10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended March 31, 2020

OR 

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

For the transition period from              to             

Commission File Number: 001-13957 

RED LION HOTELS CORPORATION

(Exact name of registrant as specified in its charter)

Washington			91-1032187
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)
1550 Market St. #425	Denver	Colorado	80202
(Address of Principal Executive Offices)			(Zip Code)

(509) 459-6100

Registrant's telephone number, including area code

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	RLH	New York Stock Exchange

__________________________________________

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).     Yes  ☒  No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer," "accelerated filer,” and "smaller reporting company" in Rule 12b-2 of the Exchange Act. 

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☒
		Emerging growth company	☐

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

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

As of May 4, 2020, there were 25,341,649 shares of the registrant’s common stock outstanding.

TABLE OF CONTENTS

Item No.	Description	Page No.
	PART I – FINANCIAL INFORMATION
Item 1	Financial Statements (unaudited):
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Comprehensive Income (Loss)	4
	Condensed Consolidated Statements of Stockholders' Equity	5
	Condensed Consolidated Statements of Cash Flows	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2	Management's Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3	Quantitative and Qualitative Disclosures About Market Risk	31
Item 4	Controls and Procedures	31
	PART II – OTHER INFORMATION
Item 1	Legal Proceedings	31
Item 1A	Risk Factors	32
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	34
Item 3	Defaults Upon Senior Securities	34
Item 4	Mine Safety Disclosures	34
Item 5	Other Information	34
Item 6	Exhibits	35
	Signatures	36

2

PART I – FINANCIAL INFORMATION

Item 1.Financial Statements

RED LION HOTELS CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

	March 31, 2020		December 31, 2019
	(In thousands, except share data)
ASSETS
Current assets:
Cash and cash equivalents ($1,914 and $1,819 attributable to VIEs)	$	37,775	$	29,497
Restricted cash ($100 and $2,311 attributable to VIEs)	100		2,311
Accounts receivable ($718 and $1,033 attributable to VIEs), net of an allowance for doubtful accounts of $8,125 and $4,589, respectively	10,701		15,143
Notes receivable, net	286		5,709
Other current assets ($144 and $311 attributable to VIEs)	5,156		5,849
Total current assets	54,018		58,509
Property and equipment, net ($11,520 and $29,848 attributable to VIEs)	36,071		68,668
Operating lease right-of-use assets ($— and $10,810 attributable to VIEs)	5,552		48,283
Goodwill	18,595		18,595
Intangible assets, net	47,845		48,612
Other assets, net ($— and $703 attributable to VIEs)	2,427		3,851
Total assets	$	164,508	$	246,518
LIABILITIES
Current liabilities:
Accounts payable ($543 and $589 attributable to VIEs)	$	6,251	$	5,510
Accrued payroll and related benefits ($68 and $349 attributable to VIEs)	1,184		2,709
Other accrued liabilities ($176 and $455 attributable to VIEs)	4,915		5,469
Long-term debt, due within one year ($5,576 and $16,984 attributable to VIEs)	5,576		16,984
Operating lease liabilities, due within one year ($— and $966 attributable to VIEs)	1,519		4,809
Total current liabilities	19,445		35,481
Long-term debt, due after one year, net of debt issuance costs ($— and $5,576 attributable to VIEs)	—		5,576
Line of credit, due after one year	—		10,000
Operating lease liabilities, due after one year ($— and $11,938 attributable to VIEs)	5,339		46,592
Deferred income and other long-term liabilities ($3 and $28 attributable to VIEs)	941		1,105
Deferred income taxes	678		743
Total liabilities	26,403		99,497
Commitments and contingencies (Note 10)
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; 25,208,983 and 25,148,005 shares issued and outstanding	253		251
Additional paid-in capital, common stock	179,568		181,608
Accumulated deficit	(44,974)		(36,875)
Total RLH Corporation stockholders' equity	134,847		144,984
Noncontrolling interest	3,258		2,037
Total stockholders' equity	138,105		147,021
Total liabilities and stockholders’ equity	$	164,508	$	246,518

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

3

RED LION HOTELS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

	Three Months Ended
	March 31,
	2020		2019
	(In thousands, except per share data)
Revenue:
Royalty	$	4,357	$	5,740
Marketing, reservations and reimbursables	5,805		6,729
Other franchise	774		542
Company operated hotels	6,329		12,970
Other	—		3
Total revenues	17,265		25,984
Operating expenses:
Selling, general, administrative and other expenses	16,265		7,391
Company operated hotels	6,678		11,545
Marketing, reservations and reimbursables	5,758		7,161
Depreciation and amortization	2,537		3,447
Asset impairment	1,760		—
Loss (gain) on asset dispositions, net	(7,892)		6
Transaction and integration costs	398		62
Total operating expenses	25,504		29,612
Operating income (loss)	(8,239)		(3,628)
Other income (expense):
Interest expense	(506)		(882)
Loss on early retirement of debt	(1,309)		—
Other income (loss), net	48		33
Total other income (expense)	(1,767)		(849)
Income (loss) before taxes	(10,006)		(4,477)
Income tax expense (benefit)	(752)		82
Net income (loss)	(9,254)		(4,559)
Net (income) loss attributable to noncontrolling interest	1,155		286
Net income (loss) and comprehensive income (loss) attributable to RLH Corporation	$	(8,099)	$	(4,273)
Earnings (loss) per share - basic	$	(0.32)	$	(0.17)
Earnings (loss) per share - diluted	$	(0.32)	$	(0.17)
Weighted average shares - basic	25,199		24,603
Weighted average shares - diluted	25,199		24,603

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

4

RED LION HOTELS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(Unaudited)

		Red Lion Hotels Corporation Stockholders' Equity
		Common Stock					Retained Earnings (Accumulated Deficit)		RLH Corporation Total Equity		Equity Attributable to Noncontrolling Interest
		Shares	Amount		Additional Paid-In Capital								Total Equity
		(In thousands, except share data)
Balances, December 31, 2018		24,570,158	$	246	$	182,018	$	(17,846)	$	164,418	$	21,164	$	185,582
	Net income (loss)	—	—		—		(4,273)		(4,273)		(286)		(4,559)
	Shared based payment activity	56,301	1		685		—		686		—		686
	Distributions to noncontrolling interests	—	—		—		—		—		(7,431)		(7,431)
Balances, March 31, 2019		24,626,459	247		182,703		(22,119)		160,831		13,447		174,278
	Net income (loss)	—	—		—		(2,997)		(2,997)		(774)		(3,771)
	Shared based payment activity	449,453	4		(1,034)		—		(1,030)		—		(1,030)
Balances, June 30, 2019		25,075,912	251		181,669		(25,116)		156,804		12,673		169,477
	Net income (loss)	—	—		—		(3,672)		(3,672)		(2,980)		(6,652)
	Shared based payment activity	42,600	1		1,054		—		1,055		—		1,055
Balances, September 30, 2019		25,118,512	252		182,723		(28,788)		154,187		9,693		163,880
	Net income (loss)	—	—		—		(8,087)		(8,087)		2,096		(5,991)
	Shared based payment activity	29,493	(1)		(739)		—		(740)		—		(740)
	Reclassification of noncontrolling interest	—	—		(376)		—		(376)		376		—
	Distributions to noncontrolling interests	—	—		—		—		—		(10,128)		(10,128)
Balances, December 31, 2019		25,148,005	251		181,608		(36,875)		144,984		2,037		147,021
	Net income (loss)	—	—		—		(8,099)		(8,099)		(1,155)		(9,254)
	Shared based payment activity	60,978	2		336		—		338		—		338
	Reclassification of noncontrolling interest	—	—		(2,376)		—		(2,376)		2,376		—
Balances, March 31, 2020		25,208,983	$	253	$	179,568	$	(44,974)	$	134,847	$	3,258	$	138,105

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

5

RED LION HOTELS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Three Months Ended
	March 31,
	2020		2019
	(In thousands)
Operating activities:
Net income (loss)	$	(9,254)	$	(4,559)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization	2,537		3,447
Noncash PIK interest and amortization of debt issuance costs	182		47
Amortization of key money and contract costs	264		206
Amortization of contract liabilities	(165)		(197)
Loss (gain) on asset dispositions, net	(7,892)		6
Noncash loss on early retirement of debt	750		—
Asset impairment	1,760		—
Deferred income taxes	(65)		52
Stock-based compensation expense	373		916
Provision for doubtful accounts	9,739		245
Change in operating assets and liabilities:
Accounts receivable	501		(1,009)
Key money disbursements	(129)		(236)
Other current assets	504		(616)
Accounts payable	459		1,383
Other accrued liabilities	(1,858)		(1,717)
Net cash provided by (used in) operating activities	(2,294)		(2,032)
Investing activities:
Capital expenditures	(782)		(1,500)
Net proceeds from disposition of property and equipment	36,896		—
Collection of notes receivable	—		21
Advances on notes receivable	—		(90)
Net cash provided by (used in) investing activities	36,114		(1,569)
Financing activities:
Borrowings on long-term debt, net of discounts	—		16,513
Repayment of long-term debt and finance leases	(17,717)		(170)
Repayment of line of credit borrowing	(10,000)		—
Distributions to noncontrolling interest	—		(7,431)
Stock-based compensation awards canceled to settle employee tax withholding	(81)		(342)
Stock option and stock purchase plan issuances, net and other	45		112
Net cash provided by (used in) financing activities	(27,753)		8,682
Change in cash, cash equivalents and restricted cash:
Net increase (decrease) in cash, cash equivalents and restricted cash	6,067		5,081
Cash, cash equivalents and restricted cash at beginning of period	31,808		19,789
Cash, cash equivalents and restricted cash at end of period	$	37,875	$	24,870

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

6

RED LION HOTELS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.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 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, Knights Inn, and Country Hearth Inns & Suites.

2.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, 2019 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, 2019, filed with the SEC in our annual report on Form 10-K on February 27, 2020.

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 Sheets, the Condensed Consolidated Statements of Comprehensive Income (Loss), the Condensed Consolidated Statements of Stockholders' Equity, and the Condensed Consolidated Statements of Cash Flows. 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.

New Accounting Pronouncements Not Yet Adopted

In June 2016, the Financial Accounting Standards Board ("FASB") issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326) – Measurement of Credit Losses on Financial Instruments, as amended by multiple subsequent ASUs, which will change how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The ASU will replace the current "incurred loss" approach with an "expected loss" model for instruments measured at amortized cost. For trade and other receivables, held to maturity debt securities, loans and other instruments, entities will be required to use a new forward-looking “expected loss” model that generally will result in the earlier recognition of allowances for losses. In October 2019, an update was issued to the standard that deferred the effective date of the guidance to the first quarter of 2023 for smaller reporting companies such as us. We are currently evaluating the effects of this ASU on our financial statements, and such effects have not yet been determined.

In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes, which amends the existing guidance related to the accounting for income taxes. The ASU eliminates certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period, and the recognition for outside basis differences related to changes in ownership of equity method investments and foreign subsidiaries. The guidance also simplifies aspects of accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. The ASU is effective the first quarter of 2021, with early adoption permitted. We are currently evaluating the effects of this ASU on our financial statements, and such effects have not yet been determined.

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

7

3. 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. We allocate selling, general, administrative and other expenses to our operating segments. All balances have been presented after the elimination of inter-segment and intra-segment revenues and expenses.

Selected financial information is provided below (in thousands):

Three Months Ended March 31, 2020	Franchised Hotels		Company Operated Hotels		Other		Total
Revenue	$	10,936	$	6,329	$	—	$	17,265
Operating expenses:
Segment and other operating expenses	17,540		7,030		4,131		28,701
Depreciation and amortization	882		866		789		2,537
Asset impairment	—		1,760		—		1,760
Transaction and integration costs	—		32		366		398
Loss (gain) on asset dispositions, net	—		(7,892)		—		(7,892)
Operating income (loss)	$	(7,486)	$	4,533	$	(5,286)	$	(8,239)
Identifiable assets as of March 31, 2020	$	82,199	$	65,523	$	16,786	$	164,508

Three Months Ended March 31, 2019	Franchised Hotels		Company Operated Hotels		Other		Total
Revenue	$	13,011	$	12,970	$	3	$	25,984
Operating expenses:
Segment and other operating expenses	9,622		12,461		4,014		26,097
Depreciation and amortization	914		1,956		577		3,447
Transaction and integration costs	62		—		—		62
Loss (gain) on asset dispositions, net	—		6		—		6
Operating income (loss)	$	2,413	$	(1,453)	$	(4,588)	$	(3,628)
Identifiable assets as of December 31, 2019	$	91,832	$	138,477	$	16,209	$	246,518

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4.  Variable Interest Entities

Our joint venture entities have been determined to be variable interest entities ("VIEs") because our voting rights are not proportional to our financial interest and substantially all of each joint 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 our joint venture partners, which do not have the unilateral ability to exercise kick-out rights, and (b) we have the obligation to absorb losses and right to receive benefits that could be significant to the entity through our equity interest and management fees. As a result, we consolidate the assets, liabilities, and results of operations of (1) RL Venture LLC ("RL Venture"), (2) RLS Atla Venture LLC ("RLS Atla Venture"), and (3) RLS DC Venture LLC ("RLS DC Venture"). The equity interests owned by our joint venture partners are reflected as a noncontrolling interest in the condensed consolidated financial statements.

In November 2019, RLH Atlanta LLC, which is wholly owned by RLS Atla Venture, sold the Red Lion Hotel Atlanta International Airport Hotel. Upon completion of the sale, no remaining distributions to our joint venture partner, Shelbourne Falcon Big Peach Investors, LLC, were required and the remaining noncontrolling interest for the entity was reclassified to Additional paid-in capital on the Condensed Consolidated Balance Sheets.

There were no cash contributions or distributions by partners to any of the joint venture entities during the three months ended March 31, 2020 or 2019 except as otherwise described below.

RL Venture

For all periods presented, RLH Corporation owns 55% of RL Venture and our JV Partner owns 45%. In March 2019, secured loans with an aggregate principal of $16.6 million were entered into for two RL Venture properties, Hotel RL Salt Lake City and Hotel RL Olympia. Shortly thereafter the net loan proceeds were distributed to us and our joint venture partner in accordance with our respective ownership percentages. In December 2019, the Hotel RL Salt Lake City sold for $33.0 million. Proceeds from the sale were used to repay in full the secured loan entered into in 2019 for the Hotel RL Salt Lake City property. As of March 31, 2020, RL Venture has one remaining property, the Hotel RL Olympia.

Cash distributions may also be made periodically based on calculated distributable income. There were no distributions made during the three months ended March 31, 2020. During the three months ended March 31, 2019, cash distributions totaled $16.5 million, of which RLH Corporation received $9.1 million.

RLS DC Venture

As of December 31, 2019, RLH Corporation owned 55% of RLS DC Venture and our Joint Venture Partner owned 45%. In May 2019, a secured loan with principal and accrued exit fee of $17.4 million was executed by RLS DC Venture. The net loan proceeds were used to pay off the previous debt with a principal balance of approximately $15.9 million. There were no cash distributions resulting from the refinancing. In February 2020, the Hotel RL in Washington DC, which was wholly-owned by RLS DC Venture, was sold for $16.4 million. Using proceeds from the sale, together with the release of $2.3 million in restricted cash held by CP Business Finance I, LP, RLS DC Venture repaid the remaining outstanding principal balance and accrued exit fee under the secured loan agreement. The $2.4 million balance remaining in non-controlling interest for the entity was reclassified to Additional paid-in capital on the Condensed Consolidated Balance Sheets as no remaining distributions to the joint venture partner are required.

9

5. Property and Equipment

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

	March 31, 2020		December 31, 2019
Buildings and equipment	$	47,186	$	101,619
Furniture and fixtures	6,718		12,407
Landscaping and land improvements	493		2,038
	54,397		116,064
Less accumulated depreciation	(29,099)		(57,491)
	25,298		58,573
Land	6,871		6,871
Construction in progress	3,902		3,224
Property and equipment, net	$	36,071	$	68,668

A novel strain of coronavirus (COVID-19) was first identified in Wuhan, China in December 2019, and subsequently declared a pandemic by the World Health Organization on March 11, 2020. To date, COVID-19 has surfaced in nearly all regions around the world and resulted in travel restrictions and business slowdowns or shutdowns in affected areas. The economic impact of the pandemic thus far has been extremely punitive to travel related businesses across the nation, significantly affecting the operating results of companies within the hospitality industry. We considered the actual and anticipated economic impacts of the COVID-19 pandemic on our financial results to be an indicator that the carrying value of our long-lived assets might not be recoverable. Accordingly, we performed a test for recoverability using probability-weighted undiscounted cash flows on our long-lived assets as of March 31, 2020.

Only the Red Lion Hotel Seattle Airport, one of our company operated hotel properties under a lease through February 2024, did not recover the carrying value of the long-lived asset group in the test for recoverability, due to the short useful life and lack of terminal value. After calculating the fair value of the Red Lion Hotel Seattle Airport property long-lived asset group, we recognized an impairment loss of $1.8 million. The fair value was determined based on a discounted cash flow analysis, which is a Level 3 fair value measurement. The impairment loss was allocated to the assets within the long-lived asset group on a pro rata basis, with $1.5 million applied against the hotel building leasehold interest, included within Property and equipment, net and $0.3 million applied against the Operating lease right-of-use asset on the Condensed Consolidated Balance Sheets. There were no other impairments of our long-lived assets.

During the three months ended March 31, 2020, we sold the Hotel RL Washington DC joint venture hotel property, and our leasehold interest in the Red Lion Anaheim for a combined net gain of $7.9 million. There were no properties sold during the three months ended March 31, 2019.

6.  Goodwill and Intangible Assets

Interim Impairment Assessment

We considered the actual and anticipated economic impacts of the COVID-19 pandemic on our financial results to be an indicator that the fair value of our goodwill and indefinite-lived intangible assets might be less than their carrying amounts. Accordingly, we performed quantitative assessments to measure the fair values of these assets as of March 31, 2020. No impairments were identified based on the quantitative impairment calculations of our goodwill and other indefinite-lived intangible assets.

10

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

	March 31, 2020		December 31, 2019
Goodwill	$	18,595	$	18,595
Intangible assets
Brand name - indefinite lived	$	32,532	$	32,532
Trademarks - indefinite lived	128		128
Brand name - finite lived, net	3,376		3,554
Customer contracts - finite lived, net	11,809		12,398
Total intangible assets, net	$	47,845	$	48,612

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

	March 31, 2020		December 31, 2019
Customer contracts	$	20,773	$	20,773
Brand name - finite lived	5,395		5,395
Accumulated amortization	(10,983)		(10,216)
Net carrying amount	$	15,185	$	15,952

7.  Revenue from Contracts with Customers

Inner Circle

In July 2019, the parent entities for eight Inner Circle franchisees and the operating entities for two other Inner Circle franchisees all filed for voluntary bankruptcy protection under Chapter 11 of the United Stated Bankruptcy Code.

As of March 31, 2020 there was approximately $7.1 million in accounts receivable and notes receivable balances related to these franchisees, including unamortized key money converted to notes receivable upon termination of contracts, of which $0.8 million had been previously allowed for. The remaining balances were supported through a security interest in property improvements and an equity interest in one of the leaseholds, as well as a personal guarantee of the owner. However, during the first quarter of 2020, the first lienholder for the collateral property indicated its desire to exercise its right to foreclose on the leasehold interest and liquidate the property. Due to the timing of this action in conjunction with the decline in fair value of the collateral property due to the economic impacts of the COVID-19 pandemic, we have concluded the fair value of the collateral no longer supports any of the remaining balances and as such we have recognized bad debt expense of $6.3 million on the previously unreserved balances.

We recognized $0.1 million and $0.3 million of royalty income from these franchisees during the three months ended March 31, 2020 and 2019, respectively.

Other Allowances

As of March 31, 2020, we evaluated the economic impacts of the COVID-19 pandemic and historical collection information on the collectibility of our accounts receivable and notes receivable balances. We determined it was appropriate to recognize additional bad debt expense of $3.4 million, primarily related to large balances under legal dispute, aged balances from terminated agreements, or aged balances placed with third party collections.

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The following table provides information about receivables, contract assets and contract liabilities from contracts with customers (in thousands):

	Financial Statement Line Item(s)	March 31, 2020		December 31, 2019
Accounts receivable	Accounts receivable, net	$	10,701	$	15,143
Key money disbursed	Other current assets and Other assets, net	1,875		2,228
Capitalized contract costs	Other current assets and Other assets, net	833		941
Contract liabilities	Other accrued liabilities and Deferred income and other long-term liabilities	1,397		1,448

Significant changes in the key money disbursements, capitalized contract costs, and contract liabilities balances during the period are as follows (in thousands):

	Key Money Disbursed		Capitalized Contract Costs		Contract Liabilities
Balance as of January 1, 2020	$	2,228	$	941	$	1,448
Key money disbursed	129		—		—
Key money converted from accounts receivable	247		—		—
Key money converted to notes receivable	(639)		—		—
Costs incurred to acquire contracts	—		66		—
Cash received in advance	—		—		114
Revenue or expense recognized that was included in the January 1, 2020 balance	(83)		(172)		(162)
Revenue or expense recognized in the period for the period	(7)		(2)		(3)
Balance as of March 31, 2020	$	1,875	$	833	$	1,397

Estimated revenues and expenses expected to be recognized related to performance obligations that were unsatisfied as of March 31, 2020, including revenues related to application, initiation and other fees were as follows (in thousands):

Year Ending December 31,	Contra Revenue		Expense		Revenue
2020 (remainder)	$	254	$	263	$	413
2021	267		183		361
2022	235		154		269
2023	197		113		170
2024	161		67		99
Thereafter	761		53		85
Total	$	1,875	$	833	$	1,397

We did not estimate revenues expected to be recognized related to our unsatisfied performance obligations for our: (i) royalty fees, as they are considered sales-based royalty fees recognized as hotel room sales occur in exchange for licenses of our brand names over the terms of the franchise contracts; and (ii) hotel management fees, since they are allocated entirely to the wholly unsatisfied promise to transfer management services, which form part of a single performance obligation in a series, over the term of the management contract. Therefore, there are no amounts included in the table above related to these revenues.

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8.  Debt and Line of Credit

The current and noncurrent portions of our debt as of March 31, 2020 and December 31, 2019 are as follows (in thousands):

	March 31, 2020				December 31, 2019
	Current		Noncurrent		Current		Noncurrent
Line of Credit	$	—	$	—	$	—	$	10,000
RL Venture - Olympia	5,600		—		—		5,600
RLH DC Venture	—		—		17,648		—
Total debt	5,600		—		17,648		15,600
Unamortized debt issuance costs	(24)		—		(664)		(24)
Debt net of debt issuance costs	$	5,576	$	—	$	16,984	$	15,576

Each of our debt agreements contain customary reporting, financial and operating covenants. We were in compliance with all the financial covenants of our debt agreements at March 31, 2020.

RL Venture - Olympia

In March 2019, RL Olympia, LLC, a subsidiary of RL Venture, executed a secured debt agreement with Umpqua Bank for a term loan with a principal balance of $5.6 million. We incurred approximately $33,000 of debt discounts and debt issuance costs in connection with the issuance of the loan. The loan is fully secured by the Hotel RL Olympia property. The loan has a maturity date of March 18, 2021 and a variable interest rate of LIBOR plus 2.25%, payable monthly. The borrower has the option to exercise two six-month extensions upon maturity of the loan. There are no principal repayment requirements prior to the maturity date and the loan includes a financial covenant to be calculated semi-annually in which the property must maintain a minimum debt service coverage ratio of not less than 1.6 to 1.0. Due to the impact of the COVID-19 pandemic, we have determined the property is unlikely to meet the required minimum financial covenants as of the next required semi-annual calculation of June 30, 2020. As a violation of the financial covenant would result in an acceleration of the maturity date of the loan, we have classified this debt as current in our Condensed Consolidated Balance Sheets as of March 31, 2020, despite the previously discussed extensions available to us under the loan agreement. We are engaged in ongoing discussions with our lenders regarding potential remedies for the anticipated covenant violation.

Line of Credit

In August 2018, we drew the full $10.0 million available to us on the Line of Credit under 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. In the first quarter of 2020, we sold our leasehold interest in the Red Lion Anaheim for $21.5 million. Using proceeds from the sale, we repaid the outstanding Line of Credit balance of $10.0 million. This debt is no longer outstanding as of March 31, 2020 and as the credit agreement has been terminated we no longer have access to this Line of Credit. Due to the early extinguishment of this debt, we recognized a Loss on early retirement of debt of $0.2 million.

RLH DC Venture

In the first quarter of 2020, we sold the Hotel RL Washington DC for $16.4 million. Using proceeds from the sale, together with the release of $2.3 million in restricted cash held by CP Business Finance I, LP, RLH DC Venture repaid the remaining outstanding principal balance and accrued exit fee under the RLH DC Venture loan agreement of $17.7 million. This debt is no longer outstanding as of March 31, 2020. Due to the early extinguishment of this debt, we recognized a Loss on early retirement of debt of $1.1 million, including a prepayment penalty of $0.6 million.

9. Leases

We lease equipment and land and/or property at certain company operated hotel properties as well as office space for our headquarters through operating leases. We have elected the practical expedient so that leases with an initial term of 12 months or less are not recorded on the balance sheet.

