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Red Lion Hotels Corporation (NYSE:RLH) 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:

    ($ in thousands, except per share)

                                                First Quarter

                                          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

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

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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.