ý | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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) | |
Large accelerated filer | o | Accelerated filer | ý | |||
Non-accelerated filer | o | Smaller reporting company | o | |||
Emerging growth company | o | |||||
Item No. | Description | Page No. |
PART I – FINANCIAL INFORMATION | ||
Item 1 | ||
Condensed Consolidated Balance Sheets at September 30, 2018 and December 31, 2017 | ||
Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months Ended September 30, 2018 and 2017 | ||
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2018 and 2017 | ||
Notes to Condensed Consolidated Financial Statements | ||
Item 2 | ||
Item 3 | ||
Item 4 | ||
PART II – OTHER INFORMATION | ||
Item 1 | ||
Item 1A | ||
Item 2 | ||
Item 3 | ||
Item 4 | ||
Item 5 | ||
Item 6 | ||
Item 1. | Financial Statements |
September 30, 2018 | December 31, 2017 | |||||||
(In thousands, except share data) | ||||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents ($6,488 and $6,487 attributable to VIEs) | $ | $ | ||||||
Restricted cash ($4,568 and $12,326 attributable to VIEs) | ||||||||
Accounts receivable, net of an allowance for doubtful accounts $2,019 and $1,436, respectively ($1,591 and $3,200 attributable to VIEs) | ||||||||
Accounts receivable from related parties | ||||||||
Notes receivable, net | ||||||||
Inventories ($123 and $276 attributable to VIEs) | ||||||||
Prepaid expenses and other ($840 and $976 attributable to VIEs) | ||||||||
Assets held for sale ($0 and $34,359 attributable to VIEs) | ||||||||
Total current assets | ||||||||
Property and equipment, net ($88,447 and $137,479 attributable to VIEs) | ||||||||
Goodwill | ||||||||
Intangible assets, net | ||||||||
Other assets, net ($572 and $174 attributable to VIEs) | ||||||||
Total assets | $ | $ | ||||||
LIABILITIES | ||||||||
Current liabilities: | ||||||||
Accounts payable ($817 and $1,810 attributable to VIEs) | $ | $ | ||||||
Accrued payroll and related benefits ($426 and $1,453 attributable to VIEs) | ||||||||
Other accrued liabilities ($1,400 and $2,184 attributable to VIEs) | ||||||||
Long-term debt, due within one year ($9,481 and $62,914 attributable to VIEs) | ||||||||
Contingent consideration for acquisition due to related party, due within one year | ||||||||
Total current liabilities | ||||||||
Long-term debt, due after one year, net of debt issuance costs ($15,641 and $48,483 attributable to VIEs) | ||||||||
Line of credit, due after one year | ||||||||
Deferred income and other long-term liabilities ($551 and $772 attributable to VIEs) | ||||||||
Deferred income taxes | ||||||||
Total liabilities | ||||||||
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; 24,274,599 and 23,651,212 shares issued and outstanding | ||||||||
Additional paid-in capital, common stock | ||||||||
Accumulated deficit | ( | ) | ( | ) | ||||
Total RLH Corporation stockholders' equity | ||||||||
Noncontrolling interest | ||||||||
Total stockholders' equity | ||||||||
Total liabilities and stockholders’ equity | $ | $ | ||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
(In thousands, except per share data) | ||||||||||||||||
Revenue: | ||||||||||||||||
Company operated hotels | $ | $ | $ | $ | ||||||||||||
Other revenues from managed properties | ||||||||||||||||
Franchised hotels | ||||||||||||||||
Other | ||||||||||||||||
Total revenues | ||||||||||||||||
Operating expenses: | ||||||||||||||||
Company operated hotels | ||||||||||||||||
Other costs from managed properties | ||||||||||||||||
Franchised hotels | ||||||||||||||||
Depreciation and amortization | ||||||||||||||||
Hotel facility and land lease | ||||||||||||||||
Asset impairment | ||||||||||||||||
Gain on asset dispositions, net | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
General, administrative and other expenses | ||||||||||||||||
Acquisition and integration costs | ||||||||||||||||
Total operating expenses | ||||||||||||||||
Operating income | ||||||||||||||||
Other income (expense): | ||||||||||||||||
Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Loss on early retirement of debt | ( | ) | ( | ) | ||||||||||||
Other income (loss), net | ||||||||||||||||
Total other income (expense) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Income (loss) from continuing operations before taxes | ( | ) | ||||||||||||||
Income tax expense (benefit) | ( | ) | ( | ) | ||||||||||||
Net income (loss) from continuing operations | ( | ) | ||||||||||||||
Discontinued operations: | ||||||||||||||||
Income (loss) from discontinued business unit, net of income tax expense (benefit) of $140 and $209 | ||||||||||||||||
Net income (loss) from discontinued operations | ||||||||||||||||
Net income (loss) | ( | ) | ||||||||||||||
Net (income) loss attributable to noncontrolling interest | ( | ) | ( | ) | ( | ) | ||||||||||
Net income (loss) and comprehensive income (loss) attributable to RLH Corporation | $ | $ | $ | $ | ( | ) | ||||||||||
Earnings (loss) per share - basic | ||||||||||||||||
Income (loss) from continuing operations attributable to RLH Corporation | $ | $ | $ | $ | ( | ) | ||||||||||
Income from discontinued operations | ||||||||||||||||
Net income (loss) attributable to RLH Corporation | $ | $ | $ | $ | ( | ) | ||||||||||
Earnings (loss) per share - diluted | ||||||||||||||||
Income (loss) from continuing operations attributable to RLH Corporation | $ | $ | $ | $ | ( | ) | ||||||||||
Income from discontinued operations | ||||||||||||||||
Net income (loss) attributable to RLH Corporation | $ | $ | $ | $ | ( | ) | ||||||||||
Weighted average shares - basic | ||||||||||||||||
Weighted average shares - diluted | ||||||||||||||||
Nine Months Ended | ||||||||
September 30, | ||||||||
2018 | 2017 | |||||||
(In thousands) | ||||||||
Operating activities: | ||||||||
Net income (loss) | $ | $ | ( | ) | ||||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||||||||
Depreciation and amortization | ||||||||
Amortization of debt issuance costs | ||||||||
Gain on disposition of property, equipment and other assets, net | ( | ) | ( | ) | ||||
Loss on early retirement of debt | ||||||||
Impairment loss | ||||||||
Deferred income taxes | ( | ) | ||||||
Stock based compensation expense | ||||||||
Provision for doubtful accounts | ||||||||
Fair value adjustments to contingent consideration | ||||||||
Change in current assets and liabilities, net of business acquired: | ||||||||
Accounts receivable, net | ( | ) | ( | ) | ||||
Notes receivable, net | ( | ) | ( | ) | ||||
Inventories | ( | ) | ||||||
Prepaid expenses and other | ( | ) | ( | ) | ||||
Accounts payable | ( | ) | ||||||
Other accrued liabilities | ( | ) | ( | ) | ||||
Net cash provided by (used in) operating activities | ( | ) | ||||||
Investing activities: | ||||||||
Capital expenditures | ( | ) | ( | ) | ||||
Contingent consideration paid for Vantage acquisition | ( | ) | ||||||
Acquisition of Knights Inn | ( | ) | ||||||
Net proceeds from disposition of property and equipment | ||||||||
Collection of notes receivable related to property sales | ||||||||
Advances on notes receivable | ( | ) | ( | ) | ||||
Net cash provided by (used in) investing activities | ( | ) | ||||||
Financing activities: | ||||||||
Borrowings on long-term debt | ||||||||
Repayment of long-term debt | ( | ) | ( | ) | ||||
Proceeds from line of credit borrowing | ||||||||
Debt issuance costs | ( | ) | ( | ) | ||||
Distributions to noncontrolling interest | ( | ) | ( | ) | ||||
Stock-based compensation awards canceled to settle employee tax withholding | ( | ) | ( | ) | ||||
Stock option and stock purchase plan issuances, net and other | ||||||||
Net cash provided by (used in) financing activities | ( | ) | ||||||
Change in cash, cash equivalents and restricted cash: | ||||||||
Net increase (decrease) in cash, cash equivalents and restricted cash | ( | ) | ||||||
Cash, cash equivalents and restricted cash at beginning of period | ||||||||
Cash, cash equivalents and restricted cash at end of period | $ | $ | ||||||
1. |
Franchised | Company Operated | Total Systemwide | ||||||||||||||||
Hotels | Total Available Rooms | Hotels | Total Available Rooms | Hotels | Total Available Rooms | |||||||||||||
Total | ||||||||||||||||||
2. |
• | Intellectual Property (IP) licenses grant a non-exclusive, limited revocable license to the RLH trademarks and hotel names. |
• | Manual and Training Services provide operational assistance unique to the RLH brands, business model and standards. |
• | Reservation Services are provided through direct or indirect system access. |
• | Marketing Services and Arrangements benefit the overall hotel network and include brand promotions, direct guest marketing, brand name marketing and various other programs targeted at advertising to guests. |
• | Brand Conference is provided typically annually for third party owners to gather and attend educational seminars and brand informational presentations. |
• | Royalty fees are generally based on a percentage of a hotel's monthly gross room revenue or a fixed monthly fee based on room count. These fees are typically billed and collected monthly, and revenue is generally recognized at the same time the fees are billed. |
• | Application, initiation and other fees are charged when: (i) new hotels enter our system; (ii) there is a change of ownership; or (iii) contracts with properties already in our system are extended or modified. These fees are typically fixed and collected upfront and are recognized as revenue over the term of the franchise contract. |
• | Reservations services/marketing expenses/other are associated with our brands and shared services, which are paid from fees collected by us from the franchised properties. Revenue is generally recognized on a gross basis as fees are billed, which are based on the underlying hotel's sales or usage (e.g., gross room revenues and number of reservations processed) and expenses are expected to equal the revenues over time. |
• | Room reservations or ancillary services are typically satisfied as the good or service is transferred to the hotel guest, which is generally when the room stay occurs. |
• | Other ancillary goods and services are purchased independently of the room reservation at standalone selling prices and are considered separate performance obligations, which are satisfied when the related good or service is provided to the hotel guest. |
• | Hotel management fees represent fees earned from hotels that we manage, usually under long-term contracts with the property owner and are generally based on a percentage of a hotel's monthly gross revenue. Base fees are typically billed and collected monthly, and revenue is generally recognized at the same time the fees are billed. |
• | Application, initiation and other fees are recognized over the term of the franchise contract based on the first penalty free termination date, rather than upon execution of the contract. These fees are recognized in franchise hotel revenue. |
• | Certain contract acquisition costs related to our management and franchise contracts are recognized over the term of the contracts rather than upon execution of the contract. The amortization of these costs is recognized in franchised hotel expenses. |
As Reported | Adjustment | Balances without adoption of topic 606 | ||||||||||
ASSETS | ||||||||||||
Prepaid expenses and other | $ | $ | ( | ) | $ | |||||||
Other assets, net | ( | ) | ||||||||||
Total assets | ( | ) | ||||||||||
LIABILITIES | ||||||||||||
Other accrued liabilities | $ | $ | ( | ) | $ | |||||||
Deferred income and other long-term liabilities | ( | ) | ||||||||||
Total liabilities | ( | ) | ||||||||||
STOCKHOLDERS’ EQUITY | ||||||||||||
RLH Corporation stockholders' equity: | ||||||||||||
Accumulated deficit | $ | ( | ) | $ | $ | ( | ) | |||||
Total RLH Corporation stockholders' equity | ||||||||||||
Total stockholders' equity | ||||||||||||
Total liabilities and stockholders’ equity | ( | ) | ||||||||||
Three Months Ended September 30, 2018 | As Reported | Adjustment | Balances without adoption of topic 606 | |||||||||
