RED LION INNS LIMITED PARTNERSHIP, 10-K, 1994-03-31

RED LION INNS LIMITED PARTNERSHIP
10-K, 1994-03-31
HOTELS & MOTELS

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K

(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1993
-----------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from --------- to ---------
Commission File Number 1-94443
-------
RED LION INNS LIMITED PARTNERSHIP
-----------------------------------
(Exact name of registrant as specified in its charter)

Delaware 94-3029959
-------- ----------

(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)

4001 Main Street, Vancouver, Washington 98663
- --------------------------------------- -----
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (206) 696-0001
--------------
Securities registered pursuant to Section 12(b) of the Act:

Title of each class Name of each exchange on
which registered
Units representing limited partnership
interests American Stock Exchange
- -------------------------------------- -----------------------
Securities registered pursuant to Section 12(g) of the Act
None
----
(Title of Class)

Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes X No
--- ---
<PAGE>
<PAGE>2
Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will not
be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part
III of this Form 10-K or any amendment to this Form 10-K. [X]

The aggregate market value of units of non-voting limited
partnership interests held by non-affiliates was $111,972,000 at
February 15, 1994, and is based on a closing price of $27.125 and
4,128,000 units outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Annual Report to Unitholders for the year ended
December 31, 1993, are incorporated in Parts I, II, III and IV hereof

Exhibits as noted in Exhibit Index in Item 14 of this report

Exhibit Index located on pages 25 and 26

PART I
Item 1 Business
- ----------------------

GENERAL DEVELOPMENT OF BUSINESS:
Red Lion Inns Limited Partnership and its subsidiary limited
partnership, Red Lion Inns Operating L.P. (the "Partnership" and the
"Operating Partnership", respectively; collectively, the
"Partnership"), were formed on January 16, 1987 under the Delaware
Revised Uniform Limited Partnership Act for the purpose of owning,
through the Operating Partnership, ten Red Lion hotels (the
"Hotels"). The Hotels had been previously owned by Red Lion, a
California Limited Partnership ("Red Lion"), since April 10, 1985.
Red Lion Properties, Inc. (the "General Partner"), a wholly-owned
subsidiary of Red Lion, is the general partner for both the
Partnership and the Operating Partnership.

On April 14, 1987, the Partnership completed an initial public
offering of units representing limited partnership interests
("Units") totaling $98.8 million. These proceeds, accompanied by a
$105.9 million mortgage loan, were used to acquire the Hotels,
through the Operating Partnership, from Red Lion for a net $195
million. Since the completion of this acquisition, the Partnership's
limited partners have had an effective 98.01 percent ownership
interest in the Hotels, with the General Partner retaining the
remaining 1.99 percent ownership interest.

Since April 14, 1987, the day-to-day management of the Hotels has
been conducted pursuant to a management agreement (the "Management
Agreement") which was entered into between the Operating Partnership
and Red Lion. Red Lion provides the same management services to the
Hotels that it renders to the other Red Lion lodging facilities,
including a toll-free reservation system, centralized purchasing and
training, marketing, sales, advertising, administration,
maintenance, accounting and planning programs.
<PAGE>
<PAGE>3
DESCRIPTION OF BUSINESS:
Red Lion manages the Hotels as part of a full service hotel chain
which operates in the western half of the United States. The Red
Lion hotel system, established in 1959, currently includes 53
lodging facilities with a total of approximately 14,000 rooms. The
lodging facilities are designed to provide guests with a full range
of high-quality hotel accommodations in convenient locations at
competitive prices.

The Partnership's Hotels are located in western and mid-western
states and compete primarily in the mid-priced sector of the
hospitality market although, in certain metropolitan areas, several
of the Hotels compete directly with higher-priced hotels. Red Lion
has had particular success in establishing its presence in the
medium-sized city segment of the hospitality market. The Hotels are
typically located near airports or major traffic arteries and are
convenient to commercial centers or tourist destinations. The
Hotels vary in size, ranging from 209 rooms to 476 rooms.

Red Lion's marketing strategy is to target business travelers,
including those traveling for meetings and conventions, and frequent
individual business travelers. In addition, Red Lion seeks to
attract local food and beverage guests and leisure travelers. The
hospitality industry is highly competitive. Red Lion distinguishes
itself from competing hotel chains by providing high-quality
facilities, food and beverage services which attract local clientele
as well as hotel guests, extensive meeting and convention
facilities, and oversized guest rooms.

The Hotels offer a variety of meeting and convention facilities
which attract not only business conventions and conferences, but
also local functions such as banquets and receptions. A network of
over 140 on-site sales representatives along with national sales
support from offices in Seattle, Portland, San Francisco,
Sacramento, Los Angeles, Washington DC, Chicago, and Red Lion's
Vancouver, Washington executive office, work to expand Red Lion's
share of convention market business.

All of the Hotels offer full-service accommodations. In addition to
restaurants, lounges, banquet and meeting space, most of the Hotels
offer oversized rooms with oversized beds, premium television
channel availability, complimentary airport shuttle service, free
parking, swimming pools, room service and valet services. Red Lion
develops and implements advertising, public relations, market
research and training programs on behalf of the Hotels. Technical
training and assistance is provided to each Hotel for other areas
such as front office operations, reservations, housekeeping,
property maintenance, energy management, laundry, valet services,
telephone systems and guest services. Other services provided by
Red Lion include accounting and cash management, risk management,
credit and collection, tax compliance, legal, computer and point of
sale systems support and internal audit. Red Lion's food and
beverage division establishes quality levels and monitors
performance, provides culinary training, and assists in menu design,
pricing, accounting and cost controls.

<PAGE>
<PAGE>4
Red Lion supplies the Hotels with certain operating supplies,
furnishings and equipment allowing Red Lion to ensure consistently
high quality and to control costs.

A toll-free reservation system is available to customers throughout
the United States and Canada. Red Lion is in the process of
upgrading and improving its central reservation system based in
Vancouver, Washington, a project expected to be implemented in 1995.
The improved system will provide, among other features, a real time
inventory of all Red Lion's rooms, which will enhance the company's
ability to manage occupancy yields and room rates. Red Lion also
participates in major national and international airline reservation
systems which allow travel agents to book Red Lion hotel reservations.

The Partnerships have no employees. Hotel and administrative
personnel are employed by Red Lion. Neither of the Partnerships is
responsible for the payment of executive compensation to the
officers of the General Partner. The Partnership reimburses Red
Lion for the cost of providing such services at the hotel level and
reimburses the General Partner for Partnership administrative costs.
For further discussion of reimbursements to the General Partner and
executive compensation, see Items 11 and 13 of this report.
<PAGE>
<PAGE>5
The table below presents comparative information on certain
characteristics of the Hotels:

Average Number of Rooms Per Hotel(1) - 307
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>

Occupancy Percentage(2) 73.3% 72.7% 73.0%

Average Room Rate(3) $66.67 $64.56 $63.58

Average Gross Revenue per room
per year(2) $31,358 $31,177 $31,531

Average Gross Operating Profit
per room per year(2) $10,427 $10,148 $ 9,855

Average Food and Beverage
Revenues per room per year(2) $10,788 $11,254 $12,066
</TABLE>

(1) As of December 31, 1993.
(2) Calculated on a per available room per year basis.
(3) Based on rooms occupied.

Item 2 Properties
- ------------------------
The Hotels were selected by the General Partner so as to be
representative of the Red Lion portfolio taking into account the
age, guest capacity, occupancy levels, average daily room rates,
profitability and the geographical diversity of the Hotels. The
Hotels have an average of 307 rooms per Hotel and have at least two
food outlets per Hotel.
<PAGE>
<PAGE>6
The following table presents certain information concerning the
Hotels:
<TABLE>
<CAPTION>
Number of
Name Location Guest Rooms
- --------------- -------- -------------
<S> <C> <C>
Red Lion Hotel/ Sacramento, California 448
Sacramento

Red Lion Hotel/ Colorado Springs, Colorado 299
Colorado Springs

Red Lion Hotel/ Boise, Idaho 308
Riverside

Red Lion Hotel/ Omaha, Nebraska 414
Omaha (1)

Red Lion Inn/ Springfield, Oregon 234
Springfield (1)

Red Lion Hotel/ Portland, Oregon 476
Lloyd Center

Red Lion Hotel/ Portland, Oregon 235
Downtown

Red Lion Inn/ Bellevue, Washington 209
Bellevue Center

Red Lion Inn/ Spokane, Washington 237
Spokane

Red Lion Inn/ Yakima, Washington 209
Yakima Valley -----

Total Rooms 3,069
</TABLE> =====
(1)Property subject to full or partial ground lease.

During 1993, the Partnership carried out improvements at the Hotels
amounting to $6.4 million, which included $2.3 million for public
area refurbishments, of which $1.8 million was used for a major
public area refurbishment at the Partnership's Sacramento property.
Other improvements included $1.3 million used for guest room
renovations, telecommunication and other computer systems.
<PAGE>
<PAGE>7
Item 3 Legal Proceedings
- ----------------------------
Information required for this Item is reported in the Partnership's
1993 Annual Report to Unitholders at Note 10 to the consolidated
financial statements and is incorporated herein by this reference.

