Red Lion Hotels 8-K Red Lion Reports First Quarter 2008 Results RevPAR for owned and leased hotels up 3.9% in Quarter; Maintaining Guidance

Exhibit 99.1

Red Lion Reports First Quarter 2008 Results
RevPAR for owned and leased hotels up 3.9% in Quarter; Maintaining Guidance

SPOKANE, WA, May 7, 2008 – Red Lion Hotels Corporation (NYSE: RLH) today announced its results for the first quarter ended March 31, 2008, showing continued growth in RevPAR and EBITDA from continuing operations. Summary results for the three month period follow:

	First Quarter
($ in thousands, except per share)	2008			2007			% change
Total revenue, as reported	$	39,559		$	39,304			0.6	%
Continuing operations before 2008 Special Item: (1)
EBITDA	$	3,210		$	3,076			4.4	%
Net loss	$	(2,153	)	$	(1,980	)	nm
Loss per share — diluted	$	(0.12	)	$	(0.10	)	nm
Continuing operations as reported:
EBITDA	$	(444	)	$	3,076		nm
Net loss	$	(4,510	)	$	(1,980	)	nm
Loss per share — diluted	$	(0.25	)	$	(0.10	)	nm
Total loss per share - diluted, as reported	$	(0.25	)	$	(0.10	)	nm

¹ Excludes $3.7 million of separation cost related to the retirement of the company’s former President and CEO, net of its impact on income taxes. A schedule of the Disclosure of 2008 Special Item is included with this release.

In addition, key hotel operating metrics, on a comparable basis, and hotel operating margins for the first quarter are highlighted below for owned and leased hotels:

	First Quarter
	2008			2007			% change
RevPAR (revenue per available room)	$	44.91		$	43.23			3.9	%
ADR (average daily rate)	$	85.00		$	82.27			3.3	%
Occupancy		52.8	%		52.5	%	+30 bp
Hotel Direct Operating Margin		14.9	%		12.8	%	+204 bp

President and Chief Executive Officer Anupam Narayan, commenting on the first quarter results, said, “We were pleased to deliver solid RevPAR growth at our owned and leased hotels that outpaced the competitors in our markets. To accomplish this in the face of a challenging economy and a quarter in which Easter was historically early demonstrates the strength of our Red Lion brand strategy. Further, the increase in our RevPAR helped grow our hotel operating margin. While we are appropriately cautious concerning the economy and our sector, we believe we are tracking well to our 2008 guidance.”

Mr. Narayan continued, “With our experienced leadership team and our strong balance sheet, we are delivering both on operations and on our growth strategy of acquiring key hotel assets in strategic western hub cities in the U.S.”

Subsequent Events

On May 7, 2008, Red Lion announced that it had entered into an agreement to acquire the fee simple interest in the Radisson Hotel Denver Southeast – a 478 room hotel – for $25.3 million. The acquisition is expected to close in the second quarter of 2008, subject to usual closing conditions. The property will be branded as a Red Lion hotel upon closing and will continue to operate while the company makes approximately $8 million in renovations, primarily to guest rooms and public spaces.

First Quarter Results

Red Lion’s total revenue during the first quarter was $39.6 million, up 0.6% from the prior-year period. Revenue from hotels was $35.2 million, up 2.5% from the first quarter of 2007, driven by the increase in RevPAR at owned and leased hotels. Hotel direct operating margin increased by 204 basis points to 14.9%. First quarter of 2008 results included no revenue from the Red Lion Hotel Sacramento, compared to three months of revenue in the prior-year period. In addition, first quarter of 2008 contained three months of revenue from the Anaheim hotel purchased in October 2007, which was not in the prior-year period results. On a comparable property basis, hotel revenue increased 4.0%.

The 3.9% RevPAR increase for owned and leased hotels in the first quarter of 2008 was driven by a 3.3% increase in ADR and a 30 basis point increase in occupancy. System-wide, RevPAR fell 0.7% on a quarter-on-quarter basis, with a 240 basis point decrease in occupancy more than offsetting a 3.9% increase in ADR. The system-wide results were negatively impacted by rooms out of service for renovation at a number of franchised hotels.