We are obligated under finance leases for certain hotel equipment at our company operated hotel locations. The finance leases typically have a five year term.

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During the first quarter of 2020, we sold the Hotel RL Washington DC joint venture property, which had a ground lease with a term through 2080. As of December 31, 2019, we had recorded an Operating lease right-of use asset of $10.8 million, and total operating lease liabilities of $12.9 million for this ground lease. The ground lease was transferred with the sale of the property, resulting in the removal of these balances from the Condensed Consolidated Balance Sheets.

Also in the first quarter of 2020, we sold our leasehold interest in the Red Lion Anaheim, which had a ground lease with a term through 2021 with renewal options through 2106 that were reasonably assured to be exercised. As of December 31, 2019, we had recorded an Operating lease right-of use asset of $31.4 million, with corresponding operating lease liabilities of $31.4 million for this ground lease. The ground lease was transferred with the sale of the property, resulting in the removal of these balances from the Condensed Consolidated Balance Sheets.

Balance sheet information related to our leases is included in the following table (in thousands):

Operating Leases	March 31, 2020		December 31, 2019
Operating lease right-of-use assets	$	5,552	$	48,283
Operating lease liabilities, due within one year	$	1,519	$	4,809
Operating lease liabilities, due after one year	5,339		46,592
Total operating lease liabilities	$	6,858	$	51,401

Finance Leases	March 31, 2020		December 31, 2019
Property and equipment	$	135	$	298
Less accumulated depreciation	(106)		(168)
Property and equipment, net	$	29	$	130
Other accrued liabilities	$	27	$	74
Deferred income and other long-term liabilities	6		76
Total finance lease liabilities	$	33	$	150

The components of lease expense during the three months ended March 31, 2020 and 2019 are included in the following table (in thousands):

	Financial Statement Line Item(s)	Three Months Ended March 31, 2020		Three months ended March 31, 2019
Operating lease expense	Selling, general, administrative and other expenses, and Company operated hotels	$	816	$	1,133
Short-term lease expense	Selling, general, administrative and other expenses, and Company operated hotels	98		247
Sublease income	Selling, general, administrative and other expenses	(18)		—
Finance lease expense
Amortization of finance right-of-use assets	Depreciation and amortization	8		35
Interest on lease liabilities	Interest expense	3		8
Total finance lease expense		11		43
Total lease expense		$	907	$	1,423

Supplemental cash flow information for our leases is included in the following table (in thousands):

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Cash paid for amounts included in the measurement of lease liabilities:	Three Months Ended March 31, 2020		Three Months Ended March 31, 2019
Cash used in operating activities for operating leases	$	848	$	1,169
Cash used in operating activities for finance leases	3		8
Cash used in financing activities for finance leases	13		34

There were no new finance lease assets or associated liabilities during the three months ended March 31, 2020 and 2019.

Information related to the weighted average remaining lease terms and discount rates for our leases as of March 31, 2020 and December 31, 2019 is included in the following table:

	March 31, 2020		December 31, 2019
Weighted average remaining lease term (in years)
Operating leases	6		69
Finance leases	1		3
Weighted average discount rate
Operating leases	5.8	%	7.2	%
Finance leases	5.7	%	11.9	%

The future maturities of lease liabilities at March 31, 2020, are as indicated below (in thousands):

Years Ending December 31,	Operating Leases		Finance Leases
2020 (remainder)	$	1,141	$	20
2021	1,522		14
2022	1,486		—
2023	1,449		—
2024	595		—
Thereafter	1,984		—
Total lease payments	8,177		34
Less: imputed interest	1,319		1
	$	6,858	$	33

The future maturities of lease liabilities in the table above do not differ materially from future minimum rental payments under the previous leasing standard.

10. Commitments and Contingencies

At any given time we are subject to claims and actions incidental to the operations of our business. During the second quarter of 2019, we accrued approximately $952,000 for a settlement over a wage dispute with former hotel employees related to the calculation of pay for certain rest, break, meal, and other periods that are required under California law. Based on information currently available, we do not expect that any other sums we may receive or have to pay in connection with any legal proceeding would have a material effect on our consolidated financial position or net cash flow.

See Item 1. Legal Proceedings within Part 2. Other Information for additional detail.

11. Stock Based Compensation

Stock Incentive Plans

The 2015 Stock Incentive Plan, as amended, ("2015 Plan") authorizes the grant or issuance of various stock-based awards, including stock options, restricted stock units, and other stock-based compensation. The 2015 Plan was approved by our shareholders in 2015, and amended in 2017, and as amended provides for awards of 2.9 million shares, subject to adjustments for stock splits, stock dividends and similar events. As of March 31, 2020, there were 1.2 million shares of common stock available for issuance pursuant to future awards under the 2015 Plan, as amended.

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Stock based compensation expense reflects the fair value of stock-based awards measured at grant date, including an estimated forfeiture rate, and is recognized over the relevant service period. For the three months ended March 31, 2020 and 2019 stock-based compensation expense is as follows (in thousands):

	Three Months Ended March 31,
	2020		2019
Restricted stock units	$	238	$	612
Unrestricted stock awards	112		129
Performance stock units	15		147
Stock options	—		22
Employee stock purchase plan	8		6
Total stock-based compensation	$	373	$	916

Restricted Stock Units

Restricted stock units (RSUs") 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 2015 Plan, 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 three months ended March 31, 2020 and 2019 was approximately $0.2 million and $1.2 million, respectively. For RSUs outstanding as of March 31, 2020, there was $1.8 million in compensation expense remaining to be recognized over the remaining weighted average vesting periods of 23 months. However, in connection with a reduction in force in April 2020, 73,613 outstanding RSUs were forfeited, leaving $1.4 million in remaining compensation expense to be recognized over the remaining weighted average vesting periods of 24 months as of April 30, 2020.

A summary of restricted stock unit activity for the three months ended March 31, 2020, is as follows:

	Number of Shares	Weighted Average Grant Date Fair Value
January 1, 2020	459,070	$	9.03
Vested	(120,017)	$	8.51
Forfeited	(51,393)	$	8.45
March 31, 2020	287,660	$	9.36

Performance Stock Units, Shares Issued as Compensation

Performance stock units ("PSUs") are granted 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. No PSUs were granted during the three months ended March 31, 2020.

During the three months ended March 31, 2020, 25,796 PSUs vested at a weighted average grant date fair value of $6.45. The fair value of PSUs that vested during the three months ended March 31, 2020 was approximately $38,000. No PSUs vested during the three months ended March 31, 2019. There are no PSUs outstanding and no remaining compensation expense to be recognized related to PSUs as of March 31, 2020.

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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 months ended March 31, 2020 and 2019:

	Three Months Ended March 31,
	2020		2019
Shares of unrestricted stock granted	30,883		15,355
Weighted average grant date fair value per share	$	3.63	$	8.44

12. Earnings (Loss) Per Share

The following table presents a reconciliation of the numerators and denominators used in the basic and diluted net income (loss) per share computations for the three months ended March 31, 2020 and 2019 (in thousands, except per share data):

	Three Months Ended March 31,
	2020		2019
Numerator - basic and diluted:
Net income (loss)	$	(9,254)	$	(4,559)
Net (income) loss attributable to noncontrolling interest	1,155		286
Net income (loss) attributable to RLH Corporation	$	(8,099)	$	(4,273)
Denominator:
Weighted average shares - basic	25,199		24,603
Weighted average shares - diluted	25,199		24,603
Earnings (loss) per share - basic	$	(0.32)	$	(0.17)
Earnings (loss) per share - diluted	$	(0.32)	$	(0.17)

The following table presents options to purchase common shares, restricted stock units outstanding, performance stock units outstanding, and warrants to purchase common 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 months ended March 31, 2020 and 2019.

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	Three Months Ended March 31,
	2020	2019
Stock Options(1)
Dilutive awards outstanding	—	—
Antidilutive awards outstanding	—	81,130
Total awards outstanding	—	81,130
Restricted Stock Units(2)
Dilutive awards outstanding	—	—
Antidilutive awards outstanding	287,660	1,395,881
Total awards outstanding	287,660	1,395,881
Performance Stock Units(3)
Dilutive awards outstanding	—	—
Antidilutive awards outstanding	—	427,638
Total awards outstanding	—	427,638
Warrants(4)
Dilutive awards outstanding	—	—
Antidilutive awards outstanding	—	442,533
Total awards outstanding	—	442,533

⁽¹⁾ All stock options for the three months ended March 31, 2020 and 2019 were anti-dilutive as a result of the net loss attributable to RLH Corporation for these periods, and as a result of the RLH Corporation weighted average share price during the reporting period.

⁽²⁾ Restricted stock units were anti-dilutive for the three months ended March 31, 2020 and 2019 due to our net loss in the reporting periods. If we had reported net income for the three months ended March 31, 2020 and 2019, then 7,733 and 697,494 weighted average restricted stock units would have been dilutive, respectively.

⁽³⁾ Performance stock units were anti-dilutive for the three months ended March 31, 2020 and 2019 due to the net loss attributable to RLH Corporation in the reporting period. If we had reported net income for the three months ended March 31, 2020 and 2019, then 10,180 and 97,406 weighted average performance stock units would have been dilutive, respectively.

⁽⁴⁾ All warrants expired without being exercised in January 2020. All warrants for the three months ended March 31, 2019 were anti-dilutive due to the net loss attributable to RLH in each reporting period. If we had reported net income for the three months ended March 31, 2019, 90,674 warrants would have been dilutive.

13. Income Taxes

On March 27, 2020, President Trump signed into law the “Coronavirus Aid, Relief and Economic security Act” (CARES Act) which generally allows for unlimited use of NOLS generated in 2019 and 2020 as well as a five year carryback provision and shortening the recovery period for qualified improvement property. We recognized an income tax (benefit) expense of $(752,000) and $82,000 for the three months ended March 31, 2020 and 2019, respectively. The income tax benefit recognized for the three months ended March 31, 2020 is principally related to the provisions of the CARES Act. The income tax expense recognized for the three months ended March 31, 2019 varies from the statutory rate primarily due to a partial valuation allowance against our deferred tax assets, as well as deferred tax expense associated with our acquired indefinite-lived intangible assets, which are amortized for tax purposes but not for GAAP purposes.

We have state operating loss carryforwards, which expire beginning in 2020, and both federal and state tax credit carryforwards, which begin to expire in 2024.

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14. Fair Value

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

Cash, Restricted cash and Accounts receivable carrying values approximate fair value due to the short-term nature of these items. 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. Estimated fair values of financial instruments are shown in the table below (in thousands).

	March 31, 2020				December 31, 2019
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial assets:
Notes receivable	$	286	$	286	$	5,709	$	5,709
Financial liabilities:
Debt	$	5,600	$	5,535	$	33,248	$	32,737
Total finance lease obligations	33		33		150		150

15. Related Party Transactions

During the fourth quarter of 2018, we transitioned management of our company operated Hotel RL Baltimore Inner Harbor and Hotel RL Washington DC from RL Management, Inc., to HEI Hotels and Resorts, of which one of the members of our Board of Directors, Ted Darnall, is currently the Chief Executive Officer. Additionally, during the first quarter of 2019, management of our company operated hotel Red Lion Hotel Seattle Airport was also transitioned from RL Management, Inc. to HEI Hotels and Resorts. During the three months ended March 31, 2020, and 2019 we paid $197,000 and $228,000, respectively, in management fees to HEI Hotels and Resorts for management of these properties.

On May 31, 2019 we executed a mortgage loan with a principal and accrued exit fee of $17.4 million with CP Business Finance I, LP, an affiliate of Columbia Pacific Opportunity Fund, LP, who currently holds 500,000 shares of RLHC common stock. Additionally, Alexander B. Washburn, who served as a member of our Board of Directors from May 2015 to April 2019, is one of the managing members of Columbia Pacific Advisor, LLC, which serves as the investment manager of Columbia Pacific Opportunity Fund, LP. This debt is no longer outstanding as of March 31, 2020.

16. Dispositions

In the first quarter of 2020, we continued the execution of a hotel asset sales initiative consistent with our previously stated business strategy to focus on moving towards operations as primarily a franchise company, and disposed of two hotels from our company operated hotels segment. These dispositions resulted in a combined net gain of $7.9 million

The following summarizes the result of operations for the two properties sold during the first quarter of 2020 (in thousands):

	Three Months Ended March 31,
	2020		2019
Pre-tax income (loss)	$	6,088	$	(121)
Net (income) loss attributable to noncontrolling interest	1,134		240
Net income (loss) attributable to RLHC	$	7,222	$	119

17. Subsequent Events

As a result of the COVID-19 pandemic, economic uncertainties have arisen which RLHC expects to negatively impact our business, operations and financial results. The impact has continued to evolve subsequent to the quarter ended March 31, 2020

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and as of the date of these unaudited consolidated financial statements. The duration of the pandemic and the resulting economic uncertainties, and the impacts on RLHC’s financial condition, results of operations and cash flows, will depend on numerous evolving factors that cannot be accurately predicted at this time. Given the dynamic nature of this situation, the Company cannot reasonably estimate the impacts of COVID-19 on its financial condition, results of operations or cash flows for the foreseeable future. However, it is expected to have a material, adverse impact on future revenue growth as well as overall profitability.

On April 2, 2020, RLHC announced a significant reduction in force in response to the anticipated impact of the COVID-19 pandemic, reducing our corporate workforce by approximately 40%. Total severance expense of approximately $0.6 million will be recognized in conjunction with the severance, with $0.2 million recognized during the first quarter of 2020 and $0.4 million recognized during the second quarter of 2020.

On April 21, 2020, RLHC received $4.2 million in loan proceeds issued pursuant to the Paycheck Protection Program (the “PPP”) of the CARES Act. In accordance with the CARES Act, RLHC planned to use proceeds from the Loan primarily for payroll costs, rent, and utilities as we concluded we met the certification criteria under the initial requirements of the PPP. However, on April 24, 2020, the U.S. government published additional guidance regarding PPP eligibility. As a result of this new guidance the Company determined it was no longer clear that we met the eligibility requirements and accordingly we determined we would repay the full amount of the loan in May.

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

This quarterly report on Form 10-Q includes forward-looking statements, including statements concerning operational and financial impacts of the COVID-19 pandemic. We have based these statements on our current expectations, assumptions, and projections about future events. When words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “seek,” “should,” “will” and similar expressions or their negatives are used in this quarterly report, these are forward-looking statements. Many possible events or factors, including the effects of the COVID-19 pandemic and those discussed in “Risk Factors” under Item 1A below and under Item 1A of our annual report on Form 10-K for the year ended December 31, 2019, which we filed with the Securities and Exchange Commission on February 27, 2020, could affect our future financial results and performance, and could cause actual results or performance to differ materially from those expressed. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this quarterly report. We undertake no obligation to update or revise any forward-looking statements except as required by law.

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

Wholly owned subsidiaries:

•Red Lion Hotels Holdings, Inc.

•Red Lion Hotels Franchising, Inc.

•Red Lion Hotels Canada Franchising, Inc.

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

•Red Lion Hotels Limited Partnership

•RL Baltimore LLC ("RL Baltimore")

•WestCoast Hotel Properties, Inc.

•Red Lion Anaheim, LLC

•RLabs, Inc.

Joint venture entities:

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

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

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

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

The following discussion and analysis should be read in connection with our unaudited condensed consolidated financial statements and the condensed notes thereto and other financial information included elsewhere in this quarterly report, as well as in conjunction with the consolidated financial statements and the notes thereto for the year ended December 31, 2019, which are included in our annual report on Form 10-K for the year ended December 31, 2019.

COVID-19 Update

COVID-19 was first identified in Wuhan, China in December 2019, and subsequently declared a pandemic by the World Health Organization. To date, COVID-19 has surfaced in nearly all regions around the world and resulted in travel restrictions and business slowdowns or shutdowns in affected areas. The economic impact of the pandemic thus far has been extremely punitive to travel related businesses across the nation, significantly affecting the operating results of companies within the hospitality industry. The measures enacted by most governments to combat the pandemic have included intensive restrictions on travel, required closure of businesses deemed non-essential, and shelter in place orders for civilians.

We have undertaken a series of organizational changes and cost cutting measures including changes to senior management, a reduction in force and the consolidation of office space to mitigate the impact of the COVID-19 pandemic on our operating results. As our business is reliant in part on the financial success and cooperation of our franchisees, we have also implemented policy changes to address the impact of the pandemic on their financial condition, including the implementation of a fee deferral program to certain of our franchisees in which billings related to fees for March through May of 2020 could be deferred for up to 12 months, temporary fee reductions for review responses, guest relations fees, and certain other fees, and a delay in implementation of capital intensive brand standards. These changes are expected to reduce cash flow, as our franchisees defer paying royalty fees to future periods.

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While we did experience some impact from the COVID-19 pandemic on our operations in March of 2020, the impact of the pandemic is ongoing, and the extent to which the COVID-19 pandemic further impacts our business, operations and financial results will depend on numerous evolving factors that we are not able to accurately predict, including the length of travel restrictions and government-mandated stay-at-home orders, the duration and spread of the virus, and the extent to which people are willing to resume travel and hotel stays, as well as the financial condition and recovery of our franchisees. Given the dynamic nature of this situation, we cannot reasonably estimate the impacts of COVID-19 on our financial condition, results of operations or cash flows for the foreseeable future. However, we expect it will have a material, adverse impact on future revenue growth as well as overall profitability.

Introduction

We are a NYSE-listed hospitality and leisure company (ticker symbol: RLH) doing business as RLH Corporation and primarily engaged in the franchising 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 ("ABVI"), Canadas Best Value Inn ("CBVI"), Signature and Signature Inn, Knights Inn, and Country Hearth Inn & Suites ("Country Hearth").

We operate in two reportable segments:

•The franchised hotels segment is engaged primarily in licensing our brands to franchisees. This segment generates revenue from royalty, marketing, and other fees that are primarily based on a percentage of room revenue or on room count or on transaction count and are charged to hotel owners in exchange for the use of our brand and access to our marketing and central services programs. These central services and marketing programs include our reservation system, guest loyalty program, national and regional sales, revenue management tools, quality inspections, advertising and brand standards. Additionally, this segment includes our initial contracts for Canvas Integrated Systems.

•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 have also been derived from management fees and related charges for hotels with which we contract to perform management services, however our last management agreement terminated in February 2019.

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

A summary of our open franchise and company operated hotels from January 1, 2020 through March 31, 2020, including the approximate number of available rooms, is provided below:

	Midscale Brand		Economy Brand		Total
	Hotels	Total Available Rooms	Hotels	Total Available Rooms	Hotels	Total Available Rooms
Beginning quantity, January 1, 2020	96	13,500	966	54,200	1,062	67,700
Newly opened	—	—	6	300	6	300
Terminated properties	(1)	(300)	(43)	(2,800)	(44)	(3,100)
Ending quantity, March 31, 2020	95	13,200	929	51,700	1,024	64,900

A summary of activity relating to our open midscale franchise and company operated hotels by brand from January 1, 2020 through March 31, 2020 is provided below:

Midscale Brand Hotels	Hotel RL	Red Lion Hotels	Red Lion Inn and Suites	Signature	Other	Total
Beginning quantity, January 1, 2020	9	39	40	4	4	96
Terminated properties	—	(1)	—	—	—	(1)
Ending quantity, March 31, 2020	9	38	40	4	4	95
Ending rooms, March 31, 2020	1,400	7,700	3,300	300	500	13,200

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A summary of activity relating to our open economy franchise hotels by brand from January 1, 2020 through March 31, 2020 is provided below:

Economy Brand Hotels	ABVI and CBVI	Knights Inn	Country Hearth	Guest House	Other	Total
Beginning quantity, January 1, 2020	657	232	47	19	11	966
Newly opened	3	3	—	—	—	6
Terminated properties	(28)	(11)	(2)	(1)	(1)	(43)
Ending quantity, March 31, 2020	632	224	45	18	10	929
Ending rooms, March 31, 2020	33,500	13,500	2,200	1,200	1,300	51,700

A summary of our executed franchise agreements for the three months ended March 31, 2020 is provided below:

	Midscale Brand	Economy Brand	Total
Executed franchise license agreements, three months ended March 31, 2020:
New locations	2	14	16
New contracts for existing locations	4	50	54
Total executed franchise license agreements, three months ended March 31, 2020	6	64	70

Overview

Consistent with our previously stated business strategy to move towards operating as primarily a franchise company, in the first quarter of 2020, we sold two of our remaining company operated hotels. On February 7, 2020, we sold the only hotel in our consolidated joint venture, RLS DC Venture, for $16.4 million. Using proceeds from the sale, together with the release of $2.3 million in restricted cash held by our lender CP Business Finance I, LP, RLS DC Venture repaid the remaining outstanding principal balance and accrued exit fee under the RLH DC Venture loan agreement of $17.7 million.

On February 27, 2020, we sold our leasehold interest in the Red Lion Anaheim for $21.5 million. Using net proceeds from the sale, the Company repaid the $10.0 million outstanding principal balance owing under the revolving line of credit with Deutsche Bank AG New York Branch, and other lenders party thereto. Upon repayment of the outstanding balance, the Line of Credit was terminated and these funds are no longer available to us.

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Results of Operations

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

	Three Months Ended March 31,
	2020		2019
Total revenues	$	17,265	$	25,984
Total operating expenses	25,504		29,612
Operating income (loss)	(8,239)		(3,628)
Other income (expense):
Interest expense	(506)		(882)
Loss on early retirement of debt	(1,309)		—
Other income (loss), net	48		33
Income (loss) before taxes	(10,006)		(4,477)
Income tax expense (benefit)	(752)		82
Net income (loss)	(9,254)		(4,559)
Net (income) loss attributable to noncontrolling interest	1,155		286
Net income (loss) and comprehensive income (loss) attributable to RLH Corporation	$	(8,099)	$	(4,273)
Non-GAAP Financial Measures (1)
EBITDA	$	(6,963)	$	(148)
Adjusted EBITDA	$	(10,315)	$	999

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

For the three months ended March 31, 2020, we reported a net loss of $9.3 million, which includes $9.7 million of bad debt expense related to reserves recognized for accounts receivable, key money, and notes receivable for certain Inner Circle franchisees and other customer balances determined to be uncollectible as of March 31, 2020, a $1.8 million asset impairment on our Red Lion Hotel Seattle Airport as a result of the impact of the COVID-19 pandemic on the operating results of that hotel, a $1.3 million loss on early retirement of debt, $0.5 million of employee separation costs, $0.4 million of stock based compensation, $0.4 million of transaction and integration costs, and $0.2 million of expense related to a non-income tax assessment, partially offset by $7.9 million in gains from the disposal of two hotel properties

For the three months ended March 31, 2019, we reported a net loss of $4.6 million, which included $0.9 million of stock based compensation, $0.2 million related to a non-income tax expense assessment and $0.1 million of transaction and integration costs.

For the three months ended March 31, 2020, Adjusted EBITDA was $(10.3) million compared with $1.0 million in 2019. This decrease was primarily due to $9.7 million of bad debt expense recognized in the first quarter of 2020 to establish reserves for certain Inner Circle franchisees in bankruptcy and other customer balances determined to be uncollectible as of March 31, 2020.

Non-GAAP Financial Measures

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

Adjusted EBITDA is an additional measure of financial performance. We believe that the inclusion or exclusion of certain special items, such as gains and losses on asset dispositions and impairments and discontinued operations, is necessary to provide the most accurate measure of core operating results and as a means to evaluate comparative results. Adjusted EBITDA also excludes the effect of non-cash stock compensation expense. We believe that the exclusion of this item is consistent with the purposes of the measure described below.

EBITDA and Adjusted EBITDA are commonly used measures of performance in our industry. We utilize these measures because management finds them a useful tool to calculate more meaningful comparisons of past, present and future operating

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results and as a means to evaluate the results of core, ongoing operations. Our board of directors and executive management team consider Adjusted EBITDA to be a key performance metric and compensation measure. We believe they are a complement to reported operating results. EBITDA and Adjusted EBITDA are not intended to represent net income (loss) defined by generally accepted accounting principles in the United States of America ("GAAP"), and such information should not be considered as an alternative to reported information or any other measure of performance prescribed by GAAP. In addition, other companies in our industry may calculate EBITDA and, in particular, Adjusted EBITDA differently than we do or may not calculate them at all, limiting the usefulness of EBITDA and Adjusted EBITDA as comparative measures.