Item 4 Submission of Matters to a Vote of Security Holders
- --------------------------------------------------------------
There were no matters submitted to a vote of Unitholders during the
year ended December 31, 1993.

PART II

Item 5 Market for Registrant's Common Equity and Related
- ------------------------------------------------------------
Stockholder Matters
-------------------
Information concerning the market for the Partnership's Units
including high and low market prices, quarterly distributions and
the number of unitholders is reported on the inside cover of the
Partnership's 1993 Annual Report to Unitholders and is incorporated
herein by this reference.

Item 6 Selected Financial Data
- ----------------------------------
Selected financial data of the Partnership for each of its last five
fiscal years are reported under "Selected Financial Data" at page 12
of the Partnership's 1993 Annual Report to Unitholders and are
incorporated herein by this reference.

Item 7 Management's Discussion and Analysis of Financial
- ------------------------------------------------------------
Condition and Results of Operations
-----------------------------------
NOTE: The Partnership's consolidated financial statements, which
are contained in the 1993 Annual Report to Unitholders at pages 2
through 10, are incorporated into the following analysis and
discussion by this reference.

FISCAL 1993 COMPARED TO FISCAL 1992
- -----------------------------------
REVENUES: Room revenues increased $2.1 million, or 4%, in 1993
while total revenues increased by a smaller increment of $.5 million
to $96.2 million from the prior year's $95.7 million. The
dampening effect on revenues was primarily due to a $1.4 million
decline in the Partnership's food and beverage revenues caused by
lower demand in the food and beverage outlets, and the temporary
closing of some outlets for renovations.
<PAGE>
<PAGE>8
Of the $2.1 million (4%) increase in room revenues, the majority,
$1.7 million (3%), was due to higher room rates related to
improvements in the market segment mix. The average daily rate
increased 3% to $66.67 from $64.56 in the prior year. Average
occupancy increased .6 percentage points to 73.3% from 72.7% in the
prior year.

OPERATING INCOME: Operating income before depreciation,
amortization and incentive management fees increased $.6 million, or
3%, in 1993 compared to the prior year. Contributing to the
increase was a $1 million decline in workers' compensation costs in
1993. Offsetting this were higher liability insurance reserves ($.4
million) and lower food and beverage profits which were caused by
the soft demand discussed above. After depreciation, amortization
and the incentive management fee, operating income of $13.4 million
was essentially unchanged from the prior year.

NET INCOME: Before the cumulative effect of a change in accounting
for income taxes, net income increased $.2 million primarily because
interest expense was lower in 1993. The $1.3 million cumulative
effect of the change in accounting for income taxes is a non-cash
charge to income resulting from the adoption, in January 1993, of
Statement of Financial Accounting Standards No. 109. This new rule
requires the Partnership to record income tax liabilities, arising
principally from current differences between book and tax
depreciation which will be in existence when the Partnership becomes
a taxable entity in 1998. For more information on this item, see
Note 3 to the Partnership's 1993 consolidated financial statements.

CASH FLOW AVAILABLE FOR DISTRIBUTIONS AND INCENTIVE MANAGEMENT FEE:
As defined in the Management Agreement, cash flow available for
distributions and incentive management fee ("Cash Flow") is net
income (or loss) before non-cash charges (principally depreciation
and amortization) and incentive management fee but after the reserve
for capital improvements and principal payments on mortgage debt.
Cash Flow increased in 1993 by $.3 million, or 3%, to $10.5 million
from the prior year's $10.2 million. Cash Flow reflects loan
principal payments which were $.5 million higher in 1993 than in
1992. After payment of $9.3 million of cash distributions in 1993
(unchanged from 1992), the Partnership had sufficient Cash Flow to
pay a current incentive management fee of $1.1 million in 1993
compared to $.9 million in 1992. For further discussion of Cash
Flow, see Note 6 to the Partnership's 1993 consolidated financial
statements.

The Partnership holds in its treasury 806,500 Units which it
repurchased, during the years 1987 through 1990, at an average cost
of $13.83 per Unit. The total cost of $11.2 million was funded from
a combination of operating cash and the Partnership's $14.1 million
revolving line of credit.

<PAGE>
<PAGE>9
FISCAL 1992 COMPARED TO FISCAL 1991
- -----------------------------------
REVENUES: Total revenues decreased $1.3 million (1.3%) in 1992 from
$97 million to $95.7 million. Room revenues increased $.7 million
(1.3%) while food and beverage revenues declined $2.4 million
(6.4%). Minor Operations revenues increased $.5 million (6.1%).

The room revenue increase reflected a higher average room rate, up
two percent from $63.58 in 1991 to $64.56 in 1992. The average
occupancy percentage remained essentially flat at 72.7 percent
compared to the prior year's 73.0 percent due to weaker corporate
demand which was attributed to the recession. The decline in food
and beverage revenues is attributed to weaker demand in banquet and
fine dining business principally due to the economic recession.

OPERATING INCOME: In spite of the overall revenue decline in 1992,
operating income before depreciation, amortization and incentive
management fees increased $.9 million (3.9%) to $24.2 million from
$23.3 million. This increase reflected Red Lion's effective cost
controls and improved labor productivity in spite of higher worker's
compensation reserves ($.5 million) in 1992 over the prior year.
After depreciation, amortization and incentive management fee,
operating income was essentially unchanged at $13.4 million.

NET INCOME: Net income of $3 million was also essentially unchanged
in 1992. Interest expense was $.1 million lower than the prior year
and reflected lower interest rates in 1992.

CASH FLOW AVAILABLE FOR DISTRIBUTIONS AND INCENTIVE MANAGEMENT FEE:
As defined in the management agreement, cash flow available for
distributions and incentive management fee is net income (or loss)
before non-cash charges (principally depreciation and amortization)
and incentive management fee but after the reserve for capital
improvements. This item, which was reduced by contractual principal
payments of $.8 million in 1992, increased $.2 million to $10.2
million from $10 million in 1991. Excluding the effect of those
principal payments, cash flow available for distributions and
incentive management fee increased $1 million. After payment of
$9.3 million of cash distributions in 1992 (unchanged from 1991),
the Partnership had sufficient cash flow to pay current incentive
management fee of $.9 million, in 1992, compared to $.7 million in
1991.
<PAGE>
<PAGE>10
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
The Partnership's principal source of cash is Hotel operations.
During the three years ended December 31, 1993, the Hotels have
generated sufficient cash from operations to cover operating needs.
It is expected that, for 1994, cash provided by both operations and
the lending facility discussed below, or other sources, will be
sufficient to meet anticipated cash requirements.

The Partnership has in place a $14.1 million line of credit.
Borrowings under the line averaged $11,784,000, $11,791,000, and
$11,237,000 during 1993, 1992 and 1991, respectively, and equaled
$11,827,000 at December 31, 1993. The average interest cost for
borrowings under the line in 1993, 1992 and 1991 was 4.6 percent,
5.2 percent, and 7.5 percent for those years, respectively. For
further discussion of the Partnership's credit facilities, see Note
5 to the Partnership's consolidated financial statements.

During 1993, 1992 and 1991, the Partnership made total capital
investments amounting to $6,389,000, $6,251,000, and $4,926,000,
respectively. Major improvements included guest room renovations,
common area refurbishments and replacement of telephone and computer
systems.

Funding of the capital improvements reserve, which was established
in May 1987, amounted to $2,887,000, $2,872,000, and $2,909,000 in
1993, 1992 and 1991, respectively. Cash invested above the reserved
amounts has been funded predominately from the line of credit
described above. At December 31, 1993, the Partnership had
commitments, related to capital improvement projects, of $547,000.

During 1993, 1992 and 1991, the Partnership's cash flow available
for distribution covered 100 percent of the priority cash
distributions and also allowed for payment of a current incentive
management fee to Red Lion of $1,142,000, $897,000, and $700,000,
respectively.

The Partnership holds in its treasury 806,500 Units which it
repurchased during the years 1987 through 1990, at an average cost
of $13.83 per Unit. The total cost of $11.2 million was funded from
a combination of operating cash and the Partnership's $14.1 million
revolving line of credit.

INCOME TAXES: As discussed in Note 3 to the consolidated financial
statements, Congress passed, in 1987, the Omnibus Budget
Reconciliation Act which, among other things, treats certain
publicly traded partnerships as corporations for tax purposes for
the years beginning after December 31, 1987. Publicly traded
partnerships in existence prior to December 18, 1987, will not be
treated as corporations, for tax purposes, for ten years from the
effective date of the 1987 law or until <PAGE>
<PAGE>11
taxable years beginning after December 31, 1997. The effect of
treating publicly traded partnerships as corporations will be to tax
the income of the Partnership at the entity level and reflect
distributions to partners as dividends.

