Dear Stockholder:                                       March 19, 1999

     You are cordially invited to attend the 1999 Annual General Meeting of
     Stockholders of Cavanaughs Hospitality Corporation at 9:00 a.m. on
     Monday, April 19, 1999, at Cavanaughs Ridpath Hotel, 515 W. Sprague
     Avenue, Spokane, Washington.

     The accompanying Notice of 1999 Annual General Meeting of Stockholders
     and the Proxy Statement describe the matters to be presented at the
     meeting.

     Whether or not you plan to attend the meeting, we hope you will have
     your stock represented by completing, signing, dating and returning
     your proxy card in the enclosed postage-paid envelope as soon as
     possible.  Your stock will be voted in accordance with the
     instructions you have given in your proxy.

     Sincerely,


     Donald K. Barbieri
     Chairman of the Board,
     President and Chief Executive Officer

     IMPORTANT

     A Proxy Statement and proxy card are enclosed.  All stockholders are
     urged to complete and mail the proxy card promptly.  The enclosed
     envelope for return of the proxy card requires no postage.  Any
     stockholder attending the meeting may personally vote on all matters
     that are considered, in which event the signed proxy will be revoked.

     IT IS IMPORTANT THAT YOUR STOCK BE VOTED.

     
<PAGE>

     NOTICE OF ANNUAL GENERAL MEETING OF STOCKHOLDERS

     APRIL 19, 1999

     To the Stockholder:

     The 1999 Annual General Meeting of Stockholders of Cavanaughs
     Hospitality Corporation will be held at the 9:00 a.m. on Monday, 
     April 19, 1999, at Cavanaughs Ridpath Hotel, 515 W. Sprague Avenue,
     Spokane, Washington for the following purposes:

     (1)  To elect two directors to hold office until the expiration of
          their respective terms three year terms and until their
          respective successors are elected and qualified; 

     (2)  To ratify the appointment of PricewaterhouseCoopers LLP as
          auditors for Cavanaughs Hospitality Corporation for 1999; and

     (3)  To transact such other business as may properly come before the
          meeting and any adjournment and postponement thereof.

     Nominees for directors are named in the enclosed Proxy Statement.
     March 5, 1999 has been set as the record date for the meeting.  Only
     stockholders of record at the close of business on that date will be
     entitled to notice of and to vote at the meeting.

     ALL STOCKHOLDERS ARE INVITED TO ATTEND THE MEETING IN PERSON, BUT EVEN
     IF YOU EXPECT TO BE PRESENT AT THE MEETING, YOU ARE REQUESTED TO
     COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD AS PROMPTLY AS
     POSSIBLE IN THE POSTAGE-PAID ENVELOPE PROVIDED TO ENSURE YOUR
     REPRESENTATION.  STOCKHOLDERS ATTENDING THE MEETING MAY VOTE IN PERSON
     EVEN IF THEY HAVE PREVIOUSLY SENT IN A PROXY.

          By Order of the Board of Directors
          Richard L.Barbieri
          General Counsel
          Spokane, Washington
 
         March 19, 1999


     The 1998 Annual Report of Cavanaughs Hospitality Corporation
     accompanies this Proxy Statement.

     
<PAGE>
     1999 PROXY STATEMENT

     GENERAL

     The enclosed proxy is solicited by the Board of Directors of
     Cavanaughs Hospitality Corporation (the "Company") for use at the 1999
     Annual General Meeting of Stockholders to be held at 9:00 a.m. on
     Monday, April 19, 1999, at Cavanaughs Ridpath Hotel, 515 W. Sprague
     Avenue, Spokane, Washington, and at any adjournment or postponement
     thereof (the "Meeting").  Only holders of record of the Company's
     Common Stock, par value $0.01 per share (the "Common Stock"), at the
     close of business on March 5, 1999 will be entitled to notice of and
     to vote at the Meeting.  On that date, the Company had 12,660,847
     shares of Common Stock outstanding.  Each share of Common Stock
     outstanding on the record date is entitled to one vote.

     The address of the Company's principal executive offices is 201 West
     North River Drive, Suite 100, Spokane, Washington 99201.  

     This Proxy Statement and the accompanying proxy are being mailed to
     the Company's stockholders on or about March 19, 1999.

     VOTING

     Shares of Common Stock for which proxies are properly executed and
     returned will be voted at the Meeting in accordance with the
     directions noted thereon or, in the absence of directions to the
     contrary, will be voted (i) "FOR" the election of the two nominees for
     the Board of Directors named on the following pages, provided that if
     any one or more of such nominees should become unavailable for
     election for any reason, such shares will be voted for the election of
     such substitute nominee or nominees as the Board of Directors may
     propose, and (ii) "FOR" the ratification of the appointment of
     PricewaterhouseCoopers LLP as auditors for the Company for 1999. 
     Under Washington law, the Company's Articles of Incorporation and By-
     Laws, the presence at the Meeting, in person or by duly authorized
     proxy, of the holders of a majority of the outstanding shares of
     Common Stock entitled to vote constitutes a quorum for the transaction
     of business.  The two nominees for the Board of Directors who receive
     the greatest number of votes cast for the election of directors by the
     shares present in person or represented by proxy at the Meeting and
     entitled to vote shall be elected directors.  The affirmative vote of
     a majority of shares entitled to vote and present in person or by
     proxy at the Meeting is required for approval of any other matters
     submitted to a vote of the shareholders.  In the election of
     directors, an abstention or broker non-vote will have no effect on the
     outcome.  In the case of any other matter,  abstention from voting
     will have the practical effect of voting against such matter.  Broker
     non-votes will be included in determining the presence of a quorum at
     the Meeting but will have no effect on the outcome of any matters,
     other than to reduce the number of "FOR" votes necessary to approve
     such matters. 
     
<PAGE>
     REVOCATION

     Any stockholder giving a proxy may revoke it at any time before it is
     voted by delivering to the Company's General Counsel a written notice
     of revocation or a duly executed proxy bearing a later date, or by
     attending the Meeting and electing to vote in person.