Franchise and management revenue was $0.3 million, down from the prior-year period due to fewer franchisees in the system and because of the receipt of a $0.2 million franchise termination fee in the prior period. Entertainment revenue was $3.2 million, a decrease of $0.1 million from the same quarter in 2007.

EBITDA from continuing operations for the first quarter 2008 before the 2008 Special Item was $3.2 million, an increase of 4.4% from the first quarter of 2007. The Special Item is comprised of a $3.7 million separation charge in the quarter incurred in connection with the retirement of former President and CEO Arthur Coffey. Net loss from continuing operations excluding this separation charge was $2.2 million – a decrease of $0.2 million from the prior-year period. Loss per fully diluted share from continuing operations excluding the separation charge was $0.12, versus a loss of $0.10 per fully diluted share in the first quarter of 2007.

Outlook for 2008

While we are watchful on the health of the economy, we are maintaining our 2008 guidance as follows:

• 2008 RevPAR growth for company owned and leased hotels in the range of 3-6%.

• 2008 direct hotel operating margins to improve between 50 and 100 basis points from 2007.

• EBITDA from continuing operations to be in the range of $34 to $36 million, up 3 to 9% from the previous year.

Red Lion’s 2008 EBITDA guidance does not include the impact of the $3.7 million Special Item for separation costs or the impact of the expected Denver acquisition.

Red Lion System Update

The company is currently in the process of renovating guest rooms at its new Anaheim hotel which was acquired in October 2007. We expect to brand the hotel as a Red Lion in 2008 and to complete all renovations in the first part of 2009.

As previously announced:

• In January 2008, the franchised property Red Lion Baton Rouge (132 rooms) joined the system.

• In January 2008, our management agreement with the Grove Hotel in Boise, Idaho expired.

• In April 2008, our franchise agreements with two small properties at a ski resort in Sandpoint, Idaho (82 rooms and 50 rooms, respectively) expired and were not renewed.

• In April 2008, our franchise agreement with the 169-room Red Lion Hotel Denver Downtown at Invesco Field expired and was not renewed.

Also in April 2008, we terminated our franchise agreement with the 117-room Seattle South – Boeing Field property for non-performance. With these changes, the company had 18 franchised hotels in the Red Lion system at the end of April 2008.

All franchised hotels were required to meet Red Lion’s elevated brand standards by the end of 2007. The majority of hotels met the standards by the end of 2007, while a few are in the process

of completing renovations. We are monitoring their work and could terminate additional hotels for noncompliance if their progress is not satisfactory.

Liquidity and Balance Sheet

As of March 31, 2008, the company had $11.6 million in cash and cash equivalents, and interest bearing debt obligations of $113.5 million – all of which are at fixed interest rates. The company continues to maintain a $50 million line of credit, which remains unused as of March 31 and is available to fund future acquisitions or other investments as market conditions warrant. We expect to use some of the credit line to complete the anticipated acquisition of the Denver hotel.

For the remainder of 2008, the company is projecting capital expenditures of $13.7 million for ongoing maintenance, hotel improvement and Anaheim renovation costs. These figures exclude any estimates for work on the expected acquisition of the Denver hotel.

Conference Call Information

The Company will hold a conference call at 11:00 a.m. Pacific Time (2:00 p.m. Eastern Time) on May 8, 2008, to discuss the results for interested investors, analysts and portfolio managers. Management on the call will include President and CEO Anupam Narayan and Chief Financial Officer Anthony Dombrowik.

To participate in the conference call, please dial the following number ten minutes prior to the scheduled time: (800) 230-1093. International callers should dial (612) 332-0107.

This conference call will also be webcast live at http://www.redlion.com in the Investor Relations section of the website. To listen to the live call, please go to the Red Lion website at least fifteen minutes prior to the start of the call to register, download and install any necessary audio software. For those unable to participate during the live broadcast, a replay will be available at 1:30 p.m. PST on May 8, 2008, through June 8, 2008 at (800) 475-6701 or (320) 365-3844 (International) access code – 921023. The replay will also be available shortly after the call on the Red Lion website.