During the first quarter of 1993, the Partnership adopted Statement
of Financial Accounting Standards No. 109, "Accounting for Income
Taxes" (SFAS 109). This statement requires, among other things, the
recording of deferred income taxes based on the difference between
the financial statement and income tax bases of assets and
liabilities using the enacted marginal income tax rate. The
cumulative effect of this accounting change resulted in a first
quarter non-cash charge to income of $1,351,000, or $.32 per unit.
This charge reflects the tax effect, as of January 1, 1993, of
cumulative differences between the book and tax bases of the
Partnership's assets from depreciation differences that are
estimated to exist after the Partnership becomes a taxable entity.

SEASONALITY: Operations of the Hotels are affected by seasonality.
Revenues are typically lower in winter periods than in summer
periods.

INFLATION: The effects of inflation, as measured by fluctuations in
the Consumer Price Index, have not had a material impact on the
Partnership's revenues or net income during the three years covered
by this report.

Item 8 Financial Statements and Supplementary Data
- ------------------------------------------------------
The consolidated financial statements and supplemental information
required by this Item which are listed below are contained in the
Partnership's 1993 Annual Report to Unitholders on the pages
indicated and are incorporated herein by this reference.
Page
----
Consolidated Statements of Income for the years
ended December 31, 1993, 1992 and 1991 2
Consolidated Balance Sheets as of December 31,
1993 and 1992 3
Consolidated Statements of Cash Flows for the
years ended December 31, 1993, 1992 and 1991 4
Consolidated Statements of Partners' Capital for
the years ended December 31, 1993, 1992 and 1991 5
Notes to Consolidated Financial Statements 6-10
Report of Independent Public Accountants 11

Item 9 Changes in and Disagreements with Accountants
- --------------------------------------------------------
Accounting and Financial Disclosure
-----------------------------------
None.

<PAGE>
<PAGE>12
PART III

Item 10 Directors and Executive Officers of the Registrant
- -------------------------------------------------------------
The Partnerships have no directors or officers. Management
functions of the Partnerships are performed by the General Partner.
The following information is provided regarding the officers and
directors of the General Partner:

Name Age Present Position with the General Partner
- -------------- --- -----------------------------------------
David J. Johnson 47 President and Chief Executive Officer
Director
Beth A. Ugoretz 38 Senior Vice President
Secretary and General Counsel
Michael J. Crowley 39 Regional Vice President
Anupam Narayan 40 Vice President
Treasurer
Jack G. Reiss 43 Regional Vice President
George G. Schweitzer 38 Regional Vice President
Edward A. Gilhuly 34 Director
Roger S. Meier 68 Director
Michael W. Michelson 42 Director
George R. Roberts 50 Director

Mr. Johnson has been a Director of the General Partner since
October 1991 and has held his present position with Red Lion
since September 1991. Prior to joining Red Lion, Mr. Johnson was
General Partner of Hellman and Friedman, a privately held
investment firm, from January 1990. Mr. Johnson was a management
consultant from 1988 to January 1990 and served as President and
Chief Operating Officer of Dillingham Holdings for the two years
prior to 1988.

Ms. Ugoretz was appointed to her present position with the
General Partner in June 1993. For more than the five consecutive
years prior to joining Red Lion in 1993, Ms. Ugoretz was
associated with the law firm of Stoel Rives Boley Jones & Grey,
with whom she served as partner from 1990.

Mr. Crowley was appointed to his current position with the
General Partner in March 1993. He has served in the same
capacity with Red Lion for more than the last five years.
<PAGE>
<PAGE>13
Mr. Narayan was appointed to his present position with the
General Partner in June 1993. He has held the same position with
Red Lion since May 1992. Prior to 1992, Mr. Narayan held the
position of Assistant Treasurer from 1985 and was promoted to
Vice President in 1990.

Mr. Reiss has held his present position with Red Lion for more
than the last five years.

Mr. Schweitzer has held his present position with Red Lion for
more than the last five years.

Mr. Gilhuly has been associated with Kohlberg Kravis Roberts &
Co. (KKR), a private investment firm, since September 1986.
Mr. Gilhuly is also a director of Layne, Inc., Owens-Illinois,
Inc., Owens-Illinois Group, Inc., and Union Texas Petroleum
Holdings, Inc.

Mr. Meier has been President and Chief Executive Officer of AMCO,
Inc., a privately-owned investment enterprise, for more than the
last five years. Mr. Meier is a director of Fred Meyer, Inc.,
Key Bank of Oregon, a wholly owned subsidiary of Keycorp, and
trustee of Acorn Fund and Acorn International.

Messrs. Roberts and Michelson are general partners in KKR and
each has been associated with KKR for more than five years.
Mr. Roberts is a director of American Re Corporation, AutoZone,
Inc., Duracell International Inc., IDEX Corporation, K-III
Communications Corp., Owens-Illinois, Inc., Owens-Illinois Group,
Inc., RJR Nabisco Holdings Corporation, RJR Nabisco Holdings
Corp., RJR Nabisco, Inc., Safeway, Inc., The Stop and Shop
Companies, Inc., Flagstar Companies, Inc., Flagstar Corporation,
Union Texas Petroleum Holdings, Inc., and World Color Press, Inc.
Mr. Michelson is a director of AutoZone, Inc., Fred Meyer, Inc.,
Owens-Illinois, Inc., Owens-Illinois Group, Inc., and Union Texas
Petroleum Holdings, Inc.

Messrs. Gilhuly, Meier, Roberts and Michelson have all held their
directorships with the General Partner since its formation in
December 1986.

Unless otherwise noted above, the directors and executive
officers listed above have held their present positions with the
General Partner since December 1986.

<PAGE>
<PAGE>14
Item 11 Executive Compensation
- ---------------------------------
The Partnerships have no directors, officers or employees. Under
the respective agreements of the limited partnership, the General
Partner is responsible for the management and administration of
the Partnership. As discussed in Item 13 below, the General
Partner is reimbursed for certain management and administrative
costs but receives no fees for providing these services to the
Partnership and the Partnership is not responsible for the
payment of compensation to the officers of the General Partner.
The Hotels are operated by Red Lion in accordance with the
Management Agreement (see Item 13).

Item 12 Security Ownership of Certain Beneficial Owners
- ----------------------------------------------------------
and Management
--------------
As of December 31, 1993, the following owner beneficially owned
more than five percent of the total number of outstanding Units.
<TABLE>
<CAPTION>
Name and Address Amount and Nature Percent
of of of
Title of Class Beneficial Owner Beneficial Ownership Class
- ------------------ ---------------- -------------------- -------
<S> <C> <C> <C>
Units representing FMR Corporation(1) 537,200 13.0%
limited partnership 82 Devonshire St.
interests Boston, MA 02109

</TABLE>
(1) This information relating to FMR Corporation was obtained from FMR
Corporation's Schedule 13G filed with the Securities and Exchange
Commission on February 11, 1994.

As of February 15, 1994, the officers and directors of the
General Partner, as a group, beneficially owned 5,500 Units which
represent less than one percent of the total outstanding Units.

Certain directors of the General Partner have indirect ownership
in the Partnership through their ownership interest in the
general partner of Red Lion, which owns the General Partner, an
effective 1.99% owner of the Partnership. Such ownership,
together with the ownership of units by directors and officers of
the General Partner noted above, constitutes less than 1% of the
ownership of the Partnership.

Item 13 Certain Relationships and Related Transactions
- ---------------------------------------------------------
Substantially all of the directors and principal officers of the
General Partner are directors and/or principal officers of Red
Lion. The General Partner is responsible for the management and
administration of the Partnership. In accordance with the
partnership agreement, the Partnership has reimbursed the General
Partner the administrative expenses. Reimbursements to the
General Partner for the years 1993, 1992 and 1991 were $457,000,
$458,000, and $486,000, respectively.

Pursuant to the Management Agreement, Red Lion receives a base
management fee equal to three percent of annual gross revenues of
the Hotels plus an incentive management fee based on adjusted
gross operating profit, as defined in the Management Agreement. <PAGE>
<PAGE>15
In order to facilitate the Partnership's ability to make minimum
annual distributions of cash flow from operations, Red Lion has
agreed to subordinate payment of its incentive management fee to
an amount sufficient to make the priority distributions. In
addition, incentive management fees earned but not paid have been
deferred without interest up to a maximum amount of $6 million
and will be repaid out of either (i) 25% of cash flow from
operations in any given year in excess of amounts sufficient to
pay debt service on the original mortgage loan, the $14.1 million
revolving credit line, the priority distribution and the current
incentive management fee, or (ii) sale or refinancing proceeds
prior to any distribution to limited partners. The $6 million
maximum deferred incentive management fee amount was reached in
November 1988 and the resulting accrual is included in Long-Term
Debt on the Partnership's consolidated balance sheets. As noted
in Item 7 to this report, the Partnership has generated
sufficient cash from operations to cover 100 percent of its
priority distributions to partners and to pay Red Lion a current
incentive management fee of $1,142,000, $897,000 and $700,000 for
1993, 1992 and 1991, respectively.

The Partnership, in accordance with the Management Agreement, is
also charged by Red Lion for its pro rata share of support
services such as computer, advertising, public relations,
promotional and sales and central reservation services.

