10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

(Mark One)

ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2017

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to             

Commission File Number: 001-13957

RED LION HOTELS CORPORATION

(Exact name of registrant as specified in its charter)

Washington	91-1032187
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
201 W. North River Drive, Suite 100 Spokane Washington	99201
(Address of principal executive offices)	(Zip Code)

Registrant’s Telephone Number, Including Area Code: (509) 459-6100

 __________________________________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ý    No  o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ý    No  o

Indicate by check mark whether the registrant is a large accelerated filer, accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	o	Accelerated filer	ý
Non-accelerated filer	o	Smaller reporting company	o
		Emerging growth company	o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act.)    Yes  o    No  ý

As of April 30, 2017, there were 23,541,642 shares of the registrant’s common stock outstanding.

TABLE OF CONTENTS

Item No.	Description	Page No.
	PART I – FINANCIAL INFORMATION
Item 1	Financial Statements (unaudited):
	Consolidated Balance Sheets at March 31, 2017 and December 31, 2016	3
	Consolidated Statements of Operations for the Three Months Ended March 31, 2017 and 2016	4
	Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2017 and 2016	5
	Condensed Notes to Consolidated Financial Statements	7
Item 2	Management's Discussion and Analysis of Financial Condition and Results of Operations	31
Item 3	Quantitative and Qualitative Disclosures About Market Risk	40
Item 4	Controls and Procedures	41
	PART II – OTHER INFORMATION
Item 1	Legal Proceedings	42
Item 1A	Risk Factors	42
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	42
Item 3	Defaults Upon Senior Securities	42
Item 4	Mine Safety Disclosures	42
Item 5	Other Information	42
Item 6	Exhibits	43
	Signatures	44

2

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

RED LION HOTELS CORPORATION

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

March 31, 2017 and December 31, 2016

	March 31, 2017			December 31, 2016
	(In thousands, except share data)
ASSETS
Current assets:
Cash and cash equivalents ($7,116 and $5,134 attributable to VIEs)	$	31,689		$	38,072
Restricted cash ($10,373 and $9,211 attributable to VIEs)	10,699			9,537
Accounts receivable, net ($3,991 and $2,811 attributable to VIEs)	13,299			10,852
Accounts receivable from related parties	2,194			1,865
Notes receivable, net	1,285			1,295
Inventories ($450 and $447 attributable to VIEs)	647			647
Prepaid expenses and other ($985 and $1,008 attributable to VIEs)	5,508			4,491
Total current assets	65,321			66,759
Property and equipment, net ($177,283 and $179,609 attributable to VIEs)	207,928			210,732
Goodwill	12,566			12,566
Intangible assets	52,336			52,854
Other assets, net ($61 and $64 attributable to VIEs)	1,851			1,624
Total assets	$	340,002		$	344,535
LIABILITIES
Current liabilities:
Accounts payable ($2,019 and $3,886 attributable to VIEs)	$	6,782		$	8,682
Accrued payroll and related benefits ($81 and $175 attributable to VIEs)	3,914			4,800
Other accrued entertainment liabilities	11,161			11,334
Other accrued liabilities ($2,579 and $1,656 attributable to VIEs)	5,444			4,336
Long-term debt, due within one year ($1,599 and $1,469 attributable to VIEs)	1,599			1,469
Contingent consideration for acquisition due to related party, due within one year	6,630			6,768
Total current liabilities	35,530			37,389
Long-term debt, due after one year, net of debt issuance costs ($108,930 and $106,862 attributable to VIEs)	108,930			106,862
Contingent consideration for acquisition due to related party, due after one year	4,336			4,432
Deferred income and other long-term liabilities ($780 and $841 attributable to VIEs)	2,116			2,293
Deferred income taxes	5,829			5,716
Total liabilities	156,741			156,692
Commitments and contingencies
STOCKHOLDERS’ EQUITY
RLHC 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; 23,525,123 and 23,434,480 shares issued and outstanding	235			234
Additional paid-in capital, common stock	171,629			171,089
Accumulated deficit	(19,591		)	(15,987		)
Total RLHC stockholders' equity	152,273			155,336
Noncontrolling interest	30,988			32,507
Total stockholders' equity	183,261			187,843
Total liabilities and stockholders’ equity	$	340,002		$	344,535

The accompanying condensed notes are an integral part of the consolidated financial statements.

3

RED LION HOTELS CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

For the Three Months EndedMarch 31, 2017 and 2016

	Three Months Ended
	March 31,
	2017			2016
	(In thousands, except per share data)
Revenue:
Company operated hotels	$	24,696		$	24,149
Other revenues from managed properties	926			1,185
Franchised hotels	10,904			3,296
Entertainment	3,379			4,031
Other	55			13
Total revenues	39,960			32,674
Operating expenses:
Company operated hotels	21,478			21,599
Other costs from managed properties	926			1,185
Franchised hotels	8,532			3,356
Entertainment	3,084			3,437
Other	4			13
Depreciation and amortization	4,543			3,502
Hotel facility and land lease	1,201			1,161
Gain on asset dispositions, net	(119		)	(117		)
General and administrative expenses	3,659			3,057
Acquisition and integration costs	(175		)	—
Total operating expenses	43,133			37,193
Operating loss	(3,173		)	(4,519		)
Other income (expense):
Interest expense	(1,958		)	(1,461		)
Other income, net	175			219
Total other income (expense)	(1,783		)	(1,242		)
Loss from operations before taxes	(4,956		)	(5,761		)
Income tax expense	167			59
Net loss	(5,123		)	(5,820		)
Net (income) loss attributable to noncontrolling interest	1,519			1,021
Net loss attributable to RLHC	$	(3,604	)	$	(4,799	)
Earnings (loss) per share - basic	$	(0.15	)	$	(0.24	)
Earnings (loss) per share - diluted	$	(0.18	)	$	(0.24	)
Weighted average shares - basic	23,469			20,088
Weighted average shares - diluted	24,159			20,088

The accompanying condensed notes are an integral part of the consolidated financial statements.

4

RED LION HOTELS CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

For the Three Months EndedMarch 31, 2017 and 2016

	Three Months Ended
	March 31,
	2017			2016
	(In thousands)
Operating activities:
Net loss	$	(5,123	)	$	(5,820	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	4,543			3,502
Amortization of debt issuance costs	297			302
Gain on disposition of property, equipment and other assets, net	(119		)	(117		)
Deferred income taxes	113			34
Equity in investments	—			(170		)
Stock based compensation expense	696			608
Provision for doubtful accounts	235			99
Fair value adjustments to contingent consideration	(234		)	—
Change in current assets and liabilities:
Accounts receivable	(3,011		)	(1,432		)
Notes receivable	(36		)	(22		)
Inventories	—			79
Prepaid expenses and other	(1,247		)	(600		)
Accounts payable	(78		)	(3,367		)
Other accrued liabilities	(9		)	496
Net cash used in operating activities	(3,973		)	(6,408		)
Investing activities:
Capital expenditures	(3,043		)	(5,180		)
Collection of notes receivable related to property sales	200			18
Advances on notes receivable	(154		)	(329		)
Proceeds from sales of short-term investments	—			365
Other, net	—			78
Net cash used in investing activities	(2,997		)	(5,048		)
Financing activities:
Borrowings on long-term debt	2,232			7,993
Repayment of long-term debt	(306		)	—
Debt issuance costs	(22		)	(34		)
Proceeds from sale of interests in joint ventures	—			1,500
Reduction of additional paid in capital for repurchased restricted stock units	(224		)	(161		)
Other, net	69			77
Net cash provided by financing activities	1,749			9,375
Change in cash, cash equivalents and restricted cash:
Net decrease in cash, cash equivalents and restricted cash	(5,221		)	(2,081		)
Cash, cash equivalents and restricted cash at beginning of period	47,609			35,202
Cash, cash equivalents and restricted cash at end of period	$	42,388		$	33,121

The accompanying condensed notes are an integral part of the consolidated financial statements.

5

RED LION HOTELS CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - (Continued)

For the Three Months EndedMarch 31, 2017 and 2016

	Three Months Ended
	March 31,
	2017		2016
	(In thousands)
Supplemental disclosure of cash flow information:
Cash paid during periods for:
Income taxes	$	6	$	14
Interest on debt	$	1,155	$	1,298
Non-cash investing and financing activities:
Property and equipment, purchases not yet paid	$	417	$	1,757
Reclassification of long-term note receivable to short-term	$	—	$	2
Reclassification of long-term debt to current	$	130	$	—

The accompanying condensed notes are an integral part of the consolidated financial statements.

6

RED LION HOTELS CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Organization

Red Lion Hotels Corporation ("RLHC", "we", "our", "us" or "our company") is a NYSE-listed hospitality and leisure company (ticker symbol: RLH) primarily engaged in the management, franchising and ownership of hotels under the following proprietary brands:

Ÿ Hotel RL	Ÿ America's Best Inn & Suites
Ÿ Red Lion Hotels	Ÿ Signature Inn
Ÿ Red Lion Inn & Suites	Ÿ Jameson Inns
Ÿ GuestHouse	Ÿ Country Hearth Inns & Suites
Ÿ Settle Inn	Ÿ Value Inn Worldwide
Ÿ Americas Best Value Inn	Ÿ Value Hotel Worldwide
Ÿ Canadas Best Value Inn	Ÿ 3 Palm Hotels
Ÿ Lexington Hotels & Inns

A summary of our hotels and available rooms as of March 31, 2017 is provided below:

	Company Operated		Franchised		Total Systemwide
	Hotels	Total Available Rooms	Hotels	Total Available Rooms	Hotels	Total Available Rooms
Total	20	4,200	1,123	69,200	1,143	73,400

We are also engaged in entertainment operations, which derive revenues from promotion and presentation of entertainment productions and ticketing services under the operations of WestCoast Entertainment and TicketsWest. The ticketing service offers online ticket sales, ticketing inventory management systems, call center services, and outlet/electronic distributions for event locations.

We were incorporated in the state of Washington in April 1978.

We are authorized to issue 50 million shares of common stock, par value $0.01 per share, and five million shares of preferred stock, par value $0.01 per share. As of March 31, 2017, there were 23,525,123 shares of common stock issued and outstanding and no shares of preferred stock issued and outstanding. The board of directors has the authority, without action by the shareholders, to designate and issue preferred stock in one or more series and to designate the rights, preferences and privileges of each series, which may be greater than the rights of the common stock.

Each holder of common stock is entitled to one vote for each share held on all matters to be voted upon by the shareholders with no cumulative voting rights. Holders of common stock are entitled to receive ratably the dividends, if any, which are declared from time to time by the board of directors out of funds legally available for that purpose. The rights, preferences and privileges of the holders of common stock are subject to, and may be adversely affected by, the rights of the holders of shares of any series of preferred stock that we may designate in the future.

2. Summary of Significant Accounting Policies

The unaudited consolidated financial statements included herein have been prepared by us pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") and in accordance with generally accepted accounting principles in the United States of America ("GAAP"). Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted as permitted by such rules and regulations.

The consolidated balance sheet as of December 31, 2016 has been compiled from the audited balance sheet as of such date. We believe the disclosures included herein are adequate; however, they should be read in conjunction with the consolidated financial statements and the notes thereto for the year ended December 31, 2016, filed with the SEC in our Annual Report on Form 10-K on March 31, 2017.

7

In the opinion of management, these unaudited condensed consolidated financial statements contain all of the adjustments of a normal and recurring nature necessary to present fairly our Consolidated Balance Sheet at March 31, 2017, the Consolidated Statements of Operations for the three months endedMarch 31, 2017 and 2016, and the Consolidated Statements of Cash Flows for the three months ended March 31, 2017 and 2016. The results of operations for the periods presented may not be indicative of that which may be expected for a full year or for any other fiscal period.

Comprehensive income (loss) is the same as net income (loss) for all periods presented. Therefore, a separate statement of comprehensive income (loss) is not included in the accompanying consolidated financial statements.

Principles of Consolidation

The financial statements encompass the accounts of RLHC and all of its consolidated subsidiaries, including:

Wholly-owned subsidiaries:

• Red Lion Hotels Holdings, Inc.

• Red Lion Hotels Franchising, Inc.

• Red Lion Hotels Canada Franchising, Inc.

• Red Lion Hotels Management, Inc. ("RL Management")

• Red Lion Hotels Limited Partnership

• TicketsWest.com, Inc.

Joint venture entities:

• RL Venture LLC ("RL Venture") in which we hold a 55% member interest

• RLS Atla Venture LLC ("RLS Atla Venture") in which we hold a 55% member interest

• RLS Balt Venture LLC ("RLS Balt Venture") in which we hold a 73% member interest

• RLS DC Venture LLC ("RLS DC Venture") in which we hold a 55% member interest

All inter-company and inter-segment transactions and accounts have been eliminated upon consolidation.

Cash and Cash Equivalents

All highly liquid investments purchased with an original maturity of three months or less are considered to be cash equivalents. At times, cash balances at banks and other financial institutions may be in excess of federal insurance limits.

Restricted Cash

In accordance with our various borrowing arrangements, at March 31, 2017 and December 31, 2016 cash of $10.7 million and $9.5 million, respectively, was held primarily as reserves for debt service (interest only), property improvements, and other requirements from the lenders.

In our Consolidated Statements of Cash Flows for the three months ended March 31, 2017 and 2016, we include restricted cash with cash and cash equivalents when reconciling the beginning and ending balances for each period. The balances included in the Consolidated Statements of Cash Flows for the periods ended are as follows (in thousands):

	Three Months Ended March 31,
	2017		2016
Cash and cash equivalents	$	31,689	$	18,852
Restricted cash	10,699		14,269
Cash, cash equivalents and restricted cash	$	42,388	$	33,121

Allowance for Doubtful Accounts

The ability to collect individual accounts receivable is reviewed on a routine basis. An allowance for doubtful accounts is recorded based on specifically identified amounts believed to be uncollectible. If actual collection experience changes, revisions to the allowance may be required, and, if all attempts to collect a receivable fail, it is recorded against the allowance. The estimate of the allowance for doubtful accounts may be impacted by, among other things, national and regional economic conditions. Acquired accounts receivable from business acquisitions are recorded at fair value, based on amounts expected to be collected. Therefore no allowance for doubtful accounts related to these accounts is recorded at the acquisition date.

8

The following schedule summarizes the activity in the allowance account for trade accounts receivable (in thousands):

	2017		2016
Allowance for doubtful accounts
Balance, January 1	$	944	$	657
Additions to allowance	217		99
Write-offs, net of recoveries	28		(2		)
Balance, March 31	$	1,189	$	754

Accounts Receivable from Related Parties

Amounts receivable from related parties relate to outstanding amounts billed to the owners of hotels we manage for reimbursement of costs of the operations of those hotels. We have a related party relationship with these owners, and there is no allowance for doubtful accounts associated with these receivables.

Inventories

Inventories consist primarily of food and beverage products held for sale at the company operated restaurants and guest supplies. Inventories are valued at the lower of cost, determined on a first-in, first-out basis, or net realizable value.

Prepaid and other expenses

Prepaid and other expenses include prepaid insurance, prepaid taxes, deposits, advertising costs and prepaid costs related to our brand conferences.

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation. The cost of improvements that extend the life of property and equipment is capitalized. Repairs and maintenance charges are expensed as incurred.

Depreciation is provided using the straight-line method over the estimated useful life of each asset, which ranges as follows:

Buildings	25 to 39 years
Equipment	2 to 15 years
Furniture and fixtures	2 to 15 years
Landscaping and improvements	15 years

Leasehold improvements are capitalized and depreciated over the term of the applicable lease, including renewable periods if reasonably assured, or over the useful lives, whichever is shorter.

Valuation of Long-Lived Assets

We test long-lived asset groups for recoverability when changes in circumstances indicate the carrying value may not be recoverable, for example, when there are material adverse changes in projected revenues or expenses, significant underperformance relative to historical or projected operating results, or significant negative industry or economic trends. We also perform a test for recoverability when management has committed to a plan to sell or otherwise dispose of an asset group. We evaluate recoverability of an asset group by comparing its carrying value to the future net undiscounted cash flows that we expect will be generated by the asset group. If the comparison indicates that the carrying value of an asset group is not recoverable, we recognize an impairment loss for the excess of carrying value over the estimated fair value. When we recognize an impairment loss for assets to be held and used, we depreciate the adjusted carrying amount of those assets over their remaining useful life.

We base our calculations of the estimated fair value of an asset group on the income approach or the market approach. The assumptions and methodology utilized for the income approach are the same as those described in the "Goodwill and Intangible Assets" caption. For the market approach, we use analyses based primarily on market comparables, recent appraisals and assumptions about market capitalization rates, growth rates, and inflation.

9

Variable Interest Entities

We analyze the investments we make in joint venture entities based on the accounting guidance for variable interest entities ("VIEs"). These joint ventures are evaluated to determine whether (1) sufficient equity at risk exists for the legal entity to finance its activities without additional subordinated financial support or, (2) as a group, the holders of the equity investment at risk lack one of the following characteristics (a) the power, through voting or similar rights, to direct the activities of the legal entity that most significantly impact the entity’s economic performance or, (b) the obligation to absorb the expected losses of the legal entity or (c) the right to receive expected residual returns of the legal entity, or (3) the voting rights of some equity investors are not proportional to their obligations to absorb the losses or the right to receive benefits and substantially all of the activities either involve or are conducted on behalf of an investor with disproportionately few voting rights. If any one of the above three conditions are met then the joint venture entities are considered to be VIEs.

We consolidate the results of any such VIE in which we determine that we have a controlling financial interest. We would have a “controlling financial interest” (i.e., be deemed the primary beneficiary) in such an entity if we had both the power to direct the activities that most significantly affect the VIE’s economic performance and the obligation to absorb the losses of, or right to receive the benefits from, the VIE that could be potentially significant to the VIE.

Business Combinations

On the date of acquisition, the assets acquired, liabilities assumed, and any noncontrolling interests in the acquiree are recorded at their fair values. The acquiree's results of operations are also included as of the date of acquisition in our consolidated results. Intangible assets that arise from contractual/legal rights, or are capable of being separated are measured and recorded at fair value, and amortized over the estimated useful life. If practicable, assets acquired and liabilities assumed arising from contingencies are measured and recorded at fair value. If not practicable, such assets and liabilities are measured and recorded when it is probable that a gain or loss has occurred and the amount can be reasonably estimated. The residual balance of the purchase price, after fair value allocations to all identified assets and liabilities, represents goodwill. Acquisition-related costs are expensed as incurred. Restructuring costs associated with an acquisition are generally expensed in periods subsequent to the acquisition date, and changes in deferred tax asset valuation allowances and acquired income tax uncertainties, including penalties and interest, after the measurement period are recognized as a component of the provision for income taxes. Our acquisitions may include contingent consideration, which require us to recognize the fair value of the estimated liability at the time of the acquisition. Subsequent changes in the estimate of the amount to be paid under the contingent consideration arrangement are recognized in the Consolidated Statements of Operations. Cash payments for contingent or deferred consideration up to the amount of liability recognized on the acquisition date are classified within cash flows from financing activities within the Consolidated Statements of Cash Flows and any excess is classified as cash flows from operating activities.

Goodwill and Intangible Assets

Goodwill and intangible assets may result from our business acquisitions. Intangible assets may also result from the purchase of assets and intellectual property in a transaction that does not qualify as a business combination. We use estimates, including estimates of useful lives of intangible assets, the amount and timing of related future cash flows, and fair values of the related operations, in determining the value assigned to goodwill and intangible assets. Our finite-lived intangible assets, which include customer contracts and certain brand names that we do not expect to maintain indefinitely, are amortized over their expected useful lives based on estimated discounted cash flows. The remaining brand name and trademark assets are considered indefinite-lived intangible assets and are not subject to amortization. Finite-lived intangible assets are tested for impairment at the asset group level when events or changes in circumstances indicate the carrying value may not be recoverable. Indefinite-lived intangible assets are tested for impairment annually, when events or changes in circumstances indicate the asset may be impaired, or at the time when their useful lives are determined to be no longer indefinite.

Goodwill is assigned to our reporting units based on the expected benefit from the synergies arising from each business combination, determined by using certain financial metrics, including the forecast discounted cash flows associated with each reporting unit. The reporting units are aligned with our reporting segments.

We test goodwill for impairment each year as of October 1, or more frequently should a significant impairment indicator occur. As part of the impairment test, we may elect to perform an assessment of qualitative factors. If this qualitative assessment indicates that it is more likely than not that the fair value of a reporting unit, including goodwill, is less than its carrying amount, or if we elect to bypass the qualitative assessment, we would then proceed with the two-step impairment test. The impairment test involves comparing the fair values of the reporting units to their carrying amounts. If the carrying amount of a reporting unit exceeds its fair value, a second step is required to measure the goodwill impairment loss amount. This second step determines the current fair

10

values of all assets and liabilities of the reporting unit and then compares the implied fair value of the reporting unit's goodwill to the carrying amount of that goodwill. If the carrying amount of the reporting unit's goodwill exceeds the implied fair value of the goodwill, an impairment loss is recognized in an amount equal to the excess.

In assessing the qualitative factors, we assess relevant events and circumstances that may impact the fair value and the carrying amount of the reporting unit. The identification of relevant events and circumstances, and how these may impact a reporting unit's fair value or carrying amount, involves significant judgments and assumptions. The judgment and assumptions include the identification of macroeconomic conditions, industry and market considerations, cost factors, overall financial performance, RLHC-specific events, and share price trends, and making the assessment as to whether each relevant factor would impact the impairment test positively or negatively and the magnitude of any such impact.

Determining the fair value of a reporting unit is judgmental in nature and involves the use of significant estimates and assumptions. We forecast discounted future cash flows at the reporting unit level using risk-adjusted discount rates and estimated future revenues and operating costs, which take into consideration factors, such as expectations of competitive and economic environments. We also identify similar publicly traded companies and develop a correlation, referred to as a multiple, to apply to the operating results of the reporting units. These combined fair values are then reconciled to the aggregate market value of our common stock on the date of valuation, while considering a reasonable control premium.

Notes Receivable

We carry notes receivable at their estimated collection amount, and they are classified as either current or long-term depending on the expected collection date. Interest income on notes receivable is recognized using the interest method.

Other Assets

Other assets primarily consist of key money arrangements with certain of our franchisees and IT system implementation and license costs, for both our franchisees and our company operated hotels. We recognize key money paid in conjunction with entering into long-term franchise agreements as prepaid expenses and amortize the amount paid as a reduction of revenue over the term of the franchise agreements. IT system implementation and license costs represent costs incurred to implement and operate RevPak, our proprietary guest management system application and are amortized over the initial term of the software license arrangement or the current license period, as applicable.

Fair Value Measurements

Applicable accounting standards define fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). We measure our assets and liabilities using inputs from the following three levels of the fair value hierarchy:

• Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities that we have the ability to access at the measurement date.

• Level 2 inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (i.e., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs).

• Level 3 includes unobservable inputs that reflect assumptions about what factors market participants would use in pricing the asset or liability. We develop these inputs based on the best information available, including our own data.

11

Deferred Income

In 2003, we sold a hotel to an unrelated party in a sale-operating leaseback transaction. The pre-tax gain on the transaction of approximately $7.0 million was deferred and is being amortized into income over the period of the lease term, which expires in November 2018 and is renewable for three, five-year terms at our option. During the three months ended March 31, 2017 and 2016, we recognized income of approximately $0.1 million each period for the amortization of the deferred gain. The remaining balances at March 31, 2017 and December 31, 2016 were $0.7 million and $0.9 million.

Income Taxes

We account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined on the basis of the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

We recognize deferred tax assets to the extent that we believe these assets are more likely than not to be realized. In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning, and results of recent operations. At March 31, 2017 and December 31, 2016, a valuation allowance has been recorded to reduce our deferred tax assets to an amount that is more likely than not to be realized. If we determine that we would be able to realize our deferred tax assets in the future in excess of their net recorded amount, we would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes.

We classify any interest expense and penalties related to underpayment of taxes and any interest income on tax overpayments as components of income tax expense.

We record uncertain tax positions in accordance with Accounting Standards Codification ("ASC") 740 on the basis of a two-step process whereby (1) we determine whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, we recognize the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority. See Note 13.

Revenue Recognition

Revenue is generally recognized as services are provided. When payments from customers are received before services have been performed, the amount received is recorded as deferred revenue until the service has been completed. We recognize revenue from the following sources:

• Company Operated Hotels - Room rental and food and beverage sales from majority owned and leased hotels and management fees from hotels under management contract. Revenues are recognized when services have been performed, generally at the time of the hotel stay or guest's visit to the restaurant or at the time the management services are provided. We recognize other revenue and costs from managed properties when we incur the related reimbursable costs. These costs primarily consist of payroll and related expenses at managed properties where we are the employer. As these costs have no added markup, the revenue and related expense have no impact on either our operating or net income.

• Franchised Hotels - Fees received in connection with the franchise and marketing of our brand names. Franchise revenues are recognized as earned in accordance with the contractual terms of the franchise agreements.

• Entertainment - Online ticketing services, ticketing inventory management systems, promotion of Broadway-style shows and other special events. Where we act as an agent and receive a net fee or commission, revenue is recognized in the period the services are performed. When we are the promoter of an event and are at-risk for the production, revenues and expenses are recorded in the period of the event performance.

12

Advertising and Promotion

Costs associated with advertising and promotional efforts are generally expensed as incurred. During the three months ended March 31, 2017 and 2016 we incurred approximately $1.1 million and $1.4 million, respectively in advertising expense.

Basic and Diluted Earnings (Loss) Per Share

Basic earnings (loss) per share attributable to RLHC is computed by dividing income (loss) attributable to RLHC by the weighted‑average number of shares outstanding during the period. Diluted earnings (loss) per share attributable to RLHC gives effect to all dilutive potential shares that are outstanding during the period and include outstanding stock options, other outstanding employee equity grants, warrants and amounts contingently issuable in association with the Vantage acquisition contingent consideration, by increasing the weighted-average number of shares outstanding by their effect. See Note 12.

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could materially differ from those estimates.

Reclassifications

Effective for the year ended December 31, 2016, we early adopted Accounting Standards Update ("ASU") 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. We have revised the Consolidated Statement of Cash Flows for the three months endedMarch 31, 2016 to reflect the adoption of this new standard. For a discussion of the new guidance and the impact of the adoption on our consolidated financial statements, refer to the discussion below in New and Recent Accounting Pronouncements.

New and Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board ("FASB") issued ASU 2014-09, Revenue from Contracts with Customers, which is a comprehensive new revenue recognition model requiring a company to recognize revenue to depict the transfer of goods or services to a customer at an amount reflecting the consideration it expects to receive in exchange for those goods or services. ASU 2014-09 may be applied using either a full retrospective or a modified retrospective approach and is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. Upon adoption our financial statements will include expanded disclosures related to contracts with customers. We are continuing our assessment of other impacts on our financial statements at this time.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The new standard establishes a right-of-use (ROU) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. We had $84.2 million of operating lease obligations as of March 31, 2017 (see Note 9) and upon the adoption of the standard will record an ROU asset and lease liability for present value of these leases, which will have a material impact on the balance sheet. However, the statement of comprehensive income (loss) recognition of lease expenses is not expected to change from the current methodology.

In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The ASU is designed to improve the accounting for share-based payments and affects all organizations that issue share-based payment awards to their employees. Several aspects of the accounting for share-based payment awards are simplified with this ASU, including income tax consequences, classification of awards as equity or liabilities and classification on the statement of cash flows. ASU 2016-09 is effective for public business entities for annual periods beginning after December 15, 2016, and interim periods within those fiscal years. We adopted ASU 2016-09 effective January 1, 2017, and the adoption of ASU 2016-09 did not have a material impact on our financial condition, results of operations or cash flows.

The FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments to address diversity in practice for eight specific topics: (1) debt prepayment or debt extinguishment costs; (2) settlement of zero-

13

coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing; (3) contingent consideration payments made after a business combination; (4) proceeds from the settlement of insurance claims; (5) proceeds from the settlement of corporate-owned life insurance policies (including bank-owned life insurance policies); (6) distributions received from equity method investees; (7) beneficial interests in securitization transactions; and (8) separately identifiable cash flows and application of the predominance principle. This guidance is effective for us beginning January 1, 2018. As this ASU is clarifying only presentation matters within the statement of cash flows, we do not expect it to have a material impact on our consolidated financial statements.

The FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash to require that restricted cash and restricted cash equivalents be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total cash amounts shown on the statement of cash flows. Consequently, transfers between cash and restricted cash will not be presented as a separate line item in the operating, investing or financing sections of the cash flow statement. We early adopted this standard, as permitted, effective for the year ended December 31, 2016. We have revised the Consolidated Statement of Cash Flows for the three months ended March 31, 2016 to reflect the adoption of this standard. As the result, the total change in cash flows for the first quarter of 2016 was a decrease of $3.0 million of cash outflows, of which $2.4 million was for operating activities, and $0.6 million was for investing activities. The change was the result of the $3.0 million net transfer of cash to restricted cash as part of our joint venture debt arrangements.

In January 2017, the FASB issued ASU 2017-01, Clarifying the Definition of a Business (ASU 2017-01), which narrows the definition of a business and provides a framework that gives entities a basis for making reasonable judgments about whether a transaction involves an asset or a business. ASU 2017-01 states that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or group of similar identifiable assets, the set is not a business. If this initial test is not met, a set cannot be considered a business unless it includes an input and a substantive process that together significantly contribute to the ability to create output. ASU 2017-01 is effective for fiscal years beginning after December 15, 2019 with early adoption permitted. We do not expect the adoption of this standard to have a material impact on our consolidated results of operations, financial position, cash flows, and related financial statement disclosures.

In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment (ASU 2017-04), which simplifies the measurement of goodwill impairment by removing step two of the goodwill impairment test that requires the determination of the fair value of individual assets and liabilities of a reporting unit. ASU 2017-04 requires goodwill impairment to be measured as the amount by which a reporting unit’s carrying value exceeds its fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. ASU 2017-04 is effective for fiscal years beginning after December 15, 2019 with early adoption permitted for interim or annual goodwill impairment tests performed after January 1, 2017. Upon adoption, we will follow the guidance in this standard for goodwill impairment testing.

In February 2017, the FASB issued ASU No. 2017-05, Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets.  The amendments clarify that a financial asset is within the scope of Subtopic 610-20 if it meets the definition of an in substance nonfinancial asset. The amendments also define the term in substance nonfinancial asset. The amendments clarify that nonfinancial assets within the scope of Subtopic 610-20 may include nonfinancial assets transferred within a legal entity to a counterparty. For example, a parent may transfer control of nonfinancial assets by transferring ownership interests in a consolidated subsidiary. A contract that includes the transfer of ownership interests in one or more consolidated subsidiaries is within the scope of Subtopic 610-20 if substantially all of the fair value of the assets that are promised to the counterparty in a contract is concentrated in nonfinancial assets. The amendments clarify that an entity should identify each distinct nonfinancial asset or in substance nonfinancial asset promised to a counterparty and derecognize each asset when a counterparty obtains control of it. The guidance is effective for us as of January 1, 2018 in conjunction with our adoption of ASU 2014-09. Entities may use either a full or modified approach to adopt the ASU. We are assessing the impact of the adoption of this new guidance on our financial statements.

We have assessed the potential impact of other recently issued, but not yet effective, accounting standards and determined that the provisions are either not applicable to us or are not anticipated to have a material impact on our consolidated financial statements.

14

3.    Business Segments

We have three operating segments: company operated hotels, franchised hotels and entertainment. The "other" segment consists of miscellaneous revenues and expenses, cash and cash equivalents, certain receivables, certain property and equipment and general and administrative expenses, which are not specifically associated with an operating segment. Management reviews and evaluates the operating segments exclusive of interest expense, income taxes and certain corporate expenses; therefore, they have not been allocated to the operating segments. All balances have been presented after the elimination of inter-segment and intra-segment revenues and expenses.

Selected financial information is provided below (in thousands):

Three Months Ended March 31, 2017	Company Operated Hotels			Franchised Hotels			Entertainment		Other			Total
Revenue	$	25,622		$	10,904		$	3,379	$	55		$	39,960
Operating expenses:
Segment operating expenses	22,404			8,532			3,084		4			34,024
Depreciation and amortization	3,667			558			33		285			4,543
Other operating expenses, acquisition costs and gains on asset dispositions	1,084			(276		)	—		3,758			4,566
Operating income (loss)	$	(1,533	)	$	2,090		$	262	$	(3,992	)	$	(3,173	)
Capital expenditures	$	541		$	369		$	59	$	254		$	1,223
Identifiable assets as of March 31, 2017	$	248,353		$	68,813		$	4,893	$	17,943		$	340,002

Three Months Ended March 31, 2016	Company Operated Hotels			Franchised Hotels			Entertainment		Other			Total
Revenue	$	25,334		$	3,296		$	4,031	$	13		$	32,674
Operating expenses:
Segment operating expenses	22,784			3,356			3,437		13			29,590
Depreciation and amortization	3,319			(86		)	54		215			3,502
Other operating expenses and gains on asset dispositions	1,045			—			—		3,056			4,101
Operating income (loss)	$	(1,814	)	$	26		$	540	$	(3,271	)	$	(4,519	)
Capital expenditures	$	6,580		$	—		$	—	$	107		$	6,687
Identifiable assets as of December 31, 2016	$	260,583		$	66,601		$	5,580	$	11,771		$	344,535

15

4.     Variable Interest Entities

Our joint venture entities have been determined to be variable interest entities ("VIEs"), and RLHC has been determined to be the primary beneficiary of each VIE. Therefore, we consolidate the assets, liabilities, and results of operations of (1) RL Venture, (2) RLS Balt Venture, (3) RLS Atla Venture and (4) RLS DC Venture. See Note 2 for discussion of the significant judgments and assumptions made by us in determining whether an entity is a VIE and if we are the primary beneficiary and therefore must consolidate the VIE. See Note 7 for further discussion of the terms of the long-term debt at each of the joint venture entities.