About Red Lion Hotels Corporation:

Red Lion Hotels Corporation is a hospitality and leisure company primarily engaged in the ownership, operation and franchising of upscale and midscale hotels under its Red Lion^® brand. As of March 31, 2008 the RLH hotel network was comprised of 53 hotels located in nine states and one Canadian province, with 9,266 rooms and 441,640 square feet of meeting space. The company also owns and operates an entertainment and event ticket distribution business. For more information, please visit the company’s website at www.redlion.com.

This press release contains forward-looking statements within the meaning of federal securities law, including statements concerning plans, objectives, goals, strategies, projections of future events or performance and underlying assumptions (many of which are based, in turn, upon further assumptions). The forward-looking statements in this press release are inherently subject to a variety of risks and uncertainties that could cause actual results to differ materially from those expressed. Such risks and uncertainties include, among others, economic cycles; international conflicts; changes in future demand and supply for hotel rooms; competitive conditions in the lodging industry; relationships with franchisees and properties; impact of government regulations; ability to obtain financing; changes in energy, healthcare, insurance and other operating expenses; ability to sell non-core assets; ability to locate lessees

for rental property; dependency upon the ability and experience of executive officers and ability to retain or replace such officers as well as other matters discussed in the company’s annual report onForm 10-K for the year ended December 31, 2007 and in other documents filed by the company with the Securities and Exchange Commission.

Contact:
Red Lion Hotels Corporation
Julie Langenheim, Investor Relations Manager
(509) 777-6322

Investor Relations:
ICR Inc.
William Schmitt
(203) 682-8200

Media:
ICR Inc.
Liz Brady
(646) 277-1226

Red Lion Hotels Corporation
Consolidated Statements of Operations
(unaudited)
($ in thousands, except footnotes)

	Three months ended March 31,
	2008			2007			$ Change			% Change
Revenue:
Hotels	$	35,235		$	34,381		$	854			2.5	%
Franchise and management		335			789			(454	)		-57.5	%
Entertainment		3,211			3,347			(136	)		-4.1	%
Other		778			787			(9	)		-1.1	%
Total revenues		39,559			39,304			255			0.6	%
Operating expenses:
Hotels		30,000			29,974			26			0.1	%
Franchise and management		73			263			(190	)		-72.2	%
Entertainment		3,060			2,855			205			7.2	%
Other		538			483			55			11.4	%
Depreciation and amortization		4,394			4,020			374			9.3	%
Hotel facility and land lease		1,786			1,714			72			4.2	%
Gain on asset dispositions, net		(107	)		(190	)		83			43.7	%
Undistributed corporate expenses		5,082			1,450			3,632			250.5	%
Total expenses		44,826			40,569			4,257			10.5	%
Operating loss		(5,267	)		(1,265	)		(4,002	)		-316.4	%
Other income (expense):
Interest expense		(2,279	)		(2,242	)		(37	)		-1.7	%
Minority interest in partnerships, net		17			12			5			41.7	%
Other income, net		412			309			103			33.3	%
Loss from continuing operations before income taxes		(7,117	)		(3,186	)		(3,931	)		-123.4	%
Income tax benefit		(2,607	)		(1,206	)		(1,401	)		-116.2	%
Net loss from continuing operations		(4,510	)		(1,980	)		(2,530	)		-127.8	%
Discontinued operations:
Loss from operations of discontinued business units, net of income tax benefit of $8		—			(14	)		14			100.0	%
Net loss on disposal of discontinued business units, net of income tax benefit of $6		—			(12	)		12			-100.0	%
Loss from discontinued operations		—			(26	)		26			100.0	%
Net loss	$	(4,510	)	$	(2,006	)	$	(2,504	)		-124.8	%
Loss per share — basic and diluted:(1)
Net loss from continuing operations	$	(0.25	)	$	(0.10	)	$	(0.15	)
Loss from discontinued operations		—			—			—
Net loss	$	(0.25	)	$	(0.10	)	$	(0.15	)
Weighted average shares — basic and diluted		18,231			19,148
EBITDA(2)	$	(444	)	$	3,034		$	(3,478	)		-114.6	%
EBITDA as a percentage of revenues(3)		-1.1	%		7.6	%
EBITDA from continuing operations(2)	$	(444	)	$	3,076		$	(3,520	)		-114.4	%
EBITDA from continuing operations (3) as a percentage of revenues		-1.1	%		7.8	%

