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 September 30, 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.)
1550 Market St. #350 Denver, Colorado	80202
(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 October 31, 2017, there were 23,626,111 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 September 30, 2017 and December 31, 2016	3
	Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months Ended September 30, 2017 and 2016	4
	Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 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	33
Item 3	Quantitative and Qualitative Disclosures About Market Risk	45
Item 4	Controls and Procedures	45
	PART II – OTHER INFORMATION
Item 1	Legal Proceedings	46
Item 1A	Risk Factors	46
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	46
Item 3	Defaults Upon Senior Securities	46
Item 4	Mine Safety Disclosures	46
Item 5	Other Information	46
Item 6	Exhibits	47
	Signatures	48

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PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

RED LION HOTELS CORPORATION

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

September 30, 2017 and December 31, 2016

	September 30, 2017			December 31, 2016
	(In thousands, except per share data)
ASSETS
Current assets:
Cash and cash equivalents ($9,599 and $5,134 attributable to VIEs)	$	36,179		$	38,072
Restricted cash ($12,620 and $9,211 attributable to VIEs)	12,946			9,537
Accounts receivable, net ($4,236 and $2,811 attributable to VIEs)	14,450			9,196
Accounts receivable from related parties	1,824			1,865
Notes receivable, net	1,572			1,295
Inventories ($455 and $447 attributable to VIEs)	631			596
Prepaid expenses and other ($1,141 and $1,008 attributable to VIEs)	5,156			4,244
Assets held for sale	4,285			5,585
Total current assets	77,043			70,390
Property and equipment, net ($173,377 and $179,609 attributable to VIEs)	204,131			210,485
Goodwill	9,404			9,404
Intangible assets	51,306			52,848
Other assets, net ($177 and $64 attributable to VIEs)	1,843			1,408
Total assets	$	343,727		$	344,535
LIABILITIES
Current liabilities:
Accounts payable ($1,998 and $3,886 attributable to VIEs)	$	5,555		$	8,479
Accrued payroll and related benefits ($1,076 and $175 attributable to VIEs)	5,516			4,590
Other accrued entertainment liabilities held for sale	6,757			11,334
Other accrued liabilities ($2,749 and $1,656 attributable to VIEs)	6,087			4,063
Long-term debt, due within one year ($24,422 and $1,469 attributable to VIEs)	24,422			1,469
Contingent consideration for acquisition due to related party, due within one year	7,581			6,768
Liabilities held for sale	739			686
Total current liabilities	56,657			37,389
Long-term debt, due after one year, net of debt issuance costs ($87,040 and $106,862 attributable to VIEs)	87,040			106,862
Contingent consideration for acquisition due to related party, due after one year	4,944			4,432
Deferred income and other long-term liabilities ($701 and $841 attributable to VIEs)	1,666			2,293
Deferred income taxes	6,132			5,716
Total liabilities	156,439			156,692
Commitments and contingencies
STOCKHOLDERS’ EQUITY
RLH Corporation 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; 23,611,519 and 23,434,480 shares issued and outstanding	236			234
Additional paid-in capital, common stock	173,341			171,089
Accumulated deficit	(16,901		)	(15,987		)
Total RLH Corporation stockholders' equity	156,676			155,336
Noncontrolling interest	30,612			32,507
Total stockholders' equity	187,288			187,843
Total liabilities and stockholders’ equity	$	343,727		$	344,535

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

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RED LION HOTELS CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)

For the Three and Nine Months EndedSeptember 30, 2017 and 2016

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2017			2016			2017			2016
	(In thousands, except per share data)
Revenue:
Company operated hotels	$	37,244		$	37,157		$	94,214		$	93,515
Other revenues from managed properties	1,054			1,733			3,047			4,498
Franchised hotels	12,714			4,766			36,045			12,194
Other	12			16			128			40
Total revenues	51,024			43,672			133,434			110,247
Operating expenses:
Company operated hotels	25,284			25,363			70,450			71,035
Other costs from managed properties	1,054			1,733			3,047			4,498
Franchised hotels	8,898			3,214			26,300			10,034
Other	(9		)	9			(2		)	30
Depreciation and amortization	4,660			3,771			13,742			11,209
Hotel facility and land lease	1,201			1,197			3,604			3,543
Gain on asset dispositions, net	(113		)	(100		)	(334		)	(729		)
General and administrative expenses	3,640			2,031			11,348			7,781
Acquisition and integration costs	1,235			1,413			1,246			1,653
Total operating expenses	45,850			38,631			129,401			109,054
Operating income	5,174			5,041			4,033			1,193
Other income (expense):
Interest expense	(2,119		)	(1,793		)	(6,114		)	(4,741		)
Other income (loss), net	338			169			562			290
Total other income (expense)	(1,781		)	(1,624		)	(5,552		)	(4,451		)
Income (loss) from continuing operations before taxes	3,393			3,417			(1,519		)	(3,258		)
Income tax expense	174			166			513			258
Net income (loss) from continuing operations	3,219			3,251			(2,032		)	(3,516		)
Discontinued operations:
Income from discontinued business unit, net of income tax benefit of $0	408			262			611			1,831
Net income (loss)	3,627			3,513			(1,421		)	(1,685		)
Net (income) loss attributable to noncontrolling interest	(871		)	(1,207		)	507			(645		)
Net income (loss) and comprehensive income (loss) attributable to RLH Corporation	$	2,756		$	2,306		$	(914	)	$	(2,330	)
Earnings (loss) per share - basic
Income (loss) from continuing operations attributable to RLH Corporation	$	0.10		$	0.10		$	(0.06	)	$	(0.21	)
Income from discontinued operations	0.02			0.01			0.02			0.09
Net income (loss) attributable to RLH Corporation	$	0.12		$	0.11		$	(0.04	)	$	(0.12	)
Earnings (loss) per share - diluted
Income (loss) from continuing operations attributable to RLH Corporation	$	0.10		$	0.10		$	(0.06	)	$	(0.21	)
Income from discontinued operations	0.01			0.01			0.02			0.09
Net income (loss) attributable to RLH Corporation	$	0.11		$	0.11		$	(0.04	)	$	(0.12	)
Weighted average shares - basic	23,609			20,228			23,542			20,157
Weighted average shares - diluted	24,176			20,613			23,542			20,157

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

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RED LION HOTELS CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

For the Nine Months EndedSeptember 30, 2017 and 2016

	Nine Months Ended
	September 30,
	2017			2016
	(In thousands)
Operating activities:
Net loss	$	(1,421	)	$	(1,685	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	13,806			11,354
Amortization of debt issuance costs	892			880
Gain on disposition of property, equipment and other assets, net	(328		)	(730		)
Deferred income taxes	416			233
Equity in investments	—			(171		)
Stock based compensation expense	2,392			1,960
Provision for doubtful accounts	407			212
Fair value adjustments to contingent consideration	1,325			—
Change in current assets and liabilities:
Accounts receivable	(4,345		)	(4,664		)
Notes receivable	(69		)	(68		)
Inventories	(32		)	63
Prepaid expenses and other	(1,324		)	(1,959		)
Accounts payable	(780		)	3,697
Other accrued liabilities	(1,936		)	(2,046		)
Net cash provided by operating activities	9,003			7,076
Investing activities:
Capital expenditures	(8,024		)	(30,266		)
Acquisition of Vantage Hospitality	—			(22,694		)
Proceeds from disposition of property and equipment	28			434
Collection of notes receivable related to property sales	200			1,781
Advance of note receivable	(408		)	(328		)
Proceeds from sales of short-term investments	—			18,060
Other, net	—			78
Net cash used in investing activities	(8,204		)	(32,935		)
Financing activities:
Borrowings on long-term debt	3,237			19,547
Repayment of long-term debt	(959		)	—
Debt issuance costs	(35		)	(192		)
Proceeds from sale of interests in joint ventures	—			3,194
Distributions to noncontrolling interest	(1,388		)	(3,594		)
Stock-based compensation awards cancelled to settle employee tax withholding	(332		)	(343		)
Other, net	194			156
Net cash provided by financing activities	717			18,768
Change in cash, cash equivalents and restricted cash:
Net increase (decrease) in cash, cash equivalents and restricted cash	1,516			(7,091		)
Cash, cash equivalents and restricted cash at beginning of period	47,609			35,202
Cash, cash equivalents and restricted cash at end of period	$	49,125		$	28,111

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

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RED LION HOTELS CORPORATION

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

For the Nine Months EndedSeptember 30, 2017 and 2016

	Nine Months Ended
	September 30,
	2017		2016
	(In thousands)
Supplemental disclosure of cash flow information:
Cash paid during periods for:
Income taxes	$	154	$	22
Interest on debt	5,199		4,187
Non-cash investing and financing activities:
Reclassification of long-term debt to current	$	22,953	$	5,912
Reclassification of current and noncurrent assets to assets held for sale	4,285		3,936
Reclassification of current and noncurrent liabilities to liabilities held for sale	739		—
Reclassification of long-term note receivable to short-term	339		25
Property and equipment, purchases not yet paid	210		59
Accrual of contingent consideration for Vantage acquisition	—		11,077
Shares issued for Vantage acquisition	—		5,755
Reclassification of current assets to noncurrent assets	—		14

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

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RED LION HOTELS CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Organization

Red Lion Hotels Corporation ("RLH Corporation", "we", "our", "us", or "our company") is a NYSE-listed hospitality and leisure company (ticker symbol: RLH) doing business as RLH Corporation and 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 3 Palm Hotels
Ÿ Americas Best Value Inn	Ÿ Value Inn Worldwide
Ÿ Canadas Best Value Inn	Ÿ Value Hotel Worldwide
Ÿ Lexington Hotels & Inns

A summary of our hotels and available rooms as of September 30, 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	1,082	66,600	1,102	70,800

On October 3, 2017, we completed the sale of certain specified liabilities and substantially all of the assets of our Entertainment segment, previously composed of WestCoast Entertainment and TicketsWest, including ticketing agreements and engagement agreements with various entertainment venues, teams and artists located throughout the Western United States. As such, the results of the Entertainment segment are reported as discontinued operations, and the assets and liabilities are classified as held for sale for all periods presented in this quarterly report on Form 10-Q. See Note 17.

We were incorporated in the state of Washington in April 1978. The Company's corporate headquarters are located in Denver, Colorado, with regional offices in Spokane, Washington, and Coral Springs, Florida.

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 September 30, 2017, there were 23,611,519 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 may be 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 annual 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 derived 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

7

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 September 30, 2017, the Consolidated Statements of Comprehensive Income (Loss) for the three and nine months endedSeptember 30, 2017 and 2016, and the Consolidated Statements of Cash Flows for the nine months ended September 30, 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.

Principles of Consolidation

The financial statements encompass the accounts of RLH Corporation 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 September 30, 2017 and December 31, 2016 cash of $12.9 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 nine months ended September 30, 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):

	Nine Months Ended September 30,
	2017		2016
Cash and cash equivalents	$	36,179	$	18,930
Restricted cash	12,946		9,181
Cash, cash equivalents and restricted cash	$	49,125	$	28,111

Allowance for Doubtful Accounts

The ability to collect individual accounts receivable is reviewed on a routine basis. An allowance for doubtful accounts is recognized 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.

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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	385			212
Write-offs, net of recoveries	(1		)	(67		)
Balance, September 30	$	1,328		$	802

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.

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.

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.

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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 the valuation of any contingent assets or liabilities is 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 Comprehensive Income (Loss). 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

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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, RLH Corporation-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.

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.

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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 nine months ended September 30, 2017 and 2016, we recognized income of approximately $0.4 million each period for the amortization of the deferred gain. The remaining balances at September 30, 2017 and December 31, 2016 were $0.5 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 September 30, 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 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.

Discontinued Operations and Held For Sale

When an asset group meets the criteria to be classified as held-for-sale, and the asset group represents a component of our business or an entire reportable segment, we classify the results of operations as discontinued operations in our consolidated statements of comprehensive income for all periods presented. An asset considered a held-for-sale is reported at the lower of the asset's carrying amount or fair value. Cash flows from the Company's discontinued operations are included in the Consolidated Statements of Cash Flows. See Note 17 for further discussion of our discontinued operations.

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.

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• 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. As the result of the sale of the Entertainment business on October 3, 2017, all revenues earned have been classified as discontinued operations for all periods presented.

Advertising and Promotion

Costs associated with advertising and promotional efforts are generally expensed as incurred. During the nine months ended September 30, 2017 and 2016 we incurred approximately $5.1 million and $4.3 million, respectively in advertising expense.

Basic and Diluted Earnings (Loss) Per Share

Basic earnings (loss) per share attributable to RLH Corporation is computed by dividing income (loss) attributable to RLH Corporation by the weighted‑average number of shares outstanding during the period. Diluted earnings (loss) per share attributable to RLH Corporation 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 nine months endedSeptember 30, 2016 to reflect the adoption of this new standard. As the result, the total change in cash flows for the first nine months of 2016 was a decrease of $2.1 million of cash inflows, of which $1.1 million was an increase for operating activities, and $3.2 million was a decrease for investing activities. The change was the result of the net transfer of restricted cash to cash for completed property improvements, partially offset by the net transfer of cash to restricted cash as part of our joint venture debt arrangements.

New and Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (FASB) issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), 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 us on January 1, 2018. Upon adoption utilizing the modified retrospective method, we will recognize a cumulative adjustment to retained earnings as opposed to retrospectively adjusting prior periods, and our financial statements will include expanded disclosures related to contracts with customers. We are continuing our assessment of our various revenue arrangements to ensure we account for them in accordance with this new guidance upon adoption. We do not expect a material impact to revenue from our company operated hotels segment. Within our franchise business, we will recognize application fee revenue and the related deal commission expense over the initial contract period, rather than immediately upon the signing of the franchise agreement.

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 $81.8 million of operating lease obligations as of September 30, 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

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a material impact on the Consolidated Balance Sheet. However, the Consolidated Statement of Comprehensive Income (Loss) recognition of lease expenses is not expected to change from the current methodology.

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.

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.

In May 2017, the FASB issued ASU No. 2017-09, Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting. The amendments provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. An entity should account for the effects of a modification unless all the following are met: (1) The fair value (or calculated value or intrinsic value, if such an alternative measurement method is used) of the modified award is the same as the fair value (or calculated value or intrinsic value, if such an alternative measurement method is used) of the original award immediately before the original award is modified. If the modification does not affect any of the inputs to the valuation technique that the entity uses to value the award, the entity is not required to estimate the value immediately before and after the modification; (2) The vesting conditions of the modified award are the same as the vesting conditions of the original award immediately before the original award is modified; and (3) The classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the original award is modified. The guidance is effective on January 1, 2018 for us, and we would apply the amendments prospectively to an award modified on or after the adoption date.

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.

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3. Business Segments

We have two operating segments: company operated hotels and franchised hotels. 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.

The results of operations of the Entertainment segment were treated as discontinued operations, due to the sale of the business completed on October 3, 2017. As a result, the revenue and operating expenses of the Entertainment segment are excluded from the segment disclosures below.

Selected financial information is provided below (in thousands):

Three Months Ended September 30, 2017	Company Operated Hotels		Franchised Hotels		Other			Total
Revenue	$	38,298	$	12,714	$	12		$	51,024
Operating expenses:
Segment operating expenses	26,338		8,898		(9		)	35,227
Depreciation and amortization	3,755		594		311			4,660
Other operating expenses, acquisition costs and gains on asset dispositions	1,090		1,235		3,638			5,963
Operating income (loss)	$	7,115	$	1,987	$	(3,928	)	$	5,174
Capital expenditures	$	1,073	$	188	$	998		$	2,259
Identifiable assets as of September 30, 2017	$	251,620	$	70,500	$	21,607		$	343,727

Three Months Ended September 30, 2016	Company Operated Hotels		Franchised Hotels		Other			Total
Revenue	$	38,890	$	4,766	$	16		$	43,672
Operating expenses:
Segment operating expenses	27,096		3,214		9			30,319
Depreciation and amortization	3,444		101		226			3,771
Other operating expenses, acquisition costs and gains on asset dispositions	1,097		1,413		2,031			4,541
Operating income (loss)	$	7,253	$	38	$	(2,250	)	$	5,041
Capital expenditures	$	9,007	$	—	$	787		$	9,794
Identifiable assets as of December 31, 2016	$	260,583	$	66,601	$	17,351		$	344,535

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Nine Months Ended September 30, 2017	Company Operated Hotels		Franchised Hotels		Other			Total
Revenue	$	97,261	$	36,045	$	128		$	133,434
Segment operating expenses	73,497		26,300		(2		)	99,795
Depreciation and amortization	11,096		1,721		925			13,742
Other operating expenses, acquisition costs and gains on asset dispositions	3,258		1,144		11,462			15,864
Operating income (loss)	$	9,410	$	6,880	$	(12,257	)	$	4,033
Capital expenditures	$	3,281	$	626	$	2,089		$	5,996
Identifiable assets as of September 30, 2017	$	251,620	$	70,500	$	21,607		$	343,727

Nine Months Ended September 30, 2016	Company Operated Hotels		Franchised Hotels		Other			Total
Revenue	$	98,013	$	12,194	$	40		$	110,247
Segment operating expenses	75,533		10,034		30			85,597
Depreciation and amortization	10,308		115		786			11,209
Other operating expenses, acquisition costs and gains on asset dispositions	3,208		1,654		7,386			12,248
Operating income (loss)	$	8,964	$	391	$	(8,162	)	$	1,193
Capital expenditures	$	28,917	$	—	$	1,919		$	30,836
Identifiable assets as of December 31, 2016	$	260,583	$	66,601	$	17,351		$	344,535

4. Variable Interest Entities

Our joint venture entities have been determined to be variable interest entities (VIEs), and RLH Corporation 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. During the third quarter of 2017, RL Venture made a cash distribution totaling $1.6 million, of which RLH Corporation received $0.9 million. During the third quarter of 2016, RL Venture made distributions totaling $4.0 million, of which RLH Corporation received $2.2 million. During the nine months ended September 30, 2017 and 2016, cash distributions totaled $3.1 million and $8.0 million, of which RLH Corporation received $1.7 million and $4.4 million, respectively.

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Subsequent to the third quarter of 2017, RL Venture made a cash distribution totaling $1.9 million, of which RLH Corporation received $1.0 million.

In October 2017, we listed the 11 properties in the RL Venture entity for sale through a commercial real estate broker.

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 RLH Corporation'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, RLH Corporation 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, RLH Corporation 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, RLH Corporation 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, RLH Corporation 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 nine months endedSeptember 30, 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 nine months endedSeptember 30, 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

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Quincy, an existing hotel business now operated as the Hotel RL Washington DC, in a business combination. The property is managed by RL Management.

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 RLH Corporation's additional paid in capital. Following the April 1, 2016 transaction, we now own 55% of RLS DC Venture, and Shelbourne Falcon IV owns 45%. 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.

In May 2017, RLH Corporation 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, RLH Corporation 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 nine months endedSeptember 30, 2017 or 2016.

5. Property and Equipment

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

	September 30, 2017			December 31, 2016
Buildings and equipment	$	252,615		$	248,132
Furniture and fixtures	37,486			37,743
Landscaping and land improvements	7,878			7,928
	297,979			293,803
Less accumulated depreciation	(142,368		)	(130,876		)
	155,611			162,927
Land	43,192			43,193
Construction in progress	5,328			4,365
Property and equipment, net	$	204,131		$	210,485

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 trade names 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 $5.5 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,

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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 7.9 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 nine months endedSeptember 30, 2017 or 2016.

In connection with the sale of the Entertainment business, $3.2 million of goodwill and $6,000 of intangible assets have been classified as held for sale. See Note 17 for further information.

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

	September 30, 2017		December 31, 2016
Goodwill	$	9,404	$	9,404
Intangible assets
Brand name - indefinite lived	$	39,704	$	39,704
Brand name - finite lived, net	2,403		2,664
Customer contracts, net	9,071		10,352
Trademarks	128		128
Total intangible assets	$	51,306	$	52,848

Goodwill and other intangible assets attributable to each of our business segments at September 30, 2017 and December 31, 2016 were as follows (in thousands):  

	September 30, 2017				December 31, 2016
			Intangible				Intangible
	Goodwill		Assets		Goodwill		Assets
Company operated hotels	$	—	$	4,660	$	—	$	4,660
Franchised hotels	9,404		46,646		9,404		48,188
Total	$	9,404	$	51,306	$	9,404	$	52,848

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

	September 30, 2017			December 31, 2016
Customer contracts	$	11,673		$	11,673
Brand name - finite lived	2,751			2,751
Accumulated amortization	(2,950		)	(1,408		)
Net carrying amount	$	11,474		$	13,016

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As of September 30, 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)	$	511
2018	1,798
2019	1,610
2020	1,419
2021	1,261
Thereafter	4,875
Total	$	11,474

7. Long-Term Debt

The current and noncurrent portions of long-term debt as of September 30, 2017 and December 31, 2016 are as follows (in thousands):

	September 30, 2017					December 31, 2016
	Current		Noncurrent			Current		Noncurrent
RL Venture	$	1,430	$	72,074		$	1,375	$	69,841
RL Baltimore	13,300		—			—		13,300
RLH Atlanta	9,390		—			40		9,360
RLH DC	302		16,379			54		16,628
Total debt	24,422		88,453			1,469		109,129
Unamortized debt issuance costs	—		(1,413		)	—		(2,267		)
Long-term debt net of debt issuance costs	$	24,422	$	87,040		$	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, which is secured by the hotels owned by RL Venture. Subsequently we disposed of one hotel, leaving 11 properties owned by RL Venture. 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 $0.4 million and $3.2 million during the three and nine months ended September 30, 2017. At September 30, 2017, there were unamortized debt issuance fees of $0.9 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%. Monthly principal payments began in January 2017 in an amount that would repay the outstanding principal balance over a 25-year amortization period.

The liabilities of RL Venture, other than its long-term debt, are nonrecourse to our general credit and assets. The long-term debt is nonrecourse as to RLH Corporation, but several investors in RL Venture, including us, are guarantors regarding completion of certain improvements to the hotels, environmental covenants in the loan agreement, or losses incurred by the lender in the event of a voluntary bankruptcy filing involving RL Venture, any of its subsidiaries or the guarantors. RLH Corporation 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 September 30, 2017.

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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 September 30, 2017 the funds on the loan were fully disbursed. At September 30, 2017, there were unamortized debt issuance fees of $0.2 million.

The balance is payable at maturity of the loan in May 2018. Interest under the advanced portions of the loan is payable monthly at LIBOR plus 6.25%.

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 nonrecourse.  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.  RLH Corporation has guaranteed these recourse obligations of RL Baltimore and agreed to customary reporting and operating covenants. We were in compliance with these covenants at September 30, 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 September 30, 2017 the funds on the loan were fully disbursed. At September 30, 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 began 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 nonrecourse.  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.  RLH Corporation has guaranteed these recourse obligations of RLH Atlanta and agreed to customary reporting and operating covenants. We were in compliance with these covenants at September 30, 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 September 30, 2017 the funds on the loan were fully disbursed. At September 30, 2017, 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%. Monthly principal payments begin in November 2017 in an amount that will repay the outstanding principal balance over a 25-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 nonrecourse.  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.  RLH Corporation has guaranteed these recourse obligations of RLH DC and agreed to customary reporting and operating covenants. We were in compliance with these covenants at September 30, 2017.

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Contractual maturities for long-term debt outstanding at September 30, 2017, for the next five years are summarized by the year as follows (in thousands):

Year ending December 31,	Amount
2017 (remainder)	$	434
2018	24,442
2019	87,999
2020	—
2021	—
Thereafter	—
Total	$	112,875

8. Derivative Financial Instruments

We enter into derivative transactions to hedge our exposure to interest rate fluctuations, and not for trading purposes. 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 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 Comprehensive Income (Loss). At September 30, 2017 and December 31, 2016, 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 within 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	%	January 2018
RL Baltimore	Commonwealth Bank of Australia	$	13.3	3	%	May 2018
RLH Atlanta	SMBC Capital Markets, Inc.	$	9.4	3	%	September 2018
RLH DC	Commonwealth Bank of Australia	$	17.5	3	%	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 September 30, 2017, are as indicated below (in thousands):

Year ending December 31,	Total Lease Obligation		Operating Lease Obligation		Capital Lease Obligation
2017 (remainder)	$	1,545	$	1,476	$	69
2018	5,573		5,293		280
2019	4,853		4,571		282
2020	4,551		4,294		257
2021	2,889		2,752		137
Thereafter	63,458		63,453		5
Total	$	82,869	$	81,839	$	1,030

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Total rent expense under leases for the three and nine months endedSeptember 30, 2017 was $1.6 million and $4.8 million, respectively, which represents the total of amounts shown within Hotel facility and land lease expense, as well as amounts included within Franchise and General and Administrative operating expenses, and Discontinued Operations on our Consolidated Statements of Comprehensive Income (Loss). Total rent expense under leases for the three and nine months endedSeptember 30, 2016 was $1.5 million and $4.2 million, respectively.

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.

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 (2015 Plan) authorizes the grant or issuance of various option and other awards including restricted stock units and other stock-based compensation. The 2015 Plan was approved by our shareholders in 2015 and provided for awards of 1.4 million shares, subject to adjustments for stock splits, stock dividends and similar events. In May 2017, our shareholders approved an amendment to the 2015 Plan to authorize an additional 1.5 million shares, for a total authorized of 2.9 million shares. As of September 30, 2017, there were 1,370,596 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 and nine months ended September 30, 2017 and 2016 stock-based compensation expense is as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
	(In thousands)
Stock options	$	17	$	17	$	51	$	34
Restricted stock units	687		561		1,891		1,588
Performance stock units	76		—		101		—
Unrestricted stock awards	104		105		319		315
Employee Stock Purchase Plan	14		11		30		25
Total stock-based compensation	$	898	$	694	$	2,392	$	1,962

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 nine months ended September 30, 2017 there were no stock options granted. For the nine months ended September 30,2016 there were 81,130 shares granted.

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Stock option fair value assumptions are as follows for stock options granted during the nine months ended September 30, 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 nine months ended September 30, 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	(18,890	)	$	12.27
Balance, September 30, 2017	113,978		$	8.36
Exercisable, September 30, 2017	53,131		$	8.53

Additional information regarding stock options outstanding and exercisable as of September 30, 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	8.49	2026	$	8.20	$	37	20,283	$	8.20	$	9
$8.74	32,848	0.64	2018	$	8.74	—		32,848	$	8.74	—
	113,978	6.23	2018-2026	$	8.36	$	37	53,131	$	8.53	$	9

⁽¹⁾ The aggregate intrinsic value, in thousands, 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 nine months of 2017, or September 30, 2017, based upon our closing stock price on that date of $8.65.

Restricted Stock Units, Shares Issued as Compensation

During the nine months endedSeptember 30, 2017 and 2016, we granted 458,020 and 282,989 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 September 30, 2017 and 2016, there were 1,288,752 and 1,095,719 unvested restricted stock units outstanding, respectively. Since we began issuing restricted stock units, approximately 21% of total restricted stock units granted have been forfeited.

A summary of restricted stock unit activity for the nine months ended September 30, 2017, is as follows:

	Number of Shares		Weighted Average Grant Date Fair Value
Balance, January 1, 2017	1,036,680		$	7.27
Granted	458,020		$	6.95
Vested	(148,674	)	$	6.93
Forfeited	(57,274	)	$	7.19
Balance, September 30, 2017	1,288,752		$	7.20

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We issued 148,674 shares of common stock to employees during the first nine 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 nine months ended September 30, 2017 and 2016 was approximately $1.0 million and $1.1 million, respectively.

During the three months ended September 30, 2017 and 2016, we recognized $0.7 million and $0.6 million, respectively in compensation expense related to these grants. During the nine months endedSeptember 30, 2017 and 2016, we recognized $1.9 million and $1.6 million, respectively, in compensation expense related to these grants, and expect to recognize an additional $5.8 million in compensation expense over the remaining weighted average vesting periods of 30 months.

Performance Stock Units, Shares Issued as Compensation

In May 2017, we granted performance stock units (PSUs) to certain of our executives under the 2015 Plan. These PSUs include both performance vesting conditions and a service vesting condition. The performance vesting conditions are based on (1) an annual earnings goal tied to Adjusted EBITDA, with a 70% weighting, and (2) a goal tied to the number of signed franchise license agreements in the year, with a 30% weighting. Each performance condition has a minimum, a target and a maximum share amount based on the level of attainment of the performance condition. Compensation expense, net of estimated forfeitures, is calculated based on the estimated full year attainment of the performance conditions during the performance period and recognized on a straight-line basis over the performance and service periods. The PSUs vest upon achievement of the performance and service conditions, provided participants are employed by RLH Corporation at the end of the service periods. For the PSUs granted in May 2017, the service period ends in March 2020.

A summary of performance stock unit activity for the nine months ended September 30, 2017, is as follows:

	Number of Shares		Weighted Average Grant Date Fair Value
Balance, January 1, 2017	—		—
Granted	274,882		$	6.45
Vested	—		—
Forfeited	(17,906	)	$	6.45
Balance, September 30, 2017	256,976		$	6.45

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 and nine months ended September 30, 2017 and 2016:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
Shares of unrestricted stock granted	14,184		14,868		42,432		42,096
Weighted average grant date fair value per share	$	7.40	$	7.06	$	7.54	$	7.48

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Employee Stock Purchase Plan

In 2008, we adopted a new employee stock purchase plan (ESPP) upon expiration of our previous plan. Under the ESPP as approved in 2008, 300,000 shares of common stock were authorized for purchase by eligible employees. In May 2017, our shareholders authorized an additional 300,000 shares for a total of 600,000 shares authorized under the ESPP plan. As of September 30, 2017, 344,847 shares were available for grant. Eligible employees may purchase shares of our common stock 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 ended September 30, 2017 and 2016, there were 21,371 and 17,060 shares issued and approximately $14,000 and $11,000 was recognized in compensation expense related to the discount associated with the plan in each year, respectively. During the nine months endedSeptember 30, 2017 and 2016, 33,925 and 29,795 shares were issued, and $30,000 and $25,000 were recognized in compensation expense related to the discount associated with the plan in each year, respectively.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
Shares of stock sold to employees	21,371		17,060		33,925		29,795
Weighted average fair value per ESPP award	$	6.25	$	5.98	$	6.16	$	5.97

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 September 30, 2017, all warrants were still outstanding.

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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 and nine months endedSeptember 30, 2017 and 2016 (in thousands, except per share data):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
Numerator - basic and diluted:
Net income (loss) from continuing operations	$	3,219		$	3,251		$	(2,032	)	$	(3,516	)
Less: net (income) loss attributable to noncontrolling interests	(871		)	(1,207		)	507			(645		)
Net income (loss) from continuing operations attributable to RLH Corporation	2,348			2,044			(1,525		)	(4,161		)
Income from discontinued operations	408			262			611			1,831
Net income (loss) attributable to RLH Corporation	2,756			2,306			(914		)	(2,330		)
Fair value adjustment of share component of contingent consideration (1)	987			—			567			—
Net income (loss) attributable to RLH Corporation for diluted earnings (loss) per share (1)	$	3,743		$	2,306		$	(347	)	$	(2,330	)
Denominator:
Weighted average shares - basic	23,609			20,228			23,542			20,157
Weighted average shares - diluted (1)	24,176			20,613			23,542			20,157
Earnings (loss) per share - basic
Net income (loss) from continuing operations attributable to RLH Corporation	$	0.10		$	0.10		$	(0.06	)	$	(0.21	)
Income from discontinued operations	0.02			0.01			0.02			0.09
Net income (loss) attributable to RLH Corporation	$	0.12		$	0.11		$	(0.04	)	$	(0.12	)
Earnings (loss) per share - diluted (1)
Net income (loss) from continuing operations attributable to RLH Corporation	$	0.10		$	0.10		$	(0.06	)	$	(0.21	)
Income from discontinued operations	0.01			0.01			0.02			0.09
Net income (loss) attributable to RLH Corporation	$	0.11		$	0.11		$	(0.04	)	$	(0.12	)

⁽¹⁾ For the three and nine months ended September 30, 2017, the effect of the fair value adjustment of share component of contingent consideration is excluded from the calculation of diluted earnings per share as it would be antidilutive.

For the three months ended September 30, 2017, we recognized $1.0 million of expense 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 Comprehensive Income (Loss)), as the result of the $1.30 per share increase in our stock price from June 30, 2017 to September 30, 2017.

For the nine months ended September 30, 2017, we recognized $0.6 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 Comprehensive Income (Loss)), as the result of the $0.30 per share increase in our stock price from December 31, 2016 to September 30, 2017.

The following table presents options to purchase common shares, restricted stock units outstanding, performance stock units outstanding, warrants to purchase common shares and contingently issuable shares included in the earnings per share calculation, as well as the amount excluded from the dilutive earnings per share calculation if they were considered antidilutive, for three and nine months endedSeptember 30, 2017 and 2016.

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	Three Months Ended September 30,		Nine Months Ended September 30,
	2017	2016	2017	2016
Stock Options(1)
Dilutive awards outstanding	—	—	—	—
Antidilutive awards outstanding	113,978	149,858	113,978	149,858
Total awards outstanding	113,978	149,858	113,978	149,858
Restricted Stock Units(2)
Dilutive awards outstanding	535,035	342,321	—	—
Antidilutive awards outstanding	753,717	753,398	1,288,752	1,095,719
Total awards outstanding	1,288,752	1,095,719	1,288,752	1,095,719
Performance Stock Units(3)
Dilutive awards outstanding	—	—	—	—
Antidilutive awards outstanding	—	—	—	—
Total awards outstanding	—	—	—	—
Warrants(4)
Dilutive awards outstanding	31,702	34,761	—	—
Antidilutive awards outstanding	410,831	407,772	442,533	442,533
Total awards outstanding	442,533	442,533	442,533	442,533
Shares for Vantage Contingent Consideration(5)
Dilutive awards outstanding	—	7,500	—	—
Antidilutive awards outstanding	483,000	682,500	483,000	690,000
Total awards outstanding	483,000	690,000	483,000	690,000
Total dilutive awards outstanding	566,737	384,582	—	—

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

⁽²⁾ Restricted stock units were anti-dilutive for the nine months ended September 30, 2017 and 2016 due to the net loss attributable to RLH Corporation in the reporting periods. If we had reported net income for the nine months ended September 30, 2017 and 2016 then 444,608 and 443,668 units, respectively, would have been dilutive.

⁽³⁾ All performance stock units are considered anti-dilutive and are not included in the weighted average diluted shares outstanding until the performance targets have been met. Performance targets relate to total company annual earnings and the number of new franchise agreements signed in 2017.

⁽⁴⁾ All warrants were anti-dilutive for the nine months ended September 30, 2017 and 2016 due to the net loss attributable to RLH Corporation in the reporting periods. If we had reported net income for the nine months ended September 30, 2017 and 2016 then 24,750 and 30,453 units, respectively, would have been dilutive.

⁽⁵⁾ 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 earn outs (see Note 16). These shares are not included in basic shares outstanding until the period the contingency is resolved. The Year 1 contingent consideration was preliminarily determined to have been earned as of September 30, 2017, resulting in 414,000 shares included in basic shares outstanding on a weighted average basis. 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 September 30, 2017, we recognized $1.0 million of expense 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 Comprehensive Income (Loss)), as the result of the $1.30 per share increase in our stock price from June 30, 2017 to September 30, 2017. For the nine months ended September 30,2017, we recognized $0.6 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 Comprehensive Income (Loss)), as the result of the $0.30 per share increase in our stock price from December 31, 2016 to September 30, 2017.

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13. Income Taxes

We recognized an income tax provision of $174,000 and $166,000 for the three months ended September 30, 2017 and 2016. For the nine months ended September 30, 2017 and 2016 we recognized an income tax provision of $513,000 and $258,000. 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.

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.

	September 30, 2017				December 31, 2016
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial assets:
Notes receivable	$	1,572	$	1,572	$	1,295	$	1,295
Financial liabilities:
Total debt	$	112,875	$	112,307	$	110,598	$	107,858
Total capital lease obligations	$	1,030	$	1,030	$	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 ended September 30, 2017 and 2016 totaled $134,000 and $221,000, respectively. The amount Shelbourne Capital earned from all four joint ventures during the nine months ended September 30, 2017 and 2016 totaled $344,000 and $423,000, 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 September 30, 2017 and 2016, Shelbourne Capital earned $117,000 and $190,000 from RL Venture in each period. During the nine months ended September 30, 2017 and 2016, Shelbourne Capital earned $291,000 and $366,000 from RL Venture in each period.

RL Venture 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 and nine months endedSeptember 30, 2017, as the obligation was fully paid by the end of 2016. RL Venture paid $11,000 and $78,000 for the construction management fee during the three and nine months endedSeptember 30, 2016, respectively.

In May 2015, we entered into a management agreement with the owner (the LLC entity) of Red Lion Hotel Woodlake Conference Center Sacramento. 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 and nine months endedSeptember 30, 2016, we recognized management fee and brand marketing fee revenue from the LLC entity of $30,000 and $92,000. On December 12, 2016 the LLC permanently closed the Red Lion Hotel Woodlake.

Effective March 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. Following the initial one-year term, we continue to manage the

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property on a month-to-month basis. 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 greater. During the three and nine months ended September 30, 2017, we recognized management fee revenue from HNA Hudson Valley Resort & Training Center LLC of $33,000 and $83,000. During the three and nine months ended September 30, 2016, we recognized management fee revenue from HNA Hudson Valley Resort & Training Center LLC of $35,000 and $65,000.

The total amounts receivable from related parties, primarily related to hotel management agreements, were $1.8 million and $1.9 million at September 30, 2017 and December 31, 2016, and are classified within Accounts receivable from related parties on our Consolidated Balance Sheets.

16. 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 RLH Corporation stock paid to TESI, which was valued at $5.8 million, based on the closing price of RLH Corporation 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 is to be paid 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 would not be contingent and would 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

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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 Comprehensive Income (Loss). 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 Comprehensive Income (Loss). For the third quarter 2017, we recognized $1.2 million in expense associated with our updated assessment, including $1.0 million of expense related to the change in fair value of the share component of the contingent consideration (classified within Acquisition and integration costs on our Consolidated Statements of Comprehensive Income (Loss)), as the result of the $1.30 per share increase in our stock price from June 30, 2017 to September 30, 2017. As of September 30, 2017, we have preliminarily determined the Year 1 anniversary contingent consideration had been earned at the full amount. The value of the Year 1 anniversary consideration was $7.6 million, including $4.0 million in cash and $3.6 million in shares of RLH Corporation stock, based on the closing price of $8.65 per share on September 30, 2017. Once agreed to between the Vantage sellers and us, as specified in the asset purchase agreement, the shares of RLH Corporation stock will be issued and the cash transferred.

