Worldwide RevPar Increased 12.3% Driven by Strong U.S. Performance
TORONTO, Oct. 26 /PRNewswire-FirstCall/ -- Fairmont Hotels &
Resorts Inc. ("FHR" or the "Company") (TSX/NYSE: FHR) today
announced its unaudited financial results for the three and nine
months ended September 30, 2005. These financial results have been
prepared in accordance with Canadian generally accepted accounting
principles. All amounts are expressed in U.S. dollars. Third
Quarter 2005 Highlights - Diluted income per share ("diluted EPS")
for the third quarter was $0.92 compared to $1.66 for the same
period in 2004. Excluding the effect of hotels sold in 2004, gains
on asset sales, tax recovery and other non-operating items, diluted
EPS rose 37.1% to $0.48. - Revenues increased 15.7% to $240.1
million. Excluding the effect on revenues of hotels sold in 2004
and the proceeds from land sales, revenues were up 8.9%. - Revenue
per available room(1) ("RevPAR") for the comparable(2) Fairmont
managed portfolio improved 12.3% to $147.63, driven by RevPAR
growth of 19.3% at the comparable U.S. managed portfolio. The
Canadian owned hotels experienced RevPAR growth of 7.1%, while
RevPAR for the comparable International owned hotels declined 5.8%.
- EBITDA(3) for the third quarter was $79.2 million compared to
$207.7 million for the same period in 2004. EBITDA for both periods
includes gains on asset sales of $17.9 million and $144.2 million,
respectively. - Adjusted EBITDA(3) for the third quarter of 2005
was $77.8 million compared to $74.3 million for the same period in
2004. Excluding the effect of the hotels sold in 2004 and The
Fairmont Southampton, Adjusted EBITDA increased 9.1%. - Assumed
management of and rebranded The Fairmont Newport Beach, bringing
the number of Fairmont-managed properties to 50 worldwide. -
Expanded development pipeline with a new management contract for a
Fairmont hotel to be built in downtown Vancouver, in connection
with an agreement to dispose of the Company's last remaining parcel
of undeveloped land in Vancouver. The hotel is anticipated to open
in 2009. - Entered into agreements to sell additional blocks of
land located in downtown Toronto. - Repurchased 2.1 million common
shares for a total cost of $65.6 million. "Our U.S. properties
continue to benefit from the robust U.S. lodging fundamentals. In
the third quarter, our comparable U.S. managed and owned portfolios
experienced RevPAR growth of 19.3% and 20.7%, respectively, driven
by strong occupancy gains across all markets," said William R.
Fatt, FHR's Chief Executive Officer. "We continue to execute on our
strategy of selling our undeveloped land and expanding our Fairmont
management portfolio," commented Mr. Fatt. "The proceeds from these
asset sales will be invested in growing our management business and
in share repurchases." Revenues Three months ended Nine months
ended (In millions of U.S. dollars) September 30 September 30 2005
2004 2005 2004 ---- ---- ---- ---- Reported Revenues $ 240.1 $
207.5 $ 625.1 $ 603.8 Less: Amounts attributable to hotels sold in
2004 - 3.6 - 51.3 Proceeds from sale of undeveloped land 18.0 -
18.0 15.4 --------------------------------------- Revenues adjusted
for hotels sold and land sales $ 222.1 $ 203.9 $ 607.1 $ 537.1
--------------------------------------- Diluted income per share
Three months ended Nine months ended September 30 September 30 2005
2004 2005 2004 ---- ---- ---- ---- Diluted income per share $ 0.92
$ 1.66 $ 1.30 $ 2.01 Less: Amounts attributable to hotels sold in
2004 - 0.01 - 0.11 Gains on asset sales 0.24 1.30 0.24 1.41 Other
non-operating items(i) (0.15) - (0.19) - Tax recovery 0.35 - 0.54 -
--------------------------------------- Diluted income per share
adjusted for hotels sold, gains on asset sales, tax recovery and
non-operating items $ 0.48 $ 0.35 $ 0.71 $ 0.49
--------------------------------------- (i) The third quarter
includes $0.15 related to a legal provision. The nine months ended
September 30, 2005 includes $0.15 for this legal provision and
$0.04 of transaction costs expensed in the second quarter. Third
Quarter Ownership Operations The Company's hotel ownership results
are affected by the seasonal nature of the assets owned. The table
below presents, by quarter, the comparable hotel ownership EBITDA
contribution by region to September 30, 2005.
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2005 Canada U.S International
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First quarter 21% 41% 38%
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Second quarter 48% 35% 17%
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Third quarter 84% 10% 6%
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Comparable hotel ownership revenues:
-----------------------------------
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Comparable revenues Canada U.S. International Total
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Increase (decrease) from third quarter 2004 10.2% 28.1% (3.8%)
11.6%
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- Canadian Owned Hotels: Revenues for the Canadian owned hotels
were impacted by the 8.7% appreciation of the Canadian dollar
against the U.S. dollar when compared to the third quarter of 2004.
The balance of the increase was primarily driven by The Fairmont
Banff Springs, which experienced revenue growth of 12.5% and a 9.5%
improvement in RevPAR. - U.S. Owned Hotels: Revenue improvements
for the U.S. owned hotels were largely driven by The Fairmont
Orchid, Hawaii and The Fairmont Scottsdale Princess, which enjoyed
RevPAR growth of 32.9% and 24.6%, respectively. - International
Owned Hotels: The decrease in revenues for the International owned
hotels was largely due to a 10.0% drop in revenues at The Fairmont
Hamilton Princess, which experienced a 13.4% decline in RevPAR.
Comparable owned portfolio operating statistics:
------------------------------------------------
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Increase (decrease) Canada U.S. International Total from third
quarter 2004
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RevPAR 7.1% 20.7% (5.8%) 7.5%
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Average daily rate (ADR) 8.5% (1.0%) 5.4% 5.6%
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Occupancy (1.0) 13.5 (5.3) 1.2 points points points points
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- Canadian Owned Hotels: The improvement in ADR is a result of the
appreciation of the Canadian dollar. Adjusting for the appreciation
of the Canadian dollar, RevPAR for the Canadian owned portfolio was
down 1.5%. - U.S. Owned Hotels: The U.S. owned portfolio enjoyed
strong occupancy growth driven by increased group demand. -
International Owned Hotels: The International owned portfolio was
primarily impacted by a year over year decrease in leisure business
at The Fairmont Hamilton Princess and the Mexican resorts. In the
third quarter, the Bermuda market experienced a decline in leisure
travel largely as a result of concerns regarding weather conditions
and the cost of airfare. Leisure demand for the Mexican resorts was
lower mainly due to some adverse publicity regarding the
destination. Comparable hotel ownership EBITDA(3):
------------------------------------
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Comparable EBITDA Canada U.S. International Total
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Increase (decrease) from third quarter 2004 5.2% 440.0% (38.0%)
9.7%
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- Canadian Owned Hotels: EBITDA for the Canadian owned hotels
increased $2.1 million to $44.7 million. This increase was enhanced
by the appreciation of the Canadian dollar, which affected both
revenues and expenses at these hotels. When denominated in Canadian
dollars, EBITDA decreased approximately 3%. - U.S. Owned Hotels:
EBITDA for this portfolio was $5.4 million in the third quarter,
compared to $1.0 million in 2004. All of the U.S. owned properties
contributed to this improvement led by The Fairmont Orchid, which
experienced a 14.3 percentage point increase in occupancy and 5.9%
improvement in ADR. The Fairmont Scottsdale Princess also reported
significant EBITDA growth as a result of a 14.4 percentage point
occupancy improvement. The key driver of occupancy expansion at
both of these hotels was a significant increase in group demand. -
International Owned Hotels: EBITDA was down $1.9 million to $3.1
million. The decrease in EBITDA was driven primarily by weaker year
over year operating performance at The Fairmont Hamilton Princess.