RL Venture

In January 2015, we transferred 12 of our wholly-owned hotels into RL Venture, a newly created entity that was initially wholly-owned by us, and immediately sold a 45% ownership stake in RL Venture to Shelbourne Falcon RLHC Hotel Investors LLC ("Shelbourne Falcon"), an entity that is led by Shelbourne Capital LLC ("Shelbourne"). Subsequently we disposed of one hotel, leaving 11 properties owned by RL Venture. We maintain a 55% interest in RL Venture, and the 11 hotels are managed by RL Management, one of our wholly-owned subsidiaries, subject to a management agreement. RL Venture is considered a variable interest entity because our voting rights are not proportional to our financial interest and substantially all of RL Venture's activities involve and are conducted on our behalf. We have determined that we are the primary beneficiary as (a) we exert power over two of the entity's key activities (hotel operations and property renovations) and share power over the remaining key activities with Shelbourne Falcon, which does not have the unilateral ability to exercise kick-out rights, and (b) we have the obligation to absorb losses and right to receive benefits that could be significant to the entity through our 55% equity interest and management fees. As a result, we consolidate RL Venture. The equity interest owned by Shelbourne Falcon is reflected as a noncontrolling interest in the consolidated financial statements.

Cash distributions may be made periodically based on calculated distributable income. There were no cash distributions made during the three months endedMarch 31, 2017 or 2016.

Subsequent to the three months endedMarch 31, 2017, RL Venture made a cash distribution totaling $1.5 million, of which RLHC

received $0.8 million.

RLS Balt Venture

In April 2015, we sold a 21% member interest in our wholly-owned RLS Balt Venture to Shelbourne Falcon Charm City Investors LLC ("Shelbourne Falcon II"), an entity led by Shelbourne. Shelbourne Falcon II had an option exercisable until December 31, 2015 to purchase up to an additional 24% member interest for $2.3 million. In December 2015, Shelbourne Falcon II elected to purchase additional member interests of 6% based on an aggregate purchase price of $560,000. With the sale of additional member interest without a corresponding change in control, $0.1 million was recognized as an increase in RLHC's additional paid in capital. RL Baltimore, LLC ("RL Baltimore"), which is wholly-owned by RLS Balt Venture, owns the Hotel RL Baltimore Inner Harbor, which is managed by RL Management. RLS Balt Venture is considered a variable interest entity because our voting rights are not proportional to our financial interest and substantially all of RLS Balt Venture's activities involve and are conducted on our behalf. We have determined that we are the primary beneficiary as (a) we exert power over the entity's key activities (hotel operations and property renovations) and share power over the remaining key activities with Shelbourne Falcon II, which does not have the unilateral ability to exercise kick-out rights, and (b) we have the obligation to absorb losses and right to receive benefits that could be significant to the entity through our 73% equity interest and management fees. As a result, we consolidate RLS Balt Venture. The equity interest owned by Shelbourne Falcon II is reflected as a noncontrolling interest in the consolidated financial statements.

In October 2015, RLHC provided $1.5 million to RLS Balt Venture to fund renovation costs and for operating losses. This funding was not treated as a loan or as a capital contribution. Rather, it is preferred capital of RLS Balt Venture and will be repaid only when the Baltimore hotel property is sold or when RLS Balt Venture is liquidated. Upon such an event, RLHC will receive the $1.5 million plus a preferred return of 11%, compounded annually, prior to any liquidation proceeds being returned to the members.

In May 2017, RLHC provided $2.8 million to RLS Balt Venture to fund operating losses. This funding was not treated as a loan or as a capital contribution. Rather, it is preferred capital of RLS Balt Venture and will be repaid only when the Baltimore hotel property is sold or when RLS Balt Venture is liquidated. Upon such an event, RLHC will receive the $2.8 million plus a preferred return of 9%, compounded annually, prior to any liquidation proceeds being returned to the members.

Cash distributions may be made periodically based on calculated distributable income. There were no cash distributions made during the three months endedMarch 31, 2017 or 2016.

16

RLS Atla Venture

In September 2015, we formed a joint venture, RLS Atla Venture, with Shelbourne Falcon Big Peach Investors LLC ("Shelbourne Falcon III"), an entity led by Shelbourne. We own a 55% interest in the joint venture and Shelbourne Falcon III owns a 45% interest. RLH Atlanta LLC ("RLH Atlanta"), which is wholly-owned by RLS Atla Venture, owns a hotel adjacent to the Atlanta International Airport that opened in April 2016 as the Red Lion Hotel Atlanta International Airport. RLS Atla Venture is considered a variable interest entity because our voting rights are not proportional to our financial interest and substantially all of RLS Atla Venture's activities involve and are conducted on our behalf. We have determined that we are the primary beneficiary as (a) we exert power over the entity's key activities (hotel operations and property renovations) and share power over the remaining key activities with Shelbourne Falcon III, which does not have the unilateral ability to exercise kick-out rights, and (b) we have the obligation to absorb losses and right to receive benefits that could be significant to the entity through our 55% equity interest and management fees. As a result, we consolidate RLS Atla Venture. The equity interest owned by Shelbourne Falcon III is reflected as a noncontrolling interest in the consolidated financial statements.

Cash distributions may be made periodically based on calculated distributable income. There were no cash distributions made during the three months endedMarch 31, 2017 or 2016.

RLS DC Venture

In October 2015, we formed a joint venture, RLS DC Venture, with Shelbourne Falcon DC Investors LLC ("Shelbourne Falcon IV"), an entity led by Shelbourne. Initially, we owned an 86% interest in the joint venture, and Shelbourne Falcon IV owned a 14% interest. On October 29, 2015, RLH DC LLC ("RLH DC"), which is wholly-owned by RLS DC Venture, acquired 100% of The Quincy, an existing hotel business now operated as the Hotel RL Washington DC, in a business combination. The property is managed by RL Management. RLS DC Venture is considered a variable interest entity because our voting rights are not proportional to our financial interest, and substantially all of RLS DC Venture's activities involve and are conducted on our behalf. We have determined that we are the primary beneficiary as (a) we exert power over the entity's key activities (hotel operations and property renovations) and share power over the remaining key activities with Shelbourne Falcon IV, which does not have the unilateral ability to exercise kick-out rights, and (b) we have the obligation to absorb losses and right to receive benefits that could be significant to the entity through our equity interest and management fees. As a result, we consolidate RLS DC Venture. The equity interest owned by Shelbourne Falcon IV is reflected as a noncontrolling interest in the consolidated financial statements.

As part of the organization of RLS DC Venture, Shelbourne Falcon IV had an option to purchase from us up to an additional 31% of the member interests. On February 3, 2016, Shelbourne Falcon IV elected to purchase from us an additional 15% of the member interests of RLS DC Venture, based on an aggregate purchase price of $1.5 million. With the sale of the additional member interest without a corresponding change in control $0.2 million was recognized as an increase in additional paid in capital in February 2016. On April 1, 2016, Shelbourne Falcon IV exercised the remaining option and purchased from us an additional 16% of the member interests of RLS DC Venture for $1.7 million, which resulted in a further increase of $0.3 million to RLHC's additional paid in capital, as we continue to consolidate RLS DC Venture since we are the primary beneficiary. Following the April 1, 2016 transaction, we now own 55% of RLS DC Venture, and Shelbourne Falcon IV owns 45%. Shelbourne Falcon IV is still considered a noncontrolling interest in the consolidated financial statements.

In May 2017, RLHC provided $950,000 to RLS DC Venture to fund restricted cash required by the loan agreement. This funding was not treated as a loan or as a capital contribution. Rather, it is preferred capital of RLS DC Venture and will be repaid only when the DC hotel property is sold, when RLS DC Venture is liquidated, or the restricted cash is released per the loan agreement. Upon such an event, RLHC will receive the $950,000 plus a preferred return of 9%, compounded annually, prior to any liquidation proceeds being returned to the members.

Cash distributions may be made periodically based on calculated distributable income. There were no cash distributions made during the three months endedMarch 31, 2017 or 2016.

17

5.    Property and Equipment

Property and equipment is summarized as follows (in thousands):

	March 31, 2017			December 31, 2016
Buildings and equipment	$	254,328		$	251,731
Furniture and fixtures	37,247			37,767
Landscaping and land improvements	7,972			7,928
	299,547			297,426
Less accumulated depreciation	(138,371		)	(134,346		)
	161,176			163,080
Land	43,192			43,193
Construction in progress	3,560			4,459
Property and equipment, net	$	207,928		$	210,732

6.     Goodwill and Intangible Assets

Goodwill represents the excess of the estimated fair value of the net assets acquired as a result of business combinations over the net tangible and identifiable intangible assets acquired. Goodwill was recorded in prior years in connection with the acquisitions of certain franchise and entertainment businesses.

The Red Lion, GuestHouse and Settle Inn & Suites brand names are identifiable, indefinite-lived intangible assets that represent the separable legal right to tradenames and associated trademarks. We acquired the Red Lion brand name in a business combination we entered into in 2001. We purchased the GuestHouse and Settle Inn & Suites brand names from GuestHouse International LLC in April 2015 and have allocated $5.4 million of the final purchase price to the brand names.

On September 30, 2016 we acquired substantially all of the assets and assumed certain liabilities of Vantage Hospitality Group, Inc. (Vantage), including customer contracts and brand names (see Note 16). The brand names include: Americas Best Value Inn, Canadas Best Value Inn, Lexington Hotels & Inns, America's Best Inns & Suites, Jameson Inns, Country Hearth Inns & Suites, Vantage Hotels, Value Inn Worldwide, Value Hotel Worldwide, 3 Palms Hotels and Resorts and Signature Inn. Based on our purchase price allocation, we allocated $30.0 million to brand names. Based on our intent with the brands acquired, we determined that certain of the brands are indefinite-lived based on our intent to hold and maintain the brands. The total of the purchase price allocated to indefinite-lived brand names was $27.2 million. We also acquired certain brand names that we intend to sunset in the future. The total of the purchase price allocated to finite-lived brand names was $2.8 million, with a weighted average remaining useful life of 8.8 years.

In the table below, the customer contracts represent the franchise license agreements acquired with the GuestHouse and Vantage acquisitions. For GuestHouse, we allocated $3.3 million of the final purchase price to the customer contracts. GuestHouse franchise license agreements are amortized over 10 years, which represents the period of expected cash flows, using an accelerated amortization method that matches the economic benefit of the agreements. For Vantage, we allocated $8.4 million to customer contracts and are amortizing them over 15 years, which represents the period of expected cash flows, using an accelerated amortization method that matches the economic benefit of the agreements.

Certain of our brand names and trademarks are considered to have indefinite lives. We assess goodwill and the other indefinite lived intangible assets for potential impairments annually as of October 1, or during the year if an event or other circumstance indicates that we may not be able to recover the carrying amount of the assets. We did not impair any goodwill or intangible assets during the three months endedMarch 31, 2017 or 2016.

18

The following table summarizes the balances of goodwill and other intangible assets (in thousands):

	March 31, 2017		December 31, 2016
Goodwill	$	12,566	$	12,566
Intangible assets
Brand name - indefinite lived	$	39,704	$	39,704
Brand name - finite lived, net	2,577		2,664
Customer contracts, net	9,921		10,352
Trademarks	134		134
Total intangible assets	$	52,336	$	52,854

Goodwill and other intangible assets attributable to each of our business segments at March 31, 2017 and December 31, 2016 were as follows (in thousands):

	March 31, 2017				December 31, 2016
			Intangible				Intangible
	Goodwill		Assets		Goodwill		Assets
Company operated hotels	$	—	$	4,660	$	—	$	4,660
Franchised hotels	9,405		47,670		9,405		48,188
Entertainment	3,161		6		3,161		6
Total	$	12,566	$	52,336	$	12,566	$	52,854

The following table summarizes the balances of amortized customer contracts and finite-lived brand names (in thousands):

	March 31, 2017			December 31, 2016
Customer contracts	$	11,673		$	11,673
Brand name - finite lived	2,751			2,751
Accumulated amortization	(1,926		)	(1,408		)
Net carrying amount	$	12,498		$	13,016

As of March 31, 2017, estimated future amortization expenses related to our customer contracts and finite-lived brand names is as follows (in thousands):

Year ending December 31,	Amount
2017 (remainder)	$	1,535
2018	1,798
2019	1,610
2020	1,419
2021	1,261
Thereafter	4,875
Total	$	12,498

19

7. Long-Term Debt

The current and noncurrent portions of long-term debt as of March 31, 2017 and December 31, 2016 are as follows (in thousands):

	March 31, 2017					December 31, 2016
	Current		Non-Current			Current		Non-Current
RL Venture	$	1,394	$	71,748		$	1,375	$	69,841
RL Baltimore	—		13,300			—		13,300
RLH Atlanta	70		9,330			40		9,360
RLH DC	135		16,547			54		16,628
Total debt	1,599		110,925			1,469		109,129
Unamortized debt issuance costs	—		(1,995		)	—		(2,267		)
Long-term debt net of debt issuance costs	$	1,599	$	108,930		$	1,469	$	106,862

The collateral for each of the borrowings within the joint venture entities is the assets and proceeds of each respective entity.

RL Venture

In January 2015, RL Venture Holding LLC, a wholly-owned subsidiary of RL Venture, and each of its 12 wholly-owned subsidiaries entered into a loan agreement with Pacific Western Bank. The original principal amount of the loan was $53.8 million with an additional $26.2 million to be drawn over a two-year period to cover improvements related to the 12 hotels owned by the subsidiaries. We drew $2.2 million during the three months ended March 31, 2017. At March 31, 2017, there were unamortized debt issuance fees of $1.2 million.

The loan matures in January 2019 and has a one-year extension option. Interest under the advanced portions of the loan is payable monthly at LIBOR plus 4.75%. Fixed monthly principal payments began in January 2017 in an amount that would repay the outstanding principal balance over a twenty-five year amortization period.

The liabilities of RL Venture, other than its long-term debt, are non-recourse to our general credit and assets. The long-term debt is non-recourse as to RLHC, but several investors in RL Venture, including us, are guarantors regarding completion of certain improvements to the hotels, environmental covenants in the loan agreement, losses incurred by the lender and in the event of a voluntary bankruptcy filing involving RL Venture, any of its subsidiaries or the guarantors. RLHC has no other obligation to provide financial support to RL Venture.

The loan requires us to comply with customary reporting and operating covenants applicable to RL Venture, including requirements relating to debt service loan coverage ratios. It also includes customary events of default. We were in compliance with these covenants at March 31, 2017.

RL Baltimore

In April 2015, RL Baltimore obtained a new mortgage loan from PFP Holding Company IV LLC, an affiliate of Prime Finance, secured by the Hotel RL Baltimore Inner Harbor. The initial principal amount of the loan was $10.1 million, and the lender agreed to advance an additional $3.2 million to cover expenses related to improvements to the hotel, which we drew during the year ended December 31, 2015. At March 31, 2017 the funds on the loan were fully disbursed. At March 31, 2017, there were unamortized debt issuance fees of $0.3 million.

The loan matures in May 2018 and has twoone-year extension options. Interest under the advanced portions of the loan is payable monthly at LIBOR plus 6.25%. No principal payments are required during the initial term of the loan. Principal payments of $16,000 per month are required beginning in May 2018 if the extension option is exercised.

The loan agreement includes customary requirements for lender approval of annual operating and capital budgets, under certain conditions. It also includes customary events of default. The liability of RL Baltimore under the loan agreement is generally non-recourse.  However, the lender may obtain a monetary judgment against RL Baltimore if the lender suffers losses under certain circumstances listed in the loan agreement, including but not limited to fraud, criminal activity, waste, misappropriation of revenues, and breach of environmental representations.  RLHC has guaranteed these recourse obligations of RL Baltimore and agreed to customary reporting and operating covenants. We were in compliance with these covenants at March 31, 2017.

20

RLH Atlanta

In September 2015, RLH Atlanta obtained a mortgage loan from PFP Holding Company IV LLC, an affiliate of Prime Finance, secured by a hotel adjacent to the Atlanta International Airport, which opened in April 2016 as the Red Lion Hotel Atlanta International Airport. The initial principal amount of the loan was $6.0 million, and the lender agreed to advance an additional $3.4 million to cover expenses related to improvements to the hotel, which we drew in the three months ended March 31, 2016. At March 31, 2017 the funds on the loan were fully disbursed. At March 31, 2017, there were unamortized debt issuance fees of $0.1 million.

The loan matures in September 2018 and has twoone-year extension options. Interest under the advanced portions of the loan is payable monthly at LIBOR plus 6.35%. Monthly principal payments of $10,000 are due beginning in September 2017.

The loan agreement includes customary requirements for lender approval of annual operating and capital budgets, under certain conditions. It also includes customary events of default. The liability of RLH Atlanta under the loan agreement is generally non-recourse.  However, the lender may obtain a monetary judgment against RLH Atlanta if the lender suffers losses under certain circumstances listed in the loan agreement, including but not limited to fraud, criminal activity, waste, misappropriation of revenues, and breach of environmental representations.  RLHC has guaranteed these recourse obligations of RLH Atlanta and agreed to customary reporting and operating covenants. We were in compliance with these covenants at March 31, 2017.

RLH DC

In October 2015, RLH DC obtained a new mortgage loan from Pacific Western Bank secured by the Hotel RL Washington DC. The initial principal amount of the loan was $15.2 million, and the lender agreed to advance an additional $2.3 million to cover expenses related to improvements to the hotel. We drew $1.5 million in additional funds during the year ended December 31, 2016. At March 31, 2017, the remaining amount of funds available to draw on the loan was $0.8 million, and there were unamortized debt issuance costs of $0.3 million.

The loan matures in October 2019 and has a one-year extension option. Interest under the advanced portions of the loan is payable monthly at LIBOR plus 4.55%. Fixed monthly principal payments begin in October 2018 in an amount that will repay the outstanding principal balance over a twenty-five years year amortization period.

The loan agreement includes customary requirements for lender approval of annual operating and capital budgets, under certain conditions. It also includes customary events of default. The liability of RLH DC under the loan agreement is generally non-recourse.  However, the lender may obtain a monetary judgment against RLH DC if the lender suffers losses under certain circumstances listed in the loan agreement, including but not limited to fraud, criminal activity, waste, misappropriation of revenues, and breach of environmental representations.  RLHC has guaranteed these recourse obligations of RLH DC and agreed to customary reporting and operating covenants. We were in compliance with these covenants at March 31, 2017.

Contractual maturities for long-term debt outstanding at March 31, 2017, for the next five years are summarized by the year as follows (in thousands):

Year ending December 31,	Amount
2017 (remainder)	$	1,132
2018	24,442
2019	86,950
2020	—
2021	—
Thereafter	—
Total	$	112,524

21

8.    Derivative Financial Instruments

We do not enter into derivative transactions for trading purposes, but rather to hedge our exposure to interest rate fluctuations. We manage our floating rate debt using interest rate caps in order to reduce our exposure to the impact of changing interest rates and future cash outflows for interest. We estimate the fair value of our interest rate caps via standard calculations that use as their basis readily available observable market parameters. This option-pricing technique utilizes a one-month LIBOR forward yield curve, obtained from an independent external service, which is a Level 2 input. Changes in fair value of these instruments are recognized in interest expense on the Consolidated Statements of Operations. At March 31, 2017, the valuation of the interest rate caps resulted in the recognition of assets with minimal values both individually and in the aggregate, which are included in "Other assets, net" on the Consolidated Balance Sheets.

Subsidiary	Institution	Original Notional Amount		LIBOR Reference Rate Cap		Expiration
		(In millions)
RL Venture	Commonwealth Bank of Australia	$	80.0	4.0	%	January 2018
RL Baltimore	Commonwealth Bank of Australia	$	13.3	3.0	%	May 2018
RLH Atlanta	SMBC Capital Markets, Inc.	$	9.4	3.0	%	September 2018
RLH DC	Commonwealth Bank of Australia	$	17.5	3.0	%	November 2018

9.    Operating and Capital Lease Commitments

We have both operating and capital leases in the normal course of business. The operating leases relate to five of our company operated hotel properties and our three administrative offices. We are obligated under capital leases for certain hotel equipment at our company operated hotel locations. The capital leases typically have a five-year term. The equipment assets are included within our property and equipment balance and are depreciated over the lease term.

Total future minimum payments due under all current term operating and capital leases at March 31, 2017, are as indicated below (in thousands):

Year ending December 31,	Total Lease Obligation		Operating Lease Obligation		Capital Lease Obligation
2017 (remainder)	$	4,582	$	4,390	$	192
2018	5,244		4,980		264
2019	4,580		4,316		264
2020	4,531		4,294		237
2021	2,877		2,752		125
Thereafter	63,453		63,453		—
Total	$	85,267	$	84,185	$	1,082

Total rent expense under leases for the three months endedMarch 31, 2017 and 2016 was $1.6 million and $1.4 million, respectively, which represents the total of amounts shown within Hotel facility and land lease expense, as well as amounts included within Franchise, Entertainment, and General and Administrative operating expenses on our consolidated statements of operations.

10.    Commitments and Contingencies

At any given time we are subject to claims and actions incidental to the operations of our business. Based on information currently available, we do not expect that any sums we may receive or have to pay in connection with any legal proceeding would have a materially adverse effect on our consolidated financial position or net cash flow.

22

11.    Stock Based Compensation

Stock Incentive Plans

The 2006 Stock Incentive Plan authorizes the grant or issuance of various option and other awards including restricted stock units and other stock-based compensation. The plan was approved by our shareholders and allowed awards of 2.0 million shares, subject to adjustments for stock splits, stock dividends and similar events. No further stock option grants or other awards are permitted under the terms of the 2006 plan.

The 2015 Stock Incentive Plan authorizes the grant or issuance of various option and other awards including restricted stock units and other stock-based compensation. The plan was approved by our shareholders and allows awards of 1.4 million shares, subject to adjustments for stock splits, stock dividends and similar events. As of March 31, 2017, there were 264,375 shares of common stock available for issuance pursuant to future stock option grants or other awards under the 2015 plan.

Stock based compensation expense reflects the fair value of stock based awards measured at grant date, including an estimated forfeiture rate, and is recognized over the relevant service period. For the three months ended March 31, 2017 and 2016 stock-based compensation expense is as follows:

	Three Months Ended March 31,
	2017		2016
	(In thousands)
Stock options	$	17	$	—
Restricted stock units	566		496
Unrestricted stock awards	105		105
Employee Stock Purchase Plan	8		7
Total stock-based compensation	$	696	$	608

Stock Options

Stock options issued are valued based upon the Black-Scholes option pricing model and we recognize this value as an expense over the periods in which the options vest. Use of the Black-Scholes option-pricing model requires that we make certain assumptions, including expected volatility, forfeiture rate, risk-free interest rate, expected dividend yield and expected life of the options, based on historical experience. Volatility is based on historical information with terms consistent with the expected life of the option. The risk free interest rate is based on the quoted daily treasury yield curve rate at the time of grant, with terms consistent with the expected life of the option. For the three months ended March 31, 2017 there were no stock options granted. For the three months ended March 31,2016 there were 81,130 shares granted.

Stock option fair value assumptions are as follows for stock options granted during the three months ended March 31, 2016:

Grant Date	Volatility	Forfeiture Rate	Risk-free Interest Rate	Dividend Yield	Expected Life (Years)
March 28, 2016	61.12%	21.07%	1.37%	—%	5

A summary of stock option activity for the three months ended March 31, 2017, is as follows:

	Number of Shares	Weighted Average Exercise Price
Balance, January 1, 2017	132,868	$	8.91
Options granted	—	—
Options exercised	—	—
Options forfeited	—	—
Balance, March 31, 2017	132,868	$	8.91
Exercisable, March 31, 2017	72,021	$	9.51

23

Additional information regarding stock options outstanding and exercisable as of March 31, 2017, is presented below:

Exercise Price	Number Outstanding	Weighted Average Remaining Contractual Life (Years)	Expiration Date	Weighted Average Exercise Price		Aggregate Intrinsic Value(1)		Number Exercisable	Weighted Average Exercise Price		Aggregate Intrinsic Value(1)
$8.20	81,130	8.99	2026	$	8.20	$	—	20,283	$	8.20	$	—
$8.74	36,093	1.14	2018	$	8.74	—		36,093	$	8.74	—
$13.00	15,645	0.13	2017	$	13.00	—		15,645	$	13.00	—
	132,868	5.81	2017-2026	$	8.91	$	—	72,021	$	9.51	$	—

(1) The aggregate intrinsic value is before applicable income taxes and represents the amount option recipients would have received if all options had been exercised on the last trading day of the first three months of 2017, or March 31, 2017, based upon our closing stock price on that date of $7.05.

Restricted Stock Units, Shares Issued as Compensation

During three months endedMarch 31, 2017 and 2016, we granted 318,815 and 242,989 unvested restricted stock units, respectively, to executive officers and other key employees, which typically vest 25% each year for four years on each anniversary of the grant date. While all of the shares are considered granted, they are not considered issued or outstanding until vested. As of March 31, 2017 and 2016, there were 1,235,035 and 1,382,344 unvested restricted stock units outstanding, respectively. Since we began issuing restricted stock units, approximately 21.0% of total restricted stock units granted have been forfeited.

A summary of restricted stock unit activity for the three months ended March 31, 2017, is as follows:

	Number of Shares		Weighted Average Grant Date Fair Value
Balance, January 1, 2017	1,036,680		$	7.27
Granted	318,815		$	7.09
Vested	(97,241	)	$	7.31
Forfeited	(23,219	)	$	7.04
Balance, March 31, 2017	1,235,035		$	7.22

We issued 97,241 shares of common stock to employees during the first three months of 2017 as their restricted stock units vested. Under the terms of the 2006 and 2015 plans and upon issuance, we authorized a net settlement of distributable shares to employees after consideration of individual employees' tax withholding obligations, at the election of each employee. The fair value of restricted stock that vested during the three months ended March 31, 2017 and 2016 was approximately $0.7 million and $0.5 million, respectively.

During the three months endedMarch 31, 2017 and 2016, we recognized $0.6 million and $0.5 million, respectively, in compensation expense related to these grants, and expect to record and additional $6.5 million in compensation expense over the remaining weighted average vesting periods of 33 months.

24

Unrestricted Stock Awards

Unrestricted stock awards are granted to members of our board of directors as part of their compensation. Awards are fully vested and expensed when granted. The fair value of unrestricted stock awards is the market close price of our common stock on the date of the grant.

The following table summarizes unrestricted stock award activity for the three months ended March 31, 2017 and 2016:

	Three Months Ended March 31,
	2017		2016
Shares of unrestricted stock granted	12,426		14,934
Weighted average grant date fair value per share	$	8.45	$	7.03

Employee Stock Purchase Plan

In 2008, we adopted a new employee stock purchase plan ("ESPP") upon expiration of our previous plan. Under the ESPP, 300,000 shares of common stock are authorized for purchase by eligible employees at a 15% discount through payroll deductions. No employee may purchase more than $25,000 worth of shares, or more than 10,000 total shares, in any calendar year. As allowed under the ESPP, a participant may elect to withdraw from the plan, effective for the purchase period in progress at the time of the election with all accumulated payroll deductions returned to the participant at the time of withdrawal. During the three months endedMarch 31, 2017 and 2016, there were 12,554 and 12,735 shares, respectively issued, and approximately $8,000 and $7,000 was recorded in compensation expense related to the discount associated with the plan in each year, respectively.

	Three Months Ended March 31,
	2017		2016
Shares of stock sold to employees	12,554		12,735
Weighted average fair value per ESPP award	$	6.00	$	5.96

Warrants

In January 2015, in connection with Shelbourne Falcon’s purchase of equity interests in RL Venture, we issued Shelbourne warrants to purchase 442,533 shares of common stock. The warrants have a five year term from the date of issuance and a per share exercise price of $6.78. The warrants have been classified as equity due to required share settlement upon exercise. Accordingly, the estimated fair value of the warrants was recorded in additional paid in capital upon issuance, and we do not recognize subsequent changes in fair value in our financial statements. As of March 31, 2017 all warrants were still outstanding.

25

12.    Earnings (Loss) Per Share

The following table presents a reconciliation of the numerators and denominators used in the basic and diluted net income (loss) per share computations for the three months endedMarch 31, 2017 and 2016 (in thousands, except per share data):

	Three Months Ended March 31,
	2017			2016
Numerator - basic and diluted:
Net income (loss)	$	(5,123	)	$	(5,820	)
Less: net (income) loss attributable to noncontrolling interests	1,519			1,021
Net income (loss) attributable to RLHC	(3,604		)	(4,799		)
Less: fair value adjustment of share component of contingent consideration	(713		)	—
Net income (loss) attributable to RLHC for diluted earnings (loss) per share	$	(4,317	)	$	(4,799	)
Denominator:
Weighted average shares - basic	23,469			20,088
Weighted average shares - diluted	24,159			20,088
Earnings (loss) per share - basic	$	(0.15	)	$	(0.24	)
Earnings (loss) per share - diluted	$	(0.18	)	$	(0.24	)

The following table presents options to purchase common shares, restricted stock units outstanding, warrants to purchase common shares and contingently issuable shares included in the earnings per share calculation and the amount excluded from the dilutive earnings per share calculation as they were considered antidilutive for three months endedMarch 31, 2017 and 2016. For the three months ended March 31,2017, we recognized $0.7 million of income related to the change in fair value of the share component of the contingent consideration (classified within acquisition and integration costs on our Consolidated Statement of Operations), as the result of the $1.30 per share decrease in our stock price from December 31, 2016 to March 31, 2017.

26

	Three Months Ended March 31,
	2017	2016
Stock Options(1)
Dilutive awards outstanding	—	—
Antidilutive awards outstanding	132,868	152,806
Total awards outstanding	132,868	152,806
Restricted Stock Units(2)
Dilutive awards outstanding	—	—
Antidilutive awards outstanding	1,235,035	1,382,344
Total awards outstanding	1,235,035	1,382,344
Warrants(3)
Dilutive awards outstanding	—	—
Antidilutive awards outstanding	442,533	442,533
Total awards outstanding	442,533	442,533
Shares for Vantage Contingent Consideration(4)
Dilutive awards outstanding	690,000	—
Antidilutive awards outstanding	—	—
Total awards outstanding	690,000	—
Total dilutive awards outstanding	690,000	—

⁽¹⁾ All stock options were anti-dilutive as a result of the RLHC weighted average share price during the reporting periods.

⁽²⁾ All restricted stock units were anti-dilutive due to the net loss attributable to RLHC in the reporting periods. If we had reported net income for the three months ended March 31, 2017 and 2016 then 375,260 and 417,041 units, respectively, would have been dilutive.

⁽³⁾ All warrants were anti-dilutive due to the net loss attributable to RLHC in the reporting periods. If we had reported net income for the three months ended March 31, 2017 and 2016 then 49,665 and 1,312 units, respectively, would have been dilutive.

⁽⁴⁾ As part of the Vantage acquisition, up to an additional 690,000 shares may be issued with the one-year and two-year contingent consideration earns outs (see Note 16). These shares would not be included in basic shares outstanding until the period the contingency is resolved. For purposes of calculating earnings per share, the income or expense recognized during the period that is related to the changes in the fair value of the share component of the contingent consideration is added back to net income/loss. For the three months ended March 31,2017, we recognized $0.7 million of income related to the change in fair value of the share component of the contingent consideration (classified within acquisition and integration costs on our Consolidated Statement of Operations), as the result of the $1.30 per share decrease in our stock price from December 31, 2016 to March 31, 2017.

13.    Income Taxes

We recognized an income tax provision of $0.2 million and $0.1 million for the three months ended March 31, 2017 and 2016, respectively. The income tax provision varies from the statutory rate primarily due to a full valuation allowance against our deferred assets, as well as for deferred tax expense associated with our acquired indefinite-lived intangible assets, which are amortized for tax purposes but not for U.S. GAAP purposes.

We have federal operating loss carryforwards, which will expire beginning in 2032, state operating loss carryforwards, which will expire beginning in 2017, and tax credit carryforwards, which will begin to expire in 2024.

27

14.    Fair Value

Applicable accounting standards define fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). We measure our assets and liabilities using inputs from the Level 1, Level 2 and Level 3 of the fair value hierarchy.

Estimated fair values of financial instruments (in thousands) are shown in the table below. We estimate the fair value of our notes receivable using expected future payments discounted at risk-adjusted rates, both of which are Level 3 inputs. We estimate the fair value of our long-term debt and capital lease obligations using expected future payments discounted at risk-adjusted rates, both of which are Level 3 inputs. The fair values provided below are not necessarily indicative of the amounts we or the debt holders could realize in a current market exchange. In addition, potential income tax ramifications related to the realization of gains and losses that would be incurred in an actual sale or settlement have not been taken into consideration.

	March 31, 2017				December 31, 2016
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial assets:
Notes receivable	$	1,285	$	1,285	$	1,295	$	1,295
Financial liabilities:
Total debt	$	112,524	$	110,936	$	110,598	$	107,858
Total capital lease obligations	1,082		1,082		1,147		1,147

15.    Related Party Transactions

All four of our joint ventures - RL Venture, RLS Atla Venture, RLS Balt Venture and RLS DC Venture - have agreed to pay to Shelbourne Capital, LLC (Shelbourne Capital) an investor relations fee each month equal to 0.50% of its total aggregate revenue. The amount Shelbourne Capital earned from all four joint ventures during the three months endedMarch 31, 2017 and 2016 totaled $90,000 and $85,000, respectively. Columbia Pacific Opportunity Fund, LP, one of our largest shareholders, is an investor in Shelbourne Falcon, our minority partner in RL Venture. During the three months ended March 31, 2017 and 2016, Shelbourne Capital earned $75,000 from RL Venture in each period.

