executed in seven different states, including two Red Lion Inn & Suites and nine Americas Best Value Inns. The company now has more than 1,140 hotels and 73,000 rooms in its system. Subsequent to the end of the first quarter, the company opened two additional Americas Best Value Inn franchise properties.

Highlights of first quarter 2017:

• Reduced net loss to $3.6 million from a net loss of $4.8 million in the first quarter of 2016; improved adjusted net loss per diluted share by $0.06 to $(0.22) from $(0.28) in the comparable prior-year period

• Adjusted EBITDA increased to $1.5 million from a loss of $0.7 million in 2016

• Achieved system-wide comparable RevPAR growth of 2.4% in the first quarter of 2017

• Increased franchise segment revenues to $10.9 million from $3.3 million in the first quarter of 2016 reflecting the strategic transformation to a franchise fee dominated business model and the brands acquired in the third quarter of 2016

• Improved franchise segment operating margin to 21.8% (15.2% excluding the impact of the recent acquisition) compared to break-even in 2016

• Executed 34 franchise agreements in the first quarter; opened 21 new franchised hotels, demonstrating focus on improving unit growth, franchise revenues and overall profitability

“The significant improvements realized in the first quarter demonstrate the fundamental changes that we have executed the past few years toward a higher-margin franchise fee business model while also achieving a less capital intensive future. This is RLHC executing on its growth platform and working to achieve consistent profitability. We are driving increased demand for our portfolio of franchise brands and are confident in our ability to generate consistent unit growth. The unit growth will be achieved across many geographic areas that represent significant long-term unit growth potential for the broad and diverse RLHC brand portfolio,” said Mount. “We are focused on achieving the substantial RevPAR benefits that are being driven by RevPak while also deploying RevPak-lite to our acquired economy-segment franchise hotels. We have also initiated our brand-stratification plan that we expect will improve profitability throughout the brand network and attract additional unit growth demand for RLHC. We are well positioned to capitalize on our asset-light franchise model, which in turn we expect to translate to continued growth in EBITDA over the years to come.”

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