(1)	For the three months ended March 31, 2008 and 2007, all of the 1,324,540 and 1,159,080 options to purchase common shares outstanding as of those dates, respectively, were considered anti-dilutive due to the loss for the period. Likewise, all of the 44,837 and 142,663 convertible operating partnership (“OP”) units, respectively, were considered anti-dilutive, as were the 41,938 and 25,803 units of unissued restricted stock outstanding.
(2)	The definition of “EBITDA” and how that measure relates to net loss is discussed further in this release under Non-GAAP Financial Measures.
(3)	The calculation of EBITDA as a percentage of revenues is based upon total operating revenues, from both continuing and discontinued operations, of $39,559,000 and $39,887,000 for the three months ended March 31, 2008 and 2007, respectively. EBITDA from continuing operations as a percentage of revenues is based upon the operating results of continuing business units as presented in the financial statements.

Red Lion Hotels Corporation
Consolidated Balance Sheets
(unaudited)
($ in thousands, except share data)

	March 31,			December 31,
	2008			2007
Assets:
Current assets:
Cash and cash equivalents	$	11,628		$	15,044
Restricted cash		4,113			4,439
Accounts receivable, net		10,257			10,330
Inventories		1,320			1,416
Prepaid expenses and other		5,511			3,352
Total current assets		32,829			34,581
Property and equipment, net		259,436			260,574
Goodwill		28,042			28,042
Intangible assets, net		11,452			11,582
Other assets, net		8,250			9,730
Total assets	$	340,009		$	344,509
Liabilities:
Current liabilities:
Accounts payable	$	4,054		$	4,189
Accrued payroll and related benefits		5,666			6,166
Accrued interest payable		353			356
Advance deposits		859			345
Other accrued expenses		10,727			10,419
Long-term debt, due within one year		5,660			5,547
Total current liabilities		27,319			27,022
Long-term debt, due after one year		77,021			77,673
Deferred income		8,996			9,169
Deferred income taxes		17,119			17,294
Minority interest in partnerships		14			31
Debentures due Red Lion Hotels Capital Trust		30,825			30,825
Total liabilities		161,294			162,014
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; 18,228,271 and 18,312,756 shares issued and outstanding		182			183
Additional paid-in capital, common stock		141,284			140,553
Retained earnings		37,249			41,759
Total stockholders’ equity		178,715			182,495
			��
Total liabilities and stockholders’ equity	$	340,009		$	344,509

Red Lion Hotels Corporation
Consolidated Statement of Cash Flows
(unaudited)
($ in thousands)