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

	Three Months Ended March 31,
	2020		2019
Net income (loss)	$	(9,254)	$	(4,559)
Depreciation and amortization	2,537		3,447
Interest expense	506		882
Income tax expense (benefit)	(752)		82
EBITDA	(6,963)		(148)
Stock-based compensation (1)	373		916
Asset impairment (2)	1,760		—
Transaction and integration costs (3)	398		62
Employee separation and transition costs (4)	528		—
Loss on early retirement of debt (5)	1,309		—
Loss (gain) on asset dispositions (6)	(7,892)		6
Non-income tax expense assessment (7)	172		163
Adjusted EBITDA	(10,315)		999
Adjusted EBITDA attributable to noncontrolling interests	(78)		(547)
Adjusted EBITDA attributable to RLH Corporation	$	(10,393)	$	452
(1) Costs represent total stock-based compensation for each period. These costs are included within Selling, general, administrative and other expenses and Marketing, reservations and reimbursables on the Condensed Consolidated Statements of Comprehensive Income (Loss).
(2) In the three months ended March 31, 2020, we recognized an impairment on our Red Lion Hotel Seattle Airport leased property.
(3) Transaction and integration costs include incremental expenses incurred for potential and executed acquisitions and dispositions of assets.
(4) The costs recognized relate to severance payments due to our Chief Financial Officer upon her departure in March 2020, along with a reduction in force that was implemented in the first quarter of 2020. These costs are included within Selling, general, administrative and other expenses and Marketing, reservations and reimbursables on the Condensed Consolidated Statements of Comprehensive Income (Loss).
(5) The Loss on early retirement of debt relates to unamortized deferred debt issuance costs and prepayment fees incurred related to the payoff of a secured debt agreement at RL Venture - Olympia and the outstanding balance on our Line of Credit.
(6) The gains relate to the sale of two properties during the first quarter of 2020. There was no comparable activity during the three months ended March 31, 2019.
(7) Costs relate to estimated non-income taxes we have concluded we are probable of being assessed. These estimated taxes have been accrued in Selling, general, administrative and other expenses on the Condensed Consolidated Statements of Comprehensive Income (Loss).

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Franchise and Marketing, Reservations and Reimbursables Revenues

	Three Months Ended March 31,
	2020		2019
	(in thousands)
Royalty	$	4,357	$	5,740
Marketing, reservations and reimbursables	5,805		6,729
Other franchise	774		542

Three months ended March 31, 2020 and 2019

Royalty revenue decreased $1.4 million or 24% and revenues from Marketing, reservations, and reimbursables revenue decreased by $0.9 million or 14%. These decreases were primarily due to terminated franchise agreements in 2019 and the first quarter of 2020, along with the impact of COVID-19 on our midscale brand hotels who generally pay royalties and marketing fees as a percentage of gross rooms revenue. Other franchise revenues increased $0.2 million or 43% primarily due to an increase in various other fees, partially offset by the impact of terminated agreements.

Company Operated Hotels Revenues

	Three Months Ended March 31,
	(in thousands)
	2020		2019
Company operated hotels revenues	$	6,329	$	12,970

Three months ended March 31, 2020 and 2019

During the three months ended March 31, 2020, revenue from our Company operated hotels segment decreased $6.6 million or 51% compared with the same period in 2019. The decrease was driven primarily by the disposal of two company operated hotel properties in the fourth quarter of 2019 and two additional company operated hotel properties in the first quarter of 2020.

Revenues for the four company operated hotels held during the entirety of both periods decreased by $1.0 million, to $3.9 million in the first quarter of 2020 compared to $4.9 million in the first quarter of 2019. This decrease was primarily due to the negative impact of the COVID-19 pandemic on hotel occupancy during March of 2020.

Operating Expenses

Selling, General, Administrative and Other Expenses

	Three Months Ended March 31,
	(in thousands)
	2020		2019
Franchise development and operations, including labor	$	1,936	$	2,005
General and administrative labor and labor-related costs	1,983		1,877
Stock-based compensation	160		474
Non-income tax expense assessment	172		163
Bad debt expense	9,720		211
Legal fees	528		588
Professional fees and outside services	568		417
Facility lease	213		278
Information technology costs	201		217
Other	784		1,161
Total Selling, general, administrative and other expenses	$	16,265	$	7,391

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Three months ended March 31, 2020 and 2019

Selling, general, administrative and other expenses increased by $8.9 million for the three months ended March 31, 2020 compared with the three months ended March 31, 2019.

Bad debt expense increased primarily due to $6.3 million of expense arising from a reserve recognized for accounts receivable, key money, and notes receivable for certain Inner Circle franchisees. The remaining increase relates primarily to reserves recognized for accounts and notes receivable related to large balances under legal dispute, aged balances from terminated agreements, or aged balances placed with third party collections. See Note 7. Revenue from Contracts with Customers within Item 8. Financial Statements for additional detail.

Labor and labor-related costs increased primarily due to accrued severance costs related to the departure of our Chief Financial Officer in March 2020, partially offset by a decrease in headcount compared to the prior period. Stock-based compensation decreased primarily due to executive terminations in the fourth quarter of 2019 and a reduction in force in the first quarter of 2020.

Other expenses decreased primarily due to various efficiencies and cost cutting initiatives implemented by management.

Company Operated Hotels Expenses

	Three Months Ended March 31,
	(in thousands)
	2020		2019
Company operated hotels expenses	$	6,678	$	11,545

Three months ended March 31, 2020 and 2019

Company operated hotels expenses decreased by $4.9 million or 42% in the first three months of 2020. The decrease was driven primarily by the disposal of two company operated hotel properties in the fourth quarter of 2019 and two additional company operated hotel properties in the first quarter of 2020.

Operating expenses for the four company operated hotels held during the entirety of both periods decreased by $0.8 million, to $4.2 million in the first quarter of 2020 compared to $5.0 million in the first quarter of 2019, primarily due to the impact of COVID-19 on hotel operations in March 2020 and other cost cutting initiatives implemented by management.

Marketing, Reservations and Reimbursables Expenses

	Three Months Ended March 31,
	(in thousands)
	2020		2019
Marketing, reservations and reimbursables expenses	$	5,758	$	7,161

Three months ended March 31, 2020 and 2019

Marketing, reservations and reimbursables expenses decreased by $1.4 million or 20% in the first three months of 2020. This decrease was primarily due a decrease in marketing expenditures in an effort by management to reduce costs in the first quarter of 2020, along with a decrease in reservation volume.

Depreciation and Amortization

	Three Months Ended March 31,
	(in thousands)
	2020		2019
Depreciation and amortization	$	2,537	$	3,447

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Three months ended March 31, 2020 and 2019

Depreciation and amortization expense decreased $0.9 million or 26% during the first three months of 2020. This decrease was driven primarily by the disposal of two company operated hotel properties in the fourth quarter of 2019 and two additional company operated hotel properties in the first quarter of 2020. This decrease was partially offset by additional depreciation recognized from other fixed assets placed in service during the remainder of 2019 and the first three months of 2020.

Asset Impairment

	Three Months Ended March 31,
	(in thousands)
	2020		2019
Asset impairment	$	1,760	$	—

Three months ended March 31, 2020 and 2019

We recognized an impairment loss of $1.8 million on our Red Lion Hotel Seattle Airport leased property in the first quarter of 2020. See Note 5. Property and Equipment within Item 8. Financial Statements for additional detail.

Loss (Gain) on Asset Dispositions, net

	Three Months Ended March 31,
	(in thousands)
	2020		2019
Loss (gain) on asset dispositions, net	$	(7,892)	$	6

Three months ended March 31, 2020 and 2019

We recognized a net gain on asset dispositions of $7.9 million from the disposal of two hotel properties during the first quarter of 2020, with no comparable activity in 2019.

Interest Expense

Interest expense decreased $0.4 million in the first quarter of 2020 compared to the first quarter of 2019. This decrease is primarily due to hotel sales and the related reduction in our average corporate and hotel-specific debt outstanding in 2020 as compared to 2019.

Loss on Early Retirement of Debt

In the first quarter of 2020, we recognized a Loss on early retirement of debt of $1.3 million related to the early payoff of our Line of Credit and a secured debt agreement at RLH DC Venture. These loans were paid off using proceeds from the sale of the Hotel RL Washington DC joint venture property and our leasehold interest in the Red Lion Anaheim.

Income Taxes

For the three months ended March 31, 2020, we reported an income tax benefit of $752,000 compared with income tax expense of $82,000 for the same period in 2019. The income tax benefit recognized for the three months ended March 31, 2020 is principally related to the provisions of the CARES Act. The income tax expense recognized for the three months ended March 31, 2019 varies from the statutory rate primarily due to a partial valuation allowance against our deferred tax assets. See Note 13 Income Taxes within Item 1. Financial Statements.

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Liquidity and Capital Resources

Our principal source of liquidity is cash flow from operations. Cash flows may fluctuate and are sensitive to many factors including changes in working capital and the timing and magnitude of capital expenditures and payments on debt. We believe the ongoing effects of COVID-19 on our operations have had, and will continue to have, a material impact on our ability to generate cash from our operations and our financial results, and the impact may continue beyond the containment of the outbreak. We cannot assure you that our assumptions used to estimate our liquidity requirements will be correct given the dynamic nature of the situation.

Working capital, which represents current assets less current liabilities, was $34.6 million and $23.0 million as of March 31, 2020 and December 31, 2019, respectively. As of March 31, 2020, we had cash and cash equivalents of $37.8 million and debt of $5.6 million. In order to preserve sufficient liquidity during these uncertain times, we implemented certain cost saving measures at the end of the first quarter of 2020, which included a reduction in force of approximately 40%, company-wide compensation reductions, consolidation of office space and a reduction in 2020 capital expenditures and key money commitments. Based upon our current liquidity position, and assumptions regarding the impact of COVID-19, including its duration, economic impact and impact on travel, we believe that we have sufficient liquidity to fund our operations at least through May 2021. However, given the uncertain nature of the COVID-19 pandemic on our operations, we cannot assure you that our assumptions used to estimate our liquidity requirements will be correct.

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

We are committed to maintaining our infrastructure for systems and services we provide to our franchisees. This requires ongoing access to capital investments in technology and related assets.

Sources and Uses of our Cash, Cash Equivalents, and Restricted Cash

The following table summarizes our net cash flows for operating, investing, and financing activities (in thousands):

	Three Months Ended March 31,
	2020		2019
Net cash provided by (used in) operating activities	$	(2,294)	$	(2,032)
Net cash provided by (used in) investing activities	36,114		(1,569)
Net cash provided by (used in) financing activities	(27,753)		8,682

Operating Activities

Net cash used in operating activities totaled $2.3 million during the first three months of 2020 compared with $2.0 million during the same period in 2019. The primary driver of the change was an increase in cash flows from working capital accounts of $1.7 million, partially offset by an increase in net loss excluding Loss (gain) on asset dispositions, net, Asset impairment, and Provision for doubtful accounts of approximately $1.3 million.

Investing Activities

Net cash provided by investing activities totaled $36.1 million during the first three months of 2020 compared with cash used in investing activities of $1.6 million during the same period in 2019. Cash flows increased in the first quarter of 2020 primarily due to net proceeds from hotel sales of $36.9 million during the first three months of 2020.

Financing Activities

Net cash used in financing activities was $27.8 million during the first three months of 2020 compared with cash provided by financing activities of $8.7 million in the first three months of 2019. During the three months ended March 31, 2020, we paid off an outstanding loan for one company operated property along with the outstanding balance on our Line of Credit. During the three months ended March 31, 2019 we executed new mortgage loans for two company operated hotel properties. Some of the loan proceeds were distributed to joint venture partners.

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Debt

As of March 31, 2020, we had outstanding total debt, excluding unamortized deferred financing costs and discounts, of $5.6 million related to a single property mortgage on our RL Venture Olympia property.

In February 2020, we sold the Hotel RL Washington DC for $16.4 million. Using proceeds from the sale, together with the release of $2.3 million in restricted cash held by CP Business Finance I, LP, RLH DC Venture repaid the remaining outstanding principal balance and accrued exit fee under the RLH DC Venture loan agreement of $17.7 million, plus a prepayment penalty of $0.6 million.

Also in February of 2020, using the net proceeds from the sale of our leasehold interest in the Red Lion Anaheim, we repaid the outstanding Line of Credit balance of $10.0 million. Upon repayment of the outstanding balance, the Line of Credit was terminated and these funds are no longer available to us.

See Note 8 Debt and Line of Credit within Item 1. Financial Statements of this quarterly report on Form 10-Q, for further additional information about our debt obligations.

Off-Balance Sheet Arrangements

As of March 31, 2020, we had no off-balance sheet arrangements which have or are reasonably likely to have a current or future effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Critical Accounting Policies and Estimates

The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that effect: (i) the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements, and (ii) the reported amounts of revenues and expenses during the reporting periods. Actual results could differ materially from those estimates. We consider a critical accounting policy to be one that is both important to the portrayal of our financial condition and results of operations and requires management's most subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Since the date of our annual report on Form 10-K for the fiscal year ended December 31, 2019, we have made no material changes to our critical accounting policies or the methodologies or assumptions that we apply under them.

New and Recent Accounting Pronouncements

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

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Item 3.Quantitative and Qualitative Disclosures About Market Risk

Pursuant to Item 305(e) of Regulation S-K (§ 229.305(e)), the Company is not required to provide the information required by this Item as it is a “smaller reporting company,” as defined by Rule 229.10(f)(1).

Item 4.Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As of March 31, 2020, we carried out an evaluation under the supervision and with the participation of our management, including our Interim Chief Executive Officer ("CEO") and our Chief Financial Officer ("CFO"), of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) or 15d-15(e) under the Securities Exchange Act of 1934, as amended). Based on that evaluation, our management, including the CEO and CFO, concluded that our disclosure controls and procedures were effective to ensure that material information required to be disclosed by us in the reports filed or submitted by us under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within time periods specified in SEC rules and forms.

Changes in Internal Control over Financial Reporting

There were no changes in the company’s internal control over financial reporting, as defined in Exchange Act Rule 13a-15(f), during the three months ended March 31, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1.Legal Proceedings

On September 26, 2018, Radisson Hotels International, Inc. filed a complaint against RLH Corporation and our subsidiary Red Lion Hotels Franchising, Inc. in the United States District Court for the Eastern District of Washington. The complaint alleges tortious interference with agreements between Radisson and several franchisees controlled by Inner Circle Investments and seeks damages in an undetermined amount. RLH Corporation believes this complaint is without merit and we intend to defend it vigorously.

On October 31, 2018, the Company's lease for the Red Lion River Inn expired. The landlord filed a lawsuit against the Company on January 24, 2019 in Spokane Superior Court, alleging breach of the lease agreement and tort claims relating to the condition of the hotel. The Company filed its Answer on January 25, 2019, denying all allegations and asserting various affirmative defenses. RLH Corporation believes this complaint is without merit and we intend to defend it vigorously.

At any given time we are subject to claims and actions incidental to the operations of our business. During the second quarter of 2019, we accrued approximately $952,000 for a settlement over a wage dispute with former hotel employees related to the calculation of pay for certain rest, break, meal, and other periods that are required under California law.

Along with many of its competitors, the Company has been named as a defendant in lawsuits filed in various state and federal courts, alleging statutory and common law claims related to purported incidents of sex trafficking at certain franchised hotel facilities. As of April 30, 2020, the Company was involved (as a named defendant) in six separate sex trafficking lawsuits. The Company is in various stages of seeking dismissal on the basis that the Company did not own, operate or manage the hotels at issue, and intends to vigorously defend the lawsuits.

At any given time, we are subject to additional claims and actions incidental to the operation of our business. While the outcome of these proceedings cannot be predicted, it is the opinion of management that none of such proceedings, individually or in the aggregate, will have a material adverse effect on our business, financial condition, cash flows or results of operations. See Note 10 Commitments and Contingencies within Item 1. Financial Statements.

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Item 1A.Risk Factors

We are subject to various risks, including those set forth below, and those discussed in Part I, Item 1A Risk Factors in our annual report on Form 10-K for the year ended December 31, 2019, that could have a negative effect on our financial condition and could cause results to differ materially from those expressed in forward-looking statements contained in this report or other RLHC communications. You should carefully consider these risk factors, in addition to the other information in this quarterly report.

The COVID-19 outbreak, or an outbreak of a similar pandemic, epidemic or other public health emergency, is expected to have a significant impact on our financial condition and operations.

The current, and uncertain future impact of the COVID-19 outbreak, including its effect on the ability or desire of people to travel, is expected to continue to impact our results, operations, outlooks, plans, goals, growth, cash flows, liquidity, and stock price.

The spread of COVID-19 and the recent developments surrounding the global pandemic are having material negative impacts on all aspects of our business. We have been, and will continue to be, further negatively impacted by related developments, including heightened domestic and foreign governmental regulations and travel advisories, social distancing recommendations by the U.S. Department of State and the Centers for Disease Control and Prevention, stay-at-home orders and travel bans and restrictions, each of which has impacted, and is expected to continue to significantly impact, our financial results.

As primarily a franchise company in the hospitality industry, we are largely reliant on the financial success and cooperation of our franchisees. Our revenues and operating results are highly dependent upon the ability of our franchisees to generate revenue at their franchised properties, which generates revenue for us from royalty, marketing, and other fees. Due to the COVID-19 pandemic, some of our franchisees have had to close their hotels, and others are experiencing unprecedented declines in room revenues. Some of our franchisees may not be able to withstand the financial pressures on their operations, and may have to close their hotels, or may have their hotels repossessed by lenders holding a mortgage on their property. As a result, we have seen and will continue to see a reduction in our anticipated income, collections of outstanding receivables, and overall cash flows, which will have a negative impact on our financial condition and results of operations.

As our business is reliant on the financial success and cooperation of our franchisees, we have implemented policy changes to address the impact of the COVID-19 pandemic on their financial condition, including the implementation of a fee deferral program to certain of our franchisees in which billings related to fees for March through May of 2020 could be deferred for up to 12 months, temporary fee reductions for review responses, guest relations fees, and certain other fees, and a delay in implementation of capital intensive brand standards. While these changes are temporary, if the COVID-19 pandemic continues for longer than expected, or reappears in the fall or winter, we may be required to extend some of these fee deferral programs, resulting in additional reductions in income and cash flows and negatively impacting our financial condition.

In addition, the hotel business is seasonal in nature, with the period from May through October generally accounting for the greatest portion of our annual company operated hotel revenues, and franchise royalties that are based on a percentage of hotel revenue. Should the COVID-19 pandemic extend into the summer months, we could experience a larger adverse impact to our revenues and results of operations as a result of this seasonality.

We cannot predict when travel restrictions will be lifted. Moreover, even once travel advisories and restrictions are lifted, demand for hotel accommodations may remain weak for a significant length of time and we cannot predict if and when it will return to pre-outbreak demand. In particular, demand may be negatively impacted by the adverse changes in the perceived or actual economic climate, including higher unemployment rates, declines in income levels and loss of personal wealth resulting from the impact of COVID-19.

We have never previously experienced a crisis of this nature or magnitude, and as a consequence, our ability to predict the impact on our future prospects is uncertain. In particular, we cannot predict the impact of the public’s concern regarding the health and safety of travel, and related decreases in demand for hotel accommodations on our financial performance and our cash flows.

In addition, the COVID-19 outbreak has significantly increased economic and demand uncertainty. The current outbreak and continued spread of COVID-19 could cause a global recession, which would have a further adverse impact on our financial condition and operations. Current economic forecasts for significant increases in unemployment in the U.S. and other regions is likely to have a negative impact on demand for hotel accommodations once operations resume, and these impacts could exist for an extensive period of time.

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The extent of the effects of the outbreak on our business and the hospitality industry at large is highly uncertain, and will ultimately depend on factors outside our control, including, but not limited to, the duration and severity of the outbreak, the length of time it takes for demand and pricing to return and normal economic and operating conditions to resume. To the extent COVID-19 adversely affects our business, operations, financial condition and operating results, it may also have the effect of heightening many of the other risks described in Part I, Item 1A. Risk Factors included in our annual report on Form 10-K for the year ended December 31, 2019.

Departures of senior executives or other key employees could adversely affect our business.

We have seen significant turnover among our senior executives over the past five years. Our Chief Executive Officer resigned in November 2019 after five years at the company, and we are currently operating with an interim CEO. The Board of Directors has suspended the Company’s search for a permanent Chief Executive Officer at this time. Our current Chief Financial Officer was promoted from Chief Accounting Officer April 1, 2020; our prior CFO was in place from January 2019 until March 2020, and her predecessor was hired in 2017 and announced his departure for personal reasons in October 2018. Our Executive Vice President, President of Global Development, left the Company effective November 7, 2019, and our Chief Marketing Officer departed the Company in May 2019.

Turnover of senior management can adversely impact our stock price, our results of operations, our relationships with our franchisees and may make recruiting for future management positions more difficult. The loss of institutional knowledge and expertise that results from the departure of experienced employees could impact our ability to timely and successfully implement our business plans and strategies, and have a material adverse effect on our business and operations. Changes in personnel could also adversely affect our internal controls over financial reporting, leading to deficiencies or the inability to timely provide reliable and accurate financial reports. Further, we may incur significant expenses related to any executive transition costs that may impact our operating results. For example, we recorded employee separation and transition costs of $0.5 million, and $1.1 million in the first quarter of 2020 and in the year ended December 31, 2019, respectively, related to executive and management transition, which included severance payments and other incremental expenses. Additional losses of senior team members could have a material adverse impact on our financial condition or results of operations. We currently do not carry key person insurance on members of our senior management team.

We place substantial reliance on the lodging industry experience and the institutional knowledge of the members of our senior management team. We compete for qualified personnel with this experience against companies with greater financial resources than ours. In order to successfully recruit qualified employees, we will likely need to offer a combination of base salary and equity compensation. These future issuances of our equity securities will dilute existing shareholders’ ownership interests. Finding suitable replacements for senior management and other key employees can be difficult, and there can be no assurance we will continue to be successful in retaining or attracting qualified personnel in the future.

To be properly integrated into our company, new executives and employees must spend a significant amount of time learning our business model and management system, in addition to performing their regular duties. As a result, the integration of new personnel may result in some disruption to our ongoing operations, and the lack of continuity among our executive team could have a material adverse effect on our business, financial condition and results of operations.

Our recent organizational changes organizational changes and cost cutting measures may not be successful.

On April 2, 2020, our Board of Directors announced a series of organizational changes and cost cutting measures including changes to senior management, a reduction in force of approximately 40% of our corporate workforce, a reduction in capital expenditures and the closing of the Company’s Spokane office. These initiatives accelerated cost-cutting measures begun at the end of 2019, and were broadened and accelerated in light of the COVID-19 pandemic. We believe these changes are needed to streamline our organization and reallocate our resources to better align with our current strategic goals, and to respond to the challenges facing the Company as a result of the COVID-19 pandemic. However, these restructuring and cost cutting activities may yield unintended consequences and costs, such the loss of institutional knowledge and expertise, attrition beyond our intended reduction in force, a reduction in morale among our remaining employees, and the risk that we may not achieve the anticipated benefits, all of which may have a material adverse effect on our results of operations or financial condition. We may also discover that the reductions in force and cost cutting measures will make it difficult for us to pursue new opportunities and initiatives, requiring us to hire qualified replacement personnel, which may require us to incur additional and unanticipated costs and expenses.

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, Item 1A Risk Factors in our annual report on Form 10-K for the year ended December 31, 2019, which could materially affect our business, financial condition or future results. The risks described in our annual report may not be the only risks facing our company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results in the future.

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

None.

Item 3.Defaults Upon Senior Securities

None.

Item 4.Mine Safety Disclosures

Not applicable.

Item 5.Other Information

None.

34

Item 6.Exhibits

Index to Exhibits

Exhibit Number	Description
10.1	Employment offer letter of Nate Troup dated April 1, 2020
10.2	Employment offer letter of Paul Moerner dated April 1, 2020
10.3	Amendment dated April 1, 2020 to Nate Troup Employment offer letter
10.4	Amendment dated April 1, 2020 to Paul Moerner Employment offer letter
31.1	Certification of Principal Executive Officer pursuant to Exchange Act Rule 13a-14(a)
31.2	Certification of Principal Financial Officer pursuant to Exchange Act Rule 13a-14(a)
32.1	Certification of Principal Executive Officer pursuant to Exchange Act Rule 13a-14(b)
32.2	Certification of Principal Financial Officer pursuant to Exchange Act Rule 13a-14(b)
101.INS	XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH	Inline XBRL Taxonomy Extension Schema Document
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document

35

SIGNATURES

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

Red Lion Hotels Corporation

Registrant

Signature		Title	Date
By:	/s/ John J. Russell, Jr.	Interim President and Chief Executive Officer (Principal Executive Officer)	May 8, 2020
	John J. Russell, Jr.
By:	/s/ Nathan M. Troup	Executive Vice President and Chief Financial Officer (Principal Financial Officer)	May 8, 2020
	Nathan M. Troup

36

EX-10.1

April 1, 2020

Mr. Nate Troup

RE: Red Lion Hotels Corporation Employment Offer Letter

Dear Nate:

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

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

The following outlines the employment package for your position.

START DATE: April 1, 2020.

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

COMPENSATION: Your position is classified as a salaried exempt position, which means it is exempt from state and federal overtime laws. You will be paid a bi-weekly base salary of $11,538.46, which is equivalent to $300,000per year, subject to normal withholdings and payroll taxes. You will not be entitled to any additional compensation in the event you are appointed to serve as an officer or director of any of the Company’s direct or indirect subsidiaries or affiliates.

BONUS: In addition to your base salary, you are eligible to earn a bonus if you are actively employed throughout the applicable bonus period, and if you meet the other requirements outlined in any bonus plan as may be approved by the Compensation Committee of the Board from time to time for Executive Vice Presidents of the Company. Bonus targets and goals for achievement of bonuses by executive officers are set by the Compensation Committee at its sole discretion. Your bonus target for this position is set at a target of 60% of base salary.