                       PROPOSAL 1:  ELECTION OF DIRECTORS

     In accordance with the Company's By-Laws, the Board of Directors has
     fixed the number of directors constituting the Board at seven, with
     all of the directors assigned to a classification based on the time
     for which they hold office.  Two of the initial directors were
     assigned to hold office for a term expiring at the 1999 annual meeting
     of shareholders.  Two of the initial directors were assigned to hold
     office for a term expiring at the 2000 annual meeting of shareholders.
     Three of the initial directors were assigned to hold office for a term
     expiring at the 2001 annual meeting of shareholders.  At each annual
     meeting of shareholders, the successors of the members of the class of
     directors whose term expires at that meeting shall be elected to hold
     office for a term expiring at the annual meeting of shareholders held
     in the third year following the year of their election.  It is
     proposed that two directors be elected as the successors of the
     members of the class of directors whose term expires at the 1999
     annual meeting of shareholders.  The two directors to be elected will
     hold office for a term expiring at the annual meeting of shareholders
     held in the third year following the year of their election and until
     their successors shall have been elected and qualified.  It is
     intended that votes will be cast pursuant to the accompanying proxy
     for the election of the two nominees named below, each of whom is
     currently a director of the Company whose term expires at the 1999
     annual meeting of shareholders.  If any nominee should become
     unavailable for any reason, it is intended that votes will be cast for
     a substitute nominee designated by the Board of Directors.  The Board
     of Directors has no reason to believe that the nominees named will be
     unable to serve if elected.  The two nominees who receive the greatest
     number of votes cast by stockholders present in person or by proxy and
     certified to vote at the Meeting, a quorum being present, shall be
     elected directors.

     NOMINEES FOR THE BOARD OF DIRECTORS

     Richard L. Barbieri has been a Senior Vice President of the Company
     since September 1997, full-time General Counsel of the Company since
     1995 and a Director of the Company since 1978.  His most recent term
     of office as a Director began in 1998, when he was elected to the
     class of Directors whose term of office expires in 1999.  From 1994 to
     1997, Mr. Barbieri served as a Vice President of the Company.  From
     1978 to 1995, Mr. Barbieri served as outside counsel and Secretary of
     the Company, during which time he was engaged in the practice of law
     at Edwards and Barbieri, a Seattle law firm, and then at Riddell
     Williams (now Graham & James/Riddell Williams), a Seattle law firm,
     
<PAGE>
     where he chaired the real estate practice group.  Mr. Barbieri has
     also served as chairman of various committees of the State and County
     Bar Association and as a member of the governing board of the King
     County Bar Association.  He also served as vice chairman of the
     Citizens' Advisory Committee to the Major League Baseball Stadium
     Public Facilities District in Seattle in 1996 and 1997.  Mr. Barbieri
     is the brother of Donald and Thomas Barbieri and the brother-in-law of
     David Bell.  

     Robert G. Templin became a Director of the Company upon consummation
     of the initial public offering of the Company, when he joined Mr.
     Barbieri in the class of Directors whose term of office expires in
     1999.  Mr. Templin has had 50 years of continuous experience in
     ownership, acquisition and disposition, transaction counseling,
     development, construction and management work in the lodging industry
     in the Northwest.  From 1962 to 1983, he was Chief Executive Officer
     of Western Frontiers, a hotel operator.  Since 1986, Mr. Templin has
     served as governor for District II for Best Western, Inc.  In 1986, he
     built Templin's Resort and Conference Center.  He served as president
     of the Idaho Inn Keepers Association from 1975 to 1976 and president
     of the Coeur d'Alene Chamber of Commerce in 1963.  Mr. Templin also
     served on the Government Affairs Committee of Holiday Inn, Inc. from
     1981 to 1982.  In addition to his responsibilities as a Director of
     the Company, Mr. Templin will continue to represent the Company on the
     board of the Idaho Travel Council.

     MEETINGS OF THE BOARD OF DIRECTORS

     The Board of Directors met eight times in 1998.  All directors
     attended all of the meetings of the Board of Directors and its
     Committees on which they serve, with the exception of one excused
     absence due to a conflict in schedule.

     COMMITTEES OF THE BOARD OF DIRECTORS

     The Company has established standing committees of its Board of
     Directors, including an Audit and a Compensation Committee.  Each of
     these Committees is responsible to the full Board of Directors, and
     its activities are therefore subject to Board approval.  The functions
     performed by these Committees are summarized below:

     AUDIT COMMITTEE.  The Audit Committee is responsible for making
     recommendations concerning the engagement of the Company's independent
     public accountants, reviewing with the independent public accountants
     the plans and results of the audit engagement, approving professional
     services provided by the independent public accountants, considering
     the range of audit and non-audit fees and reviewing the adequacy of
     the Company's internal accounting controls.  The members of the Audit
     Committee are Peter Stanton and Ronald Taylor.  The Audit Committee
     was formed in April of 1998 following the initial public offering of
     the Company.  The audit committee met once during 1998 to review the
     audit plan.
     
<PAGE>
     COMPENSATION COMMITTEE.  The Compensation Committee establishes
     salaries, incentives and other forms of compensation for directors,
     officers and other executives of the Company.  This Committee also
     administers the Company's various incentive compensation and benefit
     plans and recommends the establishment of policies relating to such
     plans.  The members of the Compensation Committee are Ronald Taylor
     and Peter Stanton.  The Compensation Committee met three times in
     1998.


     COMPENSATION OF DIRECTORS

     Directors who are employees of the Company do not receive any fees for
     their service on the Board of Directors or any committee thereof.  The
     Company pays each of its non-employee Directors an annual fee equal to
     $6,000, 50% of which is payable in cash and 50% of which is payable in
     shares of Common Stock.  In addition, each non-employee Director is
     paid $500 for attendance at each meeting of the Board of Directors and
     $250 for attendance at each meeting of a committee of the Board of
     Directors of which such Director is a member.  In addition, the
     Company reimburses Directors for their out-of-pocket expenses incurred
     in connection with their service on the Board of Directors.  At the
     initial public offering of the Company, each of the non-employee
     directors was granted options to purchase 10,000 shares of Common
     Stock of the Company at $15/share, on terms more fully described below
     (see "1998 Employment Contracts, Grants of Stock and Stock Options and
     Exercises" below).


                    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
 
                             OWNERS AND MANAGEMENT

     The following table sets forth the beneficial ownership of the Common
     Stock as of February 28, 1999, by (i) each stockholder known by the
     Company to be the beneficial owner of more than 5% of the outstanding
     Common Stock, (ii) each director, (iii) the named  executive officers
     and (iv) all directors and named executive officers as a group.  The
     business address of each shareholder is 201 W. North River Drive,
     Suite 100, Spokane, Washington, 99201, with the exception of Eagle
     Asset Management, the address for which is: 880 Carillon Parkway, St.
     Petersburg, FL 33716.
     
