EXHIBIT 10.20
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                     MEMBERSHIP INTEREST PURCHASE AGREEMENT

     THIS MEMBERSHIP INTEREST PURCHASE AGREEMENT (this "Agreement") is made
     this ____ day of December, 1999, by and among Cavanaughs Hospitality
     Corporation, a Washington corporation (the "Buyer"), October Hotel
     Investors, LLC, a Washington limited liability company ("October") and
     M and S Hotel LLC, a Washington limited liability company
     ("MS")(October and MS shall be referred to collectively herein as the
     "Seller").

     R E C I T A L S

     A.  Bellevue Inn, LLC ("Bellevue Inn") is a limited liability company
         organized and existing under the laws of the state of Washington.
         Bellevue Inn has three Members (as that term is defined in the
         Bellevue Inn Operating Agreement (the "Operating Agreement")) with
         the following ownership percentages:  October - 25%; MS   25%; and
         WestCoast Bellevue Inn, Inc., a Washington corporation ("WC
         Bellevue") 50%.

     B.  WC Bellevue is a wholly owned subsidiary of WestCoast Hotels,
         Inc., a Washington corporation ("WCH").

     C.  The shareholders of WCH are selling the stock of WCH (the "WCH
         Sale") under the terms of a Stock Purchase Agreement (the "Stock
         Purchase Agreement") by and among Buyer, Lisa Swanbeck Johnson,
         Rodney D. Olson and D. Michael Bashaw (Johnson, Olson and Bashaw
         shall be collectively referred to herein as "WCH Sellers") dated
         December 17, 1999.  In exchange for their stock in WCH, the
         shareholders will receive cash, corporate bonds and certain assets
         of the Company.  The WCH Sale will transfer indirect ownership of
         fifty percent (50%) of Bellevue Inn to Buyer.

     D.  Under the terms and conditions of this Agreement, and conditioned
         upon the closing of the transactions contemplated in, and as
         defined in, the Stock Purchase Agreement ("Stock Purchase
         Closing"), Buyer will acquire from Seller, and Seller sells to
         Buyer the remaining fifty percent (50%) membership interest of
         Bellevue Inn, which is all of Seller's ownership interest in
         Bellevue Inn ("Bellevue Inn Interests").

     NOW, THEREFORE, in consideration of the mutual promises herein made,
     and in consideration of the representations, warranties, and covenants
     herein contained, the parties agree as follows.
     <PAGE>
     AGREEMENT

     1.  PURCHASE AND SALE OF STOCK. Seller hereby agrees to sell, assign
         and convey to Buyer, and Buyer hereby agrees to purchase from
         Seller, all of Seller's right, title and interest in the Bellevue
         Inn Interests for a purchase price of Two Million Two Hundred and
         Fifty Thousand Dollars and 00/100 ($2,250,000) (the "Purchase
         Price").  The Purchase Price shall be paid as follows:

         (a)  One Million Two Hundred and Fifty Thousand Dollars
              ($1,250,000) in immediately available funds at Closing; and

         (b)  One Million Dollars ($1,000,000) in private bonds in the form
              of Exhibit A to be delivered to Seller at Closing (the "Buyer
              Bonds").

         (c)  Provided that all conditions to the obligations of the
              Parties to consummate the transactions contemplated hereby
              have been satisfied or waived (other than conditions with
              respect to actions the respective Parties will take at the
              Closing itself), the closing of the transactions contemplated
              by this Agreement (the "Closing") shall take place at the
              offices of Graham & James LLP/Riddell Williams P.S. in
              Seattle, Washington simultaneously with the Stock Purchase
              Closing.  The effective date of the transaction described in
              this Agreement ("Effective Date") shall be midnight of
              December 31, 1999, whether or not Closing has occurred by
              that date.  In order to conveniently effectuate Closing, the
              parties will cooperate to deposit all documents with Closing
              Agent under binding delivery instructions by 5:00 p.m.
              Seattle time on December 30, 1999 and arrange for the
              transfer of all funds under binding delivery instructions by
              5:00 p.m. Seattle time on Closing, but not earlier than
              January 3, 2000.  To the extent that all conditions to the
              obligations of the Parties to consummate the transactions
              contemplated hereby have not been satisfied or waived (other
              than conditions with respect to actions the respective
              Parties will take at the Closing itself), Closing shall be
              delayed until such conditions have been satisfied without
              modifying the Effective Date.