Revenue: | ||||||||||||
Franchised hotels | $ | $ | $ | |||||||||
Total revenues | ||||||||||||
Operating expenses: | ||||||||||||
Franchised hotels | ||||||||||||
Total operating expenses | ||||||||||||
Operating income | ||||||||||||
Income (loss) from continuing operations before taxes | ||||||||||||
Income tax expense (benefit) | ( | ) | ( | ) | ( | ) | ||||||
Net income (loss) from continuing operations | ||||||||||||
Net income (loss) | ||||||||||||
Net income (loss) and comprehensive income (loss) attributable to RLH Corporation | ||||||||||||
Basic earnings (loss) per share from continuing operations | $ | $ | $ | |||||||||
Diluted earnings (loss) per share from continuing operations | $ | $ | $ | |||||||||
Nine Months Ended September 30, 2018 | As Reported | Adjustment | Balances without adoption of topic 606 | |||||||||
Revenue: | ||||||||||||
Franchised hotels | $ | $ | $ | |||||||||
Total revenues | ||||||||||||
Operating expenses: | ||||||||||||
Franchised hotels | ||||||||||||
Total operating expenses | ||||||||||||
Operating income | ||||||||||||
Income (loss) from continuing operations before taxes | ||||||||||||
Income tax expense (benefit) | ( | ) | ( | ) | ( | ) | ||||||
Net income (loss) from continuing operations | ||||||||||||
Net income (loss) | ||||||||||||
Net income (loss) and comprehensive income (loss) attributable to RLH Corporation | ||||||||||||
Basic earnings (loss) per share from continuing operations | $ | $ | $ | |||||||||
Diluted earnings (loss) per share from continuing operations | $ | $ | $ | |||||||||
3. |
Three Months Ended September 30, 2018 | Franchised Hotels | Company Operated Hotels | Other | Total | ||||||||||||
Revenue | $ | $ | $ | $ | ||||||||||||
Operating expenses: | ||||||||||||||||
Segment operating expenses | ||||||||||||||||
Depreciation and amortization | ||||||||||||||||
Other operating expenses, acquisition costs, asset impairment and gains on asset dispositions | ( | ) | ( | ) | ||||||||||||
Operating income (loss) | $ | $ | $ | ( | ) | $ | ||||||||||
Identifiable assets as of September 30, 2018 | $ | $ | $ | $ | ||||||||||||
Three Months Ended September 30, 2017 | Franchised Hotels | Company Operated Hotels | Other | Total | ||||||||||||
Revenue | $ | $ | $ | $ | ||||||||||||
Operating expenses: | ||||||||||||||||
Segment operating expenses | ||||||||||||||||
Depreciation and amortization | ||||||||||||||||
Other operating expenses, acquisition costs and gains on asset dispositions | ||||||||||||||||
Operating income (loss) | $ | $ | $ | ( | ) | $ | ||||||||||
Identifiable assets as of December 31, 2017 | $ | $ | $ | $ | ||||||||||||
Nine Months Ended September 30, 2018 | Franchised Hotels | Company Operated Hotels | Other | Total | ||||||||||||
Revenue | $ | $ | $ | $ | ||||||||||||
Operating expenses: | ||||||||||||||||
Segment operating expenses | ||||||||||||||||
Depreciation and amortization | ||||||||||||||||
Other operating expenses, acquisition costs, asset impairment and gains on asset dispositions | ( | ) | ( | ) | ||||||||||||
Operating income (loss) | $ | $ | $ | ( | ) | $ | ||||||||||
Identifiable assets as of September 30, 2018 | $ | $ | $ | $ | ||||||||||||
Nine Months Ended September 30, 2017 | Franchised Hotels | Company Operated Hotels | Other | Total | ||||||||||||
Revenue | $ | $ | $ | $ | ||||||||||||
Operating expenses: | ||||||||||||||||
Segment operating expenses | ||||||||||||||||
Depreciation and amortization | ||||||||||||||||
Other operating expenses, acquisition costs and gains on asset dispositions | ||||||||||||||||
Operating income (loss) | $ | $ | $ | ( | ) | $ | ||||||||||
Identifiable assets as of December 31, 2017 | $ | $ | $ | $ | ||||||||||||
4. |
5. |
September 30, 2018 | December 31, 2017 | |||||||
Buildings and equipment | $ | $ | ||||||
Furniture and fixtures | ||||||||
Landscaping and land improvements | ||||||||
Less accumulated depreciation | ( | ) | ( | ) | ||||
Land | ||||||||
Construction in progress | ||||||||
Property and equipment, net | $ | $ | ||||||
6. |
September 30, 2018 | December 31, 2017 | ||||||
Goodwill | $ | $ | |||||
Intangible assets | |||||||
Brand name - indefinite lived | $ | $ | |||||
Brand name - finite lived, net | |||||||
Customer contracts, net | |||||||
Trademarks | |||||||
Total intangible assets, net | $ | $ | |||||
September 30, 2018 | December 31, 2017 | ||||||||||||||
Intangible | Intangible | ||||||||||||||
Goodwill | Assets | Goodwill | Assets | ||||||||||||
Company operated hotels | $ | $ | $ | $ | |||||||||||
Franchised hotels | |||||||||||||||
Total | $ | $ | $ | $ | |||||||||||
September 30, 2018 | December 31, 2017 | ||||||
Customer contracts | $ | $ | |||||
Brand name - finite lived | |||||||
Accumulated amortization | ( | ) | ( | ) | |||
Net carrying amount | $ | $ | |||||
7. |
September 30, 2018 | ||||
Accounts receivable | $ | |||
Key money disbursed | ||||
Capitalized contract costs | ||||
Contract liabilities | ||||
Key Money Disbursed | Capitalized Contract Costs | Contract Liabilities | ||||||||||
Balance as of January 1, 2018 | $ | $ | $ | |||||||||
Key money disbursed | — | — | ||||||||||
Costs incurred to acquire contracts | — | — | ||||||||||
Cash received in advance | — | — | ||||||||||
Revenue or expense recognized that was included in the January 1, 2018 balance | ( | ) | ( | ) | ( | ) | ||||||
Revenue or expense recognized in the period for the period | ( | ) | ( | ) | ( | ) | ||||||
Balance as of September 30, 2018 | $ | $ | $ | |||||||||
Key Money Disbursed | Capitalized Contract Costs | Contract Liabilities | ||||||||||
Balance as of June 30, 2018 | $ | $ | $ | |||||||||
Key money disbursed | — | — | ||||||||||
Costs incurred to acquire contracts | — | — | ||||||||||
Cash received in advance | — | — | ||||||||||
Revenue or expense recognized that was included in the January 1, 2018 balance | ( | ) | ( | ) | ( | ) | ||||||
Revenue or expense recognized in the period for the period | ( | ) | ( | ) | ( | ) | ||||||
Balance as of September 30, 2018 | $ | $ | $ | |||||||||
Year ending December 31, | Revenue | Contra Revenue | Expense | |||||||||
2018 (remainder) | $ | $ | $ | |||||||||
2019 | ||||||||||||
2020 | ||||||||||||
2021 | ||||||||||||
2022 | ||||||||||||
Thereafter | ||||||||||||
Total | $ | $ | $ | |||||||||
8. |
September 30, 2018 | December 31, 2017 | |||||||||||||||
Current | Noncurrent | Current | Noncurrent | |||||||||||||
Senior Secured Term Loan | $ | $ | $ | $ | ||||||||||||
RL Venture | ||||||||||||||||
RL Baltimore | ||||||||||||||||
RLH Atlanta | ||||||||||||||||
RLH DC | ||||||||||||||||
Total debt | ||||||||||||||||
Unamortized debt issuance costs | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Debt net of debt issuance costs | $ | $ | $ | $ | ||||||||||||
9. |
Subsidiary | Institution | Original Notional Amount | LIBOR Reference Rate Cap | Expiration | |||||||
(In millions) | |||||||||||
RLH Atlanta | SMBC Capital Markets, Inc. | $ | % | September 2019 | |||||||
RLH DC | Commonwealth Bank of Australia | $ | % | November 2018 | |||||||
10. |
Year ending December 31, | Total Lease Obligation | Operating Lease Obligation | Capital Lease Obligation | |||||||||
2018 (remainder) | $ | $ | $ | |||||||||
2019 | ||||||||||||
2020 | ||||||||||||
2021 | ||||||||||||
2022 | ||||||||||||
Thereafter | ||||||||||||
Total | $ | $ | $ | |||||||||
11. |
12. |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Restricted stock units | $ | $ | $ | $ | ||||||||||||
Unrestricted stock awards | ||||||||||||||||
Performance stock units | ||||||||||||||||
Stock options | ||||||||||||||||
Employee stock purchase plan | ||||||||||||||||
Total stock-based compensation | $ | $ | $ | $ | ||||||||||||
Number of Shares | Weighted Average Grant Date Fair Value | ||||||
Balance, January 1, 2018 | $ | ||||||
Granted | $ | ||||||
Vested | ( | ) | $ | ||||
Forfeited | ( | ) | $ | ||||
Balance, September 30, 2018 | $ | ||||||
Number of Shares | Weighted Average Grant Date Fair Value | ||||||
Balance, January 1, 2018 | $ | ||||||
Granted | $ | ||||||
Vested | |||||||
Canceled | ( | ) | $ | ||||
Forfeited | ( | ) | $ | ||||
Balance, September 30, 2018 | $ | ||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Shares of unrestricted stock granted | ||||||||||||||||
Weighted average grant date fair value per share | $ | $ | $ | $ | ||||||||||||
13. |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Numerator - basic and diluted: | ||||||||||||||||
Net income (loss) from continuing operations | $ | $ | $ | $ | ( | ) | ||||||||||
Less: net (income) loss attributable to noncontrolling interests | ( | ) | ( | ) | ( | ) | ||||||||||
Net income (loss) from continuing operations attributable to RLH Corporation | ( | ) | ||||||||||||||
Net income (loss) from discontinued operations | ||||||||||||||||
Net income (loss) attributable to RLH Corporation for diluted earnings (loss) per share | $ | $ | $ | $ | ( | ) | ||||||||||
Denominator: | ||||||||||||||||
Weighted average shares - basic | ||||||||||||||||
Weighted average shares - diluted | ||||||||||||||||
Earnings (loss) per share - basic | ||||||||||||||||
Net income (loss) from continuing operations attributable to RLH Corporation | $ | $ | $ | $ | ( | ) | ||||||||||
Net income (loss) from discontinued operations | ||||||||||||||||
Net income (loss) attributable to RLH Corporation | $ | $ | $ | $ | ( | ) | ||||||||||
Earnings (loss) per share - diluted | ||||||||||||||||
Net income (loss) from continuing operations attributable to RLH Corporation | $ | $ | $ | $ | ( | ) | ||||||||||
Net income (loss) from discontinued operations | ||||||||||||||||
Net income (loss) attributable to RLH Corporation | $ | $ | $ | $ | ( | ) | ||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||
Stock Options(1) | ||||||||||||
Dilutive awards outstanding | ||||||||||||
Antidilutive awards outstanding | ||||||||||||
Total awards outstanding | ||||||||||||
Restricted Stock Units(2) | ||||||||||||
Dilutive awards outstanding | ||||||||||||
Antidilutive awards outstanding | ||||||||||||
Total awards outstanding | ||||||||||||
Performance Stock Units(3) | ||||||||||||
Dilutive awards outstanding | ||||||||||||
Antidilutive awards outstanding | ||||||||||||
Total awards outstanding | ||||||||||||
Warrants(4) | ||||||||||||
Dilutive awards outstanding | ||||||||||||
Antidilutive awards outstanding | ||||||||||||
Total awards outstanding | ||||||||||||
Shares for Vantage Contingent Consideration(5) | ||||||||||||
Dilutive awards outstanding | ||||||||||||
Antidilutive awards outstanding | ||||||||||||
Total awards outstanding | ||||||||||||
Total dilutive awards outstanding | ||||||||||||
14. |
15. |
• | 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. |
September 30, 2018 | December 31, 2017 | |||||||||||||||
Carrying Amount | Fair Value | Carrying Amount | Fair Value | |||||||||||||
Financial assets: | ||||||||||||||||
Notes receivable | $ | $ | $ | $ | ||||||||||||
Financial liabilities: | ||||||||||||||||
Total debt | $ | $ | $ | $ | ||||||||||||
Line of credit | ||||||||||||||||
Total capital lease obligations | ||||||||||||||||
16. |
17. |
Fair Value | ||||
Current assets | $ | |||
Intangible assets | ||||
Goodwill | ||||
Total assets acquired | ||||
Current liabilities | ||||
Total liabilities acquired | ||||
Total net assets acquired | $ | |||
Fair Value | Useful Life | ||||
Brand names | $ | Indefinite | |||
Customer contracts | |||||
Total intangible assets | $ | ||||
Three Months Ended September 30, 2018 | Nine Months Ended September 30, 2018 | ||||||
Revenue | $ | $ | |||||
Net income (loss) from continuing operations before income taxes | ( | ) | |||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Revenue | $ | $ | $ | $ | ||||||||||||
Net income (loss) | ||||||||||||||||
Net income (loss) and comprehensive income (loss) attributable to RLH Corporation | ||||||||||||||||
Earnings (loss) per share attributable to RLH Corporation - basic | $ | $ | $ | $ | ||||||||||||