The Year 2 contingent consideration was $4.9 million at September 30, 2017. At December 31, 2016, the full contingent consideration was valued at $11.2 million.

Following the closing of the acquisition, Roger J. Bloss and Bernard T. Moyle were appointed to executive management positions at RLH Corporation, 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 RLH Corporation 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 September 30, 2016		Nine Months Ended September 30, 2016
	(in thousands)
Revenue	$	53,692	$	147,463
Income (loss) before income taxes	$	5,880	$	2,188

17. Discontinued Operations and Assets and Liabilities Held for Sale

On October 3, 2017, we completed the sale of certain specified liabilities and substantially all of the assets of our Entertainment segment, previously composed of WestCoast Entertainment and TicketsWest. As such, the results of the Entertainment business are reported as discontinued operations, and the assets and liabilities are classified as held for sale for all periods presented in this quarterly report on Form 10-Q. We will recognize an estimated gain on sale of $1.1 million in the fourth quarter of 2017, based on cash proceeds of $6.0 million, less estimated transaction costs of $0.7 million, and $4.2 million of net assets.

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The following summarizes the results of the Entertainment business segment included in the Consolidated Statements of Comprehensive Income (Loss) as discontinued operations (in thousands).

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2017			2016			2017		2016
Entertainment revenue	$	2,969		$	1,936		$	9,050	$	13,014
Operating expenses:
Entertainment	2,555			1,605			8,372		11,183
Other	—			13			—		14
Depreciation and amortization	7			43			64		145
Gain on asset dispositions, net	(1		)	(1		)	3		(1		)
Total operating expenses	2,561			1,660			8,439		11,341
Operating income	408			276			611		1,673
Interest expense	—			(12		)	—		(12		)
Other income (expense), net	—			(2		)	—		170
Income from discontinued operations	$	408		$	262		$	611	$	1,831

The following table presents the assets and liabilities of the Entertainment business segment included in the Consolidated Balance Sheet as Assets held for sale and Liabilities held for sale (in thousands):

	September 30, 2017		December 31, 2016
Accounts receivable, net	$	381	$	1,656
Inventories	16		51
Prepaid expenses and other	266		247
Property and equipment, net	228		247
Goodwill	3,162		3,162
Intangible assets	6		6
Other assets, net	226		216
Assets held for sale	$	4,285	$	5,585

	September 30, 2017		December 31, 2016
Accounts payable	$	318	$	203
Accrued payroll and related benefits	82		210
Other accrued liabilities	15		—
Deferred income and other long-term liabilities	324		273
Liabilities held for sale	$	739	$	686
Other accrued entertainment liabilities held for sale	$	6,757	$	11,334

The following table represents the cash flow items associated with discontinued operations of the Entertainment business segment for the nine months endedSeptember 30, 2017 and 2016 (in thousands).

	Nine Months Ended
	September 30,
	2017		2016
Depreciation and amortization	$	64	$	145
Capital expenditures	$	101	$	26

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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 "RLH Corporation" refer to Red Lion Hotels Corporation, doing business as RLH 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 3 Palm Hotels
Ÿ Americas Best Value Inn	Ÿ Value Inn Worldwide
Ÿ Canadas Best Value Inn	Ÿ Value Hotel Worldwide
Ÿ Lexington Hotels & Inns

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A summary of our properties as of September 30, 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	—	—	48		3,500		48		3,500
Terminated properties	—	—	(83	)	(5,800	)	(83	)	(5,800	)
Ending quantity, September 30, 2017	20	4,200	1,082		66,600		1,102		70,800
Executed franchise license and management agreements, nine months ended September 30, 2017:
New franchise / management agreements	1	100	49		3,300		50		3,400
Renewals / changes of ownership	—	—	70		5,000		70		5,000
Total executed franchise license agreements, nine months ended September 30, 2017	1	100	119		8,300		120		8,400

We operate in two 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.

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

On October 3, 2017, we completed the sale of certain specified liabilities and substantially all of the assets of our Entertainment segment, previously composed of WestCoast Entertainment and TicketsWest, including ticketing agreements and engagement agreements with various entertainment venues, teams and artists located throughout the Western United States. As such, the results of the Entertainment segment are reported as discontinued operations and the assets and liabilities are classified as held for sale for all periods presented in this quarterly report on Form 10-Q. See Note 17 of Item 1: Condensed Notes to Consolidated Financial Statements.

On October 5, 2017, we announced that we would be listing for sale 11 of our owned hotels while working to retain franchise agreements on these assets. This is consistent with the Company’s previously stated business strategy to focus on moving towards operations as primarily a franchise company. Based on a preliminary review of the market, we estimate the aggregate value of the 11 hotels is currently between $165 and $175 million. We expect that the completion of these sales would allow the company to significantly reduce or eliminate long-term debt and to increase cash reserves for future franchise agreement growth initiatives.

Overview

Total revenue for the three months ended September 30, 2017 increased $7.4 million, or 17%, compared with the same period in 2016, driven by our franchised hotels segment, partially offset by decreases in our company operated hotels segment. For nine months ended September 30, 2017, total revenue increased $23.2 million, or 21%, driven by our franchised hotels segment, with the company operated hotels business generating lower revenue compared with 2016. In 2017, franchise revenues were favorably impacted by the brands acquired from Vantage Hospitality Group, Inc. (Vantage) in September 2016.

Revenue per available room (RevPAR) systemwide increased 1.6% for both the three and nine months ended September 30, 2017 when compared with the same periods in 2016. The RevPAR increase for the third quarter was primarily driven by improvement

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of 2.5% in Average Daily Rate (ADR) and partially offset by 60 basis points in lower occupancy. For the year-to-date period in 2017, RevPAR improved as the result of an increase in ADR of 3.3%, with an offsetting 100 basis point decrease in occupancy.

RevPAR for company operated hotels on a comparable basis increased in the third quarter and first nine months of 2017 from the same periods in 2016, driven by increased ADR on a comparable basis for both periods, and for the first nine months of 2017 was partially offset by lower average occupancy.

Results of Operations

A summary of our Consolidated Statements of Comprehensive Income (Loss) is provided below (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
Total revenue	$	51,024		$	43,672		$	133,434		$	110,247
Total operating expenses	45,850			38,631			129,401			109,054
Operating income	5,174			5,041			4,033			1,193
Other income (expense):
Interest expense	(2,119		)	(1,793		)	(6,114		)	(4,741		)
Other income (loss), net	338			169			562			290
Income (loss) from continuing operations before taxes	3,393			3,417			(1,519		)	(3,258		)
Income tax expense	174			166			513			258
Net income (loss) from continuing operations	3,219			3,251			(2,032		)	(3,516		)
Net income from discontinued operations, net of tax	408			262			611			1,831
Net income (loss)	3,627			3,513			(1,421		)	(1,685		)
Less net (income) loss attributable to noncontrolling interests	(871		)	(1,207		)	507			(645		)
Net income (loss) and comprehensive income (loss) attributable to RLH Corporation	$	2,756		$	2,306		$	(914	)	$	(2,330	)
Non-GAAP Financial Measures (1)
EBITDA from continuing operations	$	10,580		$	9,243		$	18,948		$	14,523
Adjusted EBITDA from continuing operations	$	11,407		$	10,615		$	19,683		$	14,697
Adjusted net income (loss)	$	4,454		$	4,885		$	(686	)	$	(1,511	)

⁽¹⁾The definitions of "EBITDA", "Adjusted EBITDA" and "Adjusted net income (loss)" and how those measures relate to net income (loss) are discussed and reconciled under Reconciliation of Non-GAAP Financial Measures below.

For the three months ended September 30, 2017, we reported net income of $3.6 million, which included $1.2 million of acquisition and integration costs. For the three months ended September 30, 2016, we reported net income of $3.5 million, which included acquisition and integration costs of $1.4 million, and $0.2 million for the CFO transition and other one-time professional services costs.

For the nine months ended September 30, 2017, we reported net loss of $1.4 million, which included $1.2 million of acquisition and integration costs and $0.1 million of CFO transition costs. For the nine months ended September 30,2016, we reported net loss of $1.7 million, which included $1.7 million of acquisition and integration costs. $0.6 million for the CFO transition and other one-time professional services costs, an environmental cleanup charge of $0.1 million related to one of our hotel properties, and a net gain on the sale of intellectual property of $0.4 million.

The above special items are excluded from operating results in Adjusted EBITDA and adjusted net income (loss). For the three months ended September 30, 2017, Adjusted EBITDA was $11.4 million compared with $10.6 million in 2016. For the nine months ended September 30, 2017, Adjusted EBITDA was $19.7 million compared with $14.7 million in 2016.

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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.

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 in the fourth quarter of 2016, and one property that opened during the second quarter of 2016, as these properties had not been open at least one year as of the beginning of the current year. In addition, we exclude revenue earned and expenses incurred related to our hotel management agreements.

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.

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

	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
Net income (loss)	$	3,627		$	3,513		$	(1,421	)	$	(1,685	)
Depreciation and amortization	4,660			3,771			13,742			11,209
Interest expense	2,119			1,793			6,114			4,741
Income tax expense (benefit)	174			166			513			258
EBITDA from continuing operations	10,580			9,243			18,948			14,523
Acquisition and integration costs (1)	1,235			1,413			1,246			1,653
Employee separation and transition costs (2)	—			221			100			617
Reserve for environmental cleanup (3)	—			—			—			128
Gain on asset dispositions (4)	—			—			—			(393		)
Income from discontinued business unit (5)	(408		)	(262		)	(611		)	(1,831		)
Adjusted EBITDA from continuing operations	11,407			10,615			19,683			14,697
Income from discontinued business unit (5)	408			262			611			1,831
Depreciation and amortization of discontinued business unit	7			43			64			145
Interest expense from discontinued business unit	—			12			—			12
Adjusted EBITDA from discontinued operations	415			317			675			1,988
Adjusted EBITDA from continuing & discontinued operations	11,822			10,932			20,358			16,685
Adjusted EBITDA attributable to noncontrolling interests	(3,142		)	(3,155		)	(6,110		)	(6,137		)
Adjusted EBITDA attributable to RLH Corporation	$	8,680		$	7,777		$	14,248		$	10,548
(1)  On September 30, 2016 RLH Corporation 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 the Consolidated Statements of Comprehensive Income (Loss).
(2)  During the third quarter of 2016, RLH Corporation recorded separation costs of a former Executive Vice President and Chief Financial Officer and other legal and consulting services associated with the CFO transition. The costs recorded for the nine months ended September 30, 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 the hotel properties.
(4)  In the second quarter of 2016, RLH Corporation recorded a gain on sale of intellectual property, net of brokerage fees, of $0.4 million, included within Gain on asset dispositions, net on the Consolidated Statements of Comprehensive Income (Loss).
(5)  On October 3, 2017, the Company completed the sale of its Entertainment business. Based on this sale, the results of operations of the Entertainment business are reported as discontinued operations for all periods presented.

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

	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
Net income (loss)	$	3,627		$	3,513		$	(1,421	)	$	(1,685	)
Acquisition and integration costs (1)	1,235			1,413			1,246			1,653
Employee separation and transition costs (2)	—			221			100			617
Reserve for environmental cleanup (3)	—			—			—			128
Gain on asset dispositions (4)	—			—			—			(393		)
Income from discontinued business unit (5)	(408		)	(262		)	(611		)	(1,831		)
Adjusted net income (loss)	$	4,454		$	4,885		$	(686	)	$	(1,511	)
(1)  On September 30, 2016 RLH Corporation 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 the Consolidated Statements of Comprehensive Income (Loss).
(2)  During the third quarter of 2016, RLH Corporation recorded separation costs of a former Executive Vice President and Chief Financial Officer and other legal and consulting services associated with the CFO transition. The costs recorded for the nine months ended September 30, 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 the hotel properties.
(4)  In the second quarter of 2016, RLH Corporation recorded a gain on sale of intellectual property, net of brokerage fees, of $0.4 million, included within Gain on asset dispositions, net on the Consolidated Statements of Comprehensive Income (Loss).
(5)  On October 3, 2017, the Company completed the sale of its Entertainment business. Based on this sale, the results of operations of the Entertainment business are reported as discontinued operations for all periods presented.

The following is a reconciliation of comparable company operated hotel revenue, expenses and operating profit (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
	(in thousands)
Company operated hotel revenue	$	37,244		$	37,157		$	94,214		$	93,515
less: revenue from sold and closed hotels	—			(1,338		)	—			(2,791		)
less: revenue from hotels without comparable results	(1,307		)	(1,223		)	(3,528		)	(1,830		)
less: revenue from managed properties	(380		)	(235		)	(855		)	(982		)
Comparable company operated hotel revenue	$	35,557		$	34,361		$	89,831		$	87,912
Company operated hotel operating expenses	$	25,284		$	25,363		$	70,450		$	71,035
less: operating expenses from sold and closed hotels	—			(761		)	—			(1,949		)
less: operating expenses from hotels without comparable results	(1,108		)	(1,151		)	(3,096		)	(2,311		)
less: operating expenses from managed properties	(188		)	(237		)	(520		)	(866		)
Comparable company operated hotel operating expenses	$	23,988		$	23,214		$	66,834		$	65,909
Company operated hotel direct operating profit	$	11,960		$	11,794		$	23,764		$	22,480
less: operating profit from sold and closed hotels	—			(577		)	—			(842		)
less: operating profit from hotels without comparable results	(199		)	(72		)	(432		)	481
less: operating profit from managed properties	(192		)	2			(335		)	(116		)
Comparable company operated hotel direct profit	$	11,569		$	11,147		$	22,997		$	22,003
Comparable company operated hotel direct margin %	32.5		%	32.4		%	25.6		%	25.0		%

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Revenues

A detail of our revenues for the three and nine months ended September 30,2017 and 2016 is as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
Company operated hotels	$	37,244	$	37,157	$	94,214	$	93,515
Other revenues from managed properties	1,054		1,733		3,047		4,498
Franchised hotels	12,714		4,766		36,045		12,194
Other	12		16		128		40
Total revenues	$	51,024	$	43,672	$	133,434	$	110,247

Three months ended September 30,2017 and 2016

During the third quarter of 2017, revenue from our company operated hotel segment was flat compared with the third quarter of 2016. This business benefited from increased ADR in 2017, which was almost entirely offset by the reduction of revenue from the sale of one owned property and the closure of one managed property 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 higher ($1.2 million or 3%) in the third quarter of 2017 compared with the third quarter of 2016 primarily due to the 3.0% increase in ADR and a slight increase in average occupancy.

Revenue from our franchised hotels segment increased $7.9 million to $12.7 million in the third quarter of 2017 compared with the same period in 2016. This increase was primarily due to an additional $7.8 million from the recently acquired Vantage brands, as well as growth in the number of franchises in the system.

Nine months endedSeptember 30,2017 and 2016

During nine months ended September 30, 2017, revenue from our company operated hotel segment increased $0.7 million or 1% compared with the same period in 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 higher ($1.9 million or 2%) for the nine months ended September 30, 2017 compared with the same period in 2016 primarily due to the 3% increase in ADR and partially offset by a slightly lower average occupancy.

Revenue from our franchised hotels segment increased $23.9 million to $36.0 million in the nine months ended September 30, 2017 compared with the same period in 2016. This increase was primarily due to an additional $22.9 million from the recently acquired Vantage brands, as well as growth in the number of upscale and midscale franchises in the system.

Comparable Hotel Revenue (Non-GAAP Data)

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 in thev fourth quarter of 2016, and one property that opened during the second quarter of 2016, as these properties had not been open at least one year as of the beginning of the current year. In addition, we exclude revenue earned and expenses incurred related to our hotel management agreements.

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.

39

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

Comparable Hotel Statistics(1)
	Three Months Ended September 30,
	2017									2016
	AverageOccupancy(2)			ADR(3)			RevPAR(4)			Average Occupancy(2)		ADR(3)		RevPAR(4)
Systemwide	69.9	%		$	99.40		$	69.46		70.5	%	$	96.95	$	68.38
Change from prior comparative period:	AverageOccupancy(2)			ADR(3)			RevPAR(4)
Systemwide	(60.0	)	bps	2.5		%	1.6		%

Comparable Hotel Statistics(1)
	Nine Months Ended September 30,
	2017									2016
	AverageOccupancy(2)			ADR(3)			RevPAR(4)			Average Occupancy(2)		ADR(3)		RevPAR(4)
Systemwide	63.1	%		$	92.74		$	58.54		64.1	%	$	89.81	$	57.59
Change from prior comparative period:	AverageOccupancy(2)			ADR(3)			RevPAR(4)
Systemwide	(100.0	)	bps	3.3		%	1.6		%

⁽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 non-GAAP measures and 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, 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 our industry such as "upscale", "midscale" and "economy" are consistent with those used by Smith Travel Research (STR), an independent statistical research service that specializes in the lodging industry. These terms as used in our disclosures are consistent with the STR definitions.

40

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 and nine months ended September 30,2017 and 2016 is as follows (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
Company operated hotels	$	25,284		$	25,363		$	70,450		$	71,035
Other costs from managed properties	1,054			1,733			3,047			4,498
Franchised hotels	8,898			3,214			26,300			10,034
Other	(9		)	9			(2		)	30
Depreciation and amortization	4,660			3,771			13,742			11,209
Hotel facility and land lease	1,201			1,197			3,604			3,543
Gain on asset dispositions, net	(113		)	(100		)	(334		)	(729		)
General and administrative expenses	3,640			2,031			11,348			7,781
Acquisition and integration costs	1,235			1,413			1,246			1,653
Total operating expenses	$	45,850		$	38,631		$	129,401		$	109,054

The summary of our comparablehotel operating expenses for the three and nine months ended September 30,2017 and 2016 is as follows (in thousands):

Comparable Hotel Expenses (Non-GAAP Data)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
Company operated hotel operating expenses	$	25,284		$	25,363		$	70,450		$	71,035
less: operating expenses from sold and closed hotels	—			(761		)	—			(1,949		)
less: operating expenses from hotels without comparable results	(1,108		)	(1,151		)	(3,096		)	(2,311		)
less: operating expenses from managed properties	(188		)	(237		)	(520		)	(866		)
Comparable company operated hotel operating expenses	$	23,988		$	23,214		$	66,834		$	65,909

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 in the fourth quarter of 2016, and one property that opened during the second quarter of 2016, as these properties had not been open at least one year as of the beginning of the current year. In addition, we exclude revenue earned and expenses incurred related to our hotel management agreements.

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 September 30,2017 and 2016

Direct company operated hotel expenses were flat at $25.3 million and $25.4 million in the third quarters of 2017 and 2016. On a comparable basis, direct company operated hotel expenses were $24.0 million in the third quarter of 2017 compared with $23.2 million in the third quarter of 2016, driven by additional costs associated with higher revenue and a minimum wage increase in Washington, partially offset by cost control measures in the current period.

41

Direct expenses for the franchised hotels in the third quarter of 2017 increased $5.7 million compared with the third quarter of 2016, primarily driven by costs associated with the economy brand operations acquired from Vantage as of September 30, 2016.

Depreciation and amortization expenses increased $0.9 million in the third quarter of 2017 compared with the third quarter of 2016, primarily due to the completion of the renovations at the RL Venture and Washington, D.C. properties and the addition of the definite-lived intangibles from the Vantage acquisition.

Hotel facility and land lease costs were flat for the third quarter of 2017 compared with 2016.

General and administrative expenses increased by $1.6 million in the third quarter of 2017 compared with 2016, primarily due to the addition of costs from the Vantage acquisition and higher variable compensation expense in conjunction with our financial performance in 2017 compared with 2016.

Acquisition and integrations costs were lower by $0.2 million in the third quarter of 2017 compared with 2016. In 2017, we recognized $1.2 million in expense related to the increase in fair value of the contingent consideration for the Vantage acquisition. In 2016, we incurred costs for professional services related to the negotiations of the Vantage acquisition.

Nine months ended September 30,2017 and 2016

Direct company operated hotel expenses were $70.5 million and $71.0 million in the first nine months of 2017 and 2016, lower primarily due to the closure and sale of two properties in the fourth quarter of 2016, partially offset by the opening of two locations in the second quarter of 2016. On a comparable basis, direct company operated hotel expenses were $66.8 million in the nine month period ended September 30, 2017 compared with $65.9 million in the same period in 2016, driven by higher variable costs associated with higher revenue and a minimum wage increase in Washington, partially offset by cost control measures in the current period.

Direct expenses for the franchised hotels in the first nine months of 2017 increased $16.3 million compared with the same period of 2016, primarily driven by costs associated with the economy brand operations acquired from Vantage as of September 30, 2016.

Depreciation and amortization expenses increased $2.5 million in the first nine months of 2017 compared with 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 nine months of 2017 compared with 2016.

General and administrative expenses increased by $3.6 million in the nine months ended September 30, 2017 compared with 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 nine months of 2017 compared with 2016.

Acquisition and integrations costs were lower by $0.4 million in the first nine months of 2017 compared with 2016. In 2017, we recognized expense for the increase in fair value of the contingent consideration for the Vantage acquisition. In 2016, we incurred costs for professional services related to the negotiations of the Vantage acquisition.

Interest Expense

Interest expense increased $0.3 million in the third quarter of 2017 compared with the third quarter of 2016. Interest expense increased $1.4 million during the nine months ended September 30, 2017 compared with the same period in 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 increased $0.2 million in the third quarter of 2017 compared with the third quarter of 2016, and increased $0.3 million in the first nine months of 2017 compared with the same period in 2016. The additional income was driven by a litigation settlement for hotel equipment.

42

Income Taxes

For the three and nine months ended September 30, 2017, we reported income tax expense of $174,000 and $513,000 compared with income tax expense of $166,000 and $258,000 for the same periods in 2016. 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.

Discontinued Operations

On October 3, 2017, we completed the sale of certain specified liabilities and substantially all of the assets of our Entertainment segment, previously composed of WestCoast Entertainment and TicketsWest, including ticketing agreements and engagement agreements with various entertainment venues, teams and artists located throughout the Western United States. As such, the results of the Entertainment segment are reported as discontinued operations and the assets and liabilities are classified as held for sale for all periods presented in this quarterly report on Form 10-Q. See Note 17 of Item 1: Condensed Notes to Consolidated Financial Statements.

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 $20.4 million and $33.0 million at September 30,2017 and December 31, 2016. We believe that we have sufficient liquidity to fund our operations at least through November 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 September 30, 2017.

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 original 12 hotels owned by the subsidiaries. Subsequently we disposed of one hotel, leaving 11 properties owned by RL Venture. At September 30, 2017, draws on the loan were substantially complete, with a remaining amount of $0.3 million available for draw. Interest under the advanced portions of the loan is payable monthly at LIBOR plus 4.75%. Monthly principal payments began in January 2017 in an amount that will repay the outstanding principal balance over a 25-year amortization period. Our joint venture partner owns 45% of RL Venture at September 30, 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 September 30, 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 September 30, 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 began in September 2017. Our joint venture partner owns 45% of RLS Atla Venture at September 30, 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 has been fully

43

drawn as of September 30, 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 are required beginning in November 2017 in an amount that will repay the outstanding principal balance over an amortization period of 25-years. Our joint venture partner owns 45% of RLS DC Venture as of September 30, 2017.

At September 30, 2017 total outstanding debt was $111.5 million, net of discount, all of which is at variable interest rates. Our average pre-tax interest rate on debt was 6.3% at September 30, 2017. Refer to Note 7 in Item 1. Financial Information for further information on the specific terms of our debt.

Operating Activities

Net cash provided by operating activities totaled $9.0 million during the first nine months of 2017 compared with $7.1 million during the same period in 2016. The primary drivers of the change in cash flows were higher net income, net of non-cash items, partially offset by a decline in working capital accounts for the nine months ended September 30, 2017.

Investing Activities

Net cash used in investing activities totaled $8.2 million during the first nine months of 2017 compared with $32.9 million during the first nine months of 2016. The primary drivers of the change were a decrease in capital expenditures from $30.3 million for the nine months endedSeptember 30, 2016 down to $8.0 million for the nine months ended September 30, 2017, and the acquisition of Vantage Hospitality in the third quarter of 2016 partially offset by proceeds from sales of short-term investments of $18.1 million during the nine months endedSeptember 30, 2016.

Financing Activities

Net cash provided by financing activities was $0.7 million during the first nine months of 2017 compared with $18.8 million in the first nine months of 2016. The primary driver of the change was higher borrowings on long-term debt for the nine months endedSeptember 30, 2016 of $19.5 million down to $3.2 million for the nine months ended September 30, 2017.

Contractual Obligations

The following table summarizes our significant contractual obligations, including principal and estimated interest on debt and capital leases, as of September 30, 2017 (in thousands):

	Total		Less than 1 year		1-3 years		4-5 years		After 5 years
Debt(1)	$	122,397	$	31,430	$	90,967	$	—	$	—
Capital leases(1)	1,144		329		602		213		—
Operating leases	81,839		5,555		9,024		5,121		62,139
Total contractual obligations (2)	$	205,380	$	37,314	$	100,593	$	5,334	$	62,139

⁽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 2018 and beyond, which are reflected in the table above.

Off-Balance Sheet Arrangements

As of September 30, 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.

44

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 September 30, 2017, our outstanding debt, including current maturities and excluding unamortized origination fees, was $112.9 million, which is under term loans subject to variables rates, but is subject to interest rate caps.

We enter into derivative transactions to hedge our exposure to interest rate fluctuations, and not for trading purposes. 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.

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 September 30, 2017 on our Consolidated Balance Sheet (in thousands):

	2017		2018		2019		2020		2021		Thereafter		Total			Fair Value
Debt	$	434	$	24,442	$	87,999	$	—	$	—	$	—	$	112,875		$	112,307
Average interest rate													6.3		%

Item 4. Controls and Procedures

As of September 30, 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 our disclosure controls and procedures were effective 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 September 30, 2017 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

45

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 Item 1: 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

In connection with our acquisition of the operating assets and assumption of certain liabilities of Vantage Hospitality Group, Inc., we agreed to issue up to 414,000 shares of common stock as contingent consideration if certain performance measures were achieved as of September 30, 2017, the one year anniversary of the closing date.  As of September 30, 2017, we have preliminarily determined that the year 1 contingent consideration has been earned, and the 414,000 shares of the Company’s common stock should be issued.

The issuance of the Company’s common shares is exempt from registration under Section 4(a)(2) of the Securities Act because the transaction did not involve a public offering.  The purchaser is an accredited investor, and the shares of the Company’s common stock are restricted securities for purposes of Rule 144 and subject to certain requirements before sale, including holding period requirements. The Company has not engaged in general solicitation or advertising with regard to the issuance and sale of the Company’s common stock issued pursuant to the Purchase Agreement.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

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Item 6. Exhibits

Index to Exhibits

Exhibit Number	Description
10.1	Asset Purchase Agreement between Red Lion Hotels Corporation, TicketsWest.com, Inc. and Paciolan, LLC dated August 11, 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

47

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)	November 3, 2017
	Gregory T. Mount
By:	/s/ Douglas L. Ludwig	Executive Vice President and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)	November 3, 2017
	Douglas L. Ludwig

48

EX-10.1

EXECUTION VERSION

ASSET PURCHASE AGREEMENT
among
RED LION HOTELS CORPORATION,
TICKETSWEST.COM, INC.and
PACIOLAN, LLC
dated as of
August 11, 2017

TABLE OF CONTENTS

Page

ARTICLE I Definitions		1
ARTICLE II Purchase and Sale		10
Section 2.01	Purchase and Sale of Assets	10
Section 2.02	Excluded Assets	12
Section 2.03	Assumed Liabilities	13
Section 2.04	Excluded Liabilities	13
Section 2.05	Purchase Price	15
Section 2.06	Payment	15
Section 2.07	Purchase Price Adjustment – Closing Capital	15
Section 2.08	Purchase Price Adjustment – Ticketing Agreements	18
Section 2.09	Allocation of Purchase Price	19
ARTICLE III Closing		19
Section 3.01	Closing	19
Section 3.02	Closing Deliverables	19
ARTICLE IV Representations and warranties of seller		21
Section 4.01	Organization and Qualification	21
Section 4.02	Authority of Seller	21
Section 4.03	No Conflicts; Consents	21
Section 4.04	Financial Statements	22
Section 4.05	Undisclosed Liabilities	22
Section 4.06	Absence of Certain Changes, Events and Conditions	22
Section 4.07	Material Contracts	24
Section 4.08	Title to Purchased Assets	25
Section 4.09	Condition and Sufficiency of Assets	26
Section 4.10	Real Property	26
Section 4.11	Intellectual Property	26
Section 4.12	Subsidiaries	28
Section 4.13	Accounts Receivable	28
Section 4.14	Suppliers	29
Section 4.15	Customers	29
Section 4.16	Legal Proceedings; Governmental Orders	29
Section 4.17	Compliance with Laws; Permits	29
Section 4.18	Environmental Matters	30
Section 4.19	Employee Benefit Matters	30
Section 4.20	Employment Matters	31
Section 4.21	Taxes	31
Section 4.22	Brokers	32
Section 4.23	Insurance	32
Section 4.24	Related Party Transactions	33
Section 4.25	Ethical Practices	33
Section 4.26	Disclosure	33
ARTICLE V Representations and warranties of buyer		33

i

Section 5.01	Organization of Buyer	33
Section 5.02	Authority of Buyer	33
Section 5.03	No Conflicts; Consents	34
Section 5.04	Brokers	34
Section 5.05	Sufficiency of Funds	34
Section 5.06	Legal Proceedings	34
ARTICLE VI Covenants		34
Section 6.01	Employees and Employee Benefits	34
Section 6.02	Confidentiality	34
Section 6.03	Consents	36
Section 6.04	Books and Records	37
Section 6.05	Public Announcements	37
Section 6.06	Bulk Sales Laws	37
Section 6.07	Receivables	37
Section 6.08	Transfer Taxes	37
Section 6.09	Tax Clearance Certificates	38
Section 6.10	Conduct of Business Prior to the Closing	38
Section 6.11	Further Assurances	40
Section 6.12	Non-Solicit and Non-Competition	40
Section 6.13	Exclusivity	40
Section 6.14	Insurance	41
Section 6.15	Name Change	42
ARTICLE VII Conditions to closing		42
Section 7.01	Conditions to Obligations of All Parties	42
Section 7.02	Conditions to Obligations of Buyer	42
Section 7.03	Conditions to Obligations of Seller	44
ARTICLE VIII Indemnification		45
Section 8.01	Survival	45
Section 8.02	Indemnification By Seller and Parent	45
Section 8.03	Indemnification By Buyer	46
Section 8.04	Certain Limitations	46
Section 8.05	Indemnification Procedures	47
Section 8.06	Payments	49
Section 8.07	Tax Treatment of Indemnification Payments	49
Section 8.08	Effect of Investigation	49
Section 8.09	Exclusive Remedies	50
ARTICLE IX Termination		50
Section 9.01	Termination	50
Section 9.02	Buyer’s Right of First Refusal	51
Section 9.03	Effect of Termination	52
ARTICLE X Miscellaneous		52
Section 10.01	Expenses	52
Section 10.02	Notices	52
Section 10.03	Interpretation	53
Section 10.04	Headings	54
Section 10.05	Severability	54

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Section 10.06	Entire Agreement	54
Section 10.07	Successors and Assigns	54
Section 10.08	No Third-party Beneficiaries	54
Section 10.09	Amendment and Modification; Waiver	54
Section 10.10	Governing Law; Submission to Jurisdiction; Waiver of Jury Trial	55
Section 10.11	Counterparts	55

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ASSET PURCHASE AGREEMENT

This Asset Purchase Agreement (this “Agreement”), dated as of August 11, 2017 (the “Effective Date”), is entered into by and among RED LION HOTELS CORPORATION, a Washington corporation (“Parent”), TICKETSWEST.COM, INC., a Washington corporation (“Seller”), and PACIOLAN, LLC, a Delaware limited liability company (“Buyer”). Buyer, Parent and Seller are sometimes referred to herein collectively as the “Parties” and each individually as a “Party.”

RECITALS

WHEREAS, Seller is engaged in the business of providing primary ticketing, marketing and fundraising services to venues, teams, promoters, presenters, organizations and event organizers, while also producing and presenting live entertainment engagements in a variety of markets (the “Business”);

WHEREAS, Seller wishes to sell and assign to Buyer, and Buyer wishes to purchase and assume from Seller, substantially all the assets, and certain specified liabilities, of the Business, subject to the terms and conditions set forth herein; and

WHEREAS, Parent is entering into this Agreement to give Buyer certain rights of indemnification upon which Buyer is relying in consummating the transactions described herein.

NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound, the parties hereto agree as follows:

ARTICLE 1

DEFINITIONS

The following terms have the meanings specified or referred to in this Article I:

“2016 Ticketing Agreements” has the meaning set forth in Section 2.08(a).

“2017 Ticketing Agreements” has the meaning set forth in Section 2.08(a).

“2016 Total Ticketing OCF” has the meaning set forth in Section 2.08(b).

“Accounts Receivable” has the meaning set forth in Section 2.01(a).

“Action” means any claim, action, cause of action, demand, lawsuit, arbitration, inquiry, audit, notice of violation, proceeding, litigation, citation, summons, subpoena or investigation of any nature, whether civil, criminal, administrative, regulatory or otherwise, and whether at law or in equity.

“Affiliate” of a Person means any other Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such Person. The term “control” (including the terms “controlled by” and “under common control with”) means the

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possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

“Agreement” has the meaning set forth in the preamble.

“Allocation Statement” has the meaning set forth in Section 2.09.

“Annual Financial Statements” has the meaning set forth in Section 4.04.

“Assigned Contracts” has the meaning set forth in Section 2.01(c).

“Assignment and Assumption Agreement” has the meaning set forth in Section 3.02(a)(ii).

“Assignment and Assumption of Leases” has the meaning set forth in Section 3.02(a)(iv).

“Assumed Liabilities” has the meaning set forth in Section 2.03.

“Balance Sheet” has the meaning set forth in Section 4.04.

“Balance Sheet Date” has the meaning set forth in Section 4.04.

“Base Amount” means Six Million Dollars ($6,000,000).

“Basket” has the meaning set forth in Section 8.04(a).

“Bill of Sale” has the meaning set forth in Section 3.02(a)(i).

“Books and Records” has the meaning set forth in Section 2.01(l).

“Business” has the meaning set forth in the recitals.

“Business Day” means any day except Saturday, Sunday or any other day on which commercial banks located in Spokane, Washington or in New York, New York are authorized or required by Law to be closed for business.

“Buyer” has the meaning set forth in the preamble.

“Buyer Closing Certificate” has the meaning set forth in Section 7.03(f).

“Buyer Confidential Information” has the meaning set forth in Section 6.02(b).

“Buyer Covered Persons” has the meaning set forth in Section 6.02(a).

“Buyer Indemnitees” has the meaning set forth in Section 8.02.

“Buyer’s Accountants” means Deloitte.

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“Closing” has the meaning set forth in Section 3.01.

“Closing Date” has the meaning set forth in Section 3.01.

“Closing Portion of the Purchase Price” has the meaning set forth in Section 2.5.

“Closing Capital” means: (a) Current Assets and Long-Term Prepaids, less (b) Total Liabilities, determined as of the close of business on the Closing Date.

“Closing Capital Statement” has the meaning set forth in Section 2.07(b).

“Code” means the Internal Revenue Code of 1986, as amended.

“Contracts” means all contracts, licenses, leases, deeds, mortgages, instruments, notes, commitments, undertakings, indentures, joint ventures and all other agreements, commitments and legally binding arrangements, whether written or oral.

“Confidential Information” has the meaning set forth in Section 6.02(d).

“Covered Persons” has the meaning set forth in Section 6.02(a).

“Current Assets and Long-Term Prepaids” means the assets of Seller included in the line items set forth on Section 2.07(a)(i) of the Disclosure Schedules, in each case in accordance with GAAP. For the avoidance of doubt, Current Assets shall not include any notes receivable, any intercompany balances or any Tax asset (including, without limitation, any Prepaid Asset related to the payment of Taxes).

“Direct Claim” has the meaning set forth in Section 8.05(c).

“Direct Claim Notice” has the meaning set forth in Section 8.05(c).

“Direct Claims Dispute Period” has the meaning set forth in Section 8.05(c).

“Disclosure Schedules” means the Disclosure Schedules delivered by Seller and Buyer concurrently with the execution and delivery of this Agreement.

“Disputed Amounts” has the meaning set forth in Section 2.07(c)(iii).

“Dollars or $” means the lawful currency of the United States.

“Employee Benefit Plan” means any of the following that Seller currently maintains for any of its current or former executives, officers or other employees: (a) Employee Pension Benefit Plan, (b) Employee Welfare Benefit Plan or (c) equity-based plan or arrangement or other retirement, deferred compensation, severance, bonus, profit-sharing or incentive plan or arrangement.

“Employee Pension Benefit Plan” has the meaning set forth in ERISA § 3(2).

“Employee Welfare Benefit Plan” has the meaning set forth in ERISA § 3(1).

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“Employment Agreement” has the meaning set forth in Section 7.02(j).

“Encumbrance” means any charge, claim, community property interest, pledge, condition, equitable interest, lien (statutory or other), option, security interest, mortgage, easement, encroachment, right of way, right of first refusal, or restriction of any kind, including any restriction on use, voting, transfer, receipt of income or exercise of any other attribute of ownership.

“Environmental Claim” means any Action, Governmental Order, lien, fine, penalty, or, as to each, any settlement or judgment arising therefrom, by or from any Person alleging liability of whatever kind or nature (including liability or responsibility for the costs of enforcement proceedings, investigations, cleanup, governmental response, removal or remediation, natural resources damages, property damages, personal injuries, medical monitoring, penalties, contribution, indemnification and injunctive relief) arising out of, based on or resulting from: (a) the presence, Release of, or exposure to, any Hazardous Materials; or (b) any actual or alleged non-compliance with any Environmental Law or term or condition of any Environmental Permit.