	Three months ended March 31,
	2008			2007
Operating activities:
Net loss	$	(4,510	)	$	(2,006	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		4,394			4,028
Gain on disposition of property, equipment and other assets, net		(107	)		(190	)
Deferred income tax provision		(175	)		(12	)
Minority interest in partnerships		(17	)		(12	)
Equity in investments		9			9
Imputed interest expense		55			52
Compensation expense related to stock issuance		1,581			217
Provision for (collection of) doubtful accounts		(121	)		(13	)
Change in current assets and liabilities:
Restricted cash		326			(1,296	)
Accounts receivable		203			(414	)
Inventories		96			30
Prepaid expenses and other		(2,159	)		(726	)
Accounts payable		(135	)		(1,242	)
Accrued payroll and related benefits		(500	)		(1,705	)
Accrued interest payable		(3	)		(58	)
Other accrued expenses and advance deposits		766			1,396
Net cash used in operating activities		(297	)		(1,942	)
Investing activities:
Purchases of property and equipment		(2,968	)		(5,160	)
Non-current restricted cash for sublease tenant improvements		805			—
Proceeds from short-term liquid investments		—			7,635
Advances to Red Lion Hotels Capital Trust		(27	)		(17	)
Other, net		516			(41	)
Net cash (used in) provided by investing activities		(1,674	)		2,417
Financing activities:
Repayment of long-term debt		(594	)		(572	)
Common Stock Redeemed		(922	)		—
Proceeds from issuance of common stock under employee stock purchase plan		71			88
Proceeds from stock option exercises		—			379
Net cash used in financing activities		(1,445	)		(105	)
Net cash in discontinued operations		—			(32	)
Change in cash and cash equivalents:
Net (decrease) increase in cash and cash equivalents		(3,416	)		338
Cash and cash equivalents at beginning of period		15,044			13,262
Cash and cash equivalents at end of period	$	11,628		$	13,600

Red Lion Hotels Corporation
Additional Hotel Statistics
(unaudited)

System-wide Hotels as of March 31, 2008

					Meeting Space
	Hotels		Rooms		(sq. ft.)
Red Lion Owned and Leased Hotels		30		5,456		279,684
Other Leased Hotel (1)		1		310		5,000
Red Lion Franchised Hotels(6)		22		3,500		156,956
Total		53		9,266		441,640
Total Red Lion Hotels		52		8,956		436,640

Comparable Hotel Statistics⁽²⁾

	Three months ended March 31, 2008									Three months ended March 31, 2007
	Average									Average
	Occupancy(3)			ADR (4)			RevPAR (5)			Occupancy(3)			ADR (4)		RevPAR (5)
Owned and Leased Hotels		52.8	%	$	85.00		$	44.91			52.5	%	$	82.27	$	43.23
Franchised Hotels		47.9	%	$	73.51		$	35.22			55.7	%	$	70.92		39.50
Total System Wide		51.2	%	$	81.44		$	41.69			53.6	%	$	78.35		41.99
Change from prior comparative period:
Owned and Leased Hotels		0.3			3.3	%		3.9	%
Franchised Hotels		(7.8	)		3.7	%		-10.8	%
Total System Wide		(2.4	)		3.9	%		-0.7	%

(1)	Represents a hotelacquired in the fourth quarter of 2007 that is being repositioned as a Red Lion, although until that time has been flagged as an independent.
(2)	Includes all hotels owned, leased and franchised, presented on a comparable basis for hotel statistics.
(3)	Average occupancy represents total paid rooms divided by total available rooms. Total available rooms represents the number of rooms available multiplied by the number of days in the reported period and includes rooms taken out of service for renovation.
(4)	Average daily rate (“ADR”) represents total room revenues divided by the total number of paid rooms occupied by hotel guests.
(5)	Revenue per available room (“RevPAR”) represents total room and related revenues divided by total available rooms.
(6)	In April 2008, franchise agreements with three hotels expired and were not renewed. In addition, we terminated a franchise agreement another hotel for non-performance. This reduces the total number of franchised hotels in the system to 18, and the total hotels in the system to 49 as of the date of this release.

Red Lion Hotels Corporation
Reconciliation of EBITDA to Net Loss
(unaudited)
($ in thousands)

The following is a reconciliation of EBITDA and EBITDA from continuing operations to net loss for the periods presented:

	Three months ended March 31,
	2008			2007
EBITDA from continuing operations	$	(444	)	$	3,076
Income tax benefit — continuing operations		2,607			1,206
Interest expense — continuing operations		(2,279	)		(2,242	)
Depreciation and amortization — continuing operations		(4,394	)		(4,020	)
Net loss from continuing operations		(4,510	)		(1,980	)
Loss from discontinued operations		—			(26	)
Net loss	$	(4,510	)	$	(2,006	)
EBITDA	$	(444	)	$	3,034
Income tax benefit		2,607			1,220
Interest expense		(2,279	)		(2,231	)
Depreciation and amortization		(4,394	)		(4,029	)
Net loss	$	(4,510	)	$	(2,006	)