This property experienced a 44.9% decline in EBITDA, primarily as a
result of a 9.5 percentage point drop in occupancy. Additionally,
the Mexican resorts experienced a 19% decrease in EBITDA driven by
a 2.6 percentage point drop in occupancy. Comparable hotel
ownership EBITDA margin: ----------------------------------------
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Comparable EBITDA margin Canada U.S. International Total
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Increase (decrease) from third quarter 2004 (210bp) 980bp (680bp)
(60bp)
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- Canadian Owned Hotels: EBITDA margins for the Canadian owned
hotels decreased as revenues were negatively impacted by a 1.0
percentage point decrease in occupancy and flat ADR (after
adjusting for the foreign exchange impact). When denominated in
Canadian dollars, revenues increased 1.4% while expenses increased
approximately 5%. - U.S. Owned Hotels: Robust RevPAR growth of
20.7% was the key driver of EBITDA margin improvement for this
portfolio. - International Owned Hotels: The International owned
portfolio experienced a decline in EBITDA margins due to a 3.8%
drop in revenues and 4.3% increase in expenses. The decrease in
revenues was primarily due to The Fairmont Hamilton Princess. The
increase in expenses was related primarily to the Mexican resorts,
which due to the low occupancy were already at minimum staffing
levels and in addition, were negatively impacted by the 6.7% year
over year appreciation of the Mexican peso against the U.S. dollar.
Real estate activities: Real estate activities in the third quarter
produced revenues of $19.3 million and a $15.7 million contribution
to EBITDA. This was generated primarily by a land sale in
Vancouver, which yielded net proceeds and an after-tax gain of
$17.9 million. Real estate activities for the same period in 2004,
primarily from Fairmont Heritage Place, generated $4.8 million in
revenues and a $0.8 million loss to EBITDA. Third Quarter
Management Operations
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Increase from third quarter 2004 Fairmont Delta
-------------------------------------------------------------
Revenues under management 12.4% 17.7%
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Management fee revenues 19.1% 14.3%
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Comparable worldwide RevPAR 12.3% 15.4%
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Comparable worldwide ADR 7.8% 11.3%
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Comparable worldwide Occupancy 2.9 2.8 points points
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Fairmont Management Operations - Revenues under management of $511
million increased 12.4% over 2004. The addition of The Savoy, A
Fairmont Hotel, The Fairmont Monte Carlo, The Fairmont Newport
Beach, five hotels in Kenya and improved operating results at the
U.S. hotels, all contributed to this increase. - Management fee
revenues were up 19.1% to $16.8 million, largely due to the
increase in revenues under management. - EBITDA margin of 81.0% was
virtually flat compared to the prior year. - For the Fairmont
comparable managed portfolio, RevPAR increased 12.3% to $147.63.
RevPAR for the comparable U.S. portfolio showed strong improvement
up 19.3%, resulting from a 5.2% increase in ADR combined with an
occupancy gain of 8.6 percentage points. The International
comparable managed portfolio experienced RevPAR growth of 7.5%,
based on ADR improvement of 19.6% offset by an occupancy drop of
5.9 percentage points. The Canadian comparable portfolio reported
an 8.5% RevPAR improvement, driven primarily by an increase in ADR
of 6.7% while occupancy improved 1.3 percentage points. Adjusting
for the appreciation of the Canadian dollar, RevPAR for the
Canadian portfolio was relatively unchanged for the quarter. Delta
Management Operations - Delta's revenues under management increased
17.7% to $125 million, primarily due to improved operating results
and the appreciation of the Canadian dollar. - Management fee
revenues for the third quarter were $4.0 million compared to $3.5
million for the same period in 2004. The 14.3% increase in
management fee revenues relates primarily to the increase in
revenues under management. - EBITDA margin of 77.5% improved from
54.3% in the prior year, primarily due to a decrease in incentive
compensation costs for the third quarter of 2005. - RevPAR
increased 15.4% over the third quarter of 2004 resulting from an
11.3% ADR growth and a 2.8 percentage point improvement in
occupancy. Adjusting for the appreciation of the Canadian dollar,
RevPAR was up approximately 6.2%. General and Administrative
Expenses General and administrative expenses for the quarter were
$3.8 million compared to $8.4 million for the same period in 2004.
Stock appreciation rights for the quarter amounted to a recovery of
$3.2 million, primarily due to certain obligations which have been
extinguished, compared to an expense of $0.5 million in 2004.
Notwithstanding the appreciation of the Canadian dollar, which had
the effect of increasing expenses, general and administrative
expenses were lower by approximately 11%, after adjusting for
impact of stock appreciation rights in both quarters. Other
expenses During the third quarter, the Company recorded a provision
of $11.2 million related to a potential loss in connection with
outstanding legal obligations associated with a predecessor company
of Fairmont. Income tax expense (recovery) Earlier in the year, FHR
reached a settlement with Canadian tax authorities and in the third
quarter recorded a $26.1 million tax recovery to reflect the final
assessment. Excluding one-time items, the effective tax rate for
the third quarter was 27%, compared to 28% in 2004. Income tax
expense for the third quarter of 2004 includes $40.7 million of
income tax expense relating to the sale of The Fairmont Kea Lani
Maui. Nine Months Consolidated Results For the nine months ended
September 30, 2005, EBITDA was $148.6 million compared to $304.3
million for the same period in 2004. EBITDA for both periods
includes gains on asset sales of $17.9 million and $159.6 million,
respectively. Adjusted EBITDA was $171.4 million compared to $175.3
million for the same period in 2004. Excluding the two hotels sold
and The Fairmont Southampton, which was closed for hurricane
repairs during the first quarter of 2004, Adjusted EBITDA increased
10.7% from $145.2 million to $160.8 million. Net income for the
first nine months of the year was $99.1 million (diluted EPS of
$1.30), compared to the prior year's net income of $160.2 million
(diluted EPS of $2.01). Excluding the impact of sold hotels, gains
on asset sales, other non-operating items and the tax recovery,
diluted EPS increased 44.9% from $0.49 to $0.71. Capital
Expenditures Capital expenditures for the three and nine months
ended September 30, 2005, totaled $11 million and $51 million,
respectively. The Company expects its 2005 hotel related capital
budget to be in the range of approximately $55 - $65 million, the
majority of which is expected to be spent on maintenance projects.