RL Venture has also agreed to pay CPA Development, LLC, an affiliate of Columbia Pacific Opportunity Fund, LP, a construction management fee of $200,000 related to the renovation projects. No payment was due from RL Venture to CPA Development, LLC during the three months endedMarch 31, 2017, as the obligation was fully paid by the end of 2016. RL Venture paid $33,000 for the construction management fee during the three months endedMarch 31, 2016.

In May 2015, we entered into a management agreement with the owner (the LLC entity) of Red Lion Hotel Woodlake Conference Center Sacramento (a franchised property). A member of our board of directors is a 50% owner of the entity that serves as the manager member of the LLC entity. During the three months endedMarch 31, 2016, we recognized management fee and brand marketing fee revenue from the LLC entity of $30,000. On December 12, 2016 the LLC permanently closed the Red Lion Hotel Woodlake.

Effective March 29, 2016, our wholly owned subsidiary, RL Management entered into a one-year contract to manage the Hudson Valley Resort and Spa, a hotel located in Kerhonkson, New York. The hotel is owned by HNA Hudson Valley Resort & Training Center LLC, an affiliate of HNA RLH Investments LLC, one of our largest shareholders, and is controlled by HNA Group North America LLC, for which Enrico Marini Fichera, one of our directors, serves as the Head of Investments. Under that contract, our subsidiary is entitled to a monthly management fee equal to $8,333 or three percent of the hotel’s gross operating revenues, whichever is larger. During the three months ended March 31, 2017, we recognized management fee revenue from HNA Hudson Valley Resort & Training Center LLC of $21,000. We continue to manage the property while a new agreement is negotiated.

The total amounts receivable from related parties, primarily related to hotel management agreements, were $2.2 million and $1.9 million at March 31, 2017 and December 31, 2016, and are classified within Accounts receivable from related parties on our consolidated balance sheets. Subsequent to March 31, 2017, we received a payment of $0.8 million that fully settled one related party receivable balance.

16.    Business Acquisition

28

On September 30, 2016 (the close date), we (i) acquired selected assets and assumed certain liabilities of Vantage Hospitality Group, Inc. (“Vantage”), a subsidiary of Thirty-Eight Street, Inc. (“TESI”) and (ii) acquired one brand name asset from TESI. Vantage is a hotel franchise company, and the addition of the Vantage assets substantially increases our number of franchise properties and provides us with a broader presence in the United States and Canada. We acquired over 1,000 hotel franchise and membership license agreements, as well as multiple brand names, including Americas Best Value Inn, Canadas Best Value Inn, Lexington Hotels & Inns, America's Best Inns & Suites, Jameson Inns, Country Hearth Inns & Suites, Vantage Hotels, Value Inn Worldwide, Value Hotel Worldwide, 3 Palms Hotels and Resorts and Signature Inn.

The purchase price totaled $40.2 million, including the following (in thousands):

	Purchase Price
Cash paid to Vantage at close date	$	10,300
Cash paid to TESI at close date	12,300
Total cash consideration at close date	22,600
Value of 690,000 shares to TESI at close date	5,800
Total consideration at close date	28,400
Fair value of contingent consideration	10,900
Assumption of Vantage obligation	900
Total purchase price	$	40,200

The acquisition was funded at closing with $22.6 million of cash on hand, of which $10.3 million was paid to Vantage and $12.3 million was paid to TESI and 690,000 shares of RLHC stock paid to TESI, which was valued at $5.8 million, based on the closing price of RLHC stock of $8.34 on the close date. The total purchase price was $40.2 million, which included the estimated fair value of $0.9 million for the assumption of an obligation related to a previous business acquisition of Vantage and the fair value of $10.9 million of primarily contingent consideration, the total of which will be payable to TESI at the first and second anniversaries of the close date, based on the attainment of certain performance criteria. A minimum of $2 million of the additional consideration is not contingent and will be paid in equal amounts at the first and second anniversaries of the close date. Payment of the contingent consideration is dependent on the retention of Vantage properties under franchise or membership license agreements, as determined by the room count at the first and second year anniversary dates when compared with the room count at the close date, as follows:

	Year 1 Anniversary			Year 2 Anniversary			Total
Threshold	Shares	Cash(1)		Shares	Cash(1)		Shares	Cash(1)
90% of room count at close	414,000	$	4,000	276,000	$	3,000	690,000	$	7,000
80% of room count at close	310,500	3,000		207,000	2,250		517,500	5,250
Minimum	—	1,000		—	1,000		—	2,000
(1) in thousands

If the room counts are below the 80% thresholds at each anniversary date, but the annual franchise revenue, measured as the most recent twelve months ending on the anniversary date, of the Vantage properties is equal to or exceeds the closing date revenue benchmark, then the contingent consideration would be paid at the anniversary date based on the 90% threshold in the table above. The contingent consideration is measured at each anniversary date independent of the other measurement period and is recorded as a liability due to the expected payment of cash and a variable number of shares. Changes in the obligation are recognized within acquisition and integration costs in the Consolidated Statements of Operations. At each reporting period, we are required to assess the fair value of the liability and record any changes in fair value in our Consolidated Statement of Operations. For the first quarter of 2017, we recognized $0.2 million in income associated with our updated assessment, including $0.7 million of income related to the change in fair value of the share component of the contingent consideration (classified within acquisition and integration costs on our Consolidated Statement of Operations), as the result of the $1.30 per share decrease in our stock price from December 31, 2016 to March 31, 2017. As of March 31, 2017 and December 31, 2016, the estimated fair value of the contingent consideration was $11.0 million and $11.2 million, respectively. Roger J. Bloss and Bernard T. Moyle were appointed to executive management positions at RLHC following the closing of the acquisition, and Messrs. Bloss and Moyle also have ownership interests in TESI. Therefore, the contingent consideration obligations are classified as related party liabilities within our consolidated balance sheets.

29

The following supplemental pro forma results are based on the individual historical results of RLHC and Vantage, with adjustments to give effect to the combined operations as if the acquisition had been consummated on January 1, 2016 (unaudited):

	Three Months Ended March 31, 2016
	(in thousands)
Revenue	$	40,552
Income (loss) before income taxes	(4,930		)

30

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This quarterly report on Form 10-Q includes forward-looking statements. We have based these statements on our current expectations and projections about future events. When words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “seek,” “should,” “will” and similar expressions or their negatives are used in this quarterly report, these are forward-looking statements. Many possible events or factors, including those discussed in “Risk Factors” under Item 1A of our annual report on Form 10-K for the year ended December 31, 2016, which we filed with the Securities and Exchange Commission (“SEC”) on March 31, 2017, could affect our future financial results and performance, and could cause actual results or performance to differ materially from those expressed. You are cautioned not to place undue reliance on these forward-looking statements.

In this report, "we", "us", "our", "our company" and "RLHC" refer to Red Lion Hotels Corporation and, as the context requires, all of its consolidated subsidiaries, as follows:

Wholly-owned subsidiaries:

•Red Lion Hotels Holdings, Inc.

•Red Lion Hotels Franchising, Inc.

•Red Lion Hotels Management, Inc. ("RL Management")

•Red Lion Hotels Limited Partnership

Joint venture entities:

•RL Venture LLC ("RL Venture") in which we hold a 55% member interest

•RLS Atla Venture LLC ("RLS Atla Venture") in which we hold a 55% member interest

•RLS Balt Venture LLC ("RLS Balt Venture") in which we hold a 73% member interest

•RLS DC Venture LLC ("RLS DC Venture") in which we hold a 55% member interest

The terms "the network", "systemwide hotels" or "network of hotels" refer to our entire group of owned, managed and franchised hotels.

The following discussion and analysis should be read in connection with our unaudited consolidated financial statements and the condensed notes thereto and other financial information included elsewhere in this quarterly report, as well as in conjunction with the consolidated financial statements and the notes thereto for the year ended December 31, 2016, which are included in our annual report on Form 10-K for the year ended December 31, 2016.

Introduction

We are a NYSE-listed hospitality and leisure company (ticker symbol: RLH) primarily engaged in the management, franchising and ownership of hotels under the following proprietary brands:

Ÿ Hotel RL	Ÿ America's Best Inn & Suites
Ÿ Red Lion Hotels	Ÿ Signature Inn
Ÿ Red Lion Inn & Suites	Ÿ Jameson Inns
Ÿ GuestHouse	Ÿ Country Hearth Inns & Suites
Ÿ Settle Inn	Ÿ Value Inn Worldwide
Ÿ Americas Best Value Inn	Ÿ Value Hotel Worldwide
Ÿ Canadas Best Value Inn	Ÿ 3 Palm Hotels
Ÿ Lexington Hotels & Inns

31

A summary of our properties as of March 31, 2017, including the approximate number of available rooms, is provided below:

	Company Operated		Franchised				Total Systemwide
	Hotels	Total Available Rooms	Hotels		Total Available Rooms		Hotels		Total Available Rooms
Beginning quantity, January 1, 2017	20	4,200	1,117		68,900		1,137		73,100
Newly opened properties	—	—	21		1,300		21		1,300
Terminated properties	—	—	(15	)	(1,000	)	(15	)	(1,000	)
Ending quantity, March 31, 2017	20	4,200	1,123		69,200		1,143		73,400
Executed franchise license agreements:
New franchises	—	—	11		600		11		600
Renewals / changes of ownership	—	—	23		1,500		23		1,500
Total executed franchise license agreements	—	—	34		2,100		34		2,100

We operate in three reportable segments:

• The company operated hotel segment derives revenues primarily from guest room rentals and food and beverage offerings at owned and leased hotels for which we consolidate results. Revenues are also derived from management fees and related charges for hotels with which we contract to perform management services.

• The franchised hotels segment is engaged primarily in licensing our brands to franchisees. This segment generates revenue from franchise fees that are typically based on a percentage of room revenue and are charged to hotel owners in exchange for the use of our brand and access to our central services programs. These programs include our reservation system, guest loyalty program, national and regional sales, revenue management tools, quality inspections, advertising and brand standards.

• The entertainment segment is composed of our WestCoast Entertainment and TicketsWest operations.

Our remaining activities, none of which constitutes a reportable segment, have been aggregated into "other".

Overview

Total revenue for the three months ended March 31, 2017 increased $7.3 million, or 22%, compared with the same period in 2016, driven by our franchised hotel and company operated hotel segments, partially offset by a decrease in our entertainment segment. In 2017, franchise revenues were favorably impacted by the brands acquired brands from Vantage Hospitality Group, Inc. ("Vantage") on September 30, 2016. Revenue per available room ("RevPAR") systemwide increased 2.4% for the three months ended March 31, 2017 when compared with the same period in 2016. The RevPAR increase was primarily driven by improvement of 4.0% in Average Daily Rate ("ADR") and partially offset by 80 basis points in lower occupancy.

RevPAR for company operated hotels on a comparable basis increased in the first quarter of 2017 from the same period in 2016. ADR on a comparable basis increased in the first quarter of 2017 compared with 2016. Average occupancy on a comparable basis decreased slightly from 2016.

Our entertainment segment revenue decreased by $0.7 million for the three months ended March 31, 2017, when compared with 2016. The decrease for the quarter was primarily driven by a weaker Broadway show lineup compared with 2016.

32

Results of Operations

A summary of our Consolidated Statements of Operations is provided below (in thousands):

	Three Months Ended March 31,
	2017			2016
Total revenue	$	39,960		$	32,674
Total operating expenses	43,133			37,193
Operating loss	(3,173		)	(4,519		)
Other income (expense):
Interest expense	(1,958		)	(1,461		)
Other income (expense), net	175			219
Loss before taxes	(4,956		)	(5,761		)
Income tax expense	167			59
Net loss	(5,123		)	(5,820		)
Less net (income) loss attributable to noncontrolling interests	1,519			1,021
Net loss attributable to RLHC	$	(3,604	)	$	(4,799	)
Non-GAAP Financial Measures (1)
EBITDA	$	1,545		$	(798	)
Adjusted EBITDA	$	1,467		$	(670	)
Adjusted net income (loss)	$	(5,201	)	$	(5,692	)
(1) The definitions of "EBITDA", "Adjusted EBITDA" and Adjusted net income (loss) and how those measures relate to net income (loss) attributable to RLHC are discussed and reconciled under Non-GAAP Financial Measures below.

For the three months ended March 31, 2017, we reported net loss of $5.1 million, which includes $0.2 million of reduced acquisition and integration costs and $0.1 million of CFO transition costs. For the three months ended March 31, 2016, we reported net loss of $5.8 million, which includes an environmental cleanup charge of $0.1 million.

The above special items are excluded from operating results in Adjusted EBITDA and adjusted net income (loss). For the three months ended March 31, 2017, Adjusted EBITDA was $1.5 million compared with $(0.7) million in 2016.

Non-GAAP Financial Measures

EBITDA is defined as net income (loss), before interest, taxes, depreciation and amortization. We believe it is a useful financial performance measure due to the significance of our long-lived assets and level of indebtedness.

Adjusted EBITDA and Adjusted net income (loss) are additional measures of financial performance. We believe that the inclusion or exclusion of certain special items, such as gains and losses on asset dispositions and impairments, is necessary to provide the most accurate measure of core operating results and as a means to evaluate comparative results.

EBITDA, Adjusted EBITDA and Adjusted net income (loss) are commonly used measures of performance in our industry. We utilize these measures because management finds them a useful tool to calculate more meaningful comparisons of past, present and future operating results and as a means to evaluate the results of core, ongoing operations. We believe they are a complement to reported operating results. EBITDA, Adjusted EBITDA and Adjusted net income (loss) are not intended to represent net income (loss) defined by generally accepted accounting principles in the United States ("GAAP"), and such information should not be considered as an alternative to reported information or any other measure of performance prescribed by GAAP. In addition, other companies in our industry may calculate EBITDA and, in particular, Adjusted EBITDA and Adjusted net income (loss) differently than we do or may not calculate them at all, limiting the usefulness of EBITDA, Adjusted EBITDA and Adjusted net income (loss) as comparative measures.

33

The following is a reconciliation of EBITDA and Adjusted EBITDA to net income (loss) for the periods presented (in thousands):

			Three Months Ended March 31,
			2017			2016
Net income (loss)			$	(5,123	)	$	(5,820	)
		Depreciation and amortization	4,543			3,502
		Interest expense	1,958			1,461
		Income tax expense	167			59
EBITDA			1,545			(798		)
		Acquisition and integration costs (1)	(175		)	—
		Employee separation costs (2)	97			—
		Reserve for environmental cleanup (3)	—			128
Adjusted EBITDA			$	1,467		$	(670	)
(1	)	On September 30, 2016 RLHC acquired Vantage. Net expenses associated with the acquisition and changes in the fair value of contingent consideration are included within Acquisition and integration costs on our Consolidated Statement of Operations.
(2	)	The costs recorded in the first quarter of 2017 consisted of legal and consulting services associated with the CFO transition.
(3	)	In the first quarter of 2016, a reserve was recorded for environmental cleanup at one of our hotel properties.

The following is a reconciliation of Adjusted net income (loss) to net income (loss) for the periods presented (in thousands):

			Three Months Ended March 31,
			2017			2016
Net income (loss)			$	(5,123	)	$	(5,820	)
		Acquisition and integration costs (1)	(175		)	—
		Employee separation costs (2)	97			—
		Reserve for environmental cleanup (3)	—			128
Adjusted net income (loss)			$	(5,201	)	$	(5,692	)
(1	)	On September 30, 2016 RLHC acquired Vantage. Net expenses associated with the acquisition and changes in the fair value of contingent consideration are included within Acquisition and integration costs on our Consolidated Statement of Operations.
(2	)	The costs recorded in the first quarter of 2017 consisted of legal and consulting services associated with the CFO transition.
(3	)	In the first quarter of 2016, a reserve was recorded for environmental cleanup at one of our hotel properties.

34

Reconciliation of Comparable Company Operated Hotel Revenue, Expenses and Operating Profit

	Three Months Ended March 31,
	2017			2016
	(in thousands)
Company operated hotel revenue	$	24,696		$	24,149
less: revenue from sold and closed hotels	—			(573		)
less: revenue from hotels without comparable results	(1,032		)	(40		)
Comparable company operated hotel revenue	$	23,664		$	23,536
Company operated hotel operating expenses	$	21,478		$	21,599
less: operating expenses from sold and closed hotels	—			(497		)
less: operating expenses from hotels without comparable results	(957		)	(468		)
Comparable company operated hotel operating expenses	$	20,521		$	20,634
Company operated hotel direct operating profit	$	3,218		$	2,550
less: operating profit from sold and closed hotels	—			(76		)
less: operating profit from hotels without comparable results	(75		)	428
Comparable company operated hotel direct profit	$	3,143		$	2,902
Comparable company operated hotel direct margin %	13.3		%	12.3		%

Revenues

A detail of our revenues for the three months ended March 31,2017 and 2016 is as follows (in thousands):

	Three Months Ended March 31,
	2017		2016
Company operated hotels	$	24,696	$	24,149
Other revenues from managed properties	926		1,185
Franchised hotels	10,904		3,296
Entertainment	3,379		4,031
Other	55		13
Total revenues	$	39,960	$	32,674

Three months ended March 31,2017 and 2016

During the first quarter of 2017, revenue from our company operated hotel segment increased $0.5 million or 2.3% compared with the first quarter of 2016. The increase was driven primarily by new company operated locations that were opened in the second quarter of 2016, partially offset by two hotel properties sold or closed in the fourth quarter of 2016. On a comparable hotel basis, excluding the results of sold and closed properties and hotels for which comparable results were not available, revenue from our company operated hotel segment was slightly higher ($0.1 million or 0.5%) in the first quarter of 2017 compared with the first quarter of 2016 primarily due to the 2.4% increase in ADR and partially offset by a slightly lower average occupancy.

Revenue from our franchised hotels segment increased $7.6 million to $10.9 million in the first quarter of 2017 compared with the same period in 2016. This increase was primarily due to an additional $7.2 million from the recently acquired brands, as well as growth in the number of franchises in the system.

Revenue in the entertainment segment decreased $0.7 million to $3.4 million in the first quarter of 2017 compared with the first quarter of 2016. This was due primarily to a less favorable lineup of Broadway shows along with normal variability in the ticketing business from period to period.

35

Comparable Hotel Revenue

Comparable hotels are defined as properties that were operated by our company for at least one full calendar year as of the beginning of the current year other than hotels for which comparable results were not available. Comparable results excludes two hotels, one of which was sold and one which was closed in the fourth quarter of 2016. In addition, one owned and one managed property were opened during the second quarter of 2016 and are excluded as these properties had not been open at least one year as of the beginning of the current year.

We utilize these comparable measures because management finds them a useful tool to perform more meaningful comparisons of past, present and future operating results and as a means to evaluate the results of core, ongoing operations. We believe they are a complement to reported operating results. Comparable operating results are not intended to represent reported operating results defined by GAAP, and such information should not be considered as an alternative to reported information or any other measure of performance prescribed by GAAP.

Average occupancy, ADR and RevPAR statistics are provided below on a comparable basis.

Comparable Hotel Statistics(1)
	Three Months Ended March 31,
	2017									2016
	AverageOccupancy(2)			ADR(3)			RevPAR(4)			Average Occupancy(2)		ADR(3)		RevPAR(4)
Systemwide	53.8	%		$	82.94		$	44.62		54.6	%	$	79.78	$	43.58
Change from prior comparative period:	AverageOccupancy(2)			ADR(3)			RevPAR(4)
Systemwide	(80.0	)	bps	4.0		%	2.4		%

(1	)	Certain operating results for the periods included in this report are shown on a comparable hotel basis. Comparable hotels are defined as hotels that were in the system for at least one full calendar year as of the beginning of the current year under materially similar operations.
(2	)	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.
(3	)	Average daily rate ("ADR") represents total room revenues divided by the total number of paid rooms occupied by hotel guests.
(4	)	Revenue per available room ("RevPAR") represents total room and related revenues divided by total available rooms.

Average occupancy, RevPAR, and ADR as defined below, are widely used in the hospitality industry and appear throughout this document as important measures to the discussion of our operating performance.

• Average occupancy represents total paid rooms occupied divided by total available rooms. We use average occupancy as a measure of the utilization of capacity in our network of hotels.

• RevPAR represents total room and related revenues divided by total available rooms. We use RevPAR as a measure of performance yield in our network of hotels.

• ADR represents total room revenues divided by the total number of paid rooms occupied by hotel guests. We use ADR as a measure of room pricing in our network of hotels.

• Total available rooms represents the number of rooms available multiplied by the number of days in the reported period. We use total available rooms as a measure of capacity in our network of hotels and do not adjust total available rooms for rooms temporarily out of service for remodel or other short-term periods.

• Comparable hotels are hotels that have been owned, leased, managed, or franchised by us and were in operation for at least one full calendar year as of the beginning the current period other than hotels for which comparable results were not available.

Throughout this document and unless otherwise stated, RevPAR, ADR and average occupancy statistics are calculated using statistics for comparable hotels. Some of the terms used in this report, such as "upscale", "midscale" and "economy" are consistent with those used by Smith Travel Research, an independent statistical research service that specializes in the lodging industry.

36

Operating Expenses

Operating expenses generally include direct operating expenses for each of the operating segments, depreciation and amortization, hotel facility and land lease expense, gain or loss on asset dispositions, general and administrative expenses and acquisition and integration costs.

The detail of our operating expenses by major expense category as reported for the three months ended March 31,2017 and 2016 is as follows (in thousands):

	Three Months Ended March 31,
	2017			2016
Company operated hotels	$	21,478		$	21,599
Other costs from managed properties	926			1,185
Franchised hotels	8,532			3,356
Entertainment	3,084			3,437
Other	4			13
Depreciation and amortization	4,543			3,502
Hotel facility and land lease	1,201			1,161
Gain on asset dispositions, net	(119		)	(117		)
General and administrative expenses	3,659			3,057
Acquisition and integration costs	(175		)	—
Total operating expenses	$	43,133		$	37,193

The summary of our comparablehotel operating expenses for the three months ended March 31,2017 and 2016 is as follows (in thousands):

Comparable Hotel Expenses (Non-GAAP Data)

	Three Months Ended March 31,
	2017			2016
Company operated hotel operating expenses	$	21,478		$	21,599
less: operating expenses from sold and closed hotels	—			(497		)
less: operating expenses from hotels without comparable results	(957		)	(468		)
Comparable company operated hotel operating expenses	$	20,521		$	20,634

Comparable hotels are defined as properties that were operated by our company for at least one full calendar year as of the beginning of the current year other than hotels for which comparable results were not available. Comparable results excludes two hotels, one of which was sold and one which was closed in the fourth quarter of 2016. In addition, one owned and one managed property were opened during the second quarter of 2016 and are excluded as these properties had not been open at least one year as of the beginning of the current year.

We utilize these comparable measures because management finds them a useful tool to perform more meaningful comparisons of past, present and future operating results and as a means to evaluate the results of core, ongoing operations. We believe they are a complement to reported operating results. Comparable operating results are not intended to represent reported operating results defined by GAAP, and such information should not be considered as an alternative to reported information or any other measure of performance prescribed by GAAP.

Three months ended March 31,2017 and 2016

Direct company operated hotel expenses were $21.5 million and $21.6 million in the first quarters of 2017 and 2016. On a comparable basis, direct company operated hotel expenses were flat at $20.5 million in the first quarter of 2017 compared with $20.6 million in the first quarter of 2016.

37

Direct expenses for the franchised hotels in the first quarter of 2017 increased $5.2 million compared with the first quarter of 2016, primarily driven by costs associated with the recently acquired economy brand operations.

Direct expenses for the entertainment segment in the first quarter of 2017 decreased by $0.4 million compared with the first quarter of 2016, driven by lower revenue in the entertainment and ticketing businesses.

Depreciation and amortization expenses increased $1.0 million in the first quarter of 2017 compared with the first quarter of 2016, primarily due to the completion of the renovations at the RL Venture and Washington, D.C. properties, along with the opening of the Atlanta Airport hotel in the second quarter of 2016, and the addition of the definite-lived intangibles from the Vantage acquisition.

Hotel facility and land lease costs were flat for the first quarter of 2017 compared with 2016, primarily due to amortized lease termination fees for the Red Lion Hotel Vancouver at the Quay recorded in 2015, offset by the cost of the Hotel RL Washington DC land lease.

General and administrative expenses increased by $0.6 million in the first quarter of 2017 compared with the first quarter of 2016, primarily due to the addition of costs from the Vantage acquisition and higher variable compensation expense in conjunction with our financial performance in the first quarter of 2017 compared with 2016.

Acquisition and integrations costs were reduced as a result of the change in fair value of the contingent consideration related to the Vantage acquisition in the first quarter of 2017. There were no acquisition and integration costs recognized in the first quarter or 2016.

Interest Expense

Interest expense increased $0.5 million in the first quarter of 2017 compared with the first quarter of 2016. The increase was primarily driven by the greater outstanding principal balance of debt at the joint ventures.

Other Income (Expense), net

Other income (expense), net was flat at $0.2 million in the first quarter of 2017 compared with 2016.

Income Taxes

For the three months ended March 31, 2017 and 2016, we reported income tax expense of $0.2 million and $0.1 million, respectively. The income tax provisions vary from the statutory rate primarily due to a full valuation allowance against our deferred tax assets, as well as for deferred tax expense associated with our acquired indefinite-lived intangible assets, which are amortized for tax purposes but not for U.S. GAAP purposes.

Liquidity and Capital Resources

Our principal source of liquidity is cash flows from operations. Cash flows may fluctuate and are sensitive to many factors including changes in working capital and the timing and magnitude of capital expenditures and payments on debt. Working capital, which represents current assets less current liabilities, was $29.8 million and $29.4 million at March 31,2017 and December 31, 2016. We believe that we have sufficient liquidity to fund our operations at least through May 2018.

We may seek to raise additional funds through public or private financings, strategic relationships, sales of assets or other arrangements. We cannot assure that such funds, if needed, will be available on terms attractive to us, or at all. If we sell additional assets, these sales may result in future impairments or losses on the final sale. Finally, any additional equity financings may be dilutive to shareholders and debt financing, if available, may involve covenants that place substantial restrictions on our business.

We are committed to keeping our properties well maintained and attractive to our customers in order to maintain our competitiveness within the industry and keep our hotels properly positioned in their markets. This requires ongoing access to capital for replacement of outdated furnishings as well as for facility repair, modernization and renovation. As a result, we included property improvement expenditures in the borrowing arrangements for our RL Venture Holding LLC properties, as well as the Baltimore, Atlanta, and Washington, DC locations. Those renovations have been completed as of March 31, 2017.

38

In January 2015, RL Venture Holding LLC, a wholly-owned subsidiary of RL Venture, and each of its 12 wholly-owned subsidiaries entered into a loan agreement with Pacific Western Bank. The original principal amount of the loan was $53.8 million with an additional $26.2 million to be drawn over a two-year period to cover property improvements related to the 12 hotels owned by the subsidiaries. At March 31, 2017, draws on the loan were substantially complete, with a remaining amount of $1.3 million available for draw. Interest under the advanced portions of the loan is payable monthly at LIBOR plus 4.75%. Fixed monthly principal payments began in January 2017 in an amount that will repay the outstanding principal balance over a twenty-five year amortization period. Our joint venture partner owns 45% of RL Venture at March 31, 2017.

In April 2015, RL Baltimore, a wholly-owned subsidiary of RLS Balt Venture LLC, obtained a new mortgage loan from PFP Holding Company IV LLC, an affiliate of Prime Finance, secured by the Hotel RL Baltimore Inner Harbor. The initial principal amount of the loan was $10.1 million, and the lender agreed to advance an additional $3.2 million to cover expenses related to improvements to the hotel, all of which has been drawn. The loan matures in May 2018 and has two one-year extension options. Interest under the advanced portions of the loan is payable monthly at LIBOR plus 6.25%. Principal payments of $16,000 per month are required beginning in May 2018. Our joint venture partner owns 27% of RLS Balt Venture at March 31, 2017.

In September 2015, RLH Atlanta obtained a new mortgage loan from PFP Holding Company IV LLC, which was used to acquire, and is secured by, a hotel adjacent to the Atlanta International Airport, which opened in April 2016 as the Red Lion Hotel Atlanta International Airport. The principal amount of the loan is $9.4 million, all of which has been drawn at March 31, 2017. The loan matures in September 2018 and has two one-year extension options. Interest under the advanced portions of the loan is payable monthly at LIBOR plus 6.35%. Monthly principal payments of $10,000 are due beginning in September 2017. Our joint venture partner owns 45% of RLS Atla Venture at March 31, 2017.

In October 2015, RLH DC obtained a new mortgage loan from Pacific Western Bank, which was used, along with cash on hand, to acquire, and is secured by, the Hotel RL Washington, DC. The principal amount of the loan is $16.7 million, and $0.8 million has yet to be drawn at March 31, 2017. The loan matures in October 2019 and has a one-year extension option. Interest under the advanced portions of the loan will be calculated at LIBOR plus 4.55%. Interest only payments are due monthly and commenced November 2015. Monthly principal payments of $58,333 are required beginning in October 2018 in an amount that will repay the outstanding principal balance over an amortization period of twenty-five years. Our joint venture partner owns 45% of RLS DC Venture as of March 31, 2017.

At March 31, 2017 total outstanding debt was $110.5 million, net of discount, all of which is at variable interest rates. Our average pre-tax interest rate on debt was 5.9% at March 31, 2017. Refer to Note 7 in Item 1. Financial Information for further information on the specific terms of our debt.

Operating Activities

Net cash used by operating activities totaled $(4.0) million during the first three months of 2017 compared with $(6.4) million during the same period in 2016. The primary driver for the change in cash flows was a decline in working capital accounts.

Investing Activities

Net cash used in investing activities totaled $(3.0) million during the first three months of 2017 compared with $(5.0) million during the first three months of 2016. The primary driver of the change was a decrease in capital expenditures from $(5.2) million for the three months endedMarch 31, 2016 down to $(3.0) million for the three months ended March 31, 2017.

Financing Activities

Net cash provided by financing activities was $1.7 million during the first three months of 2017 compared with $9.4 million in the first three months of 2016. The primary driver of the change was higher borrowings on long-term debt for the three months endedMarch 31, 2016 of $8.0 million down to $2.2 million for the three months ended March 31, 2017.

39

Contractual Obligations

The following table summarizes our significant contractual obligations, including principal and estimated interest on debt and capital leases, as of March 31, 2017 (in thousands):

	Total		Less than 1 year		1-3 years		4-5 years		After 5 years
Debt(1)	$	124,471	$	8,209	$	116,262	$	—	$	—
Capital leases(1)	1,215		235		601		379		—
Operating leases	84,185		5,694		9,075		6,402		63,014
Total contractual obligations (2)	$	209,871	$	14,138	$	125,938	$	6,781	$	63,014

⁽¹⁾  Includes estimated interest payments and commitment fees over the life of the debt agreement or capital lease.

⁽²⁾  With regard to purchase obligations, we are not party to any material agreements to purchase goods or services that are enforceable or legally binding as to fixed or minimum quantities to be purchased or stated price terms.

We have leasehold interests at various hotel properties, as well as our offices located in Spokane, Washington, Denver, Colorado and Coral Springs, Florida. These leases require us to pay fixed monthly rent and have expiration dates of 2017 and beyond, which are reflected in the table above.

Off-Balance Sheet Arrangements

As of March 31, 2017, we had no off-balance sheet arrangements, as defined by SEC regulations, which have or are reasonably likely to have a current or future effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Critical Accounting Policies and Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect: (i) the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements, and (ii) the reported amounts of revenues and expenses during the reporting periods. Actual results could differ materially from those estimates. We consider a critical accounting policy to be one that is both important to the portrayal of our financial condition and results of operations and requires management's most subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Our significant accounting policies are described in Note 2 of the condensed notes to consolidated financial statements included in this quarterly report on Form 10-Q.

Management has discussed the development and selection of our critical accounting policies and estimates with the audit committee of our board of directors, and the audit committee has reviewed the disclosures presented on our annual report on Form 10-K for the year ended December 31, 2016. Since the date of our 2016 annual report on Form 10-K, there have been no material changes to our critical accounting policies, nor have there been any changes to our methodology and assumptions applied to these policies.

New and Recent Accounting Pronouncements

Please refer to Note 2: Summary of Significant Accounting Policies within Item 1. Financial Statements of this quarterly report on Form 10-Q for information on new and recent U.S. GAAP accounting pronouncements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Our earnings and cash flows are subject to fluctuations due to changes in interest rates primarily from outstanding debt. As of March 31, 2017, our outstanding debt, including current maturities and excluding unamortized origination fees, was $112.5 million, which is under term loans subject to variables rates, but is subject to interest rate caps.

We do not enter into derivative transactions for trading purposes, but rather to hedge our exposure to interest rate fluctuations. We manage our floating rate debt using interest rate caps in order to reduce our exposure to the impact of changing interest rates and future cash outflows for interest. For additional information, see Item 7A, "Quantitative and Qualitative Disclosures About Market Risk" of our annual report on Form 10-K for the year ended December 31, 2016. Our exposures to market risk have not changed materially since December 31, 2016.