         (d)  All real estate excise taxes incurred in connection with this
              Agreement, shall be allocated to Sellers and paid at Closing,
              and the Parties agree to cooperate to file all necessary Tax
              Returns and other documentation with respect to all such
              transfer taxes and to join in the execution of any such Tax
              Returns and other documentation.
     <PAGE>
     2.  REPRESENTATIONS AND WARRANTIES CONCERNING THE TRANSACTION.

         (a)  REPRESENTATIONS AND WARRANTIES OF OCTOBER.  October
              represents and warrants to the Buyer that the statements
              contained in this Section 3(a) are correct and complete as of
              the date of this Agreement.

              (i)    ORGANIZATION OF BELLEVUE INN. Bellevue Inn is a
                     limited liability company duly organized, validly
                     existing, and in good standing under the laws of the
                     State of Washington and has all requisite power and
                     authority to carry on its business and to own its
                     properties.

              (ii)   ORGANIZATION OF OCTOBER. October is a limited
                     liability company duly organized, validly existing,
                     and in good standing under the laws of the State of
                     Washington.

              (iii)  AUTHORIZATION. October has full power and authority to
                     execute and deliver this Agreement and to perform his
                     or its obligations hereunder.  This Agreement
                     constitutes the valid and legally binding obligation
                     of October, enforceable in accordance with its terms
                     and conditions.  October need not give any notice to,
                     make any filing with, or obtain any authorization,
                     consent, or approval of any government or governmental
                     agency in order to consummate the transactions
                     contemplated by this Agreement which has not been
                     obtained as of the execution of this Agreement.

              (iv)   NONCONTRAVENTION. Neither the execution and the
                     delivery of this Agreement, nor the consummation of
                     the transactions contemplated hereby, will (A) violate
                     any constitution, statute, regulation, rule,
                     injunction, judgment, order, decree, ruling, charge,
                     or other restriction of any government, governmental
                     agency, or court to which October is subject or any
                     provision of its charter or bylaws or (B) conflict
                     with, result in a breach of, constitute a default
                     under, result in the acceleration of, create in any
                     party the right to accelerate, terminate, modify, or
                     cancel, or require any notice under any agreement,
                     contract, lease, license, instrument, or other
                     arrangement to which October is a party or by which it
                     is bound or to which any of its assets is subject.
     <PAGE>
              (v)    CAPITALIZATION OF BELLEVUE INN.  As the date hereof,
                     October owns a twenty five percent (25%) membership
                     interest Bellevue Inn (the "October Interest").

              (vi)   INVESTMENT. October (A) understands that the Buyer
                     Bonds have not been, and will not be, registered under
                     the Securities Act, or under any state securities
                     laws, and are being offered and sold in reliance upon
                     federal and state exemptions for transactions not
                     involving any public offering, (B) is acquiring the
                     Buyer Bonds solely for its own account for investment
                     purposes, and not with a view to the distribution
                     thereof, (C) is a sophisticated investor with
                     knowledge and experience in business and financial
                     matters, (D) has received certain information
                     concerning the Buyer and has had the opportunity to
                     obtain additional information as desired in order to
                     evaluate the merits and the risks inherent in holding
                     the Buyer Bonds, (E) is able to bear the economic risk
                     and lack of liquidity inherent in holding the Buyer
                     Bonds, and (F) is an Accredited Investor.

         (b)  REPRESENTATIONS AND WARRANTIES OF MS.  MS represents and
              warrants to the Buyer that the statements contained in this
              Section 3(b) are correct and complete as of the date of this
              Agreement.

              (i)    ORGANIZATION OF BELLEVUE INN.  Bellevue Inn is a
                     limited liability company duly organized, validly
                     existing, and in good standing under the laws of the
                     State of Washington and has all requisite power and
                     authority to carry on its business and to own its
                     properties.

              (ii)   ORGANIZATION OF MS.  MS is a limited liability company
                     duly organized, validly existing, and in good standing
                     under the laws of the State of Washington.

              (iii)  Authorization. MS has full power and authority to
                     execute and deliver this Agreement and to perform his
                     or its obligations hereunder.  This Agreement
                     constitutes the valid and legally binding obligation
                     of MS, enforceable in accordance with its terms and
                     conditions.  MS need not give any notice to, make any
                     filing with, or obtain any authorization, consent, or
                     approval of any government or governmental agency in
                     order to consummate the transactions contemplated by
     <PAGE>
                     this Agreement which has not been obtained as of the
                     execution of this Agreement.