Announcements and Corporate Activities The Fairmont New Orleans
experienced significant damage following the impact of Hurricane
Katrina. Fortunately, the Company did not experience any guest or
employee casualties at the hotel from this tragic incident. The
hotel is currently closed and FHR is working closely with the
property owner and insurers. The financial impact of this event is
not expected to be material to FHR as the Company does not have an
ownership interest in the hotel. In the third quarter, FHR assumed
management of and rebranded The Fairmont Newport Beach, a 444-room
hotel in Newport Beach, California. A comprehensive renovation of
the hotel's guestrooms, public areas and facilities is underway,
and is expected to be completed in mid-2006. In July, FHR sold a
parcel of land in Vancouver for net proceeds and an after-tax gain
of $17.9 million. In September, FHR announced it had entered into a
purchase and sale agreement for its last block of undeveloped land
located in Coal Harbour in downtown Vancouver. Westbank, a
Vancouver-based developer, has agreed to purchase the land from a
joint venture 75% owned by FHR. Westbank plans to develop a hotel
and residential condominium project on the site. FHR also entered
into a long-term agreement to manage the hotel, which is
anticipated to open in 2009. The land sale is expected to close in
the fourth quarter of 2006. The Company has also recently entered
into separate agreements to sell additional blocks of undeveloped
land located in the Southtown lands in downtown Toronto. These
sales are expected to close over the next several quarters. During
the quarter, FHR repurchased 2.1 million shares under its normal
course issuer bid for a total cost of $65.6 million. For the first
nine months of the year, FHR has repurchased 3.9 million shares at
a cost of $126.3 million. Outlook "We expect that our U.S. hotels
will continue to benefit from strong industry fundamentals and
perform to our original expectations," said Mr. Fatt. "Although we
experienced some weakness in our international portfolio in the
third quarter, we anticipate that these hotels will experience
modest year over year growth in the fourth quarter. Our Canadian
portfolio is expected to continue to perform within our revised
expectations." FHR now expects EBITDA for the full-year to be $165
million to $175 million. 2005 Adjusted EBITDA is expected to be
$195 million to $205 million. A summary of the Company's current
estimates are as follows: Full-year 2005 -------------- EBITDA $165
to $175 million Adjusted EBITDA $195 to $205 million Net Income $93
to $100 million Diluted EPS $1.21 to $1.30 Diluted EPS excluding
gains on land sales, tax recoveries and other non-operating
expenses $0.67 to $0.76 Excluding the tax recovery, the legal
provision and the land sale gain, FHR has assumed a 2005 full-year
tax rate of approximately 29%. FHR has provided its 2005 portfolio
seasonality information under "Supplementary Financial and
Operating Information". About Fairmont Hotels & Resorts Inc.
FHR is a leading owner/operator of luxury hotels and resorts. FHR's
managed portfolio consists of 88 luxury and first-class properties
with approximately 33,000 guestrooms in the United States, Canada,
Mexico, Bermuda, Barbados, the United Kingdom, Monaco, Kenya and
the United Arab Emirates as well as two vacation ownership
properties managed by Fairmont Heritage Place. FHR owns Fairmont
Hotels Inc., North America's largest luxury hotel management
company, as measured by rooms under management, with 50 distinctive
city center and resort hotels including The Fairmont San Francisco,
The Fairmont Banff Springs and The Fairmont Scottsdale Princess.
FHR also owns Delta Hotels, Canada's largest first-class hotel
management company, which manages and franchises 38 city center and
resort properties in Canada. In addition to hotel management, FHR
holds real estate interests in 27 properties and an approximate 24%
investment interest in Legacy Hotels Real Estate Investment Trust,
which owns 24 properties. FHR owns FHP Management Company LLC, a
private residence club management company that operates Fairmont
Heritage Place, a vacation ownership business. FHR will hold a
conference call today, October 26, 2005 at 1:30 p.m. Eastern Time
to discuss its results. To participate, please dial 416.340.2216 or
1.866.898.9626. You will be requested to identify yourself and the
organization on whose behalf you are participating. A recording of
this call will be made available beginning at 4:30 p.m. Eastern
Time on October 26, 2005 through to November 2, 2005 by dialing
416.695.5800 or 1.800.408.3053 using the reservation No. 3163467. A
live audio webcast of the conference call will also be available
via FHR's website (http://www.fairmont.com/investor). An archived
recording of the webcast will remain available on FHR's website
following the conference call until the next quarter's conference
call. This news release contains certain forward-looking statements
relating, but not limited to, FHR's operations, anticipated
financial performance, business prospects and strategies.
Forward-looking information typically contains statements with
words such as "anticipate", "believe", "expect", "plan",
"estimate", "guidance", "aim" or similar words suggesting future
outcomes. Such forward-looking statements are subject to risks,
uncertainties and other factors, which could cause actual results
to differ materially from future results expressed, projected or
implied by such forward-looking statements. Such factors include,
but are not limited to economic, competitive and lodging industry
conditions. These risks are further described in FHR's filings with
Canadian securities regulatory authorities (http://www.sedar.com/)
and with the U.S. Securities and Exchange Commission website
(http://www.sec.gov/). All forward-looking statements in this news
release are qualified by these cautionary statements. These
statements are made as of the date of this news release and except
as required by applicable law, FHR disclaims any responsibility to
update any such forward-looking statements, whether as a result of
new information, future events or otherwise. 1. Revenue per
available room ("RevPAR") is calculated as room revenue divided by
the number of room nights available. Management considers RevPAR to
be a meaningful indicator of hotel operations because it measures
the period-over-period change in room revenues relative to the
number of room nights available. Investors and analysts also use it
as a measure of the Company's operating performance. However,
RevPAR is not a defined measure of operating performance under
Canadian Generally Accepted Accounting Principles ("GAAP"). It is
likely that FHR's calculation of RevPAR is different than the
calculations used by others. 2. Comparable information is
considered to be information for properties that were wholly-owned
or fully open under FHR management for at least the entire current
and prior year. Comparable information also excludes properties
under major renovation that would have a significant adverse effect
on the properties' primary operations. We present these results on
a comparable basis because we believe that doing so provides
investors and management with useful information for evaluating the
period-to-period performance of our hotels. When presenting
comparable information for this quarter, the following properties
have been excluded: Owned hotels ------------ - The Fairmont Kea
Lani Maui (sold July 2004) - The Fairmont Glitter Bay (sold July
2004) - The Fairmont Southampton (reopened April 2004 after
hurricane damage repairs) Fairmont Managed Hotels
----------------------- - The Fairmont Southampton (reopened April
2004 after hurricane damage repairs) - The Fairmont Monte Carlo
(assumed management December 2004) - The Savoy, A Fairmont Hotel
(assumed management January 2005) - The Plaza (ceased management
April 2005) - The Norfolk Hotel, Mount Kenya Safari Club, The
Aberdare Country Club, The Ark and the Mara Safari Club (assumed
management May 2005) - The Fairmont Glitter Bay (ceased management
in June 2005) - The Fairmont Newport Beach (assumed management July
2005) - The Fairmont New Orleans (closed in September 2005 due to
hurricane damage) Delta Managed Hotels -------------------- Delta
Meadowvale (assumed management September 2004) Delta Kitchener
(assumed management June 2005) Delta franchised properties 3.