40

We do not foresee any changes of significance in our exposure to fluctuations in interest rates, although we will continue to manage our exposure to this risk by monitoring available financing alternatives.

The below table summarizes the principal payment requirements on our debt obligations at March 31, 2017 on our consolidated balance sheet (in thousands):

	2017		2018		2019		2020		2021		Thereafter		Total			Fair Value
Debt	$	1,132	$	24,442	$	86,950	$	—	$	—	$	—	$	112,524		$	110,936
Average interest rate													5.9		%

Item 4. Controls and Procedures

As of March 31, 2017, we carried out an evaluation under the supervision and with the participation of our management, including our Chief Executive Officer (“CEO”) and our Chief Financial Officer (“CFO”), of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) or 15d-15(e) under the Securities Exchange Act of 1934, as amended). Based on that evaluation, our management, including the CEO and CFO, concluded that, due to a material weakness in internal controls over financial reporting described in Part II, Item 9A of our 2016 Annual Report on Form 10-K ("2016 Form 10-K"), our disclosure controls and procedures were not effective as of March 31, 2017 to ensure that material information required to be disclosed by us in the reports filed or submitted by us under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within time periods specified in SEC rules and forms.

There were no changes in internal control over financial reporting, as defined in Exchange Act Rule 13a-15(f), during the three months ended March 31, 2017 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting, other than as described below for our remediation plan.

As we described in Part II, Item 9A “Controls and Procedures” of our 2016 annual report on Form 10-K, we began implementing a remediation to address the control deficiency that led to the material weakness referred to above. We have designed, implemented and tested manual controls related to the reporting of our third party ticket sales liability recorded in our general ledger and the detailed subsidiary ledger. While we have taken these actions, the matter cannot be deemed to be remediated until operation of the controls has been tested and reviewed in connection with our issuance of future financial statements.

41

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

At any given time, we are subject to claims and actions incidental to the operation of our business. While the outcome of these proceedings cannot be predicted, it is the opinion of management that none of such proceedings, individually or in the aggregate, will have a material adverse effect on our business, financial condition, cash flows or results of operations. See Note 10 of condensed notes to consolidated financial statements.

Item 1A. Risk Factors

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, Item 1A Risk Factors in our annual report on Form 10-K for the year ended December 31, 2016, which could materially affect our business, financial condition or future results. The risks described in our annual report may not be the only risks facing our company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results in the future.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

42

Item 6. Exhibits

Index to Exhibits

Exhibit Number	Description
10.1	Employment offer letter of Douglas L. Ludwig dated March 1, 2017
10.2	2017 RLHC Executive Officers Bonus Plan (incorporated by reference to Exhibit 10.1 in the current report on Form 8-K (Commission File No. 001-13957) filed on April 3, 2017)
12.1	Statement of Computation of Ratios
31.1	Certification of Chief Executive Officer pursuant to Exchange Act Rule 13a-14(a)
31.2	Certification of Principal Financial Officer pursuant to Exchange Act Rule 13a-14(a)
32.1	Certification of Chief Executive Officer pursuant to Exchange Act Rule 13a-14(b)
32.2	Certification of Principal Financial Officer pursuant to Exchange Act Rule 13a-14(b)
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

43

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Red Lion Hotels Corporation

Registrant

Signature		Title	Date
By:	/s/ Gregory T. Mount	President and Chief Executive Officer (Principal Executive Officer)	May 9, 2017
	Gregory T. Mount
By:	/s/ Douglas L. Ludwig	Executive Vice President and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)	May 9, 2017
	Douglas L. Ludwig

44

EX-10.1

March 1, 2017

Mr. Douglas L. Ludwig

11 Blyth Dale Road

Toronto, Ontario M4N 3M3 Canada

RE: Red Lion Hotels Corporation Offer Letter

Dear Doug:

On behalf of Red Lion Hotels Corporation (the “Company”), we are delighted to offer you the position of Executive Vice President, Chief Financial Officer and Treasurer of the Company. In your new position, you will report to the President and CEO of the Company.

As an officer of the Company, the details of your hire, your compensation and any of your acquisitions and dispositions of stock of the Company may in the future be subject to Securities Exchange Commission reporting rules.

The following outlines the employment package for your position, all of which is conditioned upon government approval of your employment immigration status.

START DATE: March 20, 2017 or the soonest date following government approval of your employment immigration status.

POSITION: Executive Vice President, Chief Financial Officer and Treasurer. Your responsibilities will be those outlined in your job description, as may be modified, and as may be assigned to you from time to time by the President and CEO. You will also be required, as appropriate and consistent with other senior executives, to attend and participate in (i) necessary senior executive meetings, committees and councils and (ii) meetings of the Board of Directors of the Company.

COMPENSATION: Your position is classified as a salaried exempt position, which means it is exempt from state and federal overtime laws. You will be paid a bi-weekly base salary of $14,423.08, which is equivalent to $375,000per year, subject to normal withholdings and payroll taxes. You will not be entitled to any additional compensation in the event you are appointed to serve as an officer or director of any of the Company’s direct or indirect subsidiaries or affiliates.

BONUS: In addition to your base salary, you are eligible to earn a bonus if you are actively employed throughout the applicable bonus period, and if you meet the other requirements outlined in any bonus plan as may be approved by the Company from time to time for Executive Vice Presidents of the Company. Bonus targets and goals for achievement of bonuses by executive officers are set by the Compensation Committee of the Board. Bonus targets for this position are set for 2017 at 70% of base salary. Any bonus earned by you in 2017 would be prorated for the portion of the year you are employed by the Company.

EQUITY GRANT: At the sole discretion of the Compensation Committee of the Company’s Board, you will receive an annual grant of equity under the Company’s 2015 Stock Incentive Plan (or such successor plan as may be then in effect).  Subject to such discretion, such grant shall be in a value equal to 100% of your base salary, a portion of which shall be issued in the form of restricted stock units (“RSUs”) vesting 25% on each of the first four anniversaries of issuance, and the balance of which shall be issued in the form of performance stock units (“PSUs”) vesting in accordance with performance metrics to be determined by the Compensation Committee in its sole discretion and consistent with the terms and conditions of PSUs issued to the Company’s other executive officers.  In addition, subject to shareholder approval at the Company’s 2017 annual meeting to include additional equity in the Company’s stock incentive plan, you will receive 40,000 Restricted Stock Units in the Company vesting 25% on each of the first four anniversaries of issuance. Upon the scheduled vesting in the ordinary course of business of any RSUs the Company has granted to you, and except as may then otherwise be required by applicable law, such vested RSUs shall be settled exclusively in the common stock of the Company.

CASH PAYMENT: You will receive a cash payment of $45,000, to be paid after six (6) months of employment, subject to normal withholdings and payroll taxes. In the event you voluntarily terminate your employment with the Company prior to the first anniversary of your Start Date, you will be required to reimburse this cash payment to the Company and you authorize the Company to deduct the entire amount from your final paycheck or from any other funds the Company then owes to you or is holding on your behalf.  Should the amount exceed your final paycheck and other funds the Company then owes you, you agree to promptly reimburse the Company any remaining balance at that time.

TEMPORARY HOUSING: To assist in your travels to Denver, Colorado, you shall receive $20,000, subject to normal withholdings and payroll taxes. In the event you voluntarily terminate your employment with the Company prior to the first anniversary of your Start Date, you will be required to reimburse this cash payment to the Company and you authorize the Company to deduct the entire amount from your final paycheck or from any other funds the Company then owes to you or is holding on your behalf.  Should the amount exceed your final paycheck and other funds the Company then owes you, you agree to promptly reimburse the Company any remaining balance at that time.

BENEFITS: You will be eligible to participate in all employee benefit programs on the same terms and conditions as any Company Executive Vice President, as they may be modified from time to time, including:

• Medical and Dental insurance eligible the first of the month following your Start Date

• Employee Assistance Program (EAP)

• Long Term Disability insurance coverage starting the first of the month following your Start Date

• Flexible Spending Account - Section 125 Medical Reimbursement and Dependent Care accounts eligible within 30 days of your Start Date for the following 1^st of the month effective date

• AFLAC - Voluntary Cancer Protection, Short Term Disability, Personal Recovery and Accident / Injury Protection Plans available following Start Date and also during open enrollment periods

• Vacation, Holiday, Sick Pay and Disability Programs

• Participation in the Company 401(k) Retirement Savings Plan with a discretionary match made after the end of each calendar year.

• Direct Deposit

• Option to purchase shares of Company stock at a 15% discount through payroll deduction under Red Lion’s Employee Stock Purchase Plan

• Voluntary Term Life and AD&D Insurance coverage eligible the first of the month following your Start Date

• Continuing education reimbursement

• Discounted hotel accommodations for you and your family at Company hotels

A benefit book will be provided to you upon the commencement of your employment, describing the Company’s benefits and eligibility requirements in detail. You will also receive a copy of the Company’s Associate Handbook with information regarding the Company’s policies and procedures.

SEVERANCE BENEFITS:

UPON TERMINATION WITHOUT CAUSE: If the Company terminates your employment without Cause (defined below), the Company will pay you a lump sum payment equal to one-half (1/2) your base annual salary for the then current fiscal year, provided that as a previous condition to such payment, you shall execute and not revoke during any legally applicable revocation period, a mutually acceptable separation agreement and general release.

UPON CHANGE OF CONTROL AND CONSTRUCTIVE TERMINATION: If, during the term of your employment with the Company, there is a Change of Control (defined below) and there is a Constructive Termination (defined below) of your employment without Cause within twelve (12) months after such Change of Control, you will, in lieu of severance under the preceding paragraph, be entitled to a lump sum payment equal to the sum of (a) your base annual salary for the then current fiscal year, plus (b) an amount equal to (i) your target annual bonus under the then applicable bonus plan for the then current fiscal year, multiplied by (ii) a fraction, the numerator of which is 365 plus the number of days elapsed in the then current fiscal year at the time of the termination and the denominator of which is 365. In addition, (A) the Company shall accelerate vesting on any portion of any equity grant previously made to you under the Company’s 2015 Stock Incentive Plan, or any successor plan, that would otherwise have vested after the date of the termination of your employment; and (B) all Company imposed restrictions under any restricted stock, restricted stock unit or other similar equity-based awards granted to you by the Company shall be terminated upon the termination of your employment, and the Company shall issue all common stock that underlies such awards but has not yet been issued; provided that (i) if the terms of any such award require you to pay monetary consideration for such stock, the stock underlying such award shall be issued only if you pay such consideration, and (ii) if any restrictions under any

such award are performance-based, such restrictions shall terminate and the stock underlying such award shall be issued only if and to the extent expressly provided in the agreement evidencing the award.

As used herein, the term “Cause” means: (i) your willful and intentional failure or refusal to perform or observe any of your material duties, responsibilities or obligations, if such breach is not cured within 30 days after notice thereof to you by the Company, which notice shall state that such conduct shall, without cure, constitute Cause; (ii) any willful and intentional act by you involving fraud, theft, embezzlement or dishonesty affecting the Company; or (iii) your conviction of (or a plea of nolo contendere to) an offense which is a felony in the jurisdiction involved.

“Constructive Termination” shall be deemed to occur if the Company terminates your employment without Cause, or if you voluntarily elect to terminate your employment within thirty (30) days after any of the following events occurring without your consent: (i) there is a significant reduction in your overall scope of duties, authorities and responsibilities (it being understood that a new position within a larger combined company is not a constructive termination if it is in the same area of operations and involves similar scope of management responsibility notwithstanding that you may not retain as senior a position overall within the larger combined company as your prior position within the Company); or (ii) there is a reduction of more than 20% of your base salary or target bonus (other than any such reduction consistent with a general reduction of pay across the Company’s or its successor’s executive staff as a group, as an economic or strategic measure due to poor financial performance by the Company).

As used herein, the term “Change of Control” means the occurrence of any one of the following events: any merger or consolidation involving the acquisition of 50% or more of the combined voting power of the outstanding securities of the Company by a “person” or “group” (as those terms are defined in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934), adoption of a plan for liquidation of the Company or for sale of all or substantially all of the assets of the Company or other similar transaction or series of transactions involving the Company, or the acquisition of 50% or more of the combined voting power of the outstanding securities of the Company by a “person” or “group” (as those terms are defined in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934).

The severance amounts hereunder shall, subject to COMPLIANCE WITH SECTION 409A below, be paid to you as soon as practicable following the occurrence of the event that entitles you to such payments.

COMPLIANCE WITH SECTION 409A: Notwithstanding any other provision of this letter to the contrary, the provision, time and manner of payment or distribution of all compensation and benefits provided by this letter (“Section 409A Deferred Compensation”) that constitute nonqualified deferred compensation subject to and not exempted from the requirements of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), shall be subject to, limited by and construed in accordance with the requirements of such section and all regulations and other guidance promulgated by the Secretary of the Treasury pursuant to such section (such section, regulations and other guidance being referred to herein as “Section 409A”), including the following:

(a)    Separation from Service. Payments and benefits constituting Section 409A Deferred Compensation otherwise payable or provided pursuant to this letter upon your Constructive Termination shall be paid or provided only at the time of a termination of your employment that constitutes a Separation from Service. For the purposes of this letter, a “Separation from Service” is a separation from service within the meaning of Treasury Regulation Section 1.409A-1(h).

(b)    Six-Month Delay Applicable to Specified Employees. If, at the time of your Separation from Service, you are a “specified employee” within the meaning of Section 409A(a)(2)(B)(i) of the Code, then any payments and benefits

constituting Section 409A Deferred Compensation to be paid or provided pursuant to this letter upon your Separation from Service shall be paid or provided commencing on the later of (i) the first business day after the date that is six months after the date of such Separation from Service or, if earlier, the date of your death (in either case, the “Delayed Payment Date”), or (ii) the date or dates on which such Section 409A Deferred Compensation would otherwise be paid or provided in accordance with this letter without regard to this paragraph. All such payments and benefits that would, but for this paragraph, become payable prior to the Delayed Payment Date shall be accumulated and paid on the Delayed Payment Date.

(c)    Installments. Your right to receive any amounts payable hereunder in two or more installments shall be treated as a right to receive a series of separate payments and, accordingly, each such installment payment shall at all times be considered a separate and distinct payment for purposes of Section 409A.

(d)    Notice Upon Constructive Termination. If you voluntarily elect to terminate your employment under circumstances that would otherwise constitute a Constructive Termination under this letter, a Constructive Termination shall not be deemed to have occurred unless (i) you have given the Company written notice that a specified event has occurred giving you the right to voluntarily terminate your employment and have that be treated as a Constructive Termination, (ii) the Company fails to cure such event within a period of thirty (30) days after the receipt of such notice, and (iii) you voluntarily terminate your employment within thirty (30) days following the end of that period.

PROOF OF ELIGIBILITY TO WORK IN U.S.: Our offer is contingent upon your submission of satisfactory proof of your identity and your legal authorization to work in the United States. If you fail to submit this proof, federal law prohibits us from hiring you. The Company will pay for the costs to secure employment eligibility in the United States.

LOYALTY, NONDISCLOSURE OF CONFIDENTIAL INFORMATION: By accepting this offer, you agree that you will act at all times in the best interest of the Company. You also agree that, except as required for performance of your work, you will not use, disclose or publish any Confidential Information of the Company either during or after your employment, or remove any such information from the Company’s premises. Confidential Information includes, but is not limited to, lists of actual and prospective customers and clients, financial and personnel-related information, projections, operating procedures, budgets, reports, business or marketing plans, compilations of data created by the Company or by third parties for the benefit of the Company.

NONCOMPETITION AND NONSOLICITATION: (a) You agree that during a period after termination of your employment commensurate with the months of base salary you are paid as a benefit in connection with a related severance event, you will not, directly or indirectly, engage or participate or make any financial investments in (other than ownership of up to 5% of the aggregate of any class of securities of any corporation if such securities are listed on a national stock exchange or under section 12(g) of the Securities Exchange Act of 1934) or become employed by, or act as an agent or principal of, or render advisory or other management services to or for, any Competing Business. As used herein the term “Competing Business” means any business which includes hotel ownership, hotel management, hotel services or hotel franchising that competes directly or indirectly with the Company.

(b)     You also agree that during your employment at the Company and during a period after termination of your employment commensurate with the months of base salary you are paid as a benefit in connection with a related severance event, you will not solicit, raid, entice or induce any person that then is or at any time during the twelve-month period prior to the end of your employment was an employee of the Company (other than a person whose

employment with the Company has been terminated by the Company), to become employed by any person, firm or corporation.

COMPLAINT RESOLUTION: By accepting this offer with the Company, you also agree to continue to familiarize yourself with its policies, including its policies on equal opportunity and anti-harassment, and to promptly report to the appropriate the Company supervisors or officers any matters which require their attention.

KEY EMPLOYEE STATUS: You are regarded as a key employee under certain federal regulations governing family and medical leave. This status will require that you work closely with us in planning if you develop a need for family or medical leave.

NATURE OF EMPLOYMENT: As explained to you on the application for employment you submitted, the Company is an at-will employer. This means that your employment is not for a set amount of time; either you or the Company may terminate employment at any time, with or without cause.

BACKGROUND CHECK: The Company has a vital interest in maintaining safe, lawful and efficient working conditions for its employees. With this in mind, employment at the Company is contingent on your satisfactory completion of a background check.

ENTIRE AGREEMENT: This letter contains all of the terms of your employment with the Company, and supersedes any prior understandings or agreements, whether oral or in writing.

The Company reserves the right, subject to limitations and provisions of applicable law and regulations, to change, interpret, withdraw, or add to any of its policies, benefits, or terms and conditions of employment at its sole discretion, and without prior notice or consideration to any associate. The Company’s policies, benefits or terms and conditions of employment do not create a contract or make any promises of specific treatment.

We are pleased and proud to be adding your talents to a leadership team that is dedicated to making a difference in the communities we serve, creating fulfilling jobs and environments conducive to success, and providing the foundation for ongoing success of the Company.

Sincerely,

/s/ Gregory T. Mount

Gregory T. Mount

President and CEO

Red Lion Hotels Corporation

Accepted as of the date first set forth above:

/s/ Douglas L. Ludwig

Douglas L. Ludwig

EX-12.1

Exhibit 12.1

Statement of Computation of Ratios
	Year Ended December 31,														Year to Date
	2012			2013			2014		2015			2016			March 31, 2017
	(dollars in thousands)
Fixed charges:
Interest expense	$	7,553		$	5,416		$	4,450	$	6,044		$	5,598		$	1,661
Amortization of debt discount and related expenses	729			295			125		935			1,166			297
Estimate of interest within rental expense	1,812			1,717			1,968		2,450			1,885			525
Total fixed charges	$	10,094		$	7,428		$	6,543	$	9,429		$	8,649		$	2,483
Earnings available for fixed charges:
Income(loss) from continuing operations before taxes	$	(17,692	)	$	(15,834	)	$	2,559	$	4,156		$	(4,685	)	$	(4,956	)
Add: Fixed charges	10,094			7,428			6,543		9,429			8,649			2,483
Add: Amortization of capitalized interest	—			—			—		—			15			5
Add: Distributed income of equity investees	—			—			—		—			77			—
Less: Capitalized interest	—			—			—		(315		)	(362		)	—
Total earnings available for fixed charges	$	(7,598	)	$	(8,406	)	$	9,102	$	13,270		$	3,694		$	(2,468	)
Ratio of earnings to fixed charges(1)(2)	N/A			N/A			1.39		1.41			N/A			N/A
Deficit of earnings to fixed charges(2)	$	17,692		$	15,834		N/A		N/A			$	4,955		$	4,951
(1) For purposes of computing the ratio of earnings to fixed charges, earnings consist of income from continuing operations before income taxes plus equity in investments and less net income attributable to non-controlling interests. Fixed charges consist of interest, amortization of debt fees and that portion of rent deemed representative of interest. We have not included a ratio of earnings to combined fixed charges and preferred stock dividends because we do not have any preferred stock outstanding.
(2) In 2012, 2013 and 2016, we incurred losses from operations or our earnings were insufficient to cover our fixed charges. As a result, the ratio of earnings to fixed charges is not calculated for these periods as the ratio would be less than 1:1.

EX-31.1

Exhibit 31.1

RED LION HOTELS CORPORATION

CERTIFICATION PURSUANT TO EXCHANGE ACT RULE 13a-14(a)

I, Gregory T. Mount, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Red Lion Hotels Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and;

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 9, 2017

/s/ Gregory T. Mount

Gregory T. Mount

President and Chief Executive Officer

(Principal Executive Officer)

EX-31.2

Exhibit 31.2

RED LION HOTELS CORPORATION

CERTIFICATION PURSUANT TO EXCHANGE ACT RULE 13a-14(a)

I, Douglas L. Ludwig, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Red Lion Hotels Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and;

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 9, 2017

/s/ Douglas L. Ludwig

Douglas L. Ludwig

Executive Vice President and Chief Financial Officer

(Principal Financial Officer and Principal Accounting Officer)

EX-32.1

Exhibit 32.1

RED LION HOTELS CORPORATION

CERTIFICATION PURSUANT TO EXCHANGE ACT RULE 13a-14(b)

In connection with the quarterly report of Red Lion Hotels Corporation (the “Company”) on Form 10-Q for the period ended March 31, 2017, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Gregory T. Mount, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

May 9, 2017

/s/ Gregory T. Mount

Gregory T. Mount

President and Chief Executive Officer

(Principal Executive Officer)

EX-32.2

Exhibit 32.2

RED LION HOTELS CORPORATION

CERTIFICATION PURSUANT TO EXCHANGE ACT RULE 13a-14(b)

In connection with the quarterly report of Red Lion Hotels Corporation (the “Company”) on Form 10-Q for the period ended March 31, 2017, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Douglas L. Ludwig, Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

May 9, 2017

/s/ Douglas L. Ludwig

Douglas L. Ludwig

Executive Vice President and Chief Financial Officer

(Principal Financial Officer and Principal Accounting Officer)

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2017	Apr. 30, 2017
Document and Entity Information [Abstract]
Entity Registrant Name	Red Lion Hotels CORP
Entity Central Index Key	0001052595
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Document Type	10-Q
Document Period End Date	Mar. 31, 2017
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q1
Amendment Flag	false
Entity Common Stock, Shares Outstanding		23,541,642

XML

Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Current assets:
Cash and cash equivalents ($7,116 and $5,134 attributable to VIEs)	$ 31,689	$ 38,072
Restricted cash ($10,373 and $9,211 attributable to VIEs)	10,699	9,537
Accounts receivable, net ($3,991 and $2,811 attributable to VIEs)	13,299	10,852
Accounts receivable from related parties	2,194	1,865
Notes receivable, net	1,285	1,295
Inventories ($450 and $447 attributable to VIEs)	647	647
Prepaid expenses and other ($985 and $1,008 attributable to VIEs)	5,508	4,491
Total current assets	65,321	66,759
Property and equipment, net ($177,283 and $179,609 attributable to VIEs)	207,928	210,732
Goodwill	12,566	12,566
Intangible assets	52,336	52,854
Other assets, net ($61 and $64 attributable to VIEs)	1,851	1,624
Total assets	340,002	344,535
Current liabilities:
Accounts payable ($2,019 and $3,886 attributable to VIEs)	6,782	8,682
Accrued payroll and related benefits ($81 and $175 attributable to VIEs)	3,914	4,800
Other accrued entertainment liabilities	11,161	11,334
Other accrued liabilities ($2,579 and $1,656 attributable to VIEs)	5,444	4,336
Long-term debt, due within one year ($1,599 and $1,469 attributable to VIEs)	1,599	1,469
Contingent consideration for acquisition due to related party, due within one year	6,630	6,768
Total current liabilities	35,530	37,389
Long-term debt, due after one year, net of debt issuance costs ($108,930 and $106,862 attributable to VIEs)	108,930	106,862
Contingent consideration for acquisition due to related party, due after one year	4,336	4,432
Deferred income and other long-term liabilities ($780 and $841 attributable to VIEs)	2,116	2,293
Deferred income taxes	5,829	5,716
Total liabilities	156,741	156,692
Commitments and contingencies
RLHC stockholders' equity:
Preferred stock - 5,000,000 shares authorized; $0.01 par value; no shares issued or outstanding	0	0
Common stock - 50,000,000 shares authorized; $0.01 par value; 23,525,123 and 23,434,480 shares issued and outstanding	235	234
Additional paid-in capital, common stock	171,629	171,089
Accumulated deficit	(19,591)	(15,987)
Total RLHC stockholders' equity	152,273	155,336
Noncontrolling interest	30,988	32,507
Total stockholders' equity	183,261	187,843
Total liabilities and stockholders’ equity	$ 340,002	$ 344,535

XML

Consolidated Balance Sheets (Unaudited) (Unaudited) (Parenthetical) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Cash and cash equivalents	$ 31,689	$ 38,072
Restricted cash	10,699	9,537
Accounts receivable, net	13,299	10,852
Inventories	647	647
Prepaid expenses and other assets	5,508	4,491
Property and equipment, net	207,928	210,732
Other assets, net	1,851	1,624
Accounts payable	6,782	8,682
Accrued payroll and related benefits	3,914	4,800
Other accrued expenses	5,444	4,336
Long-term debt, due within one year	1,599	1,469
Long-term debt, due after one year, net of debt issuance costs	108,930	106,862
Deferred income and other long-term liabilities	$ 2,116	$ 2,293
RLHC stockholders' equity:
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized (in shares)	5,000,000	5,000,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	50,000,000	50,000,000
Common stock, shares issued (in shares)	23,525,123	23,434,480
Common stock, shares outstanding (in shares)	23,525,123	23,434,480
Variable Interest Entity, Primary Beneficiary
Cash and cash equivalents	$ 7,116	$ 5,134
Restricted cash	10,373	9,211
Accounts receivable, net	3,991	2,811
Inventories	450	447
Prepaid expenses and other assets	985	1,008
Property and equipment, net	177,283	179,609
Other assets, net	61	64
Accounts payable	2,019	3,886
Accrued payroll and related benefits	81	175
Other accrued expenses	2,579	1,656
Long-term debt, due within one year	1,599	1,469
Long-term debt, due after one year, net of debt issuance costs	108,930	106,862
Deferred income and other long-term liabilities	$ 780	$ 841

XML

Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Revenue:
Company operated hotels	$ 24,696	$ 24,149
Other revenues from managed properties	926	1,185
Franchised hotels	10,904	3,296
Entertainment	3,379	4,031
Other	55	13
Total revenues	39,960	32,674
Operating expenses:
Company operated hotels	21,478	21,599
Other costs from managed properties	926	1,185
Franchised hotels	8,532	3,356
Entertainment	3,084	3,437
Other	4	13
Depreciation and amortization	4,543	3,502
Hotel facility and land lease	1,201	1,161
Gain on asset dispositions, net	(119)	(117)
General and administrative expenses	3,659	3,057
Acquisition and integration costs	(175)	0
Total operating expenses	43,133	37,193
Operating income (loss)	(3,173)	(4,519)
Other income (expense):
Interest expense	(1,958)	(1,461)
Other income, net	175	219
Total other income (expense)	(1,783)	(1,242)
Loss from operations before taxes	(4,956)	(5,761)
Income tax expense	167	59
Net loss	(5,123)	(5,820)
Net (income) loss attributable to noncontrolling interest	1,519	1,021
Net loss attributable to RLHC	$ (3,604)	$ (4,799)
Earnings (loss) per share - basic (in dollars per share)	$ (0.15)	$ (0.24)
Earnings (loss) per share - diluted (in dollars per share)	$ (0.18)	$ (0.24)
Weighted average shares - basic (in shares)	23,469	20,088
Weighted average shares - diluted (in shares)	24,159	20,088

XML

Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Operating activities:
Net loss	$ (5,123)	$ (5,820)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	4,543	3,502
Amortization of debt issuance costs	297	302
Gain on disposition of property, equipment and other assets, net	(119)	(117)
Deferred income taxes	113	34
Equity in investments	0	(170)
Stock based compensation expense	696	608
Provision for doubtful accounts	235	99
Fair value adjustments to contingent consideration	(234)	0
Change in current assets and liabilities:
Accounts receivable	(3,011)	(1,432)
Notes receivable	(36)	(22)
Inventories	0	79
Prepaid expenses and other	(1,247)	(600)
Accounts payable	(78)	(3,367)
Other accrued liabilities	(9)	496
Net cash used in operating activities	(3,973)	(6,408)
Investing activities:
Capital expenditures	(3,043)	(5,180)
Collection of notes receivable related to property sales	200	18
Advances on notes receivable	(154)	(329)
Proceeds from sales of short-term investments	0	365
Other, net	0	78
Net cash used in investing activities	(2,997)	(5,048)
Financing activities:
Borrowings on long-term debt	2,232	7,993
Repayment of long-term debt	(306)	0
Debt issuance costs	(22)	(34)
Proceeds from sale of interests in joint ventures	0	1,500
Reduction of additional paid in capital for repurchased restricted stock units	(224)	(161)
Other, net	69	77
Net cash provided by financing activities	1,749	9,375
Change in cash, cash equivalents and restricted cash:
Net decrease in cash, cash equivalents and restricted cash	(5,221)	(2,081)
Cash, cash equivalents and restricted cash at beginning of period	47,609	35,202
Cash, cash equivalents and restricted cash at end of period	42,388	33,121
Cash paid during periods for:
Income taxes	6	14
Interest on debt	1,155	1,298
Non-cash investing and financing activities:
Property and equipment, purchases not yet paid	417	1,757
Reclassification of long-term note receivable to short-term	0	2
Reclassification of long-term debt to current	$ 130	$ 0

XML

Organization

3 Months Ended

Mar. 31, 2017

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization

Organization

Red Lion Hotels Corporation ("RLHC", "we", "our", "us" or "our company") is a NYSE-listed hospitality and leisure company (ticker symbol: RLH) primarily engaged in the management, franchising and ownership of hotels under the following proprietary brands:

Ÿ Hotel RL	Ÿ America's Best Inn & Suites
Ÿ Red Lion Hotels	Ÿ Signature Inn
Ÿ Red Lion Inn & Suites	Ÿ Jameson Inns
Ÿ GuestHouse	Ÿ Country Hearth Inns & Suites
Ÿ Settle Inn	Ÿ Value Inn Worldwide
Ÿ Americas Best Value Inn	Ÿ Value Hotel Worldwide
Ÿ Canadas Best Value Inn	Ÿ 3 Palm Hotels
Ÿ Lexington Hotels & Inns

A summary of our hotels and available rooms as of March 31, 2017 is provided below:

	Company Operated		Franchised		Total Systemwide
	Hotels	Total Available Rooms	Hotels	Total Available Rooms	Hotels	Total Available Rooms
Total	20	4,200	1,123	69,200	1,143	73,400

We are also engaged in entertainment operations, which derive revenues from promotion and presentation of entertainment productions and ticketing services under the operations of WestCoast Entertainment and TicketsWest. The ticketing service offers online ticket sales, ticketing inventory management systems, call center services, and outlet/electronic distributions for event locations.

We were incorporated in the state of Washington in April 1978.

We are authorized to issue 50 million shares of common stock, par value $0.01 per share, and five million shares of preferred stock, par value $0.01 per share. As of March 31, 2017, there were 23,525,123 shares of common stock issued and outstanding and no shares of preferred stock issued and outstanding. The board of directors has the authority, without action by the shareholders, to designate and issue preferred stock in one or more series and to designate the rights, preferences and privileges of each series, which may be greater than the rights of the common stock.

Each holder of common stock is entitled to one vote for each share held on all matters to be voted upon by the shareholders with no cumulative voting rights. Holders of common stock are entitled to receive ratably the dividends, if any, which are declared from time to time by the board of directors out of funds legally available for that purpose. The rights, preferences and privileges of the holders of common stock are subject to, and may be adversely affected by, the rights of the holders of shares of any series of preferred stock that we may designate in the future.

XML

Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2017

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

The unaudited consolidated financial statements included herein have been prepared by us pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") and in accordance with generally accepted accounting principles in the United States of America ("GAAP"). Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted as permitted by such rules and regulations.

The consolidated balance sheet as of December 31, 2016 has been compiled from the audited balance sheet as of such date. We believe the disclosures included herein are adequate; however, they should be read in conjunction with the consolidated financial statements and the notes thereto for the year ended December 31, 2016, filed with the SEC in our Annual Report on Form 10-K on March 31, 2017.

In the opinion of management, these unaudited condensed consolidated financial statements contain all of the adjustments of a normal and recurring nature necessary to present fairly our Consolidated Balance Sheet at March 31, 2017, the Consolidated Statements of Operations for the three months endedMarch 31, 2017 and 2016, and the Consolidated Statements of Cash Flows for the three months ended March 31, 2017 and 2016. The results of operations for the periods presented may not be indicative of that which may be expected for a full year or for any other fiscal period.

Comprehensive income (loss) is the same as net income (loss) for all periods presented. Therefore, a separate statement of comprehensive income (loss) is not included in the accompanying consolidated financial statements.

Principles of Consolidation

The financial statements encompass the accounts of RLHC and all of its consolidated subsidiaries, including:

Wholly-owned subsidiaries:

• Red Lion Hotels Holdings, Inc.

• Red Lion Hotels Franchising, Inc.

• Red Lion Hotels Canada Franchising, Inc.

• Red Lion Hotels Management, Inc. ("RL Management")

• Red Lion Hotels Limited Partnership

• TicketsWest.com, Inc.

Joint venture entities:

• RL Venture LLC ("RL Venture") in which we hold a 55% member interest

• RLS Atla Venture LLC ("RLS Atla Venture") in which we hold a 55% member interest

• RLS Balt Venture LLC ("RLS Balt Venture") in which we hold a 73% member interest

• RLS DC Venture LLC ("RLS DC Venture") in which we hold a 55% member interest

All inter-company and inter-segment transactions and accounts have been eliminated upon consolidation.