              (iv)   NONCONTRAVENTION.  Neither the execution and the
                     delivery of this Agreement, nor the consummation of
                     the transactions contemplated hereby, will (A) violate
                     any constitution, statute, regulation, rule,
                     injunction, judgment, order, decree, ruling, charge,
                     or other restriction of any government, governmental
                     agency, or court to which MS is subject or any
                     provision of its charter or bylaws or (B) conflict
                     with, result in a breach of, constitute a default
                     under, result in the acceleration of, create in any
                     party the right to accelerate, terminate, modify, or
                     cancel, or require any notice under any agreement,
                     contract, lease, license, instrument, or other
                     arrangement to which MS is a party or by which it is
                     bound or to which any of its assets is subject.

              (v)    CAPITALIZATION OF BELLEVUE INN.  As the date hereof,
                     MS owns a twenty five percent (25%) membership
                     interest in Bellevue Inn (the "MS Interest").

              (vi)   GOOD TITLE AND NO CLAIMS.  MS has good title to the MS
                     Interest, there are no claims, liens or encumbrances
                     which can lawfully be made against the MS Interest, MS
                     is transferring title to the MS Interest to Buyer free
                     and clear of any claims, liens, encumbrances, pledges
                     or options.

              (vii)  INVESTMENT.  MS (A) understands that the Buyer Bonds
                     have not been, and will not be, registered under the
                     Securities Act, or under any state securities laws,
                     and are being offered and sold in reliance upon
                     federal and state exemptions for transactions not
                     involving any public offering, (B) is acquiring the
                     Buyer Bonds solely for its own account for investment
                     purposes, and not with a view to the distribution
                     thereof, (C) is a sophisticated investor with
                     knowledge and experience in business and financial
                     matters, (D) has received certain information
                     concerning the Buyer and has had the opportunity to
                     obtain additional information as desired in order to
                     evaluate the merits and the risks inherent in holding
                     the Buyer Bonds, (E) is able to bear the economic risk
                     and lack of liquidity inherent in holding the Buyer
                     Bonds, and (F) is an Accredited Investor.
     <PAGE>
         (c)  REPRESENTATIONS AND WARRANTIES OF THE BUYER.  The Buyer
              represents and warrants to the Seller that the statements
              contained in this Section 3(c) are correct and complete as of
              the date of this Agreement.

              (i)    ORGANIZATION OF THE BUYER.  The Buyer is a corporation
                     duly organized, validly existing, and in good standing
                     under the laws of the State of Washington and has all
                     requisite power and authority to carry on its business
                     and to own its properties.

              (ii)   INVESTIGATION AND ACCESS.  Buyer has the necessary
                     knowledge and experience in financial and business
                     matters, and in particular, the hotel industry, to
                     evaluate the merits and risks of the purchase of the
                     Bellevue Inn Interests under the terms of this
                     Agreement, and Buyer has relied upon its own knowledge
                     and investigation of Bellevue Inn, and not upon any
                     representations or warranties made by Seller except as
                     set forth in this Agreement.  Buyer further represents
                     that prior to the execution of this Agreement, Buyer
                     and Buyer's advisers (including financial, accounting
                     and other advisers) had the opportunity to review the
                     books and records of Bellevue Inn and to ask questions
                     and receive answers from Seller and authorized
                     representatives of Bellevue Inn concerning Bellevue
                     Inn and purchase of the Bellevue Inn Interests.

              (iii)  INVESTMENT REPRESENTATION.  Buyer represents and
                     warrants that it is engaging in the transactions
                     described in this Agreement for its own account, for
                     investment purposes only, and not with a view to the
                     resale or distribution of the Bellevue Inn Interests
                     purchased and assigned hereunder.  Buyer acknowledges
                     that the Bellevue Inn Interests have not been
                     registered under the Securities Act of 1933, as
                     amended, or any state securities law.

              (iv)   AUTHORIZATION.  This Agreement is valid and legally
                     binding on Buyer in accordance with its terms.
                     Neither the execution or delivery of, nor the
                     performance of or compliance with this Agreement will,
                     with or without the giving of notice or passage of
                     time, result in any breach of, or constitute a default
                     under, or result in the imposition of any lien or
                     encumbrance upon any asset or property of Buyer and
                     will not violate the Articles of Incorporation or
                     Bylaws of Buyer.
     <PAGE>
     3.  INDEMNIFICATION.

         (a)  INDEMNIFICATION IN FAVOR OF BUYER.  Each of October and MS,
              severally and not jointly, agree to indemnify, defend and
              hold harmless Buyer from and against, and in respect of, any
              and all claims, losses, damages, expenses (including, without
              limitation, settlement costs and any legal or other expenses
              for investigating or defending any actions or threatened
              actions), costs, obligations and liabilities arising out of
              any breach by either MS or October, as applicable, of
              Sections 1 or 2 of this Agreement.