ANNUAL EQUITY GRANT: At the sole discretion of the Compensation Committee of the Company’s Board, you may receive an annual grant of equity under the Company’s 2015 Stock Incentive Plan (or such successor plan as may be then in effect).  Subject to such discretion, such grant shall be in a value equal to 60% of your base salary, a 25% of which is anticipated to be issued in the form of restricted stock

units (“RSUs”) vesting 25% on each of the first four anniversaries of issuance, and 75% of which is anticipated to be issued in the form of performance stock units (“PSUs”) vesting in accordance with performance metrics to be determined by the Compensation Committee in its sole discretion and consistent with the terms and conditions of PSUs issued to the Company’s other executive officers.  The type, allocation and timing of any equity issuance to you is subject to the Compensation Committee’s discretion from time to time.

INITIAL EQUITY GRANT: You will also receive effective on your Start Date a one-time grant of 88,000 Restricted Stock Units in the Company vesting one-fourth on each of the first four anniversaries of issuance. As with all the Company’s equity issuances, you must be employed by the Company at the time of the vesting in order for the vesting to occur. Any RSUs you are issued that subsequently vest shall be settled exclusively in the common stock of the Company.

PROMOTION BONUS: You will receive a $100,000 promotion bonus in your first paycheck following your Start Date as Chief Financial Officer. This promotion bonus will be subject to normal payroll and withholding taxes. In the event you voluntarily terminate your employment before the earlier of the first anniversary of your Start Date as Chief Financial Officer or a Change of Control (as defined below), you will be required to reimburse the Company $100,000 and you authorize the Company to deduct the entire amount from your final paycheck or from any other funds the Company then owes you or is holding on your behalf. Should the amount exceed your final paycheck, you agree to reimburse the Company any remaining balance promptly at that time.

TRAVEL: You may be expected as part of your duties to travel frequently to such places as may be directed from time to time by the Company. The Company will reimburse your reasonable travel expenses in accordance with its travel reimbursement policies as such policies may change from time to time.

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

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

• Employee Assistance Program (EAP)

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

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

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

• Vacation, Holiday, Sick Pay and Disability Programs

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

• Direct Deposit

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

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

• Continuing education reimbursement

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

SEVERANCE BENEFITS:

UPON TERMINATION WITHOUT CAUSE: If the Company terminates your employment without Cause (defined below), the Company will pay you a a total amount equal to one-half (1/2) your base annual salary for the then current fiscal year, paid to you in equal installments over the six months following your termination on each of the dates the Company regularly pays its employees. As a previous condition to payment of any severance under this agreement, you shall execute and not revoke during any legally applicable revocation period, a separation agreement and general release in substantially the form attached hereto as Exhibit A.

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

such award require you to pay monetary consideration for such stock, the stock underlying such award shall be issued only if you pay such consideration, and (ii) if any restrictions under any such award are performance-based, such restrictions shall terminate and the stock underlying such award shall be issued only if and to the extent expressly provided in the agreement evidencing the award. As stated above, as a previous condition to payment of any severance under this agreement, you shall execute and not revoke during any legally applicable revocation period, a separation agreement and general release in substantially the form attached hereto as Exhibit A.

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

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

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

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

COMPLIANCE WITH SECTION 409A: Notwithstanding any other provision of this letter to the contrary, the compensation and benefits provided by this letter are intended to be exempt from the requirements of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), and all regulations and other guidance promulgated by the Secretary of the Treasury pursuant to such section

(such section, regulations and other guidance being referred to herein as “Section 409A”), and this letter shall be construed and administered to give full effect to such intention. To the extent any amounts are determined to be subject to Section 409A (“Section 409A Deferred Compensation”), the terms of this letter shall be construed and administered to avoid incurring any penalties under Section 409A. In addition, this letter is subject to the following:

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

(b) Six-Month Delay Applicable to Specified Employees. If, at the time of your Separation from Service, you are a “specified employee” within the meaning of Section 409A(a)(2)(B)(i) of the Code, then any payments and benefits constituting Section 409A Deferred Compensation to be paid or provided pursuant to this letter upon your Separation from Service shall be paid or provided commencing on the later of (i) the first business day after the date that is six months after the date of such Separation from Service or, if earlier, the date of your death (in either case, the “Delayed Payment Date”), or (ii) the date or dates on which such Section 409A Deferred Compensation would otherwise be paid or provided in accordance with this letter without regard to this paragraph. All such payments and benefits that would, but for this paragraph, become payable prior to the Delayed Payment Date shall be accumulated and paid on the Delayed Payment Date.

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

(d) Notice Upon Constructive Termination. If you voluntarily elect to terminate your employment under circumstances that would otherwise constitute a Constructive Termination under this letter, a Constructive Termination shall not be deemed to have occurred unless (i) you have given the Company written notice that a specified event has occurred giving you the right to voluntarily terminate your employment and have that be treated as a Constructive Termination, (ii) such written notice is provided within ninety (90) days of the first occurrence of such specified event, (iii) the Company fails to cure such event within a period of thirty (30) days after the receipt of such notice, and (iv) you voluntarily terminate your employment within thirty (30) days following the end of the Company’s cure period.

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

procedures, budgets, reports, business or marketing plans, compilations of data created by the Company or by third parties for the benefit of the Company.

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

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

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

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

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

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

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

We are pleased and proud to be adding your talents to our leadership team.

Sincerely,

/s/ John Russell

John Russell

Interim President and CEO

Red Lion Hotels Corporation

Accepted as of the date first set forth above:

/s/ Nate Troup

Nate Troup

EXHIBIT A

GENERAL RELEASE OF CLAIMS

This Agreement and General Release of Claims (“Agreement”) is entered into by and between Nate Troup (“Employee”), Employee’s heirs, dependents, beneficiaries, executors, administrators, representatives, successors and assigns (collectively referred to throughout this Agreement as “Employee”), and Red Lion Hotels Corporation, dba RLH Corporation (the “Company”).

WHEREAS, Employee’s last date of employment with the Company was *.

WHEREAS, Employer and Company wish to settle and resolve all issues arising out of Employee’s employment with and separation from Employer without any disputes or proceedings,

NOW, THEREFORE, for and in consideration of the mutual promises and other good and valuable consideration described below, the receipt and adequacy of which are acknowledged by Company and Employee, both of them agree to the following:

ONE: Separation

Company and Employee agree that Employee’s last date of employment by Company was * (“Separation Date”).

TWO: General Release

With the exception of Company’s obligation to pay to Employee severance benefits in accordance with the Offer Letter, dated March 30, 2020, (the “Employment Agreement”), Employee knowingly and voluntarily, unconditionally and forever, releases and forever discharges the Company, all of its current and former parents, affiliates, subsidiaries, divisions, predecessors, insurers, successors and assigns, and all of their current and former employees, attorneys, officers, directors, shareholders and agents thereof, both individually and in their business capacities, and their employee benefit plans and programs and their administrators and fiduciaries (all collectively referred to throughout the remainder of this Agreement as “Releasees”), of and from any and all claims, known and unknown, asserted or unasserted, which the Employee has or may have against Releasees, including, but not limited to:

i.Any and all claims for wrongful discharge, constructive discharge, or wrongful demotion;

ii.Any and all claims relating to any contracts of employment, oral or written, express or implied, or breach of the covenant of good faith and fair dealing, oral or written, express or implied;

iii.Any and all tort claims of any nature, including but not limited to any claims for negligence, defamation, misrepresentation, fraud, or negligent or intentional infliction of emotional distress;

iv.Any and all claims for discrimination, harassment, whistle blowing or retaliation;

v.Any and all claims for alleged violation of Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, 42 U.S.C. Section 1981, the Age Discrimination in Employment Act of 1967, the Older Workers Benefit Protection Act, the Americans With Disabilities Act, the Employee Retirement Income Security Act, the Federal Rehabilitation Act of 1973, the Federal Family and Medical Leave Act, the Worker Adjustment and Retraining Notification Act, the Labor Management Relations Act, the Equal Pay Act, the Fair Credit Reporting Act, the Immigration Reform and Control Act, the Uniform Services Employment and Reemployment Rights Act, the Conscientious Employee Protection Act and any and all claims for violation of any other federal, state or local law, rule, regulation or ordinances, public policy or common law;

vi.Any and all claims for unpaid or disputed wages, bonuses, profit sharing units, commissions or other compensation;

vii.Any and all claims for attorneys’ fees or costs;

viii.Provided however nothing herein is intended to release Employee’s rights under the Company’s 401(k) plan as prescribed by law, or any other claims that may not be released by agreement pursuant to applicable law; and

ix.Further, nothing herein shall release Employee’s rights of indemnification under the Company’s organizational documents for acts committed in the ordinary course of business and within the scope of his employment, including any such rights under any insurance policy.

         Employee understands this Release includes all claims related in any manner to Employee’s employment up until the date of this Agreement. Employee further understands that Employee is hereby releasing any known or unknown claim for alleged right to discovery of information or documents of Releasees. Employee is granting this Release even though Employee understands that Employee may not, as of this date, know all of the claims Employee may lawfully have against the Releasees. This release is intended to be as broad as the law allows and includes, without limitation, any claims pursuant to statute or otherwise for attorneys’ fees and costs.

THREE: Acknowledgments of Employee

        Employee acknowledges that the severance benefits specified in the Employment Agreement represent sufficient consideration for Employee's release of claims and the other covenants contained in this Agreement that pertain to Employee. Employee further acknowledges that in the event Employee does not execute this Agreement, or fails to execute and deliver this Agreement to Company within the 60 day period following his Separation Date, Employee will not be entitled to, among other things, the severance benefits specified in the Employment Agreement.

Employee acknowledges that Employee has not suffered any on-the-job injury or illness for which Employee has not already filed a claim.

Employee acknowledges and represents that as of the date of the execution of this Agreement, Employee has not filed any complaints or charges with any administrative agency, or brought a claim in any court, and is not a party to any claim against the Company, and has not assigned any claim against the

Company to any third party. Employee further agrees not to affirmatively seek to file any claims against the Company and that if any such claim is prosecuted in Employee’s name before any court or administrative agency, Employee waives and agrees not to take any award of money or other damages from such action.

The Company has granted Employee any leave to which Employee was entitled from the Company under the Family and Medical Leave Act or related state or local leave or disability accommodation laws.

Employee has not divulged any proprietary or confidential information of the Company and will continue to maintain the confidentiality of such information consistent with the Company’s policies, Employee’s agreement(s) with the Company and/or any applicable common law.

Employee has not been retaliated against for reporting any allegations of wrongdoing by the Company, its officersor any other Releasee described in this Agreement, including any allegations of corporate fraud. Both the Company and Employee acknowledge that this Agreement does not limit either party’s right, where applicable, to file or to participate in an investigative proceeding of any federal, state or local governmental agency. To the extent permitted by law, Employee agrees that if such an administrative claim is made, Employee shall not be entitled to recover, and waives any right to recover monetary damages or other individual remedies.in connection with any such claim.

FOUR: Non-Admission of Liability

This Agreement and benefits provided hereunder are not intended to be, shall not be construed as, and are not an admission, concession by the Company or any other Releasees, or evidence of any wrongdoing or illegal or actionable acts or omissions, and the Company expressly denies that it engaged in any wrongdoing or illegal or actionable acts or omissions.

FIVE: Period for Review and Eligibility Criteria

Employee understands that he has been given a period of twenty-one (21) calendar days to review and consider this Agreement. Employee further understands that he may take as much or as little of this 21-day period of time to consider this Agreement as he wishes, before signing this Agreement.

SIX: Revocation Period

Employee may revoke HIS acceptance of this Agreement within the seven (7) day period after HE has signed it if HE so desires. Any revocation must be in writing and submitted to THE COMPANy’S General Counsel, 201 W. NORTH RIVER DRIVE, SUITE 100, sPOKANE, WASHINGTON 99201. The revocation must be either: (a) personally delivered to THE GENERAL COUNSEL within seven (7) calendar days after Employee signs the Agreement; (b) mailed to THE GENERAL COUNSEL at the address specified above by First Class United States mail and postmarked within seven (7) calendar days after Employee signs the Agreement; or (c)

delivered to THE GENERAL COUNSEL at the address specified above through a reputable overnight delivery service with documented evidence that it was sent within seven (7) calendar days after Employee signed the Agreement. This Agreement will become effective and binding on the parties on the eighth (8) day after it is signed, provided that Employee has not revoked HIS acceptance of it during the revocation period.

SEVEN: Advised to Consult with Attorney

Employee is hereby advised to consult with an attorney of his own choosing before signing this Agreement. Employee understands that whether to do so is his decision.

EIGHT: Binding Agreement

This Agreement shall be binding upon and inure to the benefit of the parties, as well as their heirs, administrators, representatives, agents, executors, successors and assigns.

NINE: Arbitration

Except as stated in Paragraph SIXTEEN, any controversy, dispute or claim arising out of or related to this Agreement or its enforceability shall be finally settled by final and binding arbitration conducted by a single arbitrator selected by the parties in accordance with the National Rules for the Resolution of Employment Disputes of the American Arbitration Association.

If Employee breaches any provision of this Agreement pertaining to Employee, the arbitrator will be empowered: (a) to specifically enforce any term or terms of this Agreement; (b) to award the Company monetary damages resulting from such breach; and/or (c) to terminate the Company’s obligations to provide future monetary payments and benefits to Employee under this Agreement.

TEN: Confidentiality

Employee represents and agrees that he will not disclose any non-public terms of this Agreement, the facts leading up to this Agreement, any allegations of wrongdoing or the terms of the negotiations leading up to this Agreement, to any persons, except (a) to members of Employee's immediate family, Employee's attorneys, accountants, tax advisors or financial advisors, provided that: (i) Employee informs each such person of this confidentiality obligation, (ii) each such person agrees to be bound to its terms, and (iii) Employee shall be responsible for any violation of the terms of this Paragraph by any of those persons; and (b) to the extent required by a subpoena or court order or otherwise required by law.

ELEVEN: Confidential Information

Employee acknowledges that he received and had access to Confidential Information (as defined below) of the Company and/or its affiliates throughout his employment, and that such Confidential Information is a special, valuable and unique asset belonging to the Company. Without limiting

Employee's continuing obligations under any existing confidentiality agreement, and in recognition of Employee's legal obligations and the consideration set forth in this Agreement, Employee agrees not to disclose to any third person or to use for the direct or indirect benefit of any person or entity other than the Company or its affiliates any Confidential Information without the Company's express written consent, unless such Confidential Information has been previously disclosed to the public by the Company or is in the public domain (other than by reason of Employee's breach of this Paragraph).

"Confidential Information" includes, but is not limited to, privileged information exchanged with the Company’s legal counsel, trade secrets, customer lists and details of contracts with or requirements of customers, the identity of any owner of a managed hotel, information relating to any current, past or prospective management agreement or joint venture, information pertaining to business methods, sales plans, design plans and strategies, management organization, computer systems or software, operating policies or manuals, personnel records or information, information relating to current, past or contemplated employee benefits or compensation data or strategies, business, financial, development or marketing plans, or manpower strategies or plans, privileged information exchanged with the Company’s legal counsel, financial records or other financial, commercial, business or technical information relating to the Company or its affiliates provided, however, that “Confidential Information” shall not include any information that demonstrably (a) is or becomes available to the public other than as a consequence of a breach of Employee of any fiduciary duty or obligation of confidentiality, (b) Employee received from a source not bound, to his knowledge, by obligations of confidentiality, or (c) was already in Employee’s possession on a non-confidential basis prior to the commencement of his employment by the Company.

Employee hereby represents that as of this Agreement that Employee has not disclosed any Confidential Information or Confidential Materials to any person or entity (other than the Company) without the express written authorization of an authorized officer of the Company.

Nothing in this Paragraph prohibits the Employee from disclosing Confidential Information or Confidential Materials to the extent required by a court or governmental agency or by applicable law or under compulsion of legal process, provided, however, that if Employee receives a subpoena or any other written or oral request for disclosure or release of any Confidential Information, Confidential Materials or any other information concerning the Company or any other Releasee described in this Agreement, including but not limited to this Agreement and any information concerning this Agreement, Employee shall (a) within two (2) business days of the service or receipt of such subpoena or other request notify the Company in writing directed to the Company’s General Counsel, 201 W. North River Drive, Suite 100, Spokane, Washington 99201 and provide the Company with a copy of any subpoena or other written request, or disclose the nature of the request for information, if oral, and (b) prior to making any such disclosure Employee will take all reasonable steps to afford the Company the opportunity to attempt to obtain a court order to assure the confidential treatment of the Confidential Information, Confidential Materials or other information concerning the Company or any other Releasee described in this Agreement or to prohibit or limit such disclosure.

TWELVE: Non-Competition; Non-Solicitation

Employee acknowledges he is bound by and agrees to comply with the Non-Competition and Non-Solicitation provisions set forth the Employment Agreement.

THIRTEEN: Return of Company Property

Employee represents that as of the Separation Date, he will return to the Company all Company property in his possession, custody or control, including, without limitation, computers, laptops, printers, scanners and accessories, disks, keys, cell phones, smart technology, credit cards, access cards, Company records, documents and files and all copies and recordings thereof, whether written or electronically created or stored.

FOURTEEN: Future Cooperation

Employee will comply with all reasonable requests from any Releasee for assistance and/or information in connection with any matters relating to the duties and responsibilities of Employee's employment with the Company, including without limitation, consulting with any of the employees in connection with the transition of on-going matters, consulting with attorneys of any Releasee and/or appearing as a witness in connection with any dispute, controversy, action or proceeding of any kind, and making himself available to attorneys of Releasees in advance of witness appearances for purposes of preparation upon the request of the Company and with reasonable advance notification without the need for the Company to issue a subpoena.

FIFTEEN: Public Announcement and Non-Disparagement

Employee shall not make any statements, whether oral or written, to the press or other media outlets regarding the Employee's employment or separation of employment with the Company, without express written consent and approval of the Company, except that this Paragraph shall not apply to any statements required to be made by reason of law, regulation, or any judicial or other similar proceeding or order, and provided further that nothing in this paragraph shall restrict Employee’s new employer from issuing a press release that states Employee was formerly employed at Company.

        Employee expresslyagrees that he will not make any disparaging, malicious, and/or false comments, whether oral or written, about the Releasees in any way, now or in the future. Employee understands that any proven breach of this paragraph is a material breach of this Agreement.

SIXTEEN: Injunctive Relief

Employee acknowledges and agrees that Paragraphs TEN, ELEVEN, TWELVE, FOURTEEN and FIFTEEN hereof relate to special, unique and extraordinary matters and that a violation of any of the terms of such Paragraphs will cause the Company irreparable injury for which adequate remedies are not

available at law. Therefore, Employee agrees that the Company shall be entitled to an injunction, restraining order or such other equitable relief (without the requirement to post bond) in a court of law restraining Employee from committing any violation of the covenants and obligations contained in Paragraphs TEN, ELEVEN, TWELVE, FOURTEEN and FIFTEEN. These remedies are cumulative and are in addition to any other rights and remedies the Company may have at law or in equity.

Employee further agrees to submit to personal jurisdiction of the federal and state courts of the State of Washington in regard to this Paragraph SIXTEEN, if the Company seeks to enjoin Employee from any actions or activities which are alleged to be violative of Paragraph TEN, ELEVEN, TWELVE, FOURTEEN and FIFTEEN of this Agreement.

SEVENTEEN: Waiver and Amendment

No delay or omission by the Company in exercising any right under this Agreement shall operate as a waiver of that right or any other right. A waiver or consent given by the Company on one occasion shall be effective only in that instance and shall not be construed as a waiver or bar of any right on any other occasion. This Agreement may not be modified, altered or changed in any manner, except by an instrument in writing signed by duly authorized representatives of the parties that specifically refers to this Agreement.

EIGHTEEN: Choice of Law

This Agreement shall be governed by the laws of the State of Washington without giving effect to the conflict of law principles thereof and except that the interpretation and enforceability of the arbitration clause herein shall be governed by the Federal Arbitration Act.

NINETEEN: Severability

If any portion of this Agreement is declared unlawful or unenforceable, the remaining parts will remain enforceable. In the event that Paragraph TWO is held invalid or unenforceable, in whole or in part, this Agreement shall be voidable in the sole discretion of the Company.

TWENTY: Entire Agreement

This Agreement is the entire Agreement between Employee and the Company regarding the subjects addressed in this document, and this Agreement supersedes and cancels any other agreements, arrangements, obligations or understandings between the Company and the Employee pertaining to the subjects addressed herein, provided, however, that: (i) Company’s obligation to pay to Employee severance benefits under his Employment Agreement, (ii) Employees obligations under his Employment Agreement that are intended to survive his termination, (iii) any confidentiality, non-disclosure, non-solicitation, intellectual property or similar agreement between Employee and the Company; (iv) any arbitration agreement between Employee and the Company; and (v) any vested rights under applicable

stock option, restricted stock or restricted stock unit agreement or plan pertaining to Employee, shall each survive this Agreement in accordance with its terms.

EMPLOYEE ACKNOWLEDGES THAT:

•  EMPLOYEE HAS READ THIS AGREEMENT;

•  EMPLOYEE FULLY UNDERSTANDS THE TERMS OF THIS AGREEMENT:

• EMPLOYEE HAS TAKEN SUFFICIENT TIME TO CONSIDER THIS AGREEMENT;

•  EMPLOYEE IS VOLUNTARILY ENTERING INTO THIS AGREEMENT;

•  EMPLOYEE HAS BEEN ADVISED TO CONSULT WITH AN ATTORNEY OF HIS OWN CHOOSING REGARDING HIS CONSIDERATION OF, AND ENTERING INTO, THIS AGREEMENT;

•  THIS AGREEMENT CONTAINS A GENERAL RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS AS OF THE DATE EMPLOYEE SIGNS THIS AGREEMENT AND A RESTRICTION ON RELEASE OF CONFIDENTIAL INFORMATION AND CONFIDENTIAL MATERIALS;

•  NO PROMISES OR AGREEMENTS OF ANY KIND HAVE BEEN MADE TO OR WITH EMPLOYEE, OTHER THAN THOSE SET FORTH IN THIS AGREEMENT, TO CAUSE EMPLOYEE TO SIGN THIS AGREEMENT.

Signature:

Dated: __________________________________________________________________

Red Lion Hotels Corporation

By: 

Dated: __________________________________________________________________

EX-10.2

April 1, 2020

Mr. Paul Moerner

RE: Red Lion Hotels Corporation Employment Offer Letter

Dear Paul:

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

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

The following outlines the employment package for your position.

START DATE: April 1, 2020.

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

COMPENSATION: Your position is classified as a salaried exempt position, which means it is exempt from state and federal overtime laws. You will be paid a bi-weekly base salary of $7,692.31, which is equivalent to $200,000per year, subject to normal withholdings and payroll taxes. You will not be entitled to any additional compensation in the event you are appointed to serve as an officer or director of any of the Company’s direct or indirect subsidiaries or affiliates.

BONUS: In addition to your base salary, you are eligible to earn a bonus if you are actively employed throughout the applicable bonus period, and if you meet the other requirements outlined in any bonus plan as may be approved by the Company from time to time at the Company’s sole discretion. Your bonus target for this position is set at a target of 40% of base salary.

ANNUAL EQUITY GRANT: At the sole discretion of the Compensation Committee of the Company’s Board, you may receive an annual grant of equity under the Company’s 2015 Stock Incentive Plan (or such successor plan as may be then in effect).  Subject to such discretion, such grant shall be in a value equal to 40% of your base salary, all of which is currently anticipated to be issued in the form of restricted stock units (“RSUs”) vesting 25% on each of the first four anniversaries of issuance.  The type, allocation

and timing of any equity issuance to you is subject to the Compensation Committee’s discretion from time to time.

TRAVEL: You may be expected as part of your duties to travel frequently to such places as may be directed from time to time by the Company. The Company will reimburse your reasonable travel expenses in accordance with its travel reimbursement policies as such policies may change from time to time.

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

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

• Employee Assistance Program (EAP)

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

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

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

• Vacation, Holiday, Sick Pay and Disability Programs

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

• Direct Deposit

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

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

• Continuing education reimbursement

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

SEVERANCE BENEFITS:

UPON TERMINATION WITHOUT CAUSE: If the Company terminates your employment without Cause (defined below), the Company will pay you a total amount equal to one-half (1/2) your base annual salary for the then current fiscal year, paid to you in equal installments over the six months following your termination on each of the dates the Company regularly pays its employees. As a previous condition to any severance under this letter, you shall execute and not revoke during any legally applicable revocation period, a separation agreement and general release in substantially the form attached hereto as Exhibit A.

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

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

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

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

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

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

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

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

We are pleased and proud to be adding your talents to our leadership team.

Sincerely,

/s/ John Russell

John Russell

Interim President and CEO

Red Lion Hotels Corporation

Accepted as of the date first set forth above:

/s/ Paul Moerner

Paul Moerner

EXHIBIT A

GENERAL RELEASE OF CLAIMS

This Agreement and General Release of Claims (“Agreement”) is entered into by and between ________________ (“Employee”), Employee’s heirs, dependents, beneficiaries, executors, administrators, representatives, successors and assigns (collectively referred to throughout this Agreement as “Employee”), and Red Lion Hotels Corporation, dba RLH Corporation (the “Company”).

WHEREAS, Employee’s last date of employment with the Company was *.

WHEREAS, Employer and Company wish to settle and resolve all issues arising out of Employee’s employment with and separation from Employer without any disputes or proceedings,

NOW, THEREFORE, for and in consideration of the mutual promises and other good and valuable consideration described below, the receipt and adequacy of which are acknowledged by Company and Employee, both of them agree to the following:

ONE: Separation

Company and Employee agree that Employee’s last date of employment by Company was * (“Separation Date”).

