Red Lion Hotels Corp. has hung “For sale” signs on its Denver and Seattle properties as it shifts to a more franchise-based network, President Jon Elliasen said Tuesday.
But he said the company plans to retain management responsibilities for the 297-room Red Lion Hotel Fifth Avenue in Seattle, which will also keep the Spokane-based chain’s brand.
“It’s an important site for us,” he said.
Sale of the hotel was timed, in part, to coincide with a previously announced effort to sell its hotel in southeast Denver, Eliassen said.
The 478-room Denver hotel was purchased in 2008 for $25.3 million, and has required extensive renovations inside and out.
Eliassen said Red Lion has already marked down the property to $20 million on its books, and a loss on the sale that will offset the expected taxable gain on the of the Seattle hotel.
He said the company would prefer to keep the Red Lion brand on the Denver property. If that is not possible, Red Lion will maintain a presence in the city with a franchised property near the old airport, he said.
Also, Eliassen said, the market for hotels appears to be strengthening as the hospitality industry recovers from the recession. How strong will be better known after the Americas Lodging Investment Summit in San Diego next week, where both Red Lion properties will be shopped, he said.
Chris Burdett of CB Richard Ellis Hotels, who is handling the Seattle sale, said the demand for downtown properties, and the barriers to new entrants should bring a lot of attention to the Fifth Avenue deal.
Maximizing cash from the sales will allow Red Lion to pay down a line of credit, readjust the debt-to-equity balance on company books, and free up capital that can be better deployed expanding a footprint of 43 hotels in eight states and one Canadian province, Eliassen said.
The company would like to add 30-40 franchise properties over the next three years, he said.