         (b)  INDEMNIFICATION IN FAVOR OF SELLER.  Buyer agrees to
              indemnify, defend and hold harmless Seller from and against,
              and in respect of, any and all claims, losses, damages,
              expenses (including, without limitation, settlement costs and
              any legal or other expenses for investigating or defending
              any actions or threatened actions), costs, obligations and
              liabilities arising out of any breach by Buyer of Sections 1
              or 2 of this Agreement.

         (C)  MATTERS INVOLVING THIRD PARTIES.  If any third party shall
              notify any party (the "Indemnified Party") with respect to
              any matter which may give rise to a claim for indemnification
              (a "Claim") against any other party (the "Indemnifying
              Party") under this Section 4, then the Indemnified Party
              shall, within five business days after receiving notice,
              notify each Indemnifying Party thereof in writing.  Any
              Indemnifying Party will have the right at any time to assume
              and thereafter conduct the defense of the Claim with counsel
              of its choice; provided, however, that the Indemnifying Party
              will not consent to the entry of any judgment or enter into
              any settlement with respect to the Claim without the prior
              written consent of the Indemnified Party (not to be withheld
              unreasonably) unless the judgment or proposed settlement
              involves only the payment of money damages and does not
              impose an injunction or other equitable relief upon the
              Indemnified Party.  Unless and until an Indemnifying Party
              assumes the defense of the Claim, as provided herein, the
              Indemnified Party may defend against the Claim in any manner
              it reasonably deems appropriate.  In no event, however, will
              the Indemnified Party consent to the entry of any judgment or
              enter into any settlement with respect to the Claim without
              the prior written consent of each of the Indemnifying
              Parties.  The Parties shall cooperate with each other in
              regard to the defense against any such Claims.
     <PAGE>
         (d)  LIMITATION.  The indemnification obligations of October and
              MS under this Section 4 shall be several and not joint and
              the total liability of each shall be limited to the total
              consideration it has received under the terms of this
              Agreement.  October and MS hereby agree that any indemnity
              obligation hereunder owing to Buyer may be collected by Buyer
              through any legal means.

     4.  CONDITIONS.

         (a)  The obligation of the Buyer hereto to consummate the
              transaction contemplated in this Agreement is subject to the
              fulfillment at or prior to the Closing of each of the
              following conditions:

              (i)    The closing of the transactions contemplated in, and
                     as defined in, the Stock Purchase Agreement.

              (ii)   This Agreement and the transactions contemplated
                     hereby shall have been duly approved by the Board of
                     Directors of Buyer in accordance with the applicable
                     provisions of Washington law and its Articles of
                     Incorporation and Bylaws.

              (iii)  The representations and warranties set forth in
                     Section 3(a) and Section 3(b) above shall be true and
                     correct in all material respects at and as of the
                     Closing;

              (iv)   The Sellers shall have performed and complied with all
                     of their covenants hereunder in all material respects
                     through the Closing;

              (v)    No action, suit, or proceeding shall be pending before
                     any court or quasi-judicial or administrative agency
                     of any federal, state, local, or foreign jurisdiction
                     or before any arbitrator wherein an unfavorable
                     injunction, judgment, order, decree, ruling, or charge
                     would (A) prevent consummation of any of the
                     transactions contemplated by this Agreement, (B) cause
                     any of the transactions contemplated by this Agreement
                     to be rescinded following consummation, (C) affect
                     adversely the right of the Buyer to own an equity
                     interest in Bellevue Inn, or (D) affect materially and
                     adversely the right of any Bellevue Inn to own its
                     assets and to operate its businesses (and no such
                     injunction, judgment, order, decree, ruling, or charge
                     shall be in effect);
     <PAGE>
              (vi)   Each Seller shall have delivered to the Buyer a
                     certificate to the effect that each of the conditions
                     specified above in Section 6(a)(iii)-(v) is satisfied
                     in all respects;

              (vii)  the Buyer shall have received from counsel to each of
                     the Sellers  an opinion addressed to the Buyer, and
                     dated as of the Closing, which includes statements
                     that such Seller has the power to enter into the
                     Agreement and that the execution of the Agreement by
                     the representative of the Seller has been authorized
                     by all necessary action.

         (b)  The obligation of each Seller to consummate the transaction
              contemplated in this Agreement is subject to the fulfillment
              at or prior to the Closing of each of the following
              conditions:

              (i)    The closing of the transactions contemplated in, and
                     as defined in, the Stock Purchase Agreement.