All Partnership personnel are employees of Red Lion and its
affiliates. All costs of services of such employees are
reimbursed to Red Lion by the Operating Partnership. These costs
include salaries, wages, payroll taxes and other employee
benefits. Additionally, auxiliary enterprises owned by Red Lion
sell operating supplies and furnishings and equipment to the
Partnership. In the opinion of Red Lion management, sales to the
Partnership by the auxiliary enterprises were made at prices and
terms which approximated arms-length transactions.

For the first 36 full months of operations which ended April 30,
1990, the General Partner agreed to make available to the
Partnership a $4 million noninterest bearing revolving credit
facility which was to be used in the event that cash flow
available for distribution was insufficient to make priority
distributions. During the 36-month period, the General Partner
was required to fund $3,726,000 from the facility. Amounts due
under this facility are included in Long-Term Debt on the
Partnership's consolidated balance sheets.

For further discussion of related party transactions, see Notes 6
and 8 to the Partnership's consolidated financial statements
included in the 1993 Annual Report to Unitholders incorporated
herein by this reference.

<PAGE>
<PAGE>16
PART IV

Item 14 Exhibits, Financial Statement Schedules, and Reports
- -----------------------------------------------------------------
on Form 8K
----------

a. The following documents are filed herewith and made a part
of this report:

1. The consolidated financial statements and supplementary
information set forth in Item 8 of Part II on page 11 of
this report.

2. Financial Statement Schedules:

Red Lion Inns Limited Partnership and Subsidiary Limited
Partnership:
Page
Reference
---------
Report of Independent Public Accountants on
Financial Statement Schedules 20

Schedule IV - Indebtedness to Related Parties -
Not Current for the years ended December 31, 1993,
1992 and 1991 21

Schedule V - Property, Plant, and Equipment for
the years ended December 31, 1993, 1992 and 1991 22

Schedule VI - Accumulated Depreciation of
Property, Plant, and Equipment for the years
ended December 31, 1993, 1992 and 1991 23

Schedule X - Supplementary Income Statement
Information for the years ended December 31,
1993, 1992 and 1991 24

All other schedules are omitted because they are not required or
because the information is presented in the financial statements
or related notes.
<PAGE>
<PAGE>17
3. Exhibits:

2.1 Amended and Restated Agreement of Limited Partnership
of Red Lion Inns Limited Partnership. Incorporated by
reference to Exhibit 2.1 to the Company's Registration
Statement on Form S-1, Registration No. 33-11954.

2.2 Amended and Restated Agreement of Limited Partnership
of Red Lion Inns Operating L.P. Incorporated by
reference to Exhibit 2.2 to the Company's Registration
Statement on Form S-1, Registration No. 33-11954.

3.1 Amended and Restated Certificate of Limited
Partnership. Incorporated by reference to Exhibit 3.1
to the Company's Registration Statement on Form S-1,
Registration No. 33-11954.

3.2 Certificate of Limited Partnership of Red Lion Inns
Operating L.P. Incorporated by reference to Exhibit
3.2 to the Company's Registration Statement on Form
S-1, Registration No. 33-11954.

4 Form of Unit Certificate. Incorporated by reference
to Exhibit 5 to the Company's Registration Statement
on Form 10.

10.1 Management Agreement between Red Lion Inns Operating
L.P. and RL Acquisition Company. Incorporated by
reference to Exhibit 10.1 to the Company's
Registration Statement on Form S-1, Registration No.
33-11954.

10.2 Purchase and Sale Agreement between RL Acquisition
(a) Company and Red Lion Inns Operating L.P. Incorporated
by reference to Exhibit 10.2(a) to the Company's
Registration Statement on Form S-1, Registration
No. 33-11954.

10.2 Supplemental Purchase and Sale Agreement between RL
(b) Acquisition Company and Red Lion Inns Operating L.P.
Incorporated by reference to Exhibit 10.2(b) to the
Company's Registration Statement on Form S-1,
Registration No. 33-11954.

10.3 Lease dated as of June 23, 1980, between Lloyd
Corporation Ltd., as Lessor, and Red Lion Inn/Lloyd
Center, Inc., as Lessee. Incorporated by reference to
Exhibit 10.3 to the Company's Registration Statement
on Form S-1, Registration No. 33-11954.

10.4 Lease dated as of October 23, 1968, by and between
First National Bank of Omaha, as Lessor, and Downtown
Development Co., Ltd., as Lessee. Incorporated by
reference to Exhibit 10.4 to the Company's
Registration Statement on Form S-1, Registration No.
33-11954.
<PAGE>
<PAGE>18
10.5 Assignment of Lease dated April 8, 1985, from Omaha
Red Lion, Inc. to RL Acquisition Company.
Incorporated by reference to Exhibit 10.5 to the
Company's Registration Statement on Form S-1,
Registration No. 33-11954.

10.6 Lease dated June 1, 1973 between Charles F. Larson, as
Lessor, and James A. McClory, as Lessee. Incorporated
by reference to Exhibit 10.6 to the Company's
Registration Statement on Form S-1, Registration No.
33-11594.

10.7 Purchase and Sale Agreement and Escrow Instructions
dated as of April 3, 1987, by and between Lloyd
Properties and Red Lion Inn/Lloyd Center, Inc.
Incorporated by reference to Exhibit 10.9 to the
Company's Registration Statement on Form S-1,
Registration No. 33-11954.

10.8 Credit Agreement, dated as of April 14, 1987, between
United States National Bank of Oregon, the Canadian
Imperial Bank of Commerce and Red Lion Inns Operating
L.P. Incorporated by reference to Exhibit 10.10 to
the Company's Registration Statement on Form S-1,
Registration No. 33-11954.

10.9 First Amendment to Credit Agreement, dated January 1,
1990. Incorporated by reference to Exhibit 10.9 to
the Company's Form 10-K for the years ended
December 31, 1992.

13 Annual Report to Unitholders for the year ended
December 31, 1993. Only deemed filed as part of this
Report on Form 10-K to the extent specifically
incorporated by reference herein.

b. Reports on Form 8-K:

No reports on Form 8-K have been filed for the period
covered by this report.

<PAGE>
<PAGE>19
SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized on the 30th day of March 1994.

RED LION INNS LIMITED
PARTNERSHIP

By: RED LION PROPERTIES, INC.
Its sole General Partner

By: /s/DAVID J. JOHNSON
-------------------
David J. Johnson
President and
Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons
on behalf of the Registrant and in the capacities and on the
dates indicated on the 30th day of March 1994.

Signatures Title
- -------------------- -------------------

/s/DAVID J. JOHNSON
- --------------------- President and
David J. Johnson Chief Executive Officer
Director
(Principal Financial Officer
and Principal Accounting Officer)

/s/GEORGE R. ROBERTS
- --------------------- Director
George R. Roberts

/s/MICHAEL W. MICHELSON Director
- -----------------------
Michael W. Michelson

/s/EDWARD A. GILHULY
- --------------------
Edward A. Gilhuly Director
<PAGE>
<PAGE>20

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULES

To the Partners of
Red Lion Inns Limited Partnership and
its Subsidiary Limited Partnership:

We have audited, in accordance with generally accepted auditing
standards, the consolidated financial statements included in Red
Lion Inns Limited Partnership's annual report to unitholders
incorporated by reference in this Form 10-K, and have issued our
report thereon dated February 11, 1994. Our audit was made for
the purpose of forming an opinion on those statements taken as a
whole. The schedules listed in the index of financial statement
schedules listed in Part IV, Item 14, are the responsibility of
the Company's management and are presented for purposes of
complying with the Securities and Exchange Commission's rules and
are not part of the basic financial statements. These schedules
have been subjected to the auditing procedures applied in the
audit of the basic financial statements and, in our opinion,
fairly state in all material respects the financial data required
to be set forth therein in relation to the basic financial
statements taken as a whole.

/s/ARTHUR ANDERSEN & CO.