Earnings (loss) per share attributable to RLH Corporation - diluted | $ | $ | $ | $ | ||||||||||||
18. |
Three Months Ended | Nine Months Ended | |||||||
September 30, 2017 | September 30, 2017 | |||||||
Entertainment revenue | $ | $ | ||||||
Operating expenses: | ||||||||
Entertainment | ||||||||
Other | ||||||||
Depreciation and amortization | ||||||||
Gain on asset dispositions, net | ( | ) | ||||||
Total operating expenses | ||||||||
Operating income | ||||||||
Interest expense | ||||||||
Other income (expense), net | ||||||||
Income tax (expense) benefit | ( | ) | ( | ) | ||||
Income (loss) from discontinued operations | $ | $ | ||||||
Depreciation and amortization | $ | |||
Capital expenditures | $ | |||
19. |
1. | Red Lion Inn & Suites Bend, Oregon |
2. | Red Lion Hotel Richland Hanford House, Washington |
3. | Red Lion Hotel Redding, California |
4. | Red Lion Hotel Eureka, California |
5. | Red Lion Hotel Boise Downtowner, Idaho |
6. | Red Lion Templin’s Hotel on the River, Post Falls, Idaho |
December 31, 2017 | ||||
Inventories | $ | |||
Property and equipment, net | ||||
Other assets, net | ||||
Assets held for sale | $ | |||
20. |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
Franchised | Company Operated | Total Systemwide | ||||||||||||||||
Hotels | Total Available Rooms | Hotels | Total Available Rooms | Hotels | Total Available Rooms | |||||||||||||
Beginning quantity, January 1, 2018 | 1,061 | 65,200 | 21 | 4,300 | 1,082 | 69,500 | ||||||||||||
Newly opened/acquired properties | 420 | 29,000 | — | — | 420 | 29,000 | ||||||||||||
Terminated properties(1) | (138 | ) | (9,600 | ) | (1 | ) | (400 | ) | (139 | ) | (10,000 | ) | ||||||
Change from company operated to franchised | 9 | 1,500 | (9 | ) | (1,500 | ) | — | — | ||||||||||
Ending quantity, September 30, 2018 | 1,352 | 86,100 | 11 | 2,400 | 1,363 | 88,500 | ||||||||||||
Executed franchise license and management agreements, nine months ended September 30, 2018: | ||||||||||||||||||
New franchise / management agreements | 46 | 5,200 | — | — | 46 | 5,200 | ||||||||||||
Renewals / changes of ownership | 54 | 2,800 | — | — | 54 | 2,800 | ||||||||||||
Change from company operated to franchised | 9 | 1,500 | (9 | ) | (1,500 | ) | — | — | ||||||||||
Total executed franchise license and management agreements, nine months ended September 30, 2018 | 109 | 9,500 | (9 | ) | (1,500 | ) | 100 | 8,000 | ||||||||||
• | The franchised hotels segment is engaged primarily in licensing our brands to franchisees. This segment generates revenue from franchise fees that are based on a percentage of room revenue or room count and are charged to hotel owners in exchange for the use of our brand and access to our central services programs. These programs include our reservation system, guest loyalty program, national and regional sales, revenue management tools, quality inspections, advertising and brand standards. |
• | The 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. |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Total revenue | $ | 36,000 | $ | 51,024 | $ | 107,651 | $ | 133,434 | ||||||||
Total operating expenses | 16,236 | 45,850 | 78,656 | 129,401 | ||||||||||||
Operating income | 19,764 | 5,174 | 28,995 | 4,033 | ||||||||||||
Other income (expense): | ||||||||||||||||
Interest expense | (1,417 | ) | (2,119 | ) | (5,366 | ) | (6,114 | ) | ||||||||
Loss on early retirement of debt | (794 | ) | — | (794 | ) | — | ||||||||||
Other income (loss), net | 34 | 338 | 214 | 562 | ||||||||||||
Income (loss) from continuing operations before taxes | 17,587 | 3,393 | 23,049 | (1,519 | ) | |||||||||||
Income tax expense (benefit) | (26 | ) | 34 | (239 | ) | 304 | ||||||||||
Net income (loss) from continuing operations | 17,613 | 3,359 | 23,288 | (1,823 | ) | |||||||||||
Net income (loss) from discontinued operations, net of tax | — | 268 | — | 402 | ||||||||||||
Net income (loss) | 17,613 | 3,627 | 23,288 | (1,421 | ) | |||||||||||
Less net (income) loss attributable to noncontrolling interests | (8,670 | ) | (871 | ) | (14,079 | ) | 507 | |||||||||
Net income (loss) and comprehensive income (loss) attributable to RLH Corporation | $ | 8,943 | $ | 2,756 | $ | 9,209 | $ | (914 | ) | |||||||
Non-GAAP Financial Measures (1) | ||||||||||||||||
EBITDA from continuing operations | $ | 22,625 | $ | 10,172 | $ | 41,129 | $ | 18,337 | ||||||||
Adjusted EBITDA from continuing operations | $ | 4,591 | $ | 11,407 | $ | 10,562 | $ | 19,683 | ||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Net income (loss) | $ | 17,613 | $ | 3,627 | $ | 23,288 | $ | (1,421 | ) | |||||||
Depreciation and amortization | 3,621 | 4,660 | 12,714 | 13,742 | ||||||||||||
Interest expense | 1,417 | 2,119 | 5,366 | 6,114 | ||||||||||||
Income tax expense (benefit) | (26 | ) | 34 | (239 | ) | 304 | ||||||||||
Net (income) loss from discontinued operations (1) | — | (268 | ) | — | (402 | ) | ||||||||||
EBITDA from continuing operations | 22,625 | 10,172 | 41,129 | 18,337 | ||||||||||||
Asset impairment (2) | 7,100 | — | 7,100 | — | ||||||||||||
Acquisition and integration costs (3) | 95 | 1,235 | 2,196 | 1,246 | ||||||||||||
Employee separation and transition costs (4) | — | — | 975 | 100 | ||||||||||||
Loss on early retirement of debt (5) | 794 | — | 794 | — | ||||||||||||
Gain on asset dispositions (6) | (26,023 | ) | — | (41,632 | ) | — | ||||||||||
Adjusted EBITDA from continuing operations | 4,591 | 11,407 | 10,562 | 19,683 | ||||||||||||
Net income (loss) from discontinued operations (1) | — | 268 | — | 402 | ||||||||||||
Depreciation and amortization of discontinued operations | — | 7 | — | 64 | ||||||||||||
Income tax expense (benefit) from discontinued operations | — | 140 | — | 209 | ||||||||||||
Adjusted EBITDA from discontinued operations | — | 415 | — | 675 | ||||||||||||
Adjusted EBITDA from continuing & discontinued operations | 4,591 | 11,822 | 10,562 | 20,358 | ||||||||||||
Adjusted EBITDA attributable to noncontrolling interests | (53 | ) | (3,142 | ) | (1,915 | ) | (6,110 | ) | ||||||||
Adjusted EBITDA attributable to RLH Corporation | $ | 4,538 | $ | 8,680 | $ | 8,647 | $ | 14,248 | ||||||||
(1) On October 3, 2017, the Company completed the sale of its entertainment segment. Based on this sale, the results of operations of the entertainment segment are reported as discontinued operations for all periods presented. | ||||||||||||||||
(2) In the three months ended September 30, 2018 we recognized an impairment on our Baltimore hotel asset. | ||||||||||||||||
(3) Net expenses for 2018 are associated with the Knights Inn and Vantage acquisitions. Net expenses for 2017 are associated with the Vantage acquisition. All acquisition costs and changes in the fair value and probability of contingent consideration are included within Acquisition and integration costs on the Condensed Consolidated Statements of Comprehensive Income (Loss). | ||||||||||||||||
(4) The costs recognized in 2018 relate to employee separation, and the costs recognized in 2017 consisted of legal and consulting services associated with the CFO transition. | ||||||||||||||||
(5) The Loss on early retirement of debt arose primarily on a $20.6 million early payment of our Senior Secured Term Loan. The debt was repaid using proceeds from a distribution from RL Venture after the sales of our Red Lion Hotel Port Angeles and Hotel RL Spokane. | ||||||||||||||||
(6) On October 5, 2017, we announced that we would be marketing for sale 11 of our owned hotels. RL Venture, our consolidated subsidiary, sold five properties in February 2018, two properties in April and May, and two properties in July. Represents the gain on our sale of these properties. | ||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Company operated hotel revenue | $ | 19,579 | $ | 37,244 | $ | 65,486 | $ | 94,214 | ||||||||
less: revenue from sold and closed hotels | (932 | ) | (18,365 | ) | (15,292 | ) | (44,073 | ) | ||||||||
less: revenue from managed properties | (277 | ) | (380 | ) | (745 | ) | (854 | ) | ||||||||
Comparable company operated hotel revenue | $ | 18,370 | $ | 18,499 | $ | 49,449 | $ | 49,287 | ||||||||
Company operated hotel operating expenses | $ | 14,534 | $ | 25,284 | $ | 50,817 | $ | 70,450 | ||||||||
less: operating expenses from sold and closed hotels | (2,008 | ) | (12,758 | ) | (14,226 | ) | (34,186 | ) | ||||||||
less: operating expenses from managed properties | (191 | ) | (188 | ) | (543 | ) | (520 | ) | ||||||||
Comparable company operated hotel operating expenses | $ | 12,335 | $ | 12,338 | $ | 36,048 | $ | 35,744 | ||||||||
Company operated hotel direct operating profit | $ | 5,045 | $ | 11,960 | $ | 14,669 | $ | 23,764 | ||||||||
less: operating profit (loss) from sold and closed hotels | 1,076 | (5,607 | ) | (1,066 | ) | (9,887 | ) | |||||||||
less: operating profit (loss) from managed properties | (86 | ) | (192 | ) | (202 | ) | (334 | ) | ||||||||
Comparable company operated hotel direct operating profit | $ | 6,035 | $ | 6,161 | $ | 13,401 | $ | 13,543 | ||||||||
Comparable company operated hotel direct margin % | 32.9 | % | 33.3 | % | 27.1 | % | 27.5 | % | ||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Company operated hotels | $ | 19,579 | $ | 37,244 | $ | 65,486 | $ | 94,214 | ||||||||
Other revenues from managed properties | 1,278 | 1,054 | 3,272 | 3,047 | ||||||||||||
Franchised hotels | 15,137 | 12,714 | 38,861 | 36,045 | ||||||||||||
Other | 6 | 12 | 32 | 128 | ||||||||||||
Total revenues | $ | 36,000 | $ | 51,024 | $ | 107,651 | $ | 133,434 | ||||||||
Comparable Hotel Statistics (1) | |||||||||||||||||||||||
Three Months Ended September 30, | |||||||||||||||||||||||
2018 | 2017 | ||||||||||||||||||||||
Average Occupancy(2) | ADR(3) | RevPAR(4) | Average Occupancy(2) | ADR(3) | RevPAR(4) | ||||||||||||||||||
Systemwide - Midscale | 66.0 | % | $ | 106.82 | $ | 70.47 | 68.3 | % | $ | 105.64 | $ | 72.13 | |||||||||||
Change from prior comparative period: | Average Occupancy(2) | ADR(3) | RevPAR(4) | ||||||||||||||||||||
Systemwide - Midscale | (231 | ) | bps | 1.1 | % | (2.3 | )% | ||||||||||||||||
Comparable Hotel Statistics (1) | |||||||||||||||||||||||
Nine Months Ended September 30, | |||||||||||||||||||||||
2018 | 2017 | ||||||||||||||||||||||
Average Occupancy(2) | ADR(3) | RevPAR(4) | Average Occupancy(2) | ADR(3) | RevPAR(4) | ||||||||||||||||||
Systemwide - Midscale | 62.4 | % | $ | 99.48 | $ | 62.10 | 62.9 | % | $ | 99.49 | $ | 62.54 | |||||||||||
Change from prior comparative period: | Average Occupancy(2) | ADR(3) | RevPAR(4) | ||||||||||||||||||||
Systemwide - Midscale | (44 | ) | bps | — | % | (0.7 | )% | ||||||||||||||||
(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 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 were owned, leased, managed or franchised by us and were in operation for at least one full calendar year as of the beginning of the reporting period other than hotels for which comparable results were not available. |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Company operated hotels | $ | 14,534 | $ | 25,284 | $ | 50,817 | $ | 70,450 | ||||||||
Other costs from managed properties | 1,278 | 1,054 | 3,272 | 3,047 | ||||||||||||
Franchised hotels | 9,220 | 8,898 | 26,486 | 26,300 | ||||||||||||
Depreciation and amortization | 3,621 | 4,660 | 12,714 | 13,742 | ||||||||||||
Hotel facility and land lease | 1,186 | 1,201 | 3,577 | 3,604 | ||||||||||||
Asset impairment | 7,100 | — | 7,100 | — | ||||||||||||
Gain on asset dispositions, net | (26,196 | ) | (113 | ) | (42,094 | ) | (334 | ) | ||||||||
General, administrative and other expenses | 5,398 | 3,631 | 14,588 | 11,346 | ||||||||||||
Acquisition and integration costs | 95 | 1,235 | 2,196 | 1,246 | ||||||||||||
Total operating expenses | $ | 16,236 | $ | 45,850 | $ | 78,656 | $ | 129,401 | ||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Company operated hotel operating expenses | $ | 14,534 | $ | 25,284 | $ | 50,817 | $ | 70,450 | ||||||||
less: operating expenses from sold and closed hotels | (2,008 | ) | (12,758 | ) | (14,226 | ) | (34,186 | ) | ||||||||