“Environmental Law” means any applicable Law, and any Governmental Order or binding agreement with any Governmental Authority: (a) relating to pollution (or the cleanup thereof) or the protection of natural resources, endangered or threatened species, human health or safety, or the environment (including ambient air, soil, surface water or groundwater, or subsurface strata); or (b) concerning the presence of, exposure to, or the management, manufacture, use, containment, storage, recycling, reclamation, reuse, treatment, generation, discharge, transportation, processing, production, disposal or remediation of any Hazardous Materials. The term “Environmental Law” includes, without limitation, the following (including their implementing regulations and any state analogs): the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C. §§ 9601 et seq.; the Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976, as amended by the Hazardous and Solid Waste Amendments of 1984, 42 U.S.C. §§ 6901 et seq.; the Federal Water Pollution Control Act of 1972, as amended by the Clean Water Act of 1977, 33 U.S.C. §§ 1251 et seq.; the Toxic Substances Control Act of 1976, as amended, 15 U.S.C. §§ 2601 et seq.; the Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C. §§ 11001 et seq.; the Clean Air Act of 1966, as amended by the Clean Air Act Amendments of 1990, 42 U.S.C. §§ 7401 et seq.; and the Occupational Safety and Health Act of 1970, as amended, 29 U.S.C. §§ 651 et seq.

“Environmental Notice” means any written directive, notice of violation or infraction, or notice respecting any Environmental Claim relating to actual or alleged non-compliance with any Environmental Law or any term or condition of any Environmental Permit.

“Environmental Permit” means any Permit, letter, clearance, consent, waiver, closure, exemption, decision or other action required under or issued, granted, given, authorized by or made pursuant to Environmental Law.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

“Escrow Agent” has the meaning set forth in Section 3.02(a)(x).

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“Escrow Agreement” has the meaning set forth in Section 3.02(a)(x).

“Escrow Amount” has the meaning set forth in Section 2.05.

“Estimated Closing Capital” has the meaning set forth in Section 2.07(a).

“Estimated Purchase Price” means (a) the Base Amount, plus (b) the amount, if any, by which Estimated Closing Capital is greater than the Target Capital, minus (c) the amount, if any, by which Estimated Closing Capital is less than the Target Capital, minus (d) the amount, if any, of the adjustment contemplated by Section 2.08.

“Estimated Purchase Price Statement” has the meaning set forth in Section 2.07(a).

“Excluded Assets” has the meaning set forth in Section 2.02.

“Excluded Liabilities” has the meaning set forth in Section 2.04.

“Final Closing Capital” has the meaning set forth in Section 2.07(d)(i).

“Final Determination Date” has the meaning set forth in Section 2.07(d)(ii).

“Final Purchase Price” has the meaning set forth in Section 2.07(d)(v).

“Financial Statements” has the meaning set forth in Section 4.04.

“FIRPTA Certificate” has the meaning set forth in Section 3.02(a)(vi).

“Funds Flow Memorandum” has the meaning set forth in Section 2.06.

“GAAP” means United States generally accepted accounting principles in effect from time to time.

“Government Contracts” has the meaning set forth in 4.07(a)(vi).

“Governmental Authority” means any federal, state, local or foreign government or political subdivision thereof, or any agency or instrumentality of such government or political subdivision, or any self-regulated organization or other non-governmental regulatory authority or quasi-governmental authority (to the extent that the rules, regulations or orders of such organization or authority have the force of Law), or any arbitrator, court or tribunal of competent jurisdiction.

“Governmental Order” means any order, writ, judgment, injunction, decree, stipulation, determination or award entered by or with any Governmental Authority.

“Hazardous Materials” means: (a) any material, substance, chemical, waste, product, derivative, compound, mixture, solid, liquid, mineral or gas, in each case, whether naturally occurring or manmade, that is hazardous, acutely hazardous, toxic, or words of similar import or regulatory effect under Environmental Laws; and (b) any petroleum or petroleum-derived products,

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radon, radioactive materials or wastes, asbestos in any form, lead or lead-containing materials, urea formaldehyde foam insulation and polychlorinated biphenyls.

“Indemnified Party” has the meaning set forth in Section 8.05.

“Indemnifying Party” has the meaning set forth in Section 8.05.

“Independent Accountant” has the meaning set forth in Section 2.07(c)(iii).

“Intellectual Property” means all intellectual property and industrial property rights and assets, and all rights, interests and protections that are associated with, similar to, or required for the exercise of, any of the foregoing, however arising, pursuant to the Laws of any jurisdiction throughout the world, whether registered or unregistered, including any and all: (a) trademarks, service marks, trade names, brand names, logos, trade dress, design rights and other similar designations of source, sponsorship, association or origin, together with the goodwill connected with the use of and symbolized by, and all registrations, applications and renewals for, any of the foregoing; (b) internet domain names, whether or not trademarks, registered in any top-level domain by any authorized private registrar or Governmental Authority, web addresses, web pages, websites and related content, accounts with Twitter, Facebook and other social media companies and the content found thereon and related thereto, and URLs; (c) works of authorship, expressions, designs and design registrations, whether or not copyrightable, including copyrights, author, performer, moral and neighboring rights, and all registrations, applications for registration and renewals of such copyrights; (d) inventions, discoveries, trade secrets, business and technical information and know-how, databases, data collections and other confidential and proprietary information and all rights therein; (e) patents (including all reissues, divisionals, provisionals, continuations and continuations-in-part, re-examinations, renewals, substitutions and extensions thereof), patent applications, and other patent rights and any other Governmental Authority-issued indicia of invention ownership (including inventor’s certificates, petty patents and patent utility models); (f) software and firmware, including data files, source code, object code, application programming interfaces, architecture, files, records, schematics, computerized databases and other related specifications and documentation; (g) royalties, fees, income, payments and other proceeds now or hereafter due or payable with respect to any and all of the foregoing; and (h) all rights to any Actions of any nature available to or being pursued by Seller to the extent related to the foregoing, whether accruing before, on or after the date hereof, including all rights to and claims for damages, restitution and injunctive relief for infringement, dilution, misappropriation, violation, misuse, breach or default, with the right but no obligation to sue for such legal and equitable relief, and to collect, or otherwise recover, any such damages.

“Intellectual Property Agreements” means all licenses, sublicenses, consent to use agreements, settlements, coexistence agreements, covenants not to sue, permissions and other Contracts (including any right to receive or obligation to pay royalties or any other consideration), whether written or oral, relating to any Intellectual Property that is used in or necessary for the conduct of the Business as currently conducted to which Seller is a party, beneficiary or otherwise bound (as licensor, licensee or otherwise).

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“Intellectual Property Assets” means all Intellectual Property that is owned by Seller and which relate to, or are used or held for use in connection with, the Business as currently conducted.

“Intellectual Property Assignment” has the meaning set forth in Section 3.02(a)(iii).

“Intellectual Property Registrations” means all Intellectual Property Assets that are subject to any issuance, registration, application or other filing by, to or with any Governmental Authority or authorized private registrar in any jurisdiction, including registered trademarks, domain names and copyrights, issued and reissued patents and pending applications for any of the foregoing.

“Interim Balance Sheet” has the meaning set forth in Section 4.04.

“Interim Balance Sheet Date” has the meaning set forth in Section 4.04.

“Interim Financial Statements” has the meaning set forth in Section 4.04.

“Inventory” has the meaning set forth in Section 2.01(b).

“KeyEmployees” means Jack Lucas and Dusty Kurtz.

“Knowledge of Seller or Seller’s Knowledge” or any other similar knowledge qualification, means the actual or constructive knowledge of any of Jack Lucas, Dusty Kurtz, Julie Shiflett, Aaron Howard and/or Tom McKiernan.

“Law” means any statute, law, ordinance, regulation, rule, code, order, constitution, treaty, common law, judgment, decree, other requirement or rule of law of any Governmental Authority.

“Leases” has the meaning set forth in Section 4.10(b).

“Liabilities” means liabilities, obligations or commitments of any nature whatsoever, asserted or unasserted, known or unknown, absolute or contingent, accrued or unaccrued, matured or unmatured or otherwise.

“LIBOR” has the meaning set forth in Section 8.06.

“Loss orLosses” means losses, damages, liabilities, deficiencies, Actions, judgments, interest, awards, penalties, fines, costs or expenses of whatever kind, including reasonable attorneys’ fees and the cost of enforcing any right to indemnification hereunder and the cost of pursuing any insurance providers; provided, however, that “Losses” shall not include punitive damages, except in the case of fraud or to the extent actually awarded to a Governmental Authority or other third party.

“Material Adverse Effect” means any event, occurrence, fact, condition or change that is, or could reasonably be expected to become, individually or in the aggregate, materially adverse to (a) the business, results of operations, condition (financial or otherwise) or assets of Seller or the Business, (b) the value of the Purchased Assets, or (c) the ability of Seller to consummate the transactions contemplated hereby on a timely basis; provided, however, that “Material Adverse

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Effect” shall not include any event, occurrence, fact, condition or change, directly or indirectly, arising out of or attributable to: (i) general economic or political conditions; (ii) conditions generally affecting the industries in which Seller or the Business operates; (iii) any changes in financial or securities markets in general; (iv) acts of war (whether or not declared), armed hostilities or terrorism, or the escalation or worsening thereof; (v) any action required by this Agreement; (vi) any changes in applicable Laws or accounting rules, including GAAP; or (vii) the public announcement, pendency or completion of the transactions contemplated by this Agreement; provided further, however, that any event, occurrence, fact, condition or change referred to in clauses (i) through (iv) immediately above shall be taken into account in determining whether a Material Adverse Effect has occurred or could reasonably be expected to occur to the extent that such event, occurrence, fact, condition or change has a disproportionate effect on Seller or the Business compared to other participants in the industries in which Seller or the Business operates.

“Material Contracts” has the meaning set forth in Section 4.07(a).

“Material Customers” has the meaning set forth in Section 4.14.

“Material Suppliers” has the meaning set forth in Section 4.14.

“Offer” has the meaning set forth in Section 9.02(b).

“Offer Notice” has the meaning set forth in Section 9.02(b).

“Outstanding Claim” has the meaning set forth in Section 2.05.

“Permits” means all permits, licenses, franchises, approvals, authorizations, registrations, certificates, variances and similar rights obtained, or required to be obtained, from Governmental Authorities.

“Permitted Encumbrances” has the meaning set forth in Section 4.08(b).

“Person” means an individual, corporation, partnership, joint venture, limited liability company, Governmental Authority, unincorporated organization, trust, association or other entity.

“Pre-Closing Occurrences” has the meaning set forth in Section 6.14(a).

“Pre-Closing Tax Period” means any taxable period ending on or before the Closing Date and, with respect to any taxable period beginning before and ending after the Closing Date, the portion of such taxable period ending on and including the Closing Date.

“Prepaid Assets” has the meaning set forth in Section 2.01(j).

“Purchase Price” has the meaning set forth in Section 2.05.

“Purchased Assets” has the meaning set forth in Section 2.01.

“Purchaser” has the meaning set forth in Section 9.02(a).

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“Release” means any actual or threatened release, spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, abandonment, disposing or allowing to escape or migrate into or through the environment (including, without limitation, ambient air (indoor or outdoor), surface water, groundwater, land surface or subsurface strata or within any building, structure, facility or fixture).

“Related Party Agreements” has the meaning set forth in Section 4.25.

“Representative” means, with respect to any Person, any and all directors, officers, employees, consultants, financial advisors, counsel, accountants and other agents of such Person.

“Required Consents” has the meaning set forth in Section 7.02(d).

“Response Notice” has the meaning set forth in Section 8.05(c).

“Resolution Period” has the meaning set forth in Section 2.07(c)(ii).

“Restricted Business” has the meaning set forth in Section 6.12(b).

“Restricted Employee” has the meaning set forth in Section 6.12(a).

“Review Period” has the meaning set forth in Section 2.07(c)(i).

“ROFR” has the meaning set forth in Section 9.02(a).

“Sale Transaction” has the meaning set forth in Section 9.02(d).

“Seller” has the meaning set forth in the preamble.

“Seller Closing Certificate” has the meaning set forth in Section 7.02(h).

“Seller Confidential Information” has the meaning set forth in Section 6.02(c).

“Seller Covered Persons” has the meaning set forth in Section 6.02(a).

“Seller Indemnitees” has the meaning set forth in Section 8.03.

“Seller Insurance Policies” has the meaning set forth in Section 6.14(a).

“Seller IT Assets” means any and all computers, software, hardware, systems, servers, workstations, routers, hubs, switches, data communications lines and other information technology equipment, and all associated documentation, used by Seller in connection with the Business.

“Seller’s Accountants” means BDO USA.

“Statement of Objections” has the meaning set forth in Section 2.07(c)(ii).

“Sublease Agreement” has the meaning set forth in Section 3.02(b)(iv).

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“Tangible Personal Property” has the meaning set forth in Section 2.01(g).

“Target Capital” means Seven Hundred Fifty Thousand Dollars ($750,000).

“Tax Return” means any return, declaration, report, claim for refund, information return or statement or other document relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.

“Taxes” means all federal, state, local, foreign and other income, gross receipts, sales, use, production, ad valorem, transfer, documentary, franchise, registration, profits, license, lease, service, service use, withholding, payroll, employment, unemployment, estimated, excise, severance, environmental, stamp, occupation, premium, property (real or personal), real property gains, windfall profits, customs, duties or other taxes, fees, assessments or charges of any kind whatsoever, together with any interest, additions or penalties with respect thereto and any interest in respect of such additions or penalties.

“Termination Date” has the meaning set forth in Section 9.1(b).

“Third Party Claim” has the meaning set forth in Section 8.05(a).

“Ticketing Agreements” has the meaning set forth in Section 2.08(a).

“Ticketing Customer Consent” has the meaning set forth in Section 2.08(b).

“Total Liabilities” means the liabilities of Seller included in the line items set forth on Section 2.07(a)(i) of the Disclosure Schedules, in each case in accordance with GAAP. For the avoidance of doubt, Total Liabilities shall not include any intercompany balances or Tax liabilities.

“Transaction Documents” means this Agreement, the Bill of Sale, and the Assignment and Assumption Agreement, and the other agreements, instruments and documents required to be delivered at the Closing.

“Transition Services Agreement” has the meaning set forth in Section 3.02(a)(xv).

“Walkaway Deficit” has the meaning set forth in Section 2.08(c).

“WARN Act” means the federal Worker Adjustment and Retraining Notification Act of 1988, and similar state, local and foreign laws related to plant closings, relocations, mass layoffs and employment losses.

ARTICLE IIPURCHASE AND SALE

Section 2.01Purchase and Sale of Assets. Subject to the terms and conditions set forth herein, at the Closing, Seller shall sell, assign, transfer, convey and deliver to Buyer, and Buyer shall purchase from Seller, free and clear of any Encumbrances other than Permitted Encumbrances, all of Seller’s right, title and interest in, to and under all of the assets, properties and rights of every

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kind and nature, whether real, personal or mixed, tangible or intangible (including goodwill), wherever located and whether now existing or hereafter acquired (other than the Excluded Assets), which relate to, or are used or held for use in connection with, the Business (collectively, the “Purchased Assets”), including, without limitation, the following:

(a)all accounts or notes receivable held by Seller, and any security, claim, remedy or other right related to any of the foregoing (“Accounts Receivable”);

(b)all inventory, finished goods, raw materials, work in progress, packaging, supplies, parts and other inventories (“Inventory”);

(c)the Contracts to which Seller is a party or by which Seller is bound that are set forth on Section 2.01(c) of the Disclosure Schedules, together with all Contracts to which Seller is a party or by which Seller is bound that involve Liabilities of, or payments to, the Company individually in excess of Ten Thousand Dollars ($10,000) or Twenty Thousand Dollars ($20,000) in the aggregate for any twelve (12) month period (collectively, the “Assigned Contracts”), which constitute all of the Contracts to which Seller is a party or by which Seller is bound which relate to, or are used or held for use in connection with, the Business, other than Contracts identified in Sections 2.02(e) and 2.02(h);

(d)all Leases under which Seller has a leasehold interest except as specifically set forth in Section 2.02(i);

(e)the cash trust balance related to the customer ticketing liability as of the Closing Date;

(f)all Intellectual Property Assets;

(g)all furniture, fixtures, equipment, machinery, tools, vehicles, office equipment, supplies, computers, telephones and other tangible personal property, that set forth on Section 2.01(g) of the Disclosure Schedules, together with all other assets owned by Seller (collectively, the “Tangible Personal Property”), which constitute all such assets, including without limitation Seller IT Assets, which are owned by Seller and used in the Business;

(h)all Permits which are held by Seller and required for the conduct of the Business as currently conducted or for the ownership and use of the Purchased Assets, including, without limitation, those listed on Section 4.17(b) of the Disclosure Schedules;

(i)all rights to any Actions of any nature available to or being pursued by Seller to the extent related to the Business, the Purchased Assets or the Assumed Liabilities, whether arising by way of counterclaim or otherwise;

(j)all prepaid expenses, credits, advance payments, claims, security, refunds, rights of recovery, rights of set-off, rights of recoupment, deposits, charges, sums and fees (“Prepaid Assets”);

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(k)all of Seller’s rights under warranties, indemnities and all similar rights against third parties to the extent related to any Purchased Assets;

(l)originals, or where not available, copies, of all books and records, including, but not limited to, books of account, ledgers and general, financial and accounting records, machinery and equipment maintenance files, customer lists, customer purchasing histories, price lists, distribution lists, supplier lists, production data, quality control records and procedures, customer complaints and inquiry files, research and development files, records and data (including all correspondence with any Governmental Authority), sales material and records (including pricing history, total sales, terms and conditions of sale, sales and pricing policies and practices), strategic plans, internal financial statements, marketing and promotional surveys, material and research and files relating to the Intellectual Property Assets and the Intellectual Property Agreements (“Books and Records”);

(m)the membership interest in Troika Entertainment limited liability company;

(n)the rights to insurance, condemnation and warranty proceeds received after the Closing Date as provided under Section 6.14; and

(o)all goodwill and the going concern value of the Business.

Section 2.02Excluded Assets. Notwithstanding the foregoing, the Purchased Assets shall not include the following assets (collectively, the “Excluded Assets”):

(a)Cash not related to the customer ticketing liability as of the Closing Date or to which Buyer is entitled pursuant to Section 6.14;

(b)the corporate seals, organizational documents, minute books, stock books, Tax Returns, books of account or other records having to do with the corporate organization of Seller;

(c)all employee benefit plans and assets attributable thereto;

(d)all insurance policies;

(e)all employment agreements and the rights and liabilities thereunder;

(f)the assets, properties and rights specifically set forth on Section 2.02(f) of the Disclosure Schedules;

(g)the rights which accrue or will accrue to Seller under the Transaction Documents; and

(h)Seller’s rights and obligations under the Lease Agreement for the offices located in Spokane, Washington.

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Section 2.03Assumed Liabilities. Subject to the terms and conditions set forth herein, Buyer shall assume and agree to pay, perform and discharge only the following Liabilities of Seller (collectively, the “Assumed Liabilities”), and no other Liabilities:

(a)all Liabilities in respect of the Assigned Contracts but only to the extent that such Liabilities thereunder are required to be performed after the Closing Date, were incurred in the ordinary course of business and do not relate to any failure to perform, improper performance, warranty or other breach, default or violation by Seller on or prior to the Closing;

(b)the Liabilities identified in the definition of Total Liabilities, in each case solely to the extent and in the amount set forth on the Final Closing Capital (as determined in accordance with Section 2.07(c)); and

(c)those Liabilities of Seller set forth on Section 2.03 of the Disclosure Schedules.

Section 2.04Excluded Liabilities. Notwithstanding the provisions of Section 2.03 or any other provision in this Agreement to the contrary, Buyer shall not assume and shall not be responsible to pay, perform or discharge any Liabilities of Seller or any of its Affiliates of any kind or nature whatsoever other than the Assumed Liabilities (the “Excluded Liabilities”). Seller shall, and shall cause each of its Affiliates to, pay and satisfy in due course all Excluded Liabilities which they are obligated to pay and satisfy. Without limiting the generality of the foregoing, the Excluded Liabilities shall include, but not be limited to, the following:

(a)any Liabilities of Seller or Parent arising or incurred in connection with the negotiation, preparation, investigation and performance of this Agreement, the other Transaction Documents and the transactions contemplated hereby and thereby, including, without limitation, fees and expenses of counsel, accountants, consultants, advisers and others;

(b)any Liability for (i) Taxes of Seller (or any stockholder or Affiliate of Seller) or relating to the Business, the Purchased Assets or the Assumed Liabilities for any Pre-Closing Tax Period (including, without limitation, any sales or other Taxes relating to the sale of event tickets by Seller prior to Closing and any Liability to make and pay over to the proper Governmental Authorities, or arising out of any failure to make and pay over to the appropriate Governmental Authorities, any withholdings or other Taxes relating to any employees or independent contractors of, or other service providers to, Seller or any of its Affiliates); (ii) Taxes that arise out of the consummation of the transactions contemplated hereby or that are the responsibility of Seller pursuant to Section 6.08; (iii) other Taxes of Seller (or any stockholder or Affiliate of Seller) of any kind or description (including any Liability for Taxes of Seller (or any stockholder or Affiliate of Seller) that becomes a Liability of Buyer under any common law doctrine of de facto merger or transferee or successor liability or otherwise by operation of contract or Law); or Taxes which may be required to be collected by Seller and/or remitted by Seller to any Governmental Authority;

(c)any Liabilities relating to or arising out of the Excluded Assets;

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(d)any Liabilities in respect of any pending or threatened Action arising out of, relating to or otherwise in respect of Seller, or the operation of Business or the Purchased Assets to the extent such Action relates to such operation on or prior to the Closing Date;

(e)any claim which arises out of or is based upon any express or implied representation, warranty, agreement or guaranty made by Seller, or by reason of the improper performance of a service by Seller;

(f)any Liabilities of Seller arising under or in connection with any Employee Benefit Plan providing benefits to any present or former employee of Seller;

(g)any Liabilities of Seller for any present or former employees, officers, directors, retirees, independent contractors or consultants of Seller, including, without limitation, (i) any Liabilities associated with any claims for wages (including claims arising out of minimum wage and overtime Laws) or other benefits, bonuses, accrued vacation, workers’ compensation, severance, retention, termination or other payments, and (ii) any Liabilities arising out of any termination of any employees of Seller in connection with the consummation of the transactions contemplated by this Agreement;

(h)any trade accounts payable of Seller (i) to the extent not accounted for in Final Closing Capital; (ii) which constitute intercompany payables owing from Seller to Parent or any of Seller’s other direct or indirect parent companies or other Affiliates; (iii) which constitute debt, loans or credit facilities to financial institutions; or (iv) which did not arise in the ordinary course of business;

(i)any Liabilities of Seller relating or arising from unfulfilled commitments, quotations, purchase orders, customer orders or work orders that (i) do not constitute part of the Purchased Assets issued by the Business’ customers to Seller on or before the Closing; (ii) did not arise in the ordinary course of business; or (iii) are not validly and effectively assigned to Buyer pursuant to this Agreement;

(j)any Liabilities to indemnify, reimburse or advance amounts to any present or former officer, director, employee or agent of Seller (including with respect to any breach of fiduciary obligations by same), except for indemnification of same pursuant to Section 8.03 as Seller Indemnitees;

(k)any Liabilities under (i) any Contracts which do not constitute Assigned Contracts under Section 2.01(c) above, (ii) any Assigned Contracts which are not validly and effectively assigned to Buyer pursuant to this Agreement; (iii) any Assigned Contracts which do not conform to the representations and warranties with respect thereto contained in this Agreement; or (iv) under any Assigned Contracts to the extent such Liabilities arise out of or relate to a breach by Seller of any such Contracts prior to Closing;

(l)any Liabilities associated with debt, loans or credit facilities of Seller and/or the Business owing to financial institutions; and

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(m)any Liabilities arising out of, in respect of or in connection with the failure by Seller or any of its Affiliates to comply with any Law or Governmental Order.

Section 2.05Purchase Price. The aggregate consideration for the Purchased Assets is the Final Purchase Price plus the assumption by Buyer of the Assumed Liabilities (the “Purchase Price”). At Closing, Buyer agrees to pay the Estimated Purchase Price as follows: (a) to the Escrow Agent referred to in Section 3.02(a)(x) hereof, Six Hundred Thousand Dollars ($600,000) (the “Escrow Amount”); and (b) to Seller, an amount equal to the Estimated Purchase Price (after deducting therefrom the Escrow Amount and the aggregate amounts set forth in clause (a) above) in accordance with Section 2.06. Notwithstanding anything herein to the contrary, on the twelve (12)-month anniversary of the Closing Date (or, if such day is not a Business Day, the Business Day immediately succeeding such day), the Escrow Agent shall release to Seller a portion of the Escrow Amount such that the amount remaining in with the Escrow Agent to be held and disbursed in accordance with the provisions of the Escrow Agreement following such release shall be Three Hundred Thousand Dollars ($300,000); provided that if any good faith claim for Losses with respect to which any Buyer Indemnitees has validly given notice in accordance with Article VIII on or prior to that date is pending or settled but not paid (an “Outstanding Claim”) on such date, then the amount that would otherwise be paid by the Escrow Agent to Seller pursuant to this Section 2.05 shall be reduced by the amount of Losses claimed in such notice for each such Outstanding Claim; provided, further, that if the amount remaining with the Escrow Agent to be held and disbursed in accordance with the provisions of the Escrow Agreement on the 6-month anniversary of the Closing Date (or, if such day is not a Business Day, the Business Day immediately succeeding such day) is less than Three Hundred Thousand Dollars ($300,000), then no amount shall be released to Seller pursuant to this Section 2.05.

Section 2.06Payment. The Estimated Purchase Price payable to Seller at Closing pursuant to Section 2.05 shall be paid by wire transfer of immediately available funds to an account designated in writing by Seller to Buyer at least three (3) Business Days prior to the Closing Date. In making the payments set forth in Section 2.05, Buyer shall rely exclusively on the closing funds flow memorandum prepared by Seller in accordance with the provisions of Section 2.05 and Section 2.07(a) and provided to Buyer at least five (5) Business Days prior to the Closing Date (the “Funds Flow Memorandum”). Notwithstanding anything to the contrary in this Agreement or elsewhere, Buyer shall not be in any way responsible for or liable in connection with any aspect or component of the Funds Flow Memorandum, including: (a) any determination or calculation of any amounts payable pursuant to the Funds Flow Memorandum; and (b) the inclusion of any amount payable in or the omission of any amount payable from the Funds Flow Memorandum.

Section 2.07Purchase Price Adjustment – Closing Capital.

(a)Estimated Closing Capital. No later than five (5) Business Days prior to the Closing Date, Seller shall prepare and deliver to Buyer a statement (the “Estimated Purchase Price Statement”) setting forth its calculation of (i) its good faith estimate of the Current Assets and Long-Term Prepaids and Total Liabilities as of the Closing Date, (ii) its good faith estimate of the Closing Capital (the “Estimated Closing Capital”), (iii) the resulting calculation of the Estimated Purchase Price, (iv) its good faith estimate of the estimated annual net operating cash flow of the

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Business attributable to each 2017 Ticketing Agreement (prepared in accordance with the provisions of Section 2.08(a)), and (v) its calculation of any adjustment to the Estimated Purchase Price pursuant to Section 2.08(b). Together with the delivery of the Estimated Purchase Price Statement, Seller shall provide such schedules and data as may be reasonably appropriate to support the calculations set forth therein. Seller shall provide Buyer and Buyer’s Accountants reasonable access upon reasonable prior notice to all relevant documentation and data prepared or used by Seller and Seller’s Accountants in connection with the preparation of the calculations set forth in the Estimated Purchase Price Statement. Section 2.07(a) of the Disclosure Schedules sets forth an illustrative calculation of the Current Assets and Total Liabilities as of the Interim Balance Sheet Date.

(b)Delivery of Closing Capital Statement. Within one hundred and twenty (120) days after the Closing Date, Buyer shall prepare and deliver to Seller a statement setting forth its calculation of Current Assets and Long-Term Prepaids and Total Liabilities as of the Closing Date (the “Closing Capital Statement”).

(c)Examination and Review.

(i)Examination. After receipt of the Closing Capital Statement, Seller shall have forty-five (45) days (the “Review Period”) to review the Closing Capital Statement. During the Review Period, Seller and Seller’s Accountants shall have full access to the relevant books and records of the Business, the personnel of, and work papers prepared by, Buyer and/or Buyer’s Accountants to the extent that they relate to the Closing Capital Statement as Seller may reasonably request for the purpose of reviewing the Closing Capital Statement and to prepare a Statement of Objections (defined below), provided, that such access shall be in a manner that does not interfere with the normal business operations of Buyer or the Business.

(ii)Objection. On or prior to the last day of the Review Period, Seller may object to the Closing Capital Statement by delivering to Buyer a written statement setting forth Seller’s objections in reasonable detail, indicating each disputed item or amount and the basis for Seller’s disagreement therewith, and shall set forth Seller’s calculation of Current Assets and Total Liabilities based on such objections (the “Statement of Objections”). If after the Review Period and to the extent not set forth in the Statement of Objections, Seller shall be deemed to have agreed with all other items and amounts contained in the Closing Capital Statement, and Seller may not thereafter dispute any item or amount not set forth in the Statement of Objections. If Seller fails to deliver the Statement of Objections before the expiration of the Review Period, the Closing Capital Statement shall be deemed to have been accepted by Seller, and the Closing Capital set forth therein shall be final, conclusive and binding. If Seller delivers the Statement of Objections before the expiration of the Review Period, Buyer and Seller shall use their commercially reasonable efforts to reach agreement on the disputed items and amounts in order to determine the amount of the Closing Capital within thirty (30) days after the delivery of the Statement of Objections (the “Resolution Period”), and, if the same are so resolved within the Resolution Period, the amount of the Closing Capital as so agreed by Buyer and Seller in accordance with the foregoing shall be final, conclusive and binding.

(iii)Resolution of Disputes. If Seller and Buyer fail to reach an agreement with respect to all of the matters set forth in the Statement of Objections before expiration of the

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Resolution Period, then either Seller or Buyer may submit any amounts remaining in dispute (“Disputed Amounts”) for resolution to either KPMG or, if such accounting firm is unwilling to resolve such dispute, a nationally recognized firm of independent certified public accountants other than Seller’s Accountants or Buyer’s Accountants that is mutually acceptable to Buyer’s Accountants and Seller’s Accountants (the “Independent Accountant”), applying the principles, adjustments, methodologies, procedures and classifications used in the preparation of the Closing Capital Statement and referred to in Section 2.07(b). In such event, Seller and Buyer shall instruct the Independent Accountant to act as arbitrator, and to promptly review this Section 2.07 and determine, solely with respect to the Disputed Amounts only, whether and to what extent, if any, the Closing Capital set forth in the Closing Capital Statement requires adjustment.

(iv)Fees of the Independent Accountant. The fees and expenses of the Independent Accountant shall be paid by Seller, on the one hand, and Buyer, on the other hand, based upon the percentage that the amount actually contested but not awarded to Seller or Buyer, respectively, bears to the aggregate amount actually contested by Seller and Buyer.

(v)Determination by Independent Accountant. The Independent Accountant shall make a determination as soon as practicable within thirty (30) days (or such other time as the parties hereto shall agree in writing) after their engagement, and their resolution of the Disputed Amounts and their adjustments to the Closing Capital Statement and amount of the Closing Capital shall be final, conclusive and binding.

(d)Calculation and Payment of Post-Closing Adjustment.

(i)“Final Closing Capital” means the Closing Capital: (x) as reflected in the Closing Capital Statement delivered by Buyer to Seller pursuant to Section 2.07(b) if no Statement of Objections with respect thereto is delivered by Seller to Buyer pursuant to Section 2.07(c)(ii); or (y) if a Statement of Objections is so delivered, (1) as agreed to by Buyer and Seller pursuant to Section 2.07(c)(ii) or (2) in the absence of such agreement, as determined by the Independent Accountant pursuant to Section 2.07(c)(iii).

(ii)If the Final Closing Capital exceeds the Estimated Closing Capital, then within five (5) Business Days following the date on which the Final Closing Capital has been finally determined (the “Final Determination Date”), Buyer shall pay such excess amount to Seller in immediately available funds using wire transfer instructions as designated in writing by Seller.

(iii)If the Estimated Closing Capital exceeds the Final Closing Capital, then within five (5) Business Days following the Final Determination Date, Seller shall pay such excess amount to Buyer in immediately available funds using wire transfer instructions as designated in writing by Buyer.

(iv)The parties agree to treat any payment made pursuant to this Section 2.07(d) as an adjustment to the Estimated Purchase Price for all Tax purposes (the Estimated Purchase Price, as so adjusted, the “Final Purchase Price”).

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Section 2.08Purchase Price Adjustment – Ticketing Agreements.

(a)Ticketing Agreements. Set forth on Section 2.08(a) of the Disclosure Schedules is a list of: (i) each Contract with a customer of Seller entered into prior to the end of fiscal year 2016 and in effect as of the date hereof (collectively, with any amendments, renewals or extensions of such Contracts on substantially the same terms, the “2016 Ticketing Agreements”), including, with respect to each such Contract, the effective date, expiration date, and the revenue and net operating cash flow of the Business attributable to such Contract for the calendar year 2016 (calculated in accordance with GAAP, and to the extent in conformity with GAAP, consistently applied with the accounting principles, adjustments, methodologies, procedures and classifications utilized in the preparation of the Financial Statements); (ii) the total operating cash flow of the Business attributable to all 2016 Ticketing Agreements, calculated in accordance with clause (i) above; and (iii) each Contract with a customer of Seller entered into after December 31, 2016 and in effect as of the date hereof, together with each Contract with a potential customer identified on Section 2.08 of the Disclosure Schedules entered into following the date of this Agreement but prior to Closing (subject to the provisions of Section 6.10 hereof) (collectively, the “2017 Ticketing Agreements”), including, with respect to each such Contract, the estimated annual net operating cash flow of the Business attributable to such Contract (calculated in accordance with the methodology set forth on Exhibit A hereto and GAAP, and to the extent in conformity with GAAP, consistently applied with the accounting principles, adjustments, methodologies, procedures and classifications utilized in the preparation of the Financial Statements). The 2016 Ticketing Agreements and the 2017 Ticketing Agreements are defined as the “Ticketing Agreements.”

(b)Purchase Price Adjustment. In the event that, on or before six (6) Business Days prior to Closing, Seller is unable to deliver consents from customers of Seller under the Ticketing Agreements (each, a “Ticketing Customer Consent”), together with Ticketing Agreements that do not require consent to be assigned to Buyer at Closing, representing at least ninety-five percent (95%) of the total 2016 annual net operating cash flow of all 2016 Ticketing Agreements as set forth on Section 2.08 of the Disclosure Schedules (the “2016 Total Ticketing OCF”), Buyer, in its sole and absolute discretion, may (i) terminate this Agreement without further obligation or liability to Seller, or (ii) waive the condition set forth in Section 7.02(e). In the event of a waiver, the Estimated Purchase Price shall be decreased (but not increased) by an amount equal to Six Million Dollars ($6,000,000) multiplied by an amount equal to the difference between (A) 1.0 and (B) a fraction, the numerator of which is (x) the total 2016 annual net operating cash flow of all 2016 Ticketing Agreements as set forth on Section 2.08 of the Disclosure Schedules for which a Ticketing Customer Consent has been received in accordance with Section 2.08(b),plus the total estimated annual net operating cash flow of all 2017 Ticketing Agreement as set forth on Section 2.08 of the Disclosure Schedules for which Seller has delivered to Buyer a Ticketing Customer Consent in accordance with Section 2.08(b), and the denominator of which is (y) the 2016 Total Ticketing OCF. Section 2.08(b) of the Disclosure Schedule sets forth an illustrative sample calculation of a decrease in the Purchase Price in accordance with the foregoing provisions of this Section 2.08(b).

(c)Right to Terminate. Notwithstanding the forgoing, in the event that the adjustment calculated pursuant to Section 2.08(b) exceeds Nine Hundred Thousand Dollars

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($900,000) (the “Walkaway Deficit”), Seller may notify Buyer in writing of Seller’s intent to terminate the transaction. Upon receipt of such notice, Buyer shall have five (5) Business Days to either (i) waive the condition set forth in Section 7.02(e), provided that the Estimated Purchase Price shall be decreased by no more than the amount of the Walkaway Deficit, or (ii) terminate the transaction, in which event, for a period of six (6) months following the date of termination, Buyer shall have a right of first refusal in accordance with Section 9.02 to purchase the Business in the event Seller entertains an offer from another party.

Section 2.09Allocation of Purchase Price. Seller and Buyer agree that the proper allocation of the Final Purchase Price and the Assumed Liabilities shall be allocated among the Purchased Assets in accordance with an allocation statement (“Allocation Statement”) to be prepared and determined by Buyer and Buyer’s Accountants. Within thirty (30) days following the Final Determination Date, Buyer and Buyer’s Accountants shall prepare and deliver such Allocation Statement to Seller and Sellers’ Accountants. If Seller agrees with the allocations set forth in the Allocation Statement, then Buyer and Seller shall report and file Tax Returns (including, but not limited to IRS Form 8594) in all respects and for all purposes consistent with such Allocation Statement. If Seller disputes any of the allocations set forth in the Allocation Statement, then Buyer and Seller shall use their commercially reasonable efforts to reach agreement on the disputed items, provided, however, that, if Buyer and Seller are unable to reach agreement on any disputed items in the Allocation Statement within thirty (30) days following delivery thereof by Buyer, each Party shall be entitled to report and file Tax Returns (including, but not limited to IRS Form 8594) consistent with such Allocation Statement and with such adjustments as each Party may determine in its discretion.

ARTICLE IIICLOSING

Section 3.01Closing. Subject to the terms and conditions of this Agreement, the consummation of the transactions contemplated by this Agreement (the “Closing”) shall take place at the offices of Davis Wright Tremaine LLP, 1201 Third Avenue, Suite 2200, Seattle, WA 98101, before or on the one hundred and twentieth (120^th) day after the Effective Date; provided that all of the conditions to Closing set forth in Article VII are either satisfied or waived (other than conditions which, by their nature, are to be satisfied on the Closing Date), or at such other time, date or place as Seller and Buyer may mutually agree upon in writing. The date on which the Closing is to occur is herein referred to as the “Closing Date”.

Section 3.02Closing Deliverables.