EBITDA is defined as earnings before interest, taxes and
amortization. Management considers EBITDA to be a meaningful
indicator of operations and uses it as the primary measure to
assess the operating performance of the Company's business
segments. EBITDA provides us with an understanding of the Company's
operating results before the impact of investing and financing
transactions and income taxes. It also facilitates comparisons
between the Company and its competitors. Management adjusts EBITDA
when evaluating operating performance because it believes that the
inclusion or exclusion of certain items such as gains and losses on
asset sales and other non-operating items, is necessary to provide
a more accurate measure of our core business operating results. It
is also a means to evaluate period- over-period results. We adjust
our reported EBITDA, as set forth above, for certain items and
refer to this measure as Adjusted EBITDA. The principal adjustments
we make are to eliminate (i) gains and losses from asset sales;
(ii) amortization, net interest expense and income taxes in
calculating our earnings from equity investments and (iii) other
non-operating items. We have chosen to provide this information to
investors to enable them to perform more meaningful comparisons of
past, present and future core business operating results. Adjusted
EBITDA may also be used by investors and analysts in their
valuation of the Company. EBITDA and Adjusted EBITDA are not
defined measures of operating performance under Canadian generally
accepted accounting principles. It is likely that FHR's
calculations of EBITDA and Adjusted EBITDA are different than the
calculations used by others. The table below provides a
reconciliation of Adjusted EBITDA and EBITDA to net income:
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Three months ended Nine months ended September 30 September 30
---------------------------------------------------------------------
(In millions of dollars) 2005 2004 2005 2004
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Net income $ 69.0 $ 131.8 $ 99.1 $ 160.2 Add (Deduct): Interest
expense, net 6.0 6.7 19.2 25.7 Income tax expense (recovery) (13.0)
52.4 (19.8) 64.1 Amortization 17.2 16.8 50.1 54.3
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EBITDA 79.2 207.7 148.6 304.3 Add (Deduct): (Gains) losses on asset
sales (17.9) (144.2) (17.9) (159.6) Proportional amortization,
interest expense and income taxes included in the results of equity
investments 8.5 10.3 26.7 30.4 Stock appreciation rights (3.2) 0.5
(0.5) 0.2 Other non-operating items 11.2 - 14.5 -
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Adjusted EBITDA $ 77.8 $ 74.3 $ 171.4 $ 175.3
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Fairmont Hotels & Resorts Inc. Consolidated Balance Sheets
(Stated in millions of U.S. dollars) ASSETS September 30 December
31 2005 2004 ------------ ------------ (Unaudited) Current assets
Cash and cash equivalents $ 86.2 $ 99.1 Accounts receivable 100.4
90.2 Taxes recoverable (note 5) 28.2 - Inventory 14.8 15.5 Prepaid
expenses and other 14.4 11.2 ------------ ------------ 244.0 216.0
Investments in partnerships and corporations (note 3) 93.7 90.7
Investment in Legacy Hotels Real Estate Investment Trust 68.9 70.0
Non-hotel real estate 106.0 100.3 Property and equipment 1,449.4
1,435.5 Goodwill 164.8 162.8 Intangible assets (notes 3, 4 and 7)
287.0 245.0 Other assets and deferred charges (notes 3 and 4) 118.0
82.3 ------------ ------------ $ 2,531.8 $ 2,402.6 ------------
------------ ------------ ------------ LIABILITIES AND
SHAREHOLDERS' EQUITY Current liabilities Accounts payable and
accrued liabilities $ 151.2 $ 127.9 Taxes payable 3.1 31.3
Dividends payable - 4.6 Current portion of long-term debt 4.3 4.1
------------ ------------ 158.6 167.9 Long-term debt 505.3 398.0
Other liabilities 101.1 95.7 Future income taxes 130.4 90.6
------------ ------------ 895.4 752.2 ------------ ------------
Shareholders' Equity (note 8) 1,636.4 1,650.4 ------------
------------ $ 2,531.8 $ 2,402.6 ------------ ------------
------------ ------------ Fairmont Hotels & Resorts Inc.
Consolidated Statements of Income (Stated in millions of U.S.
dollars, except per share amounts) (Unaudited) Three months ended
Nine months ended September 30 September 30 2005 2004 2005 2004
---------- ---------- ---------- ---------- Revenues Hotel
ownership operations (note 10 (d)) $ 193.2 $ 180.3 $ 519.4 $ 516.3
Management operations 15.2 12.0 42.3 33.1 Real estate activities
(note 6) 19.3 4.8 28.8 26.2 ---------- ---------- ----------
---------- 227.7 197.1 590.5 575.6 Other revenues from managed and
franchised properties 12.4 10.4 34.6 28.2 ---------- ----------
---------- ---------- 240.1 207.5 625.1 603.8 Expenses Hotel
ownership operations 131.4 120.5 380.6 364.0 Management operations
4.1 4.3 14.5 13.0 Real estate activities 3.6 5.6 12.4 18.8 General
and administrative 3.8 8.4 22.1 20.5 Other (note 12) 11.2 - 14.5 -
Amortization 17.2 16.8 50.1 54.3 ---------- ---------- ----------
---------- 171.3 155.6 494.2 470.6 Other expenses from managed and
franchised properties 12.4 10.4 34.2 28.6 ---------- ----------
---------- ---------- 183.7 166.0 528.4 499.2 Income from equity
investments 5.6 5.2 1.8 1.2 ---------- ---------- ----------
---------- Operating income 62.0 46.7 98.5 105.8 Interest expense,
net 6.0 6.7 19.2 25.7 Gain on sales of investments and hotel assets
- (144.2) - (144.2) ---------- ---------- ---------- ----------
Income before income tax expense (recovery) 56.0 184.2 79.3 224.3
Income tax expense (recovery) Current (note 5) (48.7) 44.5 (58.0)
50.0 Future 35.7 7.9 38.2 14.1 ---------- ---------- ----------
---------- (13.0) 52.4 (19.8) 64.1 Net income $ 69.0 $ 131.8 $ 99.1
$ 160.2 ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- Weighted average number of common
shares outstanding (in millions) (note 8) Basic 73.9 78.4 75.0 78.9
Diluted 74.9 79.3 76.0 79.7 Basic income per common share $ 0.93 $
1.68 $ 1.32 $ 2.03 Diluted income per common share $ 0.92 $ 1.66 $
1.30 $ 2.01 Fairmont Hotels & Resorts Inc. Consolidated
Statements of Cash Flows (Stated in millions of U.S. dollars)
(Unaudited) Three months ended Nine months ended September 30
September 30 2005 2004 2005 2004 ---------- ---------- ----------
---------- Cash provided by (used in) Operating activities Net
income $ 69.0 $ 131.8 $ 99.1 $ 160.2 Items not affecting cash
Amortization of property and equipment 16.7 16.0 48.3 52.1
Amortization of intangible assets 0.5 0.8 1.8 2.2 Income from
equity investments (5.6) (5.2) (1.8) (1.2) Future income taxes 35.7
7.9 38.2 14.1 Tax recovery (note 5) (28.2) - (42.8) - Unrealized
foreign exchange gain (15.7) (13.3) (7.6) (3.1) Gain on sales of
investments and hotel assets - (144.2) - (144.2) Other 3.5 5.8 2.2
7.8 Distributions 1.4 4.2 5.4 4.2 Changes in non-hotel real estate
(4.6) (0.7) (2.5) (0.4) Changes in non-cash working capital items
(note 9) 4.4 52.0 (3.0) 15.7 ---------- ---------- ----------
---------- 77.1 55.1 137.3 107.4 ---------- ---------- ----------
---------- Investing activities Additions to property and equipment
(11.2) (14.2) (51.4) (58.2) Proceeds from sale of property and
equipment - - 8.8 - Investments in partnerships and corporations -
(1.9) (11.2) (4.9) Sales of investments and hotel assets 3.0 443.6
3.0 443.6 Collection of loans receivable - 0.1 - 9.0 Issuance of
loans receivable (0.3) - (33.1) (7.0) Investments in intangible
assets (5.3) - (32.0) - ---------- ---------- ---------- ----------
(13.8) 427.6 (115.9) 382.5 ---------- ---------- ----------
---------- Financing activities Issuance of long-term debt 24.7 -
104.5 82.7 Repayment of long-term debt (1.3) (313.9) (5.8) (379.5)
Issuance of common shares 0.1 0.3 2.9 0.9 Repurchase of common
shares (65.6) (46.4) (126.3) (51.8) Dividends paid (4.5) (3.2)
(9.1) (6.4) ---------- ---------- ---------- ---------- (46.6)
(363.2) (33.8) (354.1) ---------- ---------- ---------- ----------
Effect of exchange rate changes on cash (0.4) 0.5 (0.5) 0.3
---------- ---------- ---------- ---------- Increase (decrease) in
cash 16.3 120.0 (12.9) 136.1 Cash and cash equivalents - beginning
of period 69.9 47.8 99.1 31.7 ---------- ---------- ----------
---------- Cash and cash equivalents - end of period $ 86.2 $ 167.8
$ 86.2 $ 167.8 ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- Fairmont Hotels &
Resorts Inc. Consolidated Statements of Retained Earnings (Stated
in millions of U.S. dollars) (Unaudited) Three months ended Nine
months ended September 30 September 30 2005 2004 2005 2004
---------- ---------- ---------- ---------- Balance - Beginning of
period $ 179.0 $ 101.1 $ 189.2 $ 78.1 Net income 69.0 131.8 99.1
160.2 ---------- ---------- ---------- ---------- 248.0 232.9 288.3
238.3 Repurchase of common shares (note 8) (34.5) (18.2) (70.3)
(20.4) Dividend - - (4.5) (3.2) ---------- ---------- ----------
---------- Balance - End of period $ 213.5 $ 214.7 $ 213.5 $ 214.7
---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- Fairmont Hotels & Resorts Inc. Notes to
Consolidated Financial Statements (Stated in millions of U.S.