less: operating expenses from managed properties | (191 | ) | (188 | ) | (543 | ) | (520 | ) | ||||||||
Comparable company operated hotel operating expenses | $ | 12,335 | $ | 12,338 | $ | 36,048 | $ | 35,744 | ||||||||
1. | Red Lion Inn & Suites Bend, Oregon |
2. | Red Lion Hotel Richland Hanford House, Washington |
3. | Red Lion Hotel Redding, California |
4. | Red Lion Hotel Eureka, California |
5. | Red Lion Hotel Boise Downtowner, Idaho |
6. | Red Lion Templin’s Hotel on the River, Post Falls, Idaho |
Total | Less than 1 year | 1-3 years | 4-5 years | After 5 years | ||||||||||||||||
Debt(1) | $ | 38,972 | $ | 12,141 | $ | 16,687 | $ | 10,144 | $ | — | ||||||||||
Line of credit(1) | 13,316 | 749 | 1,400 | 11,167 | — | |||||||||||||||
Capital leases(1) | 1,090 | 340 | 729 | 21 | — | |||||||||||||||
Operating leases | 76,417 | 4,872 | 10,805 | 4,238 | 56,502 | |||||||||||||||
Total contractual obligations (2) | $ | 129,795 | $ | 18,102 | $ | 29,621 | $ | 25,570 | $ | 56,502 | ||||||||||
Item 3. | Quantitative and Qualitative Disclosures About Market Risk |
2018 | 2019 | 2020 | 2021 | 2022 | Thereafter | Total | Fair Value | |||||||||||||||||||||||||
Debt | $ | 130 | $ | 25,138 | $ | — | $ | — | $ | — | $ | 9,355 | $ | 34,623 | $ | 34,249 | ||||||||||||||||
Line of credit | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 10,000 | $ | 10,000 | $ | 10,473 | ||||||||||||||||
Average interest rate | 6.6 | % | ||||||||||||||||||||||||||||||
Item 4. | Controls and Procedures |
Item 1. | Legal Proceedings |
Item 1A. | Risk Factors |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
Item 3. | Defaults Upon Senior Securities |
Item 4. | Mine Safety Disclosures |
Item 5. | Other Information |
Item 6. | Exhibits |
Exhibit Number | Description | |
First Amendment to Credit Agreement, dated as of August 31, 2018, by and among Red Lion Hotels Corporation, certain of Red Lion Hotels Corporation's direct and indirect wholly-owned subsidiaries, Deutsche Bank AG New York Branch, Capital One, National Association and Raymond James Bank, N.A. (incorporated by reference to Exhibit 10.1 in the current report on Form 8-K (Commission File No. 001-13957) filed on September 7, 2018) | ||
Loan Purchase and Sale Agreement dated September 4, 2018 between RLH Baltimore Loan Acquisition, LLC, as Buyer, and PFP IV SUB III, LLC, as Seller (incorporated by reference to Exhibit 10.2 in the current report on Form 8-K (Commission File No. 001-13957) filed on September 7, 2018) | ||
Certification of Chief Executive Officer pursuant to Exchange Act Rule 13a-14(a) | ||
Certification of Principal Financial Officer pursuant to Exchange Act Rule 13a-14(a) | ||
Certification of Chief Executive Officer pursuant to Exchange Act Rule 13a-14(b) | ||
Certification of Principal Financial Officer pursuant to Exchange Act Rule 13a-14(b) | ||
101.INS | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL 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 | |
Signature | Title | Date | ||||
By: | /s/ Gregory T. Mount | President and Chief Executive Officer (Principal Executive Officer) | November 6, 2018 | |||
Gregory T. Mount | ||||||
By: | /s/ Nathan M. Troup | Senior Vice President, Chief Accounting Officer (Principal Financial Officer and Principal Accounting Officer) | November 6, 2018 | |||
Nathan M. Troup | ||||||
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. |
/s/ Gregory T. Mount |
Gregory T. Mount |
President and Chief Executive Officer |
(Principal Executive Officer) |
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. |
/s/ Nathan M. Troup |
Nathan M. Troup |
Senior Vice President, Chief Accounting Officer |
(Principal Financial Officer and Principal Accounting Officer) |
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. |
/s/ Gregory T. Mount |
Gregory T. Mount President and Chief Executive Officer (Principal Executive Officer) |
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. |
/s/ Nathan M. Troup |
Nathan M. Troup Senior Vice President, Chief Accounting Officer (Principal Financial Officer and Principal Accounting Officer) |
Document and Entity Information - shares |
9 Months Ended | |
|---|---|---|
Sep. 30, 2018 |
Oct. 31, 2018 |
|
| 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, 2018 | |
| Document Fiscal Year Focus | 2018 | |
| Document Fiscal Period Focus | Q3 | |
| Amendment Flag | false | |
| Entity Common Stock, Shares Outstanding | 24,563,933 | |
| Entity Small Business | false | |
| Entity Emerging Growth Company | false |
Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) (Parenthetical) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended |
|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2017 |
|
| Income Statement [Abstract] | ||
| Tax expense (benefit) on income from discontinued business unit | $ 140 | $ 209 |
Organization |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Organization | Organization Red Lion Hotels Corporation ("RLH Corporation", "RLHC", "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 franchising, management and ownership of hotels under the following proprietary brands: Hotel RL, Red Lion Hotels, Red Lion Inn & Suites, GuestHouse, Settle Inn, Americas Best Value Inn, Canadas Best Value Inn, Signature and Signature Inn, Country Hearth Inns & Suites, and Knights Inn. A summary of our properties as of September 30, 2018, including the approximate number of available rooms, is provided below:
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Summary of Significant Accounting Policies |
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| Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of Significant Accounting Policies | Summary of Significant Accounting Policies The unaudited condensed consolidated financial statements included herein were 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, 2017 was 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, 2017, filed with the SEC in our annual report on Form 10-K on April 2, 2018. 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 Condensed Consolidated Balance Sheet at September 30, 2018, the Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended September 30, 2018 and 2017, and the Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2018 and 2017. 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. Revenue Recognition Revenue is generally recognized as services are provided. Revenues are primarily derived from franchise contracts with third-party hotel owners, as well as from individual hotel guests and corporate patrons at our owned and leased hotels. Revenues are also derived from management of third-party owned hotels. The majority of compensation received for our performance obligations is variable consideration from our management and franchise contracts or fixed transactional guest consideration through our owned and leased hotels. We recognize the variable fees as the services to which they relate are delivered, applying the prescribed variable consideration allocation guidance. In certain circumstances we defer consideration and recognize consideration over time as the related performance obligations are satisfied. Franchised hotel revenues We identified the following services as one performance obligation in connection with our franchise contracts:
The performance obligation related to franchise revenues is delivered over time. While the underlying services may vary from day to day, the nature of the promises are the same each day, other than the Brand Conference, which is recognized in the month the service is provided, and the property owner can independently benefit from each day's services. Franchise fees are typically based on the sales or usage of the underlying hotel, with the exception of fixed upfront fees that usually represent an insignificant portion of the transaction price. Franchised hotel revenues represent fees earned in connection with the licensing of one of our brands, usually under long-term contracts with the property owner, and include the following:
Any consideration paid or anticipated to be paid to incentivize hotel owners to enter into franchise contracts is capitalized and reduces revenues as amortized. The commission or directs costs of acquiring the contract or modification are recorded as contract acquisition costs and are recognized in franchise costs when amortized. Company operated hotels revenue We identified the following performance obligations in connection with our owned and leased hotel revenues, for which revenue is recognized as the respective performance obligations are satisfied, which results in recognizing the amount we expect to be entitled to for providing the goods or services to the hotel customer or guest:
Company operated hotels revenue primarily consist of hotel room rentals, revenue from accommodations sold in conjunction with other services(e.g., package reservations), food and beverage sales and other ancillary goods and services (e.g., parking) related to owned, leased and consolidated non-wholly owned (joint venture) hotel properties and hotel management fees. Revenue is recognized when rooms are occupied or goods and services have been delivered or rendered, respectively. Payment terms typically align with when the goods and services are provided. The management fees from third-party hotel owners earned under the contract relate to a specific outcome of providing the services (e.g., hotel room sales). We use time as the measure of progress to recognize as revenue the fees that are allocated to the period earned per the contract. Revenue from managed properties Other revenue from managed properties includes direct reimbursements including payroll and related costs and certain other operating costs of the managed properties’ operations, which are contractually reimbursed to us by the property owners as expenses are incurred. Revenue is recognized based on the amount of expenses incurred by us and are presented as other expenses from managed hotels in our Condensed Consolidated Statements of Comprehensive Income (Loss). These expenses are then reimbursed by the property owner typically on a monthly basis, which results in no net effect on operating income (loss) or net income (loss). Other revenues Other revenues include revenues generated by the incidental support of hotel operations for owned, leased, managed and franchised hotels, including purchasing operations, and other operating income. Taxes and fees collected on behalf of governmental agencies We are required to collect certain taxes and fees from customers on behalf of governmental agencies and remit these back to the applicable governmental agencies on a periodic basis. We have a legal obligation to act as a collection agent. We do not retain these taxes and fees and, therefore, they are not included in our measurement of transaction prices. We have elected to present revenue net of sales taxes and other similar taxes. We record a liability when the amounts are collected and relieve the liability when payments are made to the applicable taxing authority or other appropriate governmental agency. New and Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (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. We adopted the requirements of ASU 2014-09 on January 1, 2018 using the modified retrospective method, as permitted by the standard, resulting in a cumulative adjustment to accumulated deficit of $0.6 million. In implementation, we applied the transition guides to franchise agreements originated by us. No contract liability was recorded for franchise contracts that were acquired in prior business combinations or asset purchases. The provisions of ASU 2014-09 affected our revenue recognition as follows:
Information below represents the effect of the adoption of ASU 2014-09 on our Condensed Consolidated Balance Sheet as of September 30, 2018 and our Condensed Consolidated Statement of Comprehensive Income (Loss) for the three and nine months ended September 30, 2018 (in thousands, except per share data).