              (ii)   The representations and warranties set forth in
                     Section 3(c) above shall be true and correct in all
                     material respects at and as of the Closing;

              (iii)  The Buyer shall have performed and complied with all
                     of their covenants hereunder in all material respects
                     through the Closing;

              (iv)   No action, suit, or proceeding shall be pending before
                     any court or quasi-judicial or administrative agency
                     of any federal, state, local, or foreign jurisdiction
                     or before any arbitrator wherein an unfavorable
                     injunction, judgment, order, decree, ruling, or charge
                     would (A) prevent consummation of any of the
                     transactions contemplated by this Agreement, (B) cause
                     any of the transactions contemplated by this Agreement
                     to be rescinded following consummation.

              (v)    Each Seller shall have delivered to the Buyer a
                     certificate to the effect that each of the conditions
                     specified above in Section 6(b)(ii)-(iv) is satisfied
                     in all respects.

              (vi)   Delivery by Buyer to Sellers of an aggregate of One
                     Million Two Hundred Fifty Thousand Dollars
                     ($1,250,000) in immediately available funds; and
     <PAGE>
              (vii)  Delivery by Buyer to Sellers of the Buyer Bonds.

     5.  MISCELLANEOUS.

         (a)  NO THIRD-PARTY BENEFICIARIES.  This Agreement shall not
              confer any rights or remedies upon any person other than the
              parties and their respective successors and permitted
              assigns.

         (b)  ENTIRE AGREEMENT.  This Agreement (including the documents
              referred to herein) constitutes the entire agreement among
              the parties and supersedes any prior understandings,
              agreements, or representations by or among the parties,
              written or oral, to the extent they have related in any way
              to the subject matter hereof.

         (c)  SUCCESSION AND ASSIGNMENT.  This Agreement shall be binding
              upon and inure to the benefit of the parties named herein and
              their respective successors and permitted assigns. No party
              may assign either this Agreement or any of his or its rights,
              interests, or obligations hereunder without the prior written
              approval of the Buyer and the Seller.

         (d)  AMENDMENT.  This Agreement may be amended by the parties in
              writing.

         (e)  POST-CLOSING COVENANTS.  In case at any time after the
              closing any further action is necessary or desirable to carry
              out the purposes of this Agreement, each of the parties will
              take such further action (including the execution and
              delivery of such further instruments and documents) as any
              other party reasonably may request, all at the sole cost and
              expense of the requesting party.  In addition, Seller shall
              make Bellevue Inn's books and records available to Buyer
              and/or Buyer's authorized agent, for review, upon reasonable
              request.

         (f)  COUNTERPARTS.  This Agreement may be executed in one or more
              counterparts, each of which shall be deemed an original but
              all of which together will constitute one and the same
              instrument.

         (g)  HEADINGS.  The section headings contained in this Agreement
              are inserted for convenience only and shall not affect in any
              way the meaning or interpretation of this Agreement.
     <PAGE>
         (h)  NOTICES.  All notices, requests, demands, claims, and other
              communications hereunder will be in writing. Any notice,
              request, demand, claim, or other communication hereunder
              shall be deemed duly given if (and then two business days
              after) it is sent by hand delivery, personal service,
              registered or certified mail, return receipt requested,
              postage prepaid, and addressed to the intended recipient as
              set forth below:

              If to October:    Steve Goodfellow
                                _____________________
                                _____________________

              If to MS:         M & S Hotel LLC
                                6335   90th Avenue SE
                                Mercer Island, WA 98040
                                Roger McCracken

              If to the Buyer:  Cavanaughs Hospitality Corporation
                                201 W North River Drive
                                Spokane, WA 99201
                                Attn:  Corporate Counsel

              Any party may send any notice, request, demand, claim, or
              other communication hereunder to the intended recipient at
              the address set forth above using any other means (including
              personal delivery, expedited courier, messenger service,
              telecopy, telex, ordinary mail, or electronic mail), but no
              such notice, request, demand, claim, or other communication
              shall be deemed to have been duly given unless and until it
              actually is received by the intended recipient.  Any party
              may change the address to which notices, requests, demands,
              claims, and other communications hereunder are to be
              delivered by giving the other parties notice in the manner
              herein set forth.

         (i)  GOVERNING LAW.  This Agreement shall be governed by and
              construed in accordance with the domestic laws of the State
              of Washington without giving effect to any choice or conflict
              of law provision or rule (whether of the State of Washington
              or any other jurisdiction) that would cause the application
              of the laws of any jurisdiction other than the State of
              Washington.