Cash and Cash Equivalents

All highly liquid investments purchased with an original maturity of three months or less are considered to be cash equivalents. At times, cash balances at banks and other financial institutions may be in excess of federal insurance limits.

Restricted Cash

In accordance with our various borrowing arrangements, at March 31, 2017 and December 31, 2016 cash of $10.7 million and $9.5 million, respectively, was held primarily as reserves for debt service (interest only), property improvements, and other requirements from the lenders.

In our Consolidated Statements of Cash Flows for the three months ended March 31, 2017 and 2016, we include restricted cash with cash and cash equivalents when reconciling the beginning and ending balances for each period. The balances included in the Consolidated Statements of Cash Flows for the periods ended are as follows (in thousands):

	Three Months Ended March 31,
	2017		2016
Cash and cash equivalents	$	31,689	$	18,852
Restricted cash	10,699		14,269
Cash, cash equivalents and restricted cash	$	42,388	$	33,121

Allowance for Doubtful Accounts

The ability to collect individual accounts receivable is reviewed on a routine basis. An allowance for doubtful accounts is recorded based on specifically identified amounts believed to be uncollectible. If actual collection experience changes, revisions to the allowance may be required, and, if all attempts to collect a receivable fail, it is recorded against the allowance. The estimate of the allowance for doubtful accounts may be impacted by, among other things, national and regional economic conditions. Acquired accounts receivable from business acquisitions are recorded at fair value, based on amounts expected to be collected. Therefore no allowance for doubtful accounts related to these accounts is recorded at the acquisition date.

The following schedule summarizes the activity in the allowance account for trade accounts receivable (in thousands):

	2017		2016
Allowance for doubtful accounts
Balance, January 1	$	944	$	657
Additions to allowance	217		99
Write-offs, net of recoveries	28		(2		)
Balance, March 31	$	1,189	$	754

Accounts Receivable from Related Parties

Amounts receivable from related parties relate to outstanding amounts billed to the owners of hotels we manage for reimbursement of costs of the operations of those hotels. We have a related party relationship with these owners, and there is no allowance for doubtful accounts associated with these receivables.

Inventories

Inventories consist primarily of food and beverage products held for sale at the company operated restaurants and guest supplies. Inventories are valued at the lower of cost, determined on a first-in, first-out basis, or net realizable value.

Prepaid and other expenses

Prepaid and other expenses include prepaid insurance, prepaid taxes, deposits, advertising costs and prepaid costs related to our brand conferences.

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation. The cost of improvements that extend the life of property and equipment is capitalized. Repairs and maintenance charges are expensed as incurred.

Depreciation is provided using the straight-line method over the estimated useful life of each asset, which ranges as follows:

Buildings	25 to 39 years
Equipment	2 to 15 years
Furniture and fixtures	2 to 15 years
Landscaping and improvements	15 years

Leasehold improvements are capitalized and depreciated over the term of the applicable lease, including renewable periods if reasonably assured, or over the useful lives, whichever is shorter.

Valuation of Long-Lived Assets

We test long-lived asset groups for recoverability when changes in circumstances indicate the carrying value may not be recoverable, for example, when there are material adverse changes in projected revenues or expenses, significant underperformance relative to historical or projected operating results, or significant negative industry or economic trends. We also perform a test for recoverability when management has committed to a plan to sell or otherwise dispose of an asset group. We evaluate recoverability of an asset group by comparing its carrying value to the future net undiscounted cash flows that we expect will be generated by the asset group. If the comparison indicates that the carrying value of an asset group is not recoverable, we recognize an impairment loss for the excess of carrying value over the estimated fair value. When we recognize an impairment loss for assets to be held and used, we depreciate the adjusted carrying amount of those assets over their remaining useful life.

We base our calculations of the estimated fair value of an asset group on the income approach or the market approach. The assumptions and methodology utilized for the income approach are the same as those described in the "Goodwill and Intangible Assets" caption. For the market approach, we use analyses based primarily on market comparables, recent appraisals and assumptions about market capitalization rates, growth rates, and inflation.

Variable Interest Entities

We analyze the investments we make in joint venture entities based on the accounting guidance for variable interest entities ("VIEs"). These joint ventures are evaluated to determine whether (1) sufficient equity at risk exists for the legal entity to finance its activities without additional subordinated financial support or, (2) as a group, the holders of the equity investment at risk lack one of the following characteristics (a) the power, through voting or similar rights, to direct the activities of the legal entity that most significantly impact the entity’s economic performance or, (b) the obligation to absorb the expected losses of the legal entity or (c) the right to receive expected residual returns of the legal entity, or (3) the voting rights of some equity investors are not proportional to their obligations to absorb the losses or the right to receive benefits and substantially all of the activities either involve or are conducted on behalf of an investor with disproportionately few voting rights. If any one of the above three conditions are met then the joint venture entities are considered to be VIEs.

We consolidate the results of any such VIE in which we determine that we have a controlling financial interest. We would have a “controlling financial interest” (i.e., be deemed the primary beneficiary) in such an entity if we had both the power to direct the activities that most significantly affect the VIE’s economic performance and the obligation to absorb the losses of, or right to receive the benefits from, the VIE that could be potentially significant to the VIE.

Business Combinations

On the date of acquisition, the assets acquired, liabilities assumed, and any noncontrolling interests in the acquiree are recorded at their fair values. The acquiree's results of operations are also included as of the date of acquisition in our consolidated results. Intangible assets that arise from contractual/legal rights, or are capable of being separated are measured and recorded at fair value, and amortized over the estimated useful life. If practicable, assets acquired and liabilities assumed arising from contingencies are measured and recorded at fair value. If not practicable, such assets and liabilities are measured and recorded when it is probable that a gain or loss has occurred and the amount can be reasonably estimated. The residual balance of the purchase price, after fair value allocations to all identified assets and liabilities, represents goodwill. Acquisition-related costs are expensed as incurred. Restructuring costs associated with an acquisition are generally expensed in periods subsequent to the acquisition date, and changes in deferred tax asset valuation allowances and acquired income tax uncertainties, including penalties and interest, after the measurement period are recognized as a component of the provision for income taxes. Our acquisitions may include contingent consideration, which require us to recognize the fair value of the estimated liability at the time of the acquisition. Subsequent changes in the estimate of the amount to be paid under the contingent consideration arrangement are recognized in the Consolidated Statements of Operations. Cash payments for contingent or deferred consideration up to the amount of liability recognized on the acquisition date are classified within cash flows from financing activities within the Consolidated Statements of Cash Flows and any excess is classified as cash flows from operating activities.

Goodwill and Intangible Assets

Goodwill and intangible assets may result from our business acquisitions. Intangible assets may also result from the purchase of assets and intellectual property in a transaction that does not qualify as a business combination. We use estimates, including estimates of useful lives of intangible assets, the amount and timing of related future cash flows, and fair values of the related operations, in determining the value assigned to goodwill and intangible assets. Our finite-lived intangible assets, which include customer contracts and certain brand names that we do not expect to maintain indefinitely, are amortized over their expected useful lives based on estimated discounted cash flows. The remaining brand name and trademark assets are considered indefinite-lived intangible assets and are not subject to amortization. Finite-lived intangible assets are tested for impairment at the asset group level when events or changes in circumstances indicate the carrying value may not be recoverable. Indefinite-lived intangible assets are tested for impairment annually, when events or changes in circumstances indicate the asset may be impaired, or at the time when their useful lives are determined to be no longer indefinite.

Goodwill is assigned to our reporting units based on the expected benefit from the synergies arising from each business combination, determined by using certain financial metrics, including the forecast discounted cash flows associated with each reporting unit. The reporting units are aligned with our reporting segments.

We test goodwill for impairment each year as of October 1, or more frequently should a significant impairment indicator occur. As part of the impairment test, we may elect to perform an assessment of qualitative factors. If this qualitative assessment indicates that it is more likely than not that the fair value of a reporting unit, including goodwill, is less than its carrying amount, or if we elect to bypass the qualitative assessment, we would then proceed with the two-step impairment test. The impairment test involves comparing the fair values of the reporting units to their carrying amounts. If the carrying amount of a reporting unit exceeds its fair value, a second step is required to measure the goodwill impairment loss amount. This second step determines the current fair values of all assets and liabilities of the reporting unit and then compares the implied fair value of the reporting unit's goodwill to the carrying amount of that goodwill. If the carrying amount of the reporting unit's goodwill exceeds the implied fair value of the goodwill, an impairment loss is recognized in an amount equal to the excess.

In assessing the qualitative factors, we assess relevant events and circumstances that may impact the fair value and the carrying amount of the reporting unit. The identification of relevant events and circumstances, and how these may impact a reporting unit's fair value or carrying amount, involves significant judgments and assumptions. The judgment and assumptions include the identification of macroeconomic conditions, industry and market considerations, cost factors, overall financial performance, RLHC-specific events, and share price trends, and making the assessment as to whether each relevant factor would impact the impairment test positively or negatively and the magnitude of any such impact.

Determining the fair value of a reporting unit is judgmental in nature and involves the use of significant estimates and assumptions. We forecast discounted future cash flows at the reporting unit level using risk-adjusted discount rates and estimated future revenues and operating costs, which take into consideration factors, such as expectations of competitive and economic environments. We also identify similar publicly traded companies and develop a correlation, referred to as a multiple, to apply to the operating results of the reporting units. These combined fair values are then reconciled to the aggregate market value of our common stock on the date of valuation, while considering a reasonable control premium.

Notes Receivable

We carry notes receivable at their estimated collection amount, and they are classified as either current or long-term depending on the expected collection date. Interest income on notes receivable is recognized using the interest method.

Other Assets

Other assets primarily consist of key money arrangements with certain of our franchisees and IT system implementation and license costs, for both our franchisees and our company operated hotels. We recognize key money paid in conjunction with entering into long-term franchise agreements as prepaid expenses and amortize the amount paid as a reduction of revenue over the term of the franchise agreements. IT system implementation and license costs represent costs incurred to implement and operate RevPak, our proprietary guest management system application and are amortized over the initial term of the software license arrangement or the current license period, as applicable.

Fair Value Measurements

Applicable accounting standards define fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). We measure our assets and liabilities using inputs from the following three levels of the fair value hierarchy:

• Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities that we have the ability to access at the measurement date.

• Level 2 inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (i.e., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs).

• Level 3 includes unobservable inputs that reflect assumptions about what factors market participants would use in pricing the asset or liability. We develop these inputs based on the best information available, including our own data.

Deferred Income

In 2003, we sold a hotel to an unrelated party in a sale-operating leaseback transaction. The pre-tax gain on the transaction of approximately $7.0 million was deferred and is being amortized into income over the period of the lease term, which expires in November 2018 and is renewable for three, five-year terms at our option. During the three months ended March 31, 2017 and 2016, we recognized income of approximately $0.1 million each period for the amortization of the deferred gain. The remaining balances at March 31, 2017 and December 31, 2016 were $0.7 million and $0.9 million.

Income Taxes

We account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined on the basis of the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

We recognize deferred tax assets to the extent that we believe these assets are more likely than not to be realized. In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning, and results of recent operations. At March 31, 2017 and December 31, 2016, a valuation allowance has been recorded to reduce our deferred tax assets to an amount that is more likely than not to be realized. If we determine that we would be able to realize our deferred tax assets in the future in excess of their net recorded amount, we would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes.

We classify any interest expense and penalties related to underpayment of taxes and any interest income on tax overpayments as components of income tax expense.

We record uncertain tax positions in accordance with Accounting Standards Codification ("ASC") 740 on the basis of a two-step process whereby (1) we determine whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, we recognize the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority. See Note 13.

Revenue Recognition

Revenue is generally recognized as services are provided. When payments from customers are received before services have been performed, the amount received is recorded as deferred revenue until the service has been completed. We recognize revenue from the following sources:

• Company Operated Hotels - Room rental and food and beverage sales from majority owned and leased hotels and management fees from hotels under management contract. Revenues are recognized when services have been performed, generally at the time of the hotel stay or guest's visit to the restaurant or at the time the management services are provided. We recognize other revenue and costs from managed properties when we incur the related reimbursable costs. These costs primarily consist of payroll and related expenses at managed properties where we are the employer. As these costs have no added markup, the revenue and related expense have no impact on either our operating or net income.

• Franchised Hotels - Fees received in connection with the franchise and marketing of our brand names. Franchise revenues are recognized as earned in accordance with the contractual terms of the franchise agreements.

• Entertainment - Online ticketing services, ticketing inventory management systems, promotion of Broadway-style shows and other special events. Where we act as an agent and receive a net fee or commission, revenue is recognized in the period the services are performed. When we are the promoter of an event and are at-risk for the production, revenues and expenses are recorded in the period of the event performance.

Advertising and Promotion

Costs associated with advertising and promotional efforts are generally expensed as incurred. During the three months ended March 31, 2017 and 2016 we incurred approximately $1.1 million and $1.4 million, respectively in advertising expense.

Basic and Diluted Earnings (Loss) Per Share

Basic earnings (loss) per share attributable to RLHC is computed by dividing income (loss) attributable to RLHC by the weighted‑average number of shares outstanding during the period. Diluted earnings (loss) per share attributable to RLHC gives effect to all dilutive potential shares that are outstanding during the period and include outstanding stock options, other outstanding employee equity grants, warrants and amounts contingently issuable in association with the Vantage acquisition contingent consideration, by increasing the weighted-average number of shares outstanding by their effect. See Note 12.

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could materially differ from those estimates.

Reclassifications

Effective for the year ended December 31, 2016, we early adopted Accounting Standards Update ("ASU") 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. We have revised the Consolidated Statement of Cash Flows for the three months endedMarch 31, 2016 to reflect the adoption of this new standard. For a discussion of the new guidance and the impact of the adoption on our consolidated financial statements, refer to the discussion below in New and Recent Accounting Pronouncements.

New and Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board ("FASB") issued ASU 2014-09, Revenue from Contracts with Customers, which is a comprehensive new revenue recognition model requiring a company to recognize revenue to depict the transfer of goods or services to a customer at an amount reflecting the consideration it expects to receive in exchange for those goods or services. ASU 2014-09 may be applied using either a full retrospective or a modified retrospective approach and is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. Upon adoption our financial statements will include expanded disclosures related to contracts with customers. We are continuing our assessment of other impacts on our financial statements at this time.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The new standard establishes a right-of-use (ROU) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. We had $84.2 million of operating lease obligations as of March 31, 2017 (see Note 9) and upon the adoption of the standard will record an ROU asset and lease liability for present value of these leases, which will have a material impact on the balance sheet. However, the statement of comprehensive income (loss) recognition of lease expenses is not expected to change from the current methodology.

In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The ASU is designed to improve the accounting for share-based payments and affects all organizations that issue share-based payment awards to their employees. Several aspects of the accounting for share-based payment awards are simplified with this ASU, including income tax consequences, classification of awards as equity or liabilities and classification on the statement of cash flows. ASU 2016-09 is effective for public business entities for annual periods beginning after December 15, 2016, and interim periods within those fiscal years. We adopted ASU 2016-09 effective January 1, 2017, and the adoption of ASU 2016-09 did not have a material impact on our financial condition, results of operations or cash flows.

The FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments to address diversity in practice for eight specific topics: (1) debt prepayment or debt extinguishment costs; (2) settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing; (3) contingent consideration payments made after a business combination; (4) proceeds from the settlement of insurance claims; (5) proceeds from the settlement of corporate-owned life insurance policies (including bank-owned life insurance policies); (6) distributions received from equity method investees; (7) beneficial interests in securitization transactions; and (8) separately identifiable cash flows and application of the predominance principle. This guidance is effective for us beginning January 1, 2018. As this ASU is clarifying only presentation matters within the statement of cash flows, we do not expect it to have a material impact on our consolidated financial statements.

The FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash to require that restricted cash and restricted cash equivalents be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total cash amounts shown on the statement of cash flows. Consequently, transfers between cash and restricted cash will not be presented as a separate line item in the operating, investing or financing sections of the cash flow statement. We early adopted this standard, as permitted, effective for the year ended December 31, 2016. We have revised the Consolidated Statement of Cash Flows for the three months ended March 31, 2016 to reflect the adoption of this standard. As the result, the total change in cash flows for the first quarter of 2016 was a decrease of $3.0 million of cash outflows, of which $2.4 million was for operating activities, and $0.6 million was for investing activities. The change was the result of the $3.0 million net transfer of cash to restricted cash as part of our joint venture debt arrangements.

In January 2017, the FASB issued ASU 2017-01, Clarifying the Definition of a Business (ASU 2017-01), which narrows the definition of a business and provides a framework that gives entities a basis for making reasonable judgments about whether a transaction involves an asset or a business. ASU 2017-01 states that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or group of similar identifiable assets, the set is not a business. If this initial test is not met, a set cannot be considered a business unless it includes an input and a substantive process that together significantly contribute to the ability to create output. ASU 2017-01 is effective for fiscal years beginning after December 15, 2019 with early adoption permitted. We do not expect the adoption of this standard to have a material impact on our consolidated results of operations, financial position, cash flows, and related financial statement disclosures.

In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment (ASU 2017-04), which simplifies the measurement of goodwill impairment by removing step two of the goodwill impairment test that requires the determination of the fair value of individual assets and liabilities of a reporting unit. ASU 2017-04 requires goodwill impairment to be measured as the amount by which a reporting unit’s carrying value exceeds its fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. ASU 2017-04 is effective for fiscal years beginning after December 15, 2019 with early adoption permitted for interim or annual goodwill impairment tests performed after January 1, 2017. Upon adoption, we will follow the guidance in this standard for goodwill impairment testing.

In February 2017, the FASB issued ASU No. 2017-05, Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets.  The amendments clarify that a financial asset is within the scope of Subtopic 610-20 if it meets the definition of an in substance nonfinancial asset. The amendments also define the term in substance nonfinancial asset. The amendments clarify that nonfinancial assets within the scope of Subtopic 610-20 may include nonfinancial assets transferred within a legal entity to a counterparty. For example, a parent may transfer control of nonfinancial assets by transferring ownership interests in a consolidated subsidiary. A contract that includes the transfer of ownership interests in one or more consolidated subsidiaries is within the scope of Subtopic 610-20 if substantially all of the fair value of the assets that are promised to the counterparty in a contract is concentrated in nonfinancial assets. The amendments clarify that an entity should identify each distinct nonfinancial asset or in substance nonfinancial asset promised to a counterparty and derecognize each asset when a counterparty obtains control of it. The guidance is effective for us as of January 1, 2018 in conjunction with our adoption of ASU 2014-09. Entities may use either a full or modified approach to adopt the ASU. We are assessing the impact of the adoption of this new guidance on our financial statements.

We have assessed the potential impact of other recently issued, but not yet effective, accounting standards and determined that the provisions are either not applicable to us or are not anticipated to have a material impact on our consolidated financial statements.

XML

Business Segments

3 Months Ended

Mar. 31, 2017

Segment Reporting [Abstract]

Business Segments

Business Segments

We have three operating segments: company operated hotels, franchised hotels and entertainment. The "other" segment consists of miscellaneous revenues and expenses, cash and cash equivalents, certain receivables, certain property and equipment and general and administrative expenses, which are not specifically associated with an operating segment. Management reviews and evaluates the operating segments exclusive of interest expense, income taxes and certain corporate expenses; therefore, they have not been allocated to the operating segments. All balances have been presented after the elimination of inter-segment and intra-segment revenues and expenses.

Selected financial information is provided below (in thousands):

Three Months Ended March 31, 2017	Company Operated Hotels			Franchised Hotels			Entertainment		Other			Total
Revenue	$	25,622		$	10,904		$	3,379	$	55		$	39,960
Operating expenses:
Segment operating expenses	22,404			8,532			3,084		4			34,024
Depreciation and amortization	3,667			558			33		285			4,543
Other operating expenses, acquisition costs and gains on asset dispositions	1,084			(276		)	—		3,758			4,566
Operating income (loss)	$	(1,533	)	$	2,090		$	262	$	(3,992	)	$	(3,173	)
Capital expenditures	$	541		$	369		$	59	$	254		$	1,223
Identifiable assets as of March 31, 2017	$	248,353		$	68,813		$	4,893	$	17,943		$	340,002

Three Months Ended March 31, 2016	Company Operated Hotels			Franchised Hotels			Entertainment		Other			Total
Revenue	$	25,334		$	3,296		$	4,031	$	13		$	32,674
Operating expenses:
Segment operating expenses	22,784			3,356			3,437		13			29,590
Depreciation and amortization	3,319			(86		)	54		215			3,502
Other operating expenses and gains on asset dispositions	1,045			—			—		3,056			4,101
Operating income (loss)	$	(1,814	)	$	26		$	540	$	(3,271	)	$	(4,519	)
Capital expenditures	$	6,580		$	—		$	—	$	107		$	6,687
Identifiable assets as of December 31, 2016	$	260,583		$	66,601		$	5,580	$	11,771		$	344,535

XML

Variable Interest Entities

3 Months Ended

Mar. 31, 2017

Variable Interest Entities [Abstract]

Variable Interest Entities

Variable Interest Entities

Our joint venture entities have been determined to be variable interest entities ("VIEs"), and RLHC has been determined to be the primary beneficiary of each VIE. Therefore, we consolidate the assets, liabilities, and results of operations of (1) RL Venture, (2) RLS Balt Venture, (3) RLS Atla Venture and (4) RLS DC Venture. See Note 2 for discussion of the significant judgments and assumptions made by us in determining whether an entity is a VIE and if we are the primary beneficiary and therefore must consolidate the VIE. See Note 7 for further discussion of the terms of the long-term debt at each of the joint venture entities.

RL Venture

In January 2015, we transferred 12 of our wholly-owned hotels into RL Venture, a newly created entity that was initially wholly-owned by us, and immediately sold a 45% ownership stake in RL Venture to Shelbourne Falcon RLHC Hotel Investors LLC ("Shelbourne Falcon"), an entity that is led by Shelbourne Capital LLC ("Shelbourne"). Subsequently we disposed of one hotel, leaving 11 properties owned by RL Venture. We maintain a 55% interest in RL Venture, and the 11 hotels are managed by RL Management, one of our wholly-owned subsidiaries, subject to a management agreement. RL Venture is considered a variable interest entity because our voting rights are not proportional to our financial interest and substantially all of RL Venture's activities involve and are conducted on our behalf. We have determined that we are the primary beneficiary as (a) we exert power over two of the entity's key activities (hotel operations and property renovations) and share power over the remaining key activities with Shelbourne Falcon, which does not have the unilateral ability to exercise kick-out rights, and (b) we have the obligation to absorb losses and right to receive benefits that could be significant to the entity through our 55% equity interest and management fees. As a result, we consolidate RL Venture. The equity interest owned by Shelbourne Falcon is reflected as a noncontrolling interest in the consolidated financial statements.

Cash distributions may be made periodically based on calculated distributable income. There were no cash distributions made during the three months endedMarch 31, 2017 or 2016.

Subsequent to the three months endedMarch 31, 2017, RL Venture made a cash distribution totaling $1.5 million, of which RLHC

received $0.8 million.

RLS Balt Venture

In April 2015, we sold a 21% member interest in our wholly-owned RLS Balt Venture to Shelbourne Falcon Charm City Investors LLC ("Shelbourne Falcon II"), an entity led by Shelbourne. Shelbourne Falcon II had an option exercisable until December 31, 2015 to purchase up to an additional 24% member interest for $2.3 million. In December 2015, Shelbourne Falcon II elected to purchase additional member interests of 6% based on an aggregate purchase price of $560,000. With the sale of additional member interest without a corresponding change in control, $0.1 million was recognized as an increase in RLHC's additional paid in capital. RL Baltimore, LLC ("RL Baltimore"), which is wholly-owned by RLS Balt Venture, owns the Hotel RL Baltimore Inner Harbor, which is managed by RL Management. RLS Balt Venture is considered a variable interest entity because our voting rights are not proportional to our financial interest and substantially all of RLS Balt Venture's activities involve and are conducted on our behalf. We have determined that we are the primary beneficiary as (a) we exert power over the entity's key activities (hotel operations and property renovations) and share power over the remaining key activities with Shelbourne Falcon II, which does not have the unilateral ability to exercise kick-out rights, and (b) we have the obligation to absorb losses and right to receive benefits that could be significant to the entity through our 73% equity interest and management fees. As a result, we consolidate RLS Balt Venture. The equity interest owned by Shelbourne Falcon II is reflected as a noncontrolling interest in the consolidated financial statements.

In October 2015, RLHC provided $1.5 million to RLS Balt Venture to fund renovation costs and for operating losses. This funding was not treated as a loan or as a capital contribution. Rather, it is preferred capital of RLS Balt Venture and will be repaid only when the Baltimore hotel property is sold or when RLS Balt Venture is liquidated. Upon such an event, RLHC will receive the $1.5 million plus a preferred return of 11%, compounded annually, prior to any liquidation proceeds being returned to the members.

In May 2017, RLHC provided $2.8 million to RLS Balt Venture to fund operating losses. This funding was not treated as a loan or as a capital contribution. Rather, it is preferred capital of RLS Balt Venture and will be repaid only when the Baltimore hotel property is sold or when RLS Balt Venture is liquidated. Upon such an event, RLHC will receive the $2.8 million plus a preferred return of 9%, compounded annually, prior to any liquidation proceeds being returned to the members.

Cash distributions may be made periodically based on calculated distributable income. There were no cash distributions made during the three months endedMarch 31, 2017 or 2016.

RLS Atla Venture

In September 2015, we formed a joint venture, RLS Atla Venture, with Shelbourne Falcon Big Peach Investors LLC ("Shelbourne Falcon III"), an entity led by Shelbourne. We own a 55% interest in the joint venture and Shelbourne Falcon III owns a 45% interest. RLH Atlanta LLC ("RLH Atlanta"), which is wholly-owned by RLS Atla Venture, owns a hotel adjacent to the Atlanta International Airport that opened in April 2016 as the Red Lion Hotel Atlanta International Airport. RLS Atla Venture is considered a variable interest entity because our voting rights are not proportional to our financial interest and substantially all of RLS Atla Venture's activities involve and are conducted on our behalf. We have determined that we are the primary beneficiary as (a) we exert power over the entity's key activities (hotel operations and property renovations) and share power over the remaining key activities with Shelbourne Falcon III, which does not have the unilateral ability to exercise kick-out rights, and (b) we have the obligation to absorb losses and right to receive benefits that could be significant to the entity through our 55% equity interest and management fees. As a result, we consolidate RLS Atla Venture. The equity interest owned by Shelbourne Falcon III is reflected as a noncontrolling interest in the consolidated financial statements.

Cash distributions may be made periodically based on calculated distributable income. There were no cash distributions made during the three months endedMarch 31, 2017 or 2016.

RLS DC Venture

In October 2015, we formed a joint venture, RLS DC Venture, with Shelbourne Falcon DC Investors LLC ("Shelbourne Falcon IV"), an entity led by Shelbourne. Initially, we owned an 86% interest in the joint venture, and Shelbourne Falcon IV owned a 14% interest. On October 29, 2015, RLH DC LLC ("RLH DC"), which is wholly-owned by RLS DC Venture, acquired 100% of The Quincy, an existing hotel business now operated as the Hotel RL Washington DC, in a business combination. The property is managed by RL Management. RLS DC Venture is considered a variable interest entity because our voting rights are not proportional to our financial interest, and substantially all of RLS DC Venture's activities involve and are conducted on our behalf. We have determined that we are the primary beneficiary as (a) we exert power over the entity's key activities (hotel operations and property renovations) and share power over the remaining key activities with Shelbourne Falcon IV, which does not have the unilateral ability to exercise kick-out rights, and (b) we have the obligation to absorb losses and right to receive benefits that could be significant to the entity through our equity interest and management fees. As a result, we consolidate RLS DC Venture. The equity interest owned by Shelbourne Falcon IV is reflected as a noncontrolling interest in the consolidated financial statements.

As part of the organization of RLS DC Venture, Shelbourne Falcon IV had an option to purchase from us up to an additional 31% of the member interests. On February 3, 2016, Shelbourne Falcon IV elected to purchase from us an additional 15% of the member interests of RLS DC Venture, based on an aggregate purchase price of $1.5 million. With the sale of the additional member interest without a corresponding change in control $0.2 million was recognized as an increase in additional paid in capital in February 2016. On April 1, 2016, Shelbourne Falcon IV exercised the remaining option and purchased from us an additional 16% of the member interests of RLS DC Venture for $1.7 million, which resulted in a further increase of $0.3 million to RLHC's additional paid in capital, as we continue to consolidate RLS DC Venture since we are the primary beneficiary. Following the April 1, 2016 transaction, we now own 55% of RLS DC Venture, and Shelbourne Falcon IV owns 45%. Shelbourne Falcon IV is still considered a noncontrolling interest in the consolidated financial statements.

In May 2017, RLHC provided $950,000 to RLS DC Venture to fund restricted cash required by the loan agreement. This funding was not treated as a loan or as a capital contribution. Rather, it is preferred capital of RLS DC Venture and will be repaid only when the DC hotel property is sold, when RLS DC Venture is liquidated, or the restricted cash is released per the loan agreement. Upon such an event, RLHC will receive the $950,000 plus a preferred return of 9%, compounded annually, prior to any liquidation proceeds being returned to the members.

Cash distributions may be made periodically based on calculated distributable income. There were no cash distributions made during the three months endedMarch 31, 2017 or 2016.

XML

Property and Equipment

3 Months Ended

Mar. 31, 2017

Property, Plant and Equipment [Abstract]

Property and Equipment

Property and Equipment

Property and equipment is summarized as follows (in thousands):

	March 31, 2017			December 31, 2016
Buildings and equipment	$	254,328		$	251,731
Furniture and fixtures	37,247			37,767
Landscaping and land improvements	7,972			7,928
	299,547			297,426
Less accumulated depreciation	(138,371		)	(134,346		)
	161,176			163,080
Land	43,192			43,193
Construction in progress	3,560			4,459
Property and equipment, net	$	207,928		$	210,732

XML

Goodwill and Intangible Assets

3 Months Ended

Mar. 31, 2017

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

Goodwill and Intangible Assets

Goodwill represents the excess of the estimated fair value of the net assets acquired as a result of business combinations over the net tangible and identifiable intangible assets acquired. Goodwill was recorded in prior years in connection with the acquisitions of certain franchise and entertainment businesses.

The Red Lion, GuestHouse and Settle Inn & Suites brand names are identifiable, indefinite-lived intangible assets that represent the separable legal right to tradenames and associated trademarks. We acquired the Red Lion brand name in a business combination we entered into in 2001. We purchased the GuestHouse and Settle Inn & Suites brand names from GuestHouse International LLC in April 2015 and have allocated $5.4 million of the final purchase price to the brand names.

On September 30, 2016 we acquired substantially all of the assets and assumed certain liabilities of Vantage Hospitality Group, Inc. (Vantage), including customer contracts and brand names (see Note 16). The brand names include: Americas Best Value Inn, Canadas Best Value Inn, Lexington Hotels & Inns, America's Best Inns & Suites, Jameson Inns, Country Hearth Inns & Suites, Vantage Hotels, Value Inn Worldwide, Value Hotel Worldwide, 3 Palms Hotels and Resorts and Signature Inn. Based on our purchase price allocation, we allocated $30.0 million to brand names. Based on our intent with the brands acquired, we determined that certain of the brands are indefinite-lived based on our intent to hold and maintain the brands. The total of the purchase price allocated to indefinite-lived brand names was $27.2 million. We also acquired certain brand names that we intend to sunset in the future. The total of the purchase price allocated to finite-lived brand names was $2.8 million, with a weighted average remaining useful life of 8.8 years.

In the table below, the customer contracts represent the franchise license agreements acquired with the GuestHouse and Vantage acquisitions. For GuestHouse, we allocated $3.3 million of the final purchase price to the customer contracts. GuestHouse franchise license agreements are amortized over 10 years, which represents the period of expected cash flows, using an accelerated amortization method that matches the economic benefit of the agreements. For Vantage, we allocated $8.4 million to customer contracts and are amortizing them over 15 years, which represents the period of expected cash flows, using an accelerated amortization method that matches the economic benefit of the agreements.

Certain of our brand names and trademarks are considered to have indefinite lives. We assess goodwill and the other indefinite lived intangible assets for potential impairments annually as of October 1, or during the year if an event or other circumstance indicates that we may not be able to recover the carrying amount of the assets. We did not impair any goodwill or intangible assets during the three months endedMarch 31, 2017 or 2016.

