Red Lion Hotels — Investor Presentation (September 2017)
36 slides from Red Lion Hotels's investor presentation, Sep 8, 2017
Slide 1: Investor Presentation
CORPORATION Investor Presentation
Slide 2: Disclaimer
DISCLAIMER This presentation (the “Presentation”) is provided for information purposes only. Forward Looking Statements. Certain matters discussed throughout all of this presentation constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Gen
Slide 3: RLH By the Numbers
RLH BY THE NUMBERS 1,100+ Hotels 70,000+ Room 10th 48 4 Largest Franchisor States Countries in the United States 1,800+ 148% Associates Work 5-Year CAGR in Franchise 9 for RLH Unit Growth Brands 3
Slide 4: Asset Light Transformation 2014-2016
ASSET LIGHT TRANSFORMATION | 2014-2016 Precedent Activities and Strategies Disposition of 8 Non-Strategic Strategic Hotel Acquisitions with Organic and Acquisition Real Estate Interests $17M Capital Investment Franchise Growth All 8 properties remained with the Hotel RL Baltimore Organic growth thro
Slide 5: Investment Highlights
INVESTMENT HIGHLIGHTS Asset Light Franchise Strong Organic State of the Art Guest Model Growth* Mgmt Platform High ROIC, asset-light 15% organic growth in 2016 Developed & deployed franchise model with national proprietary digital guest and and international scale More than 40 units expected to reve
Slide 6: Investment Highlights
INVESTMENT HIGHLIGHTS Innovative Rewards Seasoned Leadership Balanced Sheet Program Team Poised for Growth* Revolutionized rewards Over 150 years of collective No corporate level debt program to recognize retail lodging experience • $111.1M net JV level consumer debt with recourse to Proven ability
Slide 7: Vantage Acquisition
VANTAGE ACQUISITION DEAL SUMMARY: Consistent with RLH’s desire Immediately added significant scale Unique business model to grow the asset-light, 1,000 to the system with the addition of has been historically franchise business nationwide HOTELS over 1,000 hotels – increasing successful in the econo
Slide 8: RLH Franchise of Choice
RLH FRANCHISE OF CHOICE
Slide 9: Adjusted EBITDA
ADJUSTED EBITDA The Franchise division is estimated to 50% contribute over 40% of the overall consolidated RLH Adjusted EBITDA 40% T DA 40% in 2017. E BI Adj 30% 27% 2017 Adjusted EBITDA faces almost d $4M of headwinds unfavorably impacting date l i YoY profit. ons o 20% The headwinds include:C of D
Slide 10: Positioning RLH as Franchise of Choice
POSITIONING RLH AS “FRANCHISE OF CHOICE” Establish RLH as the “Franchise of Choice” by blending our cultures, focusing on brand stratification, and exceeding best-in-class service and delivery. Achieving Franchise Growth by: Completing Offering Growing Meeting and Grow Implement brand competitive br
Slide 11: Streamlined Brand Platform
STREAMLINED BRAND PLATFORM INCREASE BRAND FLEXIBLE REDUCE AWARENESS FRANCHISING COSTS More resources per brand Offer owners the ability to More efficient use of Larger footprint per brand move up or down the quality marketing and Focus brand definitions scale of our 9 brand company resources offerin
Slide 12: Brand Stratification Plan – Flags
BRAND STRATIFICATION PLAN – 9 FLAGS UPSCALE Upscale offering Centrally located in destination, adventure and university cities Flat fee (Introductory offer) Midscale offering with or without a restaurant Primary and secondary markets Variable fee (% of GRR) Midscale Extended Stay Flat fee Affordable
Slide 13: Illustrative Franchise Economics and Growth Potential
ILLUSTRATIVE FRANCHISE ECONOMICS AND GROWTH POTENTIAL All figures below are year one averages More than 40 hotels expected to open over next 12 to 18 months Hotel RL Midscale Economy Room Count 130 105 59 Fee Type Flat per Key* Percent of GRR Flat per Key RLH Revenue 350K 136.5K 53.8K RLH Profit 130
Slide 14: Driving Results with Technology
DRIVING RESULTS WITH TECHNOLOGY ENGAGE INCREASE BOOKINGS MEASURE RESULTS CUSTOMERS Up to 300 booking channels Reputation Management Sales Force Automation Business Intelligence Customer Relationship Translation Services Web Analytics Management Central Reservations System Single Sign On & Dashboard
Slide 15: Embracing OTA Partnerships
EMBRACING OTA PARTNERSHIPS When we harness the distribution channels of OTA’s we can: Reach a much larger audience Retain more customers Garner loyalty through our guest recognition program 15
Slide 16: Innovative Rewards Program
INNOVATIVE REWARDS PROGRAM a recognition-based loyalty program that offers guests the best rates and rewards with every stay. Membership increased by 49% in 2016 and by 61% in 2017 through June 30 Hello Rewards has accounted for nearly 35% of direct bookings in 2016 and year to date in 2017 All bran
Slide 17: RLH Future Growth Opportunity
RLH FUTURE GROWTH OPPORTUNITY
Slide 18: Multiple Drivers to Maximize Value
MULTIPLE DRIVERS TO MAXIMIZE VALUE RLH will create value through organic franchise growth, targeted franchise acquisition, real estate sliver equity investment in key MSA markets, and improved efficiencies across the company Organic Growth Selective Accretive Platform Acquisitions MSA Acquisitions I