Portland, Oregon
February 11, 1994
<PAGE>
<PAGE>21
SCHEDULE IV

RED LION INNS LIMITED PARTNERSHIP
AND SUBSIDIARY LIMITED PARTNERSHIP

INDEBTEDNESS TO RELATED PARTIES - NOT CURRENT
(in thousands)

Balance at Balance at
Beginning End
of Period Additions Deductions of Period
--------- --------- ---------- ---------
<S> <C> <C> <C> <C>
Year ended December 31, 1993:
Red Lion, a California
Limited Partnership $ 9,726 $ -- $ -- $ 9,726
======= ======= ======= =======

Year ended December 31, 1992:
Red Lion, a California
Limited Partnership $ 9,726 $ -- $ -- $ 9,726
======= ======= ======= =======

Year ended December 31, 1991:
Red Lion, a California
Limited Partnership $ 9,726 $ -- $ -- $ 9,726
======= ======= ======= =======

/TABLE
<PAGE>
<PAGE>22
SCHEDULE V

RED LION INNS LIMITED PARTNERSHIP
AND SUBSIDIARY LIMITED PARTNERSHIP
Property, Plant and Equipment
(in thousands)
<TABLE>
<CAPTION>
Balance Other(1) Balance
at Changes at
Beginning Addi- Retire- Add End of
Classification of Period tions ments (Deduct) Period
- ----------------------------- --------- ------- ------- ------- ------
<S> <C> <C> <C> <C> <C>
Year Ended December 31, 1993:
Land $ 17,713 $ - $ - $ - $ 17,713
Buildings and improvements 155,622 - - 951 156,573
Furnishings and equipment 42,656 - (1,174) 4,282 45,764
Construction in progress 1,732 6,389 - (5,233) 2,888
-------- ------ ------- ------- --------
$217,723 $6,389 $(1,174) $ - $222,938
======== ====== ======= ======= ========

Year Ended December 31, 1992:
Land $ 17,713 $ - $ - $ - $ 17,713
Buildings and improvements 155,278 - - 344 155,622
Furnishings and equipment 36,831 43 (577) 6,359 42,656
Construction in progress 2,227 6,208 - (6,703) 1,732
-------- ------ ------- ------- --------
$212,049 $6,251 $ (577) $ - $217,723
======== ====== ======= ======= ========

Year Ended December 31, 1991:
Land $ 17,713 $ - $ - $ - $ 17,713
Buildings and improvements 155,077 - - 201 155,278
Furnishings and equipment 34,323 35 (328) 2,801 36,831
Construction in progress 338 4,891 - (3,002) 2,227
-------- ------ ------- ------- --------
$207,451 $4,926 $ (328) $ - $212,049
======== ====== ======= ======= ========

</TABLE>
(1) Other changes consist of transfers of construction in progress to
in-service classifications
<PAGE>
<PAGE>23
SCHEDULE VI

RED LION INNS LIMITED PARTNERSHIP
AND SUBSIDIARY LIMITED PARTNERSHIP

Accumulated Depreciation of
Property, Plant and Equipment
(in thousands)
<TABLE>
<CAPTION>

Addi-
Balance tions Other
at to Cost Changes Balance
Beginning and Retire- Add at End of
Classification of Period Expenses ments (Deduct) Period
- -------------------------- ---------- --------- ------- ------- ---------
<S> <C> <C> <C> <C> <C>
Year Ended December 31, 1993:
Buildings and improvements $25,517 $ 4,634 $ - $ - $30,151
Furnishings and equipment 20,761 5,502 (1,160) - 25,103
------- ------- ------ ------ -------
$46,278 $10,136 $(1,160) $ - $55,254
======= ======= ====== ====== =======

Year Ended December 31, 1992:
Buildings and improvements $20,936 $ 4,581 $ - $ - $25,517
Furnishings and equipment 16,037 5,229 (505) - 20,761
------- ------- ------ ------ -------
$36,973 $ 9,810 $ (505) $ - $46,278
======= ======= ====== ====== =======

Year Ended December 31, 1991:
Buildings and improvements $16,370 $ 4,566 $ - $ - $20,936
Furnishings and equipment 11,823 4,493 (279) - 16,037
------- ------- ------ ------ -------
$28,193 $ 9,059 $ (279) $ - $36,973
======== ======= ====== ====== =======

</TABLE>
<PAGE>
<PAGE>24
SCHEDULE X

RED LION INNS LIMITED PARTNERSHIP
AND SUBSIDIARY LIMITED PARTNERSHIP

Supplementary Income Statement Information
(in thousands)

<TABLE>
<CAPTION>
Charged to Costs and Expenses
-----------------------------

Year Ended December 31,
----------------------------
Item 1993 1992 1991
---- ---- ---- ----

<S> <C> <C> <C>
Advertising expense $1,060 $1,153 $1,391
====== ====== ======
</TABLE>

<PAGE>
<PAGE>25

INDEX OF EXHIBITS
Located
Exhibit at page
Number Number
- ------- -------
2.1 Amended and Restated Agreement of Limited Partnership
of Red Lion Inns Limited Partnership. Incorporated by
reference to Exhibit 2.1 to the Company's Registration
Statement on Form S-1, Registration No. 33-11954. _____

2.2 Amended and Restated Agreement of Limited Partnership
of Red Lion Inns Operating L.P. Incorporated by reference
to Exhibit 2.2 to the Company's Registration Statement
on Form S-1, Registration No. 33-11954. _____

3.1 Amended and Restated Certificate of Limited Partnership.
Incorporated by reference to Exhibit 3.1 to the Company's
Registration Statement on Form S-1, Registration No.
33-11954. _____

3.2 Certificate of Limited Partnership of Red Lion Inns
Operating L.P. Incorporated by reference to Exhibit
3.2 to the Company's Registration Statement on Form S-1,
Registration No. 33-11954. _____

4 Form of Unit Certificate. Incorporated by reference to
Exhibit 5 to the Company's Registration Statement on
Form 10. _____

10.1 Management Agreement between Red Lion Inns Operating L.P.
and RL Acquisition Company. Incorporated by reference to
Exhibit 10.1 to the Company's Registration Statement on
Form S-1, Registration No. 33-11954. _____

10.3 Lease dated as of June 23, 1980, between Lloyd
Corporation Ltd., as Lessor, and Red Lion Inn/Lloyd
Center, Inc., as Lessee. Incorporated by reference
to Exhibit 10.3 to the Company's Registration Statement
on Form S-1, Registration No. 33-11954. _____

10.5 Assignment of Lease dated April 8, 1985, from Omaha
Red Lion, Inc. to RL Acquisition Company. Incorporated
by reference to Exhibit 10.5 to the Company's
Registration Statement on Form S-1, Registration
No. 33-11954. _____

10.6 Lease dated June 1, 1973 between Charles F. Larson, as
Lessor, and James A. McClory, as Lessee. Incorporated
by reference to Exhibit 10.6 to the Company's Registration
Statement on Form S-1, Registration No. 33-11954. _____

10.8 Credit Agreement, dated as of April 14, 1987, between
United States National Bank of Oregon, the Canadian
Imperial Bank of Commerce and Red Lion Inns Operating L.P.
Incorporated by reference to Exhibit 10.10 to the
Company's Registration Statement on Form S-1, Registration
No. 33-11954. _____

10.9 First Amendment to Credit Agreement, dated January 1, 1990.
Incorporated by reference to Exhibit 10.9 to the Company's
Form 10-K for the year ended December 31, 1992. _____

13 Annual Report to Unitholders for the year ended December 31,
1993. Only deemed filed as part of this Report on Form
10-K to the extent specifically incorporated by reference
herein. _____

<PAGE>

Red Lion Inns Limited Partnership is a publicly-traded partnership
which, through its 99% interest in Red Lion Inns Operating L.P.,
owns ten Red Lion hotels with 3,069 rooms located in the western
United States. The hotels are managed by Red Lion Hotels & Inns as
part of its chain of 53 hotels.

Partnership Hotels:
- -------------------------------------------------------------------
California Nebraska Washington
Sacramento Omaha Bellevue Center
Spokane
Colorado Oregon Yakima Valley
Colorado Springs Portland:
Lloyd Center
Idaho Downtown
Boise-Riverside Springfield

For reservations at these and other Red Lion Hotels & Inns call toll
free 800-547-8010.
- -------------------------------------------------------------------

Red Lion Inns Limited Partnership units are listed on the American
Stock Exchange under the symbol RED. Per unit market prices during
1993 and 1992 were:
<TABLE>
<CAPTION>
Quarter Ended:
-------------------------------------
March 31 June 30 Sept. 30 Dec. 31
-------- ------- -------- -------
<S> <C> <C> <C> <C>
1993
High $26 $26-1/2 $26-1/4 $29
Low 21-1/4 23-1/4 23 26
1992
High 20-1/4 20-3/4 21-1/2 22
Low 18-1/8 18-3/4 19-7/8 20-3/8
</TABLE>
- ---------------------------------------------------------------------------
Cash distributions to unitholders were:
<TABLE>
<CAPTION>
Per Unit Cash
1993 Record Date Payment Date Distribution
- -------------- ---------------- ----------------- -------------
<S> <C> <C> <C>
First Quarter April 30, 1993 May 14, 1993 $ .55
Second Quarter July 31, 1993 August 13, 1993 .55
Third Quarter October 31, 1993 November 15, 1993 .55
Fourth Quarter January 31, 1994 February 15, 1994 .55
-------
$ 2.20
=======

1992
- --------------
First Quarter April 30, 1992 May 15, 1992 $ .55
Second Quarter July 31, 1992 August 14, 1992 .55
Third Quarter October 31, 1992 November 13, 1992 .55
Fourth Quarter January 31, 1993 February 12, 1993 .55
-------
$ 2.20
=======
</TABLE>
At December 31, 1993, the Partnership had 1,868 unitholders of
record, representing 5,443 identified beneficial owners.