NON-GAAP FINANCIAL MEASURES

EBITDA is defined as net income (loss) before interest, taxes, depreciation and amortization. EBITDA is considered a non-GAAP financial measurement. We believe it is a useful financial performance measure for us and for our shareholders and is a complement to net income (loss) and other financial performance measures provided in accordance with generally accepted accounting principles in the United States (“GAAP”). EBITDA from continuing operations is calculated in the same manner, but excludes the operating results of business units identified as discontinued under GAAP.

We use EBITDA to measure the financial performance of our owned and leased hotels because it excludes interest, taxes, depreciation and amortization, which bear little or no relationship to operating performance. By excluding interest expense, EBITDA measures our financial performance irrespective of our capital structure or how we finance our properties and operations. We generally pay federal and state income taxes on a consolidated basis, taking into account how the applicable taxing laws apply to our company in the aggregate. By excluding taxes on income, we believe EBITDA provides a basis for measuring the financial performance of our operations excluding factors that our hotels and other operations cannot control. By excluding depreciation and amortization expense, which can vary from hotel to hotel based on historical cost and other factors unrelated to the hotels’ financial performance, EBITDA measures the financial performance of our hotels without regard to their historical cost. For all of these reasons, we believe that EBITDA provides us and investors with information that is relevant and useful in evaluating our business.

However, because EBITDA excludes depreciation and amortization, it does not measure the capital we require to maintain or preserve our long-lived assets. In addition, because EBITDA does not reflect interest expense, it does not take into account the total amount of interest we pay on outstanding debt nor does it show trends in interest costs due to changes in our borrowings or changes in interest rates. EBITDA, as defined by us, may not be comparable to EBITDA as reported by other companies that do not define EBITDA exactly as we define the term. Because we use EBITDA to evaluate our financial performance, we reconcile all EBITDA measures to net income (loss), which is the most comparable financial measure calculated and presented in accordance with GAAP. EBITDA does not represent cash generated from operating activities determined in accordance with GAAP, and should not be considered as an alternative to operating income (loss) or net income (loss) determined in accordance with GAAP as an indicator of performance or as an alternative to cash flows from operating activities as an indicator of liquidity.

Disclosure of Special Items
(unaudited)

As previously announced, the Company’s former President and Chief Executive Officer retired in February 2008. In connection with the retirement agreement, the Company recorded an expense of $3.7 million in separation costs during the first quarter of 2008. As a result, the operations as presented in the accompanying financial statements do not reflect a meaningful comparison of continuing operations between periods. The follow table represents a reconciliation of certain earnings measures from continuing operations before special items to loss from continuing operations after special items.

	Three months ended March 31, 2008									Three months ended March 31, 2007
	Net Loss			EBITDA			Diluted EPS			Net Loss			EBITDA		Diluted EPS
	from Continuing			from Continuing			from Continuing			from Continuing			from Continuing		from Continuing
($ in thousands except per share data)	Operations			Operations			Operations			Operations			Operations		Operations
Amount before special item	$	(2,153	)	$	3,210		$	(0.12	)	$	(1,980	)	$	3,076	$	(0.10	)
Special items:
Separation costs(1)		(3,654	)		(3,654	)		(0.20	)		—			—		—
Income tax expense of special item(2)		1,297			—			0.07			—			—		—
Amount per consolidated statement of operations	$	(4,510	)	$	(444	)	$	(0.25	)	$	(1,980	)	$	3,076	$	(0.10	)
Change from the comparative period:
Amount before special item		-8.7	%		4.4	%		-20.7	%
Amount per consolidated statement of operations		-127.8	%		-114.4	%		150.0	%

(1)	Amount as included in the line item “Undistributed corporate expenses” on the accompanying consolidated statements of operations.
(2)	Represents taxes on special items at the Company’s expected incremental tax rate as applicable.