The following table summarizes the balances of goodwill and other intangible assets (in thousands):

	March 31, 2017		December 31, 2016
Goodwill	$	12,566	$	12,566
Intangible assets
Brand name - indefinite lived	$	39,704	$	39,704
Brand name - finite lived, net	2,577		2,664
Customer contracts, net	9,921		10,352
Trademarks	134		134
Total intangible assets	$	52,336	$	52,854

Goodwill and other intangible assets attributable to each of our business segments at March 31, 2017 and December 31, 2016 were as follows (in thousands):

	March 31, 2017				December 31, 2016
			Intangible				Intangible
	Goodwill		Assets		Goodwill		Assets
Company operated hotels	$	—	$	4,660	$	—	$	4,660
Franchised hotels	9,405		47,670		9,405		48,188
Entertainment	3,161		6		3,161		6
Total	$	12,566	$	52,336	$	12,566	$	52,854

The following table summarizes the balances of amortized customer contracts and finite-lived brand names (in thousands):

	March 31, 2017			December 31, 2016
Customer contracts	$	11,673		$	11,673
Brand name - finite lived	2,751			2,751
Accumulated amortization	(1,926		)	(1,408		)
Net carrying amount	$	12,498		$	13,016

As of March 31, 2017, estimated future amortization expenses related to our customer contracts and finite-lived brand names is as follows (in thousands):

Year ending December 31,	Amount
2017 (remainder)	$	1,535
2018	1,798
2019	1,610
2020	1,419
2021	1,261
Thereafter	4,875
Total	$	12,498

XML

Long-Term Debt

3 Months Ended

Mar. 31, 2017

Debt Disclosure [Abstract]

Long-Term Debt

Long-Term Debt

The current and noncurrent portions of long-term debt as of March 31, 2017 and December 31, 2016 are as follows (in thousands):

	March 31, 2017					December 31, 2016
	Current		Non-Current			Current		Non-Current
RL Venture	$	1,394	$	71,748		$	1,375	$	69,841
RL Baltimore	—		13,300			—		13,300
RLH Atlanta	70		9,330			40		9,360
RLH DC	135		16,547			54		16,628
Total debt	1,599		110,925			1,469		109,129
Unamortized debt issuance costs	—		(1,995		)	—		(2,267		)
Long-term debt net of debt issuance costs	$	1,599	$	108,930		$	1,469	$	106,862

The collateral for each of the borrowings within the joint venture entities is the assets and proceeds of each respective entity.

RL Venture

In January 2015, RL Venture Holding LLC, a wholly-owned subsidiary of RL Venture, and each of its 12 wholly-owned subsidiaries entered into a loan agreement with Pacific Western Bank. The original principal amount of the loan was $53.8 million with an additional $26.2 million to be drawn over a two-year period to cover improvements related to the 12 hotels owned by the subsidiaries. We drew $2.2 million during the three months ended March 31, 2017. At March 31, 2017, there were unamortized debt issuance fees of $1.2 million.

The loan matures in January 2019 and has a one-year extension option. Interest under the advanced portions of the loan is payable monthly at LIBOR plus 4.75%. Fixed monthly principal payments began in January 2017 in an amount that would repay the outstanding principal balance over a twenty-five year amortization period.

The liabilities of RL Venture, other than its long-term debt, are non-recourse to our general credit and assets. The long-term debt is non-recourse as to RLHC, but several investors in RL Venture, including us, are guarantors regarding completion of certain improvements to the hotels, environmental covenants in the loan agreement, losses incurred by the lender and in the event of a voluntary bankruptcy filing involving RL Venture, any of its subsidiaries or the guarantors. RLHC has no other obligation to provide financial support to RL Venture.

The loan requires us to comply with customary reporting and operating covenants applicable to RL Venture, including requirements relating to debt service loan coverage ratios. It also includes customary events of default. We were in compliance with these covenants at March 31, 2017.

RL Baltimore

In April 2015, RL Baltimore obtained a new mortgage loan from PFP Holding Company IV LLC, an affiliate of Prime Finance, secured by the Hotel RL Baltimore Inner Harbor. The initial principal amount of the loan was $10.1 million, and the lender agreed to advance an additional $3.2 million to cover expenses related to improvements to the hotel, which we drew during the year ended December 31, 2015. At March 31, 2017 the funds on the loan were fully disbursed. At March 31, 2017, there were unamortized debt issuance fees of $0.3 million.

The loan matures in May 2018 and has twoone-year extension options. Interest under the advanced portions of the loan is payable monthly at LIBOR plus 6.25%. No principal payments are required during the initial term of the loan. Principal payments of $16,000 per month are required beginning in May 2018 if the extension option is exercised.

The loan agreement includes customary requirements for lender approval of annual operating and capital budgets, under certain conditions. It also includes customary events of default. The liability of RL Baltimore under the loan agreement is generally non-recourse.  However, the lender may obtain a monetary judgment against RL Baltimore if the lender suffers losses under certain circumstances listed in the loan agreement, including but not limited to fraud, criminal activity, waste, misappropriation of revenues, and breach of environmental representations.  RLHC has guaranteed these recourse obligations of RL Baltimore and agreed to customary reporting and operating covenants. We were in compliance with these covenants at March 31, 2017.

RLH Atlanta

In September 2015, RLH Atlanta obtained a mortgage loan from PFP Holding Company IV LLC, an affiliate of Prime Finance, secured by a hotel adjacent to the Atlanta International Airport, which opened in April 2016 as the Red Lion Hotel Atlanta International Airport. The initial principal amount of the loan was $6.0 million, and the lender agreed to advance an additional $3.4 million to cover expenses related to improvements to the hotel, which we drew in the three months ended March 31, 2016. At March 31, 2017 the funds on the loan were fully disbursed. At March 31, 2017, there were unamortized debt issuance fees of $0.1 million.

The loan matures in September 2018 and has twoone-year extension options. Interest under the advanced portions of the loan is payable monthly at LIBOR plus 6.35%. Monthly principal payments of $10,000 are due beginning in September 2017.

The loan agreement includes customary requirements for lender approval of annual operating and capital budgets, under certain conditions. It also includes customary events of default. The liability of RLH Atlanta under the loan agreement is generally non-recourse.  However, the lender may obtain a monetary judgment against RLH Atlanta if the lender suffers losses under certain circumstances listed in the loan agreement, including but not limited to fraud, criminal activity, waste, misappropriation of revenues, and breach of environmental representations.  RLHC has guaranteed these recourse obligations of RLH Atlanta and agreed to customary reporting and operating covenants. We were in compliance with these covenants at March 31, 2017.

RLH DC

In October 2015, RLH DC obtained a new mortgage loan from Pacific Western Bank secured by the Hotel RL Washington DC. The initial principal amount of the loan was $15.2 million, and the lender agreed to advance an additional $2.3 million to cover expenses related to improvements to the hotel. We drew $1.5 million in additional funds during the year ended December 31, 2016. At March 31, 2017, the remaining amount of funds available to draw on the loan was $0.8 million, and there were unamortized debt issuance costs of $0.3 million.

The loan matures in October 2019 and has a one-year extension option. Interest under the advanced portions of the loan is payable monthly at LIBOR plus 4.55%. Fixed monthly principal payments begin in October 2018 in an amount that will repay the outstanding principal balance over a twenty-five years year amortization period.

The loan agreement includes customary requirements for lender approval of annual operating and capital budgets, under certain conditions. It also includes customary events of default. The liability of RLH DC under the loan agreement is generally non-recourse.  However, the lender may obtain a monetary judgment against RLH DC if the lender suffers losses under certain circumstances listed in the loan agreement, including but not limited to fraud, criminal activity, waste, misappropriation of revenues, and breach of environmental representations.  RLHC has guaranteed these recourse obligations of RLH DC and agreed to customary reporting and operating covenants. We were in compliance with these covenants at March 31, 2017.

Contractual maturities for long-term debt outstanding at March 31, 2017, for the next five years are summarized by the year as follows (in thousands):

Year ending December 31,	Amount
2017 (remainder)	$	1,132
2018	24,442
2019	86,950
2020	—
2021	—
Thereafter	—
Total	$	112,524

XML

Derivative Financial Instruments

3 Months Ended

Mar. 31, 2017

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments

Derivative Financial Instruments

We do not enter into derivative transactions for trading purposes, but rather to hedge our exposure to interest rate fluctuations. We manage our floating rate debt using interest rate caps in order to reduce our exposure to the impact of changing interest rates and future cash outflows for interest. We estimate the fair value of our interest rate caps via standard calculations that use as their basis readily available observable market parameters. This option-pricing technique utilizes a one-month LIBOR forward yield curve, obtained from an independent external service, which is a Level 2 input. Changes in fair value of these instruments are recognized in interest expense on the Consolidated Statements of Operations. At March 31, 2017, the valuation of the interest rate caps resulted in the recognition of assets with minimal values both individually and in the aggregate, which are included in "Other assets, net" on the Consolidated Balance Sheets.

Subsidiary	Institution	Original Notional Amount		LIBOR Reference Rate Cap		Expiration
		(In millions)
RL Venture	Commonwealth Bank of Australia	$	80.0	4.0	%	January 2018
RL Baltimore	Commonwealth Bank of Australia	$	13.3	3.0	%	May 2018
RLH Atlanta	SMBC Capital Markets, Inc.	$	9.4	3.0	%	September 2018
RLH DC	Commonwealth Bank of Australia	$	17.5	3.0	%	November 2018

XML

Operating and Capital Lease Commitments

3 Months Ended

Mar. 31, 2017

Leases [Abstract]

Operating and Capital Lease Commitments

Operating and Capital Lease Commitments

We have both operating and capital leases in the normal course of business. The operating leases relate to five of our company operated hotel properties and our three administrative offices. We are obligated under capital leases for certain hotel equipment at our company operated hotel locations. The capital leases typically have a five-year term. The equipment assets are included within our property and equipment balance and are depreciated over the lease term.

Total future minimum payments due under all current term operating and capital leases at March 31, 2017, are as indicated below (in thousands):

Year ending December 31,	Total Lease Obligation		Operating Lease Obligation		Capital Lease Obligation
2017 (remainder)	$	4,582	$	4,390	$	192
2018	5,244		4,980		264
2019	4,580		4,316		264
2020	4,531		4,294		237
2021	2,877		2,752		125
Thereafter	63,453		63,453		—
Total	$	85,267	$	84,185	$	1,082

Total rent expense under leases for the three months endedMarch 31, 2017 and 2016 was $1.6 million and $1.4 million, respectively, which represents the total of amounts shown within Hotel facility and land lease expense, as well as amounts included within Franchise, Entertainment, and General and Administrative operating expenses on our consolidated statements of operations.

XML

Commitments and Contingencies

3 Months Ended

Mar. 31, 2017

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

At any given time we are subject to claims and actions incidental to the operations of our business. Based on information currently available, we do not expect that any sums we may receive or have to pay in connection with any legal proceeding would have a materially adverse effect on our consolidated financial position or net cash flow.

XML

Stock Based Compensation

3 Months Ended

Mar. 31, 2017

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock Based Compensation

Stock Based Compensation

Stock Incentive Plans

The 2006 Stock Incentive Plan authorizes the grant or issuance of various option and other awards including restricted stock units and other stock-based compensation. The plan was approved by our shareholders and allowed awards of 2.0 million shares, subject to adjustments for stock splits, stock dividends and similar events. No further stock option grants or other awards are permitted under the terms of the 2006 plan.

The 2015 Stock Incentive Plan authorizes the grant or issuance of various option and other awards including restricted stock units and other stock-based compensation. The plan was approved by our shareholders and allows awards of 1.4 million shares, subject to adjustments for stock splits, stock dividends and similar events. As of March 31, 2017, there were 264,375 shares of common stock available for issuance pursuant to future stock option grants or other awards under the 2015 plan.

Stock based compensation expense reflects the fair value of stock based awards measured at grant date, including an estimated forfeiture rate, and is recognized over the relevant service period. For the three months ended March 31, 2017 and 2016 stock-based compensation expense is as follows:

	Three Months Ended March 31,
	2017		2016
	(In thousands)
Stock options	$	17	$	—
Restricted stock units	566		496
Unrestricted stock awards	105		105
Employee Stock Purchase Plan	8		7
Total stock-based compensation	$	696	$	608

Stock Options

Stock options issued are valued based upon the Black-Scholes option pricing model and we recognize this value as an expense over the periods in which the options vest. Use of the Black-Scholes option-pricing model requires that we make certain assumptions, including expected volatility, forfeiture rate, risk-free interest rate, expected dividend yield and expected life of the options, based on historical experience. Volatility is based on historical information with terms consistent with the expected life of the option. The risk free interest rate is based on the quoted daily treasury yield curve rate at the time of grant, with terms consistent with the expected life of the option. For the three months ended March 31, 2017 there were no stock options granted. For the three months ended March 31,2016 there were 81,130 shares granted.

Stock option fair value assumptions are as follows for stock options granted during the three months ended March 31, 2016:

Grant Date	Volatility	Forfeiture Rate	Risk-free Interest Rate	Dividend Yield	Expected Life (Years)
March 28, 2016	61.12%	21.07%	1.37%	—%	5

A summary of stock option activity for the three months ended March 31, 2017, is as follows:

	Number of Shares	Weighted Average Exercise Price
Balance, January 1, 2017	132,868	$	8.91
Options granted	—	—
Options exercised	—	—
Options forfeited	—	—
Balance, March 31, 2017	132,868	$	8.91
Exercisable, March 31, 2017	72,021	$	9.51

Additional information regarding stock options outstanding and exercisable as of March 31, 2017, is presented below:

Exercise Price	Number Outstanding	Weighted Average Remaining Contractual Life (Years)	Expiration Date	Weighted Average Exercise Price		Aggregate Intrinsic Value(1)		Number Exercisable	Weighted Average Exercise Price		Aggregate Intrinsic Value(1)
$8.20	81,130	8.99	2026	$	8.20	$	—	20,283	$	8.20	$	—
$8.74	36,093	1.14	2018	$	8.74	—		36,093	$	8.74	—
$13.00	15,645	0.13	2017	$	13.00	—		15,645	$	13.00	—
	132,868	5.81	2017-2026	$	8.91	$	—	72,021	$	9.51	$	—

(1) The aggregate intrinsic value is before applicable income taxes and represents the amount option recipients would have received if all options had been exercised on the last trading day of the first three months of 2017, or March 31, 2017, based upon our closing stock price on that date of $7.05.

Restricted Stock Units, Shares Issued as Compensation

During three months endedMarch 31, 2017 and 2016, we granted 318,815 and 242,989 unvested restricted stock units, respectively, to executive officers and other key employees, which typically vest 25% each year for four years on each anniversary of the grant date. While all of the shares are considered granted, they are not considered issued or outstanding until vested. As of March 31, 2017 and 2016, there were 1,235,035 and 1,382,344 unvested restricted stock units outstanding, respectively. Since we began issuing restricted stock units, approximately 21.0% of total restricted stock units granted have been forfeited.

A summary of restricted stock unit activity for the three months ended March 31, 2017, is as follows:

	Number of Shares		Weighted Average Grant Date Fair Value
Balance, January 1, 2017	1,036,680		$	7.27
Granted	318,815		$	7.09
Vested	(97,241	)	$	7.31
Forfeited	(23,219	)	$	7.04
Balance, March 31, 2017	1,235,035		$	7.22

We issued 97,241 shares of common stock to employees during the first three months of 2017 as their restricted stock units vested. Under the terms of the 2006 and 2015 plans and upon issuance, we authorized a net settlement of distributable shares to employees after consideration of individual employees' tax withholding obligations, at the election of each employee. The fair value of restricted stock that vested during the three months ended March 31, 2017 and 2016 was approximately $0.7 million and $0.5 million, respectively.

During the three months endedMarch 31, 2017 and 2016, we recognized $0.6 million and $0.5 million, respectively, in compensation expense related to these grants, and expect to record and additional $6.5 million in compensation expense over the remaining weighted average vesting periods of 33 months.

Unrestricted Stock Awards

Unrestricted stock awards are granted to members of our board of directors as part of their compensation. Awards are fully vested and expensed when granted. The fair value of unrestricted stock awards is the market close price of our common stock on the date of the grant.

The following table summarizes unrestricted stock award activity for the three months ended March 31, 2017 and 2016:

	Three Months Ended March 31,
	2017		2016
Shares of unrestricted stock granted	12,426		14,934
Weighted average grant date fair value per share	$	8.45	$	7.03

Employee Stock Purchase Plan

In 2008, we adopted a new employee stock purchase plan ("ESPP") upon expiration of our previous plan. Under the ESPP, 300,000 shares of common stock are authorized for purchase by eligible employees at a 15% discount through payroll deductions. No employee may purchase more than $25,000 worth of shares, or more than 10,000 total shares, in any calendar year. As allowed under the ESPP, a participant may elect to withdraw from the plan, effective for the purchase period in progress at the time of the election with all accumulated payroll deductions returned to the participant at the time of withdrawal. During the three months endedMarch 31, 2017 and 2016, there were 12,554 and 12,735 shares, respectively issued, and approximately $8,000 and $7,000 was recorded in compensation expense related to the discount associated with the plan in each year, respectively.

	Three Months Ended March 31,
	2017		2016
Shares of stock sold to employees	12,554		12,735
Weighted average fair value per ESPP award	$	6.00	$	5.96

Warrants

In January 2015, in connection with Shelbourne Falcon’s purchase of equity interests in RL Venture, we issued Shelbourne warrants to purchase 442,533 shares of common stock. The warrants have a five year term from the date of issuance and a per share exercise price of $6.78. The warrants have been classified as equity due to required share settlement upon exercise. Accordingly, the estimated fair value of the warrants was recorded in additional paid in capital upon issuance, and we do not recognize subsequent changes in fair value in our financial statements. As of March 31, 2017 all warrants were still outstanding.

XML

Earnings (Loss) Per Share

3 Months Ended

Mar. 31, 2017

Earnings Per Share [Abstract]

Earnings (Loss) Per Share

Earnings (Loss) Per Share

The following table presents a reconciliation of the numerators and denominators used in the basic and diluted net income (loss) per share computations for the three months endedMarch 31, 2017 and 2016 (in thousands, except per share data):

	Three Months Ended March 31,
	2017			2016
Numerator - basic and diluted:
Net income (loss)	$	(5,123	)	$	(5,820	)
Less: net (income) loss attributable to noncontrolling interests	1,519			1,021
Net income (loss) attributable to RLHC	(3,604		)	(4,799		)
Less: fair value adjustment of share component of contingent consideration	(713		)	—
Net income (loss) attributable to RLHC for diluted earnings (loss) per share	$	(4,317	)	$	(4,799	)
Denominator:
Weighted average shares - basic	23,469			20,088
Weighted average shares - diluted	24,159			20,088
Earnings (loss) per share - basic	$	(0.15	)	$	(0.24	)
Earnings (loss) per share - diluted	$	(0.18	)	$	(0.24	)

The following table presents options to purchase common shares, restricted stock units outstanding, warrants to purchase common shares and contingently issuable shares included in the earnings per share calculation and the amount excluded from the dilutive earnings per share calculation as they were considered antidilutive for three months endedMarch 31, 2017 and 2016. For the three months ended March 31,2017, we recognized $0.7 million of income related to the change in fair value of the share component of the contingent consideration (classified within acquisition and integration costs on our Consolidated Statement of Operations), as the result of the $1.30 per share decrease in our stock price from December 31, 2016 to March 31, 2017.

	Three Months Ended March 31,
	2017	2016
Stock Options(1)
Dilutive awards outstanding	—	—
Antidilutive awards outstanding	132,868	152,806
Total awards outstanding	132,868	152,806
Restricted Stock Units(2)
Dilutive awards outstanding	—	—
Antidilutive awards outstanding	1,235,035	1,382,344
Total awards outstanding	1,235,035	1,382,344
Warrants(3)
Dilutive awards outstanding	—	—
Antidilutive awards outstanding	442,533	442,533
Total awards outstanding	442,533	442,533
Shares for Vantage Contingent Consideration(4)
Dilutive awards outstanding	690,000	—
Antidilutive awards outstanding	—	—
Total awards outstanding	690,000	—
Total dilutive awards outstanding	690,000	—

⁽¹⁾ All stock options were anti-dilutive as a result of the RLHC weighted average share price during the reporting periods.

⁽²⁾ All restricted stock units were anti-dilutive due to the net loss attributable to RLHC in the reporting periods. If we had reported net income for the three months ended March 31, 2017 and 2016 then 375,260 and 417,041 units, respectively, would have been dilutive.

⁽³⁾ All warrants were anti-dilutive due to the net loss attributable to RLHC in the reporting periods. If we had reported net income for the three months ended March 31, 2017 and 2016 then 49,665 and 1,312 units, respectively, would have been dilutive.

⁽⁴⁾ As part of the Vantage acquisition, up to an additional 690,000 shares may be issued with the one-year and two-year contingent consideration earns outs (see Note 16). These shares would not be included in basic shares outstanding until the period the contingency is resolved. For purposes of calculating earnings per share, the income or expense recognized during the period that is related to the changes in the fair value of the share component of the contingent consideration is added back to net income/loss. For the three months ended March 31,2017, we recognized $0.7 million of income related to the change in fair value of the share component of the contingent consideration (classified within acquisition and integration costs on our Consolidated Statement of Operations), as the result of the $1.30 per share decrease in our stock price from December 31, 2016 to March 31, 2017.

XML

Income Taxes

3 Months Ended

Mar. 31, 2017

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

We recognized an income tax provision of $0.2 million and $0.1 million for the three months ended March 31, 2017 and 2016, respectively. The income tax provision varies from the statutory rate primarily due to a full valuation allowance against our deferred assets, as well as for deferred tax expense associated with our acquired indefinite-lived intangible assets, which are amortized for tax purposes but not for U.S. GAAP purposes.

We have federal operating loss carryforwards, which will expire beginning in 2032, state operating loss carryforwards, which will expire beginning in 2017, and tax credit carryforwards, which will begin to expire in 2024.

XML

Fair Value

3 Months Ended

Mar. 31, 2017

Fair Value Disclosures [Abstract]

Fair Value

Fair Value

Applicable accounting standards define fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). We measure our assets and liabilities using inputs from the Level 1, Level 2 and Level 3 of the fair value hierarchy.

Estimated fair values of financial instruments (in thousands) are shown in the table below. We estimate the fair value of our notes receivable using expected future payments discounted at risk-adjusted rates, both of which are Level 3 inputs. We estimate the fair value of our long-term debt and capital lease obligations using expected future payments discounted at risk-adjusted rates, both of which are Level 3 inputs. The fair values provided below are not necessarily indicative of the amounts we or the debt holders could realize in a current market exchange. In addition, potential income tax ramifications related to the realization of gains and losses that would be incurred in an actual sale or settlement have not been taken into consideration.

	March 31, 2017				December 31, 2016
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial assets:
Notes receivable	$	1,285	$	1,285	$	1,295	$	1,295
Financial liabilities:
Total debt	$	112,524	$	110,936	$	110,598	$	107,858
Total capital lease obligations	1,082		1,082		1,147		1,147

XML

Related Party Transactions

3 Months Ended

Mar. 31, 2017

Related Party Transactions [Abstract]

Related Party Transactions

Related Party Transactions

All four of our joint ventures - RL Venture, RLS Atla Venture, RLS Balt Venture and RLS DC Venture - have agreed to pay to Shelbourne Capital, LLC (Shelbourne Capital) an investor relations fee each month equal to 0.50% of its total aggregate revenue. The amount Shelbourne Capital earned from all four joint ventures during the three months endedMarch 31, 2017 and 2016 totaled $90,000 and $85,000, respectively. Columbia Pacific Opportunity Fund, LP, one of our largest shareholders, is an investor in Shelbourne Falcon, our minority partner in RL Venture. During the three months ended March 31, 2017 and 2016, Shelbourne Capital earned $75,000 from RL Venture in each period.

RL Venture has also agreed to pay CPA Development, LLC, an affiliate of Columbia Pacific Opportunity Fund, LP, a construction management fee of $200,000 related to the renovation projects. No payment was due from RL Venture to CPA Development, LLC during the three months endedMarch 31, 2017, as the obligation was fully paid by the end of 2016. RL Venture paid $33,000 for the construction management fee during the three months endedMarch 31, 2016.

In May 2015, we entered into a management agreement with the owner (the LLC entity) of Red Lion Hotel Woodlake Conference Center Sacramento (a franchised property). A member of our board of directors is a 50% owner of the entity that serves as the manager member of the LLC entity. During the three months endedMarch 31, 2016, we recognized management fee and brand marketing fee revenue from the LLC entity of $30,000. On December 12, 2016 the LLC permanently closed the Red Lion Hotel Woodlake.

Effective March 29, 2016, our wholly owned subsidiary, RL Management entered into a one-year contract to manage the Hudson Valley Resort and Spa, a hotel located in Kerhonkson, New York. The hotel is owned by HNA Hudson Valley Resort & Training Center LLC, an affiliate of HNA RLH Investments LLC, one of our largest shareholders, and is controlled by HNA Group North America LLC, for which Enrico Marini Fichera, one of our directors, serves as the Head of Investments. Under that contract, our subsidiary is entitled to a monthly management fee equal to $8,333 or three percent of the hotel’s gross operating revenues, whichever is larger. During the three months ended March 31, 2017, we recognized management fee revenue from HNA Hudson Valley Resort & Training Center LLC of $21,000. We continue to manage the property while a new agreement is negotiated.

The total amounts receivable from related parties, primarily related to hotel management agreements, were $2.2 million and $1.9 million at March 31, 2017 and December 31, 2016, and are classified within Accounts receivable from related parties on our consolidated balance sheets. Subsequent to March 31, 2017, we received a payment of $0.8 million that fully settled one related party receivable balance.

XML

Business Acquisition

3 Months Ended

Mar. 31, 2017

Business Combinations [Abstract]

Business Acquisition

Business Acquisition

On September 30, 2016 (the close date), we (i) acquired selected assets and assumed certain liabilities of Vantage Hospitality Group, Inc. (“Vantage”), a subsidiary of Thirty-Eight Street, Inc. (“TESI”) and (ii) acquired one brand name asset from TESI. Vantage is a hotel franchise company, and the addition of the Vantage assets substantially increases our number of franchise properties and provides us with a broader presence in the United States and Canada. We acquired over 1,000 hotel franchise and membership license agreements, as well as multiple brand names, including Americas Best Value Inn, Canadas Best Value Inn, Lexington Hotels & Inns, America's Best Inns & Suites, Jameson Inns, Country Hearth Inns & Suites, Vantage Hotels, Value Inn Worldwide, Value Hotel Worldwide, 3 Palms Hotels and Resorts and Signature Inn.

The purchase price totaled $40.2 million, including the following (in thousands):

	Purchase Price
Cash paid to Vantage at close date	$	10,300
Cash paid to TESI at close date	12,300
Total cash consideration at close date	22,600
Value of 690,000 shares to TESI at close date	5,800
Total consideration at close date	28,400
Fair value of contingent consideration	10,900
Assumption of Vantage obligation	900
Total purchase price	$	40,200

The acquisition was funded at closing with $22.6 million of cash on hand, of which $10.3 million was paid to Vantage and $12.3 million was paid to TESI and 690,000 shares of RLHC stock paid to TESI, which was valued at $5.8 million, based on the closing price of RLHC stock of $8.34 on the close date. The total purchase price was $40.2 million, which included the estimated fair value of $0.9 million for the assumption of an obligation related to a previous business acquisition of Vantage and the fair value of $10.9 million of primarily contingent consideration, the total of which will be payable to TESI at the first and second anniversaries of the close date, based on the attainment of certain performance criteria. A minimum of $2 million of the additional consideration is not contingent and will be paid in equal amounts at the first and second anniversaries of the close date. Payment of the contingent consideration is dependent on the retention of Vantage properties under franchise or membership license agreements, as determined by the room count at the first and second year anniversary dates when compared with the room count at the close date, as follows:

	Year 1 Anniversary			Year 2 Anniversary			Total
Threshold	Shares	Cash(1)		Shares	Cash(1)		Shares	Cash(1)
90% of room count at close	414,000	$	4,000	276,000	$	3,000	690,000	$	7,000
80% of room count at close	310,500	3,000		207,000	2,250		517,500	5,250
Minimum	—	1,000		—	1,000		—	2,000
(1) in thousands

If the room counts are below the 80% thresholds at each anniversary date, but the annual franchise revenue, measured as the most recent twelve months ending on the anniversary date, of the Vantage properties is equal to or exceeds the closing date revenue benchmark, then the contingent consideration would be paid at the anniversary date based on the 90% threshold in the table above. The contingent consideration is measured at each anniversary date independent of the other measurement period and is recorded as a liability due to the expected payment of cash and a variable number of shares. Changes in the obligation are recognized within acquisition and integration costs in the Consolidated Statements of Operations. At each reporting period, we are required to assess the fair value of the liability and record any changes in fair value in our Consolidated Statement of Operations. For the first quarter of 2017, we recognized $0.2 million in income associated with our updated assessment, including $0.7 million of income related to the change in fair value of the share component of the contingent consideration (classified within acquisition and integration costs on our Consolidated Statement of Operations), as the result of the $1.30 per share decrease in our stock price from December 31, 2016 to March 31, 2017. As of March 31, 2017 and December 31, 2016, the estimated fair value of the contingent consideration was $11.0 million and $11.2 million, respectively. Roger J. Bloss and Bernard T. Moyle were appointed to executive management positions at RLHC following the closing of the acquisition, and Messrs. Bloss and Moyle also have ownership interests in TESI. Therefore, the contingent consideration obligations are classified as related party liabilities within our consolidated balance sheets.

The following supplemental pro forma results are based on the individual historical results of RLHC and Vantage, with adjustments to give effect to the combined operations as if the acquisition had been consummated on January 1, 2016 (unaudited):

	Three Months Ended March 31, 2016
	(in thousands)
Revenue	$	40,552
Income (loss) before income taxes	(4,930		)

XML

Summary of Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2017

Accounting Policies [Abstract]

Basis of Presentation

The unaudited consolidated financial statements included herein have been prepared by us pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") and in accordance with generally accepted accounting principles in the United States of America ("GAAP"). Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted as permitted by such rules and regulations.

The consolidated balance sheet as of December 31, 2016 has been compiled from the audited balance sheet as of such date. We believe the disclosures included herein are adequate; however, they should be read in conjunction with the consolidated financial statements and the notes thereto for the year ended December 31, 2016, filed with the SEC in our Annual Report on Form 10-K on March 31, 2017.

In the opinion of management, these unaudited condensed consolidated financial statements contain all of the adjustments of a normal and recurring nature necessary to present fairly our Consolidated Balance Sheet at March 31, 2017, the Consolidated Statements of Operations for the three months endedMarch 31, 2017 and 2016, and the Consolidated Statements of Cash Flows for the three months ended March 31, 2017 and 2016. The results of operations for the periods presented may not be indicative of that which may be expected for a full year or for any other fiscal period.

Comprehensive Income (Loss)

Comprehensive income (loss) is the same as net income (loss) for all periods presented. Therefore, a separate statement of comprehensive income (loss) is not included in the accompanying consolidated financial statements.

Principles of Consolidation

Principles of Consolidation

The financial statements encompass the accounts of RLHC and all of its consolidated subsidiaries, including:

Wholly-owned subsidiaries:

• Red Lion Hotels Holdings, Inc.

• Red Lion Hotels Franchising, Inc.

• Red Lion Hotels Canada Franchising, Inc.

• Red Lion Hotels Management, Inc. ("RL Management")

• Red Lion Hotels Limited Partnership

• TicketsWest.com, Inc.

Joint venture entities:

• RL Venture LLC ("RL Venture") in which we hold a 55% member interest

• RLS Atla Venture LLC ("RLS Atla Venture") in which we hold a 55% member interest

• RLS Balt Venture LLC ("RLS Balt Venture") in which we hold a 73% member interest

• RLS DC Venture LLC ("RLS DC Venture") in which we hold a 55% member interest

All inter-company and inter-segment transactions and accounts have been eliminated upon consolidation.

Cash and Cash Equivalents

Cash and Cash Equivalents

All highly liquid investments purchased with an original maturity of three months or less are considered to be cash equivalents. At times, cash balances at banks and other financial institutions may be in excess of federal insurance limits.

Restricted Cash

Restricted Cash

In accordance with our various borrowing arrangements, at March 31, 2017 and December 31, 2016 cash of $10.7 million and $9.5 million, respectively, was held primarily as reserves for debt service (interest only), property improvements, and other requirements from the lenders.

In our Consolidated Statements of Cash Flows for the three months ended March 31, 2017 and 2016, we include restricted cash with cash and cash equivalents when reconciling the beginning and ending balances for each period.

Allowance for Doubtful Accounts and Accounts Receivable from Related Parties

Accounts Receivable from Related Parties

Amounts receivable from related parties relate to outstanding amounts billed to the owners of hotels we manage for reimbursement of costs of the operations of those hotels. We have a related party relationship with these owners, and there is no allowance for doubtful accounts associated with these receivables.

Allowance for Doubtful Accounts

The ability to collect individual accounts receivable is reviewed on a routine basis. An allowance for doubtful accounts is recorded based on specifically identified amounts believed to be uncollectible. If actual collection experience changes, revisions to the allowance may be required, and, if all attempts to collect a receivable fail, it is recorded against the allowance. The estimate of the allowance for doubtful accounts may be impacted by, among other things, national and regional economic conditions. Acquired accounts receivable from business acquisitions are recorded at fair value, based on amounts expected to be collected. Therefore no allowance for doubtful accounts related to these accounts is recorded at the acquisition date.

Inventories

Inventories

Inventories consist primarily of food and beverage products held for sale at the company operated restaurants and guest supplies. Inventories are valued at the lower of cost, determined on a first-in, first-out basis, or net realizable value.

Prepaid and other expenses

Prepaid and other expenses

Prepaid and other expenses include prepaid insurance, prepaid taxes, deposits, advertising costs and prepaid costs related to our brand conferences.

Property and Equipment

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation. The cost of improvements that extend the life of property and equipment is capitalized. Repairs and maintenance charges are expensed as incurred.

Leasehold improvements are capitalized and depreciated over the term of the applicable lease, including renewable periods if reasonably assured, or over the useful lives, whichever is shorter.