TWO: General Release

With the exception of Company’s obligation to pay to Employee severance benefits in accordance with __________________, dated ____________ (the “Employment Agreement”), Employee knowingly and voluntarily, unconditionally and forever, releases and forever discharges the Company, all of its current and former parents, affiliates, subsidiaries, divisions, predecessors, insurers, successors and assigns, and all of their current and former employees, attorneys, officers, directors, shareholders and agents thereof, both individually and in their business capacities, and their employee benefit plans and programs and their administrators and fiduciaries (all collectively referred to throughout the remainder of this Agreement as “Releasees”), of and from any and all claims, known and unknown, asserted or unasserted, which the Employee has or may have against Releasees, including, but not limited to:

i.Any and all claims for wrongful discharge, constructive discharge, or wrongful demotion;

ii.Any and all claims relating to any contracts of employment, oral or written, express or implied, or breach of the covenant of good faith and fair dealing, oral or written, express or implied;

iii.Any and all tort claims of any nature, including but not limited to any claims for negligence, defamation, misrepresentation, fraud, or negligent or intentional infliction of emotional distress;

iv.Any and all claims for discrimination, harassment, whistle blowing or retaliation;

v.Any and all claims for alleged violation of Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, 42 U.S.C. Section 1981, the Age Discrimination in Employment Act of 1967, the Older Workers Benefit Protection Act, the Americans With Disabilities Act, the Employee Retirement Income Security Act, the Federal Rehabilitation Act of 1973, the Federal Family and Medical Leave Act, the Worker Adjustment and Retraining Notification Act, the Labor Management Relations Act, the Equal Pay Act, the Fair Credit Reporting Act, the Immigration Reform and Control Act, the Uniform Services Employment and Reemployment Rights Act, the Conscientious Employee Protection Act and any and all claims for violation of any other federal, state or local law, rule, regulation or ordinances, public policy or common law;

vi.Any and all claims for unpaid or disputed wages, bonuses, profit sharing units, commissions or other compensation;

vii.Any and all claims for attorneys’ fees or costs;

viii.Provided however nothing herein is intended to release Employee’s rights under the Company’s 401(k) plan as prescribed by law, or any other claims that may not be released by agreement pursuant to applicable law; and

ix.Further, nothing herein shall release Employee’s rights of indemnification under the Company’s organizational documents for acts committed in the ordinary course of business and within the scope of his employment, including any such rights under any insurance policy.

         Employee understands this Release includes all claims related in any manner to Employee’s employment up until the date of this Agreement. Employee further understands that Employee is hereby releasing any known or unknown claim for alleged right to discovery of information or documents of Releasees. Employee is granting this Release even though Employee understands that Employee may not, as of this date, know all of the claims Employee may lawfully have against the Releasees. This release is intended to be as broad as the law allows and includes, without limitation, any claims pursuant to statute or otherwise for attorneys’ fees and costs.

THREE: Acknowledgments of Employee

        Employee acknowledges that the severance benefits specified in the Employment Agreement represent sufficient consideration for Employee's release of claims and the other covenants contained in this Agreement that pertain to Employee. Employee further acknowledges that in the event Employee does not execute this Agreement, or fails to execute and deliver this Agreement to Company within the 60 day period following his Separation Date, Employee will not be entitled to, among other things, the severance benefits specified in the Employment Agreement.

Employee acknowledges that Employee has not suffered any on-the-job injury or illness for which Employee has not already filed a claim.

Employee acknowledges and represents that as of the date of the execution of this Agreement, Employee has not filed any complaints or charges with any administrative agency, or brought a claim in any court, and is not a party to any claim against the Company, and has not assigned any claim against the Company to any third party. Employee further agrees not to affirmatively seek to file any claims against the Company and that if any such claim is prosecuted in Employee’s name before any court or administrative agency, Employee waives and agrees not to take any award of money or other damages from such action.

The Company has granted Employee any leave to which Employee was entitled from the Company under the Family and Medical Leave Act or related state or local leave or disability accommodation laws.

Employee has not divulged any proprietary or confidential information of the Company and will continue to maintain the confidentiality of such information consistent with the Company’s policies, Employee’s agreement(s) with the Company and/or any applicable common law.

Employee has not been retaliated against for reporting any allegations of wrongdoing by the Company, its officersor any other Releasee described in this Agreement, including any allegations of corporate fraud. Both the Company and Employee acknowledge that this Agreement does not limit either party’s right, where applicable, to file or to participate in an investigative proceeding of any federal, state or local governmental agency. To the extent permitted by law, Employee agrees that if such an administrative claim is made, Employee shall not be entitled to recover, and waives any right to recover monetary damages or other individual remedies.in connection with any such claim.

FOUR: Non-Admission of Liability

This Agreement and benefits provided hereunder are not intended to be, shall not be construed as, and are not an admission, concession by the Company or any other Releasees, or evidence of any wrongdoing or illegal or actionable acts or omissions, and the Company expressly denies that it engaged in any wrongdoing or illegal or actionable acts or omissions.

FIVE: Period for Review and Eligibility Criteria

Employee understands that he has been given a period of twenty-one (21) calendar days to review and consider this Agreement. Employee further understands that he may take as much or as little of this 21-day period of time to consider this Agreement as he wishes, before signing this Agreement.

SIX: Revocation Period

Employee may revoke HIS acceptance of this Agreement within the seven (7) day period after HE has signed it if HE so desires. Any revocation must be in writing and submitted to THE COMPANy’S General Counsel, 201 W. NORTH RIVER DRIVE, SUITE 100, sPOKANE, WASHINGTON 99201. The revocation must be either: (a) personally delivered to THE GENERAL COUNSEL within seven (7) calendar days after Employee signs the Agreement; (b) mailed to THE GENERAL COUNSEL at the address specified above by First Class United States mail and postmarked within seven (7) calendar days after Employee signs the Agreement; or (c) delivered to THE GENERAL COUNSEL at the address specified above through a reputable overnight delivery service with documented evidence that it was sent within seven (7) calendar days after Employee signed the Agreement. This Agreement will become effective and binding on the parties on the eighth (8) day after it is signed, provided that Employee has not revoked HIS acceptance of it during the revocation period.

SEVEN: Advised to Consult with Attorney

Employee is hereby advised to consult with an attorney of his own choosing before signing this Agreement. Employee understands that whether to do so is his decision.

EIGHT: Binding Agreement

This Agreement shall be binding upon and inure to the benefit of the parties, as well as their heirs, administrators, representatives, agents, executors, successors and assigns.

NINE: Arbitration

Except as stated in Paragraph SIXTEEN, any controversy, dispute or claim arising out of or related to this Agreement or its enforceability shall be finally settled by final and binding arbitration conducted by a single arbitrator selected by the parties in accordance with the National Rules for the Resolution of Employment Disputes of the American Arbitration Association.

If Employee breaches any provision of this Agreement pertaining to Employee, the arbitrator will be empowered: (a) to specifically enforce any term or terms of this Agreement; (b) to award the Company monetary damages resulting from such breach; and/or (c) to terminate the Company’s obligations to provide future monetary payments and benefits to Employee under this Agreement.

TEN: Confidentiality

Employee represents and agrees that he will not disclose any non-public terms of this Agreement, the facts leading up to this Agreement, any allegations of wrongdoing or the terms of the negotiations leading up to this Agreement, to any persons, except (a) to members of Employee's immediate family, Employee's attorneys, accountants, tax advisors or financial advisors, provided that: (i) Employee informs each such person of this confidentiality obligation, (ii) each such person agrees to be bound to its terms,

and (iii) Employee shall be responsible for any violation of the terms of this Paragraph by any of those persons; and (b) to the extent required by a subpoena or court order or otherwise required by law.

ELEVEN: Confidential Information

Employee acknowledges that he received and had access to Confidential Information (as defined below) of the Company and/or its affiliates throughout his employment, and that such Confidential Information is a special, valuable and unique asset belonging to the Company. Without limiting Employee's continuing obligations under any existing confidentiality agreement, and in recognition of Employee's legal obligations and the consideration set forth in this Agreement, Employee agrees not to disclose to any third person or to use for the direct or indirect benefit of any person or entity other than the Company or its affiliates any Confidential Information without the Company's express written consent, unless such Confidential Information has been previously disclosed to the public by the Company or is in the public domain (other than by reason of Employee's breach of this Paragraph).

"Confidential Information" includes, but is not limited to, privileged information exchanged with the Company’s legal counsel, trade secrets, customer lists and details of contracts with or requirements of customers, the identity of any owner of a managed hotel, information relating to any current, past or prospective management agreement or joint venture, information pertaining to business methods, sales plans, design plans and strategies, management organization, computer systems or software, operating policies or manuals, personnel records or information, information relating to current, past or contemplated employee benefits or compensation data or strategies, business, financial, development or marketing plans, or manpower strategies or plans, privileged information exchanged with the Company’s legal counsel, financial records or other financial, commercial, business or technical information relating to the Company or its affiliates provided, however, that “Confidential Information” shall not include any information that demonstrably (a) is or becomes available to the public other than as a consequence of a breach of Employee of any fiduciary duty or obligation of confidentiality, (b) Employee received from a source not bound, to his knowledge, by obligations of confidentiality, or (c) was already in Employee’s possession on a non-confidential basis prior to the commencement of his employment by the Company.

Employee hereby represents that as of this Agreement that Employee has not disclosed any Confidential Information or Confidential Materials to any person or entity (other than the Company) without the express written authorization of an authorized officer of the Company.

Nothing in this Paragraph prohibits the Employee from disclosing Confidential Information or Confidential Materials to the extent required by a court or governmental agency or by applicable law or under compulsion of legal process, provided, however, that if Employee receives a subpoena or any other written or oral request for disclosure or release of any Confidential Information, Confidential Materials or any other information concerning the Company or any other Releasee described in this Agreement, including but not limited to this Agreement and any information concerning this Agreement, Employee shall (a) within two (2) business days of the service or receipt of such subpoena or other request notify the Company in writing directed to the Company’s General Counsel, 201 W. North River Drive, Suite 100, Spokane, Washington 99201 and provide the Company with a copy of any subpoena or other written request, or disclose the nature of the request for information, if oral, and (b) prior to making any such

disclosure Employee will take all reasonable steps to afford the Company the opportunity to attempt to obtain a court order to assure the confidential treatment of the Confidential Information, Confidential Materials or other information concerning the Company or any other Releasee described in this Agreement or to prohibit or limit such disclosure.

TWELVE: Non-Competition; Non-Solicitation

Employee acknowledges he is bound by and agrees to comply with the Non-Competition and Non-Solicitation provisions set forth the Employment Agreement.

THIRTEEN: Return of Company Property

Employee represents that as of the Separation Date, he will return to the Company all Company property in his possession, custody or control, including, without limitation, computers, laptops, printers, scanners and accessories, disks, keys, cell phones, smart technology, credit cards, access cards, Company records, documents and files and all copies and recordings thereof, whether written or electronically created or stored.

FOURTEEN: Future Cooperation

Employee will comply with all reasonable requests from any Releasee for assistance and/or information in connection with any matters relating to the duties and responsibilities of Employee's employment with the Company, including without limitation, consulting with any of the employees in connection with the transition of on-going matters, consulting with attorneys of any Releasee and/or appearing as a witness in connection with any dispute, controversy, action or proceeding of any kind, and making himself available to attorneys of Releasees in advance of witness appearances for purposes of preparation upon the request of the Company and with reasonable advance notification without the need for the Company to issue a subpoena.

FIFTEEN: Public Announcement and Non-Disparagement

Employee shall not make any statements, whether oral or written, to the press or other media outlets regarding the Employee's employment or separation of employment with the Company, without express written consent and approval of the Company, except that this Paragraph shall not apply to any statements required to be made by reason of law, regulation, or any judicial or other similar proceeding or order, and provided further that nothing in this paragraph shall restrict Employee’s new employer from issuing a press release that states Employee was formerly employed at Company.

        Employee expresslyagrees that he will not make any disparaging, malicious, and/or false comments, whether oral or written, about the Releasees in any way, now or in the future. Employee understands that any proven breach of this paragraph is a material breach of this Agreement.

SIXTEEN: Injunctive Relief

Employee acknowledges and agrees that Paragraphs TEN, ELEVEN, TWELVE, FOURTEEN and FIFTEEN hereof relate to special, unique and extraordinary matters and that a violation of any of the terms of such Paragraphs will cause the Company irreparable injury for which adequate remedies are not available at law. Therefore, Employee agrees that the Company shall be entitled to an injunction, restraining order or such other equitable relief (without the requirement to post bond) in a court of law restraining Employee from committing any violation of the covenants and obligations contained in Paragraphs TEN, ELEVEN, TWELVE, FOURTEEN and FIFTEEN. These remedies are cumulative and are in addition to any other rights and remedies the Company may have at law or in equity.

Employee further agrees to submit to personal jurisdiction of the federal and state courts of the State of Washington in regard to this Paragraph SIXTEEN, if the Company seeks to enjoin Employee from any actions or activities which are alleged to be violative of Paragraph TEN, ELEVEN, TWELVE, FOURTEEN and FIFTEEN of this Agreement.

SEVENTEEN: Waiver and Amendment

No delay or omission by the Company in exercising any right under this Agreement shall operate as a waiver of that right or any other right. A waiver or consent given by the Company on one occasion shall be effective only in that instance and shall not be construed as a waiver or bar of any right on any other occasion. This Agreement may not be modified, altered or changed in any manner, except by an instrument in writing signed by duly authorized representatives of the parties that specifically refers to this Agreement.

EIGHTEEN: Choice of Law

This Agreement shall be governed by the laws of the State of Washington without giving effect to the conflict of law principles thereof and except that the interpretation and enforceability of the arbitration clause herein shall be governed by the Federal Arbitration Act.

NINETEEN: Severability

If any portion of this Agreement is declared unlawful or unenforceable, the remaining parts will remain enforceable. In the event that Paragraph TWO is held invalid or unenforceable, in whole or in part, this Agreement shall be voidable in the sole discretion of the Company.

TWENTY: Entire Agreement

This Agreement is the entire Agreement between Employee and the Company regarding the subjects addressed in this document, and this Agreement supersedes and cancels any other agreements, arrangements, obligations or understandings between the Company and the Employee pertaining to the subjects addressed herein, provided, however, that: (i) Company’s obligation to pay to Employee severance benefits under his Employment Agreement, (ii) Employees obligations under his Employment

Agreement that are intended to survive his termination, (iii) any confidentiality, non-disclosure, non-solicitation, intellectual property or similar agreement between Employee and the Company; (iv) any arbitration agreement between Employee and the Company; and (v) any vested rights under applicable stock option, restricted stock or restricted stock unit agreement or plan pertaining to Employee, shall each survive this Agreement in accordance with its terms.

EMPLOYEE ACKNOWLEDGES THAT:

•  EMPLOYEE HAS READ THIS AGREEMENT;

•  EMPLOYEE FULLY UNDERSTANDS THE TERMS OF THIS AGREEMENT:

• EMPLOYEE HAS TAKEN SUFFICIENT TIME TO CONSIDER THIS AGREEMENT;

•  EMPLOYEE IS VOLUNTARILY ENTERING INTO THIS AGREEMENT;

•  EMPLOYEE HAS BEEN ADVISED TO CONSULT WITH AN ATTORNEY OF HIS OWN CHOOSING REGARDING HIS CONSIDERATION OF, AND ENTERING INTO, THIS AGREEMENT;

•  THIS AGREEMENT CONTAINS A GENERAL RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS AS OF THE DATE EMPLOYEE SIGNS THIS AGREEMENT AND A RESTRICTION ON RELEASE OF CONFIDENTIAL INFORMATION AND CONFIDENTIAL MATERIALS;

•  NO PROMISES OR AGREEMENTS OF ANY KIND HAVE BEEN MADE TO OR WITH EMPLOYEE, OTHER THAN THOSE SET FORTH IN THIS AGREEMENT, TO CAUSE EMPLOYEE TO SIGN THIS AGREEMENT.

Signature:

Dated: __________________________________________________________________

Red Lion Hotels Corporation

By: 

Dated: __________________________________________________________________

EX-10.3

April 1, 2020

Mr. Nate Troup

RE: Amendment to April 1, 2020 Offer Letter between Red Lion Hotels Corporation and Nate Troup (“Existing Employment Agreement”)

Dear Nate:

This letter (the “Amendment”) is intended to clarify certain terms in your Existing Employment Agreement. Unless otherwise defined herein, all capitalized terms shall have the meaning set forth in the Existing Employment Agreement.

With respect to any severance benefits to which you may become entitled that are based upon your “annual base salary” for the current fiscal year, any temporary reduction to your annual base salary that has been approved by the Company as part of its response to the COVID-19 crisis will not be taken into account for purposes of calculating any severance amount due.

Other than as modified above, the Existing Employment Agreement will remain in full force and effect. This Amendment is effective as of the first date set forth above.

Please execute below to indicate your agreement to the terms of this Amendment.

Sincerely,

/s/ John Russell

John Russell

Interim President & CEO

Accepted as of the date first set forth above

/s/ Nate Troup

Nate Troup

EX-10.4

April 1, 2020

Mr. Paul Moerner

RE: Amendment to April 1, 2020 Offer Letter between Red Lion Hotels Corporation and Paul Moerner (“Existing Employment Agreement”)

Dear Paul:

This letter (the “Amendment”) is intended to clarify certain terms in your Existing Employment Agreement. Unless otherwise defined herein, all capitalized terms shall have the meaning set forth in the Existing Employment Agreement.

With respect to any severance benefits to which you may become entitled that are based upon your “annual base salary” for the current fiscal year, any temporary reduction to your annual base salary that has been approved by the Company as part of its response to the COVID-19 crisis will not be taken into account for purposes of calculating any severance amount due.

Other than as modified above, the Existing Employment Agreement will remain in full force and effect. This Amendment is effective as of the first date set forth above.

Please execute below to indicate your agreement to the terms of this Amendment.

Sincerely,

/s/ John Russell

John Russell

Interim President & CEO

Accepted as of the date first set forth above

/s/ Paul Moerner

Paul Moerner

EX-31.1

Exhibit 31.1

RED LION HOTELS CORPORATION

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

I, John J. Russell, Jr., certify that:

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

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

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

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

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

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

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

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

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

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

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

Date: May 8, 2020

/s/ John J. Russell, Jr.

John J. Russell, Jr.

Interim President and Chief Executive Officer

(Principal Executive Officer)

EX-31.2

Exhibit 31.2

RED LION HOTELS CORPORATION

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

I, Nathan M. Troup, certify that:

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

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

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

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

i.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;

ii.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;

iii.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

iv.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:

i.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

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

Date: May 8, 2020

/s/ Nathan M. Troup

Nathan M. Troup

Executive Vice President and Chief Financial Officer

(Principal Financial Officer)

EX-32.1

Exhibit 32.1

RED LION HOTELS CORPORATION

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

In connection with the quarterly report of Red Lion Hotels Corporation (the “Company”) on Form 10-Q for the period ended March 31, 2020, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, John J. Russell, Jr., Interim President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

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

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

May 8, 2020

/s/ John J. Russell, Jr.

John J. Russell, Jr.

Interim President and Chief Executive Officer

(Principal Executive Officer)

EX-32.2

Exhibit 32.2

RED LION HOTELS CORPORATION

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

In connection with the quarterly report of Red Lion Hotels Corporation (the “Company”) on Form 10-Q for the period ended March 31, 2020, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Nathan M. Troup, Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

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

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

May 8, 2020

/s/ Nathan M. Troup

Nathan M. Troup

Executive Vice President and Chief Financial Officer

(Principal Financial Officer)

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Stock Based Compensation - Stock Based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	$ 373	$ 916
Restricted stock units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	238	612
Unrestricted stock awards
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	112	129
Performance stock units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	15	147
Stock options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	0	22
Employee stock purchase plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	$ 8	$ 6

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Earnings (Loss) Per Share - Schedule of Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2020	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019
Numerator - basic and diluted:
Net income (loss)	$ (9,254)	$ (5,991)	$ (6,652)	$ (3,771)	$ (4,559)
Net (income) loss attributable to noncontrolling interest	1,155				286
Net income (loss) and comprehensive income (loss) attributable to RLH Corporation	$ (8,099)				$ (4,273)
Denominator:
Weighted average shares - basic (in shares)	25,199				24,603
Weighted average shares - diluted (in shares)	25,199				24,603
Earnings (loss) per share - basic (in dollars per share)	$ (0.32)				$ (0.17)
Earnings (loss) per share - diluted (in dollars per share)	$ (0.32)				$ (0.17)

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Variable Interest Entities (Details)		1 Months Ended		3 Months Ended			12 Months Ended
	Feb. 07, 2020 USD ($)	May 31, 2019 USD ($)	Mar. 31, 2019 USD ($)	Mar. 31, 2020 USD ($) hotel	Dec. 31, 2019 USD ($)	Mar. 31, 2019 USD ($)	Dec. 31, 2019 USD ($)
Variable Interest Entity [Line Items]
Reclassification of noncontrolling interest				$ 0	$ 0
Additional Paid-In Capital
Variable Interest Entity [Line Items]
Reclassification of noncontrolling interest				$ 2,376,000	376,000
RL Venture LLC | Variable Interest Entity, Primary Beneficiary
Variable Interest Entity [Line Items]
Cash distributions						$ 16,500,000
Shelbourne Capital | Shelbourne Falcon
Variable Interest Entity [Line Items]
Ownership by non-controlling interest holders				45.00%
Hotel RL Baltimore Inner Harbor | Variable Interest Entity, Primary Beneficiary
Variable Interest Entity [Line Items]
Cash distributions				$ 0		0
RL Venture LLC | Variable Interest Entity, Primary Beneficiary
Variable Interest Entity [Line Items]
Cash distributions						$ 9,100,000
Ownership percentage				55.00%
Number of hotels listed for sale | hotel				1
Funding provided			$ 16,600,000
RL Venture LLC | Disposal Group, Disposed of by Sale, Not Discontinued Operations | RL Venture Salt Lake City Debt | Variable Interest Entity, Primary Beneficiary
Variable Interest Entity [Line Items]
Amount hotels sold for					$ 33,000,000.0		$ 33,000,000.0
RLH DC Venture
Variable Interest Entity [Line Items]
Ownership percentage							45.00%
RLH DC Venture | Variable Interest Entity, Primary Beneficiary
Variable Interest Entity [Line Items]
Ownership percentage							55.00%
RLH DC Venture | RLH DC Venture | Variable Interest Entity, Primary Beneficiary
Variable Interest Entity [Line Items]
Funding provided		$ 17,400,000
Net loan proceeds used for debt refinancing		$ 15,900,000
RLH DC Venture | RLH DC Venture (PWB)
Variable Interest Entity [Line Items]
Proceeds from sale	$ 16,400,000
RLH DC Venture | RLH DC Venture (PWB) | Long-term Debt
Variable Interest Entity [Line Items]
Release of restricted cash	$ 2,300,000

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Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Dec. 31, 2019	Jun. 30, 2019	Mar. 31, 2019
Operating activities:
Net income (loss)	$ (9,254)	$ (5,991)	$ (3,771)	$ (4,559)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization	2,537			3,447
Noncash PIK interest and amortization of debt issuance costs	182			47
Amortization of key money and contract costs	264			206
Amortization of contract liabilities	(165)			(197)
Loss (gain) on asset dispositions, net	(7,892)			6
Noncash loss on early retirement of debt	750			0
Asset impairment	1,760			0
Deferred income taxes	(65)			52
Stock-based compensation expense	373			916
Provision for doubtful accounts	9,739			245
Change in operating assets and liabilities:
Accounts receivable	501			(1,009)
Key money disbursements	(129)			(236)
Other current assets	504			(616)
Accounts payable	459			1,383
Other accrued liabilities	(1,858)			(1,717)
Net cash provided by (used in) operating activities	(2,294)			(2,032)
Investing activities:
Capital expenditures	(782)			(1,500)
Net proceeds from disposition of property and equipment	36,896			0
Collection of notes receivable	0			21
Advances on notes receivable	0			(90)
Net cash provided by (used in) investing activities	36,114			(1,569)
Financing activities:
Borrowings on long-term debt, net of discounts	0			16,513
Repayment of long-term debt and finance leases	(17,717)			(170)
Repayment of line of credit borrowing	(10,000)			0
Distributions to noncontrolling interest	0			(7,431)
Stock-based compensation awards canceled to settle employee tax withholding	(81)			(342)
Stock option and stock purchase plan issuances, net and other	45			112
Net cash provided by (used in) financing activities	(27,753)			8,682
Change in cash, cash equivalents and restricted cash:
Net increase (decrease) in cash, cash equivalents and restricted cash	6,067			5,081
Cash, cash equivalents and restricted cash at beginning of period	31,808		$ 24,870	19,789
Cash, cash equivalents and restricted cash at end of period	$ 37,875	$ 31,808		$ 24,870

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Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Current assets:
Cash and cash equivalents ($1,914 and $1,819 attributable to VIEs)	$ 37,775	$ 29,497
Restricted cash ($100 and $2,311 attributable to VIEs)	100	2,311
Accounts receivable ($718 and $1,033 attributable to VIEs), net of an allowance for doubtful accounts of $8,125 and $4,589, respectively	10,701	15,143
Notes receivable, net	286	5,709
Other current assets ($144 and $311 attributable to VIEs)	5,156	5,849
Total current assets	54,018	58,509
Property and equipment, net ($11,520 and $29,848 attributable to VIEs)	36,071	68,668
Operating lease right-of-use assets ($— and $10,810 attributable to VIEs)	5,552	48,283
Goodwill	18,595	18,595
Intangible assets, net	47,845	48,612
Other assets, net ($— and $703 attributable to VIEs)	2,427	3,851
Total assets	164,508	246,518
Current liabilities:
Accounts payable ($543 and $589 attributable to VIEs)	6,251	5,510
Accrued payroll and related benefits ($68 and $349 attributable to VIEs)	1,184	2,709
Other accrued liabilities ($176 and $455 attributable to VIEs)	4,915	5,469
Long-term debt, due within one year ($5,576 and $16,984 attributable to VIEs)	5,576	16,984
Operating lease liabilities, due within one year ($— and $966 attributable to VIEs)	1,519	4,809
Total current liabilities	19,445	35,481
Long-term debt, due after one year, net of debt issuance costs ($— and $5,576 attributable to VIEs)	0	5,576
Line of credit, due after one year	0	10,000
Operating lease liabilities, due after one year ($— and $11,938 attributable to VIEs)	5,339	46,592
Deferred income and other long-term liabilities ($3 and $28 attributable to VIEs)	941	1,105
Deferred income taxes	678	743
Liabilities, Total	26,403	99,497
Total liabilities
RLH Corporation stockholders' equity:
Preferred stock - 5,000,000 shares authorized; $0.01 par value; no shares issued or outstanding	0	0
Common stock - 50,000,000 shares authorized; $0.01 par value; 25,208,983 and 25,148,005 shares issued and outstanding	253	251
Additional paid-in capital, common stock	179,568	181,608
Accumulated deficit	(44,974)	(36,875)
Total RLH Corporation stockholders' equity	134,847	144,984
Noncontrolling interest	3,258	2,037
Total stockholders' equity	138,105	147,021
Total liabilities and stockholders’ equity	$ 164,508	$ 246,518

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Earnings (Loss) Per Share (Tables)

3 Months Ended

Mar. 31, 2020

Earnings Per Share [Abstract]

Schedule of Earnings Per Share, Basic and Diluted

The following table presents a reconciliation of the numerators and denominators used in the basic and diluted net income (loss) per share computations for the three months ended March 31, 2020 and 2019 (in thousands, except per share data):

	Three Months Ended March 31,
	2020		2019
Numerator - basic and diluted:
Net income (loss)	$	(9,254)	$	(4,559)
Net (income) loss attributable to noncontrolling interest	1,155		286
Net income (loss) attributable to RLH Corporation	$	(8,099)	$	(4,273)
Denominator:
Weighted average shares - basic	25,199		24,603
Weighted average shares - diluted	25,199		24,603
Earnings (loss) per share - basic	$	(0.32)	$	(0.17)
Earnings (loss) per share - diluted	$	(0.32)	$	(0.17)

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, and warrants to purchase common 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 months ended March 31, 2020 and 2019.

