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Red Lion Debuts in Walla Walla

Zacks Equity Research

In a bid to beef up its portfolio in the domestic market, Spokane, Wash.-based hotelier, Red Lion Hotels Corporation (RLH) is set to introduce a Red Lion Inn & Suites-branded property in Walla Walla, Wash. In this regard, the hotelier inked a license agreement with a franchisee. The financial terms of the deal were not disclosed.

The 80-guestroom hotel – Red Lion Inn & Suites Walla Walla – is slated to be opened by the end of this year once it is renovated. Strategically positioned in downtown Walla Walla, the property is adjacent to Whitman College campus and other historical attractions. The property is owned and managed by BHG Hotels which also owns Red Lion Hotel Portland Airport in Oregon.

Being located in a dynamic market like Walla Walla, which is the centre of Washington Wine Country, the new property is expected to garner travelers on a regular basis. The property will enable Red Lion to enhance its portfolio in the Washington market where it currently boasts 17 properties. The deal also paved the way for the owners of the hotel to reap the benefits from Red Lion’s much greater scale and brand name. This will help the company to compete in the mid-scale market.

Red Lion is highly concentrating on increasing its franchise activities. The franchising business is capital efficient as the owner/developer partners provide the capital and the company earns a fee for managing/franchising the hotel. The company expects to include around 30 to 40 franchised hotels by 2014.

Some other hoteliers worth considering at the current level include Hyatt Hotels Corporation (H), China Lodging Group, Limited (HTHT) and Marriott Vacations Worldwide Corp. (VAC). All these companies carry a Zacks Rank #2 (Buy).

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