<PAGE>
<PAGE>2
CONSOLIDATED STATEMENTS OF INCOME
(dollar amounts in thousands, except per unit amounts)
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------
1993 1992 1991
--------- --------- ---------
<S> <C> <C> <C>
REVENUES:
Rooms ............................ $ 54,778 $ 52,723 $ 52,067
Food and beverage ................ 33,108 34,560 36,918
Other ............................ 8,351 8,462 7,974
--------- --------- --------
Total revenues ................. 96,237 95,745 96,959
--------- --------- --------
OPERATING COSTS AND EXPENSES:
Rooms ............................ 13,791 13,567 13,148
Food and beverage ................ 26,883 27,841 29,594
Administrative and general ....... 8,657 8,534 9,206
Sales, promotion and advertising.. 4,326 4,183 4,480
Utilities ........................ 3,265 3,285 3,395
Repairs and maintenance .......... 3,768 3,682 3,451
Property taxes ................... 2,791 2,891 2,645
Base management fee .............. 2,887 2,872 2,909
Incentive management fee ......... 1,142 897 700
Depreciation and amortization .... 10,249 9,924 9,173
Other ............................ 5,054 4,702 4,853
--------- --------- --------
Total operating costs and
expenses ..................... 82,813 82,378 83,554
--------- --------- ---------
Operating income ................... 13,424 13,367 13,405

INTEREST EXPENSE ................... 10,218 10,329 10,408
--------- --------- ---------
Income Before Cumulative Effect of
Change in Accounting Principle ... 3,206 3,038 2,997
Cumulative Effect of Change in
Accounting for Income Taxes ...... 1,351 -- --
--------- --------- ---------
NET INCOME ......................... $ 1,855 $ 3,038 $ 2,997
========= ========= =========
ALLOCATION OF NET INCOME:
General Partner .................. $ 37 $ 60 $ 60
========= ========= =========
Limited Partners ................. $ 1,818 $ 2,978 $ 2,937
========= ========= =========

INCOME BEFORE CUMULATIVE EFFECT
OF CHANGE IN ACCOUNTING PRINCIPLE
PER LIMITED PARTNER UNIT ......... $ 0.76 $ 0.72 $ 0.71
CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING FOR INCOME TAXES PER
LIMITED PARTNER UNIT ............. (0.32) -- --
--------- --------- ---------
NET INCOME PER LIMITED PARTNER UNIT. $ 0.44 $ 0.72 $ 0.71
========= ========= =========
AVERAGE LIMITED PARTNER UNITS
OUTSTANDING ...................... 4,133,500 4,133,500 4,133,500
========= ========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated
statements.
<PAGE>
<PAGE>3
CONSOLIDATED BALANCE SHEETS (dollar amounts in thousands)
<TABLE>
<CAPTION>
As of December 31,
-------------------
1993 1992
-------- --------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash ........................................ $ 467 $ 567
Accounts receivable, net .................... 2,905 3,218
Inventories ................................. 1,082 1,018
Prepaid expenses ............................ 1,271 1,057
-------- --------
Total current assets .................... 5,725 5,860
-------- --------
PROPERTY AND EQUIPMENT:
Land ........................................ 17,713 17,713
Buildings and improvements .................. 156,573 155,622
Furnishings and equipment ................... 45,764 42,656
Construction in progress .................... 2,888 1,732
-------- --------
222,938 217,723
Less--accumulated depreciation .............. (55,254) (46,278)
-------- --------
167,684 171,445
DEFERRED LOAN COSTS, net ...................... 146 260
-------- --------
$173,555 $177,565
======== ========
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Accounts payable ............................ $ 2,635 $ 2,296
Payable to affiliate ........................ 10,312 7,371
Accrued distributions to partners ........... 2,329 2,329
Interest payable ............................ 793 802
Taxes other than income and payroll ......... 1,325 1,124
Current portion long-term debt .............. 1,371 1,254
-------- --------
Total current liabilities ............... 18,765 15,176
-------- --------
LONG-TERM DEBT NET OF CURRENT PORTION ......... 124,023 125,514
-------- --------
DEFERRED INCOME TAXES ......................... 1,351 --
-------- --------
PARTNERS' CAPITAL:
Limited Partners, 4,940,000 units issued .... 41,777 49,053
Less--806,500 treasury units, at cost ....... (11,202) (11,202)
-------- --------
Limited Partners, net ....................... 30,575 37,851
General Partner ............................. (1,159) (976)
-------- --------
Total partners' capital ................. 29,416 36,875
-------- --------
$173,555 $177,565
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated
statements.<PAGE>
<PAGE>4
CONSOLIDATED STATEMENTS OF CASH FLOWS
Increase (decrease) in cash (dollar amounts in thousands)
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------
1993 1992 1991
--------- --------- ---------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income ..................... $ 1,855 $ 3,038 $ 2,997
Adjustments to reconcile net
income to cash provided by
operating activities--
Depreciation and
amortization ............. 10,249 9,924 9,173
Deferred income taxes ...... 1,351 -- --
Accrued incentive management
fee .................. (667) (631) (1,025)
Change in certain current
assets and liabilities:
Decrease (increase) in
receivables .......... 313 790 (157)
Decrease (increase) in
inventories .......... (64) (25) 77
Increase in prepaid
expenses ............. (214) (33) (164)
Increase in payables and
accruals ............. 4,139 1,369 1,107
--------- --------- ---------
Net cash provided by
operating activities ...... 16,962 14,432 12,008
--------- --------- ---------

CASH FLOWS FROM INVESTING
ACTIVITIES:
Additions to property and
equipment .................... (6,374) (5,125) (4,229)
Cash reserved for capital
improvements ................. (2,887) (2,872) (2,909)
Cash withdrawn from reserve for
capital improvements ......... 2,887 2,872 2,909
--------- --------- ---------
Net cash used in investing
activities ................. (6,374) (5,125) (4,229)
--------- --------- ---------
<PAGE>
<PAGE>5
CASH FLOWS FROM FINANCING
ACTIVITIES:
Distribution of cash to partners (9,314) (9,314) (9,208)
Payments on term loan .......... (1,254) (776) --
Net borrowings (repayments)
under revolving credit
facility ................... (120) 247 872
--------- --------- --------
Net cash used in financing
activities ............. (10,688) (9,843) (8,336)

DECREASE IN CASH ................... (100) (536) (557)
CASH AT BEGINNING OF YEAR .......... 567 1,103 1,660
--------- --------- --------
CASH AT END OF YEAR ................ $ 467 $ 567 $ 1,103
========= ========= ========
</TABLE>
The accompanying notes are an integral part of these consolidated
statements.<PAGE>
<PAGE>6
CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL
(dollar amounts in thousands)
<TABLE>
<CAPTION>
Limited Partners
-------------------------------------
Issued Units Treasury Units
----------------- -------------------
General
Units Amount Units Amount Partner Total
--------- ------- --------- --------- ------- ------
<S> <C> <C> <C> <C> <C> <C>
Balance at
December 31,
1990 ....... 4,940,000 $61,274 (806,500) $(11,202) $(657) $49,415
Distributions
to partners. -- (9,042) -- -- (219) (9,261)
Net income ... -- 2,937 -- -- 60 2,997
--------- -------- -------- -------- ------- ------
Balance at
December 31,
1991 ....... 4,940,000 55,169 (806,500) (11,202) (816) 43,151
Distributions
to partners -- (9,094) -- -- (220) (9,314)
Net income ... -- 2,978 -- -- 60 3,038
--------- ------- -------- -------- ----- ------
Balance at
December 31,
1992 ....... 4,940,000 49,053 (806,500) (11,202) (976) 36,875
Distributions
to partners -- (9,094) -- -- (220) (9,314)
Net income ... -- 1,818 -- -- 37 1,855
--------- ------- -------- -------- ----- -------
Balance at
December 31,
1993 ....... 4,940,000 $41,777 (806,500) $(11,202) $(1,159) $29,416
========= ======= ======== ======== ======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated
statements.<PAGE>
<PAGE>7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 1993, 1992, and 1991.

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Basis of Presentation

The accompanying consolidated financial statements include the
accounts of Red Lion Inns Limited Partnership, a Delaware limited
partnership (the "Partnership"), and its subsidiary limited
partnership, Red Lion Inns Operating L.P. (the "Operating
Partnership"). The Partnership was organized in 1987 for the
purpose of acquiring and owning ten hotels (the "Hotels") from
Red Lion, a California Limited Partnership ("Red Lion") through
the Operating Partnership. The acquisition of the Hotels was
completed on April 14, 1987. All significant intercompany
transactions and accounts have been eliminated.

Accounts Receivable

Accounts receivable are shown net of allowances for doubtful
accounts of $77,000 and $74,000 at December 31, 1993 and 1992,
respectively.

Inventories

Inventories consist primarily of consumable products and are
valued at the lower of cost, determined on a first-in, first-out
basis, or market.

Property and Equipment

The Partnership recorded the April 14, 1987 acquisition of
property and equipment on the basis of an allocation of the
purchase price to the assets acquired. Subsequent additions and
improvements have been capitalized at their cost.

Normal repairs and maintenance are charged to expense as
incurred. Upon sale or retirement of property and equipment, the
cost and related accumulated depreciation are removed from the
respective accounts and the resulting gain or loss, if any, is
included in income.