<PAGE>
 
    Names and Address of         Number of Shares        Percentage of
     Beneficial Owner             Beneficially Owned (1)  Common Stock (1)
     ---------------------------  ----------------------  ----------------

     Donald K. Barbieri (2)             3,650,635               28.5
     DKB and HHB Unity Trust              958,379                7.6
     Eagle Asset Management               815,275                6.4
     Barbieri Family Trust                652,288                5.0
     Thomas M. Barbieri                   559,618                4.2
     David M. Bell                        539,910                4.3
     Richard L. Barbieri (2)              537,697                4.2
     Arthur M. Coffey (3)                   7,938                 *
     Peter F. Stanton                       3,231                 *
     Ronald R. Taylor                      18,231                 *
     Robert G. Templin                    107,231                 *
     All directors and executive 
       officers as a group (8 
       persons)                         5,424,490               41.4%

     *Represents less than 1%


     (1)  For purposes of this table, a person or group of persons is
          deemed to have "beneficial ownership" of shares of  Common Stock
          as of a given date which such person has the right to acquire
          within 60 days after such date.  For purposes of computing the
          percentage of outstanding shares held by each person or group of
          persons named above on a given date, any security which such
          person or persons has the right to acquire within 60 days after
          such date is deemed to be outstanding, but is not deemed to be
          outstanding for the purpose of computing the percentage ownership
          of any other person.  As a result, outstanding stock includes
          185,599 of Operating Partnership Units convertible to Common
          Stock.

     (2)  Excludes 958,379 shares of Common Stock held by the DKB & HHB
          Unity Trust, an irrevocable trust, of which Donald Barbieri and
          his spouse Heather Barbieri are co-trustees, and Richard Barbieri
          is an alternate trustee for certain tax related decisions, and
          for which they disclaim beneficial ownership.

     (3)  Includes 3,000 shares issuable under the Restricted Stock Grant
          Award which will be issued within 60 days.  (See "1998 Employment
          Contracts, Grants of Stock and Stock Options and Exercises"
          below.)


             SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

     Based on the Company's review of Forms 3, 4 and 5 and any amendment
     thereto furnished to it pursuant to Section 16 of the Securities
     Exchange Act of 1934, as amended (the "Exchange Act"), all such forms
     were filed on a timely basis.
     
<PAGE>
 
                CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 

     Prior to November 1, 1997, all of the assets of the Company were held
     by the Company and Barbieri Investment Company (BIC), a sister
     corporation, directly, or indirectly through various partnerships (the
     "Partnerships") and corporations wholly-owned (with one exception) by
     the Company and/or BIC, as the case may be, and all of the properties
     owned by the Company, BIC and the Partnerships were managed by the
     Company, as the general partner of the Partnerships, or through
     various management agreements with BIC or the Partnerships.  Effective
     November 3, 1997, BIC merged with and into the Company.  The Merger
     was a stock-for-stock merger, pursuant to which the holders of the
     common stock of BIC and the holders of preferred and common stock of
     the Company received an aggregate of 7,072,025 shares of Common Stock
     of the Company pursuant to conversion ratios jointly determined by the
     boards of directors of the Company and BIC and unanimously approved by
     the shareholders of the Company and BIC.  By effecting a merger of the
     holders of the general and limited partner interests in the
     Partnerships, the Merger resulted in the dissolution of, and a
     transfer to the Company of all assets and property held by, the
     Partnerships, with the exception of Cowley Street Limited Partnership
     in which the Company is general partner with an unrelated limited
     partner.  Effective November 1, 1997, the Company (i) contributed
     certain assets not related to its core hospitality business to Inland
     Northwest Corporation, a wholly owned subsidiary of the Company
     ("INWC"), and (ii) distributed shares of capital stock of INWC and
     Huckleberry Bay Company, another wholly-owned subsidiary of the
     Company ("HBC"), on a pro rata basis, to the shareholders of the
     Company (the "Spin-Off").  The Spin-Off was structured as a tax-free
     transaction.  If the Spin-Off is ultimately determined not to qualify
     as a tax-free transaction (other than as a result of (i) actions taken
     by the Company following the initial public offering that are approved
     by a majority of the Company's independent directors or (ii) transfers
     of a limited number of shares of Common Stock with the approval of the
     INWC Board of Directors by persons who were shareholders of the
     Company at the time of the Spin-Off), INWC will indemnify the Company
     for any tax liability the Company incurs.  As a result of the
     foregoing transactions, the following assets are no longer part of the
     Company's operations: recreational real estate in Priest Lake, Idaho,
     a long-term residence inn operation, residential condominium
     properties, an interest in a milk processing and distribution business
     with associated real property, and a retail sales operation.  The
     Company recorded management fees and other income of approximately
     $35,000, $31,000 and $27,000 during the years ended October 31, 1997,
     1996 and 1995, respectively, and $17,000 for the two months ended
     December 31, 1997 for performing management and administrative
     functions for INWC and HBC.  In addition, the Company received
     commissions from INWC and HBC for real estate sales on behalf of INWC
     and HBC of $87,000, $7,000 and $51,000 for the years ended October 31,
     1997, 1996 and 1995, respectively, and $1,000 for the two months ended
     December 31, 1997.  In connection with the Spin-Off, the Company
     entered into an agreement with INWC, pursuant to which it will provide
     
<PAGE>
     management, development, accounting and other administrative services
     to INWC in exchange for commissions, leasing fees, management fees,
     service fees and development fees, as applicable, based on certain
     percentages and costs incurred by the Company in connection with
     providing such services.  The agreement is automatically renewed
     annually and is subject to termination at the option of either party
     upon 60 days' notice before such renewal date.  During 1998 the
     Company recorded fees and other income from the INWC agreement in the
     amount of $219,000.

     The Company acquired a hotel property (Cavanaughs Templin's Resort)
     from Templin's Resort and Conference Center, Inc. in February 1998.
     Robert Templin, the President of Templin's Resort and Conference
     Center, Inc., has become a Director of the Company upon consummation
     of the initial public offering of the Company.  The purchase price
     paid by the Company for this Hotel was $9.5 million consisting of
     cash, assumed indebtedness and a note to the seller.  Mr. Templin and
     members of his immediate family own 100% of equity interest in
     Templins Resort and Conference Center, Inc. and are entitled to
     receive all of the net proceeds of the purchase price paid for this
     Hotel.  The purchase price was determined through arm's-length
     negotiations between the Company and Mr. Templin.  The note to seller
     and assumed debt were paid in full during 1998.
      
     In connection with the acquisition of certain real property, the
     Company incurred a $600,000 obligation payable to the Barbieri Family
     Foundation, Inc. ("BFF"), a corporation controlled by the estate of
     Louis Barbieri, the administrator of which is Kathryn Barbieri.  Louis
     was the father and Kathryn is mother of Donald, Richard and Thomas
     Barbieri.  BFF was entitled to receive a guaranteed interest payment
     of approximately $67,000 annually, which, pursuant to the terms of the
     obligation, increased by 3% annually.  The Company had the right to
     repay its obligation in full at anytime after January 1997, and BFF
     had the right to require redemption in full at any time after January
     1999.  Interest expense of $67,000, $66,000 and $64,000 was paid by
     the Company to BFF during the years ended October 31, 1997, 1996 and
     1995, respectively, and $11,000 for the two months ended December 31,
     1997.  The Company repaid this obligation in full upon closing of the
     initial public offering.