         (j)  ARBITRATION.  Any dispute arising out of or relating to this
              Agreement or any breach hereof shall be settled by panel of
              three arbitrators, with each side to the dispute selecting an
     <PAGE>
              arbitrator and those two arbitrators selecting a third
              neutral arbitrator in accordance with the Commercial
              Arbitration Rules of the American Arbitration Association and
              judgement upon any award rendered may be entered in any court
              having jurisdiction thereof.  Arbitration proceedings
              hereunder shall be held in Seattle, Washington.  In addition
              to all other relief, the substantially prevailing party in
              any arbitration or court action shall be entitled to its or
              their reasonable attorneys' fees and costs incurred by reason
              of the dispute (including any appellate review and bankruptcy
              or enforcement proceedings) and the substantially losing
              party shall pay all fees and costs of the arbitrators and
              arbitration.  Notwithstanding anything to the contrary
              herein, this Section shall in no way prevent either party
              from seeking equitable relief as set forth in Section 6(k),
              below.

         (k)  SPECIFIC PERFORMANCE.  Each of the Parties acknowledges and
              agrees that the other Parties would be damaged irreparably in
              the event any of the provisions of this Agreement are not
              performed in accordance with their specific terms or
              otherwise are breached.  Accordingly, each of the Parties
              agrees that the other Parties shall be entitled to an
              injunction or injunctions to prevent breaches of the
              provisions of this Agreement and to enforce specifically this
              Agreement and the terms and provisions hereof in any action
              instituted in any court of the United States or any state
              thereof having jurisdiction over the Parties and the matter
              (subject to the provisions set forth in Section 6(l) below),
              in addition to any other remedy to which they may be
              entitled, at law or in equity.

         (l)  SUBMISSION TO JURISDICTION.  Subject to the provisions of
              Section 6(j), above, each of the Parties submits to the
              jurisdiction of any state or federal court sitting in
              Seattle, Washington in any action or proceeding arising out
              of or relating to this Agreement and agrees, subject to the
              provisions of  Section 6(j), above, that all claims in
              respect of the action or proceeding may be heard and
              determined in any such court.  Each Party also agrees not to
              bring any action or proceeding arising out of or relating to
              this Agreement in any other court.  Each of the Parties
              waives any defense of inconvenient forum to the maintenance
              of any action or proceeding so brought and waives any bond,
              surety, or other security that might be required of any other
              Party with respect thereto.  Any Party may make service on
              any other Party by sending or delivering a copy of the
              process to the Party to be served at the address and in the
              manner provided
     <PAGE>
              for the giving of notices in this Agreement.  Nothing in this
              Section 11(l), however, shall affect the right of any Party
              to serve legal process in any other manner permitted by law
              or at equity. Each Party agrees that a final judgment in any
              action or proceeding so brought shall be conclusive and may
              be enforced by suit on the judgment or in any other manner
              provided by law or at equity

         (m)  SEVERABILITY.  Any term or provision of this Agreement that
              is invalid or unenforceable in any situation in any
              jurisdiction shall not affect the validity or enforceability
              of the remaining terms and provisions hereof or the validity
              or enforceability of the offending term or provision in any
              other situation or in any other jurisdiction.

         (n)  EXPENSES.  The parties will bear their own costs and expenses
              (including legal fees and expenses) incurred in connection
              with this Agreement and the transactions contemplated hereby.

         (o)  ATTORNEYS' FEES AND COSTS.  If either party institutes legal
              proceedings to settle any controversy arising under this
              Agreement, the prevailing party in the action shall be
              entitled to recover its reasonable attorneys' fees and costs.

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
     the date first above written.

     BUYER:                                  SELLER:
     CAVANAUGHS HOSPITALITY CORPORATION      OCTOBER HOTEL INVESTORS, LLC

     By: ______________________________      By: __________________________
     Its:  Authorized Officer                Its: _________________________

                                             M AND S HOTEL LLC
                                             By: __________________________
                                             Its: _________________________
     <PAGE>
                                    EXHIBIT A
                                  Form of Bond

     THIS INSTRUMENT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
     1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT
     BE SOLD, DISTRIBUTED, ASSIGNED, OFFERED, PLEDGED OR OTHERWISE
     TRANSFERRED UNLESS (A) THERE IS AN EFFECTIVE REGISTRATION STATEMENT
     UNDER THE 1933 ACT AND APPLICABLE STATE SECURITIES LAWS COVERING ANY
     SUCH TRANSACTION, (B) CAVANAUGHS RECEIVES AN OPINION OF LEGAL COUNSEL
     FOR THE HOLDER OF THE INSTRUMENT (CONCURRED IN BY LEGAL COUNSEL FOR
     CAVANAUGHS) STATING THAT SUCH TRANSACTION IS EXEMPT FROM REGISTRATION,
     OR (C) CAVANAUGHS OTHERWISE SATISFIES ITSELF THAT SUCH TRANSACTION IS
     EXEMPT FROM REGISTRATION.

