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August 8, 2012

Red Lion Hotels to offload non-core Denver Southeast property

Red Lion Hotels, a hospitality and leisure company primarily engaged in the ownership, operation and franchising of midscale hotels, has agreed to sell the Red Lion Hotel Denver Southeast in Colorado, US, for $13m.

By admin-demo

Red Lion Hotels, a hospitality and leisure company primarily engaged in the ownership, operation and franchising of midscale hotels, has agreed to sell the Red Lion Hotel Denver Southeast in Colorado, US, for $13m.

The 478-room select service hotel, which borders Cherry Creek State Park, has 25,000ft² of meeting space.

The sale of the non-core property allows the company to pay down debt and enhance the competitive position of its brand.

The transaction is expected to close on or before 31 October 2012.

During the second quarter ended 30 June 2012, the western US-based hotel reported revenue of $38.8m, compared to $42.2m in the second quarter of 2011.

For comparable owned and leased hotels from continuing operations, revenue per available room (RevPAR) rose 5.4% year-over-year, driven by a 2.8% increase in occupancy to 66.8% and a 1% rise in average daily rate (ADR).

"The transaction is expected to close on or before 31 October 2012."

Franchise revenue was up from $0.9m to $1.3m, primarily due to increased room revenue.

Comparable earnings before interest, taxes, depreciation and amortisation (EBITDA) from continuing operations before special items increased to $5.5m in the second quarter of 2012, an increase from $4.7m in the prior year period.

Red Lion Hotels president and chief executive officer Jon Eliassen said the company was able to improve its overall market share due to occupancy growth.

"In addition, subsequent to quarter-end, we appointed an executive vice president for franchise development, and announced a new hotel franchise agreement in Southern California," Eliassen added.

"We also closed on the sale of one non-core hotel and announced a sale agreement for another."

As of 31 March 2012, the company’s hotel network comprised 48 hotels in nine US states and one Canadian province, with 9,010 rooms and 452,387ft² of meeting space.

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