     Effective January 1, 1998, the Company issued an aggregate of 150,817
     OP Units to BFF, Donald Barbieri, Richard Barbieri and Thomas Barbieri
     and 12,228 shares of Common Stock to Kathryn Barbieri in exchange for
     such persons' partnership interests in the G&B: Lincoln Building
     partnership.

     The Company had a $933,333 note payable to INWC.  The note was paid in
     full upon closing of the initial public offering.
     
<PAGE>
     The Company entered into employment agreements with each of Donald
     Barbieri, Arthur Coffey, Richard Barbieri, David Bell and Thomas
     Barbieri which provide for annual base salaries of $155,000, $130,000,
     $96,000, $96,000 and $96,000, respectively.  Each executive officer is
     eligible to receive annual bonuses as determined by the Compensation
     Committee and will be entitled to participate in all existing or
     future benefit plans of the Company, on the same basis as other senior
     executive officers of the Company.
      
     At October 31, 1997, the Company had loans totaling approximately
     $11.5 million with Washington Trust Bank, of which Peter Stanton, a
     Director, is the Chief Executive Officer and President.  As a result
     of a combination of loan repayments and correction of the percentage
     of participation by Washington Trust Bank in one loan, the loans with
     Washington Trust Bank as of December 31, 1998 totaled $1,436,000.
      
     With respect to future material transactions (or series of related
     transactions) between the Company and related parties, the Company has
     implemented a policy requiring any such transaction to be approved by
     a majority of the non-employee Directors, if any, upon such directors'
     determination that the terms of the transaction are no less favorable
     to the Company than those that could be obtained from unrelated third
     parties.


 
                       REPORT OF COMPENSATION COMMITTEE
                            ON EXECUTIVE COMPENSATION

     The Compensation Committee, which consists of two non-employee
     directors, implements and endorses the goals of the Company's
     executive compensation program, which reflect three guiding
     principles:  (i) to provide compensation and benefits that allow the
     Company to maintain competitive compensation to attract and retain
     executives with the skills critical to the Company's long-term
     success, (ii) to reward performance in attaining business objectives
     and maximizing stockholder value and (iii) to encourage Company stock
     ownership through officer ownership guidelines that are monitored by
     the Committee on an ongoing basis.

     The Committee examines data for positions with similar
     responsibilities in other comparable companies of similar size. 
     Because total compensation for executive officers was established in
     conjunction with the recent initial public offering of the Company in
     April of 1998 (see "1998 Employment Contracts, Grants of Stock and
     Stock Options and Exercises" below), the Committee has recommended no
     change for 1999 in total compensation for executive officers or the
     mix of pay elements (which include base salaries, annual incentives
     and long-term incentives in the form of stock options) other than: (a)
     a cost of living adjustment to base salaries of approximately 1.5%,
     and (b) a change of the base salary of Thomas Barbieri, on his
     promotion in 1999 to Executive Vice President, to the same base salary
     as Arthur Coffey, the Company's other Executive Vice President.
     
<PAGE>

     EXECUTIVE COMPENSATION

     The following table provides information for the past two fiscal years
     concerning all compensation received by those persons who were, in
     1998, the Company's Chief Executive Officer and the four other most
     highly compensated executive officers of the Company (the "named
     executive officers").

                        Summary Annual Compensation Table

     Name and Position           Year   Salary     Bonus      All Other (1)
     --------------------------  ----   --------   --------   -------------
     Donald K. Barbieri          1998   $139,110   $ 80,224        $8,404
     President/CEO               1997     88,776    256,037         7,129

     Arthur M. Coffey            1998   $117,246   $ 78,734    (2) $9,991
     Executive V.P./CFO          1997     76,680    211,055         8,799

     Thomas M. Barbieri (3)      1998   $ 88,140   $ 73,680        $8,245
     Senior V.P./Operations      1997     86,645     46,926         8,289

     Richard L. Barbieri         1998   $ 92,490   $ 40,018        $5,519
     Senior V.P./General         1997     79,572     50,891         6,544
     Counsel

     David M. Bell               1998   $ 89,391   $ 40,018        $8,909
     Senior V.P./Project         1997     67,530     36,136         7,667
     Design, Development and 
     Construction

     (1)  Includes contributions to the Company's 401(k) plan as well as
          premiums paid with respect to such executive officer's health and
          disability insurance policies.

     (2)  Excludes value attributed to 3,000 shares of restricted stock
          granted to Arthur M. Coffey at the initial public offering (see
          "1998 Employment contracts, Grants of Stock and Stock optoins and
          Exercises" below).

     (3)  Thomas M. Barbieri was named Executive Vice President/Operations
          effective January 1, 1999, at the same base salary as Arthur M.
          Coffey.
     
<PAGE>
                 DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT

     The following table sets forth certain information as of March 7, 1999
     regarding the Company's directors and executive officers.
      

     NAME                        AGE    POSITION
     ------------------------    ---    --------------------------------
     Donald K. Barbieri           53    Chairman, President and Chief 
                                          Executive Officer
     Arthur M. Coffey             43    Executive Vice President, Chief 
                                          Financial Officer and Director
     Thomas M. Barbieri           41    Executive Vice President 
                                          Operations and Director
     Richard L. Barbieri          56    Senior Vice President, General 
                                          Counsel and Director
     David M. Bell                48    Senior Vice President--Project 
                                          Design, Development and
                                          Construction 
     Lori L. Farnell              44    Vice President--Sales and 
                                          Marketing
     John M. Taffin               35    Vice President--Hotel Operations
     Jack G. Lucas                46    Vice President--Entertainment
     Peter F. Stanton             42    Director
     Ronald R. Taylor             51    Director
     Robert G. Templin            75    Director


     Donald K. Barbieri has been President and Chief Executive Officer and
     a Director of the Company since 1978 and Chairman of the Board since
     1996.  Mr. Barbieri joined the Company in 1969 and is responsible for
     the Company's development activities in commercial, residential,
     hotels and entertainment areas.  Mr. Barbieri served as president of
     the Spokane Chapter of the Building Owners and Managers Association
     from 1974 to 1975 and served as president of the Spokane Regional
     Convention and Visitors Bureau from 1977 to 1979.  He also served on
     the Washington Tourism Development Council from 1983 to 1985 and the
     Washington Economic Development Board while chairing the State of
     Washington's Quality of Life Task Force from 1985 to 1989.  Mr.
     Barbieri is the brother of Richard and Thomas Barbieri and the
     brother-in-law of David Bell.