	Three Months Ended March 31,
	2020	2019
Stock Options(1)
Dilutive awards outstanding	—	—
Antidilutive awards outstanding	—	81,130
Total awards outstanding	—	81,130
Restricted Stock Units(2)
Dilutive awards outstanding	—	—
Antidilutive awards outstanding	287,660	1,395,881
Total awards outstanding	287,660	1,395,881
Performance Stock Units(3)
Dilutive awards outstanding	—	—
Antidilutive awards outstanding	—	427,638
Total awards outstanding	—	427,638
Warrants(4)
Dilutive awards outstanding	—	—
Antidilutive awards outstanding	—	442,533
Total awards outstanding	—	442,533

⁽¹⁾ All stock options for the three months ended March 31, 2020 and 2019 were anti-dilutive as a result of the net loss attributable to RLH Corporation for these periods, and as a result of the RLH Corporation weighted average share price during the reporting period.

⁽²⁾ Restricted stock units were anti-dilutive for the three months ended March 31, 2020 and 2019 due to our net loss in the reporting periods. If we had reported net income for the three months ended March 31, 2020 and 2019, then 7,733 and 697,494 weighted average restricted stock units would have been dilutive, respectively.

⁽³⁾ Performance stock units were anti-dilutive for the three months ended March 31, 2020 and 2019 due to the net loss attributable to RLH Corporation in the reporting period. If we had reported net income for the three months ended March 31, 2020 and 2019, then 10,180 and 97,406 weighted average performance stock units would have been dilutive, respectively.

(4) All warrants expired without being exercised in January 2020. All warrants for the three months ended March 31, 2019 were anti-dilutive due to the net loss attributable to RLH in each reporting period. If we had reported net income for the three months ended March 31, 2019, 90,674 warrants would have been dilutive.

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Property and Equipment

3 Months Ended

Mar. 31, 2020

Property, Plant and Equipment [Abstract]

Property and Equipment

Property and Equipment

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

	March 31, 2020		December 31, 2019
Buildings and equipment	$	47,186	$	101,619
Furniture and fixtures	6,718		12,407
Landscaping and land improvements	493		2,038
	54,397		116,064
Less accumulated depreciation	(29,099)		(57,491)
	25,298		58,573
Land	6,871		6,871
Construction in progress	3,902		3,224
Property and equipment, net	$	36,071	$	68,668

A novel strain of coronavirus (COVID-19) was first identified in Wuhan, China in December 2019, and subsequently declared a pandemic by the World Health Organization on March 11, 2020. To date, COVID-19 has surfaced in nearly all regions around the world and resulted in travel restrictions and business slowdowns or shutdowns in affected areas. The economic impact of the pandemic thus far has been extremely punitive to travel related businesses across the nation, significantly affecting the operating results of companies within the hospitality industry. We considered the actual and anticipated economic impacts of the COVID-19 pandemic on our financial results to be an indicator that the carrying value of our long-lived assets might not be recoverable. Accordingly, we performed a test for recoverability using probability-weighted undiscounted cash flows on our long-lived assets as of March 31, 2020.

Only the Red Lion Hotel Seattle Airport, one of our company operated hotel properties under a lease through February 2024, did not recover the carrying value of the long-lived asset group in the test for recoverability, due to the short useful life and lack of terminal value. After calculating the fair value of the Red Lion Hotel Seattle Airport property long-lived asset group, we recognized an impairment loss of $1.8 million. The fair value was determined based on a discounted cash flow analysis, which is a Level 3 fair value measurement. The impairment loss was allocated to the assets within the long-lived asset group on a pro rata basis, with $1.5 million applied against the hotel building leasehold interest, included within Property and equipment, net and $0.3 million applied against the Operating lease right-of-use asset on the Condensed Consolidated Balance Sheets. There were no other impairments of our long-lived assets.

During the three months ended March 31, 2020, we sold the Hotel RL Washington DC joint venture hotel property, and our leasehold interest in the Red Lion Anaheim for a combined net gain of $7.9 million. There were no properties sold during the three months ended March 31, 2019.

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Leases

3 Months Ended

Mar. 31, 2020

Leases [Abstract]

Leases

Leases

We lease equipment and land and/or property at certain company operated hotel properties as well as office space for our headquarters through operating leases. We have elected the practical expedient so that leases with an initial term of 12 months or less are not recorded on the balance sheet.

We are obligated under finance leases for certain hotel equipment at our company operated hotel locations. The finance leases typically have a five year term.

During the first quarter of 2020, we sold the Hotel RL Washington DC joint venture property, which had a ground lease with a term through 2080. As of December 31, 2019, we had recorded an Operating lease right-of use asset of $10.8 million, and total operating lease liabilities of $12.9 million for this ground lease. The ground lease was transferred with the sale of the property, resulting in the removal of these balances from the Condensed Consolidated Balance Sheets.

Also in the first quarter of 2020, we sold our leasehold interest in the Red Lion Anaheim, which had a ground lease with a term through 2021 with renewal options through 2106 that were reasonably assured to be exercised. As of December 31, 2019, we had recorded an Operating lease right-of use asset of $31.4 million, with corresponding operating lease liabilities of $31.4 million for this ground lease. The ground lease was transferred with the sale of the property, resulting in the removal of these balances from the Condensed Consolidated Balance Sheets.

Balance sheet information related to our leases is included in the following table (in thousands):

Operating Leases	March 31, 2020		December 31, 2019
Operating lease right-of-use assets	$	5,552	$	48,283
Operating lease liabilities, due within one year	$	1,519	$	4,809
Operating lease liabilities, due after one year	5,339		46,592
Total operating lease liabilities	$	6,858	$	51,401

Finance Leases	March 31, 2020		December 31, 2019
Property and equipment	$	135	$	298
Less accumulated depreciation	(106)		(168)
Property and equipment, net	$	29	$	130
Other accrued liabilities	$	27	$	74
Deferred income and other long-term liabilities	6		76
Total finance lease liabilities	$	33	$	150

The components of lease expense during the three months ended March 31, 2020 and 2019 are included in the following table (in thousands):

	Financial Statement Line Item(s)	Three Months Ended March 31, 2020		Three months ended March 31, 2019
Operating lease expense	Selling, general, administrative and other expenses, and Company operated hotels	$	816	$	1,133
Short-term lease expense	Selling, general, administrative and other expenses, and Company operated hotels	98		247
Sublease income	Selling, general, administrative and other expenses	(18)		—
Finance lease expense
Amortization of finance right-of-use assets	Depreciation and amortization	8		35
Interest on lease liabilities	Interest expense	3		8
Total finance lease expense		11		43
Total lease expense		$	907	$	1,423

Supplemental cash flow information for our leases is included in the following table (in thousands):

Cash paid for amounts included in the measurement of lease liabilities:	Three Months Ended March 31, 2020		Three Months Ended March 31, 2019
Cash used in operating activities for operating leases	$	848	$	1,169
Cash used in operating activities for finance leases	3		8
Cash used in financing activities for finance leases	13		34

There were no new finance lease assets or associated liabilities during the three months ended March 31, 2020 and 2019.

Information related to the weighted average remaining lease terms and discount rates for our leases as of March 31, 2020 and December 31, 2019 is included in the following table:

	March 31, 2020		December 31, 2019
Weighted average remaining lease term (in years)
Operating leases	6		69
Finance leases	1		3
Weighted average discount rate
Operating leases	5.8	%	7.2	%
Finance leases	5.7	%	11.9	%

The future maturities of lease liabilities at March 31, 2020, are as indicated below (in thousands):

Years Ending December 31,	Operating Leases		Finance Leases
2020 (remainder)	$	1,141	$	20
2021	1,522		14
2022	1,486		—
2023	1,449		—
2024	595		—
Thereafter	1,984		—
Total lease payments	8,177		34
Less: imputed interest	1,319		1
	$	6,858	$	33

The future maturities of lease liabilities in the table above do not differ materially from future minimum rental payments under the previous leasing standard.

Leases

Leases

We lease equipment and land and/or property at certain company operated hotel properties as well as office space for our headquarters through operating leases. We have elected the practical expedient so that leases with an initial term of 12 months or less are not recorded on the balance sheet.

We are obligated under finance leases for certain hotel equipment at our company operated hotel locations. The finance leases typically have a five year term.

During the first quarter of 2020, we sold the Hotel RL Washington DC joint venture property, which had a ground lease with a term through 2080. As of December 31, 2019, we had recorded an Operating lease right-of use asset of $10.8 million, and total operating lease liabilities of $12.9 million for this ground lease. The ground lease was transferred with the sale of the property, resulting in the removal of these balances from the Condensed Consolidated Balance Sheets.

Also in the first quarter of 2020, we sold our leasehold interest in the Red Lion Anaheim, which had a ground lease with a term through 2021 with renewal options through 2106 that were reasonably assured to be exercised. As of December 31, 2019, we had recorded an Operating lease right-of use asset of $31.4 million, with corresponding operating lease liabilities of $31.4 million for this ground lease. The ground lease was transferred with the sale of the property, resulting in the removal of these balances from the Condensed Consolidated Balance Sheets.

Balance sheet information related to our leases is included in the following table (in thousands):

Operating Leases	March 31, 2020		December 31, 2019
Operating lease right-of-use assets	$	5,552	$	48,283
Operating lease liabilities, due within one year	$	1,519	$	4,809
Operating lease liabilities, due after one year	5,339		46,592
Total operating lease liabilities	$	6,858	$	51,401

Finance Leases	March 31, 2020		December 31, 2019
Property and equipment	$	135	$	298
Less accumulated depreciation	(106)		(168)
Property and equipment, net	$	29	$	130
Other accrued liabilities	$	27	$	74
Deferred income and other long-term liabilities	6		76
Total finance lease liabilities	$	33	$	150

The components of lease expense during the three months ended March 31, 2020 and 2019 are included in the following table (in thousands):

	Financial Statement Line Item(s)	Three Months Ended March 31, 2020		Three months ended March 31, 2019
Operating lease expense	Selling, general, administrative and other expenses, and Company operated hotels	$	816	$	1,133
Short-term lease expense	Selling, general, administrative and other expenses, and Company operated hotels	98		247
Sublease income	Selling, general, administrative and other expenses	(18)		—
Finance lease expense
Amortization of finance right-of-use assets	Depreciation and amortization	8		35
Interest on lease liabilities	Interest expense	3		8
Total finance lease expense		11		43
Total lease expense		$	907	$	1,423

Supplemental cash flow information for our leases is included in the following table (in thousands):

Cash paid for amounts included in the measurement of lease liabilities:	Three Months Ended March 31, 2020		Three Months Ended March 31, 2019
Cash used in operating activities for operating leases	$	848	$	1,169
Cash used in operating activities for finance leases	3		8
Cash used in financing activities for finance leases	13		34

There were no new finance lease assets or associated liabilities during the three months ended March 31, 2020 and 2019.

Information related to the weighted average remaining lease terms and discount rates for our leases as of March 31, 2020 and December 31, 2019 is included in the following table:

	March 31, 2020		December 31, 2019
Weighted average remaining lease term (in years)
Operating leases	6		69
Finance leases	1		3
Weighted average discount rate
Operating leases	5.8	%	7.2	%
Finance leases	5.7	%	11.9	%

The future maturities of lease liabilities at March 31, 2020, are as indicated below (in thousands):

Years Ending December 31,	Operating Leases		Finance Leases
2020 (remainder)	$	1,141	$	20
2021	1,522		14
2022	1,486		—
2023	1,449		—
2024	595		—
Thereafter	1,984		—
Total lease payments	8,177		34
Less: imputed interest	1,319		1
	$	6,858	$	33

The future maturities of lease liabilities in the table above do not differ materially from future minimum rental payments under the previous leasing standard.

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Income Taxes

3 Months Ended

Mar. 31, 2020

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

On March 27, 2020, President Trump signed into law the “Coronavirus Aid, Relief and Economic security Act” (CARES Act) which generally allows for unlimited use of NOLS generated in 2019 and 2020 as well as a five year carryback provision and shortening the recovery period for qualified improvement property. We recognized an income tax (benefit) expense of $(752,000) and $82,000 for the three months ended March 31, 2020 and 2019, respectively. The income tax benefit recognized for the three months ended March 31, 2020 is principally related to the provisions of the CARES Act. The income tax expense recognized for the three months ended March 31, 2019 varies from the statutory rate primarily due to a partial valuation allowance against our deferred tax assets, as well as deferred tax expense associated with our acquired indefinite-lived intangible assets, which are amortized for tax purposes but not for GAAP purposes.

We have state operating loss carryforwards, which expire beginning in 2020, and both federal and state tax credit carryforwards, which begin to expire in 2024.

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Subsequent Events

3 Months Ended

Mar. 31, 2020

Subsequent Events [Abstract]

Subsequent Events

Subsequent Events As a result of the COVID-19 pandemic, economic uncertainties have arisen which RLHC expects to negatively impact our business, operations and financial results. The impact has continued to evolve subsequent to the quarter ended March 31, 2020

and as of the date of these unaudited consolidated financial statements. The duration of the pandemic and the resulting economic uncertainties, and the impacts on RLHC’s financial condition, results of operations and cash flows, will depend on numerous evolving factors that cannot be accurately predicted at this time. Given the dynamic nature of this situation, the Company cannot reasonably estimate the impacts of COVID-19 on its financial condition, results of operations or cash flows for the foreseeable future. However, it is expected to have a material, adverse impact on future revenue growth as well as overall profitability.

On April 2, 2020, RLHC announced a significant reduction in force in response to the anticipated impact of the COVID-19 pandemic, reducing our corporate workforce by approximately 40%. Total severance expense of approximately $0.6 million will be recognized in conjunction with the severance, with $0.2 million recognized during the first quarter of 2020 and $0.4 million recognized during the second quarter of 2020.

On April 21, 2020, RLHC received $4.2 million in loan proceeds issued pursuant to the Paycheck Protection Program (the “PPP”) of the CARES Act. In accordance with the CARES Act, RLHC planned to use proceeds from the Loan primarily for payroll costs, rent, and utilities as we concluded we met the certification criteria under the initial requirements of the PPP. However, on April 24, 2020, the U.S. government published additional guidance regarding PPP eligibility. As a result of this new guidance the Company determined it was no longer clear that we met the eligibility requirements and accordingly we determined we would repay the full amount of the loan in May.

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Goodwill and Intangible Assets (Tables)

3 Months Ended

Mar. 31, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Goodwill and Other Intangibles

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

	March 31, 2020		December 31, 2019
Goodwill	$	18,595	$	18,595
Intangible assets
Brand name - indefinite lived	$	32,532	$	32,532
Trademarks - indefinite lived	128		128
Brand name - finite lived, net	3,376		3,554
Customer contracts - finite lived, net	11,809		12,398
Total intangible assets, net	$	47,845	$	48,612

Schedule of Intangible Assets

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

	March 31, 2020		December 31, 2019
Customer contracts	$	20,773	$	20,773
Brand name - finite lived	5,395		5,395
Accumulated amortization	(10,983)		(10,216)
Net carrying amount	$	15,185	$	15,952

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Related Party Transactions (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2019	May 31, 2019
Related Party Transaction [Line Items]
Long-term debt, gross, current	$ 5,600		$ 17,648
Secured Debt | RLH DC Venture (CPBF) - Option One
Related Party Transaction [Line Items]
Long-term debt, gross, current				$ 17,400
Number of shares held by affiliate				500,000,000
Management Agreement | HEI Hotels And Resorts
Related Party Transaction [Line Items]
Related party transaction	$ 197	$ 228

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Debt and Line of Credit - Additional Information (Details) $ in Thousands		1 Months Ended	3 Months Ended
	Feb. 07, 2020 USD ($)	Mar. 31, 2019 USD ($)	Mar. 31, 2020 USD ($) extension	Mar. 31, 2019 USD ($)	Dec. 31, 2019 USD ($)	Aug. 31, 2018 USD ($)
Debt Instrument [Line Items]
Line of credit, due after one year			$ 0		$ 10,000
Loss on early retirement of debt			1,309	$ 0
Long-term debt, gross, noncurrent			0		15,600
RL Venture LLC | Variable Interest Entity, Primary Beneficiary
Debt Instrument [Line Items]
Funding provided		$ 16,600
RLH Anaheim
Debt Instrument [Line Items]
Proceeds from sale of leasehold interest			21,500
RLH DC Venture | RLH DC Venture (PWB)
Debt Instrument [Line Items]
Proceeds from sale	$ 16,400
Line of Credit
Debt Instrument [Line Items]
Line of credit, due after one year						$ 10,000
Loss on early retirement of debt			$ 200
Long-term Debt | RLH DC Venture | RLH DC Venture (PWB)
Debt Instrument [Line Items]
Release of restricted cash	2,300
RL Venture - Olympia | Secured Debt
Debt Instrument [Line Items]
Number of extension options | extension			2
Debt service coverage ratio		1.6
Debt discounts and issuance costs			$ 33
RL Venture - Olympia | Secured Debt | LIBOR
Debt Instrument [Line Items]
Basis spread on variable rate		2.25%
RL Venture - Olympia | Secured Debt | RL Venture LLC | Variable Interest Entity, Primary Beneficiary
Debt Instrument [Line Items]
Funding provided		$ 5,600
RL Venture - Olympia | Long-term Debt
Debt Instrument [Line Items]
Long-term debt, gross, noncurrent			0		$ 5,600
Pacific Western Bank | Long-term Debt | RLH DC Venture (PWB)
Debt Instrument [Line Items]
Loss on early retirement of debt	600		$ 1,100
Long-term debt, gross, noncurrent	$ 17,700

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Revenue from Contracts with Customers - Receivables, Contract Assets, and Contract Liabilities (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Revenue from Contract with Customer [Abstract]
Accounts receivable	$ 10,701	$ 15,143
Key money disbursed	1,875	2,228
Capitalized contract costs	833	941
Contract liabilities	$ 1,397	$ 1,448

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Dispositions

3 Months Ended

Mar. 31, 2020

Business Combinations [Abstract]

Dispositions

Dispositions

In the first quarter of 2020, we continued the execution of a hotel asset sales initiative consistent with our previously stated business strategy to focus on moving towards operations as primarily a franchise company, and disposed of two hotels from our company operated hotels segment. These dispositions resulted in a combined net gain of $7.9 million

The following summarizes the result of operations for the two properties sold during the first quarter of 2020 (in thousands):

	Three Months Ended March 31,
	2020		2019
Pre-tax income (loss)	$	6,088	$	(121)
Net (income) loss attributable to noncontrolling interest	1,134		240
Net income (loss) attributable to RLHC	$	7,222	$	119

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Property and Equipment (Tables)

3 Months Ended

Mar. 31, 2020

Property, Plant and Equipment [Abstract]

Schedule of Property, Plant and Equipment

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

	March 31, 2020		December 31, 2019
Buildings and equipment	$	47,186	$	101,619
Furniture and fixtures	6,718		12,407
Landscaping and land improvements	493		2,038
	54,397		116,064
Less accumulated depreciation	(29,099)		(57,491)
	25,298		58,573
Land	6,871		6,871
Construction in progress	3,902		3,224
Property and equipment, net	$	36,071	$	68,668

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Fair Value (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Carrying Amount
Financial assets:
Notes receivable	$ 286	$ 5,709
Financial liabilities:
Debt	5,600	33,248
Total finance lease obligations	33	150
Fair Value
Financial assets:
Notes receivable	286	5,709
Financial liabilities:
Debt	5,535	32,737
Total finance lease obligations	$ 33	$ 150

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Leases - Additional Information (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2020 USD ($)	Mar. 31, 2019	Dec. 31, 2019 USD ($)
Operating Leased Assets [Line Items]
Term of contract	5 years
Operating lease right-of-use assets	$ 5,552		$ 48,283
Operating lease liabilities	$ 6,858		51,401
Number of finance leases	0	0
RLH DC Venture
Operating Leased Assets [Line Items]
Operating lease right-of-use assets			10,800
Operating lease liabilities			$ 12,900
RLH Anaheim
Operating Leased Assets [Line Items]
Operating lease right-of-use assets	$ 31,400
Operating lease liabilities	$ 31,400

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Revenue from Contracts with Customers - Changes in Contract Assets and Liabilities (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2020 USD ($)
Key Money Disbursed
Beginning balance	$ 2,228
Key money disbursed	129
Key money converted from accounts receivable	(247)
Key money converted to notes receivable	(639)
Revenue or expense recognized that was included in the January 1, 2020 balance	(83)
Revenue or expense recognized in the period for the period	(7)
Ending balance	1,875
Capitalized Contract Costs
Beginning balance	941
Costs incurred to acquire contracts	66
Revenue or expense recognized that was included in the January 1, 2020 balance	(172)
Revenue or expense recognized in the period for the period	(2)
Ending balance	833
Contract Liabilities
Beginning balance	1,448
Cash received in advance	114
Revenue or expense recognized that was included in the January 1, 2020 balance	(162)
Revenue or expense recognized in the period for the period	(3)
Ending balance	$ 1,397

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Stock Based Compensation - Additional Information (Details) - USD ($) $ in Millions	1 Months Ended	3 Months Ended
	Apr. 30, 2020	Mar. 31, 2020	Mar. 31, 2019
Restricted stock units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage per year		25.00%
Vesting period		4 years
Other than options, fair value		$ 0.2	$ 1.2
Additional compensation expense		$ 1.8
Period for recognition		23 months
Forfeited (in shares)		51,393
Restricted stock units | Subsequent Event
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Additional compensation expense	$ 1.4
Period for recognition	24 months
Forfeited (in shares)	73,613
2015 Stock Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares authorized (in shares)		2,900,000
Number of shares of common stock available for issuance (in shares)		1,200,000

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Stock Based Compensation - Unrestricted Stock Awards (Details) - Unrestricted stock awards - $ / shares	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares of unrestricted stock granted (in shares)	30,883	15,355
Weighted average grant date fair value per share (in dollars per share)	$ 3.63	$ 8.44

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Property and Equipment - Summary of Property and Equipment (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	$ 54,397	$ 116,064
Less accumulated depreciation	(29,099)	(57,491)
Property, plant and equipment, net, excluding land and construction in progress	25,298	58,573
Property and equipment, net	36,071	68,668
Buildings and equipment
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	47,186	101,619
Furniture and fixtures
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	6,718	12,407
Landscaping and land improvements
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	493	2,038
Land
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	6,871	6,871
Construction in progress
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	$ 3,902	$ 3,224

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Organization	3 Months Ended
	Mar. 31, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Organization	OrganizationRed 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 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, Knights Inn, and Country Hearth Inns & Suites.