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. We have assigned an implementation team and are still assessing the potential impact that ASU 2016-02 will have on our financial statements and disclosures. We had $76.4 million of operating lease obligations as of September 30, 2018 (see Note 10) and upon the adoption of the standard we expect to record an ROU asset and lease liability for the present value of these leases, which will have a material impact on the Condensed Consolidated Balance Sheet. |
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Business Segments |
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| Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Business Segments | Business Segments We have two operating segments: franchised hotels and company operated 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 are 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 that 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):
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Variable Interest Entities |
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Sep. 30, 2018 | |
| 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 LLC (RLS Balt Venture), (3) RLS Atla Venture LLC (RLS Atla Venture) and (4) RLS DC Venture LLC (RLS DC Venture). RL Venture We maintain a 55% interest in RL Venture, with the remaining 45% owned by Shelbourne Falcon RLHC Hotel Investors LLC (Shelbourne Falcon), an entity that is led by Shelbourne Capital LLC (Shelbourne). The hotels owned by RL Venture 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 condensed consolidated financial statements. In February 2018, five of the RL Venture properties were sold for an aggregate sale price of $47.2 million. In April 2018, one of the RL Venture properties sold for $5.5 million. In May 2018, one of the RL Venture property sold for $9.3 million. In July 2018, two additional RL Venture properties sold for $54.5 million. As of September 30, 2018, RL Venture has two remaining properties. Cash distributions may be made periodically based on calculated distributable income. During the third quarter of 2018 and 2017, RL Venture made a cash distributions totaling $37.5 million and $1.6 million, of which RLH Corporation received $20.6 million and $0.9 million, respectively. During the nine months ended September 30, 2018 and 2017, cash distributions totaled $46.5 million and $3.1 million, of which RLH Corporation received $25.6 million and $1.7 million, respectively. Under our credit agreement with Deutsche Bank AG New York Branch (DB), Capital One, National Association and Raymond James Bank, N.A., as lenders and DB as the administrative agent dated as of May 14, 2018, as amended, (DB Credit Agreement), these funds may be used to pay down the principal outstanding on the Senior Secured Term Loan. In August 2018, RLH Corporation deposited the $20.6 million received from RL Venture in a cash collateral account controlled by DB, which was used to make a prepayment on the balance outstanding under the Senior Secured Term Loan under the DB Credit Agreement. RLS Balt Venture As of September 30, 2018, we own a 73% interest in RLS Balt Venture, with the remaining 27% owned by Shelbourne Falcon Charm City Investors LLC (Shelbourne Falcon II), an entity led by Shelbourne. 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 condensed consolidated financial statements. In May 2017 and 2018, RLH Corporation provided an additional $2.8 million and $2.0 million, respectively, 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 preferred capital plus a preferred return of 9% on the May 2017 preferred capital and 11% on the May 2018 preferred capital, 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 ended September 30, 2018 or 2017. RLS Atla Venture We own a 55% interest in RLS Atla Venture and Falcon Big Peach Investors LLC (Shelbourne Falcon III), an entity led by Shelbourne, 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 condensed consolidated financial statements. Cash distributions may be made periodically based on calculated distributable income. There were no cash distributions made during the nine months ended September 30, 2018 or 2017. On August 9, 2018 we announced that we would be marketing for sale the Red Lion Hotel Atlanta International Airport owned by RLH Atlanta. RLS DC Venture We own 55% of RLS DC Venture, and Shelbourne Falcon DC Investors LLC (Shelbourne Falcon IV), an entity led by Shelbourne, 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 55% 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 condensed consolidated financial statements. In May 2017, RLH Corporation provided $950,000 to RLS DC Venture to fund restricted cash required by the loan agreement with Pacific Western Bank. In May 2018, RLH Corporation provided approximately $450,000 to RLS DC Venture to be used as a principal payment on the debt to Pacific Western Bank to bring the loan into compliance with the loan to value debt covenant requirement of 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 preferred capital plus a preferred return of 9% on the May 2017 preferred capital and 11% on the May 2018 preferred capital, compounded annually, prior to any liquidation proceeds being returned to the members. In May 2018, the loan was amended to add a $4.5 million principal guarantee by RLH Corporation. The amendment also allows future debt service coverage ratio covenant defaults to be cured by an increase in the RLH Corporation principal guarantee. This option can be exercised a maximum of two times during the remaining term of the loan. |
Property and Equipment |
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| Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Property and Equipment | Property and Equipment Property and equipment is summarized as follows (in thousands):
During the three months ended September 30, 2018, we recognized a $7.1 million impairment on our Baltimore joint venture property. The default during the third quarter on the RL Baltimore loan (described further in Note 8) coupled with challenging cash flow results for the asset gave rise to the impairment. The fair value of the asset was determined by a third-party valuation that included an analysis of selling prices for similar assets as well as a discounted cash flow analysis, which are Level 3 fair value measurements. Key inputs to the fair value measurement for these assets included forecasted revenues expected to be generated by the hotel factoring in the market it serves as well as forecasted operating costs and capital expenditure needs based upon the Company’s planning and budgeting process. Other inputs included sales data for similarly situated hotels in the market, adjusted to reflect known differences in the assets. |
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Goodwill and Intangible Assets |
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| Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Goodwill and Intangible Assets | Goodwill and Intangible Assets The following table summarizes the balances of goodwill and other intangible assets (in thousands):
On May 14, 2018 we acquired substantially all of the assets of KFS, including customer contracts and the brand name, as further described in Note 17. Goodwill and other intangible assets attributable to each of our business segments at September 30, 2018 and December 31, 2017 were as follows (in thousands):
The following table summarizes the balances of amortized customer contracts and finite-lived brand names (in thousands):
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Revenue from Contracts with Customers |
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| Revenue from Contract with Customer [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Revenue from Contracts with Customers | Revenue from Contracts with Customers The following table provides information about receivables, contract assets and contract liabilities from contracts with customers (in thousands):
Significant changes in the key money disbursements, capitalized contract costs, and contract liabilities balances during the period are as follows (in thousands):
Estimated revenues and expenses expected to be recognized related to performance obligations that were unsatisfied as of September 30, 2018, including revenues related to application, initiation and other fees were as follows (in thousands):
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Debt and Line of Credit |
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| Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt and Line of Credit | Debt and Line of Credit The current and noncurrent portions of our debt as of September 30, 2018 and December 31, 2017 are as follows (in thousands):
Each of our debt agreements contain customary reporting, financial and operating covenants. We were in compliance with all of the financial covenants of our debt agreements at September 30, 2018, unless further described below. Senior Secured Term Loan In May 2018, RLH Corporation and certain of its direct and indirect wholly-owned subsidiaries entered into a credit agreement with Deutsche Bank AG New York Branch (DB), Capital One, National Association and Raymond James Bank, N.A., as lenders and DB as the administrative agent (DB Credit Agreement). The DB Credit Agreement provided for a $30.0 million senior secured term loan facility (Senior Secured Term Loan) and a $10.0 million senior secured revolving credit facility (Revolving Credit Facility). The principal amount of the Senior Secured Term Loan was distributed at closing to fund the KFS acquisition. At September 30, 2018, there were unamortized debt issuance fees of $0.3 million and $10 million outstanding on the Revolving Credit Facility. The loans and credit commitments mature in May 2023. Principal payments equal to 1.25% of the Senior Secured Term Loan, or $375,000, will be paid quarterly beginning in September 2018, with the balance due upon maturity. Outstanding amounts under the DB Credit Agreement will bear interest at adjusted LIBOR plus 3.00%. In addition, the DB Credit Agreement includes mandatory prepayment of the Senior Secured Term Loan using any proceeds from incurred or issued indebtedness, and, starting with the full fiscal quarter ending March 31, 2019, requires prepayments in an amount equal to (x) 50% of all distributions received by RLH Corporation or its subsidiary guarantors from their respective subsidiaries and joint venture interests during any such fiscal quarter, minus (y) the amount of the amortization payment required to be made by RLH Corporation for such fiscal quarter, capped at $5.0 million. In addition, all net proceeds received by RLH Corporation from non-ordinary course asset sales and other specified dispositions of property, including the RL Venture property sales, must be maintained in a cash collateral account controlled by DB, subject to the right of RLH Corporation to prepay the Senior Secured Term Loan in whole or in part at any time with such proceeds. 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, cross-default provisions, and restrictions on payment of dividends. Our obligations under the DB Credit Agreement are (i) guaranteed by all of our direct and indirect wholly-owned subsidiaries, and (ii) secured by all of the present and after-acquired accounts, inventory, equipment, intellectual property, contractual rights and other tangible or intangible assets of RLH Corporation and the subsidiary guarantors. The default of RL Baltimore LLC on August 10, 2018 under the terms of the Baltimore Note, as described below, created a default under our DB Credit Agreement. On August 31, 2018, we entered into a First Amendment (Amendment) and Waiver (Waiver) to the DB Credit Agreement. Pursuant to the Waiver, the Lenders agreed to waive the default of RLH Corporation under the DB Credit Agreement caused by the default of RL Baltimore LLC under the terms of the Baltimore Note, with the waiver to be effective August 10, 2018. The Amendment also authorized our purchase of the Baltimore Note through our wholly owned subsidiary RLH Balt Acquisition, as described below, and added RLH Balt Acquisition as a Guarantor under the Credit Agreement. Our equity interest in RLH Balt Acquisition, and its interest in the Baltimore Note, were pledged to Lenders to secure the obligations of the Company under the Credit Agreement. In addition, the Amendment provided that there would be no cross default under the DB Credit Agreement with respect to the Baltimore Note for a period of 180 days, and clarified that no cross default under the DB Credit Agreement would occur in the event RLH Balt Acquisition waives any default under the Baltimore Note after such date. In connection with the Amendment and Waiver, we deposited a total of $20.6 million in a cash collateral account controlled by Deutsche Bank, which we used to make a prepayment on the balance outstanding under the Senior Secured Term Loan of the DB Credit Agreement. RL Baltimore In May 2018, RL Baltimore executed a three-month extension for its outstanding loan with PFP Holding Company IV (PFP). In connection with the extension, RLH Corporation agreed to allow RLS Balt Venture to transfer $2.0 million of costs owed to RLH Corporation for management fees and other operating costs into a preferred capital balance. The PFP loan matured and became due on August 10, 2018. Prior to the maturity date of the RL Baltimore loan, we were engaged in negotiations with our joint venture partner in RLS Balt Venture, LLC and the lender to evaluate options to address the maturity including, but not limited to, extending the agreement, amending the agreement, or paying off the loan with currently available cash, however, the parties were unable to reach agreement prior to the maturity date and accordingly the loan went into default. On September 6, 2018, RLH Corporation, through our wholly owned subsidiary RLH Baltimore Loan Acquisition LLC (RLH Balt Acquisition), purchased the outstanding promissory note, in the original principal amount of $13.3 million (Baltimore Note) for a total purchase price of $13.6 million. RL Baltimore is a wholly owned subsidiary of RLS Balt Venture LLC, a consolidated subsidiary of RLH Corporation in which, as of September 30, 2018, we held a 73% interest. The Baltimore Note will continue to be due and payable and accrue interest at a variable rate equal to 11.25% plus one-month LIBOR. We funded the acquisition of the Baltimore Note with $10.0 million in borrowings from our outstanding line of credit under the DB Credit Agreement (as defined above) and cash on hand. RLH DC In May 2018 the loan was amended. With the amendment, RLH Corporation provided approximately $450,000 to RLS DC Venture to be used as a principal payment on the debt. The loan was also amended to add a $4.5 million principal guarantee by RLH Corporation. The amendment also allows future debt service coverage ratio covenant defaults to be cured by an increase in the RLH Corporation principal guarantee. This option can be exercised a maximum of two times during the remaining term of the loan. As of September 30, 2018 we did not meet the debt service coverage ratio and are in the process of increasing our principal guarantee to remediate this default. RL Venture |
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Derivative Financial Instruments |
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| 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 Condensed Consolidated Statements of Comprehensive Income (Loss). At September 30, 2018 and December 31, 2017, the valuation of the interest rate caps resulted in the recognition of assets with minimal values both individually and in the aggregate, which are included within Other assets, net on the Condensed Consolidated Balance Sheets. We were in compliance with rate cap lender requirements related to RLH Atlanta and RLH DC as of September 30, 2018.
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Operating and Capital Lease Commitments |
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| 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 primarily relate to five of our company operated hotel properties and our headquarters. 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 and are recorded in Other accrued liabilities and Deferred income and other long-term liabilities on the Condensed Consolidated Balance Sheets. 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, 2018, are as indicated below (in thousands):
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Commitments and Contingencies |
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| Commitments and Contingencies Disclosure [Abstract] | |
| Commitments and Contingencies | Commitments and Contingencies |
Stock Based Compensation |
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| Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock Based Compensation | Stock Based Compensation Stock Incentive Plans 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, 2018, there were 909,570 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, 2018 and 2017 stock-based compensation expense is as follows (in thousands):
Restricted Stock Units Restricted stock units granted to executive officers and other key employees typically vest 25% each year for four years on each anniversary of the grant date. Under the terms of the plans upon issuance, we deliver 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, 2018 and 2017 was approximately $2.1 million and $1.0 million, respectively. We expect to recognize an additional $6.9 million in compensation expense over the remaining weighted average vesting periods of 35 months. A summary of restricted stock unit activity for the nine months ended September 30, 2018, is as follows:
Performance Stock Units, Shares Issued as Compensation We grant performance stock units (PSUs) to certain of our executives under the 2015 Plan. These PSUs include both performance and service vesting conditions. 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 attainment of the performance conditions during the performance period and recognized on a straight-line basis over the performance and service periods. The remaining compensation expense related to PSUs of approximately $1.6 million will be recognized over the next 26 months. A summary of performance stock unit activity for the nine months ended September 30, 2018, is as follows:
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 expense is recognized 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, 2018 and 2017:
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| 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 ended September 30, 2018 and 2017 (in thousands, except per share data):
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 the three and nine months ended September 30, 2018 and 2017.
(1) All stock options for the three and nine months ended September 30, 2017 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 due to the net loss attributable to RLH Corporation in the reporting period. If we had reported net income for the nine months ended September 30, 2017 then 444,608 units would have been dilutive. (3) Performance stock units are not included in the weighted average diluted shares outstanding until the performance targets are met. Performance stock units were anti-dilutive for three and nine months ended September 30, 2017 as no targets had been achieved during the three and nine months ended September 30, 2017. (4) All warrants were anti-dilutive for the nine months ended September 30, 2017 due to the net loss attributable to RLH Corporation in the reporting period. If we had reported net income for the nine months ended September 30, 2017 then 24,750 units would have been dilutive. (5) As part of the Vantage Hospitality Group, Inc. (Vantage Hospitality, Vantage) acquisition, up to an additional 690,000 shares could be issued with the one-year and two-year contingent consideration earn outs. These shares are not included in basic shares outstanding until the period the contingency is resolved, which was September 30, 2017 for the 414,000 shares related to the year-one contingent consideration earn out and May 2018 for the 276,000 share year-two earn out. As of September 30, 2018 no shares are contingent and the remaining 276,000 shares will be issued during the fourth quarter of 2018. For the nine months ended September 30, 2017, all of the contingent consideration shares were anti-dilutive due to the net loss from continuing operations attributable to RLH Corporation in the reporting period. If we had reported net income for the nine months ended September 30, 2017, none of the contingent consideration shares would have been dilutive.
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Income Taxes |
9 Months Ended |
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Sep. 30, 2018 | |
| Income Tax Disclosure [Abstract] | |
| Income Taxes | Income Taxes We recognized an income tax provision (benefit) for continuing operations of $(26,000) and $34,000 for the three months ended September 30, 2018 and 2017, respectively. For the nine months ended September 30, 2018 and 2017 we recognized an income tax provision (benefit) for continuing operations of $(239,000) and $304,000, respectively. The income tax provision varies from the statutory rate primarily due to a partial 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. |
Fair Value |
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| 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 following three levels 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. Cash, Restricted cash, and Accounts receivable carrying values approximate fair value due to the short-term nature of these items.