     Arthur M. Coffey has been Chief Financial Officer and Executive Vice
     President of the Company since June 1997 and a Director of the Company
     since 1990.  Mr. Coffey served as Chief Operating Officer of the
     Company from 1990 to June 1997.  Mr. Coffey has been in the hotel
     business since 1971 and joined the Company in 1981.  Mr. Coffey is
     currently a trustee of the Spokane Area Chamber of Commerce, served as
     a director of the Washington State Hotel Association from 1996 to
     1997, served as director of the Spokane Regional Convention and
     Visitors Bureau from 1982 to 1985 and served as president of the
     Spokane Hotel Association from 1989 to 1990.
     
<PAGE>
     Thomas M. Barbieri has been Executive Vice President Operations of the
     Company since January 1, 1999, and a Director of the Company since
     1985.  From 1985 to 1997, Mr. Barbieri served as a Vice President of
     the Company.  Mr. Barbieri joined the Company in 1979 and from 1987 to
     the present has overseen the management, supervision, and development
     of the Company's real estate portfolio.  From 1982 to 1987, Mr.
     Barbieri was Operations Manager of the Company's hospitality division.
     From 1979 to 1981, Mr. Barbieri was the General Manager of Cavanaughs
     River Inn.  He served on Washington State Governor Lowery's Real
     Estate Advisory Council from 1993 to 1994, as a president of the
     Downtown Spokane Association from 1992 to 1994, as a director of the
     Spokane Convention and Visitors Bureau from 1983 to 1987, as a trustee
     of the Spokane Area Chamber of Commerce from 1987 to 1991 and as a
     director of the Spokane Economic Development Council from 1991 to
     1996.  Mr. Barbieri is the brother of Donald and Richard Barbieri and
     the brother-in-law of David Bell.
      
     Richard L. Barbieri has been a Senior Vice President of the Company
     since September 1997, full-time General Counsel of the Company since
     1995 and a Director of the Company since 1978.  From 1994 to 1997, Mr.
     Barbieri served as a Vice President of the Company.  From 1978 to
     1995, Mr. Barbieri served as outside counsel and Secretary of the
     Company, during which time he was engaged in the practice of law at
     Edwards and Barbieri, a Seattle law firm, and then at Riddell Williams
     (now Riddell Williams/Graham & James), a Seattle law firm, where he
     chaired the real estate practice group.  Mr. Barbieri has also served
     as chairman of various committees of the State and County Bar
     Association and as a member of the governing board of the County Bar
     Association.  He also served as vice chairman of the Citizens'
     Advisory Committee to the Major League Baseball Stadium Public
     Facilities District in Seattle in 1996 and 1997.  Mr. Barbieri is the
     brother of Donald and Thomas Barbieri and the brother-in-law of David
     Bell.
      
     David M. Bell has been Senior Vice President--Project Design,
     Development and Construction of the Company since September 1997 and a
     Director of the Company since 1985.  From 1985 to 1997, Mr. Bell
     served as Vice President of the Company.  He is in charge of new
     project development, property renovations and major building
     construction.  Since joining the Company in 1984, Mr. Bell has been
     responsible for numerous projects, including the development of the
     CHC Building, the Cavanaughs at Kalispell Center hotel and the
     Kalispell Center Mall, two major room tower additions to Cavanaughs
     Inn at the Park and the conversion of the U.S. Bank of Washington
     office building in Seattle into Cavanaughs on Fifth Avenue.  Mr. Bell
     is a registered Professional Engineer.  Mr. Bell is the brother-in-law
     of Donald, Richard and Thomas Barbieri.
      
     Lori L. Farnell has been the Vice President--Sales and Marketing since
     October 1993.  Ms. Farnell joined the Company in 1981 as Director of
     Sales for the hospitality division.  Ms. Farnell is responsible for
     directing the sales and marketing activities of the Company and the
     in-house advertising and art department.  Prior to joining the 
     
<PAGE>
     Company, Ms. Farnell worked as Director of Sales for the Spokane
     Davenport Hotel.  She is a member of the Eastern Washington University
     Foundation Board, the Sacred Heart Hospital Ambassadors Board, a past
     President and Woman of the Year of Executive Women International and
     an active member of the Washington Society of Association Executives
     and the National Tour Association.
      
     John M. Taffin has been Vice President--Hotel Operations since
     September 1997.  Mr. Taffin is responsible for the Company's overall
     hotel operations and directs the Company's yield management strategy.
     Mr. Taffin joined the Company's hospitality division in November 1995
     as a regional manager.  Mr. Taffin's prior lodging experience includes
     13 years of service with Red Lion Hotels, during which time he was a
     general manager of various full service hotels throughout the
     Northwest.  Prior to September 1997, Mr. Taffin was responsible for
     all aspects of operations for the Hotels located in Spokane.
      
     Jack G. Lucas has been Vice President--Entertainment Services Division
     since June 1998.  Mr. Lucas joined the Company in 1987 as General
     Manager for G&B Select-a-Seat.  Mr. Lucas is responsible for the
     overall operation and direction of the Entertainment Division, which
     consists of G&B Select-a-Seat, Cavanaughs Entertainment, and the 800
     Call Center.  Prior to joining the Company, Mr. Lucas worked on the
     management staff for the private Spokane Entertainment Facilities. 
     Mr. Lucas graduated from Eastern Washington University.  Mr. Lucas is
     a member and past President of the Spokane Central Lions Club, current
     Vice President, Board of Directors, Big Brothers and Sisters of
     Spokane County, Board Member of the Spokane Lilac Blind Foundation, as
     well as other civic organizations within the Spokane community. 
       
     Peter F. Stanton has been a Director of the Company since April 1998.
     Mr. Stanton is the Chairman, Chief Executive Officer and President of
     Washington Trust Bank.  Mr. Stanton has been with Washington Trust
     Bank since 1982 and has served as its President since 1990, Chief
     Executive Officer since 1993 and Chairman since 1997.  Mr. Stanton is
     also Chief Executive Officer, President and a director of W.T.B.
     Financial Corporation (a bank holding company) and a director of
     Northern State Bank and Reardon and Rivard & Associates (a registered
     investment advisor).  In addition to serving on numerous civic boards,
     Mr. Stanton was president of the Washington Bankers Association from
     1995 to 1996 and serves as state chairman of the American Bankers
     Association for 1997 and 1998.
      
     Ronald R. Taylor has been a Director of the Company since April 1998.
     He has been a General Partner of Enterprise Partners, a venture
     capital firm since April, 1998.  From 1996 to 1998, Mr. Taylor has
     worked as an independent business consultant.  From 1987 to 1996, Mr.
     Taylor was chairman, president and chief financial officer of Pyxis
     Corporation (a health care services provider).  He is currently a
     director of Watson Pharmaceuticals, Inc. (a pharmaceutical
     manufacturer), and several privately held companies.
     