                       CAVANAUGHS HOSPITALITY CORPORATION
                                CONVERTIBLE BOND
     $_______________                                   Spokane, Washington
                                                        __________ __, 2000

     FOR VALUE RECEIVED, the undersigned, CAVANAUGHS HOSPITALITY
     CORPORATION, a Washington corporation ("Cavanaughs"), hereby promises
     to pay to the order of ____________________________________ or any
     successor holder of this instrument as described in Section 7 (the
     "Holder"), at _______________________ or such other place as the
     Holder may designate by written notice to Cavanaughs, the principal
     sum of _________________________ ($___________), with interest, as
     provided herein.

     6.  INTEREST; PAYMENTS. Interest on the outstanding principal balance
         hereunder shall accrue at the rate of seven percent (7%) per annum
         from the date hereof.  Subject to earlier payment or conversion
         according to the terms hereof, the principal balance of this
         instrument, together with accrued interest thereon, shall be paid
         in 120 equal monthly installments of $______________ on the _____
         day of each month, beginning on ____________, 2000 and ending on
         ____________, 2009.  An amortization schedule for the payments due
         under this instrument is attached hereto as Appendix A.

     7.  PREPAYMENT.  Cavanaughs may at any time (subject to prior
         conversion in accordance with Section 4) prepay all or any portion
         of the principal and accrued interest owing under this instrument,
         without fee or penalty, upon thirty (30) days' prior written
         notice to the Holder.

     8.  EVENTS OF DEFAULT.  If any of the following events (herein
         individually referred to as an "Event of Default") shall occur,
         the Holder may, at any time during the period in which the Event
     <PAGE>
         of Default is continuing, declare the entire principal and unpaid
         accrued interest hereof immediately due and payable, by notice in
         writing to Cavanaughs:

         (a)  Default in payment when due of any principal or accrued
              interest owing under this instrument, if such default is not
              cured by Cavanaughs within ten (10) days after the Holder has
              given Cavanaughs written notice of such default; or

         (b)  The institution by Cavanaughs of proceedings to be
              adjudicated as bankrupt or insolvent, or the consent by it to
              institution of bankruptcy or insolvency proceedings against
              it or the filing by it of a petition or answer or consent
              seeking reorganization or release under the federal
              Bankruptcy Act, or any other applicable federal or state law,
              or the consent by it to the filing of any such petition or
              the appointment of a receiver, liquidator, assignee, trustee
              or other similar official of Cavanaughs, or of any
              substantial part of its property, or the making by it of an
              assignment for the benefit of creditors, or the taking of
              corporate action by Cavanaughs in furtherance of any such
              action; or

         (c)  If, within sixty (60) days after the commencement of an
              action against Cavanaughs (and service or process in
              connection therewith on Cavanaughs) seeking any bankruptcy,
              insolvency, reorganization, liquidation, dissolution or
              similar relief under any present or future statute, law or
              regulation, such action shall not have been resolved in favor
              of Cavanaughs or all orders or proceedings thereunder
              affecting the operations or the business of Cavanaughs
              stayed, or if the stay of any such order or proceeding shall
              thereafter be set aside, or if, within sixty (60) days after
              the appointment without the consent or acquiescence of
              Cavanaughs of any trustee, receiver or liquidator of
              Cavanaughs or of all or any substantial part of the
              properties of Cavanaughs, such appointment shall not have
              been vacated.

     9.  CONVERSION.  The Holder may at any time prior to payment in full
         of the principal and accrued interest owing under this instrument,
         upon five (5) days prior written notice to Cavanaughs, convert all
         or any portion of such principal and interest (the "Conversion
         Amount") into shares of Common Stock of Cavanaughs as follows:
         the Conversion Amount may be converted into that number of shares
         of Common Stock equal to the quotient obtained by dividing the
         Conversion Amount by Fifteen Dollars ($15.00), as such amount
     <PAGE>
         shall be proportionately adjusted to take into account any change
         in the number or class of Cavanaughs Common Stock by reason of a
         reclassification, recapitalization, split-up, combination,
         exchange of shares, stock dividend, subdivision or combination of
         the Common Stock of Cavanaughs (the "Conversion Price"); provided,
         however, that (a) the Conversion Amount shall be an integral
         multiple of the Conversion Price, and (b) at the time of any
         conversion, the Holder shall be an "accredited investor" (as such
         term is defined in Regulation D promulgated under the Securities
         Act of 1933, as amended).  Cavanaughs shall at all times reserve
         and keep available out of its authorized but unissued shares of
         Common Stock, solely for the purpose of effecting the conversion
         pursuant to this Section 4, such number of its shares of Common
         Stock as shall from time to time be sufficient to effect the
         conversion pursuant to this Section 4.

