SPOKANE, Washington—Executives of Red Lion Hotels Corporation reported Thursday the company made substantial progress during the third quarter in its goal to maximize value for shareholders.
Since 30 June, Red Lion has sold three hotels in its portfolio, using $17.7 million of the proceeds to pay down debt, said Jon Eliassen, CEO of Red Lion, during the company’s third-quarter-earnings call. As of 30 September, the company had an outstanding debt of $89.3 million.
Four additional hotels still are being marketed for sale, as well as a commercial mall asset the company has in Montana, Eliassen said.
“We have ongoing negotiations with (prospective buyers),” said Julie Shiflet, CFO of Red Lion, of the company’s properties on the market. “We’d love to have some of those sold before year end, but I believe they will (in) the first quarter,” she said.
Once those are sold, executives do not have plans to bring any additional assets to the market. However, they will continue to evaluate their portfolio and determine if there is anything that can be done to increase value, Eliassen said.
“There might be a situation in the future where we might want to move out of one property we’re in right now and move to another market,” he said.
Refining the guest message
Going forward, Red Lion is committed to refining the message of what the brand means to guests, Eliassen said.
Continuing to make capital improvements at Red Lion properties is a big part of that, he said. For the nine months ended 30 September, capital expenditures was $5.8 million.
Improvements such as remodeling meeting space and refurbishing public areas will continue to draw customers into properties such as the Red Lion Hotel at the Park in Spokane, Washington, where these renovations have already been completed, Shifflet said.
Also, to ensure the company is meeting the needs of the full-service hotel segment, Eliassen said Red Lion Inn & Suites properties have been introduced in several markets.
Over time, guests will learn what they can expect from both products, Red lion Inn and Red Lion Inn & Suites hotels, and will have more options in the marketplace, he said.
To support the initiative of refining the guest message, the company will roll out a new website during the fourth quarter, Eliassen said. And a new mobile-friendly version of the Red Lion site will launch in 2013. “The new platforms will significantly improve the visibility of Red Lion … and will drive revenues on RedLion.com,” Eliassen said.
Strategic alternative suspension
During the third quarter, Red Lion also announced the suspension of its strategic alternatives process to increase shareholder value, a review process that included a potential sale of the company.
The board of directors, however, is open to any transaction that could maximize value to shareholders, Shifflet said.
While active discussions are no longer taking place with Merrill Lynch, the financial adviser Red Lion retained in March to oversee the process, Eliassen said executives are open to speaking with other advisers if the strategic alternatives process were to resume. “We are not tied to any one organization,” he said.