Doubletree, Red Lion Hotels in Merger Talks

Doubletree Corp., a fast-growing hotel management company headed by former Los Angeles Olympics organizer Peter Ueberroth, is discussing a takeover of the Red Lion hotel chain, the two companies announced Wednesday.

Red Lion Hotels Inc., a Vancouver, Wash.-based chain of 56 hotels concentrated in Western states, said the discussions were at an early stage and there was no guarantee they would result in a final deal. The company also said the negotiations do not involve the units of Red Lion Inns, a limited partnership that trades on the American Stock Exchange.

Red Lion said it would have no further comment on the negotiations until an agreement is signed or discussions terminated. A spokeswoman for Phoenix-based Doubletree, which manages 172 properties nationwide, confirmed the negotiations with Red Lion but declined further comment.

Red Lion could fetch as much as $1.15 billion, including assumed debt, analysts said. The amount would value Red Lion shares in the low- to mid-$30 range, said Harry Venezia, an analyst at Raymond James.

On Wednesday, Red Lion shares ended the day unchanged at $23.625 on the New York Stock Exchange. Doubletree stock rose 25 cents to $38.125 in over-the-counter trading. The companies announced their discussions after the financial markets had closed for the day.

Ueberroth, a wealthy travel industry executive who headed the start-up of RLA, shares the chairmanship of Doubletree with Richard Ferris, a former chairman and chief executive of United Airlines. Ueberroth owns about 5% of the company’s shares.

In July 1993, Doubletree merged with Boston-based Guest Quarters Hotels Partnership, which was partially owned by Ueberroth. Ueberroth became co-chairman of Doubletree as a result of the deal.

Doubletree, which operates 15 hotels in Southern California, has expanded its operations recently as the nation’s hotel industry enjoys a rise in room rates and occupancy. Last week, Doubletree teamed up with a Dallas-based hotel owner--Patriot American Hospitality Inc.--to spend $200 million on hotel acquisitions over the next two years.

Red Lion, which once focused primarily on small- and medium- sized cities, has expanded over the years into large metropolitan areas. Earlier this year, Red Lion, which has five hotels in Southern California, announced plans to add as many as 24 hotels across the Western U.S. and buy an $11- million computer reservation system.