dollars) (Unaudited) 1. Fairmont Hotels & Resorts Inc. ("FHR"
or the "Company") has operated and owned hotels and resorts for
over 118 years and currently manages properties, principally under
the Fairmont and Delta brands. As at September 30, 2005, FHR
managed or franchised 88 luxury and first-class hotels. FHR owns
Fairmont Hotels Inc. ("Fairmont") which, as at September 30, 2005,
managed 50 luxury properties in major city centers and key resort
destinations throughout Canada, the United States, Mexico, Bermuda,
Barbados, United Kingdom, Monaco, Kenya and the United Arab
Emirates. Delta Hotels Limited ("Delta"), a wholly-owned subsidiary
of FHR, managed or franchised 38 Canadian hotels and resorts as at
September 30, 2005. In addition to hotel and resort management, as
at September 30, 2005, FHR had hotel ownership interests ranging
from approximately 15% to 100% in 27 properties, located in Canada,
the United States, Mexico, Bermuda, Barbados, Monaco, Kenya and the
United Arab Emirates. FHR also has an approximate 24% equity
interest in Legacy Hotels Real Estate Investment Trust ("Legacy")
as at September 30, 2005, which owns 24 hotels and resorts across
Canada and the United States. FHR also owns real estate properties
that are suitable for either commercial or residential development,
and has a vacation ownership product. Results for the three and
nine months ended September 30, 2005 are not necessarily indicative
of the results that may be expected for the full year due to
seasonal and short-term variations. Revenues are typically higher
in the second and third quarters versus the first and fourth
quarters of the year. The income tax rate is also higher in the
first quarter as hotels in non-taxable jurisdictions typically
generate losses and certain equity investments usually produce
losses without tax benefits. 2. These interim consolidated
financial statements do not include all disclosures as required by
Canadian generally accepted accounting principles ("GAAP") for
annual consolidated financial statements and should be read in
conjunction with the audited consolidated financial statements for
the year ended December 31, 2004. The accounting policies used in
the preparation of these interim consolidated financial statements
are consistent with the accounting policies used in the December
31, 2004 audited consolidated financial statements, except as
discussed below. Liabilities and equity On January 1, 2005, FHR
adopted the Canadian Institute of Chartered Accountants' ("CICA")
new accounting requirements on the classification of financial
instruments as liabilities or equity. The CICA amended its
disclosure requirements surrounding the presentation of financial
instruments that may be settled in cash or by an issuer's own
equity instruments, at the issuer's discretion, as liabilities.
Adoption of this new standard did not have an impact on the
Company's financial statements. Determining whether an arrangement
contains a lease In 2004, the Emerging Issues Committee issued
Abstract 150, "Determining whether an Arrangement Contains a Lease"
("EIC 150"). An entity may enter into certain arrangements
comprising a transaction or a series of related transactions that
does not take the legal form of a lease but conveys a right to use
a tangible asset (e.g., an item of property, plant or equipment) in
return for a payment or series of payments. The Company is required
to adopt the recommendations of EIC 150 for affected transactions
commencing December 9, 2004. Adoption of this new standard did not
have an impact on the Company's financial statements. Variable
interest entities Effective January 1, 2005, the Company adopted
Accounting Guideline No. 15, "Consolidation of Variable Interest
Entities" ("AcG-15"), which established criteria to identify
variable interest entities ("VIE") and the primary beneficiary of
such entities. Entities that qualify as VIEs must be consolidated
by their primary beneficiary. Adoption of this new standard did not
have an impact on the Company's financial statements. 3. In May
2005, FHR entered into long-term contracts to manage five
properties in Kenya. FHR invested $10.0 in connection with the five
management contracts. A portion of the investment was funded as a
loan and a portion of the investment financed the acquisition of an
approximate 15% interest in a corporation owned jointly with
Kingdom Hotels Investments and IFA Hotels & Resorts. The
corporation holds an ownership interest in five Kenyan properties
known as The Norfolk Hotel, Mount Kenya Safari Club, The Aberdare
Country Club, The Ark and the Mara Safari Club. Based on the
relative fair value of the management contracts, the investment
interest and the loan, $5.7 of the $10.0 was allocated to the
management contracts. The investment of $3.1 is accounted for using
the equity method due to significant influence through contractual
arrangements. $1.2 was allocated to the loan, which has a face
value of $5.0, bears no interest and is payable in 2020. 4. In
January 2005, FHR entered into a long-term contract to manage The
Savoy in London, England. In 2004, FHR agreed to commit
approximately $63.0 to obtain the management contract and provide
loans to the hotel's owners. As at September 30, 2005, FHR had
funded $54.3 of the total commitment, of which $22.8 related to the
management contract, and $31.5 related to a loan receivable, due in
2015 and bearing interest at 7.75%. 5. In the quarter ended June
30, 2005, the Company reached a favorable tax settlement with the
Canada Revenue Agency and recorded a $14.6 recovery of current
income taxes. During the quarter ended September 30, 2005, the
Company recorded an additional tax recovery of $26.1, net of taxes
payable of approximately $2.1 on interest income, to reflect the
final assessment. 6. In July 2005, FHR disposed of a parcel of land
in Vancouver for net proceeds and an after-tax gain of $17.9. 7. In
July 2005, FHR entered into a long-term management contract related
to The Fairmont Newport Beach. FHR invested $3.3 in connection with
this transaction. 8. Shareholders' equity September 30, December
31, 2005 2004 ------------ ------------ Common shares $ 1,104.4 $
1,163.1 Other equity 19.2 19.2 Treasury stock - (5.6) Contributed
surplus 143.9 142.4 Foreign currency translation adjustments 155.4
142.1 Retained earnings 213.5 189.2 ------------ ------------ $
1,636.4 $ 1,650.4 ------------ ------------ ------------
------------ The diluted weighted-average number of common shares
outstanding is calculated as follows: Three months ended Nine
months ended September 30 September 30 2005 2004 2005 2004
---------- ---------- ---------- ---------- (in millions) (in
millions) Weighted-average number of common shares outstanding -
basic 73.9 78.4 75.0 78.9 Stock options 1.0 0.9 1.0 0.8 ----------
---------- ---------- ---------- Weighted-average number of common
shares outstanding - diluted 74.9 79.3 76.0 79.7 ----------
---------- ---------- ---------- Effective October 29, 2004, FHR
may repurchase for cancellation up to 10% of its outstanding common
shares. The amounts and timing of repurchases are at FHR's
discretion. During the nine months ended September 30, 2005, FHR
repurchased 3,925,600 shares (2,076,300 during the third quarter).