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Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Cash and cash equivalents	$ 37,775	$ 29,497
Restricted cash	100	2,311
Accounts receivable	10,701	15,143
Prepaid expenses and other	5,156	5,849
Property and equipment, net	36,071	68,668
Operating lease right-of-use assets	5,552	48,283
Other assets, net	2,427	3,851
Accounts payable	6,251	5,510
Accrued payroll and related benefits	1,184	2,709
Other accrued liabilities	4,915	5,469
Long-term debt, due within one year	5,576	16,984
Operating lease liabilities, due within one year	1,519	4,809
Long-term debt, due after one year, debt issuance costs	0	5,576
Operating lease liabilities, due after one year	5,339	46,592
Deferred income and other long-term liabilities	$ 941	$ 1,105
RLH Corporation stockholders' equity:
Preferred stock, shares authorized (in shares)	5,000,000	5,000,000
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock, shares authorized (in shares)	50,000,000	50,000,000
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares issued (in shares)	25,208,983	25,208,983
Common stock, shares outstanding (in shares)	25,148,005	25,148,005
Variable Interest Entity, Primary Beneficiary
Cash and cash equivalents	$ 1,914	$ 1,819
Restricted cash	100	2,311
Accounts receivable	718	1,033
Allowance for doubtful accounts	8,125	4,589
Prepaid expenses and other	144	311
Property and equipment, net	11,520	29,848
Operating lease right-of-use assets	0	10,810
Other assets, net	0	703
Accounts payable	543	589
Accrued payroll and related benefits	68	349
Other accrued liabilities	176	455
Long-term debt, due within one year	5,576	16,984
Operating lease liabilities, due within one year	0	966
Long-term debt, due after one year, debt issuance costs	0	5,576
Operating lease liabilities, due after one year	0	11,938
Deferred income and other long-term liabilities	$ 3	$ 28

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Fair Value (Tables)

3 Months Ended

Mar. 31, 2020

Fair Value Disclosures [Abstract]

Schedule of Fair Value and Carrying Amount of Financial Assets and Financial Liabilities

Estimated fair values of financial instruments are shown in the table below (in thousands).

	March 31, 2020				December 31, 2019
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial assets:
Notes receivable	$	286	$	286	$	5,709	$	5,709
Financial liabilities:
Debt	$	5,600	$	5,535	$	33,248	$	32,737
Total finance lease obligations	33		33		150		150

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Earnings (Loss) Per Share

3 Months Ended

Mar. 31, 2020

Earnings Per Share [Abstract]

Earnings (Loss) Per Share

Earnings (Loss) Per Share

The following table presents a reconciliation of the numerators and denominators used in the basic and diluted net income (loss) per share computations for the three months ended March 31, 2020 and 2019 (in thousands, except per share data):

	Three Months Ended March 31,
	2020		2019
Numerator - basic and diluted:
Net income (loss)	$	(9,254)	$	(4,559)
Net (income) loss attributable to noncontrolling interest	1,155		286
Net income (loss) attributable to RLH Corporation	$	(8,099)	$	(4,273)
Denominator:
Weighted average shares - basic	25,199		24,603
Weighted average shares - diluted	25,199		24,603
Earnings (loss) per share - basic	$	(0.32)	$	(0.17)
Earnings (loss) per share - diluted	$	(0.32)	$	(0.17)

The following table presents options to purchase common shares, restricted stock units outstanding, performance stock units outstanding, and warrants to purchase common 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 months ended March 31, 2020 and 2019.

	Three Months Ended March 31,
	2020	2019
Stock Options(1)
Dilutive awards outstanding	—	—
Antidilutive awards outstanding	—	81,130
Total awards outstanding	—	81,130
Restricted Stock Units(2)
Dilutive awards outstanding	—	—
Antidilutive awards outstanding	287,660	1,395,881
Total awards outstanding	287,660	1,395,881
Performance Stock Units(3)
Dilutive awards outstanding	—	—
Antidilutive awards outstanding	—	427,638
Total awards outstanding	—	427,638
Warrants(4)
Dilutive awards outstanding	—	—
Antidilutive awards outstanding	—	442,533
Total awards outstanding	—	442,533

⁽¹⁾ All stock options for the three months ended March 31, 2020 and 2019 were anti-dilutive as a result of the net loss attributable to RLH Corporation for these periods, and as a result of the RLH Corporation weighted average share price during the reporting period.

⁽²⁾ Restricted stock units were anti-dilutive for the three months ended March 31, 2020 and 2019 due to our net loss in the reporting periods. If we had reported net income for the three months ended March 31, 2020 and 2019, then 7,733 and 697,494 weighted average restricted stock units would have been dilutive, respectively.

⁽³⁾ Performance stock units were anti-dilutive for the three months ended March 31, 2020 and 2019 due to the net loss attributable to RLH Corporation in the reporting period. If we had reported net income for the three months ended March 31, 2020 and 2019, then 10,180 and 97,406 weighted average performance stock units would have been dilutive, respectively.

(4) All warrants expired without being exercised in January 2020. All warrants for the three months ended March 31, 2019 were anti-dilutive due to the net loss attributable to RLH in each reporting period. If we had reported net income for the three months ended March 31, 2019, 90,674 warrants would have been dilutive.

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Variable Interest Entities

3 Months Ended

Mar. 31, 2020

Variable Interest Entities [Abstract]

Variable Interest Entities

Variable Interest Entities

Our joint venture entities have been determined to be variable interest entities ("VIEs") because our voting rights are not proportional to our financial interest and substantially all of each joint 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 our joint venture partners, which do not have the unilateral ability to exercise kick-out rights, and (b) we have the obligation to absorb losses and right to receive benefits that could be significant to the entity through our equity interest and management fees. As a result, we consolidate the assets, liabilities, and results of operations of (1) RL Venture LLC ("RL Venture"), (2) RLS Atla Venture LLC ("RLS Atla Venture"), and (3) RLS DC Venture LLC ("RLS DC Venture"). The equity interests owned by our joint venture partners are reflected as a noncontrolling interest in the condensed consolidated financial statements.

In November 2019, RLH Atlanta LLC, which is wholly owned by RLS Atla Venture, sold the Red Lion Hotel Atlanta International Airport Hotel. Upon completion of the sale, no remaining distributions to our joint venture partner, Shelbourne Falcon Big Peach Investors, LLC, were required and the remaining noncontrolling interest for the entity was reclassified to Additional paid-in capital on the Condensed Consolidated Balance Sheets.

There were no cash contributions or distributions by partners to any of the joint venture entities during the three months ended March 31, 2020 or 2019 except as otherwise described below.

RL Venture

For all periods presented, RLH Corporation owns 55% of RL Venture and our JV Partner owns 45%. In March 2019, secured loans with an aggregate principal of $16.6 million were entered into for two RL Venture properties, Hotel RL Salt Lake City and Hotel RL Olympia. Shortly thereafter the net loan proceeds were distributed to us and our joint venture partner in accordance with our respective ownership percentages. In December 2019, the Hotel RL Salt Lake City sold for $33.0 million. Proceeds from the sale were used to repay in full the secured loan entered into in 2019 for the Hotel RL Salt Lake City property. As of March 31, 2020, RL Venture has one remaining property, the Hotel RL Olympia.

Cash distributions may also be made periodically based on calculated distributable income. There were no distributions made during the three months ended March 31, 2020. During the three months ended March 31, 2019, cash distributions totaled $16.5 million, of which RLH Corporation received $9.1 million.

RLS DC Venture

As of December 31, 2019, RLH Corporation owned 55% of RLS DC Venture and our Joint Venture Partner owned 45%. In May 2019, a secured loan with principal and accrued exit fee of $17.4 million was executed by RLS DC Venture. The net loan proceeds were used to pay off the previous debt with a principal balance of approximately $15.9 million. There were no cash distributions resulting from the refinancing. In February 2020, the Hotel RL in Washington DC, which was wholly-owned by RLS DC Venture, was sold for $16.4 million. Using proceeds from the sale, together with the release of $2.3 million in restricted cash held by CP Business Finance I, LP, RLS DC Venture repaid the remaining outstanding principal balance and accrued exit fee under the secured loan agreement. The $2.4 million balance remaining in non-controlling interest for the entity was reclassified to Additional paid-in capital on the Condensed Consolidated Balance Sheets as no remaining distributions to the joint venture partner are required.

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Debt and Line of Credit

3 Months Ended

Mar. 31, 2020

Debt Disclosure [Abstract]

Debt and Line of Credit

Debt and Line of Credit

The current and noncurrent portions of our debt as of March 31, 2020 and December 31, 2019 are as follows (in thousands):

	March 31, 2020				December 31, 2019
	Current		Noncurrent		Current		Noncurrent
Line of Credit	$	—	$	—	$	—	$	10,000
RL Venture - Olympia	5,600		—		—		5,600
RLH DC Venture	—		—		17,648		—
Total debt	5,600		—		17,648		15,600
Unamortized debt issuance costs	(24)		—		(664)		(24)
Debt net of debt issuance costs	$	5,576	$	—	$	16,984	$	15,576

Each of our debt agreements contain customary reporting, financial and operating covenants. We were in compliance with all the financial covenants of our debt agreements at March 31, 2020.

RL Venture - Olympia

In March 2019, RL Olympia, LLC, a subsidiary of RL Venture, executed a secured debt agreement with Umpqua Bank for a term loan with a principal balance of $5.6 million. We incurred approximately $33,000 of debt discounts and debt issuance costs in connection with the issuance of the loan. The loan is fully secured by the Hotel RL Olympia property. The loan has a maturity date of March 18, 2021 and a variable interest rate of LIBOR plus 2.25%, payable monthly. The borrower has the option to exercise two six-month extensions upon maturity of the loan. There are no principal repayment requirements prior to the maturity date and the loan includes a financial covenant to be calculated semi-annually in which the property must maintain a minimum debt service coverage ratio of not less than 1.6 to 1.0. Due to the impact of the COVID-19 pandemic, we have determined the property is unlikely to meet the required minimum financial covenants as of the next required semi-annual calculation of June 30, 2020. As a violation of the financial covenant would result in an acceleration of the maturity date of the loan, we have classified this debt as current in our Condensed Consolidated Balance Sheets as of March 31, 2020, despite the previously discussed extensions available to us under the loan agreement. We are engaged in ongoing discussions with our lenders regarding potential remedies for the anticipated covenant violation.

Line of Credit

In August 2018, we drew the full $10.0 million available to us on the Line of Credit under 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. In the first quarter of 2020, we sold our leasehold interest in the Red Lion Anaheim for $21.5 million. Using proceeds from the sale, we repaid the outstanding Line of Credit balance of $10.0 million. This debt is no longer outstanding as of March 31, 2020 and as the credit agreement has been terminated we no longer have access to this Line of Credit. Due to the early extinguishment of this debt, we recognized a Loss on early retirement of debt of $0.2 million.

RLH DC Venture

In the first quarter of 2020, we sold the Hotel RL Washington DC for $16.4 million. Using proceeds from the sale, together with the release of $2.3 million in restricted cash held by CP Business Finance I, LP, RLH DC Venture repaid the remaining outstanding principal balance and accrued exit fee under the RLH DC Venture loan agreement of $17.7 million. This debt is no longer outstanding as of March 31, 2020. Due to the early extinguishment of this debt, we recognized a Loss on early retirement of debt of $1.1 million, including a prepayment penalty of $0.6 million.

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Fair Value

3 Months Ended

Mar. 31, 2020

Fair Value Disclosures [Abstract]

Fair Value

Fair Value

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

Cash, Restricted cash and Accounts receivable carrying values approximate fair value due to the short-term nature of these items. 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. Estimated fair values of financial instruments are shown in the table below (in thousands).

	March 31, 2020				December 31, 2019
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial assets:
Notes receivable	$	286	$	286	$	5,709	$	5,709
Financial liabilities:
Debt	$	5,600	$	5,535	$	33,248	$	32,737
Total finance lease obligations	33		33		150		150

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Summary of Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2020

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, 2019 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, 2019, filed with the SEC in our annual report on Form 10-K on February 27, 2020.

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 Sheets, the Condensed Consolidated Statements of Comprehensive Income (Loss), the Condensed Consolidated Statements of Stockholders' Equity, and the Condensed Consolidated Statements of Cash Flows. 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.

New Accounting Pronouncements Not Yet Adopted and Adopted

New Accounting Pronouncements Not Yet Adopted

In June 2016, the Financial Accounting Standards Board ("FASB") issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326) – Measurement of Credit Losses on Financial Instruments, as amended by multiple subsequent ASUs, which will change how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The ASU will replace the current "incurred loss" approach with an "expected loss" model for instruments measured at amortized cost. For trade and other receivables, held to maturity debt securities, loans and other instruments, entities will be required to use a new forward-looking “expected loss” model that generally will result in the earlier recognition of allowances for losses. In October 2019, an update was issued to the standard that deferred the effective date of the guidance to the first quarter of 2023 for smaller reporting companies such as us. We are currently evaluating the effects of this ASU on our financial statements, and such effects have not yet been determined.

In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes, which amends the existing guidance related to the accounting for income taxes. The ASU eliminates certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period, and the recognition for outside basis differences related to changes in ownership of equity method investments and foreign subsidiaries. The guidance also simplifies aspects of accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. The ASU is effective the first quarter of 2021, with early adoption permitted. We are currently evaluating the effects of this ASU on our financial statements, and such effects have not yet been determined.

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

Fair Value

Applicable accounting standards define fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). We measure our assets and liabilities using inputs from the Level 1, Level 2 and Level 3 of the fair value hierarchy.Cash, Restricted cash and Accounts receivable carrying values approximate fair value due to the short-term nature of these items. 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.

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Revenue from Contracts with Customers (Tables)

3 Months Ended

Mar. 31, 2020

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):

	Financial Statement Line Item(s)	March 31, 2020		December 31, 2019
Accounts receivable	Accounts receivable, net	$	10,701	$	15,143
Key money disbursed	Other current assets and Other assets, net	1,875		2,228
Capitalized contract costs	Other current assets and Other assets, net	833		941
Contract liabilities	Other accrued liabilities and Deferred income and other long-term liabilities	1,397		1,448

Significant changes in the key money disbursements, capitalized contract costs, and contract liabilities balances during the period are as follows (in thousands):

	Key Money Disbursed		Capitalized Contract Costs		Contract Liabilities
Balance as of January 1, 2020	$	2,228	$	941	$	1,448
Key money disbursed	129		—		—
Key money converted from accounts receivable	247		—		—
Key money converted to notes receivable	(639)		—		—
Costs incurred to acquire contracts	—		66		—
Cash received in advance	—		—		114
Revenue or expense recognized that was included in the January 1, 2020 balance	(83)		(172)		(162)
Revenue or expense recognized in the period for the period	(7)		(2)		(3)
Balance as of March 31, 2020	$	1,875	$	833	$	1,397

Summary of Estimated Performance Obligations

Estimated revenues and expenses expected to be recognized related to performance obligations that were unsatisfied as of March 31, 2020, including revenues related to application, initiation and other fees were as follows (in thousands):

Year Ending December 31,	Contra Revenue		Expense		Revenue
2020 (remainder)	$	254	$	263	$	413
2021	267		183		361
2022	235		154		269
2023	197		113		170
2024	161		67		99
Thereafter	761		53		85
Total	$	1,875	$	833	$	1,397

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Leases - Components of Lease Expense (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2019
Leases [Abstract]
Operating lease expense	$ 816	$ 1,133
Short-term lease expense	98	247
Sublease income	(18)	0
Amortization of finance right-of-use assets	8	35
Interest on lease liabilities	3	8
Total finance lease expense	11	43
Total lease expense	907	1,423
Cash paid for amounts included in the measurement of lease liabilities:
Cash used in operating activities for operating leases	848	1,169
Cash used in operating activities for finance leases	3	8
Cash used in financing activities for finance leases	$ 13	$ 34
Weighted average remaining lease term (in years)
Operating leases	6 years		69 years
Finance leases	1 year		3 years
Weighted average discount rate
Operating leases	5.80%		7.20%
Finance leases	5.70%		11.90%

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Debt and Line of Credit - Schedule of Debt (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Debt Instrument [Line Items]
Line of credit, current	$ 0	$ 0
Line of credit, noncurrent	0	10,000
Long-term debt, gross, current	5,600	17,648
Long-term debt, gross, noncurrent	0	15,600
Unamortized debt issuance costs, current	(24)	(664)
Unamortized debt issuance costs, noncurrent	0	(24)
Long-term debt net of debt issuance costs, current	5,576	16,984
Long-term debt net of debt issuance costs, noncurrent	0	15,576
Long-term Debt | RL Venture - Olympia
Debt Instrument [Line Items]
Long-term debt, gross, current	5,600	0
Long-term debt, gross, noncurrent	0	5,600
Long-term Debt | RLH DC Venture (CPBF)
Debt Instrument [Line Items]
Long-term debt, gross, current	0	17,648
Long-term debt, gross, noncurrent	$ 0	$ 0

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Revenue from Contracts with Customers - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Related Party Transaction [Line Items]
Key money converted to notes receivable	$ 639
Additional bad debt expense	3,400
Inner Circle franchises
Related Party Transaction [Line Items]
Trade receivables	7,100
Key money converted to notes receivable	800
Bad debt expense on previously unreserved balances	6,300
Royalty income from franchises	$ 100	$ 300

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Dispositions (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Net income (loss)	$ (9,254)	$ (5,991)	$ (6,652)	$ (3,771)	$ (4,559)
Net (income) loss attributable to noncontrolling interest	1,155				286
Net income (loss) attributable to RLHC	(8,099)				(4,273)
Disposal Group, Disposed of by Sale, Not Discontinued Operations
Business Combinations [Abstract]
Gain (loss) on disposal					0
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Net income (loss)	6,088				(121)
Net (income) loss attributable to noncontrolling interest	1,134				240
Net income (loss) attributable to RLHC	$ 7,222				$ 119

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Leases - Future Minimum Payments Due (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Operating Leases
2020 (remainder)	$ 1,141
2021	1,522
2022	1,486
2023	1,449
2024	595
Thereafter	1,984
Total lease payments	8,177
Less: imputed interest	1,319
Total liability	6,858	$ 51,401
Finance Leases
2020 (remainder)	20
2021	14
2022	0
2023	0
2024	0
Thereafter	0
Total lease payments	34
Less: imputed interest	1
Total liability	$ 33	$ 150

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Stock Based Compensation - Restricted Stock Units (Details) - Restricted stock units - $ / shares	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Number of Shares
Other than options outstanding (in shares)	459,070
Vested (in shares)	(120,017)
Forfeited (in shares)	(51,393)
Other than options outstanding (in shares)	287,660	1,395,881
Weighted Average Grant Date Fair Value
Beginning Balance (in dollars per share)	$ 9.03
Vested (in dollars per share)	8.51
Forfeited (in dollars per share)	8.45
Ending Balance (in dollars per share)	$ 9.36

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Earnings (Loss) Per Share - Schedule of Antidilutive Securities (Details) - shares	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2019
Stock Options
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
Dilutive awards outstanding (in shares)	0	0
Awards outstanding (in shares)	0	81,130
Restricted stock units
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
Dilutive awards outstanding (in shares)	0	0
Awards outstanding (in shares)	287,660	1,395,881	459,070
Performance stock units
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
Dilutive awards outstanding (in shares)	0	0
Awards outstanding (in shares)	25,796
Awards outstanding (in shares)	0	427,638
Warrants
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
Dilutive awards outstanding (in shares)	0	0
Awards outstanding (in shares)	0	442,533
Stock Options
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
Antidilutive awards outstanding (in shares)	0	81,130
Restricted stock units
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
Antidilutive awards outstanding (in shares)	287,660	1,395,881
Total dilutive award outstanding (in shares)	7,733	697,494
Performance stock units
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
Antidilutive awards outstanding (in shares)	0	427,638
Total dilutive award outstanding (in shares)	10,180	97,406
Warrants
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
Antidilutive awards outstanding (in shares)	0	442,533
Total dilutive award outstanding (in shares)		90,674

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Goodwill and Intangible Assets

3 Months Ended

Mar. 31, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

Goodwill and Intangible Assets

Interim Impairment Assessment

We considered the actual and anticipated economic impacts of the COVID-19 pandemic on our financial results to be an indicator that the fair value of our goodwill and indefinite-lived intangible assets might be less than their carrying amounts. Accordingly, we performed quantitative assessments to measure the fair values of these assets as of March 31, 2020. No impairments were identified based on the quantitative impairment calculations of our goodwill and other indefinite-lived intangible assets.

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

	March 31, 2020		December 31, 2019
Goodwill	$	18,595	$	18,595
Intangible assets
Brand name - indefinite lived	$	32,532	$	32,532
Trademarks - indefinite lived	128		128
Brand name - finite lived, net	3,376		3,554
Customer contracts - finite lived, net	11,809		12,398
Total intangible assets, net	$	47,845	$	48,612

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

	March 31, 2020		December 31, 2019
Customer contracts	$	20,773	$	20,773
Brand name - finite lived	5,395		5,395
Accumulated amortization	(10,983)		(10,216)
Net carrying amount	$	15,185	$	15,952

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Commitments and Contingencies

3 Months Ended

Mar. 31, 2020

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

At any given time we are subject to claims and actions incidental to the operations of our business. During the second quarter of 2019, we accrued approximately $952,000 for a settlement over a wage dispute with former hotel employees related to the calculation of pay for certain rest, break, meal, and other periods that are required under California law. Based on information currently available, we do not expect that any other sums we may receive or have to pay in connection with any legal proceeding would have a material effect on our consolidated financial position or net cash flow.

See Item 1. Legal Proceedings within Part 2. Other Information for additional detail.

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Business Segments

3 Months Ended

Mar. 31, 2020

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. We allocate selling, general, administrative and other expenses to our operating segments. All balances have been presented after the elimination of inter-segment and intra-segment revenues and expenses.