Base stock (linens, china, silverware and glassware) for new
hotels is depreciated to 50 percent of its initial cost on a
straight-line basis over a three year period. Subsequent
replacements are expensed when purchased. The carrying value of
base stock is included in furnishings and equipment in the
accompanying consolidated balance sheets.

Depreciation is computed on a straight-line basis using the
following estimated useful lives:

Buildings and improvements ........................... 5 to 35 years
Furnishings and equipment ............................ 3 to 15 years
<PAGE>
<PAGE>8
Deferred Loan Costs

Deferred loan costs consist primarily of financing fees on the
Partnership's mortgage loan and are being amortized over the
eight year term of the loan.

Income Taxes

No current provision for federal or state income taxes has been
provided by the Partnership in the accompanying consolidated
financial statements since such taxes are the responsibility of
the individual partners (see Note 3).

Cash Distributions

The Partnership declares each quarterly distribution in the month
following the end of the quarter to which it applies. Fourth
Quarter distributions are accrued in the accompanying
consolidated balance sheets for both of the years presented.

2. ORGANIZATION:

The Partnership was formed on January 16, 1987, under the
Delaware Revised Uniform Limited Partnership Act and will
continue until December 31, 2062, unless sooner terminated under
the provisions of the partnership agreement. The Partnership was
formed to acquire, own and operate the Hotels through its 99
percent limited partnership interest in the Operating
Partnership.

Red Lion Properties, Inc. (the "General Partner"), a wholly-owned
subsidiary of Red Lion, is the General Partner of the Partnership
and the Operating Partnership. On April 14, 1987, the
Partnership completed an initial public offering of units
representing limited partnership interests ("units") totaling
$98.8 million. These proceeds, accompanied by a $105.9 million
mortgage loan, were used to acquire, through the Operating
Partnership, the Hotels from Red Lion for approximately $195
million. After completion of this acquisition, the Partnership's
limited partners have an effective 98.01 percent ownership
interest in the Hotels with the General Partner retaining the
remaining 1.99 percent ownership interest.

The allocation of the Partnerships profits and losses is based on
the relative ownership interests in accordance with the terms of
the partnership agreement. Cash flow available for distribution,
as defined in the partnership agreement, will generally be
distributed to the partners in proportion to their respective
ownership interests until certain preferential distributions are
achieved and then allocated to both the general and limited
partners depending on factors related to the source of the net
cash flow and cash distributions as specified in the partnership
agreement (see Note 6).
<PAGE>
<PAGE>9
3. INCOME TAXES:

During 1987, Congress passed the Omnibus Budget Reconciliation
Act which, among other things, treats certain publicly traded
partnerships as corporations for tax purposes for the years
beginning after December 31, 1987. Publicly-traded partnerships
in existence prior to December 18, 1987 will not be treated as
corporations, for tax purposes, for ten years from the effective
date of the 1987 law or until taxable years beginning after
December 31, 1997. The effect of treating publicly traded
partnerships as corporations will be to tax the income of the
partnership at the entity level and reflect distributions to
partners as dividends.

During the first quarter of 1993, the Partnership adopted
Statement of Financial Accounting Standards No. 109, "Accounting
for Income Taxes" (SFAS 109). This statement requires, among
other things, the recording of deferred income taxes based on the
difference between the financial statement and income tax bases
of assets and liabilities using the enacted marginal income tax
rate. The cumulative effect of this accounting change resulted
in a first quarter non-cash charge to income of $1,351,000, or
$.32 per unit. This charge reflects the tax effect, as of
January 1, 1993, of cumulative differences between the book and
tax bases of the Partnership's assets from depreciation
differences that are estimated to exist after the Partnership
becomes a taxable entity.

The cumulative effect of the change in accounting method is
comprised of federal deferred income taxes of $1,209,000 and
state deferred income taxes, net of federal benefits, of
$142,000.

This accounting change also requires provision of deferred income
taxes resulting from the accumulation of book/tax depreciation
differences on assets acquired in periods after the effective
date of the change.

No additional deferred taxes were provided in 1993.

4. CASH RESERVE FOR CAPITAL IMPROVEMENTS:

A cash reserve for capital improvements has been established in
accordance with the provisions of the management agreement.
Funding of three percent of gross revenues is to be used for
renovations, refurbishments and other capital expenditures.
During the years ended December 31, 1993, 1992 and 1991,
$2,887,000, $2,872,000, and $2,909,000 respectively, was
accumulated, then withdrawn, from this reserve.
<PAGE>
<PAGE>10
5. LONG-TERM DEBT:

Long-term debt at December 31 consists of the following (in
thousands):
<TABLE>
<CAPTION>
1993 1992
-------- --------
<S> <C> <C>
Mortgage note, payable in varying
installments through April 14, 1995 ...... $103,841 $105,095
Revolving line of credit, due
April 14, 1995 ........................... 11,827 11,947
Non-interest bearing amounts payable to
Red Lion ................................. 9,726 9,726
-------- --------
Total long-term debt ....................... 125,394 126,768
Less current portion ....................... 1,371 1,254
-------- --------
$124,023 $125,514
======== ========
</TABLE>
The mortgage note bears interest at a 9 percent fixed rate.
Payments on the mortgage note were interest only through April
13, 1992. Scheduled maturities on the mortgage note for the
years subsequent to 1993 are as follows: 1994 - $1,371,000 and
1995 - $102,470,000.

The revolving line of credit allows borrowings up to $14.1
million. This facility has been used to cover, among other items,
the cost of units repurchased and incurs interest at floating
interest rates. The weighted average interest rate on this
facility was 4.6 percent at December 31, 1993. The Partnership
must pay a nominal commitment fee on the unused portion of the
line. The line has no scheduled principal payments until its
expiration on April 14, 1995. Borrowings under the line averaged
$11,784,000, $11,791,000 and $11,237,000 during 1993, 1992 and
1991, respectively. The average interest rates for borrowings
under the line for the years ended December 31, 1993, 1992, and
1991 were 4.6 percent, 5.2 percent and 7.5 percent, respectively.
Both the credit line and mortgage note are secured by the Hotels.

Non-interest bearing amounts payable to Red Lion comprise
deferred incentive management fees of $6 million at December 31,
1993 and 1992 and amounts drawn against a $4 million General
Partner credit facility of $3,726,000 at December 31, 1993 and
1992. These items are more fully discussed in Note 6.

During the years ended December 31, 1993, 1992, and 1991, the
Partnership made total interest payments of $10,227,000,
$10,365,000, and $10,407,000, respectively.

Disclosures Concerning Fair Value of Financial Instruments:

Based on the borrowing rates currently quoted by financial
institutions for bank loans with terms and maturities similar to
the Partnerships mortgage debt, the carrying value of such debt
approximates its fair value. <PAGE>
<PAGE>11
6. CASH DISTRIBUTIONS TO PARTNERS:

Since inception, the Partnership has made quarterly cash
distributions to partners to the extent that cash flow has been
available for distribution as defined in the management
agreement.

The Partnership declared cash distributions of $9.3 million in
1993, 1992 and 1991. On a per unit basis, declared cash
distributions were $2.20 in both 1993 and 1992 and $2.1875 in
1991.

In accordance with the management agreement, Red Lion has
subordinated current payment of its incentive management fee (see
Note 8) to an amount sufficient to make annual priority
distributions. These priority distributions were $2.00 per unit
during the first 12 months of operations, increasing annually at
the rate of $.05 per unit until annual distributions reached
$2.20 per unit in the second quarter of 1991.

During 1993, 1992 and 1991, the Partnership's cash flow available
for distribution covered 100 percent of the priority cash
distributions and also allowed payment of current incentive
management fees to Red Lion of $1,142,000, $897,000 and $700,000
for those years, respectively.

For the first 36 months of operations, the General Partner also
agreed to make available to the Partnership a $4 million
non-interest bearing revolving credit facility which was to be
used in the event that cash flow available for distributions was
insufficient to make priority distributions. During the 36 month
period, which ended April 30, 1990, the General Partner was
required to fund $3,726,000 from the facility. This amount will
be repaid out of either (i) cash flow after payment of priority
distributions and incentive management fees, or (ii) sale or
refinancing proceeds prior to any distribution to limited
partners.