Valuation of Long-Lived Assets

Valuation of Long-Lived Assets

We test long-lived asset groups for recoverability when changes in circumstances indicate the carrying value may not be recoverable, for example, when there are material adverse changes in projected revenues or expenses, significant underperformance relative to historical or projected operating results, or significant negative industry or economic trends. We also perform a test for recoverability when management has committed to a plan to sell or otherwise dispose of an asset group. We evaluate recoverability of an asset group by comparing its carrying value to the future net undiscounted cash flows that we expect will be generated by the asset group. If the comparison indicates that the carrying value of an asset group is not recoverable, we recognize an impairment loss for the excess of carrying value over the estimated fair value. When we recognize an impairment loss for assets to be held and used, we depreciate the adjusted carrying amount of those assets over their remaining useful life.

We base our calculations of the estimated fair value of an asset group on the income approach or the market approach. The assumptions and methodology utilized for the income approach are the same as those described in the "Goodwill and Intangible Assets" caption. For the market approach, we use analyses based primarily on market comparables, recent appraisals and assumptions about market capitalization rates, growth rates, and inflation.

Variable Interest Entities

Variable Interest Entities

We analyze the investments we make in joint venture entities based on the accounting guidance for variable interest entities ("VIEs"). These joint ventures are evaluated to determine whether (1) sufficient equity at risk exists for the legal entity to finance its activities without additional subordinated financial support or, (2) as a group, the holders of the equity investment at risk lack one of the following characteristics (a) the power, through voting or similar rights, to direct the activities of the legal entity that most significantly impact the entity’s economic performance or, (b) the obligation to absorb the expected losses of the legal entity or (c) the right to receive expected residual returns of the legal entity, or (3) the voting rights of some equity investors are not proportional to their obligations to absorb the losses or the right to receive benefits and substantially all of the activities either involve or are conducted on behalf of an investor with disproportionately few voting rights. If any one of the above three conditions are met then the joint venture entities are considered to be VIEs.

We consolidate the results of any such VIE in which we determine that we have a controlling financial interest. We would have a “controlling financial interest” (i.e., be deemed the primary beneficiary) in such an entity if we had both the power to direct the activities that most significantly affect the VIE’s economic performance and the obligation to absorb the losses of, or right to receive the benefits from, the VIE that could be potentially significant to the VIE.

Business Combinations

Business Combinations

On the date of acquisition, the assets acquired, liabilities assumed, and any noncontrolling interests in the acquiree are recorded at their fair values. The acquiree's results of operations are also included as of the date of acquisition in our consolidated results. Intangible assets that arise from contractual/legal rights, or are capable of being separated are measured and recorded at fair value, and amortized over the estimated useful life. If practicable, assets acquired and liabilities assumed arising from contingencies are measured and recorded at fair value. If not practicable, such assets and liabilities are measured and recorded when it is probable that a gain or loss has occurred and the amount can be reasonably estimated. The residual balance of the purchase price, after fair value allocations to all identified assets and liabilities, represents goodwill. Acquisition-related costs are expensed as incurred. Restructuring costs associated with an acquisition are generally expensed in periods subsequent to the acquisition date, and changes in deferred tax asset valuation allowances and acquired income tax uncertainties, including penalties and interest, after the measurement period are recognized as a component of the provision for income taxes. Our acquisitions may include contingent consideration, which require us to recognize the fair value of the estimated liability at the time of the acquisition. Subsequent changes in the estimate of the amount to be paid under the contingent consideration arrangement are recognized in the Consolidated Statements of Operations. Cash payments for contingent or deferred consideration up to the amount of liability recognized on the acquisition date are classified within cash flows from financing activities within the Consolidated Statements of Cash Flows and any excess is classified as cash flows from operating activities.

Goodwill and Intangible Assets

Goodwill and Intangible Assets

Goodwill and intangible assets may result from our business acquisitions. Intangible assets may also result from the purchase of assets and intellectual property in a transaction that does not qualify as a business combination. We use estimates, including estimates of useful lives of intangible assets, the amount and timing of related future cash flows, and fair values of the related operations, in determining the value assigned to goodwill and intangible assets. Our finite-lived intangible assets, which include customer contracts and certain brand names that we do not expect to maintain indefinitely, are amortized over their expected useful lives based on estimated discounted cash flows. The remaining brand name and trademark assets are considered indefinite-lived intangible assets and are not subject to amortization. Finite-lived intangible assets are tested for impairment at the asset group level when events or changes in circumstances indicate the carrying value may not be recoverable. Indefinite-lived intangible assets are tested for impairment annually, when events or changes in circumstances indicate the asset may be impaired, or at the time when their useful lives are determined to be no longer indefinite.

Goodwill is assigned to our reporting units based on the expected benefit from the synergies arising from each business combination, determined by using certain financial metrics, including the forecast discounted cash flows associated with each reporting unit. The reporting units are aligned with our reporting segments.

We test goodwill for impairment each year as of October 1, or more frequently should a significant impairment indicator occur. As part of the impairment test, we may elect to perform an assessment of qualitative factors. If this qualitative assessment indicates that it is more likely than not that the fair value of a reporting unit, including goodwill, is less than its carrying amount, or if we elect to bypass the qualitative assessment, we would then proceed with the two-step impairment test. The impairment test involves comparing the fair values of the reporting units to their carrying amounts. If the carrying amount of a reporting unit exceeds its fair value, a second step is required to measure the goodwill impairment loss amount. This second step determines the current fair values of all assets and liabilities of the reporting unit and then compares the implied fair value of the reporting unit's goodwill to the carrying amount of that goodwill. If the carrying amount of the reporting unit's goodwill exceeds the implied fair value of the goodwill, an impairment loss is recognized in an amount equal to the excess.

In assessing the qualitative factors, we assess relevant events and circumstances that may impact the fair value and the carrying amount of the reporting unit. The identification of relevant events and circumstances, and how these may impact a reporting unit's fair value or carrying amount, involves significant judgments and assumptions. The judgment and assumptions include the identification of macroeconomic conditions, industry and market considerations, cost factors, overall financial performance, RLHC-specific events, and share price trends, and making the assessment as to whether each relevant factor would impact the impairment test positively or negatively and the magnitude of any such impact.

Determining the fair value of a reporting unit is judgmental in nature and involves the use of significant estimates and assumptions. We forecast discounted future cash flows at the reporting unit level using risk-adjusted discount rates and estimated future revenues and operating costs, which take into consideration factors, such as expectations of competitive and economic environments. We also identify similar publicly traded companies and develop a correlation, referred to as a multiple, to apply to the operating results of the reporting units. These combined fair values are then reconciled to the aggregate market value of our common stock on the date of valuation, while considering a reasonable control premium.

Notes Receivable

Notes Receivable

We carry notes receivable at their estimated collection amount, and they are classified as either current or long-term depending on the expected collection date. Interest income on notes receivable is recognized using the interest method.

Other Assets

Other Assets

Other assets primarily consist of key money arrangements with certain of our franchisees and IT system implementation and license costs, for both our franchisees and our company operated hotels. We recognize key money paid in conjunction with entering into long-term franchise agreements as prepaid expenses and amortize the amount paid as a reduction of revenue over the term of the franchise agreements. IT system implementation and license costs represent costs incurred to implement and operate RevPak, our proprietary guest management system application and are amortized over the initial term of the software license arrangement or the current license period, as applicable.

Fair Value Measurements

Fair Value Measurements

Applicable accounting standards define fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). We measure our assets and liabilities using inputs from the following three levels of the fair value hierarchy:

• Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities that we have the ability to access at the measurement date.

• Level 2 inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (i.e., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs).

• Level 3 includes unobservable inputs that reflect assumptions about what factors market participants would use in pricing the asset or liability. We develop these inputs based on the best information available, including our own data.

Deferred Income

Deferred Income

In 2003, we sold a hotel to an unrelated party in a sale-operating leaseback transaction. The pre-tax gain on the transaction of approximately $7.0 million was deferred and is being amortized into income over the period of the lease term, which expires in November 2018 and is renewable for three, five-year terms at our option. During the three months ended March 31, 2017 and 2016, we recognized income of approximately $0.1 million each period for the amortization of the deferred gain. The remaining balances at March 31, 2017 and December 31, 2016 were $0.7 million and $0.9 million.

Income Taxes

Income Taxes

We account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined on the basis of the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

We recognize deferred tax assets to the extent that we believe these assets are more likely than not to be realized. In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning, and results of recent operations. At March 31, 2017 and December 31, 2016, a valuation allowance has been recorded to reduce our deferred tax assets to an amount that is more likely than not to be realized. If we determine that we would be able to realize our deferred tax assets in the future in excess of their net recorded amount, we would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes.

We classify any interest expense and penalties related to underpayment of taxes and any interest income on tax overpayments as components of income tax expense.

We record uncertain tax positions in accordance with Accounting Standards Codification ("ASC") 740 on the basis of a two-step process whereby (1) we determine whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, we recognize the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority. See Note 13.

Revenue Recognition

Revenue Recognition

Revenue is generally recognized as services are provided. When payments from customers are received before services have been performed, the amount received is recorded as deferred revenue until the service has been completed. We recognize revenue from the following sources:

• Company Operated Hotels - Room rental and food and beverage sales from majority owned and leased hotels and management fees from hotels under management contract. Revenues are recognized when services have been performed, generally at the time of the hotel stay or guest's visit to the restaurant or at the time the management services are provided. We recognize other revenue and costs from managed properties when we incur the related reimbursable costs. These costs primarily consist of payroll and related expenses at managed properties where we are the employer. As these costs have no added markup, the revenue and related expense have no impact on either our operating or net income.

• Franchised Hotels - Fees received in connection with the franchise and marketing of our brand names. Franchise revenues are recognized as earned in accordance with the contractual terms of the franchise agreements.

• Entertainment - Online ticketing services, ticketing inventory management systems, promotion of Broadway-style shows and other special events. Where we act as an agent and receive a net fee or commission, revenue is recognized in the period the services are performed. When we are the promoter of an event and are at-risk for the production, revenues and expenses are recorded in the period of the event performance.

Advertising and Promotion

Advertising and Promotion

Costs associated with advertising and promotional efforts are generally expensed as incurred. During the three months ended March 31, 2017 and 2016 we incurred approximately $1.1 million and $1.4 million, respectively in advertising expense.

Basic and Diluted Earnings (Loss) Per Share

Basic and Diluted Earnings (Loss) Per Share

Basic earnings (loss) per share attributable to RLHC is computed by dividing income (loss) attributable to RLHC by the weighted‑average number of shares outstanding during the period. Diluted earnings (loss) per share attributable to RLHC gives effect to all dilutive potential shares that are outstanding during the period and include outstanding stock options, other outstanding employee equity grants, warrants and amounts contingently issuable in association with the Vantage acquisition contingent consideration, by increasing the weighted-average number of shares outstanding by their effect. See Note 12.

Use of Estimates

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could materially differ from those estimates.

Reclassifications

Reclassifications

Effective for the year ended December 31, 2016, we early adopted Accounting Standards Update ("ASU") 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. We have revised the Consolidated Statement of Cash Flows for the three months endedMarch 31, 2016 to reflect the adoption of this new standard. For a discussion of the new guidance and the impact of the adoption on our consolidated financial statements, refer to the discussion below in New and Recent Accounting Pronouncements.

New and Recent Accounting Pronouncements

New and Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board ("FASB") issued ASU 2014-09, Revenue from Contracts with Customers, which is a comprehensive new revenue recognition model requiring a company to recognize revenue to depict the transfer of goods or services to a customer at an amount reflecting the consideration it expects to receive in exchange for those goods or services. ASU 2014-09 may be applied using either a full retrospective or a modified retrospective approach and is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. Upon adoption our financial statements will include expanded disclosures related to contracts with customers. We are continuing our assessment of other impacts on our financial statements at this time.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The new standard establishes a right-of-use (ROU) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. We had $84.2 million of operating lease obligations as of March 31, 2017 (see Note 9) and upon the adoption of the standard will record an ROU asset and lease liability for present value of these leases, which will have a material impact on the balance sheet. However, the statement of comprehensive income (loss) recognition of lease expenses is not expected to change from the current methodology.

In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The ASU is designed to improve the accounting for share-based payments and affects all organizations that issue share-based payment awards to their employees. Several aspects of the accounting for share-based payment awards are simplified with this ASU, including income tax consequences, classification of awards as equity or liabilities and classification on the statement of cash flows. ASU 2016-09 is effective for public business entities for annual periods beginning after December 15, 2016, and interim periods within those fiscal years. We adopted ASU 2016-09 effective January 1, 2017, and the adoption of ASU 2016-09 did not have a material impact on our financial condition, results of operations or cash flows.

The FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments to address diversity in practice for eight specific topics: (1) debt prepayment or debt extinguishment costs; (2) settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing; (3) contingent consideration payments made after a business combination; (4) proceeds from the settlement of insurance claims; (5) proceeds from the settlement of corporate-owned life insurance policies (including bank-owned life insurance policies); (6) distributions received from equity method investees; (7) beneficial interests in securitization transactions; and (8) separately identifiable cash flows and application of the predominance principle. This guidance is effective for us beginning January 1, 2018. As this ASU is clarifying only presentation matters within the statement of cash flows, we do not expect it to have a material impact on our consolidated financial statements.

The FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash to require that restricted cash and restricted cash equivalents be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total cash amounts shown on the statement of cash flows. Consequently, transfers between cash and restricted cash will not be presented as a separate line item in the operating, investing or financing sections of the cash flow statement. We early adopted this standard, as permitted, effective for the year ended December 31, 2016. We have revised the Consolidated Statement of Cash Flows for the three months ended March 31, 2016 to reflect the adoption of this standard. As the result, the total change in cash flows for the first quarter of 2016 was a decrease of $3.0 million of cash outflows, of which $2.4 million was for operating activities, and $0.6 million was for investing activities. The change was the result of the $3.0 million net transfer of cash to restricted cash as part of our joint venture debt arrangements.

In January 2017, the FASB issued ASU 2017-01, Clarifying the Definition of a Business (ASU 2017-01), which narrows the definition of a business and provides a framework that gives entities a basis for making reasonable judgments about whether a transaction involves an asset or a business. ASU 2017-01 states that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or group of similar identifiable assets, the set is not a business. If this initial test is not met, a set cannot be considered a business unless it includes an input and a substantive process that together significantly contribute to the ability to create output. ASU 2017-01 is effective for fiscal years beginning after December 15, 2019 with early adoption permitted. We do not expect the adoption of this standard to have a material impact on our consolidated results of operations, financial position, cash flows, and related financial statement disclosures.

In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment (ASU 2017-04), which simplifies the measurement of goodwill impairment by removing step two of the goodwill impairment test that requires the determination of the fair value of individual assets and liabilities of a reporting unit. ASU 2017-04 requires goodwill impairment to be measured as the amount by which a reporting unit’s carrying value exceeds its fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. ASU 2017-04 is effective for fiscal years beginning after December 15, 2019 with early adoption permitted for interim or annual goodwill impairment tests performed after January 1, 2017. Upon adoption, we will follow the guidance in this standard for goodwill impairment testing.

In February 2017, the FASB issued ASU No. 2017-05, Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets.  The amendments clarify that a financial asset is within the scope of Subtopic 610-20 if it meets the definition of an in substance nonfinancial asset. The amendments also define the term in substance nonfinancial asset. The amendments clarify that nonfinancial assets within the scope of Subtopic 610-20 may include nonfinancial assets transferred within a legal entity to a counterparty. For example, a parent may transfer control of nonfinancial assets by transferring ownership interests in a consolidated subsidiary. A contract that includes the transfer of ownership interests in one or more consolidated subsidiaries is within the scope of Subtopic 610-20 if substantially all of the fair value of the assets that are promised to the counterparty in a contract is concentrated in nonfinancial assets. The amendments clarify that an entity should identify each distinct nonfinancial asset or in substance nonfinancial asset promised to a counterparty and derecognize each asset when a counterparty obtains control of it. The guidance is effective for us as of January 1, 2018 in conjunction with our adoption of ASU 2014-09. Entities may use either a full or modified approach to adopt the ASU. We are assessing the impact of the adoption of this new guidance on our financial statements.

We have assessed the potential impact of other recently issued, but not yet effective, accounting standards and determined that the provisions are either not applicable to us or are not anticipated to have a material impact on our consolidated financial statements.

XML

Organization (Tables)

3 Months Ended

Mar. 31, 2017

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Schedule of summary of properties

Red Lion Hotels Corporation ("RLHC", "we", "our", "us" or "our company") is a NYSE-listed hospitality and leisure company (ticker symbol: RLH) primarily engaged in the management, franchising and ownership of hotels under the following proprietary brands:

Ÿ Hotel RL	Ÿ America's Best Inn & Suites
Ÿ Red Lion Hotels	Ÿ Signature Inn
Ÿ Red Lion Inn & Suites	Ÿ Jameson Inns
Ÿ GuestHouse	Ÿ Country Hearth Inns & Suites
Ÿ Settle Inn	Ÿ Value Inn Worldwide
Ÿ Americas Best Value Inn	Ÿ Value Hotel Worldwide
Ÿ Canadas Best Value Inn	Ÿ 3 Palm Hotels
Ÿ Lexington Hotels & Inns

A summary of our hotels and available rooms as of March 31, 2017 is provided below:

	Company Operated		Franchised		Total Systemwide
	Hotels	Total Available Rooms	Hotels	Total Available Rooms	Hotels	Total Available Rooms
Total	20	4,200	1,123	69,200	1,143	73,400

XML

Summary of Significant Accounting Policies (Tables)

3 Months Ended

Mar. 31, 2017

Accounting Policies [Abstract]

Schedule of Restricted Cash

The balances included in the Consolidated Statements of Cash Flows for the periods ended are as follows (in thousands):

	Three Months Ended March 31,
	2017		2016
Cash and cash equivalents	$	31,689	$	18,852
Restricted cash	10,699		14,269
Cash, cash equivalents and restricted cash	$	42,388	$	33,121

Schedule of Alowance for Doubtful Accounts

The following schedule summarizes the activity in the allowance account for trade accounts receivable (in thousands):

	2017		2016
Allowance for doubtful accounts
Balance, January 1	$	944	$	657
Additions to allowance	217		99
Write-offs, net of recoveries	28		(2		)
Balance, March 31	$	1,189	$	754

Schedule of Property, Plant, and Equipment, Estimated Useful Life

Depreciation is provided using the straight-line method over the estimated useful life of each asset, which ranges as follows:

Buildings	25 to 39 years
Equipment	2 to 15 years
Furniture and fixtures	2 to 15 years
Landscaping and improvements	15 years

XML

Business Segments (Tables)

3 Months Ended

Mar. 31, 2017

Segment Reporting [Abstract]

Schedule of Segment Reporting Information

Selected financial information is provided below (in thousands):

Three Months Ended March 31, 2017	Company Operated Hotels			Franchised Hotels			Entertainment		Other			Total
Revenue	$	25,622		$	10,904		$	3,379	$	55		$	39,960
Operating expenses:
Segment operating expenses	22,404			8,532			3,084		4			34,024
Depreciation and amortization	3,667			558			33		285			4,543
Other operating expenses, acquisition costs and gains on asset dispositions	1,084			(276		)	—		3,758			4,566
Operating income (loss)	$	(1,533	)	$	2,090		$	262	$	(3,992	)	$	(3,173	)
Capital expenditures	$	541		$	369		$	59	$	254		$	1,223
Identifiable assets as of March 31, 2017	$	248,353		$	68,813		$	4,893	$	17,943		$	340,002

Three Months Ended March 31, 2016	Company Operated Hotels			Franchised Hotels			Entertainment		Other			Total
Revenue	$	25,334		$	3,296		$	4,031	$	13		$	32,674
Operating expenses:
Segment operating expenses	22,784			3,356			3,437		13			29,590
Depreciation and amortization	3,319			(86		)	54		215			3,502
Other operating expenses and gains on asset dispositions	1,045			—			—		3,056			4,101
Operating income (loss)	$	(1,814	)	$	26		$	540	$	(3,271	)	$	(4,519	)
Capital expenditures	$	6,580		$	—		$	—	$	107		$	6,687
Identifiable assets as of December 31, 2016	$	260,583		$	66,601		$	5,580	$	11,771		$	344,535

XML

Property and Equipment (Tables)

3 Months Ended

Mar. 31, 2017

Property, Plant and Equipment [Abstract]

Schedule of Property, Plant and Equipment

Property and equipment is summarized as follows (in thousands):

	March 31, 2017			December 31, 2016
Buildings and equipment	$	254,328		$	251,731
Furniture and fixtures	37,247			37,767
Landscaping and land improvements	7,972			7,928
	299,547			297,426
Less accumulated depreciation	(138,371		)	(134,346		)
	161,176			163,080
Land	43,192			43,193
Construction in progress	3,560			4,459
Property and equipment, net	$	207,928		$	210,732

XML

Goodwill and Intangible Assets (Tables)

3 Months Ended

Mar. 31, 2017

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Goodwill and Other Intangibles

The following table summarizes the balances of goodwill and other intangible assets (in thousands):

	March 31, 2017		December 31, 2016
Goodwill	$	12,566	$	12,566
Intangible assets
Brand name - indefinite lived	$	39,704	$	39,704
Brand name - finite lived, net	2,577		2,664
Customer contracts, net	9,921		10,352
Trademarks	134		134
Total intangible assets	$	52,336	$	52,854

Goodwill and other intangible assets attributable to each of our business segments at March 31, 2017 and December 31, 2016 were as follows (in thousands):

	March 31, 2017				December 31, 2016
			Intangible				Intangible
	Goodwill		Assets		Goodwill		Assets
Company operated hotels	$	—	$	4,660	$	—	$	4,660
Franchised hotels	9,405		47,670		9,405		48,188
Entertainment	3,161		6		3,161		6
Total	$	12,566	$	52,336	$	12,566	$	52,854

Schedule of Intangible Assets

The following table summarizes the balances of amortized customer contracts and finite-lived brand names (in thousands):

	March 31, 2017			December 31, 2016
Customer contracts	$	11,673		$	11,673
Brand name - finite lived	2,751			2,751
Accumulated amortization	(1,926		)	(1,408		)
Net carrying amount	$	12,498		$	13,016

Schedule of Estimated Future Amortization Expenses

As of March 31, 2017, estimated future amortization expenses related to our customer contracts and finite-lived brand names is as follows (in thousands):

Year ending December 31,	Amount
2017 (remainder)	$	1,535
2018	1,798
2019	1,610
2020	1,419
2021	1,261
Thereafter	4,875
Total	$	12,498

XML

Long-Term Debt (Tables)

3 Months Ended

Mar. 31, 2017

Debt Disclosure [Abstract]

Schedule of current and non-current portions of long-term debt and capital lease obligations

The current and noncurrent portions of long-term debt as of March 31, 2017 and December 31, 2016 are as follows (in thousands):

	March 31, 2017					December 31, 2016
	Current		Non-Current			Current		Non-Current
RL Venture	$	1,394	$	71,748		$	1,375	$	69,841
RL Baltimore	—		13,300			—		13,300
RLH Atlanta	70		9,330			40		9,360
RLH DC	135		16,547			54		16,628
Total debt	1,599		110,925			1,469		109,129
Unamortized debt issuance costs	—		(1,995		)	—		(2,267		)
Long-term debt net of debt issuance costs	$	1,599	$	108,930		$	1,469	$	106,862

Schedule of contractual maturities for long-term debt outstanding

Contractual maturities for long-term debt outstanding at March 31, 2017, for the next five years are summarized by the year as follows (in thousands):

Year ending December 31,	Amount
2017 (remainder)	$	1,132
2018	24,442
2019	86,950
2020	—
2021	—
Thereafter	—
Total	$	112,524

XML

Derivative Financial Instruments (Tables)

3 Months Ended

Mar. 31, 2017

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Interest Rate Derivatives

At March 31, 2017, the valuation of the interest rate caps resulted in the recognition of assets with minimal values both individually and in the aggregate, which are included in "Other assets, net" on the Consolidated Balance Sheets.

Subsidiary	Institution	Original Notional Amount		LIBOR Reference Rate Cap		Expiration
		(In millions)
RL Venture	Commonwealth Bank of Australia	$	80.0	4.0	%	January 2018
RL Baltimore	Commonwealth Bank of Australia	$	13.3	3.0	%	May 2018
RLH Atlanta	SMBC Capital Markets, Inc.	$	9.4	3.0	%	September 2018
RLH DC	Commonwealth Bank of Australia	$	17.5	3.0	%	November 2018

XML

Operating and Capital Lease Commitments (Tables)

3 Months Ended

Mar. 31, 2017

Leases [Abstract]

Schedule of Future Minimum Payments for Leases

Total future minimum payments due under all current term operating and capital leases at March 31, 2017, are as indicated below (in thousands):

Year ending December 31,	Total Lease Obligation		Operating Lease Obligation		Capital Lease Obligation
2017 (remainder)	$	4,582	$	4,390	$	192
2018	5,244		4,980		264
2019	4,580		4,316		264
2020	4,531		4,294		237
2021	2,877		2,752		125
Thereafter	63,453		63,453		—
Total	$	85,267	$	84,185	$	1,082

XML

Stock Based Compensation (Tables)

3 Months Ended

Mar. 31, 2017

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of Compensation Cost

For the three months ended March 31, 2017 and 2016 stock-based compensation expense is as follows:

	Three Months Ended March 31,
	2017		2016
	(In thousands)
Stock options	$	17	$	—
Restricted stock units	566		496
Unrestricted stock awards	105		105
Employee Stock Purchase Plan	8		7
Total stock-based compensation	$	696	$	608

Schedule of Stock Option Fair Value Assumptions

Stock option fair value assumptions are as follows for stock options granted during the three months ended March 31, 2016:

Grant Date	Volatility	Forfeiture Rate	Risk-free Interest Rate	Dividend Yield	Expected Life (Years)
March 28, 2016	61.12%	21.07%	1.37%	—%	5

Schedule of Stock Options Activity

A summary of stock option activity for the three months ended March 31, 2017, is as follows:

	Number of Shares	Weighted Average Exercise Price
Balance, January 1, 2017	132,868	$	8.91
Options granted	—	—
Options exercised	—	—
Options forfeited	—	—
Balance, March 31, 2017	132,868	$	8.91
Exercisable, March 31, 2017	72,021	$	9.51

Schedule of Stock Option Plans, by Exercise Price Range

Additional information regarding stock options outstanding and exercisable as of March 31, 2017, is presented below:

Exercise Price	Number Outstanding	Weighted Average Remaining Contractual Life (Years)	Expiration Date	Weighted Average Exercise Price		Aggregate Intrinsic Value(1)		Number Exercisable	Weighted Average Exercise Price		Aggregate Intrinsic Value(1)
$8.20	81,130	8.99	2026	$	8.20	$	—	20,283	$	8.20	$	—
$8.74	36,093	1.14	2018	$	8.74	—		36,093	$	8.74	—
$13.00	15,645	0.13	2017	$	13.00	—		15,645	$	13.00	—
	132,868	5.81	2017-2026	$	8.91	$	—	72,021	$	9.51	$	—

(1) The aggregate intrinsic value is before applicable income taxes and represents the amount option recipients would have received if all options had been exercised on the last trading day of the first three months of 2017, or March 31, 2017, based upon our closing stock price on that date of $7.05.

Schedule of Restricted Stock

A summary of restricted stock unit activity for the three months ended March 31, 2017, is as follows:

	Number of Shares		Weighted Average Grant Date Fair Value
Balance, January 1, 2017	1,036,680		$	7.27
Granted	318,815		$	7.09
Vested	(97,241	)	$	7.31
Forfeited	(23,219	)	$	7.04
Balance, March 31, 2017	1,235,035		$	7.22

Schedule of Unrestricted Stock Awards

The following table summarizes unrestricted stock award activity for the three months ended March 31, 2017 and 2016:

	Three Months Ended March 31,
	2017		2016
Shares of unrestricted stock granted	12,426		14,934
Weighted average grant date fair value per share	$	8.45	$	7.03

Schedule Employee Stock Purchase Plan

During the three months endedMarch 31, 2017 and 2016, there were 12,554 and 12,735 shares, respectively issued, and approximately $8,000 and $7,000 was recorded in compensation expense related to the discount associated with the plan in each year, respectively.

	Three Months Ended March 31,
	2017		2016
Shares of stock sold to employees	12,554		12,735
Weighted average fair value per ESPP award	$	6.00	$	5.96

XML

Earnings (Loss) Per Share (Tables)

3 Months Ended

Mar. 31, 2017

Earnings Per Share [Abstract]

Schedule of Earnings Per Share, Basic and Diluted

The following table presents a reconciliation of the numerators and denominators used in the basic and diluted net income (loss) per share computations for the three months endedMarch 31, 2017 and 2016 (in thousands, except per share data):

	Three Months Ended March 31,
	2017			2016
Numerator - basic and diluted:
Net income (loss)	$	(5,123	)	$	(5,820	)
Less: net (income) loss attributable to noncontrolling interests	1,519			1,021
Net income (loss) attributable to RLHC	(3,604		)	(4,799		)
Less: fair value adjustment of share component of contingent consideration	(713		)	—
Net income (loss) attributable to RLHC for diluted earnings (loss) per share	$	(4,317	)	$	(4,799	)
Denominator:
Weighted average shares - basic	23,469			20,088
Weighted average shares - diluted	24,159			20,088
Earnings (loss) per share - basic	$	(0.15	)	$	(0.24	)
Earnings (loss) per share - diluted	$	(0.18	)	$	(0.24	)

Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share

The following table presents options to purchase common shares, restricted stock units outstanding, warrants to purchase common shares and contingently issuable shares included in the earnings per share calculation and the amount excluded from the dilutive earnings per share calculation as they were considered antidilutive for three months endedMarch 31, 2017 and 2016. For the three months ended March 31,2017, we recognized $0.7 million of income related to the change in fair value of the share component of the contingent consideration (classified within acquisition and integration costs on our Consolidated Statement of Operations), as the result of the $1.30 per share decrease in our stock price from December 31, 2016 to March 31, 2017.

	Three Months Ended March 31,
	2017	2016
Stock Options(1)
Dilutive awards outstanding	—	—
Antidilutive awards outstanding	132,868	152,806
Total awards outstanding	132,868	152,806
Restricted Stock Units(2)
Dilutive awards outstanding	—	—
Antidilutive awards outstanding	1,235,035	1,382,344
Total awards outstanding	1,235,035	1,382,344
Warrants(3)
Dilutive awards outstanding	—	—
Antidilutive awards outstanding	442,533	442,533
Total awards outstanding	442,533	442,533
Shares for Vantage Contingent Consideration(4)
Dilutive awards outstanding	690,000	—
Antidilutive awards outstanding	—	—
Total awards outstanding	690,000	—
Total dilutive awards outstanding	690,000	—

⁽¹⁾ All stock options were anti-dilutive as a result of the RLHC weighted average share price during the reporting periods.

⁽²⁾ All restricted stock units were anti-dilutive due to the net loss attributable to RLHC in the reporting periods. If we had reported net income for the three months ended March 31, 2017 and 2016 then 375,260 and 417,041 units, respectively, would have been dilutive.

⁽³⁾ All warrants were anti-dilutive due to the net loss attributable to RLHC in the reporting periods. If we had reported net income for the three months ended March 31, 2017 and 2016 then 49,665 and 1,312 units, respectively, would have been dilutive.

⁽⁴⁾ As part of the Vantage acquisition, up to an additional 690,000 shares may be issued with the one-year and two-year contingent consideration earns outs (see Note 16). These shares would not be included in basic shares outstanding until the period the contingency is resolved. For purposes of calculating earnings per share, the income or expense recognized during the period that is related to the changes in the fair value of the share component of the contingent consideration is added back to net income/loss. For the three months ended March 31,2017, we recognized $0.7 million of income related to the change in fair value of the share component of the contingent consideration (classified within acquisition and integration costs on our Consolidated Statement of Operations), as the result of the $1.30 per share decrease in our stock price from December 31, 2016 to March 31, 2017.