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Related Party Transactions |
9 Months Ended |
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Sep. 30, 2018 | |
| 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. Shelbourne Capital is the entity that leads Shelbourne Falcon, Shelbourne Falcon II, Shelbourne Falcon III and Shelbourne Falcon IV, the minority interest holder in these joint ventures. The amount Shelbourne Capital earned from all four joint ventures during the three months ended September 30, 2018 and 2017 totaled $40,000 and $134,000, respectively. The amount Shelbourne Capital earned from all four joint ventures during the nine months ended September 30, 2018 and 2017 totaled $187,000 and $344,000, respectively. Columbia Pacific Opportunity Fund, LP (CP) is an investor in Shelbourne Falcon, our minority partner in RL Venture. Alexander Washburn, a member of our board of directors, is a managing member of Columbia Pacific Advisors, LLC, the investment manager and general partner of CP. During the three months ended September 30, 2018 and 2017, Shelbourne Capital earned $28,000 and $117,000 from RL Venture in each period. During the nine months ended September 30, 2018 and 2017, Shelbourne Capital earned $145,000 and $291,000 from RL Venture in each period. RL Management, one of our wholly-owned subsidiaries, currently manages the Hudson Valley Resort and Spa, a hotel located in Kerhonkson, New York, 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 (HNA). Prior to June 12, 2018, HNA was one of our largest shareholders. 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, 2018, we recognized management fee revenue from HNA Hudson Valley Resort & Training Center LLC of $25,000 and $75,000, respectively. 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, respectively. The total amount receivable from related parties, primarily related to hotel management agreements, was $1.5 million at December 31, 2017, and classified within Accounts receivable from related parties on our Condensed Consolidated Balance Sheet. The total amount of comparable receivables, primarily related to hotel management agreements, was $0.4 million at September 30, 2018, and are classified within Accounts receivable, net on our Condensed Consolidated Balance Sheet as they no longer qualify as a related party at that date. On April 17, 2018, we entered into a commitment letter with CP that described the general terms and conditions for a single advance term loan of $20 million. Upon execution of the commitment letter, we paid CP a non-refundable commitment fee of $200,000, and agreed to reimburse CP for all reasonable out-of-pocket costs and expenses, including reasonable legal fees, whether or not the loan was funded. The commitment was not used and terminated on May 31, 2018. At the time of the transaction, CP held beneficial ownership of 1,510,105 shares of our common stock, and 442,533 shares of common stock subject to a warrant held by an entity in which an affiliate of CP holds an indirect interest. CP is also an investor in Shelbourne Falcon, which holds a 45% interest in RL Venture. On September 30, 2016, we completed our acquisition of the operating assets and assumption of certain liabilities (the Assets) relating to specified hotel brands and brand extensions from Thirty-Eight Street, Inc. (TESI), Vantage Hospitality Group, Inc. (Vantage Hospitality) and certain other parties, pursuant to an Asset Purchase Agreement dated September 13, 2016 (the Purchase Agreement). From the date of the acquisition, our board appointed Bernard T. Moyle, as our Executive Vice President and Chief Operating Officer and Roger J. Bloss as our Executive Vice President and President of Global Development. Messrs. Moyle and Bloss are shareholders of TESI and Vantage Hospitality. On May 21, 2018, Messrs. Moyle and Bloss resigned from their RLH Corporation officer positions. In connection with their resignation, Messrs. Moyle and Bloss each entered into an Independent Contractor Agreement (ICA) with the Company under which each will provide consulting services to the Company through December 31, 2020 for a consulting fee of $10,000 per month. In addition, each are eligible under their ICA to receive a mutually agreed upon referral fee for any new hotel franchisee referred to the Company that enters into a franchise agreement for a Red Lion brand. The Company may terminate the ICA at any time, but if an ICA is terminated without cause (as defined in the ICA) the Company remains obligated to pay the monthly consulting fees through the end of the term. During the three and nine months ended September 30, 2018, under the ICA we made payments of $30,000 and $40,000, respectively, each to Messrs. Moyle and Bloss. On May 21, 2018, the Company also entered into a letter agreement (Letter Agreement) and a First Amendment (First Amendment) to the Purchase Agreement dated as of September 13, 2016, by and among Red Lion Hotels Franchising, Inc., Red Lion Hotels Canada Franchising, Inc., TESI, Vantage Hospitality and certain other parties (including Moyle and Bloss) (the Amended Purchase Agreement). The First Amendment provides for an amendment to the non-competition and non-solicitation restrictive covenant under the Purchase Agreement. Under the Letter Agreement, the Company agreed that the second year earn-out payment payable under the Purchase Agreement would be paid in the full amount of $3.0 million and 276,000 shares of Company common stock (Second Year Additional Consideration) in October 2018. The Company understands that Mr. Bloss and Mr. Moyle each own 50% of the outstanding shares of TESI. As of September 30, 2018, the recorded fair value of the remaining contingent consideration (Year 2) is $3.0 million in cash and 276,000 shares of Company common valued at $10.40 as of May 21, 2018. The Year 2 consideration was paid in October 2018. |
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| Business Combinations [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Business Acquisitions | Business Acquisitions Knights Inn Acquisition On May 14, 2018, RLH Franchising completed the purchase of all of the issued and outstanding shares of capital stock of KFS, and the purchase of certain operating assets from, and assumption of certain liabilities relating to the business of franchising Knights Inn branded hotels to hotel owners from Wyndham Hotel Group Canada, ULC and Wyndham Hotel Group Europe Limited, pursuant to the Amended and Restated Purchase Agreement, dated May 1, 2018. The aggregate purchase price of $26.9 million is subject to a post-closing purchase price adjustment mechanism for the cash, unpaid indebtedness, unpaid transaction expenses and working capital of KFS. The purchase price was financed through the DB Credit Agreement See Note 8 Long-Term Debt for discussion of the DB Credit Agreement. The acquisition of KFS was treated as a business combination under U.S. GAAP. During the second quarter, we estimated the allocation of the purchase price to the assets acquired and liabilities assumed based on estimated fair value assessments. The allocation of the purchase price is preliminary pending the completion of various analyses and the finalization of estimates primarily pertaining to the fair value assessment of accounts receivable. During the measurement period (which is not to exceed one year from the acquisition date), additional assets or liabilities may be recognized if new information is obtained about facts and circumstances that existed as of the acquisition date that, if known, would have resulted in the recognition of those assets or liabilities as of that date. The preliminary allocation may be adjusted after obtaining additional information regarding, among other things, asset valuations, liabilities assumed and revisions of previous estimates, and these adjustments may be significant. The following reflects our preliminary purchase price allocation as of September 30, 2018 (in thousands):
Current assets are comprised of $4.2 million in contractual value of acquired receivables, less a fair value adjustment of $3.3 million based on expected collectability. During the three months ended September 30, 2018, we recorded an additional $0.9 million fair value adjustment on accounts receivable due to additional information about the collectability of the accounts receivable that became available during the quarter. Intangible assets acquired are as follows (in thousands):
We recognized $9.2 million in goodwill as the result of the acquisition, recorded within our franchise reporting segment. The goodwill is deductible for income tax purposes. The factors that make up the goodwill are primarily expected synergies from combining the operations of Knights Inn with our own. The following table presents the revenues and earnings from Knights Inn's operations that are included in the Condensed Consolidated Statement of Comprehensive Income (Loss) (unaudited) for the three and nine months ended September 30, 2018 (in thousands):
The following supplemental pro forma results are based on the individual historical results of RLH Corporation and KFS, with adjustments to give effect to the combined operations as if the acquisition had been consummated on January 1, 2017 (in thousands, except per share data) (unaudited):
We recognized acquisition related expenses of $0.3 million and $1.9 million during the three and nine months ended September 30, 2018, and they are included within Acquisition and integration costs on our Condensed Consolidated Statements of Comprehensive Income (Loss). Vantage Acquisition |
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Discontinued Operations |
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| Discontinued Operations and Disposal Groups [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Discontinued Operations | 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. The transaction represented a strategic shift that had a major impact on our financial statements. This was considered to be a strategic shift as we chose to exit the business segment entirely and focus on our growing franchise segment. In accordance with this strategic shift, 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 recognized a loss on sale of $0.2 million, net of tax 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 $4.4 million of net assets. The following summarizes the results of the entertainment segment included in the Condensed Consolidated Statements of Comprehensive Income (Loss) as discontinued operations (in thousands).
The following table represents the cash flow items associated with discontinued operations of the entertainment segment for the nine months ended September 30, 2017 (in thousands).
RL Venture Hotels At September 30, 2018, we have no properties classified as held for sale. At December 31, 2017, based on RLH Corporation and RL Venture joint venture approval of non-binding letters of intent (LOIs) or approval to negotiate LOIs under proposed terms at that time, we classified the following six properties as held for sale:
The following table presents the assets of the Hotel business segment included in the Condensed Consolidated Balance Sheets as Assets held for sale at December 31, 2017 (in thousands):
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Assets Held for Sale |
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| Discontinued Operations and Disposal Groups [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Assets Held for Sale | 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. The transaction represented a strategic shift that had a major impact on our financial statements. This was considered to be a strategic shift as we chose to exit the business segment entirely and focus on our growing franchise segment. In accordance with this strategic shift, 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 recognized a loss on sale of $0.2 million, net of tax 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 $4.4 million of net assets. The following summarizes the results of the entertainment segment included in the Condensed Consolidated Statements of Comprehensive Income (Loss) as discontinued operations (in thousands).
The following table represents the cash flow items associated with discontinued operations of the entertainment segment for the nine months ended September 30, 2017 (in thousands).
RL Venture Hotels At September 30, 2018, we have no properties classified as held for sale. At December 31, 2017, based on RLH Corporation and RL Venture joint venture approval of non-binding letters of intent (LOIs) or approval to negotiate LOIs under proposed terms at that time, we classified the following six properties as held for sale:
The following table presents the assets of the Hotel business segment included in the Condensed Consolidated Balance Sheets as Assets held for sale at December 31, 2017 (in thousands):
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Subsequent Events |
9 Months Ended |
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Sep. 30, 2018 | |
| Subsequent Events [Abstract] | |
| Subsequent Events | Subsequent Events |
Summary of Significant Accounting Policies (Policies) |
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| Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Basis of Presentation | The unaudited condensed consolidated financial statements included herein were 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, 2017 was 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, 2017, filed with the SEC in our annual report on Form 10-K on April 2, 2018. |
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| Revenue Recognition | Revenue Recognition Revenue is generally recognized as services are provided. Revenues are primarily derived from franchise contracts with third-party hotel owners, as well as from individual hotel guests and corporate patrons at our owned and leased hotels. Revenues are also derived from management of third-party owned hotels. The majority of compensation received for our performance obligations is variable consideration from our management and franchise contracts or fixed transactional guest consideration through our owned and leased hotels. We recognize the variable fees as the services to which they relate are delivered, applying the prescribed variable consideration allocation guidance. In certain circumstances we defer consideration and recognize consideration over time as the related performance obligations are satisfied. Franchised hotel revenues We identified the following services as one performance obligation in connection with our franchise contracts:
The performance obligation related to franchise revenues is delivered over time. While the underlying services may vary from day to day, the nature of the promises are the same each day, other than the Brand Conference, which is recognized in the month the service is provided, and the property owner can independently benefit from each day's services. Franchise fees are typically based on the sales or usage of the underlying hotel, with the exception of fixed upfront fees that usually represent an insignificant portion of the transaction price. Franchised hotel revenues represent fees earned in connection with the licensing of one of our brands, usually under long-term contracts with the property owner, and include the following:
Any consideration paid or anticipated to be paid to incentivize hotel owners to enter into franchise contracts is capitalized and reduces revenues as amortized. The commission or directs costs of acquiring the contract or modification are recorded as contract acquisition costs and are recognized in franchise costs when amortized. Company operated hotels revenue We identified the following performance obligations in connection with our owned and leased hotel revenues, for which revenue is recognized as the respective performance obligations are satisfied, which results in recognizing the amount we expect to be entitled to for providing the goods or services to the hotel customer or guest:
Company operated hotels revenue primarily consist of hotel room rentals, revenue from accommodations sold in conjunction with other services(e.g., package reservations), food and beverage sales and other ancillary goods and services (e.g., parking) related to owned, leased and consolidated non-wholly owned (joint venture) hotel properties and hotel management fees. Revenue is recognized when rooms are occupied or goods and services have been delivered or rendered, respectively. Payment terms typically align with when the goods and services are provided. The management fees from third-party hotel owners earned under the contract relate to a specific outcome of providing the services (e.g., hotel room sales). We use time as the measure of progress to recognize as revenue the fees that are allocated to the period earned per the contract. Revenue from managed properties Other revenue from managed properties includes direct reimbursements including payroll and related costs and certain other operating costs of the managed properties’ operations, which are contractually reimbursed to us by the property owners as expenses are incurred. Revenue is recognized based on the amount of expenses incurred by us and are presented as other expenses from managed hotels in our Condensed Consolidated Statements of Comprehensive Income (Loss). These expenses are then reimbursed by the property owner typically on a monthly basis, which results in no net effect on operating income (loss) or net income (loss). Other revenues Other revenues include revenues generated by the incidental support of hotel operations for owned, leased, managed and franchised hotels, including purchasing operations, and other operating income. Taxes and fees collected on behalf of governmental agencies We are required to collect certain taxes and fees from customers on behalf of governmental agencies and remit these back to the applicable governmental agencies on a periodic basis. We have a legal obligation to act as a collection agent. We do not retain these taxes and fees and, therefore, they are not included in our measurement of transaction prices. We have elected to present revenue net of sales taxes and other similar taxes. We record a liability when the amounts are collected and relieve the liability when payments are made to the applicable taxing authority or other appropriate governmental agency. |
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| New and Recent Accounting Pronouncements | New and Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (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. We adopted the requirements of ASU 2014-09 on January 1, 2018 using the modified retrospective method, as permitted by the standard, resulting in a cumulative adjustment to accumulated deficit of $0.6 million. In implementation, we applied the transition guides to franchise agreements originated by us. No contract liability was recorded for franchise contracts that were acquired in prior business combinations or asset purchases. The provisions of ASU 2014-09 affected our revenue recognition as follows:
Information below represents the effect of the adoption of ASU 2014-09 on our Condensed Consolidated Balance Sheet as of September 30, 2018 and our Condensed Consolidated Statement of Comprehensive Income (Loss) for the three and nine months ended September 30, 2018 (in thousands, except per share data).