Also, an additional 166,100 shares that were classified as treasury
stock at December 31, 2004, were cancelled in 2005. Total
consideration relating to the repurchase amounted to $126.3 ($65.6
for the third quarter), of which $59.0 was charged to common shares
($31.1 for the third quarter) and $67.3 was charged to retained
earnings ($34.5 for the third quarter). Of the $5.6 of treasury
stock outstanding at December 31, 2004, $2.6 was reclassified to
common shares and $3.0 to retained earnings in 2005. During the
nine months ended September 30, 2005, FHR issued 146,690 shares
(6,637 for the third quarter) pursuant to the Key Employee Stock
Option Plan for which $2.9 was credited to common shares ($0.1 for
the third quarter) for proceeds from options exercised. At
September 30, 2005, 72,448,338 common shares were outstanding
(December 31, 2004 - 76,393,348). During the nine months ended
September 30, 2005, 320,000 stock options were granted (20,000 in
the third quarter), and the cost of this stock-based compensation
was recorded based on the estimated fair value of these options.
Assuming FHR elected to recognize the cost of its stock-based
compensation based on the estimated fair value of stock options
granted after January 1, 2002 but before January 1, 2003, net
income and basic and diluted earnings per share would have been:
Three months ended Nine months ended September 30 September 30 2005
2004 2005 2004 ---------- ---------- ---------- ---------- Reported
net income $ 69.0 $ 131.8 $ 99.1 $ 160.2 Net income assuming fair
value method used $ 68.9 $ 131.7 $ 98.8 $ 159.9 Assuming fair value
method used Basic earnings per share $ 0.93 $ 1.68 $ 1.32 $ 2.03
Diluted earnings per share $ 0.92 $ 1.66 $ 1.30 $ 2.01 9. Changes
in non-cash working capital: Three months ended Nine months ended
September 30 September 30 2005 2004 2005 2004 ---------- ----------
---------- ---------- Decrease (increase) in current assets
Accounts receivable $ 11.6 $ (5.9) $ (6.9) $ (31.1) Inventory 0.9
0.1 0.9 (1.2) Prepaid expenses and other 3.5 6.6 (2.7) (1.3)
Increase (decrease) in current liabilities Accounts payable and
accrued liabilities (0.5) 2.9 20.7 - Taxes payable (11.1) 48.3
(15.0) 49.3 ---------- ---------- ---------- ---------- $ 4.4 $
52.0 $ (3.0) $ 15.7 ---------- ---------- ---------- ---------- 10.
Segmented Information FHR has five reportable segments in two core
business activities, ownership and management operations. The
segments are hotel ownership, investment in Legacy, real estate
activities, Fairmont and Delta. Results of individual properties
have been aggregated into their respective reportable segments.
Hotel ownership consists of real estate interests ranging from
approximately 15% to 100% in 27 properties. The investment in
Legacy consists of an approximate 24% equity interest in Legacy,
which owns 24 hotels and resorts across Canada and the United
States. Real estate activities consist primarily of two undeveloped
land blocks in Toronto and Vancouver and a vacation ownership
product. Fairmont is an international luxury hotel and resort
management company and Delta is a Canadian first-class hotel and
resort management company. The performance of all segments is
evaluated by management primarily on earnings before interest,
taxes and amortization ("EBITDA"), which management defines as
income before interest, income taxes and amortization. EBITDA
includes income or loss from equity investments. General and
administrative expenses, other, gain on sales of investments and
hotel assets, amortization, interest and income taxes are not
allocated to the individual segments. All transactions among
operating segments are conducted at fair market value. The
following tables present revenues, EBITDA, total assets and capital
expenditures for FHR's reportable segments: Three months ended
September 30, 2005
------------------------------------------------------- Ownership
Management -------------------------------- ---------------------
Hotel Real estate Ownership Legacy activities Fairmont Delta
--------- --------- --------- --------- --------- Operating
revenues (d) $ 193.2 $ - $ 19.3 $ 16.8 $ 4.0 Other revenues from
managed and franchised properties - - - 9.4 3.0 Income from equity
investments 1.6 4.0 - - - EBITDA (b) 57.8 4.0 15.7 13.6 3.1 Total
assets (c) 1,925.2 68.9 108.4 468.2 83.6 Capital expenditures 8.1 -
- 3.1 - General and adminis- Inter- trative segment and elimina-
other (e) tion (a) Total ------------------------------- Operating
revenues (d) $ - $ (5.6) $ 227.7 Other revenues from managed and
franchised properties - - 12.4 ---------- 240.1 Income from equity
investments - 5.6 EBITDA (b) (15.0) - 79.2 Total assets (c) -
(122.5) 2,531.8 Capital expenditures - - 11.2 Three months ended
September 30, 2004
------------------------------------------------------ Ownership
Management -------------------------------- ---------------------
Hotel Real estate Ownership Legacy activities Fairmont Delta
--------- --------- --------- --------- --------- Operating
revenues (d) $ 180.3 $ - $ 4.8 $ 14.1 $ 3.5 Other revenues from
managed and franchised properties - - - 8.2 2.2 Income from equity
investments 1.5 3.7 - - - EBITDA (b) 55.7 3.7 (0.8) 11.4 1.9 Total
assets (c) 2,028.1 70.8 99.1 340.0 77.1 Capital expenditures 12.0 -
- 2.2 - General and adminis- Inter- trative segment and elimina-
other (e) tion (a) Total ------------------------------- Operating
revenues (d) $ - $ (5.6) $ 197.1 Other revenues from managed and