In connection with the subordination of incentive management fees
noted above, the Partnership reached, in 1988, the maximum
deferred amount of $6 million of such fees in accordance with the
management agreement. The deferred amount, which will not accrue
interest, will be paid out of either (i) 25 percent of cash flow
after payment of priority distributions and current incentive
management fees or (ii) sale or refinancing proceeds prior to any
distribution to limited partners.
<PAGE>
<PAGE>12
Following is a calculation of 1993, 1992, and 1991 cash flow
available for distribution and related cash flow available for
payment of incentive management fees (in thousands):
<TABLE>
<CAPTION>
1993 1992 1991
------- ------- -------
<S> <C> <C> <C>
Net income .................... $ 1,855 $ 3,038 $ 2,997
Add (Deduct):
Depreciation and amortization 10,249 9,924 9,173
Incentive management fee .... 1,142 897 700
Cash reserved for capital
improvements .............. (2,887) (2,872) (2,909)
Repayments on term loan ..... (1,254) (776) --
Cumulative effect of change
in accounting for
income taxes .............. 1,351 -- --
------- ------- --------
Cash flow available for
distribution and incentive
management fee .............. 10,456 10,211 9,961
Distributions to partners ..... (9,314) (9,314) (9,261)
------- ------- --------
Cash flow available for payment
of incentive management fee . $ 1,142 $ 897 $ 700
======= ======= =======
</TABLE>
7. LEASES:

Two of the Hotels hold leases on all or a portion of their land.
The leases contain rental provisions which are based on increases
in the Consumer Price Index. The terms of the leases exceed the
estimated remaining useful lives of the Hotels. The Partnership
leases certain equipment under operating leases. Total land and
equipment rent expenses for 1993, 1992 and 1991 were $88,000,
$128,000, and $198,000, respectively.

Future minimum rental payments, substantially all of which relate
to land leases, are as follows:
Minimum
Rental
Year Ending December 31, Payment
- ------------------------ ----------
1994 $ 85,000
1995 98,000
1996 98,000
1997 98,000
1998 98,000
Thereafter 5,835,000
----------
$6,312,000
==========
<PAGE>
<PAGE>13
8. RELATED PARTY TRANSACTIONS:

The General Partner is responsible for the management and
administration of the Partnership. In accordance with the
partnership agreement, the Partnership reimbursed the General
Partner for such services in the amount of $457,000 for 1993,
$458,000 for 1992 and $486,000 for 1991.

Red Lion manages the Hotels pursuant to a management agreement
and receives a base management fee equal to three percent of the
annual gross revenues of the Hotels plus an incentive management
fee based on adjusted gross operating profit, as defined in the
management agreement.

The Hotels, in accordance with the management agreement, are also
charged by Red Lion for their pro rata share of support services
such as computer, advertising, public relations, promotional and
sales and central reservation services.

All Partnership personnel are employees of Red Lion and its
affiliates. All costs for services of such employees are
reimbursed to Red Lion by the Operating Partnership. These costs
include salaries, wages, payroll taxes and other employee
benefits. Additionally, auxiliary enterprises owned by Red Lion
sell operating supplies, furnishings and equipment to the
Partnership. In the opinion of Red Lion management, sales to the
Partnership by the auxiliary enterprises were made at prices and
terms which approximated arms-length transactions.

The aggregate amounts, excluding personnel related expenses
charged to the Partnership during 1993, 1992, and 1991 under the
arrangements described above were as follows (in thousands):
<TABLE>
<CAPTION>
1993 1992 1991
------ ------ ------
<S> <C> <C> <C>
Management fees ............... $4,029 $3,769 $3,609
Support services .............. 4,405 4,279 4,269
Purchases from auxiliary
enterprises ................. 9,409 9,470 8,919
</TABLE>
The amounts shown in current liabilities as payable to affiliate
in the accompanying consolidated balance sheets consist of
amounts payable to Red Lion for payroll and payroll taxes,
support services, base and current incentive management fees and
purchases of operating supplies, furnishings and equipment. These
balances are due in the normal course of business. Included in
amounts payable to affiliate at December 31, 1993 and 1992 is
$1,703,000 relating to capital expenditures. This amount was
treated as a non-cash investing item for purposes of the 1991
consolidated statement of cash flows.

Included in long-term debt on the accompanying consolidated
balance sheets are deferred incentive management fees of $6
million and $3,726,000 advanced under the $4 million non-interest
bearing credit facility. For further discussion of the
non-current amounts due to Red Lion, see Note 5. <PAGE>
<PAGE>14
9. PROPERTY TAX REFUNDS:

In 1991, the General Partner was successful in obtaining a
reassessment, for property tax purposes, of one of the Hotels.
The reassessment resulted in a refund, related to property tax,
totalling $651,000 in 1991. The entire 1991 refund related to
prior years' property taxes. The refund was recorded as a
reduction of property tax expense in the 1991 results of
operations.

10. COMMITMENTS AND CONTINGENCIES:

At December 31, 1993, the Partnership had commitments, relating
to capital improvement projects, of $547,000.

The Partnership is subject to claims arising in the ordinary
course of business. In the opinion of management such claims
will not have a material effect, if any, on the financial
position or results of operations of the Partnership or its
subsidiary.

11. SUMMARIZED QUARTERLY FINANCIAL DATA (Unaudited):

Summarized quarterly financial data are as follows: (in
thousands, except per unit amounts, room and occupancy
statistics)
<TABLE>
<CAPTION>
Quarter Ended
------------------------------------
1993 Mar. 31 Jun. 30 Sep. 30 Dec. 31
- ---- ------- ------- ------- -------
<S> <C> <C> <C> <C>
Revenues ...................... $22,149 $25,315 $25,583 $23,190
Operating income .............. $ 2,346 $ 4,338 $ 3,430 $ 3,310
Income (loss) before cumulative
effect of change in
accounting principle ........ $ (252) $ 1,719 $ 817 $ 922
Cumulative effect of change in
accounting principle ........ $(1,351) -- -- --
Net income (loss) ............. $(1,603) $ 1,719 $ 817 $ 922
Per unit:
Income (loss) before
cumulative effect of change
in accounting principle ... $ (.06) $ .41 $ .19 $ .22
Cumulative effect of change
in accounting principle ... $ (.32) -- -- --
Net income .................... $ (.38) $ .41 $ .19 $ .22
Average units outstanding ..... 4,134 4,134 4,134 4,134
Occupancy % ................... 67.2% 76.7% 82.8% 66.6%
Average room rate ............. $ 65.61 $ 67.81 $ 68.34 $64.35
</TABLE>
<PAGE>
<PAGE>15
<TABLE>
<CAPTION>

Quarter Ended
------------------------------------------------------
1992 Mar. 31 Jun. 30 Sep. 30 Dec. 31
- ---- ------- ------- ------- -------
<S> <C> <C> <C> <C>
Revenues ...................... $21,930 $25,700 $25,076 $23,039
Operating income .............. $ 2,165 $ 4,404 $ 3,435 $ 3,363
Net income (loss) ............. $ (373) $ 1,817 $ 880 $ 714
Allocated net income
(loss) per unit ............. $ (.09) $ .43 $ .21 $ .17
Average units outstanding ..... 4,134 4,134 4,134 4,134
Occupancy % ................... 65.4% 78.5% 81.3% 65.4%
Average room rate ............. $ 63.64 $ 65.04 $ 66.31 $ 62.74
</TABLE>
Fourth Quarter 1993 net income includes a $.4 million increase in
estimated insurance liabilities offset by a $.2 million reduction
of estimated deferred income taxes recorded in prior quarters.
<PAGE>
<PAGE>16
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Partners of
Red Lion Inns Limited Partnership and its Subsidiary Limited
Partnership:

We have audited the accompanying consolidated balance sheets of
Red Lion Inns Limited Partnership (a Delaware limited
partnership) and its subsidiary limited partnership as of
December 31, 1993 and 1992 and the related consolidated
statements of income, partners' capital and cash flows for each
of the three years in the period ended December 31, 1993. These
financial statements are the responsibility of the partnerships'
management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial
position of Red Lion Inns Limited Partnership and its subsidiary
limited partnership as of December 31, 1993 and 1992, and the
results of their operations and their cash flows for each of the
three years in the period ended December 31, 1993 in conformity
with generally accepted accounting principles.

As discussed in Note 3 to the consolidated financial statements,
effective January 1, 1993, the Partnership changed its method of
accounting for income taxes.

/s/ARTHUR ANDERSEN & CO.

Portland, Oregon
February 11, 1994 <PAGE>
<PAGE>17
SELECTED FINANCIAL DATA
(in thousands, except for operating data)
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------------------------------------------
(unaudited)
1993 1992 1991 1990 1989
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Financial Data:
Operating revenues ... $96,237 $95,745 $96,959 $94,712 $91,304
Gross operating
profit (a) ......... 31,999 31,163 30,303 30,216 29,939
Operating Data:
Gross operating profit
as a percentage of
operating revenues.. 33.3% 32.5% 31.3% 31.9% 32.8%
Number of rooms at end
of period .......... 3,069 3,071 3,075 3,075 3,075
Occupancy
percentage (b) ..... 73.3% 72.7% 73.0% 70.7% 71.4%
Average room rate (c). $ 66.67 $ 64.56 $ 63.58 $ 62.97 $ 60.86

</TABLE>

Balance Sheet Data:
<TABLE>
<CAPTION>
December 31,
-------------------------------------------------------------------
1993 1992 1991 1990 1989
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Total assets ........... $173,555 $177,565 $182,578 $187,187 $191,359
Total liabilities ...... 144,139 140,690 139,427 137,772 133,897
Partners' capital ...... 29,416 36,875 43,151 49,415 57,462

</TABLE>
(a) "Gross operating profit" is net income before income and property
taxes, insurance, rent, interest, depreciation, amortization,
management fees and extraordinary items.

(b) Calculated on a per available room per year basis.