<PAGE>
     Robert G. Templin has been a Director of the Company since April 1998.
     Mr. Templin has had 50 years of continuous experience in ownership,
     acquisition and disposition, transaction counseling, development,
     construction and management work in the lodging industry in the
     Northwest.  From 1962 to 1983, he was Chief Executive Officer of
     Western Frontiers, a hotel operator.  Since 1986, Mr. Templin has
     served as governor for District II for Best Western, Inc.  In 1986, he
     built Templin's Resort and Conference Center.  He served as president
     of the Idaho Inn Keepers Association from 1975 to 1976 and president
     of the Coeur d'Alene Chamber of Commerce in 1963.  Mr. Templin also
     served on the Government Affairs Committee of Holiday Inn, Inc. from
     1981 to 1982.  In addition to his responsibilities as a Director of
     the Company, Mr. Templin continues to serve as a representative of
     Region one of the Idaho Travel Council under the Idaho Department of
     Commerce.

                 1998 EMPLOYMENT CONTRACTS, GRANTS OF STOCK AND
                           STOCK OPTIONS AND EXERCISES

     EMPLOYMENT AGREEMENTS
      
     The Company has entered into employment agreements with each of Donald
     Barbieri, Arthur Coffey, Richard Barbieri, David Bell and Thomas
     Barbieri which provided for 1998 base salaries of $155,000 in the case
     of Donald Barbieri, $130,000 in the case of Mr. Coffey, and $96,000 in
     the case of Richard Barbieri, Mr. Bell and Thomas Barbieri, subject,
     in each case, to periodic increases.  Each executive officer will be
     eligible to receive annual bonuses as determined by the Compensation
     Committee and will be entitled to participate in all existing or
     future benefit plans of the Company, on the same basis as other senior
     officers of the Company.
      
     The employment agreements with these Named Executive Officers (as used
     below, each an "Executive") will be substantially similar and provide
     as follows.  Each Executive shall serve in the position described
     above through December 31, 1999, unless terminated earlier in
     accordance with the terms of such agreement.  Thereafter, each
     agreement will automatically be renewed for additional one-year
     periods, unless terminated by either party upon 120 days' notice prior
     to any renewal.  Each agreement may be terminated by the Company for
     Cause (as defined in such agreement) or by the Executive (i) for Good
     Reason (as defined in such agreement) or (ii) within six months of a
     Change of Control of the Company (as defined in such agreement).  If
     the Executive terminates the agreement for Good Reason (or the Company
     terminates the agreement without Cause) or, after the initial term
     ends, unilaterally determines to not renew such Executive's agreement,
     the Executive will receive a severance payment equal to two times such
     Executive's total compensation in the prior year, plus a continuation
     of all benefits for a two-year period, and all outstanding options of
     such Executive shall become fully vested.  If the Executive terminates
     the agreement following a Change of Control, the severance payment
     will be equal to three times such Executive's total compensation for
     
<PAGE>
     the prior year.  The Executive is required to devote his full business
     time and attention to the business and affairs of the Company, except
     that he may devote such reasonable amount of time, as he determines,
     to (i) serving, with the approval of the Board, as a director, trustee
     or member of any board or committee of any organization, (ii) engaging
     in charitable and community activities, (iii) managing his personal
     investments and affairs, and (iv) acting as a director and officer of
     Inland Northwest Corporation, previously a wholly-owned subsidiary of
     the Company; provided, however, that such activities may not involve
     any material conflict of interest with the interests of the Company or
     interfere materially with the performance of his duties and
     responsibilities under such agreement.

     Each Executive is eligible to receive a bonus under the Company's
     management bonus plan or such other plan adopted from time to time.
     The award and amount of such bonus shall be based upon the
     Compensation Committee's determination of such Executive's actual
     performance as measured against established goals.  The Company has
     also agreed to reimburse the Executive for any federal, state or local
     excise taxes ("Excise Tax"), and any additional taxes to which he may
     be subject, on any payments to the Executive from the Company as a
     result of accelerated vesting of his options, up to a maximum
     reimbursement equal to two times the amount of such Excise Tax.

     RESTRICTED STOCK AND CERTAIN STOCK OPTION GRANTS
      
     The Company has entered into an agreement to issue an aggregate of
     55,000 restricted shares of Common Stock under the 1998 Stock
     Incentive Plan (described below) to five members of senior management:
     Arthur Coffey (15,000 shares), John Taffin (10,000 shares), Lori
     Farnell (10,000 shares), David Peterson (10,000 shares) and Shannon
     Kapek (10,000 shares).  Twenty percent of each recipient's stock grant
     was issued on the date of the initial public offering of the Company
     and an additional twenty percent will be issued on each anniversary of
     such date, provided such person is an employee of the Company at that
     time.
      
     In connection with the initial public offering of the Company, options
     to purchase up to 900,000 shares of Common Stock were granted pursuant
     to the 1998 Stock Incentive Plan, at an exercise price equal to the
     initial public offering price of $15/share.  Through December 31,
     1998, the following options were granted to: Donald Barbieri (90,594
     shares), Arthur Coffey (55,513 shares), Richard Barbieri (45,532
     shares), Thomas Barbieri (45,419 shares) and David Bell (45,452
     shares).  The options have a term of ten years.  Fifty percent of each
     recipient's options will vest on the fourth anniversary of the date of
     grant and the remaining 50% will vest on the fifth anniversary of the
     date of grant.  This vesting schedule will change if, beginning one
     year after the option grant date, the stock price of the Common Stock
     remains at the following appreciation levels (measured as a percentage
     increase over the stock price at the time the option was granted) for
     60 consecutive trading days:
     
<PAGE>
                   PERCENT OF                       OPTION
               SHARE PRICE INCREASE             SHARES VESTED:
               --------------------             --------------
                        25%                           25%
                        50%                           50%
                        75%                           75%
                       100%                          100%


     Such options shall be exercisable, subject to vesting, for ten years
     from the date of grant and in all other respects shall be subject to
     the terms and conditions of the 1998 Stock Incentive Plan.  Vesting of
     such options is also conditioned upon the holder's employment with the
     Company on the scheduled vesting date.  No options had been exercised
     or were capable of being exercised as of December 31, 1998.