(a)At the Closing, Seller shall deliver to Buyer the following:

(i)a bill of sale in the form of Exhibit B (the “Bill of Sale”) and duly executed by Seller, transferring the tangible personal property included in the Purchased Assets to Buyer;

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(ii)an assignment and assumption agreement in the form of Exhibit C (the “Assignment and Assumption Agreement”) and duly executed by Seller, effecting the assignment to and assumption by Buyer of the Purchased Assets and the Assumed Liabilities;

(iii)an assignment of intellectual property in the form of Exhibit D (the “Intellectual Property Assignment”) and duly executed by Seller, transferring all of Seller’s right, title and interest in and to the Intellectual Property Assets to Buyer;

(iv)an assignment and assumption of leases agreement in the form of Exhibit E (the “Assignment and Assumption of Leases”) and duly executed by Seller, effecting the assignment to and assumption by Buyer of the Leases;

(v)the Seller Closing Certificate;

(vi)the Seller Foreign Investment in Real Property Tax Act certification (the “FIRPTA Certificate”);

(vii)the certificate of the Secretary or Assistant Secretary of Seller required by Section 7.02(i);

(viii)such other customary instruments of transfer, assumption, filings or documents, in form and substance reasonably satisfactory to Buyer, as may be required to give effect to this Agreement;

(ix)the Funds Flow Memorandum, duly executed by Seller in accordance with Section 2.06;

(x)an escrow agreement, in a form to be mutually agreed among U.S. Bank, as escrow agent (the “Escrow Agent”), Buyer and Seller (the “Escrow Agreement”), duly executed by the Escrow Agent and Seller;

(xi)a certificate of good standing for Seller from the State of Washington dated within five (5) Business Days of the date hereof;

(xii)a transition services agreement in a form to be mutually agreed between Buyer and Seller (the “Transition Services Agreement”), duly executed by Seller; and

(xiii)each of the Employment Agreements, duly executed by each Key Employee.

(b)At the Closing, Buyer shall deliver to Seller the following:

(i)a counterpart to the Assignment and Assumption Agreement;

(ii)a counterpart to the Intellectual Property Assignment;

(iii)a counterpart to the Assignment and Assumption of Leases;

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(iv)a sublease agreement in the form of Exhibit F (the “Sublease Agreement”) by and between Buyer and Red Lion Hotel Corporation for the sublease of the office facilities located in Spokane, Washington, duly executed by Buyer;

(v)the Buyer Closing Certificate;

(vi)the certificates of the Secretary or Assistant Secretary of Buyer required by Section 7.03(g); and

(vii)The Transition Services Agreement, duly executed by Buyer

(viii)The Escrow Agreement, duly executed by Buyer.

ARTICLE IVREPRESENTATIONS AND WARRANTIES OF SELLER

Except as set forth in the correspondingly numbered Section of the Disclosure Schedules, Seller represents and warrants to Buyer that as of the date of this Agreement and as of the Closing Date, the statements contained in this Article IV are true and correct.

Section 4.01Organization and Qualification. Seller is a corporation duly organized, validly existing and in good standing under the Laws of the State of Washington and has full corporate power and authority to own, operate or lease the properties and assets now owned, operated or leased by it and to carry on the Business as currently conducted. Section 4.01 of the Disclosure Schedules sets forth each jurisdiction in which Seller is licensed or qualified to do business, and Seller is duly licensed or qualified to do business and is in good standing in each jurisdiction in which the ownership of the Purchased Assets or the operation of the Business as currently conducted makes such licensing or qualification necessary.

Section 4.02Authority of Seller. Seller has full power and authority to enter into this Agreement and the other Transaction Documents to which Seller is a party, to carry out its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution and delivery by Seller of this Agreement and any other Transaction Document to which Seller is a party, the performance by Seller of its obligations hereunder and thereunder and the consummation by such Seller of the transactions contemplated hereby and thereby have been duly authorized by all requisite corporate action on the part of Seller. This Agreement has been duly executed and delivered by Seller, and (assuming due authorization, execution and delivery by Buyer) this Agreement constitutes a legal, valid and binding obligation of Seller enforceable against Seller in accordance with its terms. When each other Transaction Document to which Seller is or will be a party has been duly executed and delivered by Seller (assuming due authorization, execution and delivery by each other party thereto), such Transaction Document will constitute a legal and binding obligation of Seller enforceable against it in accordance with its terms.

Section 4.03No Conflicts; Consents. The execution, delivery and performance by Seller of this Agreement and the other Transaction Documents to which Seller is a party, and the consummation of the transactions contemplated hereby and thereby, do not and will not: (a) conflict

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with or result in a violation or breach of, or default under, any provision of the certificate of incorporation, by-laws or other organizational documents of Seller; (b) conflict with or result in a violation or breach of any provision of any Law or Governmental Order applicable to Seller, the Business or the Purchased Assets; (c) except as set forth in Section 4.03 of the Disclosure Schedules, require the consent, notice or other action by any Person under, conflict with, result in a violation or breach of, constitute a default or an event that, with or without notice or lapse of time or both, would constitute a default under, result in the acceleration of or create in any party the right to accelerate, terminate, modify or cancel any Contract or Permit to which Seller is a party or by which Seller or the Business is bound or to which any of the Purchased Assets are subject (including any Assigned Contract); or (d) result in the creation or imposition of any Encumbrance other than Permitted Encumbrances on the Purchased Assets. No consent, approval, Permit, Governmental Order, declaration or filing with, or notice to, any Governmental Authority is required by or with respect to Seller in connection with the execution and delivery of this Agreement or any of the other Transaction Documents and the consummation of the transactions contemplated hereby and thereby.

Section 4.04Financial Statements. Complete copies of the unaudited financial statements consisting of the balance sheet of Seller as of December 31, 2016 and the related statements of income for the year then ended (the “Annual Financial Statements”), and unaudited financial statements consisting of the balance sheet of the Business as at May 31, 2017 and the related statements of income for the period then ended (the “Interim Financial Statements” and together with the Annual Financial Statements, the “Financial Statements”) have been delivered to Buyer. The Financial Statements have been prepared in accordance with GAAP applied on a consistent basis throughout the period involved, subject to normal and recurring year-end adjustments (the aggregate effect of which will not be materially adverse) and the absence of notes. The Financial Statements are based on the books and records of Seller, all of which are correct and complete, and fairly present in all material respects the financial condition of Seller as of the respective dates they were prepared and the results of the operations of the Business for the periods indicated. The balance sheet of the Business as of December 31, 2016 is referred to herein as the “Balance Sheet” and the date thereof as the “Balance Sheet Date” and the balance sheet of the Business as of May 31, 2017 is referred to herein as the “Interim Balance Sheet” and the date thereof as the “Interim Balance Sheet Date”. Seller maintains a standard system of accounting for the Business established and administered in accordance with GAAP.

Section 4.05Undisclosed Liabilities. Seller has no Liabilities with respect to the Business, except (a) those which are adequately reflected or reserved against in the Balance Sheet as of the Balance Sheet Date, and (b) those which have been incurred in the ordinary course of business consistent with past practice since the Balance Sheet Date and which are not, individually or in the aggregate, material. None of the Purchased Assets are encumbered by any third party or secured lender, except for Permitted Encumbrances.

Section 4.06Absence of Certain Changes, Events and Conditions. Since the Balance Sheet Date, (i) Seller has operated its business and managed its affairs in the ordinary course, consistent with past practices, and (ii) with respect to the Business, there has not been any:

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(a)event, occurrence or development that has had, or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect;

(b)material change in any method of accounting or accounting practice for the Business, except as required by GAAP;

(c)change in cash management practices and policies, practices and procedures with respect to collection of Accounts Receivable, establishment of reserves for uncollectible Accounts Receivable, accrual of Accounts Receivable, inventory control, prepayment of expenses, payment of trade accounts payable, accrual of other expenses, deferral of revenue and acceptance of customer deposits;

(d)incurrence, assumption or guarantee of any indebtedness for borrowed money in connection with the Business except unsecured current Liabilities incurred in the ordinary course of business consistent with past practice;

(e)transfer, assignment, sale or other disposition of any of the Purchased Assets shown or reflected in the Balance Sheet, except sales of inventory or obsolete equipment in the ordinary course of business consistent with past practice;

(f)cancellation of any debts or claims or amendment, termination or waiver of any material rights constituting Purchased Assets;

(g)transfer, assignment or grant of any license or sublicense of any material rights under or with respect to any Intellectual Property Assets or Intellectual Property Agreements;

(h)non de-minimis damage, destruction or loss, or any material interruption in use, of any Purchased Assets, whether or not covered by insurance;

(i)imposition of any Encumbrance upon any of the Purchased Assets;

(j)adoption of any plan of merger, consolidation, reorganization, liquidation or dissolution or filing of a petition in bankruptcy under any provisions of federal or state bankruptcy Law or consent to the filing of any bankruptcy petition against it under any similar Law;

(k)(i) grant of any severance, retention or termination pay to any employee of Seller except during a termination or increase in the benefits payable under any existing severance, retention or termination policies or employment agreements, (ii) increase in the base compensation, bonus or other compensation or benefits payable to any employee, (iii) hire of any new employees other than to fill vacancies arising due to terminations of employment or (iv) termination of any employee unless for cause or consistent with past practices;

(l)any Contract to do any of the foregoing, or any action or omission that would result in any of the foregoing.

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Section 4.07Material Contracts.

(a)Section 4.07(a) of the Disclosure Schedules lists each of the following Contracts by which any of the Purchased Assets are bound or affected or to which Seller is a party or by which it is bound in connection with the Business or the Purchased Assets (such Contracts, together with all the Ticketing Agreements set forth on Section 2.08 of the Disclosure Schedules, Leases set forth in Section 4.10(b) of the Disclosure Schedules, all Intellectual Property Agreements set forth in Section 4.11(b) of the Disclosure Schedules, the employment agreements forth on Section 4.20 of the Disclosure Schedules and all Related Party Agreements set forth on Section 4.24 of the Disclosure Schedules, being “Material Contracts”):

(i)all Contracts for the purchase, or sale, license or lease, of materials, supplies, goods, services or equipment providing for either (A) payments by Seller in excess of Thirty Thousand Dollars ($30,000) in 2016 or any year thereafter or (B) remaining payments by Seller of Fifty Thousand Dollars ($50,000) or more in the aggregate;

(ii)all Contracts providing for the sale by Seller of materials, supplies, goods, services or equipment that provides for either (A) payments to Seller in excess of Thirty Thousand Dollars ($30,000) in 2016 or any year thereafter or (B) remaining payments to Seller of Fifty Thousand Dollars ($50,000) or more in the aggregate;

(iii)all Contracts relating to the acquisition or disposition of any business or material assets (whether by merger, sale of stock, sale of assets or otherwise) under which Seller has any remaining obligation, other than acquisitions of materials, supplies or equipment in the ordinary course of business consistent with past practice or dispositions of obsolete equipment in the ordinary course of business consistent with past practice, that (A) has not been consummated or (B) was entered into within the past six (6) years;

(iv)all Contracts (A) relating to indebtedness for borrowed money or the deferred purchase price of property (in either case, whether incurred, assumed, guaranteed or secured by any asset), (B) relating to a guaranty of any material obligation, or (C) granting any Encumbrances, other than Permitted Encumbrances, over any material asset of Seller;

(v)all Contracts for which Seller has remaining monetary obligations in excess of Ten Thousand Dollars ($10,000) for capital expenditures;

(vi)all Contracts with any Governmental Authority (“Government Contracts”);

(vii)all Contracts that limit the ability of Seller to compete in any line of business or with any Person or in any geographic area or during any period of time, or which would so limit the freedom of Seller after the Closing Date, except with respect to any obligation or covenant not to use proprietary information of any third party arising under any confidentiality, non-disclosure or other agreement or contract;

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(viii)all franchise agreements and all joint venture, partnership or similar Contracts;

(ix)all Contracts for the sale of any of the Purchased Assets or for the grant to any Person of any option, right of first refusal or preferential or similar right to purchase any of the Purchased Assets;

(x)all powers of attorney with respect to the Business or any Purchased Asset;

(xi)any settlement agreement in respect of any Action under which Seller has continuing obligations (other than confidentiality and indemnification obligations);

(xii)any Contract with a “most favored nations” or similar provision binding on Seller, or any Contract requiring Seller to make any minimum payment obligation of any products or services;

(xiii)all material Contracts under which Seller acquires any goods or services pursuant to any Contract between parent or one of Parent’s Affiliates other than Seller and any third party and the parties expressly acknowledge and agree that the materiality qualification in this section shall not be subject to the “materiality scrape” clause found in the last clause of Section 8.02(a); and

(xiv)all client Contracts relating to Seller’s entertainment division.

(b)Each Material Contract is valid and binding on Seller in accordance with its terms and is in full force and effect. None of Seller or, to Seller’s Knowledge, any other party thereto is in breach of or default under (or is alleged to be in breach of or default under) in any material respect, or has provided or received any notice of any intention to terminate or refuse to renew, any Material Contract. No event or circumstance has occurred that, with notice or lapse of time or both, would constitute an event of default under any Material Contract or result in a termination thereof or would cause or permit the acceleration or other changes of any right or obligation or the loss of any benefit thereunder and, to Seller’s Knowledge, there is no basis for any of the foregoing. To Seller’s Knowledge, there are no material disputes pending or threatened under any Contract included in the Purchased Assets.

Section 4.08Title to Purchased Assets. Seller has good and valid title to, or a valid leasehold interest in, all of the Purchased Assets. All such Purchased Assets (including leasehold interests) are free and clear of Encumbrances except for the following:

(a)those items set forth in Section 4.08 of the Disclosure Schedules, each of which shall be extinguished and released in full as of the Closing;

(b)liens for Taxes not yet due and payable that are being contested by appropriate proceedings and for which adequate reserves have been established in accordance with GAAP (collectively referred to as “Permitted Encumbrances”).

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Section 4.09Condition and Sufficiency of Assets. To Seller’s Knowledge, the Purchased Assets are sufficient for the continued conduct of the Business after the Closing in substantially the same manner as conducted prior to the Closing and constitute all of the rights, property and assets necessary to conduct the Business as currently conducted. None of the Excluded Assets is material to the Business.

Section 4.10Real Property.

(a)Seller owns no real property.

(b)Section 4.10(b) of the Disclosure Schedule contains a list of the following:

(i)All leases and subleases of real property (collectively, the “Leases”) and interests in real property and the buildings, structures and improvements thereon pursuant to which Seller is the lessee; and

(ii)All Contracts (and all amendments, extensions and modifications thereto) held by Seller or contractual obligations (and all amendments, extensions and modifications thereto) to acquire or dispose of any interest in real property.

(c)Except for the Leases, Seller has not entered into any leases, subleases, licenses, occupancy agreements, options, rights, concessions or other agreements or arrangements, written or oral, granting to any person the right to purchase, use or occupy real property, or any portion thereof or interest in any such real property. Seller has made available to Buyer copies of all Leases.

(d)To the Knowledge of Seller, there is no pending condemnation, expropriation, eminent domain or similar proceeding affecting all or any portion of any the real property subject to a Lease. To the Knowledge of Seller, all of the real property and the buildings and other assets subject to a Lease (i) is usable in the ordinary course of business and is in good operating condition and repair, and (ii) conforms with any applicable Laws relating to its construction, use and operation.

Section 4.11Intellectual Property.

(a)Section 4.11(a) of the Disclosure Schedules lists all (i) Intellectual Property Registrations and (ii) Intellectual Property Assets, including software, that are not registered but that are material to the operation of the Business. All required filings and fees related to the Intellectual Property Registrations have been timely filed with and paid to the relevant Governmental Authorities and authorized registrars, and all Intellectual Property Registrations are otherwise in good standing. Seller has provided Buyer with true and complete copies of file histories, documents, certificates, office actions, correspondence and other materials related to all Intellectual Property Registrations.

(b)Section 4.11(b) of the Disclosure Schedules lists all Intellectual Property Agreements. Seller has provided Buyer with true and complete copies of all such Intellectual Property Agreements, including all modifications, amendments and supplements thereto and

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waivers thereunder. Each Intellectual Property Agreement is valid and binding on Seller in accordance with its terms and is in full force and effect. None of Seller or, to Seller’s Knowledge, any other party thereto is in breach of or default under (or is alleged to be in breach of or default under) in any material respect, or has provided or received any notice of breach or default of or any intention to terminate, any Intellectual Property Agreement. No event or circumstance has occurred that, with notice or lapse of time or both, would constitute an event of default under any Intellectual Property Agreement or result in a termination thereof or would cause or permit the acceleration or other changes of any right or obligation or the loss of any benefit thereunder.

(c)Except as set forth in Section 4.11(c) of the Disclosure Schedules, Seller is the sole and exclusive legal and beneficial, and with respect to the Intellectual Property Registrations, record, owner of all right, title and interest in and to the Intellectual Property Assets, and has the valid right to use all other Intellectual Property used in or necessary for the conduct of the Business as currently conducted, in each case, free and clear of Encumbrances other than Permitted Encumbrances.

(d)To the Knowledge of Seller, the Intellectual Property Assets and Intellectual Property licensed under the Intellectual Property Agreements are all of the Intellectual Property necessary to operate the Business as presently conducted.

(e)Seller’s rights in the Intellectual Property Assets are valid, subsisting and enforceable. Seller has taken all reasonable steps to maintain the Intellectual Property Assets and to protect and preserve the confidentiality of all trade secrets included in the Intellectual Property Assets, including requiring all Persons having access thereto to execute written non-disclosure agreements.

(f)The conduct of the Business as currently and formerly conducted, and the Intellectual Property Assets and Intellectual Property licensed under the Intellectual Property Agreements as currently or formerly owned, licensed or used by Seller, have not infringed, misappropriated, diluted or otherwise violated, and have not and do not infringe, dilute, misappropriate or otherwise violate, the Intellectual Property or other rights of any Person. No Person has infringed, misappropriated, diluted or otherwise violated, or is currently infringing, misappropriating, diluting or otherwise violating, any Intellectual Property Assets.

(g)There are no Actions (including any oppositions, interferences or re-examinations) settled, pending or threatened (including in the form of offers to obtain a license): (i) alleging any infringement, misappropriation, dilution or violation of the Intellectual Property of any Person by Seller in connection with the Business; (ii) challenging the validity, enforceability, registrability or ownership of any Intellectual Property Assets or Seller’s rights with respect to any Intellectual Property Assets; or (iii) by Seller or any other Person alleging any infringement, misappropriation, dilution or violation by any Person of any Intellectual Property Assets. Seller is not subject to any outstanding or prospective Governmental Order (including any motion or petition therefor) that does or would restrict or impair the use of any Intellectual Property Assets.

(h)In the year prior to the date hereof, there has been no failure of any Seller IT Assets which has caused any disruption to the Business, except as is not, and would not reasonably

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be expected to be, material to Seller or the Business. Seller has taken commercially reasonable steps to provide for the backup and recovery of data and information of its business and has commercially reasonable disaster recovery plans, procedures and facilities for its businesses and, as applicable, has taken commercially reasonable steps to implement such plans and procedures. Seller has taken commercially reasonable actions to protect the integrity and security of the Seller IT Assets, and the information and data of the Business (including any personally identifiable information) stored thereon from unauthorized use, access, or modification by third parties. To the knowledge of Seller, the Seller IT Assets (i) operate and perform in accordance with their specifications and documentation and as required for the conduct of the Business as currently conducted, (ii) are free from defects, viruses, worms, Trojan horses or similar flaws or harmful programs, (iii) have not been subjected to any “denial of service” or other such attack and (iv) have not been the subject of any actual or attempted intrusion or unauthorized access, except in each of clauses (i) through (iv) as is not, and would not reasonably be expected to be, material to Seller or the Business.

(i)Since January 1, 2015, Seller has taken commercially reasonable steps to comply with, and is currently in compliance with, (i) all Laws relating to (A) the privacy of the users of the products, services and websites of the Business, and (B) the collection, use, storage, processing and disclosure of any personally-identifiable information and other confidential data or information collected or stored by or on behalf of Seller in connection with the Business, and (ii) all documented or published rules, policies and procedures established by Seller with respect to the foregoing, except in each of clauses (i) and (ii) as is not, and would not reasonably be expected to be, material to Seller or the Business. No claims have been asserted or threatened in writing against Seller (and to Seller’s Knowledge, no such claims are likely to be asserted or threatened against Seller) by any Person alleging a violation of such Person’s privacy, personal or confidentiality rights under any applicable Law, or applicable policies or procedures relating to data privacy. The consummation of the transactions contemplated by this Agreement will not breach or otherwise cause any violation of any applicable policies or procedures relating to data privacy, other than any such breaches or violations as would not be, or would not reasonably be expected to be, individually or in the aggregate, material to Seller or the Business.

Section 4.12Subsidiaries. Except for the membership interests in Troika Entertainment limited liability company described in Section 4.12 of the Disclosure Schedules, Seller does not currently own or control, directly or indirectly, any interest in any other corporation, partnership, trust, joint venture, limited liability company, association, or other business entity.

Section 4.13Accounts Receivable. The Accounts Receivable reflected on the Interim Balance Sheet and the Accounts Receivable arising after the date thereof (a) have arisen from bona fide transactions entered into by Seller involving the sale of goods or the rendering of services in the ordinary course of business consistent with past practice; and (b) constitute only valid, undisputed claims of Seller not subject to claims of set-off or other defenses or counterclaims other than normal cash discounts in the ordinary course of business consistent with past practice and for which adequate reserves have been established in accordance with GAAP and are collectible in full within one hundred and twenty (120) days after billing. Attached hereto as Section 4.13 of the Disclosure

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Schedules is a true, correct and complete accounts receivable aging report of Seller and the Business, dated as of the close of business on July 31, 2017.

Section 4.14Suppliers. Section 4.14 of the Disclosure Schedules sets forth with respect to the Business (i) the name of each supplier to whom Seller has paid consideration for goods or services rendered in an amount greater than or equal to Twenty Thousand Dollars ($20,000) for each of the two most recent fiscal years (collectively, the “Material Suppliers”); and (ii) the amount of purchases from each Material Supplier during such periods. Since December 31, 2016, none of the Material Suppliers has cancelled, terminated or modified its agreement with Seller nor has Seller received a written notice from any Material Supplier stating the intention of such Person to (a) cease doing business with Seller or otherwise refuse to renew its agreement with Seller, or (b) change, in a manner adverse to Seller, the relationship of such Person with Seller, except as is not, and would not reasonably be expected to be, individually or in the aggregate, material to Seller or the Business.

Section 4.15Customers. Section 4.15 of the Disclosure Schedules sets forth the names of the top twenty-five (25) customers of the Business by revenue for the fiscal year ending December 31, 2016 (collectively, the “Material Customers”). Since December 31, 2016, none of the Material Customers has cancelled, terminated or modified its agreement with Seller nor has Seller received a written notice from any Material Customer stating the intention of such Person to (a) cease doing business with Seller or otherwise refuse to renew its agreement with Seller, or (b) change, in a manner adverse to Seller, the relationship of such Person with Seller, except as is not, and would not reasonably be expected to be, individually or in the aggregate, material to Seller or the Business.

Section 4.16Legal Proceedings; Governmental Orders.

(a)Except as set forth in Section 4.16(a) of the Disclosure Schedules, there are no Actions pending or, to Seller’s Knowledge, threatened against or by Seller (a) relating to or affecting the Business, the Purchased Assets or the Assumed Liabilities; or (b) that challenge or seek to prevent, enjoin or otherwise delay the transactions contemplated by this Agreement. No event has occurred or circumstances exist that may give rise to, or serve as a basis for, any such Action.

(b)Except as set forth in Section 4.16(b) of the Disclosure Schedules, there are no outstanding Governmental Orders and no judgments, penalties or awards against, relating to or affecting the Business.

Section 4.17Compliance with Laws; Permits.

(a)Except as set forth in Section 4.17(a) of the Disclosure Schedules, Seller has complied, and is now complying, with all Laws applicable to the conduct of the Business as currently conducted or the ownership and use of the Purchased Assets.

(b)All Permits required for Seller to conduct the Business as currently conducted or for the ownership and use of the Purchased Assets have been obtained by Seller and are valid and in full force and effect. All fees and charges with respect to such Permits as of the date hereof have been paid in full. Section 4.17(b) of the Disclosure Schedules lists all current Permits issued

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to Seller which are related to the conduct of the Business as currently conducted or the ownership and use of the Purchased Assets, including the names of the Permits and their respective dates of issuance and expiration. No event has occurred that, with or without notice or lapse of time or both, would reasonably be expected to result in the revocation, suspension, lapse or limitation of any Permit set forth in Section 4.17(b) of the Disclosure Schedules.

Section 4.18Environmental Matters. The operations of Seller with respect to the Business and the Purchased Assets are currently and have been in compliance with all Environmental Laws. Seller has not received from any Person, with respect to the Business or the Purchased Assets, any: (i) Environmental Notice or Environmental Claim; or (ii) written request for information pursuant to Environmental Law, which, in each case, either remains pending or unresolved, or is the source of ongoing obligations or requirements as of the Closing Date.

Section 4.19Employee Benefit Matters.

(a)Section 4.19(a) of the Disclosure Schedules lists each material Employee Benefit Plan maintained by Seller and any of its Affiliates. Each Employee Benefit Plan complies in all material respects with the applicable requirements of ERISA, the Code and other applicable Laws.

(b)In such regard, and except as set forth in Section 4.19(b) of the Disclosure Schedules or where failure to comply would not be material:

(i)All required reports and descriptions (including Form 5500 Annual Reports, summary annual reports, and summary plan descriptions) have been timely filed and distributed with respect to each Employee Benefit Plan as and to the extent required by the Code or ERISA.

(ii)All contributions to each Employee Benefit Plan, including without limitation premium payments required to provide or maintain coverage under any Employee Benefit Plan that is an Employee Welfare Benefit Plan, that are for any period ending on or before the date hereof (A) have been paid to the extent due for payment no later than the date hereof and (B) to the extent not so due, have either been paid or (except for contributions and premiums payable by participating employees and their dependents and beneficiaries) accrued by the applicable Company.

(iii)There has been no “prohibited transaction” (as defined in ERISA § 406 or Code §§ 4975 or 409) with respect to any Employee Benefit Plan.

(iv)The requirements of COBRA have been met with respect to each Employee Benefit Plan that is a group health plan as described in ERISA § 607(1) or Code § 5000(b)(1).

(c)Seller is not, and has never been, required to contribute to any Multiemployer Plan, and no Employee Benefit Plan and no Employee Pension Benefit Plan maintained by Seller during the past three (3) years is or has been subject to Title IV of ERISA or the minimum funding requirements of Code § 412. Seller has never provided health care or other non-pension benefits

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to any employees after their employment is terminated (other than as required by COBRA) or, except as set forth on Section 4.19(c) of the Disclosure Schedules, has never promised to provide such post-termination benefits which as of the Closing have not been satisfied in full.

(d)The execution of the Transaction Documents and the performance of the transactions contemplated by this Agreement will not constitute a triggering event under any Employee Benefit Plan or other Contract that will result in any payment, “parachute payment” (as defined in Code § 280G), acceleration, vesting or increase in benefits to any employee, former employee or director of Seller.

(e)No Action with respect to the administration or the investment of the assets of any Employee Benefit Plan (other than routine claims for benefits) is pending or, to Seller’s Knowledge, threatened. There are no pending, or to Seller’s Knowledge, threatened claims with respect to any Employee Benefit Plan other than routine claims for benefits.

Section 4.20Employment Matters. Seller is not a party to any collective bargaining agreement with any employee of Seller and, to Seller’s Knowledge, there is no organizational effort presently being made or threatened by or on behalf of any labor union with respect to employees of Seller and there are no strikes, slowdowns, stoppages of work, or any other concerted or intentional interference with normal operations existing or, to the Knowledge of Seller, threatened against or involving Seller. Set forth on Section 4.20 of the Disclosure Schedules is a list that sets forth the name, job title, current salary (including base compensation and current bonus and commission compensation, if any) and current accrued vacation or paid time off with respect to each employee of Seller as of the date that is five (5) days prior to the date of this Agreement. Section 4.20 of the Disclosure Schedules lists any employment agreements with any employee who is listed thereon. Five (5) Business Days prior to Closing, Seller shall deliver to Buyer any updates to Section 4.20 of the Disclosure Schedule arising out of Seller’s activities prior to Closing in compliance with Seller’s obligations under Section 6.10. Seller is not delinquent for any payments to any of its employees for any wages, salaries, commissions, bonuses or other compensation for any services performed for Seller. Seller has complied with all laws and regulations relating to its employment or engagement of its employees, independent contractors, and other workers. Seller has not received notice of any actual or potential claims arising out of or relating to Seller’s employment or engagement of its employees, independent contractors, or other workers, including without limitation employment discrimination claims, wage and hour claims, and/or unfair labor practice charges. Except as set forth on Section 4.20 of the Disclosure Schedules, since December 31, 2015, Seller has made no pension, bonus or other payment, other than base salary, or become obligated to make any such payment, to any employee of Seller in the Business. Except as set forth on Section 4.20 of the Disclosure Schedules, neither Seller nor any of Seller’s Affiliates has any outstanding loans or advances to employees of the Business.

Section 4.21Taxes.

(a)All Tax Returns with respect to the Business required to be filed by Seller for any Pre-Closing Tax Period have been, or will be, timely filed. Such Tax Returns are, or will be, true, complete and correct in all respects. All Taxes relating to the Business due and owing by Seller (whether or not shown on any Tax Return) have been, or will be, timely paid.

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(b)Seller has withheld and paid each Tax required to have been withheld and paid in connection with amounts paid or owing to any employee, independent contractor, creditor, customer, shareholder or other party, and complied with all information reporting and backup withholding provisions of applicable Law.

(c)No extensions or waivers of statutes of limitations have been given or requested with respect to any Taxes of Seller.

(d)All deficiencies asserted, or assessments made, against Seller as a result of any examinations by any taxing authority have been fully paid.

(e)Seller is not a party to any Action by any taxing authority. There are no pending or threatened Actions by any taxing authority.

(f)There are no Encumbrances for Taxes upon any of the Purchased Assets nor, to Seller’s Knowledge, is any taxing authority in the process of imposing any Encumbrances for Taxes on any of the Purchased Assets (other than for current Taxes not yet due and payable).

(g)Seller is not a “foreign person” as that term is used in Treasury Regulations Section 1.1445-2.

(h)Seller is not, and has not been, a party to, or a promoter of, a “reportable transaction” within the meaning of Section 6707A(c)(1) of the Code and Treasury Regulations Section 1.6011 4(b).

(i)None of the Purchased Assets is (i) required to be treated as being owned by another person pursuant to the so-called “safe harbor lease” provisions of former Section 168(f)(8) of the Internal Revenue Code of 1954, as amended, (ii) subject to Section 168(g)(1)(A) of the Code, or (iii) subject to a disqualified leaseback or long-term agreement as defined in Section 467 of the Code.

(j)None of the Purchased Assets is tax-exempt use property within the meaning of Section 168(h) of the Code.

Section 4.22Brokers.No broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the transactions contemplated by this Agreement or any other Transaction Document based upon arrangements made by or on behalf of Seller.

Section 4.23Insurance. Section 4.23 of the Disclosure Schedules sets forth the following information with respect to each insurance policy to which Seller is a party, a named insured, covered or otherwise the beneficiary of coverage: the name of the insurer, the policy number, the period of coverage, the type and the amount of coverage. Each such insurance policy is in full force and effect. Except as set forth on Section 4.23 of the Disclosure Schedules, there are currently no material claims pending against Seller under any insurance policies currently in effect and covering the property, business or employees of Seller, and all premiums due and payable with respect to the

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policies described in Section 4.23 of the Disclosure Schedules_, have been paid to date. To Seller’s Knowledge, there is no threatened termination of any such policies or arrangements. No claim is pending as of the date of this Agreement under any such insurance policy.

Section 4.24Related Party Transactions. Section 4.24 of the Disclosure Schedules sets forth a true and complete list as of the date hereof of all written material Contracts or an accurate description of all other material Contracts between Seller, on the one hand, and any Affiliate of Seller, on the other hand for the provisioning of services and access to equipment and other assets that are used by Seller in the Business, and, where reasonably feasible, an identification of all material assets and Seller IT Assets owned by any such Affiliates and used by Seller in the conduct of the Business and the parties expressly acknowledge and agree that the materiality qualifications in this section shall not be subject to the “materiality scrape” clause found in the last clause of Section 8.02(a).

Section 4.25Ethical Practices. Neither Seller nor any of its officers, directors, or, to Seller’s Knowledge, employees has directly or indirectly offered or given, and, to Seller’s Knowledge, no Person has offered or given on its behalf, anything of value to: (a) any official or employee of a Governmental Authority, any political party or official thereof, or any candidate for political office; or (b) any other Person, in any such case while knowing, or being aware of a probability that all or a portion of such money or thing of value may be offered, given or promised, directly or indirectly, to any official or employee of a Governmental Authority, political party or official thereof or candidate for political office: (i) for the purpose of influencing any action or decision of such Person, in his, her or its official capacity, including a decision to fail to perform his, her or its official function; (ii) for the purpose of inducing such Person to use his, her or its influence with any government or instrumentality thereof to affect or influence any act or decision of such government or instrumentality; (iii) for the purpose of securing any improper advantage; in the case of each of clauses (i), (ii) and (iii), in order to assist Seller in obtaining or retaining business for or with, or directing business to, any Person; or (iv) where such payment would constitute a bribe, kickback or illegal or improper payment. Section 4.25 of the Disclosure Schedules lists each non-U.S. country where Seller currently conducts, or has conducted at any time since January 1, 2013, any business activity.

Section 4.26Disclosure. Except for the representations contained in this Article IV, Seller makes no other representations or warranties about the Business, express or implied.

ARTICLE VREPRESENTATIONS AND WARRANTIES OF BUYER

Buyer represents and warrants to Seller that, as of the date of this Agreement and as of the Closing Date the statements contained in this Article V are true and correct.

Section 5.01Organization of Buyer. Buyer is a limited liability company duly organized, validly existing and in good standing under the Laws of the state of Delaware.

Section 5.02Authority of Buyer. Buyer has full limited liability company power and authority to enter into this Agreement and the other Transaction Documents to which Buyer is a

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party, to carry out its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution and delivery by Buyer of this Agreement and any other Transaction Document to which Buyer is a party, the performance by Buyer of its obligations hereunder and thereunder and the consummation by Buyer of the transactions contemplated hereby and thereby have been duly authorized by all requisite corporate action on the part of Buyer. This Agreement has been duly executed and delivered by Buyer, and (assuming due authorization, execution and delivery by Seller) this Agreement constitutes a legal, valid and binding obligation of Buyer enforceable against Buyer in accordance with its terms. When each other Transaction Document to which Buyer is or will be a party has been duly executed and delivered by Buyer (assuming due authorization, execution and delivery by each other party thereto), such Transaction Document will constitute a legal and binding obligation of Buyer enforceable against it in accordance with its terms.

Section 5.03No Conflicts; Consents. The execution, delivery and performance by Buyer of this Agreement and the other Transaction Documents to which it is a party, and the consummation of the transactions contemplated hereby and thereby, do not and will not: (a) conflict with or result in a violation or breach of, or default under, any provision of the certificate of formation, operating agreement or other organizational documents of Buyer; (b) conflict with or result in a violation or breach of any provision of any Law or Governmental Order applicable to Buyer; or (c) require the consent, notice or other action by any Person under any Contract to which Buyer is a party. No consent, approval, Permit, Governmental Order, declaration or filing with, or notice to, any Governmental Authority is required by or with respect to Buyer in connection with the execution and delivery of this Agreement and the other Transaction Documents and the consummation of the transactions contemplated hereby and thereby.

Section 5.04Brokers. No broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the transactions contemplated by this Agreement or any other Transaction Document based upon arrangements made by or on behalf of Buyer.

Section 5.05Sufficiency of Funds. Buyer has sufficient cash on hand or other sources of immediately available funds to enable it to make payment of the Purchase Price and consummate the transactions contemplated by this Agreement.

Section 5.06Legal Proceedings. There are no Actions pending or, to Buyer’s knowledge, threatened against or by Buyer or any Affiliate of Buyer that challenge or seek to prevent, enjoin or otherwise delay the transactions contemplated by this Agreement. No event has occurred or circumstances exist that may give rise or serve as a basis for any such Action.

ARTICLE VICOVENANTS

Section 6.01Employees and Employee Benefits.

(a)Buyer may, but is not obligated to, interview employees of Seller with respect to potential employment by Buyer after the Closing Date.

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(b)On the next scheduled payroll run immediately after Closing, Seller shall pay (i) all accrued vacation benefits of any employees of Seller engaged in or on behalf of the Business on or before Closing and (ii) a pro rata portion of the annual bonus compensation payable to each employee of Seller who Buyer hires as of Closing, based on the applicable calculation as of the day immediately prior to the Closing consistent with the methodology described on Section 6.01(b) of the Disclosure Schedule. Buyer will have no obligation for any accrued vacation benefits, accrued and unpaid pension obligations, or any other obligation or liability arising from the termination of employment of any employee of Seller, even if Buyer rehires such employee. and the Parties acknowledge and agree that any Liability under the WARN Act arising out of, or relating to, actions taken by or omissions of Seller in connection with this Agreement shall be Excluded Liabilities. Seller agrees and acknowledges that Buyer has no obligation to hire or otherwise employ any of Seller’s employees, sales agents or independent contractors. Nothing in this Agreement is intended to confer upon any employee of Seller any rights or remedies, including any right to continued or new employment.

Section 6.02Confidentiality.

(a)Following the Closing for a period of five (5) years thereafter, Seller shall, and shall cause its Affiliates and its and their Representatives (collectively, the “Seller Covered Persons”) to, treat and hold as confidential and refrain from using all Buyer Confidential Information, and Buyer shall, and shall cause its Affiliates and its and their Representatives (collectively, the “Buyer Covered Persons”, and together with the Seller Covered Persons, collectively, the “Covered Persons”) to, treat and hold as confidential and refrain from using all Seller Confidential Information, in each case except (i) to the extent explicitly contemplated by this Agreement or any other Transaction Document or (ii) with respect to any such Confidential Information that is generally available to the public immediately prior to the time of disclosure or use other than as a result of a breach of this Section 6.02 or (iii) to comply with any regulatory or public company disclosure requirements. In the event that a Seller Covered Person or a Buyer Covered Person is requested or required to disclose any Confidential Information pursuant to any Action or by any Governmental Authority, such Covered Person, as applicable, shall notify Seller or Buyer, as applicable, promptly so that such Person may seek an appropriate protective order or waive compliance with the provisions of this Section 6.02. In the absence of a protective order or receipt of a waiver hereunder, such Person may disclose only such Confidential Information as may be required to be produced by Law or such Action or Governmental Authority. Notwithstanding this Section 6.02, a party may disclose Confidential Information to its Representatives; provided, however, such disclosing party shall be liable for any breach by its Representatives of this Section 6.02.