Slide 19: Investment Opportunities
INVESTMENT OPPORTUNITIES Adaptive Re-use of existing structures (not limited to historic) Extensive Rehabilitation (full renovation… close, re-hab, reopen) New Construction (Shovel-ready site, development incentives, EB-5) Portfolio Acquisition for strategic growth Institutional JV partner (80% majo
Slide 20: Franchise Development Opportunities
FRANCHISE DEVELOPMENT OPPORTUNITIES Recent changes with many industry brands result in unhappy franchisees and are targets for our development efforts. The teams look to convert other brands and independent properties. We have a practical commonsense approach to property improvement capital programs
Slide 21: Recent Results & Outlook - 2017
RECENT RESULTS & OUTLOOK - 2017
Slide 22: Summary Financials
SUMMARY FINANCIALS Summary Income Statement Q2 Revenue 2017 2016 %r Hotel $33.3M $33.8M -1.3% Franchise $12.4M $4.1M 200.8% Entertainment & Other $2.8M $7.1M -60.8% Total Revenue $48.5M $45.0M 7.9% Adjusted EBITDA $7.1M $6.4M 10.1% EBITDA Margin 14.6% 14.3% 29 bps Balance Sheet as of 6/30/2017 Cash
Slide 23: 2017 Guidance
2017 GUIDANCE Systemwide Same Store RevPAR Growth 1% to 3% Adjusted EBITDA $22 to $23 Million Capital expenditures $11 to $13 Million Executed Franchise Agreements 100 to 120 hotels 23
Slide 24: Entertainment Business
ENTERTAINMENT BUSINESS On August 16th, 2017, Paciolan announced it has agreed to acquire the assets of TicketsWest and WestCoast Entertainment. The acquisition enables RLH Corporation to dedicate complete attention to its core business. The transaction is anticipated to close near the end of Q3 at w
Slide 25: Strong Leadership Team
STRONG LEADERSHIP TEAM Well-Respected Hospitality Veterans Driving Corporate Strategy Greg Mount, President & CEO 30+ Year Industry Veteran JV Real Estate Expert Proven Growth Strategist Doug Ludwig , CFO & Treasurer Bill Linehan, EVP & 30+ Year Industry Veteran Chief Marketing Officer Former CFO of
Slide 26: Investment Highlights
INVESTMENT HIGHLIGHTS State of the Art Asset Light Strong Organic Guest Mgt Franchise Model Growth Platform (RevPAK) Innovative Balanced Sheet Rewards Seasoned Poised for Program (Hello Leadership Team Franchise Unit Rewards) Growth 26
Slide 27: RLH Appendix
RLH APPENDIX
Slide 28: Revitalized Prototypes
REVITALIZED PROTOTYPES 28
Slide 29: Hotel RL – New Iconic Upscale Brand
HOTEL RL – NEW ICONIC UPSCALE BRAND PIONEER We’re bold, always pushing forward and confidently leading the pack NURTURE We’re welcoming, comfortable, inspired – a place to pursue passions freely Launched 7 Hotel RL’s so far and have 4 under development that are expected to open in the next 18-24 mon
Slide 30: Red Lion Brands
RED LION BRANDS REFRESHED, RELEVANT, ATTRACTIVE CONVERSION OPTIONS Friendly service and unique local flair • Full service hotel • Food & beverage • Meeting facilities • Diverse room selection • Fitness center • Midscale • Average size: 120-300 rooms Clever design providing guests the essentials they
Slide 31: Settle Inn
SETTLE INN With big, comfy studio rooms, neighborly service and lots of space to relax and do your thing, we invite you to unpack, unwind and settle in. • Midscale • Select service • Extended stay 31
Slide 32: GuestHouse
GUESTHOUSE Sit back, relax and enjoy a crisp, clean stay. We focus on getting all the comforts of home just right—spotless spaces, friendly faces, and service you can rely on—because when you stay here, you’re a guest in our house. • Economy • Select service • Average size: 60-200 rooms 32
Slide 33: Signature Inn
SIGNATURE INN Signature Inn is an upper-economy brand with an independent ethos. It is ideally suited for conversions in primary and secondary markets. • Upper economy • Convenient locations • Independent ethos • Colorful and hip tone of voice • Modern retro design 33
Slide 34: Americas & Canadas Best Value Inns
AMERICAS & CANADAS BEST VALUE INNS Guests always leave with a sense of pride knowing they received the most for their money. It’s this value that makes us such an accessible option for solo travelers and families alike, and why we so strongly uphold our small business identity and the heritage from
Slide 35: Country Hearth
COUNTRY HEARTH With a strong concentration on getting the essentials just right, our guests can expect an effortless hotel experience whether they are just coming in off the road or made a reservation in advance. Ideally suited for conversions in secondary and tertiary markets • Lower economy • Focu
Slide 36: Reconciliation of Adjusted EBITDA
RECONCILIATION OF ADJUSTED EBITDA Three Months Ended June 30, 2017 2016 (In thousands) Net income (loss) $ 75 $ 622 Depreciation and amortization 4,596 4,037 Interest expense 2,037 1,487 Income tax expense 172 34 EBITDA 6,880 6,180 Acquisition and integration costs (1) 186 240 Employee separation co
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