     1998 STOCK INCENTIVE PLAN
      
     In January 1998, the Board adopted the 1998 Stock Incentive Plan to
     attract and retain officers, key employees and consultants. 
     Additional options may be granted subject to Board approval.  An
     aggregate of 1,200,000 shares of Common Stock, subject to adjustment
     for stock splits, stock dividends and similar events, has been
     authorized for issuance upon exercise of options, stock appreciation
     rights ("SARs"), and other awards, including restricted or deferred
     stock awards under the 1998 Stock Incentive Plan.  The Compensation
     Committee administers the 1998 Stock Incentive Plan and determines to
     whom options, SARs, restricted stock purchase rights and other awards
     are to be granted and the terms and conditions, including the number
     of shares and the period of exercisability, thereof.  Upon
     consummation of the Offering, non-employee Directors were granted
     options under the 1998 Stock Incentive Plan to purchase 10,000 shares
     of Common Stock, subject to one year restriction on sale and vesting
     equal percentages over five years.

     The 1998 Stock Incentive Plan authorizes the grant or issuance of
     various options and other awards.  Nonqualified stock options
     ("NQSOs") may be granted for any term specified by the Compensation
     Committee and will provide for the right to purchase Common Stock at a
     specified price which, except with respect to NQSOs intended to
     qualify as performance-based compensation under Section 162(m) of the
     Internal Revenue Code of 1986, as amended (the "Code"), may be less
     than fair market value on the date of grant (but not less than par
     value), and may become exercisable (at the discretion of the
     Compensation Committee) in one or more installments after the date of
     grant.  Incentive stock options may be granted only to employees and
     if granted will be designed to comply with the provisions of the Code
     and will be subject to restrictions contained in the Code, including
     having an exercise price equal to at least 100% of fair market value
     of Common Stock on the grant date and ten year restriction on their
     term, but may be subsequently modified to disqualify them from
     treatment as an incentive stock option.  The maximum fair market value
     
<PAGE>
     (determined on the date of grant) of shares which may be issued
     pursuant to incentive stock options granted under the 1998 Stock
     Incentive Plan to any individual in any calendar year may not exceed
     $100,000.  SARs granted by the Compensation Committee in connection
     with stock options or other awards typically will provide for payments
     to the holder based upon increases in the price of the Common Stock
     over the exercise price of the related option or other awards, but
     alternatively may be based upon other criteria such as book value.
     Participants may receive dividend equivalents representing the value
     of the dividends per share paid by the Company, calculated with
     reference to the number of shares covered by the stock options, SARs
     or other awards held by the participant.  Performance awards may be
     granted by the Compensation Committee on an individual or group basis
     and may include bonus or "phantom" stock awards that provide for
     payments based upon increases in the price of the Common Stock over a
     predetermined period.  Restricted stock may be sold to participants at
     various prices (but not below par value) and made subject to such
     restrictions as may be determined by the Compensation Committee.
     Deferred stock awards may be granted to partiipants, typically without
     payment of consideration, but subject to vesting conditions based on
     continued employment or on performance criteria established by the
     Compensation Committee.  Whereas purchasers of restricted stock will
     have voting rights and will receive dividends prior to the time when
     the restrictions lapse, recipients of deferred stock generally will
     have no voting or dividend rights prior to the time when vesting
     conditions are satisfied.

     Payments for the shares purchased upon the exercise of options may be
     in cash or, if the terms of an option so provide, with shares of
     Common Stock owned by the optionee (or issuable upon exercise of the
     option) or with other lawful consideration, including services
     rendered.

     No option, SAR or other right to acquire Common Stock granted under
     the 1998 Stock Incentive Plan may be assigned or transferred by the
     grantee, except by will or the laws of succession, although the shares
     underlying such rights may be transferred if all applicable
     restrictions have lapsed.  During the lifetime of the holder of any
     option or right, such option or right may be exercised only by the
     holder.

     The Compensation Committee will have the right to accelerate, in whole
     or in part, from time to time, including upon a change in control of
     the Company, conditionally or unconditionally, the right to exercise
     any option or other award granted under the 1998 Stock Incentive Plan.
      
     Amendments of the 1998 Plan to increase the number of shares as to
     which options, SARs, restricted stock and other awards may be granted
     (except for adjustments resulting from stock splits and similar
     events) will require the approval of the Company's shareholders.  In
     all other respects, the 1998 Stock Incentive Plan may be amended,
     modified, suspended or terminated by the Compensation Committee,
     
<PAGE>
     unless such action would otherwise require shareholder approval as a
     matter of applicable law, regulation or rule.  Amendments of the 1998
     Stock Incentive Plan will not, without the consent of the participant,
     affect such person's rights under an award previously granted, unless
     the award itself otherwise expressly so provides.  The 1998 Stock
     Incentive Plan will terminate ten years after the date the 1998 Stock
     Incentive Plan was adopted by the Board and approved by the Company's
     shareholders.

 
                            STOCK PRICE PERFORMANCE

     The following graph depicts the Company's Common Stock price
     performance relative to the performance of the Russell 2000 Composite
     Index and the Standard & Poor's Lodging-Hotels Index.

                     Comparison of Cumulative Total Returns*

     (A graph depicting a comparison of Cavanaughs to the Russell 2000 and
     the S&P Lodging-Hotels which indicate the following cumulative returns
     at December 31, 1998)

                               Initial Investment
                               April 3, 1998          December 31, 1998
                               ------------------     -----------------
       Cavanaughs                   $100.00                $71.67
       Russell 2000                 $100.00                 87.84
       S&P Lodging-Hotels           $100.00                 73.99

       *Total return is based on $100 initial investment and reinvestment
        of dividends.

     The graph above assumes an investment of $100 in the Company's Common
     Stock, the Russell 2000 Composite Index and the Standard & Poor's
     Lodging-Hotels Index commencing April 3, 1998 and ending December 31,
     1998, and assumes a reinvestment of all dividends.  The Company has
     not paid cash dividends on its Common Stock.  Note that the Company's
     Common Stock price performance on the graph above is not necessarily
     indicative of future stock price performance.

                                 RETIREMENT PLAN

     The Company adopted a tax-qualified employee savings and retirement
     plan (the "401(k) Plan") effective as of March 1, 1989 covering all
     employees who have been employed by the Company for at least 90 days
     and who are at least 21 years of age.  Pursuant to the 401(k) Plan,
     participants may elect to reduce their current compensation by not
     less than 1.0% nor more than 15.0% of eligible compensation.  The
     amount of each participant's contributions to the 401(k) Plan is
     partially matched by the Company based on years of service and amounts
     contributed, up to 3% of a participant's earnings.  The trustee under
     the 401(k) Plan invests the assets of the 401(k) Plan in designated
     investment options.  The Company may amend the 401(k) Plan to permit
     participants to designate the Company's Common Stock as an investment
     option; provided, however, no more than 15% of a participant's total
     
<PAGE>
     investments in the 401(k) Plan may be allocated to the Common Stock.
     The 401(k) Plan is intended to qualify under Section 401 of the Code
     so that (i) contributions to the 401(k) Plan, and the income earned on
     such contributions, are not taxable to participants until withdrawn
     from the 401(k) Plan and (ii) contributions by the Company are
     deductible by the Company when made for income tax purposes.