(b)“Buyer Confidential Information” means all information relating to (i) the Business, Purchased Assets or Assumed Liabilities, (ii) Buyer or its Affiliates (except to the extent such information is hereafter independently developed by any Seller Covered Person without the use of or reference to any Buyer Confidential Information or which such Seller Covered Person can demonstrate was in its lawful possession prior to the disclosure thereof by Buyer), or (iii) the discussions and negotiations preceding, and the terms of, this Agreement and each other Transaction Document.

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(c)“Seller Confidential Information” means all information, other than information constituting Buyer Confidential Information, relating to (i) the Excluded Assets or Excluded Liabilities, (ii) Seller or its Affiliates (except to the extent such information is hereafter independently developed by any Buyer Covered Person without the use of or reference to any Seller Confidential Information or which such Buyer Covered Person can demonstrate was in its lawful possession prior to the disclosure thereof by Seller), or (iii) the discussions and negotiations preceding, and the terms of, this Agreement and each other Transaction Document.

(d)“Confidential Information” means Buyer Confidential Information or Seller Confidential Information, as applicable.

(e)Notwithstanding the foregoing or any other provision of this Agreement, Buyer’s and its Affiliates’ obligations to keep any information confidential pursuant to this Section 6.02 shall, in each case, not be deemed to be breached by any disclosure by any Affiliate of Buyer in the ordinary course of their business of disseminating news and information; provided that the individuals involved in such dissemination received such information from a source other than the personnel of Buyer or its Affiliates involved in the transactions contemplated by this Agreement.

Section 6.03Consents. Anything in this Agreement to the contrary notwithstanding, this Agreement shall not constitute an agreement to assign any Assigned Contract, or any claim, right or benefit arising thereunder or resulting therefrom if an attempted assignment thereof, without consent, would be ineffective or would constitute a breach of Seller’s obligations thereunder or give rise to any right of termination thereof. From the date hereof until the Closing Date, and subject to the provisions of Section 2.08 hereof, Seller shall use its commercially reasonable efforts to give all notices to, and obtain all consents from, all third parties under any Required Consents, Ticketing Customer Consents and any other third parties that are described in Section 4.03 of the Disclosure Schedule. In the event any Required Consent is not obtained on or prior to the Closing Date, Seller shall continue to use its commercially reasonable efforts following the Closing to obtain such Required Consent. With respect to any such Required Consent, Seller and Buyer shall cooperate in a mutually agreeable arrangement under which Buyer would obtain the benefits and assume the obligations thereunder in accordance with this Agreement from and after the Closing Date, including subcontracting, sublicensing or subleasing to Buyer, or under which Seller would enforce for the benefit of Buyer, with Buyer assuming Seller’s obligations and any and all rights of Seller against any third party thereto. During the pendency of any such arrangement, (a) Seller shall promptly pay to Buyer when received all monies received by Seller under any such Assigned Contract which requires authorization for assignment or any claim or right or any benefit arising thereunder and (b) Buyer shall assume, pay and perform all obligations and liabilities relating to any such Assigned Contract and shall promptly reimburse Seller for all of its costs, fees and expenses (including attorneys’ fees and expenses) relating thereto. In the event any Ticketing Customer Consent is not obtained on or prior to the Closing Date, Seller shall have no obligation to obtain any such Ticketing Customer Consent following the Closing or otherwise to enter into any arrangement under which Buyer would obtain the benefits thereof, provided, however, that Seller shall execute any written consent or other instrument necessary or otherwise reasonably requested by Buyer to enable Buyer to obtain any such Ticketing Customer Consent. For the avoidance of doubt, to the extent a Ticketing Customer Consent is required to assign any Ticketing Agreement to Buyer and such Ticketing

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Customer Consent is not obtained on or prior to six (6) Business Days prior to the Closing Date, then the annual net operating cash flow attributable to such Ticketing Agreements as set forth on Section 2.08(B)(b)(x) of the Disclosure Schedules shall be excluded from the determination of the adjustment to the Purchase Price pursuant to Section 2.08(b).

Section 6.04Books and Records.

(a)In order to facilitate the resolution of any claims made against or incurred by Seller prior to the Closing, or for any other reasonable purpose, for a period of six (6) years after the Closing, Buyer shall:

(i)retain the Books and Records (including personnel files) relating to periods prior to the Closing in a manner reasonably consistent with the prior practices of Seller and applicable Law; and

(ii)upon reasonable notice, afford the Seller’s Representatives reasonable access (including the right to make, at Seller’s expense, photocopies), during normal business hours, to such Books and Records.

Section 6.05Public Announcements. Unless otherwise required by applicable Law or stock exchange requirements (based upon the reasonable advice of counsel), no party to this Agreement shall make any public announcements in respect of this Agreement or the transactions contemplated hereby or otherwise communicate with any news media without the prior written consent of the other party (which consent shall not be unreasonably withheld or delayed), and the parties shall cooperate as to the timing and contents of any such announcement.

Section 6.06Bulk Sales Laws. The parties hereby waive compliance with the provisions of any bulk sales, bulk transfer or similar Laws of any jurisdiction that may otherwise be applicable with respect to the sale of any or all of the Purchased Assets to Buyer; it being understood that any Liabilities arising out of the failure of Seller to comply with the requirements and provisions of any bulk sales, bulk transfer or similar Laws of any jurisdiction which would not otherwise constitute Assumed Liabilities shall be treated as Excluded Liabilities.

Section 6.07Receivables. From and after the Closing and for one year thereafter, if Seller or any of its Affiliates receives or collects any funds relating to any Accounts Receivable or any other Purchased Asset, Seller or its Affiliate shall remit such funds to Buyer within five (5) Business Days after its receipt thereof. From and after the Closing and for one year thereafter, if Buyer or its Affiliate receives or collects any funds relating to any Excluded Asset, Buyer or its Affiliate shall remit any such funds to Seller within five (5) Business Days after its receipt thereof.

Section 6.08Transfer Taxes. All transfer, documentary, sales, use, stamp, registration, value added and other such Taxes and fees (including any penalties and interest) incurred in connection with this Agreement and the other Transaction Documents (including any real property transfer Tax and any other similar Tax) shall be borne and paid fifty percent (50%) by Buyer and fifty percent (50%) by Seller. Buyer and Seller will cooperate to timely file all necessary Tax Returns or other documents with respect to such Taxes or fees.

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Section 6.09Tax Clearance Certificates. If requested by Buyer, Seller shall notify all of the taxing authorities in the jurisdictions that impose Taxes on Seller or where Seller has a duty to file Tax Returns of the transactions contemplated by this Agreement in the form and manner required by such taxing authorities, if the failure to make such notifications or receive any available tax clearance certificate (a “Tax Clearance Certificate”) could subject the Buyer to any Taxes of Seller. If any taxing authority asserts that Buyer is liable for any Tax, Buyer shall promptly pay any and all such amounts and shall provide evidence to Seller that such liabilities have been paid in full or otherwise satisfied.

Section 6.10Conduct of Business Prior to the Closing.

(a)From the date hereof until the Closing Date, except as required by applicable Law, as expressly contemplated by this Agreement or as consented to in writing by Buyer (which consent shall not be unreasonably withheld or delayed, except with respect to the matters set forth under clauses (b)(iii), (b)(vii) and (b)(x), as to which Buyer may withhold its consent in its sole and absolute discretion), Seller shall conduct the Business in the ordinary course consistent with past practice and use its commercially reasonable best efforts to maintain and preserve intact the current organization and assets of Seller and preserve the rights, franchises, goodwill and relationships of its employees, customers, lenders, suppliers, regulators and others having business relationships with Seller.

(b)Without limiting the generality of clause (a), from the date hereof until the Closing Date, except as required by applicable Law, as expressly contemplated by this Agreement or as consented to in writing by Buyer, Seller shall not, in relation to the Business:

(i)acquire (by merger, consolidation, acquisition of stock or assets or otherwise), directly or indirectly, any assets, securities, properties, interests or businesses, other than supplies, materials or services in the ordinary course of business consistent with past practice;

(ii)(A) sell, dispose, lease, license, assign or transfer any material tangible or intangible assets, properties, securities or interests, other than in the ordinary course of business consistent with past practice, or (B) create or incur any Encumbrances (other than Permitted Encumbrances) on any tangible or intangible assets, properties, securities or interests;

(iii)except in the ordinary course of business consistent with past practice, sell, dispose of, lease, license, assign or otherwise transfer, abandon or fail to maintain any material Intellectual Property Assets or Intellectual Property Agreements;

(iv)incur any capital expenditures exceeding Twenty-Five Thousand Dollars ($25,000) individually or Fifty Thousand Dollars ($50,000) in the aggregate;

(v)create or suffer to incur any Encumbrance on any of the Purchased Assets;

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(vi)make any loan, advance or capital contribution to, or investment in, any other Person other than routine expense advances to employees of Seller, customers or suppliers in the ordinary course of business consistent with past practice;

(vii)(A) enter into any agreement or arrangement that limits or otherwise restricts in any material respect Seller, Buyer or any successor thereto or that could, after the Closing Date, limit or restrict in any material respect Buyer or any of its Affiliates, from engaging or competing in any line of business, in any location or with any Person, (B) enter into, amend or modify or terminate any Material Contract or any Contract that would constitute a Material Contract if in effect as of the date hereof (other than (1) terminations of Contracts as a result of the expiration of the term of such agreements, (2) modifications of Contracts that would constitute Material Contracts if in effect as of the date hereof in connection with renewals or extensions of such Contracts on substantially the same terms, or (3) modifications to Contracts that would constitute Material Contracts if in effect as of the date hereof in order to renew or extend such Contracts or to add services to such Contracts, provided that there is no decrease in aggregate revenue under such Contracts) or (C) otherwise waive, release or assign any material rights, claims or benefits;

(viii)except as required by GAAP or applicable Law, change Seller’s cash management practices or Seller’s policies, practices and procedures with respect to collection of accounts receivable, establishment of reserves for uncollectible accounts, accrual of accounts receivable, prepayment of expenses, payment of trade accounts payable, accrual of other expenses, deferral of revenue and acceptance of customer deposits;

(ix)(A) settle, offer or propose to settle any Action involving or against Seller or the Business (except with respect to immaterial routine matters in the ordinary course of business consistent with past practice or with respect to any settlement that is discharged in full in cash prior to the Closing and without admission of any wrongdoing by Seller), (B) settle, offer or propose to settle, or commence any Action that relates to the transactions contemplated hereby, or (C) commence any Action involving Seller or the Businesses that would reasonably be expected to be material to Seller or the Business;

(x)enter into any Contract by and between Seller, on the one hand, and an Affiliate of Seller, on the other hand;

(xi)(i) grant any severance, retention or termination pay to any employee of Seller (except in connection with a termination as of the Closing Date (as to which such payment shall remain the obligation of Seller and an Excluded Liability hereunder), or increase the benefits payable under any existing severance, retention or termination policies or employment agreements, (ii) increase the base compensation, bonus or other compensation or benefits payable to any employee, (iii) hire any new employees other than to fill vacancies arising due to terminations of employment for cause or (iv) terminate any employee other than for cause or consistent with past practices; or

(xii)agree, resolve or commit to do any of the foregoing.

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Section 6.11Further Assurances. Following the Closing, each of the Parties shall, and shall cause their respective Affiliates to, execute and deliver such additional documents, instruments, conveyances and assurances and take such further actions as may be reasonably required to carry out the provisions hereof and give effect to the transactions contemplated by this Agreement and the other Transaction Documents.

Section 6.12Non-Solicit and Non-Competition.

(a)For a period of eighteen (18) months following the Closing Date, Seller agrees that neither Seller nor any of its Affiliates (including but not limited to Parent) shall (i) solicit for employment (or cause to be solicited for employment) any employee of Buyer who is employed by Buyer or any of its Affiliates in the Business (each, a “Restricted Employee”) or (ii) hire or employ (or cause to be hired or employed) any Restricted Employee; provided that the term “solicit for employment,” as used in this Section 6.12(a), shall not be deemed to include generalized searches for employees not targeted at employees of Buyer or any of its Affiliates through media advertisements of general circulation, employment search firms, open job fairs or otherwise; provided, further, that nothing herein shall be deemed to prohibit Seller from hiring, employing or soliciting for employment (or causing to be hired, employed or solicited for employment) any Restricted Employee who was terminated by Buyer or its Affiliates at least two months prior to the hiring, employment or solicitation of such person by Buyer or its Affiliates.

(b)For a period of five (5) years following the Closing Date, Seller and Parent agree that neither Seller nor any of its Affiliates shall engage, either directly or indirectly, as a principal or for its own account or solely or jointly with others, or owner, investor or manager, in any business that is the same as, substantially similar to the Business within North America (the “Restricted Business”); provided that nothing herein shall prohibit Seller or any of its Affiliates from making investments in the ordinary course of business in Persons engaging in the Restricted Business, provided that each such investment is a passive investment where neither Seller nor any of its Affiliates (i) has the right to designate a member of the board of directors or other governing body of such entity or to otherwise direct the operation or management of such entity, and (ii) collectively own five percent (5%) or more of the outstanding securities of such entity.

(c)Each of Seller and Parent acknowledges that the covenants in this Section 6.12 are necessary in order to induce Buyer to enter into and consummate the transactions contemplated by this Agreement, and that Buyer would not enter into and consummate the transactions contemplated by this Agreement without the covenants contained in this Section 6.12. Each of Seller and Parent agrees that the covenants set forth in this Section 6.12 are reasonable with respect to scope, duration and geographic area. If any of the covenants set forth in this Section 6.12 is held to be unreasonable, arbitrary or against public policy, such covenants will be considered divisible with respect to scope, time and geographic area, and in such lesser scope, time and geographic area will be effective, binding and enforceable.

Section 6.13Exclusivity. Until the earlier of the Closing or the sooner termination of this Agreement in accordance with the terms hereof, except for the transactions contemplated by this Agreement, Seller shall not, and shall cause its Affiliates not to, directly or indirectly, (a) solicit, initiate or take any action to facilitate or encourage any submission, (b) enter into or participate in

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any negotiation or discussion with, furnish any information relating to Seller, the Purchased Assets or the Business or (c) afford access to the business, properties, assets, books or records of Seller, in each case, with respect to the sale of all or a portion of the Purchased Assets or all or a material portion of the capital stock of Seller, or any merger, recapitalization or similar transaction with respect to Seller, the Purchased Assets or the Business.

Section 6.14Insurance.

(a)Seller and Parent shall, and shall cause their Affiliates to, (i) use commercially reasonable efforts in the ordinary course to maintain the coverage provided to Seller through the historical insurance policies or programs of Seller and its Affiliates applicable to the Business, whether provided by a third-party insurer, “captive insurer,” self-insurance or a co-insurance program (the “Seller Insurance Policies”), or substantially similar coverage, in full force and effect until the Closing, and (ii) prior to the Closing, report to the applicable third-party insurance provider under each such applicable Seller Insurance Policy events, acts, errors, accidents, omissions, incidents, injuries or other forms of occurrences to the extent relating to the Business or any Purchased Asset that, in each case, occur prior to the Closing (collectively, the “Pre-Closing Occurrences”) of which Seller becomes aware prior to the Closing in accordance with Seller’s standard risk management practices and applicable Seller Insurance Policy requirements in the ordinary course of business. After the Closing, (i) Seller shall use its commercially reasonable efforts to report in good faith to the applicable third-party insurance provider, if applicable, all Pre-Closing Occurrences reasonably requested by Buyer and otherwise reasonably cooperate with Buyer to reasonably ensure that applicable claim reporting and other applicable material Seller Insurance Policy requirements are met, in each case with respect to Pre-Closing Occurrences to the extent covered by the Seller Insurance Policies, and (ii) Seller shall, and shall cause their applicable Affiliates to, use commercially reasonable efforts to obtain the benefit of the applicable insurance coverage under any applicable Seller Insurance Policy and pay such benefit to Buyer, net of (A) any deductibles, co-payments or other out-of-pocket costs and expenses (including reasonable legal fees and expenses, if any) actually and reasonably incurred by Seller and its Affiliates in seeking such insurance proceeds and (B) any Taxes imposed on Seller and its Affiliates in respect of the receipt or accrual of such insurance proceeds. After the Closing, Seller shall not, and shall cause their Affiliates to not, release, commute, buy-back or otherwise eliminate (whether in whole or in part) insurance coverage under any of the applicable Seller Insurance Policies with respect to any such Pre-Closing Occurrences.

(b)Seller agrees that any cash proceeds received by Seller or any of its Affiliates prior to the Closing in respect of Pre-Closing Occurrences under any Seller Insurance Policies on account of damage or loss to any Purchased Assets shall be paid to Buyer or its designee at the Closing (and shall not be included as a Current Asset and Long-Term Prepaid for purposes of calculating the Closing Capital) to the extent such proceeds are not expended by Seller or its Affiliates to restore or replace the Purchased Assets affected by the applicable Pre-Closing Occurrence, and net of (i) any costs or expenses (including reasonable attorneys’ fees) incurred by Seller or its Affiliates in pursuing such claims and (ii) any Taxes imposed on Seller or its Affiliates in respect of the receipt or accrual of such recoveries.

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Section 6.15Name Change. Within five (5) days after closing Seller will change all of its business and corporate names to Sleeping Lion, Inc., and Seller shall have no right to use any names bearing a resemblance to any of the business or trade names of Seller used in the Business prior to Closing, including “Ticketswest”, “Ticketswest.com” or variations thereof, and “West Coast Entertainment” or variations thereof, as corporate or business or trade names or titles anywhere in the world.

ARTICLE VIICONDITIONS TO CLOSING

Section 7.01Conditions to Obligations of All Parties. The obligations of each party to consummate the transactions contemplated by this Agreement shall be subject to the fulfillment, at or prior to the Closing, of each of the following conditions:

(a)No Governmental Authority shall have enacted, issued, promulgated, enforced or entered any Governmental Order which is in effect and has the effect of making the transactions contemplated by this Agreement illegal, otherwise restraining or prohibiting consummation of such transactions or causing any of the transactions contemplated hereunder to be rescinded following completion thereof.

(b)Seller shall have received all consents, authorizations, orders and approvals from the Governmental Authorities referred to in Section 4.03 and Buyer shall have received all consents, authorizations, orders and approvals from the Governmental Authorities referred to in Section 5.03, in each case, in form and substance reasonably satisfactory to Buyer and Seller, and no such consent, authorization, order and approval shall have been revoked.

Section 7.02Conditions to Obligations of Buyer. The obligations of Buyer to consummate the transactions contemplated by this Agreement shall be subject to the fulfillment or Buyer’s waiver, at or prior to the Closing, of each of the following conditions:

(a)Other than the representations and warranties of Seller contained in Section 4.01, and Section 4.02 the representations and warranties of Seller contained in this Agreement, the other Transaction Documents and any certificate or other writing delivered pursuant hereto shall be true and correct in all respects (in the case of any representation or warranty qualified by materiality or Material Adverse Effect) or in all material respects (in the case of any representation or warranty not qualified by materiality or Material Adverse Effect) on and as of the date hereof and on and as of the Closing Date with the same effect as though made at and as of such date (except those representations and warranties that address matters only as of a specified date, the accuracy of which shall be determined as of that specified date in all respects). The representations and warranties of Seller contained in Section 4.01 and Section 4.02 shall be true and correct in all respects on and as of the date hereof and on and as of the Closing Date with the same effect as though made at and as of such date (except those representations and warranties that address matters only as of a specified date, the accuracy of which shall be determined as of that specified date in all respects).

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(b)Seller shall have duly performed and complied in all material respects with all agreements, covenants and conditions required by this Agreement and each of the other Transaction Documents to be performed or complied with by it prior to or on the Closing Date.

(c)No Action shall have been commenced against Seller, which would prevent the Closing. No injunction or restraining order shall have been issued by any Governmental Authority, and be in effect, which restrains or prohibits any transaction contemplated hereby.

(d)All approvals, consents and waivers that are listed on Section 7.02(d) of the Disclosure Schedules (collectively, the “Required Consents”) shall have been received and remain in effect as of the Closing, and executed counterparts thereof shall have been delivered to Buyer at or prior to the Closing, in each case in form reasonably satisfactory to Buyer and, with respect any Contracts included in the Required Consents, consenting to the assignment of the applicable Contract in connection with the consummation of the transactions contemplated hereunder, without amendment or modification thereof or payment of money by either Buyer or Seller.

(e)Ticketing Customer Consents for Ticketing Agreements shall have been received and remain in effect as of the Closing Date and, together with Ticketing Agreements that do not require consent to be assigned at Closing, represent at least ninety-five percent (95%) of the 2016 Total Ticketing OCF, and executed counterparts thereof shall have been delivered to Buyer at or prior to the Closing, in each case in form reasonably satisfactory to Buyer and, with respect any Contracts included in the Required Consents, consenting to the assignment of the applicable Contract in connection with the consummation of the transactions contemplated hereunder, without amendment or modification thereof or payment of money by either Buyer or Seller.

(f)From the date of this Agreement, there shall not have occurred any Material Adverse Effect, nor shall any event or events have occurred that, individually or in the aggregate, with or without the lapse of time, could reasonably be expected to result in a Material Adverse Effect.

(g)Seller shall have delivered to Buyer duly executed counterparts to the Transaction Documents (other than this Agreement) and such other documents and deliveries set forth in Section 3.02(a).

(h)Buyer shall have received a certificate, dated the Closing Date and signed by a duly authorized officer of Seller, that each of the conditions set forth in Section 7.02(a) and Section 7.02(b) have been satisfied (the “Seller Closing Certificate”).

(i)Buyer shall have received a certificate of the Secretary or an Assistant Secretary (or equivalent officer) of Seller certifying that attached thereto are true and complete copies of all resolutions adopted by the board of directors of Seller authorizing the execution, delivery and performance of this Agreement and the other Transaction Documents and the consummation of the transactions contemplated hereby and thereby, and that all such resolutions are in full force and effect and are all the resolutions adopted in connection with the transactions contemplated hereby and thereby.

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(j)An employment agreement between Buyer and each of the Key Employees, in a form to be mutually agreed between Buyer and each Key Employee, relating to such Key Employee’s employment with Buyer following the Closing (each, an “Employment Agreement”), shall (i) have been executed and delivered by the parties within fourteen (14) days of the Effective Date and (ii) shall be in full force and effect.

(k)Seller shall have delivered to Buyer such other documents or instruments as Buyer reasonably requests and are reasonably necessary to consummate the transactions contemplated by this Agreement.

Section 7.03Conditions to Obligations of Seller. The obligations of Seller to consummate the transactions contemplated by this Agreement shall be subject to the fulfillment or Seller’s waiver, at or prior to the Closing, of each of the following conditions:

(a)Other than the representations and warranties of Buyer contained in Section 5.01, and Section 5.02 the representations and warranties of Buyer contained in this Agreement, the other Transaction Documents and any certificate or other writing delivered pursuant hereto shall be true and correct in all respects (in the case of any representation or warranty qualified by materiality or Material Adverse Effect) or in all material respects (in the case of any representation or warranty not qualified by materiality or Material Adverse Effect) on and as of the date hereof and on and as of the Closing Date with the same effect as though made at and as of such date (except those representations and warranties that address matters only as of a specified date, the accuracy of which shall be determined as of that specified date in all respects). The representations and warranties of Buyer contained in Section 5.01, and Section 5.02 shall be true and correct in all respects on and as of the date hereof and on and as of the Closing Date with the same effect as though made at and as of such date.

(b)Buyer shall have duly performed and complied in all material respects with all agreements, covenants and conditions required by this Agreement and each of the other Transaction Documents to be performed or complied with by it prior to or on the Closing Date.

(c)No injunction or restraining order shall have been issued by any Governmental Authority, and be in effect, which restrains or prohibits any material transaction contemplated hereby.

(d)All approvals, consents and waivers that are listed on Section 5.03 of the Disclosure Schedules shall have been received and remain in effect as of the Closing, and executed counterparts thereof shall have been delivered to Seller at or prior to the Closing.

(e)Buyer shall have delivered to Seller duly executed counterparts to the Transaction Documents (other than this Agreement) and such other documents and deliveries set forth in Section 3.02(b).

(f)Seller shall have received a certificate, dated the Closing Date and signed by a duly authorized officer of Buyer, that each of the conditions set forth in Section 7.03(a) and Section 7.03(b) have been satisfied (the “Buyer Closing Certificate”).

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(g)Seller shall have received a certificate of the Secretary or an Assistant Secretary (or equivalent officer) of Buyer certifying the names and signatures of the officers of Buyer authorized to sign this Agreement, the Transaction Documents and the other documents to be delivered hereunder and thereunder.

(h)Buyer shall have delivered to Seller such other documents or instruments as Seller reasonably requests and are reasonably necessary to consummate the transactions contemplated by this Agreement.

ARTICLE VIIIINDEMNIFICATION

Section 8.01Survival. Subject to the limitations and other provisions of this Agreement, the representations and warranties contained herein shall survive the Closing and shall remain in full force and effect until the date that is eighteen (18) months from the Closing Date; provided, that the representations and warranties in (i) Section 4.01, Section 4.02, Section 4.08, Section 4.24, Section 5.01, and Section 5.02 shall survive indefinitely, (ii) Section 4.19, Section 4.20, Section 4.21 and Section 4.22 shall survive for the full period of all applicable statutes of limitations (giving effect to any waiver, mitigation or extension thereof) plus sixty (60) days. All covenants and agreements of the parties contained herein shall survive the Closing indefinitely or for the period explicitly specified therein. Notwithstanding the foregoing, any claims asserted in good faith with reasonable specificity (to the extent known at such time) and in writing by notice from the non-breaching party to the breaching party prior to the expiration date of the applicable survival period shall not thereafter be barred by the expiration of the relevant representation or warranty and such claims shall survive until finally resolved.

Section 8.02Indemnification By Seller and Parent. Subject to the other terms and conditions of this Article VIII, each of Seller and Parent, jointly and severally, shall indemnify and defend each of Buyer and its Affiliates and their respective Representatives (collectively, the “Buyer Indemnitees”) against, and shall hold each of them harmless from and against, and shall pay and reimburse each of them for, any and all Losses incurred or sustained by, or imposed upon, the Buyer Indemnitees based upon, arising out of, with respect to or by reason of:

(a)any inaccuracy in or breach of any of the representations or warranties of Seller contained in this Agreement, the other Transaction Documents or in any certificate or instrument delivered by or on behalf of either Seller or Parent pursuant to this Agreement, as of the date such representation or warranty was made or as if such representation or warranty was made on and as of the Closing Date (except for representations and warranties that expressly relate to a specified date, the inaccuracy in or breach of which will be determined with reference to such specified date), in each case determined without regard to any qualification or exception contained therein relating to “material,” “materiality,” “Material Adverse Effect” or any similar qualification or standard (other than those that solely qualify an affirmative requirement to disclose items on the Disclosure Schedules and do not qualify any exception from the accuracy of a specific representation or warranty, except for the materiality qualifications in Sections 4.07(a)(xiii) and 4.24);

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(b)any breach or non-fulfillment of any covenant, agreement or obligation to be performed by Seller pursuant to this Agreement, the other Transaction Documents or any certificate or instrument delivered by or on behalf of Seller pursuant to this Agreement;

(c)any Excluded Asset or any Excluded Liability;

(d)any Third Party Claim based upon, resulting from or arising out of the business, operations, properties, assets or obligations of Seller or any of its Affiliates conducted, existing or arising on or prior to the Closing Date; or

(e)any obligations for Taxes resulting from the operation of the Business or ownership of the Purchased Assets prior to the Closing Date.

Section 8.03Indemnification By Buyer. Subject to the other terms and conditions of this Article VIII, Buyer shall indemnify and defend each of Seller and its Affiliates and their respective Representatives (collectively, the “Seller Indemnitees”) against, and shall hold each of them harmless from and against, and shall pay and reimburse each of them for, any and all Losses incurred or sustained by, or imposed upon, the Seller Indemnitees based upon, arising out of, with respect to or by reason of:

(a)any inaccuracy in or breach of any of the representations or warranties of Buyer contained in this Agreement or in any certificate or instrument delivered by or on behalf of Buyer pursuant to this Agreement, as of the date such representation or warranty was made or as if such representation or warranty was made on and as of the Closing Date (except for representations and warranties that expressly relate to a specified date, the inaccuracy in or breach of which will be determined with reference to such specified date);

(b)any breach or non-fulfillment of any covenant, agreement or obligation to be performed by Buyer pursuant to this Agreement;

(c)any Assumed Liability;

(d)any Third Party Claim based upon, resulting from or arising out of the business, operations, properties, assets or obligations of Buyer or any of its Affiliates conducted, existing or arising on or after the Closing Date; or

(e)any obligations for Taxes resulting from the operation of the Business or ownership of the Purchased Assets after the Closing Date.

Section 8.04Certain Limitations. The indemnification provided for in Section 8.02 and Section 8.03 shall be subject to the following limitations:

(a)Seller and Parent shall not be liable to the Buyer Indemnitees for indemnification under Section 8.02(a) until the aggregate amount of all Losses in respect of indemnification under Section 8.02(a) exceeds Thirty-Five Thousand Dollars ($35,000) (the “Basket”), in which event Seller shall be required to pay or be liable for all such Losses in excess

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of the Basket. In addition, Seller and Parent’s maximum liability under Section 8.02(a) shall not exceed an amount equal to Nine Hundred Thousand Dollars ($900,000).

(b)Buyer shall not be liable to the Seller Indemnitees for indemnification under Section 8.03(a) until the aggregate amount of all Losses in respect of indemnification under Section 8.03(a) exceeds the Basket, in which event Buyer shall be required to pay or be liable for all such Losses from and after the Basket.

(c)Notwithstanding the foregoing, the limitations set forth in Section 8.04(a) and Section 8.04(b) shall not apply to Losses based upon, arising out of, with respect to or by reason of any inaccuracy in or breach of any representation or warranty in Section 4.01, Section 4.02, Section 4.08, Section 4.19, Section 4.20, Section 4.21, Section 4.22, Section 5.01, and Section 5.02.

(d)The limitations contained in this Section 8.04 do not apply to indemnification required by Section 8.02(b), Section 8.02(c), Section 8.02(d) or Section 8.02(e) or Section 8.03(b), Section 8.03(c), Section 8.03(d) or Section 8.03(e).

Section 8.05Indemnification Procedures. The party making a claim under this Article VIII is referred to as the “Indemnified Party”, and the party against whom such claims are asserted under this Article VIII is referred to as the “Indemnifying Party”.

(a)Third Party Claims. If any Indemnified Party receives notice of the assertion or commencement of any Action made or brought by any Person who is not a party to this Agreement or an Affiliate of a party to this Agreement or a Representative of the foregoing (a “Third Party Claim”) against such Indemnified Party with respect to which the Indemnifying Party is obligated to provide indemnification under this Agreement, the Indemnified Party shall give the Indemnifying Party reasonably prompt written notice thereof, but in any event not later than thirty (30) calendar days after receipt of such notice of such Third Party Claim. The failure to give such prompt written notice shall not, however, relieve the Indemnifying Party of its indemnification obligations, except and only to the extent that such failure shall have actually prejudiced the Indemnifying Party. Such notice by the Indemnified Party shall describe the Third Party Claim in reasonable detail, shall include copies of all material written evidence thereof and shall indicate the estimated amount, if reasonably practicable, of the Loss that has been or may be sustained by the Indemnified Party. The Indemnifying Party shall have the right to participate in, or by giving written notice to the Indemnified Party, to assume the defense of any Third Party Claim at the Indemnifying Party’s expense and by the Indemnifying Party’s own counsel, and the Indemnified Party shall cooperate in good faith in such defense; provided that, if the Indemnifying Party is Seller, such Indemnifying Party shall not have the right to defend or direct the defense of any such Third Party Claim that (x) is asserted directly by or on behalf of a Person that is a supplier or customer of the Business, or (y) seeks an injunction or other equitable relief against the Indemnified Party. In the event that the Indemnifying Party assumes the defense of any Third Party Claim, subject to Section 8.05(b), it shall have the right to take such action as it deems necessary to avoid, dispute, defend, appeal or make counterclaims pertaining to any such Third Party Claim in the name and on behalf of the Indemnified Party. The Indemnified Party shall have the right to participate in the defense of any Third Party Claim with counsel selected by it subject to the Indemnifying Party’s right to

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control the defense thereof. The fees and disbursements of such counsel shall be at the expense of the Indemnified Party, provided, that if in the reasonable opinion of counsel to the Indemnified Party, (A) there are legal defenses available to an Indemnified Party that are different from or additional to those available to the Indemnifying Party; or (B) there exists a conflict of interest between the Indemnifying Party and the Indemnified Party that cannot be waived, the Indemnifying Party shall be liable for the reasonable fees and expenses of counsel to the Indemnified Party in each jurisdiction for which the Indemnified Party determines counsel is required. If the Indemnifying Party elects not to compromise or defend such Third Party Claim, fails to promptly notify the Indemnified Party in writing of its election to defend as provided in this Agreement, or fails to diligently prosecute the defense of such Third Party Claim, the Indemnified Party may, subject to Section 8.05(b), pay, compromise, defend such Third Party Claim and seek indemnification for any and all Losses based upon, arising from or relating to such Third Party Claim. Seller and Parent and Buyer shall cooperate with each other in all reasonable respects in connection with the defense of any Third Party Claim, including making available (subject to the provisions of Section 6.02) records relating to such Third Party Claim and furnishing, without expense (other than reimbursement of actual out-of-pocket expenses) to the defending party, management employees of the non-defending party as may be reasonably necessary for the preparation of the defense of such Third Party Claim.

(b)Settlement of Third Party Claims. Notwithstanding any other provision of this Agreement, the Indemnifying Party shall not enter into settlement of any Third Party Claim without the prior written consent of the Indemnified Party, except as provided in this Section 8.05(b). If a firm offer is made to settle a Third Party Claim without leading to any liability or the admission thereof, or the creation of a financial or other obligation on the part of the Indemnified Party, and provides, in customary form, for the unconditional release of each Indemnified Party from all liabilities and obligations in connection with such Third Party Claim and the Indemnifying Party desires to accept and agree to such offer, the Indemnifying Party shall give written notice to that effect to the Indemnified Party. If the Indemnified Party fails to consent to such firm offer within ten (10) days after its receipt of such notice, the Indemnified Party may take over defense of such claim and continue to contest or defend such Third Party Claim and in such event, the maximum liability of the Indemnifying Party as to such Third Party Claim shall not exceed the amount of such settlement offer. If the Indemnified Party fails to consent to such firm offer and also fails to assume defense of such Third Party Claim, the Indemnifying Party may settle the Third Party Claim upon the terms set forth in such firm offer to settle such Third Party Claim. If the Indemnified Party has assumed the defense pursuant to Section 8.05(a), it shall not agree to any settlement without the written consent of the Indemnifying Party (which consent shall not be unreasonably withheld or delayed).

(c)Direct Claims. In the event an Indemnified Party has a claim for indemnity under this Article VIII on account of a Loss which does not result from a Third Party Claim (a “Direct Claim”), the Indemnified Party agrees to give prompt notice in writing of such Direct Claim to the Indemnifying Party (a “Direct Claim Notice”). The failure to give such prompt written notice shall not, however, relieve the Indemnifying Party of its indemnification obligations, except and only to the extent that such failure shall have actually prejudiced the Indemnifying Party. Such notice by the Indemnified Party shall describe the Direct Claim in reasonable detail, shall include

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copies of all material written evidence thereof and shall indicate the estimated amount, if reasonably practicable, of the Loss that has been or may be sustained by the Indemnified Party. Within fifteen (15) days after receipt of a Direct Claim Notice (the “Direct Claims Dispute Period”), the Indemnifying Party shall by written notice (the “Response Notice”) to the Indemnified Party either (i) concede liability in whole as to the claimed amount of Losses set forth in the Direct Claim Notice, (ii) deny liability in whole as to such claimed amount of Losses, or (iii) concede liability in part and deny liability in part of such claimed amount of Losses. If a Response Notice is not received by the Indemnified Party prior to the expiration of the Direct Claims Dispute Period, then the Indemnifying Party shall be conclusively deemed to have denied that the full claimed amount of Losses set forth in the Direct Claim Notice or ultimately arising out of the Direct Claim Notice is owed to the Indemnified Party. If the parties are not able to resolve any dispute over a claim brought under this Section 8.05(c) within thirty (30) days after the receipt of a Response Notice denying liability in whole or in part, then the Indemnified Party shall be entitled to submit such indemnification claim to any court or authority of competent jurisdiction described in Section 10.10, which claim shall be adjudicated in accordance with the limitations set forth in this Article VIII.

Section 8.06Payments. Once a Loss is agreed to by the Indemnifying Party or finally adjudicated to be payable pursuant to this Article VIII, the Indemnifying Party shall satisfy its obligations within ten (10) Business Days of such final, non-appealable adjudication by wire transfer of immediately available funds, and any amount not paid within such ten (10) Business Day period shall accrue interest to and including the date such payment has been made at a rate per annum equal to the London Interbank Offered Rate (“LIBOR”) plus six percent (6%). The Parties further agree that interest shall accrue at a rate per annum equal to LIBOR plus two percent (2%) on (a) any Direct Claim over the period from and including the date of the applicable Direct Claim Notice through the date on which the Indemnifying Party’s obligation to satisfy such Direct Claim is finally determined pursuant to this Article VIII, and (b) on any Third Party Claim over the period from and including the date on which payment in satisfaction thereof is due to the Person bringing the Third Party Claim through the date on which the Indemnifying Party’s obligation to satisfy such Third Party Claim is finally determined pursuant to this Article VIII. All interest accruing pursuant to this Section 8.06 shall be calculated daily on the basis of a 365 day year and the actual number of days elapsed.

Section 8.07Tax Treatment of Indemnification Payments. All indemnification payments made under this Agreement shall be treated by the parties as an adjustment to the Purchase Price for Tax purposes, unless otherwise required by Law.

Section 8.08Effect of Investigation. The representations, warranties and covenants of the Indemnifying Party, and the Indemnified Party’s right to indemnification with respect thereto, shall not be affected or deemed waived by reason of any investigation made by or on behalf of the Indemnified Party (including by any of its Representatives) or by reason of the fact that the Indemnified Party or any of its Representatives knew or should have known that any such representation or warranty is, was or might be inaccurate or by reason of the Indemnified Party’s waiver of any condition set forth in Section 7.02 or Section 7.03, as the case may be.

