Red Lion Hotels 8-K Sale Closes on Red Lion Hotel Fifth Avenue Seattle

Exhibit 99.2

RED LION HOTELS CORPORATION UNAUDITED PRO FORMA
CONSOLIDATED FINANCIAL INFORMATION

     The following unaudited pro forma consolidated financial information gives effect to (a) the sale of the hotel and the related franchise agreement described in Item 2.01 of this Form 8-K, and (b) the repayment of the entire principal balance outstanding under the registrant’s revolving credit facility with KeyBank National Association (collectively, the “Transactions”).

     The following unaudited pro forma consolidated balance sheet as of March 31, 2011 gives effect to the Transactions as if they were consummated on March 31, 2011. The information included in this unaudited pro forma consolidated balance sheet was derived from the registrant’s unaudited March 31, 2011 historical consolidated balance sheet included in its Quarterly Report filed on Form 10-Q for the quarter ended March 31, 2011.

     The following unaudited pro forma consolidated statement of operations for the fiscal year ended December 31, 2010 gives effect to the Transactions as if they were consummated at the beginning of that fiscal year. The information included in this unaudited pro forma consolidated statement of operations was derived from the registrant’s historical audited consolidated statement of operations for the fiscal year ended December 31, 2010, which was included in the registrant’s Annual Report filed on Form 10-K for the fiscal year ended December 31, 2010.

     The following unaudited pro forma consolidated statement of operations for the three months ended March 31, 2011 gives effect to the Transactions as if they were consummated at the beginning of that three-month period. The information included in this unaudited pro forma consolidated statement of operations was derived from the registrant’s consolidated statement of operations for the three months ended March 31, 2011, which was included in the registrant’s Quarterly Report filed on Form 10-Q for the quarter ended March 31, 2011.

     The historical consolidated financial information has been adjusted to give effect to pro forma events that are directly attributable to the Transactions, are factually supportable and, in the case of the pro forma consolidated statements of operations, have a recurring impact. The following unaudited pro forma consolidated financial information has been prepared by management of the registrant for illustrative purposes only. The unaudited pro forma consolidated financial information is not intended to represent or be indicative of the registrant’s financial position or results of operations in future periods or the results that actually would have been realized had the registrant not included the business operations of its Red Lion Hotel on Fifth Avenue property during the specified periods.

     The assumptions and estimates used and pro forma adjustments derived from such assumptions and estimates are based on currently available information. Management of the registrant believes such assumptions and estimates are reasonable under the circumstances. The unaudited pro forma consolidated financial information, including the notes thereto, is qualified in its entirety by reference to, and should be read in conjunction with, the historical consolidated financial statements of the registrant included in its Form 10-K filed with the SEC on March 16, 2011 and its Form 10-Q filed with the SEC on May 9, 2011.

RED LION HOTELS CORPORATION
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF MARCH 31, 2011

(Amounts in thousands)

	Historical
	Consolidated			Sale of
	Red Lion Hotels			Red Lion Hotel on			Unaudited
	Corporation			Fifth Avenue			Pro Forma
ASSETS
Current assets:
Cash and cash equivalents	$	5,607		$	(137	)(1)	$	49,009
					43,539	(3)
Restricted cash		4,792			(38	)(1)		4,754
Accounts receivable, net		5,992			(202	)(1)		5,790
Inventories		1,322			(54	)(1)		1,268
Prepaid expenses and other		1,920			(50	)(1)		1,870
Deferred income taxes		7,377			(4,651	)(4)		2,726
Assets held for sale		43,944			(34,138	)(1)		9,806
Total current assets		70,954			4,269			75,223
Property and equipment, net		229,458			—			229,458
Goodwill		22,730			—			22,730
Intangible assets, net		7,972			—			7,972
Other assets, net		6,732			(895	)(5)		5,837
Total assets	$	337,846		$	3,374		$	341,220
LIABILITIES
Current liabilities:
Accounts payable	$	5,504		$	(58	)(1)	$	5,446
Income Taxes Payable		—			8,827	(4)		8,827
Accrued payroll and related benefits		3,239			(150	)(1)		3,089
Accrued interest payable		291			—			291
Advance deposits		1,079			(102	)(1)		977
Other accrued expenses		11,991			(327	)(1)		11,664
Revolving credit facility, due within one year		25,000			(25,000	)(6)		—
Current portion of long-term debt		24,928			—			24,928
Total current liabilities		72,032			(16,810	)		55,222
Long-term debt, due after one year		51,391			—			51,391
Deferred income		5,015			—			5,015
Deferred income taxes		11,789			—			11,789
Debentures due Red Lion Hotels Capital Trust		30,825			—			30,825
Total liabilities		171,052			(16,810	)		154,242
Commitments and contingencies
STOCKHOLDERS’ EQUITY
Red Lion Hotels 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; 18,993,267 shares issued and outstanding		190			—			190
Additional paid-in capital, common stock		147,633			—			147,633
Retained earnings		18,975			20,184	(12)		39,159
Total Red Lion Hotels Corporation stockholders’ equity		166,798			20,184			186,982
Noncontrolling interest		(4	)		—			(4	)
Total equity		166,794			20,184			186,978
Total liabilities and stockholders’ equity	$	337,846		$	3,374		$	341,220

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RED LION HOTELS CORPORATION
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2010

(Amounts in thousands, except per share data)

