Loeb believes Red Lion can create substantial shareholder value by increasing the geographic distribution of the brand through ownership, joint ventures, and franchising. "The brand's regional size might be a bit of a work-in-progress before its value is maximized, which would be the board's case should it reject the public offer," he says. "The biggest challenge to the board will be balancing the historically low multiples seen in today's public hotel markets with recent RLH share performance and the long-run value potential of the company."Columbia Pacific Opportunity Fund LP includes Alexander B. Washburn, Daniel R. Baty, Stanley L. Baty and Brandon D. Baty. The principal business address of the Reporting Persons is 1910 Fairview Avenue East, Suite 500, Seattle, Washington 98102. Columbia Pacific Advisors LLC serves as the investment manager of Columbia Pacific Opportunity Fund. Washburn and the Batys serve as the managing members of the CPA and are primarily responsible for all investment decisions regarding each Fund's investment portfolio.

Loeb says Columbia Pacific might only be interested in the real estate, not the company. "It's possible Columbia Pacific sees RLH as a pure real estate play where it can sell the company's real estate and entertainment business in a public to private arbitrage," he says. "Our scenario analysis of this possibility suggests substantial upside to current levels, perhaps to $17 in liquidation, though the execution of this strategy is challenged in today's financing environment."