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Section 8.09Exclusive Remedies. Subject to Section 10.11, the parties acknowledge and agree that their sole and exclusive remedy with respect to any and all claims (other than claims arising from fraud, criminal activity or willful misconduct on the part of a party hereto in connection with the transactions contemplated by this Agreement) for any breach of any representation, warranty, covenant, agreement or obligation set forth herein or otherwise relating to the subject matter of this Agreement, shall be pursuant to the indemnification provisions set forth in this Article VIII. In furtherance of the foregoing, each party hereby waives, to the fullest extent permitted under Law, any and all rights, claims and causes of action for any breach of any representation, warranty, covenant, agreement or obligation set forth herein or otherwise relating to the subject matter of this Agreement it may have against the other parties hereto and their Affiliates and each of their respective Representatives arising under or based upon any Law, except pursuant to the indemnification provisions set forth in this Article VIII. Nothing in this Section 8.09 shall limit any Person’s right to seek and obtain any equitable relief to which any Person shall be entitled or to seek any remedy on account of any party’s fraudulent, criminal or intentional misconduct. Notwithstanding the foregoing or any other provision of this Agreement to the contrary, each party hereto acknowledges that the remedy at Law for any breach by Seller of its obligations under Sections 6.02 and 6.12 is inadequate and that Buyer shall be entitled to equitable remedies in the event of breach thereof by Seller, including, without limitation, temporary and permanent injunctive relief in any such case without the necessity of posting a bond or proving actual Losses.

ARTICLE IXTERMINATION

Section 9.01Termination. This Agreement may be terminated and the transactions contemplated hereby abandoned at any time prior to Closing as follows:

(a)by written agreement of Seller and Buyer;

(b)by either the Buyer or Seller if the Closing Date has not occurred one hundred and twenty (120) days from the Effective Date (the “Termination Date”)); provided, that the right to terminate this Agreement under this Section 9.01 shall not be available to any party whose failure to fulfill any obligation hereunder has been the cause of, or resulted in, the failure of the Closing Date to occur on or before the Termination Date and such failure constitutes a breach of this Agreement;

(c)by the Buyer if it is not in material breach of its obligations under this Agreement and there has been a breach of any representation, warranty, covenant or agreement contained in this Agreement on the part of Seller provided, that if such breach is curable by Seller within fifteen (15) days following Seller’s receipt of written notice from the Buyer of such breach, Buyer may not terminate this Agreement pursuant to this Section 9.01 if such breach by Seller is cured within such fifteen (15) day period so that the conditions would then be satisfied;

(d)by Seller if it is not in material breach of its obligations under this Agreement and there has been a breach of any representation, warranty, covenant or agreement contained in this Agreement on the part of the Buyer provided, that if such breach is curable by the Buyer within fifteen (15) days following the Buyer’s receipt of written notice from Seller of such breach, Seller

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may not terminate this Agreement pursuant to this Section 9.01(c) if such breach by the Buyer is cured within such fifteen (15) day period so that the conditions would then be satisfied; or

(e)by Buyer or Seller in accordance with the provisions of Section 2.08.

Section 9.02Buyer’s Right of First Refusal.

(a)Grant of Right. In the event this Agreement is terminated in accordance with the provisions of Section 2.08 hereof, for the six (6) -month period after the date of such termination (the “Offer Period”), Seller shall neither approve nor enter into any Sale Transaction with a third party (the “Purchaser”) without having first complied with the provisions of this Section 9.02. Without limiting the generality of the foregoing in any respect, with respect to any such Sale Transaction proposed to be made by Seller during the Offer Period, Buyer shall have a right of first refusal to consummate such Sale Transaction on substantially the same terms and conditions, including price, as the Purchaser (the “ROFR”), which right of first refusal shall be governed by, subject to and in accordance with the provisions of this Section 9.02; provided, however, that, in the event the Sale Transaction provides for the sale (directly or indirectly) to the Purchaser of any Excluded Assets, or the assumption (directly or indirectly) by the Purchaser of any Excluded Liabilities, Buyer shall have the option in connection with its exercise of the ROFR, to consummate such Sale Transaction and exclude any such Excluded Assets and Excluded Liabilities, and the aggregate purchase price payable by Buyer shall be equitably reduced in such manner as the Parties shall mutually agree in good faith.

(b)Notice of a Sale Transaction. If Seller receives a bona fide, written offer from a Purchaser to enter into a Sale Transaction (an “Offer”), Seller shall deliver to Buyer a written notice thereof (the “Offer Notice”) stating: (i) Seller’s bona fide intention to consummate the Sale Transaction; (ii) the identity of the Purchaser; (iii) the material terms and conditions of such Sale Transaction (including the bona fide cash price or other consideration to be paid by Purchaser in such Sale Transaction); and (iv) the intended closing date of the Sale Transaction.

(c)Exercise of Right of First Refusal. At any time within thirty (30) days after receipt of Seller’s notice, Buyer may, by giving written notice to Seller, exercise its ROFR and consummate the proposed Sale Transaction on substantially the same terms and conditions (including price) as set forth in the Offer Notice. In the event the Offer provides for delivery of any non-cash consideration upon consummation of the proposed Sale Transaction, in lieu thereof Buyer shall have the right to pay a cash sum equal to (i) the amount that is expressly ascribed to the value of such non-cash consideration in the Offer or, (ii) if no amount is provided in the Offer, then the value of such non-cash consideration as reasonably determined by the parties acting in mutual good faith. If Buyer elects not to exercise its ROFR, Seller may then proceed to close the Sale Transaction upon the terms set forth in the Offer Notice, or on terms no more favorable to the proposed Purchaser than those contained in the Offer Notice; provided, however, that, in the event Buyer elects not to exercise its ROFR and such Sale Transaction is not consummated within ninety (90) days, then the ROFR process described in this Agreement shall survive and repeat itself until expiration of the Offer Period.

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(d)Certain Defined Terms. For purposes of this Section 9.02, a “Sale Transaction” shall mean either: (A) a transaction or series of related transactions in which a Person, or a group of related Persons, acquires, directly or indirectly, fifty percent (50%) of the outstanding voting power of Seller, other than in connection with a sale of more than fifty percent (50%) of the outstanding voting power, or sale of all or substantially all of the assets, of Red Lion Hotel Corporation; or (B) the sale, lease, transfer, exclusive license or other disposition, in a single transaction or series of related transactions, by Seller of all or substantially all of the Purchased Assets or the Business.

Section 9.03Effect of Termination. In the event this Agreement is terminated for any reason, Buyer and Seller agree that:

(a)The confidentiality obligations contained in Section 6.02 shall be applied to both Buyer and Seller for a period of twelve (12) months;

(b)The provisions of Section 9.02 shall survive termination for the periods specified therein; and

(c)Buyer shall not solicit for employment or hire (for itself or on behalf of any third party) any senior management employee of Seller with whom Buyer had substantive discussions in the course of considering the transaction that is the subject of this Agreement, for a period of twelve (12) months following the date of termination of this Agreement (other than such a person whose employment with Seller terminated prior to the commencement of the discussions with Buyer), without Seller’s prior written consent, in its sole discretion; provided, however, Buyer shall not be prohibited from employing any person who contacts Buyer pursuant to a general industry solicitation or on his or her own initiative and without any direct solicitation by Buyer or any person or entity acting on Buyer’s behalf (it being understood that Buyer shall not be prohibited from engaging independent employment agencies so as long as they are not directed by Buyer).

ARTICLE XMISCELLANEOUS

Section 10.01Expenses. Except as otherwise expressly provided herein, all costs and expenses, including, without limitation, fees and disbursements of counsel, financial advisors and accountants, incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such costs and expenses, whether or not the Closing shall have occurred.

Section 10.02Notices. All notices, requests, consents, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed to have been given (a) when delivered by hand (with written confirmation of receipt); (b) when received by the addressee if sent by a nationally recognized overnight courier (receipt requested); (c) on the date sent by e-mail of a PDF document (with confirmation of transmission) if sent during normal business hours of the recipient, and on the next Business Day if sent after normal business hours of the recipient or (d) on the third day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid. Such communications must be sent to the respective parties at the following addresses (or

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at such other address for a party as shall be specified in a notice given in accordance with this Section 10.02):

If to Seller or Parent: TicketsWest.com, Inc.
201 W. North River Drive
Spokane, WA 99201E-mail:        Dusty.Kurtz@ticketswest.com
Attention:    President

with a copy to: Davis Wright Tremaine LLP
1201 Third Avenue, Suite 2200
Seattle, WA 98101E-mail:     mattlemaster@dwt.com
Attention:    Matt LeMaster

If to Buyer: Paciolan, LLC
5171 California Ave., Ste. 200
Irvine, CA 92617
E-mail:     legal@paciolan.com

Attention:    General Counsel

with a copy (which shall not        Learfield Communications, LLC

constitute notice) to: 2400 Dallas Parkway, Suite 500
Plano, TX 75093
Email: jraleigh@learfield.comAttention: General Counsel
and:
Cozen O’Connor
One Liberty Place1650 Market Street, Suite 2800
Philadelphia, Pennsylvania 19103
Email: shaas@cozen.comAttention: Steven N. Haas

Section 10.03Interpretation. For purposes of this Agreement, (a) the words “include,” “includes” and “including” shall be deemed to be followed by the words “without limitation”; (b) the word “or” is not exclusive; and (c) the words “herein,” “hereof,” “hereby,” “hereto” and “hereunder” refer to this Agreement as a whole. Unless the context otherwise requires, references herein: (i) to Articles, Sections, Disclosure Schedules and Exhibits mean the Articles and Sections of, and Disclosure Schedules and Exhibits attached to, this Agreement; (ii) to an agreement, instrument or other document means such agreement, instrument or other document as amended, supplemented and modified from time to time to the extent permitted by the provisions thereof and (iii) to a statute means such statute as amended from time to time and includes any successor legislation thereto and any regulations promulgated thereunder. This Agreement shall be construed

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without regard to any presumption or rule requiring construction or interpretation against the party drafting an instrument or causing any instrument to be drafted. The Disclosure Schedules and Exhibits referred to herein shall be construed with, and as an integral part of, this Agreement to the same extent as if they were set forth verbatim herein.

Section 10.04Headings. The headings in this Agreement are for reference only and shall not affect the interpretation of this Agreement.

Section 10.05Severability. If any term or provision of this Agreement is invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other term or provision of this Agreement or invalidate or render unenforceable such term or provision in any other jurisdiction. Upon such determination that any term or other provision is invalid, illegal or unenforceable, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the greatest extent possible.

Section 10.06Entire Agreement. This Agreement and the other Transaction Documents constitute the sole and entire agreement of the parties to this Agreement with respect to the subject matter contained herein and therein, and supersede all prior and contemporaneous understandings and agreements, both written and oral, with respect to such subject matter. In the event of any inconsistency between the statements in the body of this Agreement and those in the other Transaction Documents, the Exhibits and Disclosure Schedules (other than an exception expressly set forth as such in the Disclosure Schedules), the statements in the body of this Agreement will control.

Section 10.07Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns. Neither party may assign its rights or obligations hereunder without the prior written consent of the other party, which consent shall not be unreasonably withheld or delayed; provided, however, that Buyer may assign its rights and obligations hereunder, in whole or in part, without the prior written consent of Seller or Parent, to any of Buyer’s Affiliates or to Learfield Communications, LLC or any of its Affiliates in connection with a sale of all or substantially all of the equity securities or assets of Buyer by merger, consolidation, sale of equity securities or assets, or otherwise, provided in the event of such assignment, Buyer shall provide notice to Seller of such assignment. No assignment shall relieve the assigning party of any of its obligations hereunder.

Section 10.08No Third-party Beneficiaries. Except as provided in Article VIII, this Agreement is for the sole benefit of the parties hereto and their respective successors and permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other Person or entity any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.

Section 10.09Amendment and Modification; Waiver. This Agreement may only be amended, modified or supplemented by an agreement in writing signed by each party hereto. No waiver by any party of any of the provisions hereof shall be effective unless explicitly set forth in

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writing and signed by the party so waiving. No waiver by any party shall operate or be construed as a waiver in respect of any failure, breach or default not expressly identified by such written waiver, whether of a similar or different character, and whether occurring before or after that waiver. No failure to exercise, or delay in exercising, any right, remedy, power or privilege arising from this Agreement shall operate or be construed as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.

Section 10.10Governing Law; Submission to Jurisdiction; Waiver of Jury Trial.

(a)This Agreement shall be governed by and construed in accordance with the internal laws of the State of Washington without giving effect to any choice or conflict of law provision or rule (whether of the State of Washington or any other jurisdiction).

(b)EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT OR THE OTHER TRANSACTION DOCUMENTS IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES AND, THEREFORE, EACH SUCH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LEGAL ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER TRANSACTION DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. EACH PARTY TO THIS AGREEMENT CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT SEEK TO ENFORCE THE FOREGOING WAIVER IN THE EVENT OF A LEGAL ACTION, (B) SUCH PARTY HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (D) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 10.10(b).

Section 10.11Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall be deemed to be one and the same agreement. A signed copy of this Agreement delivered by facsimile, e-mail or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement.

[Signature Page Follow]

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized.

Parent:	RED LION HOTELS CORPORATION
	By/s/ Thomas L. McKeirnan Name: Thomas L. McKeirnan Title: Executive Vice President
Seller:	TICKETSWEST.COM, INC.
	By/s/ Thomas L. McKeirnan Name: Thomas L. McKeirnan Title: Executive Vice President
Buyer:	PACIOLAN, LLC
	By /s/ Kimberly Damron Name: Kimberly Damron Title: President

EXECUTION

AMENDMENT TO ASSET PURCHASE AGREEMENT

This Amendment (“Amendment”) dated this 3rdof October, 2017, to that certain Asset Purchase Agreement, dated as of August 11, 2017 (the “Agreement”), by and among RED LION HOTELS CORPORATION, a Washington corporation (“Parent”), TICKETSWEST.COM, INC., a Washington corporation (“Seller”), and PACIOLAN, LLC, a Delaware limited liability company (“Buyer”), is entered among the Company and the Holders pursuant to Section 10.09 of the Agreement. Capitalized terms used and not otherwise defined in this Amendment shall have meanings given such terms in the Agreement.

BACKGROUND

Each of Parent, Seller and Buyer desire to amend the Agreement to modify the terms on which the Escrow Amount shall be released following the Closing, all on the terms and subject to the conditions and other provisions set forth in this Amendment.

NOW, THEREFORE, in consideration of the promises and the terms and conditions set forth in this Amendment No. 1, and intending to be legally bound, the parties hereto agree as follows:

1. Section 2.05 of the Agreement is amended, restated and replaced follows:

“The aggregate consideration for the Purchased Assets is the Final Purchase Price plus the assumption by Buyer of the Assumed Liabilities (the “Purchase Price”). At Closing, Buyer agrees to pay the Estimated Purchase Price as follows: (a) to the Escrow Agent referred to in Section 3.02(a)(x) hereof, Six Hundred Thousand Dollars ($600,000) (the “Escrow Amount”); and (b) to Seller, an amount equal to the Estimated Purchase Price (after deducting therefrom the Escrow Amount referred to in clause (a) above) in accordance with Section 2.06. Notwithstanding anything herein to the contrary: (i) on the twelve (12) month anniversary of the Closing Date (or, if such day is not a Business Day, the Business Day immediately succeeding such day), the Escrow Agent shall release to Seller a portion of the Escrow Amount such that the amount remaining in with the Escrow Agent to be held and disbursed in accordance with the provisions of the Escrow Agreement following such release shall be Three Hundred Thousand Dollars ($300,000); provided, however, that if one or more good faith claims for Losses with respect to which any Buyer Indemnitees has validly given notice in accordance with Article VIII on or prior to that date are then pending or settled but not yet paid (an “Outstanding Claim”), then the amount to be paid by the Escrow Agent to Seller pursuant to this clause (i) shall be reduced by the amount of the Outstanding Claims and shall be withheld by the Escrow Agent until all such claims are resolved in accordance with this Agreement and the Escrow Agreement; provided, further, that if the amount remaining with the

Escrow Agent on the twelve (12) month anniversary of the Closing Date (or, if such day is not a Business Day, the Business Day immediately succeeding such day) is less than Three Hundred Thousand Dollars ($300,000), or would be less after taking into account all Outstanding Claims, then no amount shall be released to Seller pursuant to this clause (i);and (ii) on the eighteen (18) month anniversary of the Closing Date (or, if such day is not a Business Day, the Business Day immediately succeeding such day), the Escrow Agent shall release to Seller the balance of the amount remaining with the Escrow Agent less the amount of any then Outstanding Claims (if any), which amount shall be withheld by the Escrow Agent until all such claims are resolved in accordance with this Agreement and the Escrow Agreement.”

2.Except as set forth above in this Amendment, the Agreement is hereby ratified and confirmed in all respects.

3.This Amendment may be executed in two (2) or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. This Agreement may also be executed via facsimile, which shall be deemed an origin

[Signature Page Follows]

IN WITNESS WHEREOF, this Amendment to Asset Purchase Agreement has been executed and delivered as of the date and year first above written by a duly authorized officer of Parent, Seller and Buyer.

Parent:	RED LION HOTELS CORPORATION
	By/s/ Thomas L. McKeirnan Name: Thomas L. McKeirnan Title: Executive Vice President
Seller:	TICKETSWEST.COM, INC.
	By/s/ Thomas L. McKeirnan Name: Thomas L. McKeirnan Title: Executive Vice President
Buyer:	PACIOLAN, LLC
	By/s/ Kimberly Damron Name: Kimberly Damron Title: President

[Signature Page to Amendment to Asset Purchase Agreement]

Certain schedules and exhibits to the Asset Purchase Agreement have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company agrees to furnish supplementally to the Securities and Exchange Commission a copy of any omitted schedule or exhibit upon request.

EX-12.1

Exhibit 12.1

Statement of Computation of Ratios
	Year Ended December 31,														Year to Date
	2012			2013			2014		2015			2016			September 30, 2017
	(dollars in thousands)
Fixed charges:
Interest expense	$	7,553		$	5,416		$	4,450	$	6,044		$	5,598		$	5,222
Amortization of debt discount and related expenses	729			295			125		935			1,166			892
Estimate of interest within rental expense	1,812			1,717			1,968		2,450			1,885			1,583
Total fixed charges	$	10,094		$	7,428		$	6,543	$	9,429		$	8,649		$	7,697
Earnings available for fixed charges:
Income(loss) from continuing operations before taxes	$	(17,692	)	$	(15,834	)	$	2,559	$	4,156		$	(4,685	)	$	(1,519	)
Add: Fixed charges	10,094			7,428			6,543		9,429			8,649			7,697
Add: Amortization of capitalized interest	—			—			—		—			15			15
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		$	6,193
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		$	1,504
(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, 2016 and year-to-date 2017, 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: November 3, 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: November 3, 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 September 30, 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.

November 3, 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 September 30, 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.

November 3, 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	9 Months Ended
	Sep. 30, 2017	Oct. 31, 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	Sep. 30, 2017
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q3
Amendment Flag	false
Entity Common Stock, Shares Outstanding		23,626,111

XML

Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Current assets:
Cash and cash equivalents ($9,599 and $5,134 attributable to VIEs)	$ 36,179	$ 38,072
Restricted cash ($12,620 and $9,211 attributable to VIEs)	12,946	9,537
Accounts receivable, net ($4,236 and $2,811 attributable to VIEs)	14,450	9,196
Accounts receivable from related parties	1,824	1,865
Notes receivable, net	1,572	1,295
Inventories ($455 and $447 attributable to VIEs)	631	596
Prepaid expenses and other ($1,141 and $1,008 attributable to VIEs)	5,156	4,244
Assets held for sale	4,285	5,585
Total current assets	77,043	70,390
Property and equipment, net ($173,377 and $179,609 attributable to VIEs)	204,131	210,485
Goodwill	9,404	9,404
Intangible assets	51,306	52,848
Other assets, net ($177 and $64 attributable to VIEs)	1,843	1,408
Total assets	343,727	344,535
Current liabilities:
Accounts payable ($1,998 and $3,886 attributable to VIEs)	5,555	8,479
Accrued payroll and related benefits ($1,076 and $175 attributable to VIEs)	5,516	4,590
Other accrued entertainment liabilities held for sale	6,757	11,334
Other accrued liabilities ($2,749 and $1,656 attributable to VIEs)	6,087	4,063
Long-term debt, due within one year ($24,422 and $1,469 attributable to VIEs)	24,422	1,469
Contingent consideration for acquisition due to related party, due within one year	7,581	6,768
Liabilities held for sale	739	686
Total current liabilities	56,657	37,389
Long-term debt, due after one year, net of debt issuance costs ($87,040 and $106,862 attributable to VIEs)	87,040	106,862
Contingent consideration for acquisition due to related party, due after one year	4,944	4,432
Deferred income and other long-term liabilities ($701 and $841 attributable to VIEs)	1,666	2,293
Deferred income taxes	6,132	5,716
Total liabilities	156,439	156,692
Commitments and contingencies
RLH Corporation 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; 23,611,519 and 23,434,480 shares issued and outstanding	236	234
Additional paid-in capital, common stock	173,341	171,089
Accumulated deficit	(16,901)	(15,987)
Total RLH Corporation stockholders' equity	156,676	155,336
Noncontrolling interest	30,612	32,507
Total stockholders' equity	187,288	187,843
Total liabilities and stockholders’ equity	$ 343,727	$ 344,535

XML

Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Cash and cash equivalents	$ 36,179	$ 38,072
Restricted cash	12,946	9,537
Accounts receivable, net	14,450	9,196
Inventories	631	596
Prepaid expenses and other assets	5,156	4,244
Property and equipment, net	204,131	210,485
Other assets, net	1,843	1,408
Accounts payable	5,555	8,479
Accrued payroll and related benefits	5,516	4,590
Other accrued expenses	6,087	4,063
Long-term debt, due within one year	24,422	1,469
Long-term debt, due after one year, net of debt issuance costs	87,040	106,862
Deferred income and other long-term liabilities	$ 1,666	$ 2,293
RLH Corporation 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)	23,611,519	23,434,480
Common stock, shares outstanding (in shares)	23,611,519	23,434,480
Variable Interest Entity, Primary Beneficiary
Cash and cash equivalents	$ 9,599	$ 5,134
Restricted cash	12,620	9,211
Accounts receivable, net	4,236	2,811
Inventories	455	447
Prepaid expenses and other assets	1,141	1,008
Property and equipment, net	173,377	179,609
Other assets, net	177	64
Accounts payable	1,998	3,886
Accrued payroll and related benefits	1,076	175
Other accrued expenses	2,749	1,656
Long-term debt, due within one year	24,422	1,469
Long-term debt, due after one year, net of debt issuance costs	87,040	106,862
Deferred income and other long-term liabilities	$ 701	$ 841

XML

Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Revenue:
Company operated hotels	$ 37,244	$ 37,157	$ 94,214	$ 93,515
Other revenues from managed properties	1,054	1,733	3,047	4,498
Franchised hotels	12,714	4,766	36,045	12,194
Other	12	16	128	40
Total revenues	51,024	43,672	133,434	110,247
Operating expenses:
Company operated hotels	25,284	25,363	70,450	71,035
Other costs from managed properties	1,054	1,733	3,047	4,498
Franchised hotels	8,898	3,214	26,300	10,034
Other	(9)	9	(2)	30
Depreciation and amortization	4,660	3,771	13,742	11,209
Hotel facility and land lease	1,201	1,197	3,604	3,543
Gain on asset dispositions, net	(113)	(100)	(334)	(729)
General and administrative expenses	3,640	2,031	11,348	7,781
Acquisition and integration costs	1,235	1,413	1,246	1,653
Total operating expenses	45,850	38,631	129,401	109,054
Operating income	5,174	5,041	4,033	1,193
Other income (expense):
Interest expense	(2,119)	(1,793)	(6,114)	(4,741)
Other income (loss), net	338	169	562	290
Total other income (expense)	(1,781)	(1,624)	(5,552)	(4,451)
Income (loss) from continuing operations before taxes	3,393	3,417	(1,519)	(3,258)
Income tax expense	174	166	513	258
Net income (loss) from continuing operations	3,219	3,251	(2,032)	(3,516)
Discontinued operations:
Income from discontinued business unit, net of income tax benefit of $0	408	262	611	1,831
Net income (loss)	3,627	3,513	(1,421)	(1,685)
Net (income) loss attributable to noncontrolling interest	(871)	(1,207)	507	(645)
Net income (loss) and comprehensive income (loss) attributable to RLH Corporation	$ 2,756	$ 2,306	$ (914)	$ (2,330)
Earnings (loss) per share - basic
Income (loss) from continuing operations attributable to RLH Corporation (in dollars per share)	$ 0.10	$ 0.10	$ (0.06)	$ (0.21)
Income from discontinued operations (in dollars per share)	0.02	0.01	0.02	0.09
Net income (loss) attributable to RLH Corporation (in dollars per share)	0.12	0.11	(0.04)	(0.12)
Earnings (loss) per share - diluted
Income (loss) from continuing operations attributable to RLH Corporation (in dollars per share)	0.10	0.10	(0.06)	(0.21)
Income from discontinued operations (in dollars per share)	0.01	0.01	0.02	0.09
Net income (loss) attributable to RLH Corporation (in dollars per share)	$ 0.11	$ 0.11	$ (0.04)	$ (0.12)
Weighted average shares - basic (in shares)	23,609	20,228	23,542	20,157
Weighted average shares - diluted (in shares)	24,176	20,613	23,542	20,157

XML

Consolidated Statements of Comprehensive Income (Loss) (Unaudited) (Parenthetical) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Income Statement [Abstract]
Tax benefit on income from discontinued business unit	$ 0	$ 0	$ 0	$ 0

XML

Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Operating activities:
Net loss	$ (1,421)	$ (1,685)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	13,806	11,354
Amortization of debt issuance costs	892	880
Gain on disposition of property, equipment and other assets, net	(328)	(730)
Deferred income taxes	416	233
Equity in investments	0	(171)
Stock based compensation expense	2,392	1,960
Provision for doubtful accounts	407	212
Fair value adjustments to contingent consideration	1,325	0
Change in current assets and liabilities:
Accounts receivable	(4,345)	(4,664)
Notes receivable	(69)	(68)
Inventories	(32)	63
Prepaid expenses and other	(1,324)	(1,959)
Accounts payable	(780)	3,697
Other accrued liabilities	(1,936)	(2,046)
Net cash provided by operating activities	9,003	7,076
Investing activities:
Capital expenditures	(8,024)	(30,266)
Acquisition of Vantage Hospitality	0	(22,694)
Proceeds from disposition of property and equipment	28	434
Collection of notes receivable related to property sales	200	1,781
Advance of note receivable	(408)	(328)
Proceeds from sales of short-term investments	0	18,060
Other, net	0	78
Net cash used in investing activities	(8,204)	(32,935)
Financing activities:
Borrowings on long-term debt	3,237	19,547
Repayment of long-term debt	(959)	0
Debt issuance costs	(35)	(192)
Proceeds from sale of interests in joint ventures	0	3,194
Distributions to noncontrolling interest	(1,388)	(3,594)
Stock-based compensation awards cancelled to settle employee tax withholding	(332)	(343)
Other, net	194	156
Net cash provided by financing activities	717	18,768
Change in cash, cash equivalents and restricted cash:
Net increase (decrease) in cash, cash equivalents and restricted cash	1,516	(7,091)
Cash, cash equivalents and restricted cash at beginning of period	47,609	35,202
Cash, cash equivalents and restricted cash at end of period	49,125	28,111
Cash paid during periods for:
Income taxes	154	22
Interest on debt	5,199	4,187
Non-cash investing and financing activities:
Reclassification of long-term debt to current	22,953	5,912
Reclassification of current and noncurrent assets to assets held for sale	4,285	3,936
Reclassification of current and noncurrent liabilities to liabilities held for sale	739	0
Reclassification of long-term note receivable to short-term	339	25
Property and equipment, purchases not yet paid	210	59
Accrual of contingent consideration for Vantage acquisition	0	11,077
Shares issued for Vantage acquisition	0	5,755
Reclassification of current assets to noncurrent assets	$ 0	$ 14

XML

Organization

9 Months Ended

Sep. 30, 2017

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization

Organization

Red Lion Hotels Corporation ("RLH Corporation", "we", "our", "us", or "our company") is a NYSE-listed hospitality and leisure company (ticker symbol: RLH) doing business as RLH Corporation and 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 3 Palm Hotels
Ÿ Americas Best Value Inn	Ÿ Value Inn Worldwide
Ÿ Canadas Best Value Inn	Ÿ Value Hotel Worldwide
Ÿ Lexington Hotels & Inns

A summary of our hotels and available rooms as of September 30, 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	1,082	66,600	1,102	70,800

On October 3, 2017, we completed the sale of certain specified liabilities and substantially all of the assets of our Entertainment segment, previously composed of WestCoast Entertainment and TicketsWest, including ticketing agreements and engagement agreements with various entertainment venues, teams and artists located throughout the Western United States. As such, the results of the Entertainment segment are reported as discontinued operations, and the assets and liabilities are classified as held for sale for all periods presented in this quarterly report on Form 10-Q. See Note 17.

We were incorporated in the state of Washington in April 1978. The Company's corporate headquarters are located in Denver, Colorado, with regional offices in Spokane, Washington, and Coral Springs, Florida.

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 September 30, 2017, there were 23,611,519 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 may be 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.

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Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 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 annual 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 derived 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 September 30, 2017, the Consolidated Statements of Comprehensive Income (Loss) for the three and nine months endedSeptember 30, 2017 and 2016, and the Consolidated Statements of Cash Flows for the nine months ended September 30, 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.

Principles of Consolidation

The financial statements encompass the accounts of RLH Corporation 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 September 30, 2017 and December 31, 2016 cash of $12.9 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 nine months ended September 30, 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):

	Nine Months Ended September 30,
	2017		2016
Cash and cash equivalents	$	36,179	$	18,930
Restricted cash	12,946		9,181
Cash, cash equivalents and restricted cash	$	49,125	$	28,111

Allowance for Doubtful Accounts

The ability to collect individual accounts receivable is reviewed on a routine basis. An allowance for doubtful accounts is recognized 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	385			212
Write-offs, net of recoveries	(1		)	(67		)
Balance, September 30	$	1,328		$	802

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.

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.

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 the valuation of any contingent assets or liabilities is 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 Comprehensive Income (Loss). 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, RLH Corporation-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.

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 nine months ended September 30, 2017 and 2016, we recognized income of approximately $0.4 million each period for the amortization of the deferred gain. The remaining balances at September 30, 2017 and December 31, 2016 were $0.5 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 September 30, 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 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.

Discontinued Operations and Held For Sale

When an asset group meets the criteria to be classified as held-for-sale, and the asset group represents a component of our business or an entire reportable segment, we classify the results of operations as discontinued operations in our consolidated statements of comprehensive income for all periods presented. An asset considered a held-for-sale is reported at the lower of the asset's carrying amount or fair value. Cash flows from the Company's discontinued operations are included in the Consolidated Statements of Cash Flows. See Note 17 for further discussion of our discontinued operations.

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. As the result of the sale of the Entertainment business on October 3, 2017, all revenues earned have been classified as discontinued operations for all periods presented.

Advertising and Promotion

Costs associated with advertising and promotional efforts are generally expensed as incurred. During the nine months ended September 30, 2017 and 2016 we incurred approximately $5.1 million and $4.3 million, respectively in advertising expense.

Basic and Diluted Earnings (Loss) Per Share

Basic earnings (loss) per share attributable to RLH Corporation is computed by dividing income (loss) attributable to RLH Corporation by the weighted‑average number of shares outstanding during the period. Diluted earnings (loss) per share attributable to RLH Corporation 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 nine months endedSeptember 30, 2016 to reflect the adoption of this new standard. As the result, the total change in cash flows for the first nine months of 2016 was a decrease of $2.1 million of cash inflows, of which $1.1 million was an increase for operating activities, and $3.2 million was a decrease for investing activities. The change was the result of the net transfer of restricted cash to cash for completed property improvements, partially offset by the net transfer of cash to restricted cash as part of our joint venture debt arrangements.

New and Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (FASB) issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), 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 us on January 1, 2018. Upon adoption utilizing the modified retrospective method, we will recognize a cumulative adjustment to retained earnings as opposed to retrospectively adjusting prior periods, and our financial statements will include expanded disclosures related to contracts with customers. We are continuing our assessment of our various revenue arrangements to ensure we account for them in accordance with this new guidance upon adoption. We do not expect a material impact to revenue from our company operated hotels segment. Within our franchise business, we will recognize application fee revenue and the related deal commission expense over the initial contract period, rather than immediately upon the signing of the franchise agreement.

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 $81.8 million of operating lease obligations as of September 30, 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 Consolidated Balance Sheet. However, the Consolidated Statement of Comprehensive Income (Loss) recognition of lease expenses is not expected to change from the current methodology.

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.

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.

In May 2017, the FASB issued ASU No. 2017-09, Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting. The amendments provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. An entity should account for the effects of a modification unless all the following are met: (1) The fair value (or calculated value or intrinsic value, if such an alternative measurement method is used) of the modified award is the same as the fair value (or calculated value or intrinsic value, if such an alternative measurement method is used) of the original award immediately before the original award is modified. If the modification does not affect any of the inputs to the valuation technique that the entity uses to value the award, the entity is not required to estimate the value immediately before and after the modification; (2) The vesting conditions of the modified award are the same as the vesting conditions of the original award immediately before the original award is modified; and (3) The classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the original award is modified. The guidance is effective on January 1, 2018 for us, and we would apply the amendments prospectively to an award modified on or after the adoption date.

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.

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Business Segments

9 Months Ended

Sep. 30, 2017

Segment Reporting [Abstract]

Business Segments

Business Segments

We have two operating segments: company operated hotels and franchised hotels. 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.

The results of operations of the Entertainment segment were treated as discontinued operations, due to the sale of the business completed on October 3, 2017. As a result, the revenue and operating expenses of the Entertainment segment are excluded from the segment disclosures below.

Selected financial information is provided below (in thousands):

Three Months Ended September 30, 2017	Company Operated Hotels		Franchised Hotels		Other			Total
Revenue	$	38,298	$	12,714	$	12		$	51,024
Operating expenses:
Segment operating expenses	26,338		8,898		(9		)	35,227
Depreciation and amortization	3,755		594		311			4,660
Other operating expenses, acquisition costs and gains on asset dispositions	1,090		1,235		3,638			5,963
Operating income (loss)	$	7,115	$	1,987	$	(3,928	)	$	5,174
Capital expenditures	$	1,073	$	188	$	998		$	2,259
Identifiable assets as of September 30, 2017	$	251,620	$	70,500	$	21,607		$	343,727

Three Months Ended September 30, 2016	Company Operated Hotels		Franchised Hotels		Other			Total
Revenue	$	38,890	$	4,766	$	16		$	43,672
Operating expenses:
Segment operating expenses	27,096		3,214		9			30,319
Depreciation and amortization	3,444		101		226			3,771
Other operating expenses, acquisition costs and gains on asset dispositions	1,097		1,413		2,031			4,541
Operating income (loss)	$	7,253	$	38	$	(2,250	)	$	5,041
Capital expenditures	$	9,007	$	—	$	787		$	9,794
Identifiable assets as of December 31, 2016	$	260,583	$	66,601	$	17,351		$	344,535

Nine Months Ended September 30, 2017	Company Operated Hotels		Franchised Hotels		Other			Total
Revenue	$	97,261	$	36,045	$	128		$	133,434
Segment operating expenses	73,497		26,300		(2		)	99,795
Depreciation and amortization	11,096		1,721		925			13,742
Other operating expenses, acquisition costs and gains on asset dispositions	3,258		1,144		11,462			15,864
Operating income (loss)	$	9,410	$	6,880	$	(12,257	)	$	4,033
Capital expenditures	$	3,281	$	626	$	2,089		$	5,996
Identifiable assets as of September 30, 2017	$	251,620	$	70,500	$	21,607		$	343,727

Nine Months Ended September 30, 2016	Company Operated Hotels		Franchised Hotels		Other			Total
Revenue	$	98,013	$	12,194	$	40		$	110,247
Segment operating expenses	75,533		10,034		30			85,597
Depreciation and amortization	10,308		115		786			11,209
Other operating expenses, acquisition costs and gains on asset dispositions	3,208		1,654		7,386			12,248
Operating income (loss)	$	8,964	$	391	$	(8,162	)	$	1,193
Capital expenditures	$	28,917	$	—	$	1,919		$	30,836
Identifiable assets as of December 31, 2016	$	260,583	$	66,601	$	17,351		$	344,535

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Variable Interest Entities

9 Months Ended

Sep. 30, 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 RLH Corporation 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. During the third quarter of 2017, RL Venture made a cash distribution totaling $1.6 million, of which RLH Corporation received $0.9 million. During the third quarter of 2016, RL Venture made distributions totaling $4.0 million, of which RLH Corporation received $2.2 million. During the nine months ended September 30, 2017 and 2016, cash distributions totaled $3.1 million and $8.0 million, of which RLH Corporation received $1.7 million and $4.4 million, respectively.

Subsequent to the third quarter of 2017, RL Venture made a cash distribution totaling $1.9 million, of which RLH Corporation received $1.0 million.

In October 2017, we listed the 11 properties in the RL Venture entity for sale through a commercial real estate broker.

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 RLH Corporation'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, RLH Corporation 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, RLH Corporation 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, RLH Corporation 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, RLH Corporation 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 nine months endedSeptember 30, 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 nine months endedSeptember 30, 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.

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 RLH Corporation's additional paid in capital. Following the April 1, 2016 transaction, we now own 55% of RLS DC Venture, and Shelbourne Falcon IV owns 45%. 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.

In May 2017, RLH Corporation 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, RLH Corporation 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 nine months endedSeptember 30, 2017 or 2016.

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Property and Equipment

9 Months Ended

Sep. 30, 2017

Property, Plant and Equipment [Abstract]

Property and Equipment

Property and Equipment

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

	September 30, 2017			December 31, 2016
Buildings and equipment	$	252,615		$	248,132
Furniture and fixtures	37,486			37,743
Landscaping and land improvements	7,878			7,928
	297,979			293,803
Less accumulated depreciation	(142,368		)	(130,876		)
	155,611			162,927
Land	43,192			43,193
Construction in progress	5,328			4,365
Property and equipment, net	$	204,131		$	210,485

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Goodwill and Intangible Assets

9 Months Ended

Sep. 30, 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 trade names 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 $5.5 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 7.9 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 nine months endedSeptember 30, 2017 or 2016.

In connection with the sale of the Entertainment business, $3.2 million of goodwill and $6,000 of intangible assets have been classified as held for sale. See Note 17 for further information.