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. We have assigned an implementation team and are still assessing the potential impact that ASU 2016-02 will have on our financial statements and disclosures. We had $76.4 million of operating lease obligations as of September 30, 2018 (see Note 10) and upon the adoption of the standard we expect to record an ROU asset and lease liability for the present value of these leases, which will have a material impact on the Condensed Consolidated Balance Sheet. |
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| 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 following three levels of the fair value hierarchy:
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Organization (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Summary of Properties | A summary of our properties as of September 30, 2018, including the approximate number of available rooms, is provided below:
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Summary of Significant Accounting Policies (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Effect of Adoption of ASU 2014-09 | Information below represents the effect of the adoption of ASU 2014-09 on our Condensed Consolidated Balance Sheet as of September 30, 2018 and our Condensed Consolidated Statement of Comprehensive Income (Loss) for the three and nine months ended September 30, 2018 (in thousands, except per share data).
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Business Segments (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Segment Reporting Information | Selected financial information is provided below (in thousands):
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Property and Equipment (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Property, Plant and Equipment | Property and equipment is summarized as follows (in thousands):
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Goodwill and Intangible Assets (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 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):
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| Schedule of Intangible Assets | The following table summarizes the balances of amortized customer contracts and finite-lived brand names (in thousands):
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Revenue from Contracts with Customers (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Revenue from Contract with Customer [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of Contract with Customer Assets and Liabilities | The following table provides information about receivables, contract assets and contract liabilities from contracts with customers (in thousands):
Significant changes in the key money disbursements, capitalized contract costs, and contract liabilities balances during the period are as follows (in thousands):
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| Summary of Estimated Performance Obligations | Estimated revenues and expenses expected to be recognized related to performance obligations that were unsatisfied as of September 30, 2018, including revenues related to application, initiation and other fees were as follows (in thousands):
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Debt and Line of Credit (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Current and Non-Current Portions of Long-Term Debt and Capital Lease Obligations | The current and noncurrent portions of our debt as of September 30, 2018 and December 31, 2017 are as follows (in thousands):
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Derivative Financial Instruments (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Interest Rate Derivatives | At September 30, 2018 and December 31, 2017, the valuation of the interest rate caps resulted in the recognition of assets with minimal values both individually and in the aggregate, which are included within Other assets, net on the Condensed Consolidated Balance Sheets. We were in compliance with rate cap lender requirements related to RLH Atlanta and RLH DC as of September 30, 2018.
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Operating and Capital Lease Commitments (Tables) |
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 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, 2018, are as indicated below (in thousands):
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Stock Based Compensation (Tables) |
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Compensation Cost | For the three and nine months ended September 30, 2018 and 2017 stock-based compensation expense is as follows (in thousands):
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| Schedule of Restricted Stock | A summary of restricted stock unit activity for the nine months ended September 30, 2018, is as follows:
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| Schedule of Performance Stock Units | A summary of performance stock unit activity for the nine months ended September 30, 2018, is as follows:
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| Schedule of Unrestricted Stock Awards | The following table summarizes unrestricted stock award activity for the three and nine months ended September 30, 2018 and 2017:
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Earnings (Loss) Per Share (Tables) |
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 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 ended September 30, 2018 and 2017 (in thousands, except per share data):
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| 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 the three and nine months ended September 30, 2018 and 2017.
(1) All stock options for the three and nine months ended September 30, 2017 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 due to the net loss attributable to RLH Corporation in the reporting period. If we had reported net income for the nine months ended September 30, 2017 then 444,608 units would have been dilutive. (3) Performance stock units are not included in the weighted average diluted shares outstanding until the performance targets are met. Performance stock units were anti-dilutive for three and nine months ended September 30, 2017 as no targets had been achieved during the three and nine months ended September 30, 2017. (4) All warrants were anti-dilutive for the nine months ended September 30, 2017 due to the net loss attributable to RLH Corporation in the reporting period. If we had reported net income for the nine months ended September 30, 2017 then 24,750 units would have been dilutive. (5) As part of the Vantage Hospitality Group, Inc. (Vantage Hospitality, Vantage) acquisition, up to an additional 690,000 shares could be issued with the one-year and two-year contingent consideration earn outs. These shares are not included in basic shares outstanding until the period the contingency is resolved, which was September 30, 2017 for the 414,000 shares related to the year-one contingent consideration earn out and May 2018 for the 276,000 share year-two earn out. As of September 30, 2018 no shares are contingent and the remaining 276,000 shares will be issued during the fourth quarter of 2018. For the nine months ended September 30, 2017, all of the contingent consideration shares were anti-dilutive due to the net loss from continuing operations attributable to RLH Corporation in the reporting period. If we had reported net income for the nine months ended September 30, 2017, none of the contingent consideration shares would have been dilutive. |
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Fair Value (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Fair Value and Carrying Amount of Financial Assets and Financial Liabilities | 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. Cash, Restricted cash, and Accounts receivable carrying values approximate fair value due to the short-term nature of these items.
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Business Acquisitions (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Business Combinations [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Preliminary Price Allocation | The following reflects our preliminary purchase price allocation as of September 30, 2018 (in thousands):
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| Schedule of Intangible Assets Acquired | Intangible assets acquired are as follows (in thousands):
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| Schedule of Business Acquisitions | The following table presents the revenues and earnings from Knights Inn's operations that are included in the Condensed Consolidated Statement of Comprehensive Income (Loss) (unaudited) for the three and nine months ended September 30, 2018 (in thousands):
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| Schedule of Supplemental Pro Forma Results | The following supplemental pro forma results are based on the individual historical results of RLH Corporation and KFS, with adjustments to give effect to the combined operations as if the acquisition had been consummated on January 1, 2017 (in thousands, except per share data) (unaudited):
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Discontinued Operations (Tables) |
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 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 segment included in the Condensed Consolidated Statements of Comprehensive Income (Loss) as discontinued operations (in thousands).
The following table represents the cash flow items associated with discontinued operations of the entertainment segment for the nine months ended September 30, 2017 (in thousands).
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Assets Held for Sale (Tables) |
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||
| Discontinued Operations and Disposal Groups [Abstract] | |||||||||||||||||||||||||||||||||||||||
| Summary of Assets Held for Sale | The following table presents the assets of the Hotel business segment included in the Condensed Consolidated Balance Sheets as Assets held for sale at December 31, 2017 (in thousands):
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Organization (Details) $ in Millions |
May 14, 2018
USD ($)
|
Sep. 30, 2018
room
hotel
|
|---|---|---|
| Real Estate Properties [Line Items] | ||
| Hotels | hotel | 1,363 | |
| Total available rooms | room | 88,500 | |
| Franchised hotels | ||
| Real Estate Properties [Line Items] | ||
| Hotels | hotel | 1,352 | |
| Total available rooms | room | 86,100 | |
| Company Operated | ||
| Real Estate Properties [Line Items] | ||
| Hotels | hotel | 11 | |
| Total available rooms | room | 2,400 | |
| Knights Franchise Systems, Inc. | ||
| Real Estate Properties [Line Items] | ||
| Total consideration | $ | $ 26.9 |
Summary of Significant Accounting Policies (Narrative) (Details) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Jan. 01, 2018 |
Dec. 31, 2017 |
|---|---|---|---|
| New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
| Additional paid-in capital, common stock | $ 183,412 | $ 178,028 | |
| Operating lease obligations | $ 76,417 | ||
| Adjustment | Accounting Standards Update 2014-09 | |||
| New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
| Additional paid-in capital, common stock | $ 600 |
Goodwill and Intangible Assets (Summary of Balances of Goodwill and Other Intangibles) (Details) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
|---|---|---|
| Schedule of Goodwill and Intangible Assets [Line Items] | ||
| Goodwill | $ 18,607 | $ 9,404 |
| Finite-lived Intangible assets | 18,451 | 11,461 |
| Total intangible assets | 65,439 | 50,749 |
| Brand names | ||
| Schedule of Goodwill and Intangible Assets [Line Items] | ||
| Finite-lived Intangible assets | 2,433 | 2,814 |
| Customer contracts | ||
| Schedule of Goodwill and Intangible Assets [Line Items] | ||
| Finite-lived Intangible assets | 16,018 | 8,647 |
| Trademarks | ||
| Schedule of Goodwill and Intangible Assets [Line Items] | ||
| Finite-lived Intangible assets | 128 | 128 |
| Brand names | ||
| Schedule of Goodwill and Intangible Assets [Line Items] | ||
| Brand name - indefinite lived | $ 46,860 | $ 39,160 |
Goodwill and Intangible Assets (Goodwill and Intangible Assets by Business Segment) (Details) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
|---|---|---|
| Goodwill [Line Items] | ||
| Goodwill | $ 18,607 | $ 9,404 |
| Intangible assets | 65,439 | 50,749 |
| Company operated hotels | ||
| Goodwill [Line Items] | ||
| Goodwill | 0 | 0 |
| Intangible assets | 4,660 | 4,660 |
| Franchised hotels | ||
| Goodwill [Line Items] | ||
| Goodwill | 18,607 | 9,404 |
| Intangible assets | $ 60,779 | $ 46,089 |
Goodwill and Intangible Assets (Summary of Amortization of Intangible Assets) (Details) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
|---|---|---|
| Finite-Lived Intangible Assets [Line Items] | ||
| Accumulated amortization | $ (5,617) | $ (3,507) |
| Net carrying amount | 18,451 | 11,461 |