	Historical
	Consolidated			Sale of
	Red Lion Hotels			Red Lion Hotel on			Unaudited
	Corporation			Fifth Avenue			Pro Forma
Revenue:
Hotels	$	148,568		$	(14,279	)(2)	$	134,289
Franchise		3,209			669	(7)		3,878
Entertainment		9,236			—			9,236
Other		2,481			—			2,481
Total revenues		163,494			(13,610	)		149,884
Operating expenses:
Hotels		116,574			(9,465	)(2)		107,216
					107	(8)
Franchise		3,118			396	(7)		3,514
Entertainment		7,769			—			7,769
Other		1,598			—			1,598
Depreciation and amortization		20,885			(1,851	)(2)		18,803
					(231	)(9)
Impairment Loss		5,733			—			5,733
Hotel facility and land lease		5,840			—			5,840
Gain (loss) on asset dispositions, net		(25	)		(2	)(2)		(27	)
Undistributed corporate expenses		6,304			—			6,304
Total expenses		167,796			(11,046	)		156,750
Operating income (loss)		(4,302	)		(2,564	)		(6,866	)
Other income (expense):
Interest expense		(9,073	)		843	(10)		(8,230	)
Other income, net		409			—			409
Income (loss) before taxes		(12,966	)		(1,721	)		(14,687	)
Income tax expense (benefit)		(4,736	)		(627	)(11)		(5,363	)
Net income (loss) from continuing operations		(8,230	)		(1,094	)		(9,324	)
Less: Net income (loss) attributable to noncontrolling interest		10			(10	)(2)		—
Net income (loss) from continuing operations attributable to Red Lion Hotels Corporation	$	(8,220	)	$	(1,104	)	$	(9,324	)
				��
Earnings per share — basic and diluted
Net income (loss) from continuing operations	$	(0.45	)				$	(0.50	)
Weighted average shares -basic and diluted		18,485						18,485

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RED LION HOTELS CORPORATION
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2011

(Amounts in thousands, except per share data)

	Historical
	Consolidated			Sale of
	Red Lion Hotels			Red Lion Hotel on			Unaudited
	Corporation			Fifth Avenue			Pro Forma
Revenue:
Hotels	$	30,158		$	(2,841	)(2)	$	27,317
Franchise		707			135	(7)		842
Entertainment		2,800			—			2,800
Other		607			—			607
Total revenues		34,272			(2,706	)		31,566
Operating expenses:
Hotels		27,169			(2,143	)(2)		25,054
					28	(8)
Franchise		894			85	(7)		979
Entertainment		2,614			—			2,614
Other		393			—			393
Depreciation and amortization		5,306			(457	)(2)		4,523
					(326	)(9)
Hotel facility and land lease		2,111			—			2,111
Gain (loss) on asset dispositions, net		(86	)		—			(86	)
Undistributed corporate expenses		1,344			—			1,344
Total expenses		39,745			(2,813	)		36,932
Operating income (loss)		(5,473	)		107			(5,366	)
Other income (expense):
Interest expense		(2,301	)		283	(10)		(2,018	)
Other income, net		4			—			4
Income (loss) before taxes		(7,770	)		390			(7,380	)
Income tax expense (benefit)		(2,999	)		151	(11)		(2,848	)
Net income (loss)		(4,771	)		239			(4,532	)
Less: Net income (loss) attributable to noncontrolling interest		10			(1	)(2)		9
Net income (loss) attributable to Red Lion Hotels Corporation	$	(4,761	)	$	238		$	(4,523	)
Earnings per share — basic and diluted
Net income (loss)	$	(0.25	)				$	(0.24	)
Net income (loss) attributable to Red Lion Hotels Corporation	$	(0.25	)				$	(0.24	)
Weighted average shares -basic and diluted		18,974						18,974

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RED LION HOTELS CORPORATION
ADJUSTMENTS TO UNAUDITED
PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

(1) These adjustments reflect the elimination of the assets transferred and liabilities assumed by the buyer.

(2) These adjustments reflect the elimination of the operating results of the Red Lion Hotel on Fifth Avenue.

(3) Reflects cash proceeds received at the closing of the sale of $71 million, net of estimated transaction and selling costs, and the repayment of the principal balance outstanding under the registrant’s revolving credit facility. The credit facility was secured by the hotel sold and the registrant was required to repay the outstanding principal balance with proceeds from the sale.

(4) Reflects the tax impact of the sale on income taxes payable and deferred income taxes. It is estimated that the sale will result in income taxes payable of approximately $8.8 million after utilizing net operating loss carry forwards and credits, the impact of which can be seen in the adjustment to deferred income taxes. Note that the pro forma tax adjustments are subject to further refinement and adjustment based on a more comprehensive tax analysis and review. Such income taxes payable are reflected as an adjustment in the pro forma consolidated balance sheet as of March 31, 2011. However, as the charge is non-recurring, such amount is not reflected in the pro forma consolidated statements of operations for any periods presented.

(5) To record the reduction of deferred financing costs associated with the credit facility.

(6) To record the repayment of the principal balance outstanding under the credit facility.

(7) To record franchise revenue and expense associated with operating the hotel as a franchise.

(8) To record the retained corporate expenses previously allocated to this hotel.

(9) To record the reduction of loan fee amortization expense related to the credit facility.

(10) To record elimination of interest expense under the credit facility.

(11) Adjustment to reflect the income tax effect of the pro forma adjustments at the applicable tax rates.

(12) To record the impact of adjustments made, including the gain on sale. The estimated gain, net of tax, has been included as an adjustment to retained earnings but has not been reflected in the pro forma consolidated statements of operations as it is non-recurring in nature.

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