franchised properties - - 10.4 --------- 207.5 Income from equity
investments - - 5.2 EBITDA (b) 135.8 - 207.7 Total assets (c) -
(195.1) 2,420.0 Capital expenditures - - 14.2 Nine months ended
September 30, 2005
----------------------------------------------------- Ownership
Management -------------------------------- ---------------------
Hotel Real estate Ownership Legacy activities Fairmont Delta
--------- --------- --------- --------- --------- Operating
revenues (d) $ 519.4 $ - $ 28.8 $ 47.7 $ 10.1 Other revenues from
managed and franchised properties - - - 26.2 8.4 Income (loss) from
equity investments 3.7 (1.9) - - - EBITDA (b) 127.0 (1.9) 16.4 36.3
7.0 Total assets (c) 1,925.2 68.9 108.4 468.2 83.6 Capital
expenditures 44.0 - - 7.4 - General and adminis- Inter- trative
segment and elimina- other (e) tion (a) Total
------------------------------- Operating revenues (d) $ - $ (15.5)
$ 590.5 Other revenues from managed and franchised properties - -
34.6 --------- 625.1 Income (loss) from equity investments - - 1.8
EBITDA (b) (36.6) 0.4 148.6 Total assets (c) - (122.5) 2,531.8
Capital expenditures - - 51.4 Nine months ended September 30, 2004
------------------------------------------------------ Ownership
Management -------------------------------- ---------------------
Hotel Real estate Ownership Legacy activities Fairmont Delta
--------- --------- --------- --------- --------- Operating
revenues (d) $ 516.3 $ - $ 26.2 $ 40.2 $ 9.6 Other revenues from
managed and franchised properties - - - 20.9 7.3 Income (loss) from
equity investments 2.0 (0.8) - - - EBITDA (b) 137.5 (0.8) 7.4 30.9
6.0 Total assets (c) 2,028.1 70.8 99.1 340.0 77.1 Capital
expenditures 55.5 - - 2.7 - General and adminis- Inter- trative
segment and elimina- other (e) tion (a) Total
------------------------------- Operating revenues (d) $ - $ (16.7)
$ 575.6 Other revenues from managed and franchised properties - -
28.2 --------- 603.8 Income (loss) from equity investments - - 1.2
EBITDA (b) 123.7 (0.4) 304.3 Total assets (c) - (195.1) 2,420.0
Capital expenditures - - 58.2 (a) Operating revenues include
management fees that are charged by Fairmont of $5.4 (2004 - $5.5)
and $15.1 (2004 - $16.4) for the three and nine months ended
September 30, 2005, respectively, and Delta of $0.2 (2004 - $0.1)
and $0.4 (2004 - $0.3) for the three and nine months ended
September 30, 2005, respectively, to the hotel ownership
operations, which are eliminated on consolidation. EBITDA includes
expenses not reimbursed relating to marketing and reservation
services performed by FHR under the terms of its hotel management
and franchise agreements. Total assets have been reduced for the
elimination of inter-segment loans net of corporate assets. (b) A
reconciliation of aggregate EBITDA of the reportable segments to
net income is as follows: Three months ended Nine months ended
September 30 September 30 2005 2004 2005 2004 ---------- ----------
---------- ---------- EBITDA $ 79.2 $ 207.7 $ 148.6 $ 304.3
Amortization (17.2) (16.8) (50.1) (54.3) Interest expense, net
(6.0) (6.7) (19.2) (25.7) Income tax (expense) recovery 13.0 (52.4)
19.8 (64.1) ---------- ---------- ---------- ---------- Net income
$ 69.0 $ 131.8 $ 99.1 $ 160.2 ---------- ---------- ----------
---------- (c) Hotel ownership assets include $93.6 (2004 - $69.6)
of investments accounted for using the equity method. (d) A
breakdown of the Company's hotel ownership operations revenues are
as follows: Three months ended Nine months ended September 30
September 30 2005 2004 2005 2004 ---------- ---------- ----------
---------- Rooms revenue $ 103.2 $ 100.7 $ 272.8 $ 287.4 Food and
beverage revenue 62.3 55.9 176.1 163.9 Other 27.7 23.7 70.5 65.0
---------- ---------- ---------- ---------- $ 193.2 $ 180.3 $ 519.4
$ 516.3 ---------- ---------- ---------- ---------- (e) In 2004,
General and administrative and other includes general and
administrative expenses as well as gain on sales of investments and
hotel assets of $144.2. 11. FHR recorded pension and other post
employment benefit expenses as follows: Three months ended Nine
months ended September 30 September 30 2005 2004 2005 2004
---------- ---------- ---------- ---------- Pension $ 0.5 $ (0.1) $
1.4 $ 0.9 Other post-employment benefits 0.1 0.1 0.3 0.2 ----------
---------- ---------- ---------- $ 0.6 $ - $ 1.7 $ 1.1 ----------
---------- ---------- ---------- 12. During the third quarter, the
Company recorded a provision of $11.2 related to outstanding legal
obligations associated with a predecessor company of Fairmont.
During the second quarter, the Company undertook certain
development activities related to a major portfolio acquisition,
which the Company did not complete. A total of $3.3 was expensed
relating to transaction costs in the second quarter. 13. Certain of
the prior period figures have been reclassified to conform with the
presentation adopted for 2005. (xx) Index of supplementary
financial and operating information to follow (xx) Fairmont Hotels
& Resorts Inc. Index of Supplementary Financial and Operating
Information Page ---- Comparable operating statistics for the three
and nine months ended September 30, 2005 ii 2004 hotel ownership
revenues and EBITDA adjusted for assets sales iv 2005 portfolio
seasonality information v Comparable operating statistics for hotel
portfolio as of September 30, 2005 vi Summary of hotel portfolio at
September 30, 2005 and 2004 viii Fairmont Hotels & Resorts Inc.