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

	September 30, 2017		December 31, 2016
Goodwill	$	9,404	$	9,404
Intangible assets
Brand name - indefinite lived	$	39,704	$	39,704
Brand name - finite lived, net	2,403		2,664
Customer contracts, net	9,071		10,352
Trademarks	128		128
Total intangible assets	$	51,306	$	52,848

Goodwill and other intangible assets attributable to each of our business segments at September 30, 2017 and December 31, 2016 were as follows (in thousands):  

	September 30, 2017				December 31, 2016
			Intangible				Intangible
	Goodwill		Assets		Goodwill		Assets
Company operated hotels	$	—	$	4,660	$	—	$	4,660
Franchised hotels	9,404		46,646		9,404		48,188
Total	$	9,404	$	51,306	$	9,404	$	52,848

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

	September 30, 2017			December 31, 2016
Customer contracts	$	11,673		$	11,673
Brand name - finite lived	2,751			2,751
Accumulated amortization	(2,950		)	(1,408		)
Net carrying amount	$	11,474		$	13,016

As of September 30, 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)	$	511
2018	1,798
2019	1,610
2020	1,419
2021	1,261
Thereafter	4,875
Total	$	11,474

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Long-Term Debt

9 Months Ended

Sep. 30, 2017

Debt Disclosure [Abstract]

Long-Term Debt

Long-Term Debt

The current and noncurrent portions of long-term debt as of September 30, 2017 and December 31, 2016 are as follows (in thousands):

	September 30, 2017					December 31, 2016
	Current		Noncurrent			Current		Noncurrent
RL Venture	$	1,430	$	72,074		$	1,375	$	69,841
RL Baltimore	13,300		—			—		13,300
RLH Atlanta	9,390		—			40		9,360
RLH DC	302		16,379			54		16,628
Total debt	24,422		88,453			1,469		109,129
Unamortized debt issuance costs	—		(1,413		)	—		(2,267		)
Long-term debt net of debt issuance costs	$	24,422	$	87,040		$	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, which is secured by the hotels owned by RL Venture. Subsequently we disposed of one hotel, leaving 11 properties owned by RL Venture. 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 $0.4 million and $3.2 million during the three and nine months ended September 30, 2017. At September 30, 2017, there were unamortized debt issuance fees of $0.9 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%. Monthly principal payments began in January 2017 in an amount that would repay the outstanding principal balance over a 25-year amortization period.

The liabilities of RL Venture, other than its long-term debt, are nonrecourse to our general credit and assets. The long-term debt is nonrecourse as to RLH Corporation, but several investors in RL Venture, including us, are guarantors regarding completion of certain improvements to the hotels, environmental covenants in the loan agreement, or losses incurred by the lender in the event of a voluntary bankruptcy filing involving RL Venture, any of its subsidiaries or the guarantors. RLH Corporation 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 September 30, 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 September 30, 2017 the funds on the loan were fully disbursed. At September 30, 2017, there were unamortized debt issuance fees of $0.2 million.

The balance is payable at maturity of the loan in May 2018. Interest under the advanced portions of the loan is payable monthly at LIBOR plus 6.25%.

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 nonrecourse.  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.  RLH Corporation has guaranteed these recourse obligations of RL Baltimore and agreed to customary reporting and operating covenants. We were in compliance with these covenants at September 30, 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 September 30, 2017 the funds on the loan were fully disbursed. At September 30, 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 began 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 nonrecourse.  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.  RLH Corporation has guaranteed these recourse obligations of RLH Atlanta and agreed to customary reporting and operating covenants. We were in compliance with these covenants at September 30, 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 September 30, 2017 the funds on the loan were fully disbursed. At September 30, 2017, 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%. Monthly principal payments begin in November 2017 in an amount that will repay the outstanding principal balance over a 25-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 nonrecourse.  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.  RLH Corporation has guaranteed these recourse obligations of RLH DC and agreed to customary reporting and operating covenants. We were in compliance with these covenants at September 30, 2017.

Contractual maturities for long-term debt outstanding at September 30, 2017, for the next five years are summarized by the year as follows (in thousands):

Year ending December 31,	Amount
2017 (remainder)	$	434
2018	24,442
2019	87,999
2020	—
2021	—
Thereafter	—
Total	$	112,875

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Derivative Financial Instruments

9 Months Ended

Sep. 30, 2017

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments

Derivative Financial Instruments

We enter into derivative transactions to hedge our exposure to interest rate fluctuations, and not for trading purposes. 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 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 Comprehensive Income (Loss). At September 30, 2017 and December 31, 2016, 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 within 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	%	January 2018
RL Baltimore	Commonwealth Bank of Australia	$	13.3	3	%	May 2018
RLH Atlanta	SMBC Capital Markets, Inc.	$	9.4	3	%	September 2018
RLH DC	Commonwealth Bank of Australia	$	17.5	3	%	November 2018

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Operating and Capital Lease Commitments

9 Months Ended

Sep. 30, 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 September 30, 2017, are as indicated below (in thousands):

Year ending December 31,	Total Lease Obligation		Operating Lease Obligation		Capital Lease Obligation
2017 (remainder)	$	1,545	$	1,476	$	69
2018	5,573		5,293		280
2019	4,853		4,571		282
2020	4,551		4,294		257
2021	2,889		2,752		137
Thereafter	63,458		63,453		5
Total	$	82,869	$	81,839	$	1,030

Total rent expense under leases for the three and nine months endedSeptember 30, 2017 was $1.6 million and $4.8 million, respectively, which represents the total of amounts shown within Hotel facility and land lease expense, as well as amounts included within Franchise and General and Administrative operating expenses, and Discontinued Operations on our Consolidated Statements of Comprehensive Income (Loss). Total rent expense under leases for the three and nine months endedSeptember 30, 2016 was $1.5 million and $4.2 million, respectively.

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Commitments and Contingencies

9 Months Ended

Sep. 30, 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.

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Stock Based Compensation

9 Months Ended

Sep. 30, 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 (2015 Plan) authorizes the grant or issuance of various option and other awards including restricted stock units and other stock-based compensation. The 2015 Plan was approved by our shareholders in 2015 and provided for awards of 1.4 million shares, subject to adjustments for stock splits, stock dividends and similar events. In May 2017, our shareholders approved an amendment to the 2015 Plan to authorize an additional 1.5 million shares, for a total authorized of 2.9 million shares. As of September 30, 2017, there were 1,370,596 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 and nine months ended September 30, 2017 and 2016 stock-based compensation expense is as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
	(In thousands)
Stock options	$	17	$	17	$	51	$	34
Restricted stock units	687		561		1,891		1,588
Performance stock units	76		—		101		—
Unrestricted stock awards	104		105		319		315
Employee Stock Purchase Plan	14		11		30		25
Total stock-based compensation	$	898	$	694	$	2,392	$	1,962

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 nine months ended September 30, 2017 there were no stock options granted. For the nine months ended September 30,2016 there were 81,130 shares granted.

Stock option fair value assumptions are as follows for stock options granted during the nine months ended September 30, 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 nine months ended September 30, 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	(18,890	)	$	12.27
Balance, September 30, 2017	113,978		$	8.36
Exercisable, September 30, 2017	53,131		$	8.53

Additional information regarding stock options outstanding and exercisable as of September 30, 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	8.49	2026	$	8.20	$	37	20,283	$	8.20	$	9
$8.74	32,848	0.64	2018	$	8.74	—		32,848	$	8.74	—
	113,978	6.23	2018-2026	$	8.36	$	37	53,131	$	8.53	$	9

⁽¹⁾ The aggregate intrinsic value, in thousands, 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 nine months of 2017, or September 30, 2017, based upon our closing stock price on that date of $8.65.

Restricted Stock Units, Shares Issued as Compensation

During the nine months endedSeptember 30, 2017 and 2016, we granted 458,020 and 282,989 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 September 30, 2017 and 2016, there were 1,288,752 and 1,095,719 unvested restricted stock units outstanding, respectively. Since we began issuing restricted stock units, approximately 21% of total restricted stock units granted have been forfeited.

A summary of restricted stock unit activity for the nine months ended September 30, 2017, is as follows:

	Number of Shares		Weighted Average Grant Date Fair Value
Balance, January 1, 2017	1,036,680		$	7.27
Granted	458,020		$	6.95
Vested	(148,674	)	$	6.93
Forfeited	(57,274	)	$	7.19
Balance, September 30, 2017	1,288,752		$	7.20

We issued 148,674 shares of common stock to employees during the first nine 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 nine months ended September 30, 2017 and 2016 was approximately $1.0 million and $1.1 million, respectively.

During the three months ended September 30, 2017 and 2016, we recognized $0.7 million and $0.6 million, respectively in compensation expense related to these grants. During the nine months endedSeptember 30, 2017 and 2016, we recognized $1.9 million and $1.6 million, respectively, in compensation expense related to these grants, and expect to recognize an additional $5.8 million in compensation expense over the remaining weighted average vesting periods of 30 months.

Performance Stock Units, Shares Issued as Compensation

In May 2017, we granted performance stock units (PSUs) to certain of our executives under the 2015 Plan. These PSUs include both performance vesting conditions and a service vesting condition. The performance vesting conditions are based on (1) an annual earnings goal tied to Adjusted EBITDA, with a 70% weighting, and (2) a goal tied to the number of signed franchise license agreements in the year, with a 30% weighting. Each performance condition has a minimum, a target and a maximum share amount based on the level of attainment of the performance condition. Compensation expense, net of estimated forfeitures, is calculated based on the estimated full year attainment of the performance conditions during the performance period and recognized on a straight-line basis over the performance and service periods. The PSUs vest upon achievement of the performance and service conditions, provided participants are employed by RLH Corporation at the end of the service periods. For the PSUs granted in May 2017, the service period ends in March 2020.

A summary of performance stock unit activity for the nine months ended September 30, 2017, is as follows:

	Number of Shares		Weighted Average Grant Date Fair Value
Balance, January 1, 2017	—		—
Granted	274,882		$	6.45
Vested	—		—
Forfeited	(17,906	)	$	6.45
Balance, September 30, 2017	256,976		$	6.45

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 and nine months ended September 30, 2017 and 2016:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
Shares of unrestricted stock granted	14,184		14,868		42,432		42,096
Weighted average grant date fair value per share	$	7.40	$	7.06	$	7.54	$	7.48

Employee Stock Purchase Plan

In 2008, we adopted a new employee stock purchase plan (ESPP) upon expiration of our previous plan. Under the ESPP as approved in 2008, 300,000 shares of common stock were authorized for purchase by eligible employees. In May 2017, our shareholders authorized an additional 300,000 shares for a total of 600,000 shares authorized under the ESPP plan. As of September 30, 2017, 344,847 shares were available for grant. Eligible employees may purchase shares of our common stock 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 ended September 30, 2017 and 2016, there were 21,371 and 17,060 shares issued and approximately $14,000 and $11,000 was recognized in compensation expense related to the discount associated with the plan in each year, respectively. During the nine months endedSeptember 30, 2017 and 2016, 33,925 and 29,795 shares were issued, and $30,000 and $25,000 were recognized in compensation expense related to the discount associated with the plan in each year, respectively.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
Shares of stock sold to employees	21,371		17,060		33,925		29,795
Weighted average fair value per ESPP award	$	6.25	$	5.98	$	6.16	$	5.97

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 September 30, 2017, all warrants were still outstanding.

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Earnings (Loss) Per Share

9 Months Ended

Sep. 30, 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 and nine months endedSeptember 30, 2017 and 2016 (in thousands, except per share data):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
Numerator - basic and diluted:
Net income (loss) from continuing operations	$	3,219		$	3,251		$	(2,032	)	$	(3,516	)
Less: net (income) loss attributable to noncontrolling interests	(871		)	(1,207		)	507			(645		)
Net income (loss) from continuing operations attributable to RLH Corporation	2,348			2,044			(1,525		)	(4,161		)
Income from discontinued operations	408			262			611			1,831
Net income (loss) attributable to RLH Corporation	2,756			2,306			(914		)	(2,330		)
Fair value adjustment of share component of contingent consideration (1)	987			—			567			—
Net income (loss) attributable to RLH Corporation for diluted earnings (loss) per share (1)	$	3,743		$	2,306		$	(347	)	$	(2,330	)
Denominator:
Weighted average shares - basic	23,609			20,228			23,542			20,157
Weighted average shares - diluted (1)	24,176			20,613			23,542			20,157
Earnings (loss) per share - basic
Net income (loss) from continuing operations attributable to RLH Corporation	$	0.10		$	0.10		$	(0.06	)	$	(0.21	)
Income from discontinued operations	0.02			0.01			0.02			0.09
Net income (loss) attributable to RLH Corporation	$	0.12		$	0.11		$	(0.04	)	$	(0.12	)
Earnings (loss) per share - diluted (1)
Net income (loss) from continuing operations attributable to RLH Corporation	$	0.10		$	0.10		$	(0.06	)	$	(0.21	)
Income from discontinued operations	0.01			0.01			0.02			0.09
Net income (loss) attributable to RLH Corporation	$	0.11		$	0.11		$	(0.04	)	$	(0.12	)

⁽¹⁾ For the three and nine months ended September 30, 2017, the effect of the fair value adjustment of share component of contingent consideration is excluded from the calculation of diluted earnings per share as it would be antidilutive.

For the three months ended September 30, 2017, we recognized $1.0 million of expense 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 Comprehensive Income (Loss)), as the result of the $1.30 per share increase in our stock price from June 30, 2017 to September 30, 2017.

For the nine months ended September 30, 2017, we recognized $0.6 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 Comprehensive Income (Loss)), as the result of the $0.30 per share increase in our stock price from December 31, 2016 to September 30, 2017.

The following table presents options to purchase common shares, restricted stock units outstanding, performance stock units outstanding, warrants to purchase common shares and contingently issuable shares included in the earnings per share calculation, as well as the amount excluded from the dilutive earnings per share calculation if they were considered antidilutive, for three and nine months endedSeptember 30, 2017 and 2016.

	Three Months Ended September 30,		Nine Months Ended September 30,
	2017	2016	2017	2016
Stock Options(1)
Dilutive awards outstanding	—	—	—	—
Antidilutive awards outstanding	113,978	149,858	113,978	149,858
Total awards outstanding	113,978	149,858	113,978	149,858
Restricted Stock Units(2)
Dilutive awards outstanding	535,035	342,321	—	—
Antidilutive awards outstanding	753,717	753,398	1,288,752	1,095,719
Total awards outstanding	1,288,752	1,095,719	1,288,752	1,095,719
Performance Stock Units(3)
Dilutive awards outstanding	—	—	—	—
Antidilutive awards outstanding	—	—	—	—
Total awards outstanding	—	—	—	—
Warrants(4)
Dilutive awards outstanding	31,702	34,761	—	—
Antidilutive awards outstanding	410,831	407,772	442,533	442,533
Total awards outstanding	442,533	442,533	442,533	442,533
Shares for Vantage Contingent Consideration(5)
Dilutive awards outstanding	—	7,500	—	—
Antidilutive awards outstanding	483,000	682,500	483,000	690,000
Total awards outstanding	483,000	690,000	483,000	690,000
Total dilutive awards outstanding	566,737	384,582	—	—

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

⁽²⁾ Restricted stock units were anti-dilutive for the nine months ended September 30, 2017 and 2016 due to the net loss attributable to RLH Corporation in the reporting periods. If we had reported net income for the nine months ended September 30, 2017 and 2016 then 444,608 and 443,668 units, respectively, would have been dilutive.

⁽³⁾ All performance stock units are considered anti-dilutive and are not included in the weighted average diluted shares outstanding until the performance targets have been met. Performance targets relate to total company annual earnings and the number of new franchise agreements signed in 2017.

⁽⁴⁾ All warrants were anti-dilutive for the nine months ended September 30, 2017 and 2016 due to the net loss attributable to RLH Corporation in the reporting periods. If we had reported net income for the nine months ended September 30, 2017 and 2016 then 24,750 and 30,453 units, respectively, would have been dilutive.

⁽⁵⁾ 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 earn outs (see Note 16). These shares are not included in basic shares outstanding until the period the contingency is resolved. The Year 1 contingent consideration was preliminarily determined to have been earned as of September 30, 2017, resulting in 414,000 shares included in basic shares outstanding on a weighted average basis. 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 September 30, 2017, we recognized $1.0 million of expense 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 Comprehensive Income (Loss)), as the result of the $1.30 per share increase in our stock price from June 30, 2017 to September 30, 2017. For the nine months ended September 30,2017, we recognized $0.6 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 Comprehensive Income (Loss)), as the result of the $0.30 per share increase in our stock price from December 31, 2016 to September 30, 2017.

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Income Taxes

9 Months Ended

Sep. 30, 2017

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

We recognized an income tax provision of $174,000 and $166,000 for the three months ended September 30, 2017 and 2016. For the nine months ended September 30, 2017 and 2016 we recognized an income tax provision of $513,000 and $258,000. 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.

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Fair Value

9 Months Ended

Sep. 30, 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.

	September 30, 2017				December 31, 2016
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial assets:
Notes receivable	$	1,572	$	1,572	$	1,295	$	1,295
Financial liabilities:
Total debt	$	112,875	$	112,307	$	110,598	$	107,858
Total capital lease obligations	$	1,030	$	1,030	$	1,147	$	1,147

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Related Party Transactions

9 Months Ended

Sep. 30, 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 ended September 30, 2017 and 2016 totaled $134,000 and $221,000, respectively. The amount Shelbourne Capital earned from all four joint ventures during the nine months ended September 30, 2017 and 2016 totaled $344,000 and $423,000, 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 September 30, 2017 and 2016, Shelbourne Capital earned $117,000 and $190,000 from RL Venture in each period. During the nine months ended September 30, 2017 and 2016, Shelbourne Capital earned $291,000 and $366,000 from RL Venture in each period.

RL Venture 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 and nine months endedSeptember 30, 2017, as the obligation was fully paid by the end of 2016. RL Venture paid $11,000 and $78,000 for the construction management fee during the three and nine months endedSeptember 30, 2016, respectively.

In May 2015, we entered into a management agreement with the owner (the LLC entity) of Red Lion Hotel Woodlake Conference Center Sacramento. 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 and nine months endedSeptember 30, 2016, we recognized management fee and brand marketing fee revenue from the LLC entity of $30,000 and $92,000. On December 12, 2016 the LLC permanently closed the Red Lion Hotel Woodlake.

Effective March 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. Following the initial one-year term, we continue to manage the property on a month-to-month basis. 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 greater. During the three and nine months ended September 30, 2017, we recognized management fee revenue from HNA Hudson Valley Resort & Training Center LLC of $33,000 and $83,000. During the three and nine months ended September 30, 2016, we recognized management fee revenue from HNA Hudson Valley Resort & Training Center LLC of $35,000 and $65,000.

The total amounts receivable from related parties, primarily related to hotel management agreements, were $1.8 million and $1.9 million at September 30, 2017 and December 31, 2016, and are classified within Accounts receivable from related parties on our Consolidated Balance Sheets.

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Business Acquisition

9 Months Ended

Sep. 30, 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 RLH Corporation stock paid to TESI, which was valued at $5.8 million, based on the closing price of RLH Corporation 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 is to be paid 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 would not be contingent and would 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 Comprehensive Income (Loss). 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 Comprehensive Income (Loss). For the third quarter 2017, we recognized $1.2 million in expense associated with our updated assessment, including $1.0 million of expense related to the change in fair value of the share component of the contingent consideration (classified within Acquisition and integration costs on our Consolidated Statements of Comprehensive Income (Loss)), as the result of the $1.30 per share increase in our stock price from June 30, 2017 to September 30, 2017. As of September 30, 2017, we have preliminarily determined the Year 1 anniversary contingent consideration had been earned at the full amount. The value of the Year 1 anniversary consideration was $7.6 million, including $4.0 million in cash and $3.6 million in shares of RLH Corporation stock, based on the closing price of $8.65 per share on September 30, 2017. Once agreed to between the Vantage sellers and us, as specified in the asset purchase agreement, the shares of RLH Corporation stock will be issued and the cash transferred.

The Year 2 contingent consideration was $4.9 million at September 30, 2017. At December 31, 2016, the full contingent consideration was valued at $11.2 million.

Following the closing of the acquisition, Roger J. Bloss and Bernard T. Moyle were appointed to executive management positions at RLH Corporation, 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 RLH Corporation 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 September 30, 2016		Nine Months Ended September 30, 2016
	(in thousands)
Revenue	$	53,692	$	147,463
Income (loss) before income taxes	$	5,880	$	2,188

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Discontinued Operations and Assets and Liabilities Held for Sale

9 Months Ended

Sep. 30, 2017

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations and Assets and Liabilities Held for Sale

Discontinued Operations and Assets and Liabilities Held for Sale

On October 3, 2017, we completed the sale of certain specified liabilities and substantially all of the assets of our Entertainment segment, previously composed of WestCoast Entertainment and TicketsWest. As such, the results of the Entertainment business are reported as discontinued operations, and the assets and liabilities are classified as held for sale for all periods presented in this quarterly report on Form 10-Q. We will recognize an estimated gain on sale of $1.1 million in the fourth quarter of 2017, based on cash proceeds of $6.0 million, less estimated transaction costs of $0.7 million, and $4.2 million of net assets.

The following summarizes the results of the Entertainment business segment included in the Consolidated Statements of Comprehensive Income (Loss) as discontinued operations (in thousands).

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2017			2016			2017		2016
Entertainment revenue	$	2,969		$	1,936		$	9,050	$	13,014
Operating expenses:
Entertainment	2,555			1,605			8,372		11,183
Other	—			13			—		14
Depreciation and amortization	7			43			64		145
Gain on asset dispositions, net	(1		)	(1		)	3		(1		)
Total operating expenses	2,561			1,660			8,439		11,341
Operating income	408			276			611		1,673
Interest expense	—			(12		)	—		(12		)
Other income (expense), net	—			(2		)	—		170
Income from discontinued operations	$	408		$	262		$	611	$	1,831

The following table presents the assets and liabilities of the Entertainment business segment included in the Consolidated Balance Sheet as Assets held for sale and Liabilities held for sale (in thousands):

	September 30, 2017		December 31, 2016
Accounts receivable, net	$	381	$	1,656
Inventories	16		51
Prepaid expenses and other	266		247
Property and equipment, net	228		247
Goodwill	3,162		3,162
Intangible assets	6		6
Other assets, net	226		216
Assets held for sale	$	4,285	$	5,585

	September 30, 2017		December 31, 2016
Accounts payable	$	318	$	203
Accrued payroll and related benefits	82		210
Other accrued liabilities	15		—
Deferred income and other long-term liabilities	324		273
Liabilities held for sale	$	739	$	686
Other accrued entertainment liabilities held for sale	$	6,757	$	11,334

The following table represents the cash flow items associated with discontinued operations of the Entertainment business segment for the nine months endedSeptember 30, 2017 and 2016 (in thousands).

	Nine Months Ended
	September 30,
	2017		2016
Depreciation and amortization	$	64	$	145
Capital expenditures	$	101	$	26

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Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 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 annual 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 derived 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 September 30, 2017, the Consolidated Statements of Comprehensive Income (Loss) for the three and nine months endedSeptember 30, 2017 and 2016, and the Consolidated Statements of Cash Flows for the nine months ended September 30, 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.

Principles of Consolidation

Principles of Consolidation

The financial statements encompass the accounts of RLH Corporation 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 September 30, 2017 and December 31, 2016 cash of $12.9 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 nine months ended September 30, 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

Allowance for Doubtful Accounts

The ability to collect individual accounts receivable is reviewed on a routine basis. An allowance for doubtful accounts is recognized 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.

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.

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.

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

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.

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.

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 the valuation of any contingent assets or liabilities is 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 Comprehensive Income (Loss). 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, RLH Corporation-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.

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 nine months ended September 30, 2017 and 2016, we recognized income of approximately $0.4 million each period for the amortization of the deferred gain. The remaining balances at September 30, 2017 and December 31, 2016 were $0.5 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 September 30, 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 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.

Discontinued Operations and Held For Sale

Discontinued Operations and Held For Sale

When an asset group meets the criteria to be classified as held-for-sale, and the asset group represents a component of our business or an entire reportable segment, we classify the results of operations as discontinued operations in our consolidated statements of comprehensive income for all periods presented. An asset considered a held-for-sale is reported at the lower of the asset's carrying amount or fair value. Cash flows from the Company's discontinued operations are included in the Consolidated Statements of Cash Flows. See Note 17 for further discussion of our discontinued operations.

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. As the result of the sale of the Entertainment business on October 3, 2017, all revenues earned have been classified as discontinued operations for all periods presented.

Advertising and Promotion

Advertising and Promotion

Costs associated with advertising and promotional efforts are generally expensed as incurred. During the nine months ended September 30, 2017 and 2016 we incurred approximately $5.1 million and $4.3 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 RLH Corporation is computed by dividing income (loss) attributable to RLH Corporation by the weighted‑average number of shares outstanding during the period. Diluted earnings (loss) per share attributable to RLH Corporation 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 nine months endedSeptember 30, 2016 to reflect the adoption of this new standard. As the result, the total change in cash flows for the first nine months of 2016 was a decrease of $2.1 million of cash inflows, of which $1.1 million was an increase for operating activities, and $3.2 million was a decrease for investing activities. The change was the result of the net transfer of restricted cash to cash for completed property improvements, partially offset by the net transfer of cash to restricted cash as part of our joint venture debt arrangements.

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 (Topic 606), 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 us on January 1, 2018. Upon adoption utilizing the modified retrospective method, we will recognize a cumulative adjustment to retained earnings as opposed to retrospectively adjusting prior periods, and our financial statements will include expanded disclosures related to contracts with customers. We are continuing our assessment of our various revenue arrangements to ensure we account for them in accordance with this new guidance upon adoption. We do not expect a material impact to revenue from our company operated hotels segment. Within our franchise business, we will recognize application fee revenue and the related deal commission expense over the initial contract period, rather than immediately upon the signing of the franchise agreement.

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 $81.8 million of operating lease obligations as of September 30, 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 Consolidated Balance Sheet. However, the Consolidated Statement of Comprehensive Income (Loss) recognition of lease expenses is not expected to change from the current methodology.

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.

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.

In May 2017, the FASB issued ASU No. 2017-09, Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting. The amendments provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. An entity should account for the effects of a modification unless all the following are met: (1) The fair value (or calculated value or intrinsic value, if such an alternative measurement method is used) of the modified award is the same as the fair value (or calculated value or intrinsic value, if such an alternative measurement method is used) of the original award immediately before the original award is modified. If the modification does not affect any of the inputs to the valuation technique that the entity uses to value the award, the entity is not required to estimate the value immediately before and after the modification; (2) The vesting conditions of the modified award are the same as the vesting conditions of the original award immediately before the original award is modified; and (3) The classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the original award is modified. The guidance is effective on January 1, 2018 for us, and we would apply the amendments prospectively to an award modified on or after the adoption date.

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.

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Organization (Tables)

9 Months Ended

Sep. 30, 2017

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Schedule of summary of properties

Red Lion Hotels Corporation ("RLH Corporation", "we", "our", "us", or "our company") is a NYSE-listed hospitality and leisure company (ticker symbol: RLH) doing business as RLH Corporation and 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 3 Palm Hotels
Ÿ Americas Best Value Inn	Ÿ Value Inn Worldwide
Ÿ Canadas Best Value Inn	Ÿ Value Hotel Worldwide
Ÿ Lexington Hotels & Inns

A summary of our hotels and available rooms as of September 30, 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	1,082	66,600	1,102	70,800

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Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 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):

	Nine Months Ended September 30,
	2017		2016
Cash and cash equivalents	$	36,179	$	18,930
Restricted cash	12,946		9,181
Cash, cash equivalents and restricted cash	$	49,125	$	28,111

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	385			212
Write-offs, net of recoveries	(1		)	(67		)
Balance, September 30	$	1,328		$	802

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

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Business Segments (Tables)

9 Months Ended

Sep. 30, 2017

Segment Reporting [Abstract]

Schedule of Segment Reporting Information

Selected financial information is provided below (in thousands):

Three Months Ended September 30, 2017	Company Operated Hotels		Franchised Hotels		Other			Total
Revenue	$	38,298	$	12,714	$	12		$	51,024
Operating expenses:
Segment operating expenses	26,338		8,898		(9		)	35,227
Depreciation and amortization	3,755		594		311			4,660
Other operating expenses, acquisition costs and gains on asset dispositions	1,090		1,235		3,638			5,963
Operating income (loss)	$	7,115	$	1,987	$	(3,928	)	$	5,174
Capital expenditures	$	1,073	$	188	$	998		$	2,259
Identifiable assets as of September 30, 2017	$	251,620	$	70,500	$	21,607		$	343,727

Three Months Ended September 30, 2016	Company Operated Hotels		Franchised Hotels		Other			Total
Revenue	$	38,890	$	4,766	$	16		$	43,672
Operating expenses:
Segment operating expenses	27,096		3,214		9			30,319
Depreciation and amortization	3,444		101		226			3,771
Other operating expenses, acquisition costs and gains on asset dispositions	1,097		1,413		2,031			4,541
Operating income (loss)	$	7,253	$	38	$	(2,250	)	$	5,041
Capital expenditures	$	9,007	$	—	$	787		$	9,794
Identifiable assets as of December 31, 2016	$	260,583	$	66,601	$	17,351		$	344,535

Nine Months Ended September 30, 2017	Company Operated Hotels		Franchised Hotels		Other			Total
Revenue	$	97,261	$	36,045	$	128		$	133,434
Segment operating expenses	73,497		26,300		(2		)	99,795
Depreciation and amortization	11,096		1,721		925			13,742
Other operating expenses, acquisition costs and gains on asset dispositions	3,258		1,144		11,462			15,864
Operating income (loss)	$	9,410	$	6,880	$	(12,257	)	$	4,033
Capital expenditures	$	3,281	$	626	$	2,089		$	5,996
Identifiable assets as of September 30, 2017	$	251,620	$	70,500	$	21,607		$	343,727

Nine Months Ended September 30, 2016	Company Operated Hotels		Franchised Hotels		Other			Total
Revenue	$	98,013	$	12,194	$	40		$	110,247
Segment operating expenses	75,533		10,034		30			85,597
Depreciation and amortization	10,308		115		786			11,209
Other operating expenses, acquisition costs and gains on asset dispositions	3,208		1,654		7,386			12,248
Operating income (loss)	$	8,964	$	391	$	(8,162	)	$	1,193
Capital expenditures	$	28,917	$	—	$	1,919		$	30,836
Identifiable assets as of December 31, 2016	$	260,583	$	66,601	$	17,351		$	344,535

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Property and Equipment (Tables)

9 Months Ended

Sep. 30, 2017

Property, Plant and Equipment [Abstract]

Schedule of Property, Plant and Equipment

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

	September 30, 2017			December 31, 2016
Buildings and equipment	$	252,615		$	248,132
Furniture and fixtures	37,486			37,743
Landscaping and land improvements	7,878			7,928
	297,979			293,803
Less accumulated depreciation	(142,368		)	(130,876		)
	155,611			162,927
Land	43,192			43,193
Construction in progress	5,328			4,365
Property and equipment, net	$	204,131		$	210,485

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Goodwill and Intangible Assets (Tables)

9 Months Ended

Sep. 30, 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):

	September 30, 2017		December 31, 2016
Goodwill	$	9,404	$	9,404
Intangible assets
Brand name - indefinite lived	$	39,704	$	39,704
Brand name - finite lived, net	2,403		2,664
Customer contracts, net	9,071		10,352
Trademarks	128		128
Total intangible assets	$	51,306	$	52,848

Goodwill and other intangible assets attributable to each of our business segments at September 30, 2017 and December 31, 2016 were as follows (in thousands):  

	September 30, 2017				December 31, 2016
			Intangible				Intangible
	Goodwill		Assets		Goodwill		Assets
Company operated hotels	$	—	$	4,660	$	—	$	4,660
Franchised hotels	9,404		46,646		9,404		48,188
Total	$	9,404	$	51,306	$	9,404	$	52,848

Schedule of Intangible Assets

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

	September 30, 2017			December 31, 2016
Customer contracts	$	11,673		$	11,673
Brand name - finite lived	2,751			2,751
Accumulated amortization	(2,950		)	(1,408		)
Net carrying amount	$	11,474		$	13,016

Schedule of Estimated Future Amortization Expenses

As of September 30, 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)	$	511
2018	1,798
2019	1,610
2020	1,419
2021	1,261
Thereafter	4,875
Total	$	11,474

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Long-Term Debt (Tables)

9 Months Ended

Sep. 30, 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 September 30, 2017 and December 31, 2016 are as follows (in thousands):

	September 30, 2017					December 31, 2016
	Current		Noncurrent			Current		Noncurrent
RL Venture	$	1,430	$	72,074		$	1,375	$	69,841
RL Baltimore	13,300		—			—		13,300
RLH Atlanta	9,390		—			40		9,360
RLH DC	302		16,379			54		16,628
Total debt	24,422		88,453			1,469		109,129
Unamortized debt issuance costs	—		(1,413		)	—		(2,267		)
Long-term debt net of debt issuance costs	$	24,422	$	87,040		$	1,469	$	106,862

Schedule of contractual maturities for long-term debt outstanding

Contractual maturities for long-term debt outstanding at September 30, 2017, for the next five years are summarized by the year as follows (in thousands):

Year ending December 31,	Amount
2017 (remainder)	$	434
2018	24,442
2019	87,999
2020	—
2021	—
Thereafter	—
Total	$	112,875

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Derivative Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2017

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Interest Rate Derivatives

At September 30, 2017 and December 31, 2016, 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 within 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	%	January 2018
RL Baltimore	Commonwealth Bank of Australia	$	13.3	3	%	May 2018
RLH Atlanta	SMBC Capital Markets, Inc.	$	9.4	3	%	September 2018
RLH DC	Commonwealth Bank of Australia	$	17.5	3	%	November 2018

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Operating and Capital Lease Commitments (Tables)

9 Months Ended

Sep. 30, 2017

Leases [Abstract]

Schedule of Future Minimum Payments for Leases

Total future minimum payments due under all current term operating and capital leases at September 30, 2017, are as indicated below (in thousands):

Year ending December 31,	Total Lease Obligation		Operating Lease Obligation		Capital Lease Obligation
2017 (remainder)	$	1,545	$	1,476	$	69
2018	5,573		5,293		280
2019	4,853		4,571		282
2020	4,551		4,294		257
2021	2,889		2,752		137
Thereafter	63,458		63,453		5
Total	$	82,869	$	81,839	$	1,030

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Stock Based Compensation (Tables)

9 Months Ended

Sep. 30, 2017

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

Schedule of Compensation Cost

For the three and nine months ended September 30, 2017 and 2016 stock-based compensation expense is as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
	(In thousands)
Stock options	$	17	$	17	$	51	$	34
Restricted stock units	687		561		1,891		1,588
Performance stock units	76		—		101		—
Unrestricted stock awards	104		105		319		315
Employee Stock Purchase Plan	14		11		30		25
Total stock-based compensation	$	898	$	694	$	2,392	$	1,962

Schedule of Stock Option Fair Value Assumptions

Stock option fair value assumptions are as follows for stock options granted during the nine months ended September 30, 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 nine months ended September 30, 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	(18,890	)	$	12.27
Balance, September 30, 2017	113,978		$	8.36
Exercisable, September 30, 2017	53,131		$	8.53

Schedule of Stock Option Plans, by Exercise Price Range

Additional information regarding stock options outstanding and exercisable as of September 30, 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	8.49	2026	$	8.20	$	37	20,283	$	8.20	$	9
$8.74	32,848	0.64	2018	$	8.74	—		32,848	$	8.74	—
	113,978	6.23	2018-2026	$	8.36	$	37	53,131	$	8.53	$	9

⁽¹⁾ The aggregate intrinsic value, in thousands, 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 nine months of 2017, or September 30, 2017, based upon our closing stock price on that date of $8.65.

Schedule of Restricted Stock

A summary of restricted stock unit activity for the nine months ended September 30, 2017, is as follows:

	Number of Shares		Weighted Average Grant Date Fair Value
Balance, January 1, 2017	1,036,680		$	7.27
Granted	458,020		$	6.95
Vested	(148,674	)	$	6.93
Forfeited	(57,274	)	$	7.19
Balance, September 30, 2017	1,288,752		$	7.20

Schedule of Performance Stock Units

A summary of performance stock unit activity for the nine months ended September 30, 2017, is as follows:

	Number of Shares		Weighted Average Grant Date Fair Value
Balance, January 1, 2017	—		—
Granted	274,882		$	6.45
Vested	—		—
Forfeited	(17,906	)	$	6.45
Balance, September 30, 2017	256,976		$	6.45

Schedule of Unrestricted Stock Awards

The following table summarizes unrestricted stock award activity for the three and nine months ended September 30, 2017 and 2016:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
Shares of unrestricted stock granted	14,184		14,868		42,432		42,096
Weighted average grant date fair value per share	$	7.40	$	7.06	$	7.54	$	7.48

Schedule Employee Stock Purchase Plan

During the nine months endedSeptember 30, 2017 and 2016, 33,925 and 29,795 shares were issued, and $30,000 and $25,000 were recognized in compensation expense related to the discount associated with the plan in each year, respectively.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
Shares of stock sold to employees	21,371		17,060		33,925		29,795
Weighted average fair value per ESPP award	$	6.25	$	5.98	$	6.16	$	5.97

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Earnings (Loss) Per Share (Tables)

9 Months Ended

Sep. 30, 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 and nine months endedSeptember 30, 2017 and 2016 (in thousands, except per share data):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
Numerator - basic and diluted:
Net income (loss) from continuing operations	$	3,219		$	3,251		$	(2,032	)	$	(3,516	)
Less: net (income) loss attributable to noncontrolling interests	(871		)	(1,207		)	507			(645		)
Net income (loss) from continuing operations attributable to RLH Corporation	2,348			2,044			(1,525		)	(4,161		)
Income from discontinued operations	408			262			611			1,831
Net income (loss) attributable to RLH Corporation	2,756			2,306			(914		)	(2,330		)
Fair value adjustment of share component of contingent consideration (1)	987			—			567			—
Net income (loss) attributable to RLH Corporation for diluted earnings (loss) per share (1)	$	3,743		$	2,306		$	(347	)	$	(2,330	)
Denominator:
Weighted average shares - basic	23,609			20,228			23,542			20,157
Weighted average shares - diluted (1)	24,176			20,613			23,542			20,157
Earnings (loss) per share - basic
Net income (loss) from continuing operations attributable to RLH Corporation	$	0.10		$	0.10		$	(0.06	)	$	(0.21	)
Income from discontinued operations	0.02			0.01			0.02			0.09
Net income (loss) attributable to RLH Corporation	$	0.12		$	0.11		$	(0.04	)	$	(0.12	)
Earnings (loss) per share - diluted (1)
Net income (loss) from continuing operations attributable to RLH Corporation	$	0.10		$	0.10		$	(0.06	)	$	(0.21	)
Income from discontinued operations	0.01			0.01			0.02			0.09
Net income (loss) attributable to RLH Corporation	$	0.11		$	0.11		$	(0.04	)	$	(0.12	)

⁽¹⁾ For the three and nine months ended September 30, 2017, the effect of the fair value adjustment of share component of contingent consideration is excluded from the calculation of diluted earnings per share as it would be antidilutive.

Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share

The following table presents options to purchase common shares, restricted stock units outstanding, performance stock units outstanding, warrants to purchase common shares and contingently issuable shares included in the earnings per share calculation, as well as the amount excluded from the dilutive earnings per share calculation if they were considered antidilutive, for three and nine months endedSeptember 30, 2017 and 2016.

	Three Months Ended September 30,		Nine Months Ended September 30,
	2017	2016	2017	2016
Stock Options(1)
Dilutive awards outstanding	—	—	—	—
Antidilutive awards outstanding	113,978	149,858	113,978	149,858
Total awards outstanding	113,978	149,858	113,978	149,858
Restricted Stock Units(2)
Dilutive awards outstanding	535,035	342,321	—	—
Antidilutive awards outstanding	753,717	753,398	1,288,752	1,095,719
Total awards outstanding	1,288,752	1,095,719	1,288,752	1,095,719
Performance Stock Units(3)
Dilutive awards outstanding	—	—	—	—
Antidilutive awards outstanding	—	—	—	—
Total awards outstanding	—	—	—	—
Warrants(4)
Dilutive awards outstanding	31,702	34,761	—	—
Antidilutive awards outstanding	410,831	407,772	442,533	442,533
Total awards outstanding	442,533	442,533	442,533	442,533
Shares for Vantage Contingent Consideration(5)
Dilutive awards outstanding	—	7,500	—	—
Antidilutive awards outstanding	483,000	682,500	483,000	690,000
Total awards outstanding	483,000	690,000	483,000	690,000
Total dilutive awards outstanding	566,737	384,582	—	—

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

⁽²⁾ Restricted stock units were anti-dilutive for the nine months ended September 30, 2017 and 2016 due to the net loss attributable to RLH Corporation in the reporting periods. If we had reported net income for the nine months ended September 30, 2017 and 2016 then 444,608 and 443,668 units, respectively, would have been dilutive.

⁽³⁾ All performance stock units are considered anti-dilutive and are not included in the weighted average diluted shares outstanding until the performance targets have been met. Performance targets relate to total company annual earnings and the number of new franchise agreements signed in 2017.

⁽⁴⁾ All warrants were anti-dilutive for the nine months ended September 30, 2017 and 2016 due to the net loss attributable to RLH Corporation in the reporting periods. If we had reported net income for the nine months ended September 30, 2017 and 2016 then 24,750 and 30,453 units, respectively, would have been dilutive.

⁽⁵⁾ 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 earn outs (see Note 16). These shares are not included in basic shares outstanding until the period the contingency is resolved. The Year 1 contingent consideration was preliminarily determined to have been earned as of September 30, 2017, resulting in 414,000 shares included in basic shares outstanding on a weighted average basis. 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 September 30, 2017, we recognized $1.0 million of expense 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 Comprehensive Income (Loss)), as the result of the $1.30 per share increase in our stock price from June 30, 2017 to September 30, 2017. For the nine months ended September 30,2017, we recognized $0.6 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 Comprehensive Income (Loss)), as the result of the $0.30 per share increase in our stock price from December 31, 2016 to September 30, 2017.

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Fair Value (Tables)

9 Months Ended

Sep. 30, 2017

Fair Value Disclosures [Abstract]

Fair Value and Carrying Amount

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.

	September 30, 2017				December 31, 2016
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial assets:
Notes receivable	$	1,572	$	1,572	$	1,295	$	1,295
Financial liabilities:
Total debt	$	112,875	$	112,307	$	110,598	$	107,858
Total capital lease obligations	$	1,030	$	1,030	$	1,147	$	1,147

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Business Acquisition (Tables)

9 Months Ended

Sep. 30, 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 RLH Corporation 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 September 30, 2016		Nine Months Ended September 30, 2016
	(in thousands)
Revenue	$	53,692	$	147,463
Income (loss) before income taxes	$	5,880	$	2,188

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Discontinued Operations and Assets and Liabilities Held for Sale (Tables)

9 Months Ended

Sep. 30, 2017

Discontinued Operations and Disposal Groups [Abstract]

Schedule of Discontinued Operations and Assets and Liabilities Held for Sale

The following summarizes the results of the Entertainment business segment included in the Consolidated Statements of Comprehensive Income (Loss) as discontinued operations (in thousands).

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2017			2016			2017		2016
Entertainment revenue	$	2,969		$	1,936		$	9,050	$	13,014
Operating expenses:
Entertainment	2,555			1,605			8,372		11,183
Other	—			13			—		14
Depreciation and amortization	7			43			64		145
Gain on asset dispositions, net	(1		)	(1		)	3		(1		)
Total operating expenses	2,561			1,660			8,439		11,341
Operating income	408			276			611		1,673
Interest expense	—			(12		)	—		(12		)
Other income (expense), net	—			(2		)	—		170
Income from discontinued operations	$	408		$	262		$	611	$	1,831

The following table presents the assets and liabilities of the Entertainment business segment included in the Consolidated Balance Sheet as Assets held for sale and Liabilities held for sale (in thousands):

	September 30, 2017		December 31, 2016
Accounts receivable, net	$	381	$	1,656
Inventories	16		51
Prepaid expenses and other	266		247
Property and equipment, net	228		247
Goodwill	3,162		3,162
Intangible assets	6		6
Other assets, net	226		216
Assets held for sale	$	4,285	$	5,585

	September 30, 2017		December 31, 2016
Accounts payable	$	318	$	203
Accrued payroll and related benefits	82		210
Other accrued liabilities	15		—
Deferred income and other long-term liabilities	324		273
Liabilities held for sale	$	739	$	686
Other accrued entertainment liabilities held for sale	$	6,757	$	11,334

The following table represents the cash flow items associated with discontinued operations of the Entertainment business segment for the nine months endedSeptember 30, 2017 and 2016 (in thousands).

	Nine Months Ended
	September 30,
	2017		2016
Depreciation and amortization	$	64	$	145
Capital expenditures	$	101	$	26

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Organization (Details)	Sep. 30, 2017 room hotel $ / shares shares	Dec. 31, 2016 $ / shares shares
Real Estate Properties [Line Items]
Hotels | hotel	1,102
Total available rooms | room	70,800
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)	23,611,519	23,434,480
Common stock, shares outstanding (in shares)	23,611,519	23,434,480
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Franchised hotels
Real Estate Properties [Line Items]
Hotels | hotel	1,082
Total available rooms | room	66,600
Company Operated
Real Estate Properties [Line Items]
Hotels | hotel	20
Total available rooms | room	4,200

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Summary of Significant Accounting Policies (Narrative) (Details) $ in Thousands		1 Months Ended			9 Months Ended
	Apr. 01, 2016	Oct. 31, 2015	Sep. 30, 2015	Jan. 31, 2015	Sep. 30, 2017 USD ($) term	Sep. 30, 2016 USD ($)	Dec. 31, 2016 USD ($)	Dec. 31, 2003 USD ($)
Accounting Policies [Line Items]
Restricted cash					$ 12,946	$ 9,181	$ 9,537
Deferred Income
Deferred gain								$ 7,000
Number of renewable terms | term					3
Renewable lease period					5 years
Recognized income					$ 400	400
Deferred revenue					500		900
Advertising expense					5,100	4,300
Decrease of cash outflows					(1,516)	7,091
Net cash provided by operating activities					9,003	7,076
Net cash used in investing activities					8,204	32,935
Operating lease obligations					81,839
Adjustments for New Accounting Principle, Early Adoption [Member]
Deferred Income
Decrease of cash outflows						2,100
Net cash provided by operating activities						1,100
Net cash used in investing activities						$ 3,200
Variable Interest Entity, Primary Beneficiary
Accounting Policies [Line Items]
Restricted cash					$ 12,620		$ 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%

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Summary of Significant Accounting Policies (Restricted Cash) (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016	Sep. 30, 2016	Dec. 31, 2015
Accounting Policies [Abstract]
Cash and cash equivalents	$ 36,179	$ 38,072	$ 18,930
Restricted cash	12,946	9,537	9,181
Cash, cash equivalents and restricted cash	$ 49,125	$ 47,609	$ 28,111	$ 35,202

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Summary of Significant Accounting Policies (Allowance for Doubtful Accounts) (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Allowance for Doubtful Accounts Receivable [Roll Forward]
Balance, beginning of year	$ 944	$ 657
Additions to allowance	385	212
Write-offs, net of recoveries	(1)	(67)
Balance, end of year	$ 1,328	$ 802

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Summary of Significant Accounting Policies (Property and Equipment) (Details)	9 Months Ended
	Sep. 30, 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

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Business Segments (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017 USD ($)	Sep. 30, 2016 USD ($)	Sep. 30, 2017 USD ($) segment	Sep. 30, 2016 USD ($)	Dec. 31, 2016 USD ($)
Segment Reporting Information [Line Items]
Number of operating segments | segment			2
Revenue	$ 51,024	$ 43,672	$ 133,434	$ 110,247
Segment operating expenses	35,227	30,319	99,795	85,597
Depreciation and amortization	4,660	3,771	13,742	11,209
Other operating expenses, acquisition costs and gains on asset dispositions	5,963	4,541	15,864	12,248
Operating income	5,174	5,041	4,033	1,193
Capital expenditures	2,259	9,794	5,996	30,836
Identifiable assets	343,727		343,727		$ 344,535
Operating segments | Company operated hotels
Segment Reporting Information [Line Items]
Revenue	38,298	38,890	97,261	98,013
Segment operating expenses	26,338	27,096	73,497	75,533
Depreciation and amortization	3,755	3,444	11,096	10,308
Other operating expenses, acquisition costs and gains on asset dispositions	1,090	1,097	3,258	3,208
Operating income	7,115	7,253	9,410	8,964
Capital expenditures	1,073	9,007	3,281	28,917
Identifiable assets	251,620		251,620		260,583
Operating segments | Franchised hotels
Segment Reporting Information [Line Items]
Revenue	12,714	4,766	36,045	12,194
Segment operating expenses	8,898	3,214	26,300	10,034
Depreciation and amortization	594	101	1,721	115
Other operating expenses, acquisition costs and gains on asset dispositions	1,235	1,413	1,144	1,654
Operating income	1,987	38	6,880	391
Capital expenditures	188	0	626	0
Identifiable assets	70,500		70,500		66,601
Other
Segment Reporting Information [Line Items]
Revenue	12	16	128	40
Segment operating expenses	(9)	9	(2)	30
Depreciation and amortization	311	226	925	786
Other operating expenses, acquisition costs and gains on asset dispositions	3,638	2,031	11,462	7,386
Operating income	(3,928)	(2,250)	(12,257)	(8,162)
Capital expenditures	998	$ 787	2,089	$ 1,919
Identifiable assets	$ 21,607		$ 21,607		$ 17,351

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Variable Interest Entities (Details)			1 Months Ended								3 Months Ended		9 Months Ended
	Apr. 01, 2016 USD ($)	Feb. 03, 2016 USD ($)	Nov. 03, 2017 USD ($)	Oct. 31, 2017 hotel	May 31, 2017 USD ($)	Feb. 29, 2016 USD ($)	Dec. 31, 2015 USD ($)	Oct. 31, 2015 USD ($)	Sep. 30, 2015	Jan. 31, 2015 hotel	Sep. 30, 2017 USD ($) hotel	Sep. 30, 2016 USD ($)	Sep. 30, 2017 USD ($) hotel	Sep. 30, 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%
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]
Cash distributions											$ 1,600,000	$ 4,000,000	$ 3,100,000	$ 8,000,000
Variable Interest Entity, Primary Beneficiary | RL Venture LLC | Subsequent Event
Variable Interest Entity [Line Items]
Cash distributions			$ 1,900,000
Variable Interest Entity, Primary Beneficiary | RL Venture LLC
Variable Interest Entity [Line Items]
Number of hotels transfered | hotel										12	11		11
Ownership by non-controlling interest holders										45.00%
Number of hotels disposed of | hotel											1		1
Ownership percentage										55.00%			55.00%
Cash distributions											$ 900,000	$ 2,200,000	$ 1,700,000	4,400,000
Variable Interest Entity, Primary Beneficiary | RL Venture LLC | Subsequent Event
Variable Interest Entity [Line Items]
Cash distributions			$ 1,000,000
Number of hotels listed for sale | hotel				11
Variable Interest Entity, Primary Beneficiary | RLS Balt Venture LLC
Variable Interest Entity [Line Items]
Ownership percentage													73.00%
Cash distributions													$ 0	0
Funding provided					$ 2,800,000			$ 1,500,000
Funding preferred return					9.00%			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
Funding provided					$ 950,000
Funding preferred return					9.00%

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Property and Equipment (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	$ 297,979	$ 293,803
Less accumulated depreciation	(142,368)	(130,876)
Property, plant and equipment, net, excluding land and construction in progress	155,611	162,927
Property and equipment, net	204,131	210,485
Buildings and equipment
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	252,615	248,132
Furniture and fixtures
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	37,486	37,743
Landscaping and land improvements
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	7,878	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	$ 5,328	$ 4,365

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Goodwill and Intangible Assets (Details) - USD ($) $ in Thousands		1 Months Ended
	Sep. 30, 2016	Apr. 30, 2015	Sep. 30, 2017	Dec. 31, 2016
Schedule of Goodwill and Intangible Assets [Line Items]
Total intangible assets			$ 51,306	$ 52,848
Goodwill			9,404	9,404
Accumulated amortization			(2,950)	(1,408)
Net carrying amount			11,474	13,016
Discontinued Operations, Held-for-sale | Entertainment Business
Schedule of Goodwill and Intangible Assets [Line Items]
Goodwill			3,200
Intangible assets			6
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			46,646	48,188
Goodwill			9,404	9,404
Brand Names
Schedule of Goodwill and Intangible Assets [Line Items]
Finite-lived intangibles			2,751	2,751
Net carrying amount			2,403	2,664
Customer contracts
Schedule of Goodwill and Intangible Assets [Line Items]
Finite-lived intangibles			11,673	11,673
Net carrying amount			9,071	10,352
Trademarks
Schedule of Goodwill and Intangible Assets [Line Items]
Net carrying amount			128	128
Brand Names
Schedule of Goodwill and Intangible Assets [Line Items]
Brand name - indefinite lived			$ 39,704	$ 39,704
GuestHouse International LLC | Customer contracts
Schedule of Goodwill and Intangible Assets [Line Items]
Amortization period		10 years
Finite-lived intangibles assets		$ 3,300
GuestHouse International LLC | Brand Names
Schedule of Goodwill and Intangible Assets [Line Items]
Indefinite-lived intangible assets acquired		$ 5,500
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	7 years 11 months
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

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Goodwill and Intangible Assets (Future Amortization Expense) (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Goodwill and Intangible Assets Disclosure [Abstract]
2017 (remainder)	$ 511
2018	1,798
2019	1,610
2020	1,419
2021	1,261
Thereafter	4,875
Net carrying amount	$ 11,474	$ 13,016

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Long-Term Debt (Schedule of Debt) (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Debt Instrument [Line Items]
Long-term debt, due within one year	$ 24,422	$ 1,469
Total debt	88,453	109,129
Unamortized debt issuance costs	(1,413)	(2,267)
Long-term debt net of debt issuance costs	87,040	106,862
Long-term Debt | RL Venture
Debt Instrument [Line Items]
Long-term debt, due within one year	1,430	1,375
Total debt	72,074	69,841
Long-term Debt | RL Baltimore
Debt Instrument [Line Items]
Long-term debt, due within one year	13,300	0
Total debt	0	13,300
Long-term Debt | RLH Atlanta
Debt Instrument [Line Items]
Long-term debt, due within one year	9,390	40
Total debt	0	9,360
Long-term Debt | RLH DC
Debt Instrument [Line Items]
Long-term debt, due within one year	302	54
Total debt	$ 16,379	$ 16,628

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Long-Term Debt (RL Venture) (Details)	1 Months Ended	3 Months Ended	9 Months Ended
	Jan. 31, 2015 USD ($) hotel subsidiary	Sep. 30, 2017 USD ($) hotel	Sep. 30, 2017 USD ($) hotel	Dec. 31, 2016 USD ($)
Debt Instrument [Line Items]
Unamortized debt issuance costs		$ 1,413,000	$ 1,413,000	$ 2,267,000
RL Venture Holding LLC
Debt Instrument [Line Items]
Number of wholly-owned subsidiaries | subsidiary	12
RL Venture Holding LLC | 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		400,000	3,200,000
Unamortized debt issuance costs		$ 900,000	$ 900,000
Extension period	1 year
Amortization period	25 years
RL Venture Holding LLC | Long-term Debt | LIBOR
Debt Instrument [Line Items]
Basis spread on variable rate	4.75%
Variable Interest Entity, Primary Beneficiary | RL Venture LLC
Debt Instrument [Line Items]
Number of hotels disposed of | hotel		1	1
Number of hotels transfered | hotel	12	11	11

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Long-Term Debt (RL Baltimore) (Details) - USD ($)	1 Months Ended
	Apr. 30, 2015	Sep. 30, 2017	Dec. 31, 2016
Debt Instrument [Line Items]
Unamortized debt issuance costs		$ 1,413,000	$ 2,267,000
RL Baltimore | Long-term Debt
Debt Instrument [Line Items]
Principal amount of debt	$ 10,100,000.0
Additional advance	$ 3,200,000.0
Unamortized debt issuance costs		$ 200,000
RL Baltimore | Long-term Debt | LIBOR
Debt Instrument [Line Items]
Basis spread on variable rate	6.25%

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Long-Term Debt (RLH Atlanta) (Details)	1 Months Ended
	Sep. 30, 2017 USD ($)	Sep. 30, 2015 USD ($) extension	Dec. 31, 2016 USD ($)
Debt Instrument [Line Items]
Unamortized debt issuance costs	$ 1,413,000		$ 2,267,000
RLH Atlanta | Long-term Debt
Debt Instrument [Line Items]
Principal amount of debt		$ 6,000,000.0
Additional advance		$ 3,400,000.0
Unamortized debt issuance costs	100,000
Number of extension options | extension		2
Extension period		1 year
Monthly principal payments	$ 10,000
RLH Atlanta | Long-term Debt | LIBOR
Debt Instrument [Line Items]
Basis spread on variable rate		6.35%

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Long-Term Debt (RLH DC) (Details) - USD ($)	1 Months Ended		12 Months Ended
	Oct. 31, 2015	Jan. 31, 2015	Dec. 31, 2016	Sep. 30, 2017	Oct. 30, 2015
Debt Instrument [Line Items]
Unamortized debt issuance costs			$ 2,267,000	$ 1,413,000
RLH DC | Long-term Debt
Debt Instrument [Line Items]
Principal amount of debt					$ 15,200,000.0
Additional advance					$ 2,300,000.0
Amount drawn			$ 1,500,000
Unamortized debt issuance costs				$ 300,000
Extension period	1 year
Amortization period		25 years
RLH DC | Long-term Debt | LIBOR
Debt Instrument [Line Items]
Basis spread on variable rate	4.55%

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Long-Term Debt (Contractual Maturities) (Details) $ in Thousands	Sep. 30, 2017 USD ($)
Debt Disclosure [Abstract]
2017 (remainder)	$ 434
2018	24,442
2019	87,999
2020	0
2021	0
Thereafter	0
Total	$ 112,875

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Derivative Financial Instruments (Details) - Interest rate cap $ in Millions	Sep. 30, 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%

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Operating and Capital Lease Commitments (Future Minimum Payments Due) (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017 USD ($) office hotel	Sep. 30, 2016 USD ($)	Sep. 30, 2017 USD ($) office hotel	Sep. 30, 2016 USD ($)
Operating Leased Assets [Line Items]
Number of properties | hotel	1,102		1,102
Typical capital lease term			5 years
2017 (remainder)	$ 1,545		$ 1,545
2018	5,573		5,573
2019	4,853		4,853
2020	4,551		4,551
2021	2,889		2,889
Thereafter	63,458		63,458
Total	82,869		82,869
Operating Lease Obligation
2017 (remainder)	1,476		1,476
2018	5,293		5,293
2019	4,571		4,571
2020	4,294		4,294
2021	2,752		2,752
Thereafter	63,453		63,453
Total	81,839		81,839
Capital Lease Obligation
2017 (remainder)	69		69
2018	280		280
2019	282		282
2020	257		257
2021	137		137
Thereafter	5		5
Total	1,030		1,030
Rent expense	$ 1,600	$ 1,500	$ 4,800	$ 4,200
Company Operated Hotels [Member]
Operating Leased Assets [Line Items]
Number of properties | hotel	5		5
Administrative Offices [Member]
Operating Leased Assets [Line Items]
Number of properties | office	3		3

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Stock Based Compensation (Stock Incentive Plans Narrative) (Details) - shares	1 Months Ended
	May 31, 2017	Sep. 30, 2017	Dec. 31, 2015
2006 Stock Incentive Plan
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 (in shares)		0
2015 Stock Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares authorized (in shares)	2,900,000.0		1,400,000
Number of shares of common stock available for issuance (in shares)		1,370,596
Additional shares authorized (in shares)	1,500,000

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Stock Based Compensation (Stock Based Compensation Expense) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	$ 898	$ 694	$ 2,392	$ 1,962
Stock options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	17	17	51	34
Restricted stock units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	687	561	1,891	1,588
Performance stock units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	76	0	101	0
Unrestricted stock awards
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	104	105	319	315
Employee Stock Purchase Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	$ 14	$ 11	$ 30	$ 25

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Stock Based Compensation (Fair Value Assumptions) (Details) - Stock options	9 Months Ended
	Sep. 30, 2016
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

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Stock Based Compensation (Stock Option Activity) (Details) - Stock Options - $ / shares	9 Months Ended
	Sep. 30, 2017	Sep. 30, 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)	(18,890)
Balance (in shares)	113,978	149,858
Exercisable (in shares)	53,131
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)	12.27
Balance (in dollars per share)	8.36
Exercisable (in dollars per share)	$ 8.53

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Stock Based Compensation (Exercise Price Range) (Details) - USD ($) $ / shares in Units, $ in Thousands	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Share price (in dollars per share)	$ 8.65	$ 8.34
Stock Options
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Number of Options Outstanding (in shares)	113,978
Weighted Average Remaining Contractual Life	6 years 2 months 23 days
Weighted Average Exercise Price (in dollars per share)	$ 8.36
Aggregate Intrinsic Value	$ 37
Number of Exercisable Options (in shares)	53,131
Weighted Average Exercise Price, Exercisable (in dollars per share)	$ 8.53
Aggregate Intrinsic Value, Exercisable	$ 9
$8.20 | Stock Options
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise Price (in dollars per share)	$ 8.20
Number of Options Outstanding (in shares)	81,130
Weighted Average Remaining Contractual Life	8 years 5 months 27 days
Weighted Average Exercise Price (in dollars per share)	$ 8.20
Aggregate Intrinsic Value	$ 37
Number of Exercisable Options (in shares)	20,283
Weighted Average Exercise Price, Exercisable (in dollars per share)	$ 8.20
Aggregate Intrinsic Value, Exercisable	$ 9
$8.74 | Stock Options
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise Price (in dollars per share)	$ 8.74
Number of Options Outstanding (in shares)	32,848
Weighted Average Remaining Contractual Life	7 months 21 days
Weighted Average Exercise Price (in dollars per share)	$ 8.74
Aggregate Intrinsic Value	$ 0
Number of Exercisable Options (in shares)	32,848
Weighted Average Exercise Price, Exercisable (in dollars per share)	$ 8.74
Aggregate Intrinsic Value, Exercisable	$ 0

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Stock Based Compensation (Restricted Stock Units, SharesIssued as Compensation Narrative) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	$ 898	$ 694	$ 2,392	$ 1,962
Restricted stock units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted (in shares)			458,020	282,989
Vesting percentage per year			25.00%
Vesting period			4 years
Other than options outstanding (in shares)	1,288,752	1,095,719	1,288,752	1,095,719	1,036,680
Percentage of total units granted that are forfeited	21.00%		21.00%
Vested (in shares)			(148,674)
Other than options, fair value			$ 1,000	$ 1,100
Stock-based compensation expense	$ 687	$ 561	1,891	$ 1,588
Additional compensation expense	$ 5,800		$ 5,800
Period for recognition			30 months

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Stock Based Compensation (Restricted Stock Units) (Details) - Restricted stock units - $ / shares	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Number of Shares
Other than options outstanding (in shares)	1,036,680
Granted (in shares)	458,020	282,989
Vested (in shares)	(148,674)
Forfeited (in shares)	(57,274)
Other than options outstanding (in shares)	1,288,752	1,095,719
Weighted Average Grant Date Fair Value
Balance (in dollars per share)	$ 7.27
Granted (in dollars per share)	6.95
Vested (in dollars per share)	6.93
Forfeited (in dollars per share)	7.19
Balance (in dollars per share)	$ 7.20

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Stock Based Compensation (Performance Stock Units) (Details) - $ / shares	1 Months Ended	9 Months Ended
	May 31, 2017	Sep. 30, 2017
Annual earnings goal tied to Adjusted EBITDA
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Performance vesting weighting	70.00%
Franchise license agreements
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Performance vesting weighting	30.00%
Performance stock units
Number of Shares
Other than options outstanding (in shares)		0
Granted (in shares)		274,882
Vested (in shares)		0
Forfeited (in shares)		(17,906)
Other than options outstanding (in shares)		256,976
Weighted Average Grant Date Fair Value
Balance (in dollars per share)		$ 0.00
Granted (in dollars per share)		6.45
Vested (in dollars per share)		0.00
Forfeited (in dollars per share)		6.45
Balance (in dollars per share)		$ 6.45

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Stock Based Compensation (Unrestricted Stock Awards) (Details) - Unrestricted stock awards - $ / shares	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares of unrestricted stock granted (in shares)	14,184	14,868	42,432	42,096
Weighted average grant date fair value per share (in dollars per share)	$ 7.40	$ 7.06	$ 7.54	$ 7.48

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Stock Based Compensation (Employee Stock Purchase Plan) (Details) - USD ($)		1 Months Ended	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2017	May 31, 2017	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2008
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense			$ 898,000	$ 694,000	$ 2,392,000	$ 1,962,000
2008 ESPP
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares of common stock authorized for purchase by eligible employees (in shares)	600,000	300,000					300,000
Number of shares of common stock available for issuance (in shares)	344,847		344,847		344,847
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)			21,371	17,060	33,925	29,795
Weighted average fair value per ESPP award (in dollars per share)			$ 6.25	$ 5.98	$ 6.16	$ 5.97
Employee Stock Purchase Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense			$ 14,000	$ 11,000	$ 30,000	$ 25,000

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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

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Earnings (Loss) Per Share (Schedule of Earnings Per Share) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Numerator - basic and diluted:
Net income (loss) from continuing operations	$ 3,219	$ 3,251	$ (2,032)	$ (3,516)
Less: net (income) loss attributable to noncontrolling interests	(871)	(1,207)	507	(645)
Net income (loss) from continuing operations attributable to RLH Corporation	2,348	2,044	(1,525)	(4,161)
Income from discontinued business unit, net of income tax benefit of $0	408	262	611	1,831
Net income (loss) and comprehensive income (loss) attributable to RLH Corporation	2,756	2,306	(914)	(2,330)
Fair value adjustment of share component of contingent consideration (1)	987	0	567	0
Net income (loss) attributable to RLH Corporation for diluted earnings (loss) per share (1)	$ 3,743	$ 2,306	$ (347)	$ (2,330)
Denominator:
Weighted average shares - basic (in shares)	23,609	20,228	23,542	20,157
Weighted average shares - diluted (in shares)	24,176	20,613	23,542	20,157
Earnings (loss) per share - basic
Income (loss) from continuing operations attributable to RLH Corporation (in dollars per share)	$ 0.10	$ 0.10	$ (0.06)	$ (0.21)
Income from discontinued operations (in dollars per share)	0.02	0.01	0.02	0.09
Net income (loss) attributable to RLH Corporation (in dollars per share)	0.12	0.11	(0.04)	(0.12)
Earnings (loss) per share - diluted
Income (loss) from continuing operations attributable to RLH Corporation (in dollars per share)	0.10	0.10	(0.06)	(0.21)
Income from discontinued operations (in dollars per share)	0.01	0.01	0.02	0.09
Net income (loss) attributable to RLH Corporation (in dollars per share)	$ 0.11	$ 0.11	$ (0.04)	$ (0.12)

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Earnings (Loss) Per Share (Details) - $ / shares			3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
Dilutive awards outstanding (in shares)			0	7,500	0	0
Total dilutive awards outstanding			567,000	385,000	0	0
Increase (decrease) in share price due to contingent consideration (in dollars per share)					$ 0.30
Vantage Hospitality Group, Inc.
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
Equity consideration (in shares)		690,000
Increase (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]
Options outstanding (in shares)	113,978	149,858	113,978	149,858	113,978	149,858	132,868
Dilutive awards outstanding (in shares)			0	0	0	0
Restricted stock units
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
Dilutive awards outstanding (in shares)				342,321
Other than options outstanding (in shares)	1,288,752	1,095,719	1,288,752	1,095,719	1,288,752	1,095,719	1,036,680
Performance stock units
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
Other than options outstanding (in shares)	0	0	0	0	0	0
Dilutive awards outstanding (in shares)			0	0	0	0
Other than options outstanding (in shares)	256,976		256,976		256,976		0
Warrants
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
Dilutive awards outstanding (in shares)			31,702	34,761	0	0
Other than options outstanding (in shares)	442,533	442,533	442,533	442,533	442,533	442,533
Total dilutive awards outstanding					24,750	30,453
Contingent Consideration
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
Other than options outstanding (in shares)	483,000	690,000	483,000	690,000	483,000	690,000
Stock Options
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
Antidilutive securities excluded from computation of EPS (in shares)			113,978	149,858	113,978	149,858
Restricted stock units
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
Antidilutive securities excluded from computation of EPS (in shares)			753,717	753,398	1,288,752	1,095,719
Dilutive awards outstanding (in shares)			535,035		0	0
Total dilutive awards outstanding					444,608	443,668
Warrants
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
Antidilutive securities excluded from computation of EPS (in shares)			410,831	407,772	442,533	442,533
Performance stock units
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
Antidilutive securities excluded from computation of EPS (in shares)			0	0	0	0
Contingent Consideration
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
Antidilutive securities excluded from computation of EPS (in shares)			483,000	682,500	483,000	690,000
90% of Room Count at Close, Year 1 Anniversary [Member] | Vantage Hospitality Group, Inc.
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
Equity consideration (in shares)	3,600,000
Contingent consideration, potential outcome (in shares)	414,000		414,000		414,000

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Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Income Tax Disclosure [Abstract]
Income tax expense	$ 174	$ 166	$ 513	$ 258

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Fair Value (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Carrying Amount
Financial assets:
Notes receivable	$ 1,572	$ 1,295
Notes receivable
Total debt	112,875	110,598
Total capital lease obligations	1,030	1,147
Fair Value
Financial assets:
Notes receivable	1,572	1,295
Notes receivable
Total debt	112,307	107,858
Total capital lease obligations	$ 1,030	$ 1,147

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Related Party Transactions (Details)		1 Months Ended	3 Months Ended		9 Months Ended
	Mar. 29, 2016 USD ($)	May 31, 2015	Sep. 30, 2017 USD ($) jointventure	Sep. 30, 2016 USD ($)	Sep. 30, 2017 USD ($) jointventure	Sep. 30, 2016 USD ($)	Dec. 31, 2016 USD ($)
Related Party Transaction [Line Items]
Number of joint ventures | jointventure			4		4
Accounts receivable from related parties			$ 1,824,000		$ 1,824,000		$ 1,865,000
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		$ 92,000
RL Venture LLC | CPA Development, LLC | Construction Management Fee
Related Party Transaction [Line Items]
Construction management and investor relations fees paid			0	11,000	0	78,000
Construction management fee due			200,000		200,000
Red Lion Hotels Management, Inc. | Hudson Valley Resort and Spa [Member] | Management Agreement
Related Party Transaction [Line Items]
Management fee revenue recognized			33,000	35,000	83,000	65,000
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			134,000	221,000	$ 344,000	423,000
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			$ 117,000	$ 190,000	$ 291,000	$ 366,000
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] | 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%

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Business Acquisition (Details) $ / shares in Units, $ in Thousands			3 Months Ended		9 Months Ended
	Sep. 30, 2017 USD ($) $ / shares shares	Sep. 30, 2016 USD ($) hotel brand_name $ / shares shares	Sep. 30, 2017 USD ($) $ / shares shares	Sep. 30, 2016 USD ($) brand_name $ / shares	Sep. 30, 2017 USD ($) $ / shares shares	Sep. 30, 2016 USD ($) brand_name $ / shares	Dec. 31, 2016 USD ($)
Business Acquisition [Line Items]
Shares issued for Vantage acquisition					$ 0	$ 5,755
Accrual of contingent consideration for Vantage acquisition					$ 0	$ 11,077
Share price (in dollars per share) | $ / shares	$ 8.65	$ 8.34	$ 8.65	$ 8.34	$ 8.65	$ 8.34
Income (expense) related to change in fair value of share component of contingent consideration			$ (987)	$ 0	$ (567)	$ 0
Increase (decrease) in share price due to contingent consideration (in dollars per share) | $ / shares					$ 0.30
Vantage Hospitality Group, Inc.
Business Acquisition [Line Items]
Number of brand names acquired | brand_name		1		1		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	$ 4,900	10,900	4,900	$ 10,900	$ 4,900	$ 10,900	$ 11,200
Accrual of contingent consideration for Vantage acquisition		900
Total consideration		$ 40,200
Equity consideration (in shares) | shares		690,000
Other consideration		$ 2,000
Contingent consideration expense recognized			1,200
Income (expense) related to change in fair value of share component of contingent consideration			$ 1,000
Increase (decrease) in share price due to contingent consideration (in dollars per share) | $ / shares			$ 1.30
Revenue				53,692		147,463
Income (loss) before income taxes				$ 5,880		$ 2,188
Vantage Hospitality Group, Inc. | 90% of Room Count at Close [Member]
Business Acquisition [Line Items]
Contingent consideration, potential outcome (in shares) | shares	690,000		690,000		690,000
Contingent consideration, potential outcome, cash	$ 7,000		$ 7,000		$ 7,000
Contingent consideration, threshold	90.00%		90.00%		90.00%
Vantage Hospitality Group, Inc. | 90% of Room Count at Close, Year 1 Anniversary [Member]
Business Acquisition [Line Items]
Cash on hand consideration	$ 4,000
Total consideration	$ 7,600
Equity consideration (in shares) | shares	3,600,000
Contingent consideration, potential outcome (in shares) | shares	414,000		414,000		414,000
Contingent consideration, potential outcome, cash	$ 4,000		$ 4,000		$ 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		276,000		276,000
Contingent consideration, potential outcome, cash	$ 3,000		$ 3,000		$ 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		517,500		517,500
Contingent consideration, potential outcome, cash	$ 5,250		$ 5,250		$ 5,250
Contingent consideration, threshold	80.00%		80.00%		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		310,500		310,500
Contingent consideration, potential outcome, cash	$ 3,000		$ 3,000		$ 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		207,000		207,000
Contingent consideration, potential outcome, cash	$ 2,250		$ 2,250		$ 2,250
Vantage Hospitality Group, Inc. | Minimum Threshold [Member]
Business Acquisition [Line Items]
Contingent consideration, potential outcome (in shares) | shares	0		0		0
Contingent consideration, potential outcome, cash	$ 2,000		$ 2,000		$ 2,000
Vantage Hospitality Group, Inc. | Minimum Threshold, Year 1 Anniversary [Member]
Business Acquisition [Line Items]
Contingent consideration, potential outcome (in shares) | shares	0		0		0
Contingent consideration, potential outcome, cash	$ 1,000		$ 1,000		$ 1,000
Vantage Hospitality Group, Inc. | Minimum Threshold, Year 2 Anniversary [Member]
Business Acquisition [Line Items]
Contingent consideration, potential outcome (in shares) | shares	0		0		0
Contingent consideration, potential outcome, cash	$ 1,000		$ 1,000		$ 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

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Discontinued Operations and Assets and Liabilities Held for Sale - Narrative (Details) - Entertainment Business - Discontinued Operations, Disposed of by Sale - USD ($) $ in Millions		3 Months Ended
	Oct. 03, 2017	Dec. 31, 2017
Subsequent Event
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Cash proceeds from sale	$ 6.0
Transaction costs	0.7
Net assets	$ 4.2
Scenario, Forecast
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Gain on sale		$ 1.1

XML

Discontinued Operations and Assets and Liabilities Held for Sale (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Operating expenses:
Income from discontinued operations	$ 408	$ 262	$ 611	$ 1,831
Entertainment Business | Discontinued Operations, Disposed of by Sale
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Entertainment revenue	2,969	1,936	9,050	13,014
Operating expenses:
Entertainment	2,555	1,605	8,372	11,183
Other	0	13	0	14
Depreciation and amortization	7	43	64	145
Gain on asset dispositions, net	(1)	(1)	3	(1)
Total operating expenses	2,561	1,660	8,439	11,341
Operating income	408	276	611	1,673
Interest expense	0	(12)	0	(12)
Other income (expense), net	0	(2)	0	170
Income from discontinued operations	408	$ 262	611	1,831
Assets:
Accounts receivable, net	381		381		$ 1,656
Inventories	16		16		51
Prepaid expenses and other	266		266		247
Property and equipment, net	228		228		247
Goodwill	3,162		3,162		3,162
Intangible assets	6		6		6
Other assets, net	226		226		216
Assets held for sale	4,285		4,285		5,585
Liabilities:
Accounts payable	318		318		203
Accrued payroll and related benefits	82		82		210
Other accrued liabilities	15		15		0
Deferred income and other long-term liabilities	324		324		273
Liabilities held for sale	739		739		686
Other accrued entertainment liabilities held for sale	$ 6,757		6,757		$ 11,334
Depreciation and amortization			64	145
Capital expenditures			$ 101	$ 26