WestCoast Corporation Announces Fourth Quarter

WestCoast Hospitality Corporation today announced financial results for
the fourth quarter and year ended December 31, 2003. The Company reported
total revenue of $41.2 million for the fourth quarter of 2003, compared to
$44.4 million for the comparable period in 2002. EBITDA (earnings before
interest, taxes, depreciation and amortization) was $2.3 million in the
fourth quarter of 2003 compared to $3.1 million for the fourth quarter of
2002. Loss per share was $0.20 in the fourth quarter of 2003, compared to
a per share loss of $0.15 in the prior year fourth quarter. RevPAR
(revenue per available room) for comparable hotels (hotels owned, leased,
managed and franchised for at least one year) decreased 3.7% from $33.95
in the fourth quarter of 2002 to $32.68 in the comparable period of 2003,
due to a 3.5% decrease in average daily rate, to $66.54, and a slight
decrease in occupancy, to 49.1% for the fourth quarter of 2003.

Total revenue for 2003 was $184.0 million compared to $194.2 million in
2002. EBITDA was $25.3 million in 2003 compared to $33.6 million in 2002,
and the loss per share in 2003 was $0.10 compared to diluted earnings per
share of $0.41 in 2002. During 2003, the Company generated $11.3 million
of net cash provided from operating activities and ended 2003 with cash on
hand of $13.1 million compared to $2.7 million at the end of 2002. A
number of repositioning initiatives impacted year-on-year financial
comparisons, including the following: results from the first quarter of
2002 included a $3.0 million pre-tax gain on the sale of an office
building; 2003 results included more than $794,000 of conversion expenses
including a non-cash write down of signage related to the re-branding of
hotels to the Red Lion name; the Company completed the refinance and
replacement of its revolving credit facility in the second and third
quarter of 2003, resulting in a non-cash write-off of $927,000 in loan
fees; in the second quarter of 2003 the Company realized a loss on
disposition of partnership interest of $443,000; and, the Company during
2003 recaptured approximately $2.1 million of non-cash depreciation
expense associated with assets that were reclassified in 2003 as no longer
held for sale. The above items accounted for a decline in income before
taxes of $7.3 million in 2003 compared to 2002.

The Company reported hotel and restaurant revenue at owned and leased
hotels of $36.4 million for the fourth quarter of 2003, compared to $38.9
million in the comparable period of 2002. Revenue declines were primarily
a result of reduced group business as compared to the fourth quarter of
2002. A large component of 2002 group business which was not repeated in
2003 was from the Transportation Security Administration, which conducted
extensive training during that time. The Company expects to experience
normal seasonal declines in revenue during the fourth quarter and was able
to reduce the impact of these declines through effective expense
management, lowering hotel operating expenses by $1.6 million compared to
the prior year quarter. The Company continued in the fourth quarter to
strengthen its market penetration through implementation of its Alternate
Distribution Channel management system and increased sales efforts, which
mitigated the decline in group business with increased occupancy in the
transient leisure markets. This strategy has successfully increased
customer market share, albeit at a reduced average daily rate. The Company
intends to focus on increasing its occupancy percentage and then increase
its rate structure to the extent permitted by any improvement in the
general economy and increase in travel demand.
During the quarter, the Company announced the disposition of the 245-room
Red Lion River Inn in a sale and leaseback transaction. The sale provided
a pre-tax gain of $7.0 million of deferred income, which is being
recognized over the initial 15-year lease term. The Company continues to
operate the property as the Red Lion River Inn under an operating lease,
which also includes three five-year renewal options. On January 13, 2004,
the Company announced that proceeds from the sale were used to acquire the
172-room Red Lion Hotel Yakima Gateway in a Section 1031 tax deferred
exchange. This hotel was previously operated by the Company through an
operating lease.
On November 4, 2003, the Company announced a proposed public offering of
$40 million ($46 million with over allotment option) of trust preferred
securities by WestCoast Hospitality Capital Trust, a Delaware statutory
trust sponsored by the Company. The offering is expected to commence
during the first quarter of 2004. Upon completion of the offering,
approximately $30 million of the net proceeds will be used to redeem all
of the outstanding Series A and Series B Preferred Stock of the Company
and the balance of the proceeds will be used for general corporate
purposes.
For the quarter, franchise, central services and development revenue was
$700,000 compared to $800,000 in the prior year period. The decrease in
revenue was primarily due to a reduction in royalty fees resulting from a
net decline in the number of hotels franchised by the Company. Operating
expenses for the fourth quarter of 2003 declined $185,000 compared to the
prior year comparable period.
Entertainment division revenue was $2.0 million in the fourth quarter of
2003 compared to $2.5 million in the prior year fourth quarter. The
revenue decline was primarily due to a reduction in the number of
entertainment presentations during the fourth quarter of 2003. Expenses
declined by $541,000 during the fourth quarter of 2003 compared to the
comparable period of 2002, also primarily due to the reduction in
entertainment presentations. The reduction in presentations was due to
scheduling differences from the prior year quarter.

Real estate division revenue was $2.1 million during the fourth quarter of
2003 compared to $2.2 million in the prior year comparable period. The
year-on-year decline was due primarily to a reduction in fee income
compared to the prior year quarter. Expenses declined $52,000 during the
fourth quarter of 2003 compared to the fourth quarter of 2002. On January
22, 2004, the Company announced a lease agreement with Sterling Savings
Bank to occupy approximately 45,000 square feet of office space in the
Company-owned Crescent Building in Spokane, Washington.

Depreciation and amortization increased $406,000 during the quarter to
$3.0 million, compared to $2.6 million for the fourth quarter of 2002.
During the second and third quarter of 2003, three Company-owned assets
were reclassified from assets held for sale to property and equipment.
Depreciation on these assets in the fourth quarter of 2003 was the primary
reason for the increased depreciation expense during that period as
compared to the prior year quarter.

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Interest expense increased $328,000 to $2.9 million during the fourth
quarter of 2003 compared to the comparable prior year quarter, primarily
due to the Company`s securing $55.2 million of long-term fixed-rate debt
and paying off the outstanding balance on its revolving credit facility.
The new debt carries an interest rate of 6.7% for ten years, which the
Company believes is a favorable long-term rate.

WestCoast Hospitality Corporation is a NYSE-listed hospitality and leisure
company primarily engaged in the ownership, management, development and
franchising of mid-scale, full service hotels under its WestCoast(R) and
Red Lion(R) brands. In addition, through its entertainment division, which
includes its TicketsWest.com, Inc. subsidiary, it engages in event ticket
distribution and promotes and presents a variety of entertainment
productions. G&B Real Estate Services, its real estate division, engages
in traditional real estate-related services, including developing,
managing and acting as a broker for sales and leases of commercial and
multi-unit residential properties. Registered trademarks of WestCoast
Hospitality Corporation and its affiliates protect the use of “WestCoast”,
“Red Lion”, “TicketsWest” and “G&B” and various derivatives of those
usages.
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