         EFFECT OF CONVERSION.  Upon conversion in accordance with
         Section 4 of all or any portion of the principal and accrued
         interest owing under this instrument:

         (a)  CONVERSION DATE.  Such conversion shall be deemed to occur on
              the date that is five (5) business days after written notice
              of conversion is received by Cavanaughs (the "Conversion
              Date").

         (b)  Certificates On the Conversion Date or as soon as practicable
              thereafter, Cavanaughs shall issue and deliver to the Holder
              a certificate or certificates for the number of shares of
              stock to which the Holder shall be entitled.  The Holder
              shall be treated for all purposes as the record holder of
              such stock on the Conversion Date.

         (c)  SATISFACTION OF INSTRUMENT.  Cavanaugh's issuance of shares
              of stock to the Holder upon conversion of the Conversion
              Amount pursuant to the terms of this instrument shall
              constitute satisfaction in full of Cavanaugh's obligation to
              pay the Conversion Amount, and the portion of this instrument
              represented by the Conversion Amount shall thereafter be of
              no further force or effect.

     10. GOVERNING LAW.  This instrument shall be governed by and
         interpreted in accordance with the laws of the State of Washington
         without regard to principles of conflict of laws.

     11. SEVERABILITY.  If any part of this instrument is determined to be
         illegal or unenforceable, all other parts shall remain in full
         force and effect.
     <PAGE>
     12. TRANSFERABILITY.  Neither this instrument nor any rights hereunder
         may be transferred by the Holder without the consent of
         Cavanaughs, except that the Holder may assign this instrument to
         any "accredited investor" (as such term is defined in Regulation D
         promulgated under the Securities Act of 1933, as amended).

     13. COLLECTION COSTS BORNE BY CAVANAUGHS.  Cavanaughs agrees to pay
         all costs and expenses, including without limitation reasonable
         attorneys' fees, incurred by the Holder in any action brought to
         enforce the terms of this instrument and/or to collect this
         instrument, and in any appeal thereof.

     14. MISCELLANEOUS.

         (a)  No delay or omission on the part of the Holder in exercising
              any right under this instrument shall operate as a waiver of
              such right or of any other right under this instrument.

         (b)  Cavanaughs hereby waives presentation for payment, demand,
              notice of demand and of dishonor and non-payment of this
              instrument, protest and notice of protest, diligence in
              collecting, and the bringing of suit against any other party.
              The pleading of any statute of limitations as a defense to
              any demand against Cavanaughs, any endorsers, guarantors and
              sureties of this instrument is expressly waived by each and
              all of such parties to the extent permitted by law.  Time is
              of the essence under this instrument.

         (c)  All notices to Cavanaughs under this instrument shall be in
              writing and shall be deemed to be given to Cavanaughs (i)
              upon delivery of the notice in person; (ii) three (3) days
              after deposit, at a U.S. Post Office or in a regularly
              maintained U.S. Postal Service letter box, of a letter
              containing the notice sent by first-class mail with postage
              prepaid, (iii) one (1) day after delivery of a package
              containing the notice to an overnight receipted courier
              service, or (iv) delivery of the notice via a confirmed
              facsimile transmission.  Notices shall be given to Cavanaughs
              at its address or facsimile number listed in the signature
              block below or at such other address or facsimile number as
              Cavanaughs may hereafter specify in writing to the Holder.

         (d)  Any payment hereunder shall first be applied to any
              collection costs, then against accrued and unpaid interest
              hereunder and then against the outstanding principal balance
              of this instrument.
     <PAGE>
     IN WITNESS WHEREOF, Cavanaughs has caused this instrument to be signed
     in its corporate name by its duly authorized officer and dated the day
     and year first above written.

                                   CAVANAUGHS HOSPITALITY CORPORATION

                                   By:
                                        -----------------------------------
                                        Its:
                                        201 W. North River Drive, Suite 100
                                        Spokane, Washington 99201
                                        Facsimile: (509) 325-7324