1052595--3/12/2009--Red_Lion_Hotels

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Due to the geographic concentration of the hotels in our system, our results of operations and financial condition are subject to fluctuations in regional economic conditions. Our operating results are subject to conditions affecting the lodging industry. Our expenses may remain constant or increase even if revenues decline. We have incurred debt financing and may incur increased indebtedness in connection with potential acquisitions in the future, capital expenditures or for other corporate purposes. Our business is capital intensive and any potential acquisition, development, redevelopment and renovation projects might be more costly than we anticipate. Failure to comply with debt covenants could adversely affect our financial results or condition. We will be required to refinance our credit facility and other debt maturities in 2011, including extension options, and there is no assurance that we will be able to refinance our maturing debt on acceptable terms. The lodging industry is highly competitive, which may impact our ability to compete successfully with other hospitality and leisure companies in the future. The results of some of our individual hotels are significantly impacted by group contract business and other large customers, and the loss of such customers for any reason could harm our operating results. Our success depends on the value of our name, image and brand. If demand for our hotels decreases or the value of our name, image or brand diminishes, our business and operations would be harmed. The illiquidity of real estate investments and the lack of alternative uses of hotel properties could significantly limit our ability to respond to adverse changes in the performance of our hotels and harm our financial condition. Risks associated with real estate ownership may adversely affect revenue or increase expenses. The increasing use of third-party travel websites by consumers may adversely affect our profitability. Our hotels may be faced with labor disputes which would harm the operation of our hotels. We may have disputes with the owners of the hotels that we manage or franchise. Our business is seasonal in nature, and we are likely to experience fluctuations in our results of operations and financial condition. Our properties are subject to risks relating to natural disasters, terrorist activity and war and any such event could materially adversely affect our operating results without adequate insurance coverage or preparedness. If we fail to comply with privacy regulations, we could be subject to fines or other restrictions on our business. Failure to maintain the security of internal or customer data could adversely affect us. Any failure to protect our trademarks could have a negative impact on the value of our brand names. We are subject to environmental regulations. We face risks relating to litigation. If our franchisees terminate or fail to renew their relationship with our company, our franchise revenue will decline. If any hotel acquisitions fail to perform in accordance with our expectations or if we are unable to effectively integrate new hotels into our operations, our results of operations and financial condition may suffer. We rely on our central reservation system for occupancy at our hotels and any failures in such system could negatively affect our revenues and cash flows. Our current or future joint venture arrangements may not reflect solely our best interests and may subject these investments to increased risks. Failure to retain senior management or other key employees could adversely affect our business. The market price for our common stock may be volatile. The unsolicited proposal from Columbia Pacific Opportunity Fund LP may create uncertainty that may adversely impact our business. Washington law and our governing corporate documents contain provisions that could deter takeover attempts. Due to the shareholdings of our Chairman, together with other members of the Barbieri family, we may be limited in our ability to undertake transactions requiring shareholder approval.

Full 10-K form ▸

1052595--3/12/2009--Red_Lion_Hotels_CORP