                         CHANGE OF CONTROL ARRANGEMENTS

     CERTAIN PROVISIONS OF ARTICLES AND BY-LAWS AFFECTING CONTROL

     The By-Laws provide for shareholder action by written consent and the
     Articles reserve to the directors the exclusive right to change the
     number of directors or to fill vacancies on the Board.  The Articles
     also provide for the Board to be divided into three classes of
     directors serving staggered three year terms.  As a result,
     approximately one-third of the Board will be elected each year.  The
     purpose and intended effect of the above described provisions in the
     Articles and By-Laws are to enhance the continuity and stability of
     the Company's management by making it more difficult for shareholders
     to remove or change the incumbent members of the Board.  Such
     provisions, coupled with the ownership by existing shareholders of
     approximately 60% of the Common Stock following the Offering, could
     also render the Company more difficult to be acquired pursuant to an
     unfriendly acquisition by an outsider by making it more difficult for
     such person to obtain control of the Company and replace current
     management without the approval of the Board.
      
     WASHINGTON ANTI-TAKEOVER STATUTE
      
     Washington law contains certain provisions that may have the effect of
     delaying, deterring or preventing a takeover or change in control of
     the Company.  Chapter 23B.19 of the Washington Act prohibits the
     Company, with certain exceptions, from engaging in certain significant
     business transactions with an "acquiring person" (defined as a person
     who acquires 10% or more of the Company's voting securities without
     the prior approval of the Board) for a period of five years after such
     acquisition.  The prohibited transactions include, among others, a
     merger with, disposition of assets to, or issuance or redemption of
     stock to or from, the acquiring person, or otherwise allowing the
     acquiring person to receive any disproportionate benefit as a
     shareholder.  The Company may not exempt itself from coverage of this
     statute.

 
             PROPOSAL 2:  RATIFICATION OF APPOINTMENT OF AUDITORS

     Unless instructed to the contrary, it is intended that votes be cast
     pursuant to the accompanying proxy for the ratification of the
     appointment of PricewaterhouseCoopers LLP as auditors for the Company
     for 1999.  PricewaterhouseCoopers LLP has audited the accounts of the
     Company for 1998.  Representatives of PricewaterhouseCoopers LLP are
     expected to attend the Meeting and will have an opportunity to make a
     statement and/or respond to appropriate questions from stockholders.
     
<PAGE>
 
    The Board of Directors recommends a vote "FOR" the ratification of the
     appointment of PricewaterhouseCoopers LLP as auditors for the Company
     for 1999. 
      
     In the event that the ratification of the appointment of auditors is
     not made by a majority of the shares entitled to vote thereon, the
     selection of other auditors will be considered by the Board of
     Directors. 

                            EXPENSES OF SOLICITATION

     The accompanying proxy is solicited by and on behalf of the Board of
     Directors, and the entire cost of such solicitation will be borne by
     the Company.  The Company will distribute proxy materials to
     beneficial owners and may solicit proxies by personal interview, mail,
     telephone and telegram, and will request brokerage houses and other
     custodians, nominees and fiduciaries to forward soliciting material to
     the beneficial owners of the Common Stock held on the record date by
     such persons. 
      
                                  OTHER MATTERS

     The Company knows of no other matters that are likely to be brought
     before the Meeting.  If, however, other matters that are not now known
     or determined come before the Meeting, the persons named in the
     enclosed proxy or their substitutes will vote such proxy in accordance
     with their judgment.

                            PROPOSALS OF STOCKHOLDERS

     Proposals of stockholders to be considered for inclusion in the Proxy
     Statement and proxy for the Company's 2000 Annual General Meeting of
     Stockholders must be received by the Company's General Counsel by
     November 8, 1999.

                  ANNUAL REPORT AND ANNUAL REPORT ON FORM 10-K

     A copy of the Company's 1998 Annual Report on Form 10-K for the year
     ended December 31, 1998 as filed with the Securities and Exchange
     Commission is being mailed with this Proxy Statement to each
     stockholder of record.  Stockholders not receiving a copy of such
     Annual Reports may obtain one without charge by writing or calling
     Stephen Barbieri, 201 West North River Drive, Suite 100, Spokane,
     Washington 99201, (509) 459-6100.

          By Order of the Board of Directors
          Richard L. Barbieri
          General Counsel
          Spokane, Washington
          March 19, 1999
     
<PAGE>
     SCHEDULE 14A INFORMATION 

          PROXY STATEMENT PURSUANT TO SECTION 14 (A) OF THE SECURITIES 
                      EXCHANGE ACT OF 1934 (AMENDMENT NO.)
                           Filed by the Registrant [X]
                 Filed by a Party other than the Registrant [ ]
                           Check the appropriate box:

     [ ]  Preliminary Proxy Statement 

     [ ]  Confidential, for use of the Commission Only as permitted by 
          Rule 14a-6(e)(2)

     [X]  Definitive Proxy Statement

     [ ]  Definitive Additional Materials 

     [ ]  Soliciting Material Pursuant to Rule 14a-111(c) or Rule 14a-12

                       CAVANAUGHS HOSPITALITY CORPORATION
                (Name of Registrant as Specified In Its Charter) 

                   (Name of Person(s) Filing Proxy Statement,
                         if other than the Registrant) 

     Payment of Filing Fee (Check the appropriate box): 

     [X]  No fee required 

     [ ]  Fee computed on table below per Exchange Act Rules 14a-6(i)(1) 
          and 0-11. 

     (1)  Title of each class of securities to which transaction applies: 

     (2)  Aggregate number of securities to which transaction applies: 

     (3)  Per unit price or other underlying value of transaction computed
          pursuant to Exchange Act Rule 0-11          

          (set forth the amount on which the filing fee is calculated and
          state how it was determined): 

     (4)  Proposed maximum aggregate value of transaction: 

     (5)  Total fee paid:

     [ ]  Fee paid previously with preliminary materials: 

     [ ]  Check box if any part of the fee is offset as provided by
          Exchange Act Rule 0-11(a)(2) and identify the filing for which
          the offsetting fee was paid previously.  Identify the previous
          filing y registration statement number, or the Form or Schedule
          and the date of its filing. 
     
<PAGE>
     (1)  Amount Previously Paid: 

     (2)  Form, Schedule or Registration Statement No.: 

     (3)  Filing Party: 

     (4)  Date Filed:   

<PAGE>