| Customer contracts | ||
| Finite-Lived Intangible Assets [Line Items] | ||
| Finite-lived intangibles | 20,773 | 11,673 |
| Net carrying amount | 16,018 | 8,647 |
| Brand names | ||
| Finite-Lived Intangible Assets [Line Items] | ||
| Finite-lived intangibles | 3,295 | 3,295 |
| Net carrying amount | $ 2,433 | $ 2,814 |
Revenue from Contracts with Customers (Receivables, Contract Assets, and Contract Liabilities) (Details) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Jun. 30, 2018 |
Dec. 31, 2017 |
|---|---|---|---|
| Revenue from Contract with Customer [Abstract] | |||
| Accounts receivable | $ 22,214 | $ 13,143 | |
| Key money disbursed | 6,255 | $ 6,106 | 1,148 |
| Capitalized contract costs | 1,100 | 1,032 | 750 |
| Contract liabilities | $ 1,946 | $ 1,889 | $ 1,444 |
Debt and Line of Credit (Senior Secured Term Loan) (Details) - Line of Credit - USD ($) |
1 Months Ended | ||
|---|---|---|---|
May 31, 2018 |
Sep. 30, 2018 |
Aug. 31, 2018 |
|
| Debt Instrument [Line Items] | |||
| Cash collateral | $ 20,600,000 | ||
| RLH Corporation | |||
| Debt Instrument [Line Items] | |||
| Unamortized debt issuance costs | $ 300,000 | ||
| Term Loan Facility | RLH Corporation | |||
| Debt Instrument [Line Items] | |||
| Principal amount of debt | $ 30,000,000.0 | ||
| Principal payment, percentage of balance | 1.25% | ||
| Principal payment | $ 375,000 | ||
| Mandatory prepayment amount, percent of distributions | 50.00% | ||
| Mandatory prepayment amount, maximum amount | $ 5,000,000.0 | ||
| Term Loan Facility | RLH Corporation | LIBOR | |||
| Debt Instrument [Line Items] | |||
| Basis spread on variable rate | 3.00% | ||
| Revolving Credit Facility | RLH Corporation | |||
| Debt Instrument [Line Items] | |||
| Maximum borrowing capacity | $ 10,000,000.0 | ||
| Outstanding line of credit | $ 10,000,000 |
Debt and Line of Credit (RL Baltimore) (Details) - USD ($) |
1 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 06, 2018 |
May 31, 2018 |
May 31, 2017 |
Sep. 30, 2018 |
|
| Promissory note | ||||
| Debt Instrument [Line Items] | ||||
| Purchase price | $ 13,600,000 | |||
| RL Baltimore | Long-term Debt | ||||
| Debt Instrument [Line Items] | ||||
| Extension period | 3 months | |||
| RL Baltimore | Promissory note | ||||
| Debt Instrument [Line Items] | ||||
| Principal amount of debt | $ 13,300,000 | |||
| Interest rate | 11.25% | |||
| Variable Interest Entity, Primary Beneficiary | RLS Balt Venture LLC | ||||
| Debt Instrument [Line Items] | ||||
| Funding provided | $ 2,000,000.0 | $ 2,800,000 | ||
| Ownership percentage | 73.00% | |||
| Revolving Credit Facility | Line of Credit | ||||
| Debt Instrument [Line Items] | ||||
| Proceeds from lines of credit | $ 10,000,000.0 | |||
Debt and Line of Credit (RLH DC) (Details) - RLS DC Venture - Variable Interest Entity, Primary Beneficiary $ in Thousands |
1 Months Ended | |
|---|---|---|
|
May 31, 2018
USD ($)
extension
|
May 31, 2017
USD ($)
|
|
| Debt Instrument [Line Items] | ||
| Funding provided | $ 450 | $ 950 |
| Principal guarantee | $ 4,500 | |
| Number of extension options | extension | 2 | |
Derivative Financial Instruments (Details) - Interest rate cap $ in Millions |
Sep. 30, 2018
USD ($)
|
|---|---|
| RLH Atlanta | |
| Derivative [Line Items] | |
| Original Notional Amount | $ 9.3 |
| 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% |
Operating and Capital Lease Commitments (Details) $ in Millions |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
|
Sep. 30, 2018
USD ($)
hotel
|
Sep. 30, 2017
USD ($)
|
Sep. 30, 2018
USD ($)
hotel
|
Sep. 30, 2017
USD ($)
|
|
| Operating Leased Assets [Line Items] | ||||
| Hotels | 1,363 | 1,363 | ||
| Term of contract | 5 years | |||
| Rent expense | $ | $ 1.4 | $ 1.6 | $ 4.4 | $ 4.8 |
| Company Operated Hotels | ||||
| Operating Leased Assets [Line Items] | ||||
| Hotels | 5 | 5 | ||
Operating and Capital Lease Commitments (Future Minimum Payments Due) (Details) $ in Thousands |
Sep. 30, 2018
USD ($)
|
|---|---|
| Leases [Abstract] | |
| 2018 (remainder) | $ 1,291 |
| 2019 | 5,146 |
| 2020 | 4,891 |
| 2021 | 3,335 |
| 2022 | 2,578 |
| Thereafter | 60,132 |
| Total | 77,373 |
| Operating Lease Obligation | |
| 2018 (remainder) | 1,236 |
| 2019 | 4,843 |
| 2020 | 4,587 |
| 2021 | 3,163 |
| 2022 | 2,467 |
| Thereafter | 60,121 |
| Total | 76,417 |
| Capital Lease Obligation | |
| 2018 (remainder) | 55 |
| 2019 | 303 |
| 2020 | 304 |
| 2021 | 172 |
| 2022 | 111 |
| Thereafter | 11 |
| Total | $ 956 |
Stock Based Compensation (Stock Incentive Plans Narrative) (Details) - 2015 Stock Incentive Plan - shares |
1 Months Ended | ||
|---|---|---|---|
May 31, 2017 |
Sep. 30, 2018 |
Dec. 31, 2015 |
|
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
| Shares authorized (in shares) | 2,900,000 | 1,400,000 | |
| Additional shares authorized (in shares) | 1,500,000 | ||
| Number of shares of common stock available for issuance (in shares) | 909,570 |
Stock Based Compensation (Restricted Stock Units, Narrative) (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
|---|---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
Dec. 31, 2017 |
|
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
| Stock-based compensation expense | $ 1,160 | $ 898 | $ 2,896 | $ 2,392 | |
| Restricted stock units | |||||
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
| Granted (in shares) | 508,212 | ||||
| Vesting percentage per year | 25.00% | ||||
| Vesting period | 4 years | ||||
| Other than options outstanding (in shares) | 1,375,952 | 1,288,752 | 1,375,952 | 1,288,752 | 1,246,966 |
| Vested (in shares) | 205,920 | ||||
| Other than options, fair value | $ 2,100 | $ 1,000 | |||
| Stock-based compensation expense | $ 841 | $ 687 | 2,033 | $ 1,891 | |
| Additional compensation expense | $ 6,900 | $ 6,900 | |||
| Period for recognition | 35 months | ||||
Stock Based Compensation (Restricted Stock Units) (Details) - Restricted stock units - $ / shares |
3 Months Ended | 9 Months Ended |
|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2018 |
|
| Number of Shares | ||
| Other than options outstanding (in shares) | 1,246,966 | |
| Granted (in shares) | 508,212 | |
| Vested (in shares) | (205,920) | |
| Forfeited (in shares) | (173,306) | |
| Other than options outstanding (in shares) | 1,288,752 | 1,375,952 |
| Weighted Average Grant Date Fair Value | ||
| Balance (in dollars per share) | $ 7.27 | |
| Granted (in dollars per share) | 10.45 | |
| Vested (in dollars per share) | 6.95 | |
| Forfeited (in dollars per share) | 7.73 | |
| Balance (in dollars per share) | $ 8.40 |
Stock Based Compensation (Unrestricted Stock Awards) (Details) - Unrestricted stock awards - $ / shares |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
| Shares of unrestricted stock granted (in shares) | 9,210 | 14,184 | 32,961 | 42,432 |
| Weighted average grant date fair value per share (in dollars per share) | $ 11.40 | $ 7.40 | $ 10.14 | $ 7.54 |
Income Taxes (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
| Income Tax Disclosure [Abstract] | ||||
| Income tax expense (benefit) | $ (26) | $ 34 | $ (239) | $ 304 |
Fair Value (Details) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
|---|---|---|
| Carrying Amount | ||
| Financial assets: | ||
| Notes receivable | $ 1,642 | $ 1,098 |
| Financial liabilities: | ||
| Total debt | 34,623 | 112,522 |
| Line of credit | 10,000 | 0 |
| Total capital lease obligations | 956 | 1,409 |
| Fair Value | ||
| Financial assets: | ||
| Notes receivable | 1,642 | 1,098 |
| Financial liabilities: | ||
| Total debt | 34,249 | 112,117 |
| Line of credit | 10,473 | 0 |
| Total capital lease obligations | $ 956 | $ 1,409 |
Business Acquisitions (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||||
|---|---|---|---|---|---|---|---|
May 14, 2018 |
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
May 21, 2018 |
Dec. 31, 2017 |
|
| Business Acquisition [Line Items] | |||||||
| Goodwill | $ 18,607 | $ 18,607 | $ 9,404 | ||||
| Acquisition and integration costs | 95 | $ 1,235 | 2,196 | $ 1,246 | |||
| Knights Franchise Systems, Inc. | |||||||
| Business Acquisition [Line Items] | |||||||
| Purchase price | $ 26,900 | ||||||
| Acquired receivables | 4,200 | ||||||
| Adjustment to receivables | 3,300 | 900 | |||||
| Goodwill | $ 9,200 | 9,203 | 9,203 | ||||
| Acquisition and integration costs | $ 300 | $ 1,900 | |||||
| Vantage Hospitality Group, Inc. | |||||||
| Business Acquisition [Line Items] | |||||||
| Contingent consideration, potential outcome, cash | $ 3,000 | ||||||
| Contingent consideration, potential outcome (in shares) | 276,000 | 276,000 | 276,000 | ||||
| Contingent consideration | $ 300 | ||||||
Business Acquisitions (Allocation of Purchase Price) (Details) - USD ($) $ in Thousands |
Sep. 30, 2018 |
May 14, 2018 |
Dec. 31, 2017 |
|---|---|---|---|
| Business Acquisition [Line Items] | |||
| Goodwill | $ 18,607 | $ 9,404 | |
| Knights Franchise Systems, Inc. | |||
| Business Acquisition [Line Items] | |||
| Current assets | 915 | ||
| Intangible assets | 16,800 | $ 16,800 | |
| Goodwill | 9,203 | $ 9,200 | |
| Total assets acquired | 26,918 | ||
| Current liabilities | 30 | ||
| Total liabilities acquired | 30 | ||
| Total net assets acquired | $ 26,888 |
Business Acquisitions (Intangible Assets Acquired) (Details) - Knights Franchise Systems, Inc. - USD ($) $ in Thousands |
May 14, 2018 |
Sep. 30, 2018 |
|---|---|---|
| Business Acquisition [Line Items] | ||
| Intangible assets, fair value | $ 16,800 | $ 16,800 |
| Brand names | ||
| Business Acquisition [Line Items] | ||
| Indefinite-lived intangible assets, fair value | 7,700 | |
| Customer contracts | ||
| Business Acquisition [Line Items] | ||
| Finite-lived intangible assets, fair value | $ 9,100 | |
| Finite-lived intangible assets, useful life | 15 years |
Business Acquisitions (Revenues and Earnings From Knights Inn's Operations) (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
| Business Acquisition [Line Items] | ||||
| Revenue | $ 36,000 | $ 51,024 | $ 107,651 | $ 133,434 |
| Net income (loss) from continuing operations before income taxes | 17,587 | $ 3,393 | 23,049 | $ (1,519) |
| Knights Franchise Systems, Inc. | ||||
| Business Acquisition [Line Items] | ||||
| Revenue | 1,753 | 2,714 | ||
| Net income (loss) from continuing operations before income taxes | $ 862 | $ (40) | ||
Business Acquisitions (Pro Forma Information) (Details) - Knights Franchise Systems, Inc. - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
| Business Acquisition [Line Items] | ||||
| Revenue | $ 36,000 | $ 52,958 | $ 110,280 | $ 139,162 |
| Net income (loss) | 17,613 | 5,236 | 25,219 | 3,286 |
| Net income (loss) and comprehensive income (loss) attributable to RLH Corporation | $ 8,943 | $ 4,365 | $ 11,140 | $ 3,793 |
| Earnings (loss) per share attributable to RLH Corporation - basic (in dollars per share) | $ 0.36 | $ 0.18 | $ 0.46 | $ 0.16 |
| Earnings (loss) per share attributable to RLH Corporation - diluted (in dollars per share) | $ 0.35 | $ 0.18 | $ 0.44 | $ 0.15 |
Discontinued Operations - Narrative (Details) $ in Millions |
3 Months Ended |
|---|---|
|
Dec. 31, 2017
USD ($)
| |
| Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |
| Tax expense for gain (loss) on sale | $ 1.1 |
| Entertainment Business | Discontinued Operations, Disposed of by Sale | |
| Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |
| Gain (loss) on sale | (0.2) |
| Cash proceeds from sale | 6.0 |
| Transaction costs | 0.7 |
| Net assets | $ 4.4 |
Discontinued Operations (Summary of Entertainment Segment) (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
| Operating expenses: | ||||
| Income (loss) from discontinued operations | $ 0 | $ 268 | $ 0 | $ 402 |
| 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 | 9,050 | ||
| Operating expenses: | ||||
| Entertainment | 2,555 | 8,372 | ||
| Other | 0 | 0 | ||
| Depreciation and amortization | 7 | 64 | ||
| Gain on asset dispositions, net | (1) | 3 | ||
| Total operating expenses | 2,561 | 8,439 | ||
| Operating income | 408 | 611 | ||
| Interest expense | 0 | 0 | ||
| Other income (expense), net | 0 | 0 | ||
| Income tax (expense) benefit | (140) | (209) | ||
| Income (loss) from discontinued operations | $ 268 | 402 | ||
| Depreciation and amortization | 64 | |||
| Capital expenditures | $ 101 | |||
Assets Held for Sale (Summary of Discontinued Operations) (Details) - Company operated hotels - Discontinued Operations, Held-for-sale $ in Thousands |
Dec. 31, 2017
USD ($)
|
|---|---|
| Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |
| Inventories | $ 156 |
| Property and equipment, net | 34,143 |
| Other assets, net | 60 |
| Assets held for sale | $ 34,359 |
Subsequent Event (Details) - RLS Balt Venture LLC - Variable Interest Entity, Primary Beneficiary |
9 Months Ended | |
|---|---|---|
Oct. 25, 2018 |
Sep. 30, 2018 |
|
| Subsequent Event [Line Items] | ||
| Ownership percentage | 73.00% | |
| Subsequent Event | ||
| Subsequent Event [Line Items] | ||
| Ownership percentage | 100.00% |
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