Selected financial information is provided below (in thousands):

Three Months Ended March 31, 2020	Franchised Hotels		Company Operated Hotels		Other		Total
Revenue	$	10,936	$	6,329	$	—	$	17,265
Operating expenses:
Segment and other operating expenses	17,540		7,030		4,131		28,701
Depreciation and amortization	882		866		789		2,537
Asset impairment	—		1,760		—		1,760
Transaction and integration costs	—		32		366		398
Loss (gain) on asset dispositions, net	—		(7,892)		—		(7,892)
Operating income (loss)	$	(7,486)	$	4,533	$	(5,286)	$	(8,239)
Identifiable assets as of March 31, 2020	$	82,199	$	65,523	$	16,786	$	164,508

Three Months Ended March 31, 2019	Franchised Hotels		Company Operated Hotels		Other		Total
Revenue	$	13,011	$	12,970	$	3	$	25,984
Operating expenses:
Segment and other operating expenses	9,622		12,461		4,014		26,097
Depreciation and amortization	914		1,956		577		3,447
Transaction and integration costs	62		—		—		62
Loss (gain) on asset dispositions, net	—		6		—		6
Operating income (loss)	$	2,413	$	(1,453)	$	(4,588)	$	(3,628)
Identifiable assets as of December 31, 2019	$	91,832	$	138,477	$	16,209	$	246,518

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Goodwill and Intangible Assets - Summary of Balances of Goodwill and Other Intangibles (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Schedule of Goodwill and Intangible Assets [Line Items]
Goodwill	$ 18,595	$ 18,595
Finite-lived Intangible assets	15,185	15,952
Total intangible assets	47,845	48,612
Brand names
Schedule of Goodwill and Intangible Assets [Line Items]
Finite-lived Intangible assets	3,376	3,554
Customer contracts
Schedule of Goodwill and Intangible Assets [Line Items]
Finite-lived Intangible assets	11,809	12,398
Brand names
Schedule of Goodwill and Intangible Assets [Line Items]
Indefinite-lived intangible assets	32,532	32,532
Trademarks
Schedule of Goodwill and Intangible Assets [Line Items]
Indefinite-lived intangible assets	$ 128	$ 128

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Business Segments (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2020 USD ($) segment	Mar. 31, 2019 USD ($)	Dec. 31, 2019 USD ($)
Segment Reporting [Abstract]
Number of operating segments | segment	2
Segment Reporting Information [Line Items]
Revenue	$ 17,265	$ 25,984
Operating expenses:
Segment and other operating expenses	28,701	26,097
Depreciation and amortization	2,537	3,447
Asset impairment	1,760	0
Transaction and integration costs	398	62
Loss (gain) on asset dispositions, net	(7,892)	6
Operating income (loss)	(8,239)	(3,628)
Identifiable assets	164,508		$ 246,518
Operating segments | Franchised hotels
Segment Reporting Information [Line Items]
Revenue	10,936	13,011
Operating expenses:
Segment and other operating expenses	17,540	9,622
Depreciation and amortization	882	914
Asset impairment	0
Transaction and integration costs	0	62
Loss (gain) on asset dispositions, net	0	0
Operating income (loss)	(7,486)	2,413
Identifiable assets	82,199		91,832
Operating segments | Company operated hotels
Segment Reporting Information [Line Items]
Revenue	6,329	12,970
Operating expenses:
Segment and other operating expenses	7,030	12,461
Depreciation and amortization	866	1,956
Asset impairment	1,760
Transaction and integration costs	32	0
Loss (gain) on asset dispositions, net	(7,892)	6
Operating income (loss)	4,533	(1,453)
Identifiable assets	65,523		138,477
Other
Segment Reporting Information [Line Items]
Revenue	0	3
Operating expenses:
Segment and other operating expenses	4,131	4,014
Depreciation and amortization	789	577
Asset impairment	0
Transaction and integration costs	366	0
Loss (gain) on asset dispositions, net	0	0
Operating income (loss)	(5,286)	$ (4,588)
Identifiable assets	$ 16,786		$ 16,209

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Condensed Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands	Total	Common Stock	Additional Paid-In Capital	Retained Earnings (Accumulated Deficit)	RLH Corporation Total Equity	Equity Attributable to Non-controlling Interest
Beginning balance (in shares) at Dec. 31, 2018		24,570,158
Beginning balance at Dec. 31, 2018	$ 185,582	$ 246	$ 182,018	$ (17,846)	$ 164,418	$ 21,164
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	(4,559)			(4,273)	(4,273)	(286)
Shared based payment activity (in shares)		56,301
Shared based payment activity	686	$ 1	685		686
Distributions to noncontrolling interests	(7,431)					(7,431)
Ending balance (in shares) at Mar. 31, 2019		24,626,459
Ending balance at Mar. 31, 2019	174,278	$ 247	182,703	(22,119)	160,831	13,447
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	(3,771)			(2,997)	(2,997)	(774)
Shared based payment activity (in shares)		449,453
Shared based payment activity	(1,030)	$ 4	(1,034)		(1,030)
Ending balance (in shares) at Jun. 30, 2019		25,075,912
Ending balance at Jun. 30, 2019	169,477	$ 251	181,669	(25,116)	156,804	12,673
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	(6,652)			(3,672)	(3,672)	(2,980)
Shared based payment activity (in shares)		42,600
Shared based payment activity	1,055	$ 1	1,054		1,055
Ending balance (in shares) at Sep. 30, 2019		25,118,512
Ending balance at Sep. 30, 2019	163,880	$ 252	182,723	(28,788)	154,187	9,693
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	(5,991)			(8,087)	(8,087)	2,096
Shared based payment activity (in shares)		29,493
Shared based payment activity	(740)	$ (1)	(739)		(740)
Distributions to noncontrolling interests	(10,128)					(10,128)
Reclassification of noncontrolling interest	0		(376)		(376)	376
Ending balance (in shares) at Dec. 31, 2019		25,148,005
Ending balance at Dec. 31, 2019	147,021	$ 251	181,608	(36,875)	144,984	2,037
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	(9,254)			(8,099)	(8,099)	(1,155)
Shared based payment activity (in shares)		60,978
Shared based payment activity	338	$ 2	336		338
Reclassification of noncontrolling interest	0		(2,376)		(2,376)	2,376
Ending balance (in shares) at Mar. 31, 2020		25,208,983
Ending balance at Mar. 31, 2020	$ 138,105	$ 253	$ 179,568	$ (44,974)	$ 134,847	$ 3,258

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Cover Page - shares	3 Months Ended
	Mar. 31, 2020	May 04, 2020
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Mar. 31, 2020
Document Transition Report	false
Entity File Number	001-13957
Entity Registrant Name	RED LION HOTELS CORP
Entity Incorporation, State or Country Code	WA
Entity Tax Identification Number	91-1032187
Entity Address, Address Line One	1550 Market St. #425
Entity Address, City or Town	Denver
Entity Address, State or Province	CO
Entity Address, Postal Zip Code	80202
City Area Code	509
Local Phone Number	459-6100
Title of 12(b) Security	Common Stock
Trading Symbol	RLH
Security Exchange Name	NYSE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		25,341,649
Entity Central Index Key	0001052595
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q1
Amendment Flag	false

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Stock Based Compensation (Tables)

3 Months Ended

Mar. 31, 2020

Share-based Payment Arrangement [Abstract]

Schedule of Compensation Cost

For the three months ended March 31, 2020 and 2019 stock-based compensation expense is as follows (in thousands):

	Three Months Ended March 31,
	2020		2019
Restricted stock units	$	238	$	612
Unrestricted stock awards	112		129
Performance stock units	15		147
Stock options	—		22
Employee stock purchase plan	8		6
Total stock-based compensation	$	373	$	916

Schedule of Restricted Stock

A summary of restricted stock unit activity for the three months ended March 31, 2020, is as follows:

	Number of Shares	Weighted Average Grant Date Fair Value
January 1, 2020	459,070	$	9.03
Vested	(120,017)	$	8.51
Forfeited	(51,393)	$	8.45
March 31, 2020	287,660	$	9.36

Schedule of Unrestricted Stock Awards

The following table summarizes unrestricted stock award activity for the three months ended March 31, 2020 and 2019:

	Three Months Ended March 31,
	2020		2019
Shares of unrestricted stock granted	30,883		15,355
Weighted average grant date fair value per share	$	3.63	$	8.44

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Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Income Tax Disclosure [Abstract]
Income tax expense (benefit)	$ (752)	$ 82

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Commitments and Contingencies (Details) $ in Thousands	3 Months Ended
	Jun. 30, 2019 USD ($)
Commitments and Contingencies Disclosure [Abstract]
Gain from litigation settlement	$ 952

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Stock Based Compensation - Performance Stock Units (Details) - Performance stock units $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2020 USD ($) $ / shares shares
Number of Shares
Other than options outstanding (in shares)
Other than options outstanding (in shares)	25,796
Weighted Average Grant Date Fair Value
Vested (in dollars per share) | $ / shares	$ 6.45
Fair value of PSUs vested in period | $	$ 38

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Revenue from Contracts with Customers

3 Months Ended

Mar. 31, 2020

Revenue from Contract with Customer [Abstract]

Revenue from Contracts with Customers

Revenue from Contracts with Customers

Inner Circle

In July 2019, the parent entities for eight Inner Circle franchisees and the operating entities for two other Inner Circle franchisees all filed for voluntary bankruptcy protection under Chapter 11 of the United Stated Bankruptcy Code.

As of March 31, 2020 there was approximately $7.1 million in accounts receivable and notes receivable balances related to these franchisees, including unamortized key money converted to notes receivable upon termination of contracts, of which $0.8 million had been previously allowed for. The remaining balances were supported through a security interest in property improvements and an equity interest in one of the leaseholds, as well as a personal guarantee of the owner. However, during the first quarter of 2020, the first lienholder for the collateral property indicated its desire to exercise its right to foreclose on the leasehold interest and liquidate the property. Due to the timing of this action in conjunction with the decline in fair value of the collateral property due to the economic impacts of the COVID-19 pandemic, we have concluded the fair value of the collateral no longer supports any of the remaining balances and as such we have recognized bad debt expense of $6.3 million on the previously unreserved balances.

We recognized $0.1 million and $0.3 million of royalty income from these franchisees during the three months ended March 31, 2020 and 2019, respectively.

Other Allowances

As of March 31, 2020, we evaluated the economic impacts of the COVID-19 pandemic and historical collection information on the collectibility of our accounts receivable and notes receivable balances. We determined it was appropriate to recognize additional bad debt expense of $3.4 million, primarily related to large balances under legal dispute, aged balances from terminated agreements, or aged balances placed with third party collections.

The following table provides information about receivables, contract assets and contract liabilities from contracts with customers (in thousands):

	Financial Statement Line Item(s)	March 31, 2020		December 31, 2019
Accounts receivable	Accounts receivable, net	$	10,701	$	15,143
Key money disbursed	Other current assets and Other assets, net	1,875		2,228
Capitalized contract costs	Other current assets and Other assets, net	833		941
Contract liabilities	Other accrued liabilities and Deferred income and other long-term liabilities	1,397		1,448

Significant changes in the key money disbursements, capitalized contract costs, and contract liabilities balances during the period are as follows (in thousands):

	Key Money Disbursed		Capitalized Contract Costs		Contract Liabilities
Balance as of January 1, 2020	$	2,228	$	941	$	1,448
Key money disbursed	129		—		—
Key money converted from accounts receivable	247		—		—
Key money converted to notes receivable	(639)		—		—
Costs incurred to acquire contracts	—		66		—
Cash received in advance	—		—		114
Revenue or expense recognized that was included in the January 1, 2020 balance	(83)		(172)		(162)
Revenue or expense recognized in the period for the period	(7)		(2)		(3)
Balance as of March 31, 2020	$	1,875	$	833	$	1,397

Estimated revenues and expenses expected to be recognized related to performance obligations that were unsatisfied as of March 31, 2020, including revenues related to application, initiation and other fees were as follows (in thousands):

Year Ending December 31,	Contra Revenue		Expense		Revenue
2020 (remainder)	$	254	$	263	$	413
2021	267		183		361
2022	235		154		269
2023	197		113		170
2024	161		67		99
Thereafter	761		53		85
Total	$	1,875	$	833	$	1,397

We did not estimate revenues expected to be recognized related to our unsatisfied performance obligations for our: (i) royalty fees, as they are considered sales-based royalty fees recognized as hotel room sales occur in exchange for licenses of our brand names over the terms of the franchise contracts; and (ii) hotel management fees, since they are allocated entirely to the wholly unsatisfied promise to transfer management services, which form part of a single performance obligation in a series, over the term of the management contract. Therefore, there are no amounts included in the table above related to these revenues.

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Stock Based Compensation

3 Months Ended

Mar. 31, 2020

Share-based Payment Arrangement [Abstract]

Stock Based Compensation

Stock Based Compensation

Stock Incentive Plans

The 2015 Stock Incentive Plan, as amended, ("2015 Plan") authorizes the grant or issuance of various stock-based awards, including stock options, restricted stock units, and other stock-based compensation. The 2015 Plan was approved by our shareholders in 2015, and amended in 2017, and as amended provides for awards of 2.9 million shares, subject to adjustments for stock splits, stock dividends and similar events. As of March 31, 2020, there were 1.2 million shares of common stock available for issuance pursuant to future awards under the 2015 Plan, as amended.

Stock based compensation expense reflects the fair value of stock-based awards measured at grant date, including an estimated forfeiture rate, and is recognized over the relevant service period. For the three months ended March 31, 2020 and 2019 stock-based compensation expense is as follows (in thousands):

	Three Months Ended March 31,
	2020		2019
Restricted stock units	$	238	$	612
Unrestricted stock awards	112		129
Performance stock units	15		147
Stock options	—		22
Employee stock purchase plan	8		6
Total stock-based compensation	$	373	$	916

Restricted Stock Units

Restricted stock units (RSUs") 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 2015 Plan, 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 three months ended March 31, 2020 and 2019 was approximately $0.2 million and $1.2 million, respectively. For RSUs outstanding as of March 31, 2020, there was $1.8 million in compensation expense remaining to be recognized over the remaining weighted average vesting periods of 23 months. However, in connection with a reduction in force in April 2020, 73,613 outstanding RSUs were forfeited, leaving $1.4 million in remaining compensation expense to be recognized over the remaining weighted average vesting periods of 24 months as of April 30, 2020.

A summary of restricted stock unit activity for the three months ended March 31, 2020, is as follows:

	Number of Shares	Weighted Average Grant Date Fair Value
January 1, 2020	459,070	$	9.03
Vested	(120,017)	$	8.51
Forfeited	(51,393)	$	8.45
March 31, 2020	287,660	$	9.36

Performance Stock Units, Shares Issued as Compensation

Performance stock units ("PSUs") are granted 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. No PSUs were granted during the three months ended March 31, 2020.

During the three months ended March 31, 2020, 25,796 PSUs vested at a weighted average grant date fair value of $6.45. The fair value of PSUs that vested during the three months ended March 31, 2020 was approximately $38,000. No PSUs vested during the three months ended March 31, 2019. There are no PSUs outstanding and no remaining compensation expense to be recognized related to PSUs as of March 31, 2020.

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 months ended March 31, 2020 and 2019:

	Three Months Ended March 31,
	2020		2019
Shares of unrestricted stock granted	30,883		15,355
Weighted average grant date fair value per share	$	3.63	$	8.44

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Dispositions (Tables)

3 Months Ended

Mar. 31, 2020

Business Combinations [Abstract]

Summary of Operations for Properties

The following summarizes the result of operations for the two properties sold during the first quarter of 2020 (in thousands):

	Three Months Ended March 31,
	2020		2019
Pre-tax income (loss)	$	6,088	$	(121)
Net (income) loss attributable to noncontrolling interest	1,134		240
Net income (loss) attributable to RLHC	$	7,222	$	119

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Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Revenue	$ 17,265	$ 25,984
Operating expenses:
Selling, general, administrative and other expenses	16,265	7,391
Depreciation and amortization	2,537	3,447
Asset impairment	1,760	0
Loss (gain) on asset dispositions, net	(7,892)	6
Transaction and integration costs	398	62
Total operating expenses	25,504	29,612
Operating income (loss)	(8,239)	(3,628)
Other income (expense):
Interest expense	(506)	(882)
Loss on early retirement of debt	(1,309)	0
Other income (loss), net	48	33
Total other income (expense)	(1,767)	(849)
Income (loss) before taxes	(10,006)	(4,477)
Income tax expense (benefit)	(752)	82
Net income (loss)	(9,254)	(4,559)
Net (income) loss attributable to noncontrolling interest	1,155	286
Net income (loss) and comprehensive income (loss) attributable to RLH Corporation	$ (8,099)	$ (4,273)
Earnings Per Share, Basic and Diluted
Earnings (loss) per share - basic (in dollars per share)	$ (0.32)	$ (0.17)
Earnings (loss) per share - diluted (in dollars per share)	$ (0.32)	$ (0.17)
Weighted Average Number of Shares Outstanding, Basic and Diluted
Weighted average shares - basic (in shares)	25,199	24,603
Weighted average shares - diluted (in shares)	25,199	24,603
Royalty
Revenue	$ 4,357	$ 5,740
Marketing, reservations and reimbursables
Revenue	5,805	6,729
Operating expenses:
Cost of goods and services sold	5,758	7,161
Other franchise
Revenue	774	542
Company operated hotels
Revenue	6,329	12,970
Operating expenses:
Cost of goods and services sold	6,678	11,545
Other
Revenue	$ 0	$ 3

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Leases (Tables)

3 Months Ended

Mar. 31, 2020

Leases [Abstract]

Schedule of Balance Sheet Information

Balance sheet information related to our leases is included in the following table (in thousands):

Operating Leases	March 31, 2020		December 31, 2019
Operating lease right-of-use assets	$	5,552	$	48,283
Operating lease liabilities, due within one year	$	1,519	$	4,809
Operating lease liabilities, due after one year	5,339		46,592
Total operating lease liabilities	$	6,858	$	51,401

Finance Leases	March 31, 2020		December 31, 2019
Property and equipment	$	135	$	298
Less accumulated depreciation	(106)		(168)
Property and equipment, net	$	29	$	130
Other accrued liabilities	$	27	$	74
Deferred income and other long-term liabilities	6		76
Total finance lease liabilities	$	33	$	150

Schedule of Components of Lease Expense and Supplemental Cash Flow Information

The components of lease expense during the three months ended March 31, 2020 and 2019 are included in the following table (in thousands):

	Financial Statement Line Item(s)	Three Months Ended March 31, 2020		Three months ended March 31, 2019
Operating lease expense	Selling, general, administrative and other expenses, and Company operated hotels	$	816	$	1,133
Short-term lease expense	Selling, general, administrative and other expenses, and Company operated hotels	98		247
Sublease income	Selling, general, administrative and other expenses	(18)		—
Finance lease expense
Amortization of finance right-of-use assets	Depreciation and amortization	8		35
Interest on lease liabilities	Interest expense	3		8
Total finance lease expense		11		43
Total lease expense		$	907	$	1,423

Supplemental cash flow information for our leases is included in the following table (in thousands):

Cash paid for amounts included in the measurement of lease liabilities:	Three Months Ended March 31, 2020		Three Months Ended March 31, 2019
Cash used in operating activities for operating leases	$	848	$	1,169
Cash used in operating activities for finance leases	3		8
Cash used in financing activities for finance leases	13		34

Information related to the weighted average remaining lease terms and discount rates for our leases as of March 31, 2020 and December 31, 2019 is included in the following table:

	March 31, 2020		December 31, 2019
Weighted average remaining lease term (in years)
Operating leases	6		69
Finance leases	1		3
Weighted average discount rate
Operating leases	5.8	%	7.2	%
Finance leases	5.7	%	11.9	%

Schedule of Future Maturities of Lease Liabilities

The future maturities of lease liabilities at March 31, 2020, are as indicated below (in thousands):

Years Ending December 31,	Operating Leases		Finance Leases
2020 (remainder)	$	1,141	$	20
2021	1,522		14
2022	1,486		—
2023	1,449		—
2024	595		—
Thereafter	1,984		—
Total lease payments	8,177		34
Less: imputed interest	1,319		1
	$	6,858	$	33

Schedule of Future Maturities of Lease Liabilities

The future maturities of lease liabilities at March 31, 2020, are as indicated below (in thousands):

Years Ending December 31,	Operating Leases		Finance Leases
2020 (remainder)	$	1,141	$	20
2021	1,522		14
2022	1,486		—
2023	1,449		—
2024	595		—
Thereafter	1,984		—
Total lease payments	8,177		34
Less: imputed interest	1,319		1
	$	6,858	$	33

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Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2020

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, 2019 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, 2019, filed with the SEC in our annual report on Form 10-K on February 27, 2020.

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 Sheets, the Condensed Consolidated Statements of Comprehensive Income (Loss), the Condensed Consolidated Statements of Stockholders' Equity, and the Condensed Consolidated Statements of Cash Flows. 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.

New Accounting Pronouncements Not Yet Adopted

In June 2016, the Financial Accounting Standards Board ("FASB") issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326) – Measurement of Credit Losses on Financial Instruments, as amended by multiple subsequent ASUs, which will change how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The ASU will replace the current "incurred loss" approach with an "expected loss" model for instruments measured at amortized cost. For trade and other receivables, held to maturity debt securities, loans and other instruments, entities will be required to use a new forward-looking “expected loss” model that generally will result in the earlier recognition of allowances for losses. In October 2019, an update was issued to the standard that deferred the effective date of the guidance to the first quarter of 2023 for smaller reporting companies such as us. We are currently evaluating the effects of this ASU on our financial statements, and such effects have not yet been determined.

In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes, which amends the existing guidance related to the accounting for income taxes. The ASU eliminates certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period, and the recognition for outside basis differences related to changes in ownership of equity method investments and foreign subsidiaries. The guidance also simplifies aspects of accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. The ASU is effective the first quarter of 2021, with early adoption permitted. We are currently evaluating the effects of this ASU on our financial statements, and such effects have not yet been determined.

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

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Property and Equipment - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Property, Plant and Equipment [Line Items]
Asset impairment	$ 1,760	$ 0
Disposal Group, Disposed of by Sale, Not Discontinued Operations
Property, Plant and Equipment [Line Items]
Gain (loss) on disposal		$ 0
RLH Seattle Airport | RLH Seattle Airport
Property, Plant and Equipment [Line Items]
Asset impairment	1,800
Impairment loss applied against hotel building	1,500
Impairment loss applied against right-of-use assets	300
RLH DC Venture | Disposal Group, Disposed of by Sale, Not Discontinued Operations
Property, Plant and Equipment [Line Items]
Gain (loss) on disposal	$ 7,900

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Debt and Line of Credit (Tables)

3 Months Ended

Mar. 31, 2020

Debt Disclosure [Abstract]

Schedule of Current and Non-Current Portions of Long-Term Debt

The current and noncurrent portions of our debt as of March 31, 2020 and December 31, 2019 are as follows (in thousands):

	March 31, 2020				December 31, 2019
	Current		Noncurrent		Current		Noncurrent
Line of Credit	$	—	$	—	$	—	$	10,000
RL Venture - Olympia	5,600		—		—		5,600
RLH DC Venture	—		—		17,648		—
Total debt	5,600		—		17,648		15,600
Unamortized debt issuance costs	(24)		—		(664)		(24)
Debt net of debt issuance costs	$	5,576	$	—	$	16,984	$	15,576

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Related Party Transactions

3 Months Ended

Mar. 31, 2020

Related Party Transactions [Abstract]

Related Party Transactions

Related Party Transactions

During the fourth quarter of 2018, we transitioned management of our company operated Hotel RL Baltimore Inner Harbor and Hotel RL Washington DC from RL Management, Inc., to HEI Hotels and Resorts, of which one of the members of our Board of Directors, Ted Darnall, is currently the Chief Executive Officer. Additionally, during the first quarter of 2019, management of our company operated hotel Red Lion Hotel Seattle Airport was also transitioned from RL Management, Inc. to HEI Hotels and Resorts. During the three months ended March 31, 2020, and 2019 we paid $197,000 and $228,000, respectively, in management fees to HEI Hotels and Resorts for management of these properties.

On May 31, 2019 we executed a mortgage loan with a principal and accrued exit fee of $17.4 million with CP Business Finance I, LP, an affiliate of Columbia Pacific Opportunity Fund, LP, who currently holds 500,000 shares of RLHC common stock. Additionally, Alexander B. Washburn, who served as a member of our Board of Directors from May 2015 to April 2019, is one of the managing members of Columbia Pacific Advisor, LLC, which serves as the investment manager of Columbia Pacific Opportunity Fund, LP. This debt is no longer outstanding as of March 31, 2020.

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Business Segments (Tables)

3 Months Ended

Mar. 31, 2020

Segment Reporting [Abstract]

Schedule of Segment Reporting Information

Selected financial information is provided below (in thousands):

Three Months Ended March 31, 2020	Franchised Hotels		Company Operated Hotels		Other		Total
Revenue	$	10,936	$	6,329	$	—	$	17,265
Operating expenses:
Segment and other operating expenses	17,540		7,030		4,131		28,701
Depreciation and amortization	882		866		789		2,537
Asset impairment	—		1,760		—		1,760
Transaction and integration costs	—		32		366		398
Loss (gain) on asset dispositions, net	—		(7,892)		—		(7,892)
Operating income (loss)	$	(7,486)	$	4,533	$	(5,286)	$	(8,239)
Identifiable assets as of March 31, 2020	$	82,199	$	65,523	$	16,786	$	164,508

Three Months Ended March 31, 2019	Franchised Hotels		Company Operated Hotels		Other		Total
Revenue	$	13,011	$	12,970	$	3	$	25,984
Operating expenses:
Segment and other operating expenses	9,622		12,461		4,014		26,097
Depreciation and amortization	914		1,956		577		3,447
Transaction and integration costs	62		—		—		62
Loss (gain) on asset dispositions, net	—		6		—		6
Operating income (loss)	$	2,413	$	(1,453)	$	(4,588)	$	(3,628)
Identifiable assets as of December 31, 2019	$	91,832	$	138,477	$	16,209	$	246,518

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Revenue from Contracts with Customers - Performance Obligations (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2020 USD ($)
Contra Revenue
2020 (remainder)	$ 254
2021	267
2022	235
2023	197
2024	161
Thereafter	761
Total	1,875
Expense
2020 (remainder)	263
2021	183
2022	154
2023	113
2024	67
Thereafter	53
Total	833
Revenue, remaining performance obligation	1,397
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-04-01
Expense
Revenue, remaining performance obligation	$ 413
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation, expected timing of satisfaction	9 months
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-01
Expense
Revenue, remaining performance obligation	$ 361
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation, expected timing of satisfaction	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-01
Expense
Revenue, remaining performance obligation	$ 269
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation, expected timing of satisfaction	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01
Expense
Revenue, remaining performance obligation	$ 170
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation, expected timing of satisfaction	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-01-01
Expense
Revenue, remaining performance obligation	$ 99
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation, expected timing of satisfaction	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-01-01
Expense
Revenue, remaining performance obligation	$ 85
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation, expected timing of satisfaction

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Goodwill and Intangible Assets - Summary of Amortization of Intangible Assets (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Finite-Lived Intangible Assets [Line Items]
Accumulated amortization	$ (10,983)	$ (10,216)
Net carrying amount	15,185	15,952
Customer contracts
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangibles	20,773	20,773
Net carrying amount	11,809	12,398
Brand names
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangibles	5,395	5,395
Net carrying amount	$ 3,376	$ 3,554

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Leases - Balance Sheet Information (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Operating Leases
Operating lease right-of-use assets	$ 5,552	$ 48,283
Operating lease liabilities, due within one year	1,519	4,809
Operating lease liabilities, due after one year	5,339	46,592
Total operating lease liabilities	6,858	51,401
Finance Leases
Property and equipment	135	298
Less accumulated depreciation	(106)	(168)
Property and equipment, net	29	130
Other accrued liabilities	27	74
Deferred income and other long-term liabilities	6	76
Total finance lease liabilities	$ 33	$ 150

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Subsequent Events (Details) - USD ($) $ in Millions	Apr. 21, 2020	Apr. 02, 2020
Forecast
Subsequent Event [Line Items]
Severance expense in second quarter of 2020		$ 0.4
Subsequent Event
Subsequent Event [Line Items]
Positions eliminated		40.00%
Total severance expense		$ 0.6
Severance expense in first quarter of 2020		$ 0.2
Subsequent Event | Long-term Debt | Idaho First bank
Subsequent Event [Line Items]
Proceeds from loan	$ 4.2