XML

Fair Value (Tables)

3 Months Ended

Mar. 31, 2017

Fair Value Disclosures [Abstract]

Fair Value and Carrying Amount

	March 31, 2017				December 31, 2016
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial assets:
Notes receivable	$	1,285	$	1,285	$	1,295	$	1,295
Financial liabilities:
Total debt	$	112,524	$	110,936	$	110,598	$	107,858
Total capital lease obligations	1,082		1,082		1,147		1,147

XML

Business Acquisition (Tables)

3 Months Ended

Mar. 31, 2017

Business Combinations [Abstract]

Schedule of Business Acquisition

The purchase price totaled $40.2 million, including the following (in thousands):

	Purchase Price
Cash paid to Vantage at close date	$	10,300
Cash paid to TESI at close date	12,300
Total cash consideration at close date	22,600
Value of 690,000 shares to TESI at close date	5,800
Total consideration at close date	28,400
Fair value of contingent consideration	10,900
Assumption of Vantage obligation	900
Total purchase price	$	40,200

Payment of the contingent consideration is dependent on the retention of Vantage properties under franchise or membership license agreements, as determined by the room count at the first and second year anniversary dates when compared with the room count at the close date, as follows:

	Year 1 Anniversary			Year 2 Anniversary			Total
Threshold	Shares	Cash(1)		Shares	Cash(1)		Shares	Cash(1)
90% of room count at close	414,000	$	4,000	276,000	$	3,000	690,000	$	7,000
80% of room count at close	310,500	3,000		207,000	2,250		517,500	5,250
Minimum	—	1,000		—	1,000		—	2,000
(1) in thousands

Pro Forma Information

The following supplemental pro forma results are based on the individual historical results of RLHC and Vantage, with adjustments to give effect to the combined operations as if the acquisition had been consummated on January 1, 2016 (unaudited):

	Three Months Ended March 31, 2016
	(in thousands)
Revenue	$	40,552
Income (loss) before income taxes	(4,930		)

XML

Organization (Details)	Mar. 31, 2017 room hotel $ / shares shares	Dec. 31, 2016 $ / shares shares
Real Estate Properties [Line Items]
Hotels | hotel	1,143
Total available rooms | room	73,400
Common stock, shares authorized (in shares)	50,000,000	50,000,000
Common stock, par value (in dollars per share) | $ / shares	$ 0.01	$ 0.01
Preferred stock, shares authorized (in shares)	5,000,000	5,000,000
Preferred stock, par value (in dollars per share) | $ / shares	$ 0.01	$ 0.01
Common stock, shares issued (in shares)	23,525,123	23,434,480
Preferred stock, shares issued (in shares)	0	0
Franchised hotels
Real Estate Properties [Line Items]
Hotels | hotel	1,123
Total available rooms | room	69,200
Company Operated
Real Estate Properties [Line Items]
Hotels | hotel	20
Total available rooms | room	4,200

XML

Summary of Significant Accounting Policies (Narrative) (Details) $ in Thousands		1 Months Ended			3 Months Ended
	Apr. 01, 2016	Oct. 31, 2015	Sep. 30, 2015	Jan. 31, 2015	Mar. 31, 2017 USD ($) term	Mar. 31, 2016 USD ($)	Dec. 31, 2016 USD ($)	Dec. 31, 2003 USD ($)
Accounting Policies [Line Items]
Restricted cash					$ 10,699	$ 14,269	$ 9,537
Deferred Income
Deferred gain								$ 7,000
Number of renewable terms | term					3
Renewable lease period					5 years
Recognized income					$ 100	100
Deferred revenue					700		900
Advertising expense					1,100	1,400
Operating lease obligations					84,185
Decrease of cash outflows					5,221	2,081
Net cash used in operating activities					3,973	6,408
Net cash used in investing activities					2,997	5,048
Variable Interest Entity, Primary Beneficiary
Accounting Policies [Line Items]
Restricted cash					$ 10,373		$ 9,211
RL Venture LLC | Variable Interest Entity, Primary Beneficiary
Accounting Policies [Line Items]
Ownership percentage				55.00%	55.00%
RLS Atla Venture | Variable Interest Entity, Primary Beneficiary
Accounting Policies [Line Items]
Ownership percentage			55.00%		55.00%
RLS Balt Venture LLC | Variable Interest Entity, Primary Beneficiary
Accounting Policies [Line Items]
Ownership percentage					73.00%
RLS DC Venture | Variable Interest Entity, Primary Beneficiary
Accounting Policies [Line Items]
Ownership percentage	55.00%	86.00%			55.00%
Adjustments for New Accounting Principle, Early Adoption
Deferred Income
Decrease of cash outflows						3,000
Net cash used in operating activities						2,400
Net cash used in investing activities						$ 600

XML

Summary of Significant Accounting Policies (Restricted Cash) (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016	Mar. 31, 2016	Dec. 31, 2015
Accounting Policies [Abstract]
Cash and cash equivalents	$ 31,689	$ 38,072	$ 18,852
Restricted cash	10,699	9,537	14,269
Cash, cash equivalents and restricted cash	$ 42,388	$ 47,609	$ 33,121	$ 35,202

XML

Summary of Significant Accounting Policies (Allowance for Doubtful Accounts) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Allowance for Doubtful Accounts Receivable [Roll Forward]
Balance, beginning of year	$ 944	$ 657
Additions to allowance	217	99
Write-offs, net of recoveries	28	(2)
Balance, end of year	$ 1,189	$ 754

XML

Summary of Significant Accounting Policies (Property and Equipment) (Details)	3 Months Ended
	Mar. 31, 2017
Buildings | Minimum [Member]
Property, Plant and Equipment [Line Items]
Useful life	25 years
Buildings | Maximum [Member]
Property, Plant and Equipment [Line Items]
Useful life	39 years
Equipment | Minimum [Member]
Property, Plant and Equipment [Line Items]
Useful life	2 years
Equipment | Maximum [Member]
Property, Plant and Equipment [Line Items]
Useful life	15 years
Furniture and fixtures | Minimum [Member]
Property, Plant and Equipment [Line Items]
Useful life	2 years
Furniture and fixtures | Maximum [Member]
Property, Plant and Equipment [Line Items]
Useful life	15 years
Landscaping and improvements
Property, Plant and Equipment [Line Items]
Useful life	15 years

XML

Business Segments (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2017 USD ($) segment	Mar. 31, 2016 USD ($)	Dec. 31, 2016 USD ($)
Segment Reporting Information [Line Items]
Number of operating segments | segment	3
Revenue	$ 39,960	$ 32,674
Segment operating expenses	34,024	29,590
Depreciation and amortization	4,543	3,502
Other operating expenses, acquisition costs and gains on asset dispositions	4,566	4,101
Operating income (loss)	(3,173)	(4,519)
Capital expenditures	1,223	6,687
Identifiable assets	340,002		$ 344,535
Operating segments | Company operated hotels
Segment Reporting Information [Line Items]
Revenue	25,622	25,334
Segment operating expenses	22,404	22,784
Depreciation and amortization	3,667	3,319
Other operating expenses, acquisition costs and gains on asset dispositions	1,084	1,045
Operating income (loss)	(1,533)	(1,814)
Capital expenditures	541	6,580
Identifiable assets	248,353		260,583
Operating segments | Franchised hotels
Segment Reporting Information [Line Items]
Revenue	10,904	3,296
Segment operating expenses	8,532	3,356
Depreciation and amortization	558	(86)
Other operating expenses, acquisition costs and gains on asset dispositions	(276)	0
Operating income (loss)	2,090	26
Capital expenditures	369	0
Identifiable assets	68,813		66,601
Operating segments | Entertainment
Segment Reporting Information [Line Items]
Revenue	3,379	4,031
Segment operating expenses	3,084	3,437
Depreciation and amortization	33	54
Other operating expenses, acquisition costs and gains on asset dispositions	0	0
Operating income (loss)	262	540
Capital expenditures	59	0
Identifiable assets	4,893		5,580
Other
Segment Reporting Information [Line Items]
Revenue	55	13
Segment operating expenses	4	13
Depreciation and amortization	285	215
Other operating expenses, acquisition costs and gains on asset dispositions	3,758	3,056
Operating income (loss)	(3,992)	(3,271)
Capital expenditures	254	$ 107
Identifiable assets	$ 17,943		$ 11,771

XML

Variable Interest Entities (Details)				1 Months Ended						3 Months Ended
	May 08, 2017 USD ($)	Apr. 01, 2016 USD ($)	Feb. 03, 2016 USD ($)	May 08, 2017 USD ($)	Feb. 29, 2016 USD ($)	Dec. 31, 2015 USD ($)	Oct. 31, 2015 USD ($)	Sep. 30, 2015	Jan. 31, 2015 hotel	Mar. 31, 2017 USD ($) hotel	Mar. 31, 2016 USD ($)	Oct. 29, 2015	Apr. 30, 2015 USD ($)
RLS DC Venture | The Quincy Hotel
Variable Interest Entity [Line Items]
Voting interest acquired												100.00%
RL Venture LLC
Variable Interest Entity [Line Items]
Number of hotels disposed of | hotel										1
RLS Balt Venture LLC
Variable Interest Entity [Line Items]
Ownership by non-controlling interest holders													21.00%
Option to purchase additional interest percent													24.00%
Option to purchase additional interest cost													$ 2,300,000
RLS Balt Venture LLC | Shelbourne Falcon II
Variable Interest Entity [Line Items]
Purchase of additional interest percent						6.00%
Purchase of additional interest						$ 560,000
Gain on purchase of equity interests in additional paid in capital						$ 100,000
RLS Atla Venture | Shelbourne Falcon III
Variable Interest Entity [Line Items]
Ownership percentage								45.00%
RLS DC Venture | Shelbourne Falcon IV
Variable Interest Entity [Line Items]
Ownership percentage		45.00%					14.00%
Option to purchase additional interest percent		16.00%										31.00%
Purchase of additional interest percent			15.00%
Purchase of additional interest		$ 1,700,000	$ 1,500,000
Gain on purchase of equity interests in additional paid in capital					$ 200,000
Variable Interest Entity, Primary Beneficiary | RL Venture LLC
Variable Interest Entity [Line Items]
Ownership by non-controlling interest holders									45.00%
Number of hotels transfered | hotel									12	11
Ownership percentage									55.00%	55.00%
Cash distributions										$ 0	$ 0
Variable Interest Entity, Primary Beneficiary | RLS Balt Venture LLC
Variable Interest Entity [Line Items]
Ownership percentage										73.00%
Cash distributions										$ 0	0
Funding provided							$ 1,500,000
Funding preferred return							11.00%
Variable Interest Entity, Primary Beneficiary | RLS Atla Venture
Variable Interest Entity [Line Items]
Ownership percentage								55.00%		55.00%
Cash distributions										$ 0	0
Variable Interest Entity, Primary Beneficiary | RLS DC Venture
Variable Interest Entity [Line Items]
Ownership percentage		55.00%					86.00%			55.00%
Cash distributions										$ 0	$ 0
Gain on purchase of equity interests in additional paid in capital		$ 300,000
Subsequent Event | Variable Interest Entity, Primary Beneficiary | RL Venture LLC
Variable Interest Entity [Line Items]
Cash distributions				$ 1,500,000
Subsequent Event | Variable Interest Entity, Primary Beneficiary | RL Venture LLC
Variable Interest Entity [Line Items]
Cash distributions				$ 800,000
Subsequent Event | Variable Interest Entity, Primary Beneficiary | RLS Balt Venture LLC
Variable Interest Entity [Line Items]
Funding provided	$ 2,800,000
Funding preferred return	9.00%
Subsequent Event | Variable Interest Entity, Primary Beneficiary | RLS DC Venture
Variable Interest Entity [Line Items]
Funding provided	$ 950,000
Funding preferred return	9.00%

XML

Property and Equipment (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	$ 299,547	$ 297,426
Less accumulated depreciation	(138,371)	(134,346)
Property, plant and equipment, net, excluding land and construction in progress	161,176	163,080
Property and equipment, net	207,928	210,732
Buildings and equipment
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	254,328	251,731
Furniture and fixtures
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	37,247	37,767
Landscaping and land improvements
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	7,972	7,928
Land
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	43,192	43,193
Construction in progress
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	$ 3,560	$ 4,459

XML

Goodwill and Intangible Assets (Details) - USD ($) $ in Thousands		1 Months Ended
	Sep. 30, 2016	Apr. 30, 2015	Mar. 31, 2017	Dec. 31, 2016
Schedule of Goodwill and Intangible Assets [Line Items]
Total intangible assets			$ 52,336	$ 52,854
Goodwill			12,566	12,566
Accumulated amortization			(1,926)	(1,408)
Net carrying amount			12,498	13,016
Company operated hotels
Schedule of Goodwill and Intangible Assets [Line Items]
Total intangible assets			4,660	4,660
Goodwill			0	0
Franchised hotels
Schedule of Goodwill and Intangible Assets [Line Items]
Total intangible assets			47,670	48,188
Goodwill			9,405	9,405
Entertainment
Schedule of Goodwill and Intangible Assets [Line Items]
Total intangible assets			6	6
Goodwill			3,161	3,161
Brand Names
Schedule of Goodwill and Intangible Assets [Line Items]
Finite-lived intangibles			2,751	2,751
Net carrying amount			2,577	2,664
Customer contracts
Schedule of Goodwill and Intangible Assets [Line Items]
Finite-lived intangibles			11,673	11,673
Net carrying amount			9,921	10,352
Trademarks
Schedule of Goodwill and Intangible Assets [Line Items]
Net carrying amount			134	134
Brand Names
Schedule of Goodwill and Intangible Assets [Line Items]
Brand name - indefinite lived			$ 39,704	$ 39,704
GuestHouse International LLC [Member] | Customer contracts
Schedule of Goodwill and Intangible Assets [Line Items]
Amortization period		10 years
Finite-lived intangibles assets		$ 3,300
GuestHouse International LLC [Member] | Brand Names
Schedule of Goodwill and Intangible Assets [Line Items]
Indefinite-lived intangible assets acquired		$ 5,400
Vantage Hospitality Group, Inc.
Schedule of Goodwill and Intangible Assets [Line Items]
Total intangible assets	$ 30,000
Vantage Hospitality Group, Inc. | Brand Names
Schedule of Goodwill and Intangible Assets [Line Items]
Finite-lived intangible assets acquired	$ 2,800
Acquired finite-lived intangible assets, weighted average useful life	8 years 9 months 18 days
Vantage Hospitality Group, Inc. | Customer contracts
Schedule of Goodwill and Intangible Assets [Line Items]
Finite-lived intangibles assets	$ 8,400
Acquired finite-lived intangible assets, weighted average useful life	15 years
Vantage Hospitality Group, Inc. | Brand Names
Schedule of Goodwill and Intangible Assets [Line Items]
Indefinite-lived intangible assets acquired	$ 27,200

XML

Goodwill and Intangible Assets (Future Amortization Expense) (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Goodwill and Intangible Assets Disclosure [Abstract]
2017 (remainder)	$ 1,535
2018	1,798
2019	1,610
2020	1,419
2021	1,261
Thereafter	4,875
Net carrying amount	$ 12,498	$ 13,016

XML

Long-Term Debt (Schedule of Debt) (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Debt Instrument [Line Items]
Long-term debt, due within one year	$ 1,599	$ 1,469
Total debt	110,925	109,129
Unamortized debt issuance costs	(1,995)	(2,267)
Long-term debt net of debt issuance costs	108,930	106,862
Long-term Debt | RL Venture
Debt Instrument [Line Items]
Long-term debt, due within one year	1,394	1,375
Total debt	71,748	69,841
Long-term Debt | RL Baltimore
Debt Instrument [Line Items]
Long-term debt, due within one year	0	0
Total debt	13,300	13,300
Long-term Debt | RLH Atlanta
Debt Instrument [Line Items]
Long-term debt, due within one year	70	40
Total debt	9,330	9,360
Long-term Debt | RLH DC
Debt Instrument [Line Items]
Long-term debt, due within one year	135	54
Total debt	$ 16,547	$ 16,628

XML

Long-Term Debt (RL Venture) (Details) - RL Venture Holding LLC [Member]	1 Months Ended	3 Months Ended
	Jan. 31, 2015 USD ($) subsidiary	Mar. 31, 2017 USD ($)
Debt Instrument [Line Items]
Number of wholly-owned subsidiaries | subsidiary	12
Long-term Debt
Debt Instrument [Line Items]
Principal amount of debt	$ 53,800,000.0
Additional advance	$ 26,200,000.0
Term of loan	2 years
Amount drawn		$ 2,200,000
Unamortized debt issuance fees		$ 1,200,000
Amortization period	25 years
Extension period	1 year
Long-term Debt | LIBOR
Debt Instrument [Line Items]
Basis spread on variable rate	4.75%

XML

Long-Term Debt (RL Baltimore) (Details) - RL Baltimore - Long-term Debt	1 Months Ended
	May 31, 2018 USD ($)	Apr. 30, 2015 USD ($) extension	Mar. 31, 2017 USD ($)
Debt Instrument [Line Items]
Principal amount of debt		$ 10,100,000.0
Additional advance		$ 3,200,000.0
Unamortized debt issuance fees			$ 300,000
Number of extension options | extension		2
Extension period		1 year
LIBOR
Debt Instrument [Line Items]
Basis spread on variable rate		6.25%
Scenario, Forecast [Member]
Debt Instrument [Line Items]
Monthly principal payments	$ 16,000

XML

Long-Term Debt (RLH Atlanta) (Details) - RLH Atlanta - Long-term Debt	1 Months Ended
	Sep. 30, 2017 USD ($)	Sep. 30, 2015 USD ($) extension	Mar. 31, 2017 USD ($)
Debt Instrument [Line Items]
Principal amount of debt		$ 6,000,000.0
Additional advance		$ 3,400,000.0
Unamortized debt issuance fees			$ 100,000
Number of extension options | extension		2
Extension period		1 year
LIBOR
Debt Instrument [Line Items]
Basis spread on variable rate		6.35%
Scenario, Forecast [Member]
Debt Instrument [Line Items]
Monthly principal payments	$ 10,000

XML

Long-Term Debt (RLH DC) (Details) - RLH DC - Long-term Debt - USD ($)	1 Months Ended	12 Months Ended
	Oct. 31, 2015	Dec. 31, 2016	Mar. 31, 2017	Oct. 30, 2015
Debt Instrument [Line Items]
Principal amount of debt				$ 15,200,000.0
Additional advance				$ 2,300,000.0
Amount drawn		$ 1,500,000
Available to draw			$ 800,000
Unamortized debt issuance fees			$ 300,000
Extension period	1 year
Amortization period	25 years
LIBOR
Debt Instrument [Line Items]
Basis spread on variable rate	4.55%

XML

Long-Term Debt (Contractual Maturities) (Details) $ in Thousands	Mar. 31, 2017 USD ($)
Debt Disclosure [Abstract]
2017 (remainder)	$ 1,132
2018	24,442
2019	86,950
2020	0
2021	0
Thereafter	0
Total	$ 112,524

XML

Derivative Financial Instruments (Details) - Interest rate cap $ in Millions	Mar. 31, 2017 USD ($)
RL Venture LLC
Derivative [Line Items]
Original Notional Amount	$ 80.0
RL Venture LLC | LIBOR
Derivative [Line Items]
LIBOR Reference Rate Cap	4.00%
RL Baltimore
Derivative [Line Items]
Original Notional Amount	$ 13.3
RL Baltimore | LIBOR
Derivative [Line Items]
LIBOR Reference Rate Cap	3.00%
RLH Atlanta
Derivative [Line Items]
Original Notional Amount	$ 9.4
RLH Atlanta | LIBOR
Derivative [Line Items]
LIBOR Reference Rate Cap	3.00%
RLH DC
Derivative [Line Items]
Original Notional Amount	$ 17.5
RLH DC | LIBOR
Derivative [Line Items]
LIBOR Reference Rate Cap	3.00%

XML

Operating and Capital Lease Commitments (Future Minimum Payments Due) (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2017 USD ($) office hotel	Mar. 31, 2016 USD ($)
Operating Leased Assets [Line Items]
Number of properties | hotel	1,143
Typical capital lease term	5 years
2017	$ 4,582
2018	5,244
2019	4,580
2020	4,531
2021	2,877
Thereafter	63,453
Total	85,267
Operating Lease Obligation
2017	4,390
2018	4,980
2019	4,316
2020	4,294
2021	2,752
Thereafter	63,453
Total	84,185
Capital Lease Obligation
2017	192
2018	264
2019	264
2020	237
2021	125
Thereafter	0
Total	1,082
Rent expense	$ 1,600	$ 1,400
Company Operated Hotels [Member]
Operating Leased Assets [Line Items]
Number of properties | hotel	5
Administrative Offices [Member]
Operating Leased Assets [Line Items]
Number of properties | office	3

XML

Stock Based Compensation (Stock Incentive Plans Narrative) (Details)	Mar. 31, 2017 shares
2006 Stock Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares authorized (in shares)	2,000,000
Number of shares of common stock available for issuance	0
2015 Stock Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares authorized (in shares)	1,400,000
Number of shares of common stock available for issuance	264,375

XML

Stock Based Compensation (Stock Based Compensation Expense) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	$ 696	$ 608
Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	17	0
Restricted Stock Units (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	566	496
Unrestricted stock awards
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	105	105
ESPP
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	$ 8	$ 7

XML

Stock Based Compensation (Fair Value Assumptions) (Details) - Stock Options	3 Months Ended
	Mar. 31, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Volatility	61.12%
Forfeiture Rate	21.07%
Risk-free Interest Rate	1.37%
Dividend Yield	0.00%
Expected Life (Years)	5 years

XML

Stock Based Compensation (Stock Option Activity) (Details) - Stock Options - $ / shares	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Number of Shares (in shares)
Balance (in shares)	132,868
Options granted (in shares)	0	81,130
Options exercised (in shares)	0
Options forfeited (in shares)	0
Balance (in shares)	132,868	152,806
Exercisable (in shares)	72,021
Weighted Average Exercise Price (in dollars per share)
Balance (in dollars per share)	$ 8.91
Options granted (in dollars per share)	0.00
Options exercised (in dollars per share)	0.00
Options forfeited (in dollars per share)	0.00
Balance (in dollars per share)	8.91
Exercisable (in dollars per share)	$ 9.51

XML

Stock Based Compensation (Exercise Price Range) (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2017	Sep. 30, 2016
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Share price (in dollars per share)	$ 7.05	$ 8.34
Stock Options
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Number of Options Outstanding (in shares)	132,868
Weighted Average Remaining Contractual Life	5 years 9 months 22 days
Weighted Average Exercise Price (in dollars per share)	$ 8.91
Aggregate Intrinsic Value	$ 0
Number of Exercisable Options (in shares)	72,021
Weighted Average Exercise Price, Exercisable (in dollars per share)	$ 9.51
Aggregate Intrinsic Value, Exercisable	$ 0
$8.20 | Stock Options
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise Price, Upper Limit (in dollars per share)	$ 8.20
Number of Options Outstanding (in shares)	81,130
Weighted Average Remaining Contractual Life	8 years 11 months 27 days
Weighted Average Exercise Price (in dollars per share)	$ 8.20
Aggregate Intrinsic Value	$ 0
Number of Exercisable Options (in shares)	20,283
Weighted Average Exercise Price, Exercisable (in dollars per share)	$ 8.20
Aggregate Intrinsic Value, Exercisable	$ 0
$8.74 | Stock Options
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise Price, Upper Limit (in dollars per share)	$ 8.74
Number of Options Outstanding (in shares)	36,093
Weighted Average Remaining Contractual Life	1 year 1 month 21 days
Weighted Average Exercise Price (in dollars per share)	$ 8.74
Aggregate Intrinsic Value	$ 0
Number of Exercisable Options (in shares)	36,093
Weighted Average Exercise Price, Exercisable (in dollars per share)	$ 8.74
Aggregate Intrinsic Value, Exercisable	$ 0
$13.00 | Stock Options
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise Price, Upper Limit (in dollars per share)	$ 13.00
Number of Options Outstanding (in shares)	15,645
Weighted Average Remaining Contractual Life	1 month 17 days
Weighted Average Exercise Price (in dollars per share)	$ 13.00
Aggregate Intrinsic Value	$ 0
Number of Exercisable Options (in shares)	15,645
Weighted Average Exercise Price, Exercisable (in dollars per share)	$ 13.00
Aggregate Intrinsic Value, Exercisable	$ 0

XML

Stock Based Compensation (Restricted Stock Units, SharesIssued as Compensation Narrative) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Dec. 31, 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	$ 696	$ 608
Restricted Stock Units (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Other than options outstanding (in shares)	1,235,035	1,382,344	1,036,680
Granted (in shares)	318,815	242,989
Vesting percentage per year	25.00%
Vesting period	4 years
Vested (in shares)	(97,241)
Percentage of total units granted that are forfeited	21.00%
Other than options, fair value	$ 700	$ 500
Stock-based compensation expense	566	$ 496
Additional compensation expense	$ 6,500
Period for recognition	33 months

XML

Stock Based Compensation (Restricted Stock Units) (Details) - Restricted Stock Units (RSUs) - $ / shares	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Number of Shares
Other than options outstanding (in shares)	1,036,680
Granted (in shares)	318,815	242,989
Vested (in shares)	(97,241)
Forfeited (in shares)	(23,219)
Other than options outstanding (in shares)	1,235,035	1,382,344
Weighted Average Grant Date Fair Value
Balance (in dollars per share)	$ 7.27
Granted (in dollars per share)	7.09
Vested (in dollars per share)	7.31
Forfeited (in dollars per share)	7.04
Balance (in dollars per share)	$ 7.22

XML

Stock Based Compensation (Unrestricted Stock Awards) (Details) - Unrestricted stock awards - $ / shares	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted (in shares)	12,426	14,934
Weighted average grant date fair value per share (in dollars per share)	$ 8.45	$ 7.03

XML

Stock Based Compensation (Employee Stock Purchase Plan) (Details) - USD ($)	1 Months Ended	3 Months Ended
	Jan. 31, 2008	Mar. 31, 2017	Mar. 31, 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense		$ 696,000	$ 608,000
2008 ESPP [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares of common stock authorized for purchase by eligible employees (in shares)	300,000
Discount on price	15.00%
Maximum amount employees can purchase	$ 25,000
Maximum number of shares employees can purchase	10,000
Number of shares issued to participants (in shares)		12,554	12,735
Weighted average fair value per ESPP award (in dollars per share)		$ 6.00	$ 5.96
ESPP
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense		$ 8,000	$ 7,000

XML

Stock Based Compensation (Warrants) (Details) - Common stock	1 Months Ended
	Jan. 31, 2015 $ / shares shares
Class of Warrant or Right [Line Items]
Warrants issued (in shares) | shares	442,533
Warrant term	5 years
Warrants issued (in dollars per share) | $ / shares	$ 6.78

XML

Earnings (Loss) Per Share (Schedule of Earnings Per Share) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Numerator - basic and diluted:
Net loss	$ (5,123)	$ (5,820)
Less: net (income) loss attributable to noncontrolling interests	1,519	1,021
Net loss attributable to RLHC	(3,604)	(4,799)
Less: fair value adjustment of share component of contingent consideration	(713)	0
Net income (loss) attributable to RLHC for diluted earnings (loss) per share	$ (4,317)	$ (4,799)
Denominator:
Weighted average shares - basic (in shares)	23,469	20,088
Weighted average shares - diluted (in shares)	24,159	20,088
Earnings (loss) per share - basic (in dollars per share)	$ (0.15)	$ (0.24)
Earnings (loss) per share - diluted (in dollars per share)	$ (0.18)	$ (0.24)

XML

Earnings (Loss) Per Share (Details) - $ / shares		3 Months Ended
	Sep. 30, 2016	Mar. 31, 2017	Mar. 31, 2016	Dec. 31, 2016
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
Dilutive awards outstanding (in shares)		0	0
Dilutive awards outstanding (in shares)		690,000	0
Total dilutive awards outstanding		690,000	0
Decrease in share price due to contingent consideration (in dollars per share)		$ 1.30
Vantage Hospitality Group, Inc.
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
Equity consideration (in shares)	690,000
Decrease in share price due to contingent consideration (in dollars per share)		$ 1.30
Stock Options
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
Dilutive awards outstanding (in shares)		0	0
Options outstanding (in shares)		132,868	152,806	132,868
Restricted Stock Units (RSUs)
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
Dilutive awards outstanding (in shares)		0	0
Other than options outstanding (in shares)		1,235,035	1,382,344	1,036,680
Warrants
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
Other than options outstanding (in shares)		442,533	442,533
Performance Shares
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
Other than options outstanding (in shares)		690,000	0
Stock Options
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
Antidilutive securities excluded from computation of EPS (in shares)		132,868	152,806
Restricted Stock Units (RSUs)
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
Dilutive awards outstanding (in shares)		375,260	417,041
Warrants
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
Dilutive awards outstanding (in shares)		49,665	1,312
Performance Shares
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
Antidilutive securities excluded from computation of EPS (in shares)		0	0

XML

Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Income Tax Disclosure [Abstract]
Income tax expense	$ 167	$ 59

XML

Fair Value (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Carrying Amount
Notes receivable
Total debt	$ 112,524	$ 110,598
Total capital lease obligations	1,082	1,147
Fair Value
Financial assets:
Notes receivable	1,285	1,295
Notes receivable
Total debt	110,936	107,858
Total capital lease obligations	$ 1,082	$ 1,147

XML

Related Party Transactions (Details) - USD ($)		1 Months Ended		3 Months Ended
	Mar. 29, 2016	May 08, 2017	May 31, 2015	Mar. 31, 2017	Mar. 31, 2016	Dec. 31, 2016
Management Agreement
Related Party Transaction [Line Items]
Total amounts receivable from related parties				$ 2,200,000		$ 1,900,000
Red Lion Hotel Woodlake Conference Center Sacramento LLC | Management Agreement
Related Party Transaction [Line Items]
Ownership by member of board of directors			50.00%
Management fee revenue recognized					$ 30,000
RL Venture LLC | CPA Development, LLC | Construction Management Fee
Related Party Transaction [Line Items]
Construction management and investor relations fees paid				0	33,000
Construction management fee due				200,000
Red Lion Hotels Management, Inc. | Hudson Valley Resort and Spa [Member] | Management Agreement
Related Party Transaction [Line Items]
Management fee revenue recognized				21,000
Contract period	1 year
Monthly management fee	$ 8,333
Monthly management fee, percent of gross revenue	3.00%
Shelbourne Capital [Member] | Investor Relations Fee
Related Party Transaction [Line Items]
Construction management and investor relations fees paid				$ 90,000	85,000
Shelbourne Capital [Member] | RLS Atla Venture | Investor Relations Fee
Related Party Transaction [Line Items]
Monthly investor relations fee, percent of total revenue				0.50%
Shelbourne Capital [Member] | RL Venture LLC | Investor Relations Fee
Related Party Transaction [Line Items]
Monthly investor relations fee, percent of total revenue				0.50%
Construction management and investor relations fees paid				$ 75,000	$ 75,000
Shelbourne Capital [Member] | RLS Balt Venture LLC | Investor Relations Fee
Related Party Transaction [Line Items]
Monthly investor relations fee, percent of total revenue				0.50%
Shelbourne Capital [Member] | RLS DC Venture | Investor Relations Fee
Related Party Transaction [Line Items]
Monthly investor relations fee, percent of total revenue				0.50%
Subsequent Event | Management Agreement
Related Party Transaction [Line Items]
Management fee revenue recognized		$ 800,000

XML

Business Acquisition (Details) $ / shares in Units, $ in Thousands		3 Months Ended
	Sep. 30, 2016 USD ($) hotel brand_name $ / shares shares	Mar. 31, 2017 USD ($) $ / shares shares	Mar. 31, 2016 USD ($)	Dec. 31, 2016 USD ($)
Business Acquisition [Line Items]
Share price (in dollars per share) | $ / shares	$ 8.34	$ 7.05
Fair value adjustment of share component of contingent consideration		$ 713	$ 0
Decrease in share price due to contingent consideration (in dollars per share) | $ / shares		$ 1.30
Vantage Hospitality Group, Inc.
Business Acquisition [Line Items]
Number of brand names acquired | brand_name	1
Number of business acquired (more than) | hotel	1,000
Cash on hand consideration	$ 22,600
Shares issued for Vantage acquisition	5,800
Total consideration at close date	28,400
Contingent consideration	10,900	$ 11,000		$ 11,200
Liabilities assumed	900
Total consideration	$ 40,200
Equity consideration (in shares) | shares	690,000
Other consideration	$ 2,000
Contingent consideration income recognized		200
Fair value adjustment of share component of contingent consideration		$ 700
Decrease in share price due to contingent consideration (in dollars per share) | $ / shares		$ 1.30
Revenue			40,552
Income (loss) before income taxes			$ (4,930)
Vantage Hospitality Group, Inc. | 90% of Room Count at Close [Member]
Business Acquisition [Line Items]
Contingent consideration, potential outcome (in shares) | shares		690,000
Contingent consideration, potential outcome, cash		$ 7,000
Contingent consideration, threshold		90.00%
Vantage Hospitality Group, Inc. | 90% of Room Count at Close, Year 1 Anniversary [Member]
Business Acquisition [Line Items]
Contingent consideration, potential outcome (in shares) | shares		414,000
Contingent consideration, potential outcome, cash		$ 4,000
Vantage Hospitality Group, Inc. | 90% of Room Count at Close, Year 2 Anniversary [Member]
Business Acquisition [Line Items]
Contingent consideration, potential outcome (in shares) | shares		276,000
Contingent consideration, potential outcome, cash		$ 3,000
Vantage Hospitality Group, Inc. | 80% of Room Count at Close [Member]
Business Acquisition [Line Items]
Contingent consideration, potential outcome (in shares) | shares		517,500
Contingent consideration, potential outcome, cash		$ 5,250
Contingent consideration, threshold		80.00%
Vantage Hospitality Group, Inc. | 80% of Room Count at Close, Year 1 Anniversary [Member]
Business Acquisition [Line Items]
Contingent consideration, potential outcome (in shares) | shares		310,500
Contingent consideration, potential outcome, cash		$ 3,000
Vantage Hospitality Group, Inc. | 80% of Room Count at Close, Year 2 Anniversary [Member]
Business Acquisition [Line Items]
Contingent consideration, potential outcome (in shares) | shares		207,000
Contingent consideration, potential outcome, cash		$ 2,250
Vantage Hospitality Group, Inc. | Minimum Threshold [Member]
Business Acquisition [Line Items]
Contingent consideration, potential outcome (in shares) | shares		0
Contingent consideration, potential outcome, cash		$ 2,000
Vantage Hospitality Group, Inc. | Minimum Threshold, Year 1 Anniversary [Member]
Business Acquisition [Line Items]
Contingent consideration, potential outcome (in shares) | shares		0
Contingent consideration, potential outcome, cash		$ 1,000
Vantage Hospitality Group, Inc. | Minimum Threshold, Year 2 Anniversary [Member]
Business Acquisition [Line Items]
Contingent consideration, potential outcome (in shares) | shares		0
Contingent consideration, potential outcome, cash		$ 1,000
Vantage | Vantage Hospitality Group, Inc.
Business Acquisition [Line Items]
Cash on hand consideration	10,300
TESI | Vantage Hospitality Group, Inc.
Business Acquisition [Line Items]
Cash on hand consideration	$ 12,300