Comparable operating statistics for the three and nine months ended
September 30, 2005
-------------------------------------------------------------------------
Three months ended September 30 September 30 Nine months ended
-------------------------------------------------------------------------
2005 2004 Variance 2005 2004 Variance
-------------------------------------------------------------------------
OWNED HOTELS
-------------------------------------------------------------------------
Worldwide 14 properties/ 6,746 rooms
-------------------------------------------------------------------------
RevPAR $148.87 $138.53 7.5% $133.13 $123.95 7.4%
-------------------------------------------------------------------------
ADR 219.19 207.65 5.6% 205.02 194.06 5.6%
-------------------------------------------------------------------------
Occupancy 67.9% 66.7% 1.2 64.9% 63.9% 1.0 points points
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Canada 7 properties/ 3,336 rooms
-------------------------------------------------------------------------
RevPAR $186.11 $173.78 7.1% $133.52 $125.19 6.7%
-------------------------------------------------------------------------
ADR 239.58 220.81 8.5% 195.77 180.95 8.2%
-------------------------------------------------------------------------
Occupancy 77.7% 78.7% (1.0) 68.2% 69.2% (1.0) points points
-------------------------------------------------------------------------
-------------------------------------------------------------------------
U.S. 3 properties/ 1,574 rooms
-------------------------------------------------------------------------
RevPAR $142.60 $118.11 20.7% $166.82 $147.42 13.2%
-------------------------------------------------------------------------
ADR 190.58 192.60 (1.0%) 225.02 224.54 0.2%
-------------------------------------------------------------------------
Occupancy 74.8% 61.3% 13.5 74.1% 65.7% 8.4 points points
-------------------------------------------------------------------------
-------------------------------------------------------------------------
International 4 properties / 1,836 rooms
-------------------------------------------------------------------------
RevPAR $86.59 $91.97 (5.8%) $103.62 $101.64 1.9%
-------------------------------------------------------------------------
ADR 195.57 185.61 5.4% 202.62 192.36 5.3%
-------------------------------------------------------------------------
Occupancy 44.3% 49.6% (5.3) 51.1% 52.8% (1.7) points points
-------------------------------------------------------------------------
-------------------------------------------------------------------------
FAIRMONT MANAGED HOTELS(1)
-------------------------------------------------------------------------
Worldwide 39 hotels/ 19,142 rooms
-------------------------------------------------------------------------
RevPAR $147.63 $131.44 12.3% $131.54 $118.42 11.1%
-------------------------------------------------------------------------
ADR 205.35 190.57 7.8% 196.33 180.51 8.8%
-------------------------------------------------------------------------
Occupancy 71.9% 69.0% 2.9 67.0% 65.6% 1.4 points points
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Canada 20 properties/ 10,095 rooms
-------------------------------------------------------------------------
RevPAR $149.35 $137.64 8.5% $113.58 $105.08 8.1%
-------------------------------------------------------------------------
ADR 196.85 184.41 6.7% 169.86 156.16 8.8%
-------------------------------------------------------------------------
Occupancy 75.9% 74.6% 1.3 66.9% 67.3% (0.4) points points
-------------------------------------------------------------------------
-------------------------------------------------------------------------
U.S. 14 properties/ 6,817 rooms
-------------------------------------------------------------------------
RevPAR $159.61 $133.84 19.3% $160.54 $141.56 13.4%
-------------------------------------------------------------------------
ADR 219.27 208.50 5.2% 229.14 218.61 4.8%
-------------------------------------------------------------------------
Occupancy 72.8% 64.2% 8.6 70.1% 64.8% 5.3 points points
-------------------------------------------------------------------------
-------------------------------------------------------------------------
International 5 properties / 2,230 rooms
-------------------------------------------------------------------------
RevPAR $105.20 $97.85 7.5% $123.85 $108.62 14.0%
-------------------------------------------------------------------------
ADR 201.88 168.84 19.6% 211.16 178.39 18.4%
-------------------------------------------------------------------------
Occupancy 52.1% 58.0% (5.9) 58.7% 60.9% (2.2) points points
-------------------------------------------------------------------------
-------------------------------------------------------------------------
DELTA MANAGED HOTELS(1)
-------------------------------------------------------------------------
Worldwide 27 properties/ 8,175 rooms
-------------------------------------------------------------------------
RevPAR $89.17 $77.25 15.4% $74.36 $65.60 13.4%
-------------------------------------------------------------------------
ADR 115.22 103.51 11.3% 107.87 97.92 10.2%
-------------------------------------------------------------------------
Occupancy 77.4% 74.6% 2.8 68.9% 67.0% 1.9 points points
-------------------------------------------------------------------------
(1) Includes hotels owned by Fairmont Hotels & Resorts Inc.
Comparable hotels and resorts are considered to be properties that
were wholly-owned by or fully open under FHR management for at
least the entire current and prior period. Comparable hotels and
resorts statistics exclude properties under major renovation that
would have a significant adverse effect on the properties' primary
operations. The following properties were excluded: Owned: The
Fairmont Southampton; The Fairmont Kea Lani Maui (sold July 2004),
The Fairmont Glitter Bay (sold July 2004) Fairmont Managed: The
Fairmont Southampton; The Fairmont Monte Carlo, The Savoy, A
Fairmont Hotel, The Norfolk Hotel, Mount Kenya Safari Club, The
Aberdare Country Club, The Ark, Mara Safari Club, The Fairmont
Glitter Bay, The Fairmont New Orleans, The Fairmont Newport Beach,
The Plaza Delta Managed: Delta Meadowvale, Delta Kitchener and
Delta franchised hotels Fairmont Hotels & Resorts Inc. 2004
hotel ownership revenues and EBITDA adjusted for assets sales 2004
-------------------------------------------- First Second Third
Fourth Revenues Quarter Quarter Quarter Quarter Year --------
-------- -------- -------- -------- (In millions of US dollars)
Hotel ownership revenues adjusted for sold hotels $ 131.1 $ 157.1 $
176.7 $ 137.9 $ 602.8 Add: hotels sold 24.3 23.4 3.6 - 51.3
-------------------------------------------- Hotel ownership
revenues $ 155.4 $ 180.5 $ 180.3 $ 137.9 $ 654.1
-------------------------------------------- 2004
-------------------------------------------- First Second Third
Fourth EBITDA Quarter Quarter Quarter Quarter Year --------
-------- -------- -------- -------- (In millions of US dollars)
Hotel ownership EBITDA adjusted for sold hotels $ 25.4 $ 37.9 $
54.2 $ 22.6 $ 140.1 Add: hotels sold 9.8 8.7 1.5 - 20.0
-------------------------------------------- Hotel ownership EBITDA
35.2 46.6 55.7 22.6 160.1 Gain on sales of investments and hotels
sales - - 144.2 (0.5) (143.7) EBITDA contribution (deduction) from
other segments (1.1) 15.9 7.8 (1.7) 20.9
-------------------------------------------- Total EBITDA 34.1 62.5
207.7 20.4 324.7 Deduct (Add): Amortization 19.5 18.0 16.8 19.6
73.9 Interest expense, net 10.0 9.0 6.7 7.4 33.1 Income tax expense
(recovery), net 5.2 6.5 52.4 (2.2) 61.9
-------------------------------------------- Net Income (loss) $
(0.6) $ 29.0 $ 131.8 $ (4.4) $ 155.8
-------------------------------------------- Fairmont Hotels &
Resorts Inc. 2005 portfolio seasonality information First Second
Third Fourth Quarter Quarter Quarter Quarter Year -------- --------
-------- -------- -------- 2005 quarterly Adjusted EBITDA(1) range
guidance $195 - $205 Mid-point of range 17% 30% 39% 14% million Tax
rate(2) (excludes gain on land sale, tax recovery and legal
provision) - 21% 27% 23% 29% Notes: (1) Given the seasonality of
FHR's portfolio, the information above provides insight into the
estimated quarterly breakdown of FHR's Adjusted EBITDA. (2) The tax
rate will be dependent upon the geographical source of earnings in
any one quarter. Quarterly tax rates vary significantly throughout
the year due to the seasonality of FHR's earnings and differing tax
rates in various jurisdictions. In the first quarter, FHR's hotels
in non-taxable jurisdictions typically generate losses and equity
investments usually produce non-taxable losses. This results in an
unusual income tax rate in the first quarter. Assumptions: - The
estimates above are based on the current portfolio and do not
anticipate any acquisitions or dispositions. - An exchange rate of
C$1.25/U.S.$1.00 has been assumed for the year. - Readers should
note that the above information is qualified by the forward-looking
statement outlined in the Company's public filings. Fairmont Hotels
& Resorts Inc. Operating statistics for comparable hotels as of
September 30, 2005
-------------------------------------------------------------------------
First Second First Second Third Fourth 2004 Quarter Quarter Quarter
Quarter Quarter Quarter Full 2005 2005 2004 2004 2004 2004 Year
-------------------------------------------------------------------------
OWNED HOTELS
-------------------------------------------------------------------------
Worldwide
-------------------------------------------------------------------------
RevPAR $128.41 $121.88 $116.64 $116.37 $138.53 $102.88 $118.63
-------------------------------------------------------------------------
ADR 202.22 192.43 189.14 184.22 207.65 180.19 190.85
-------------------------------------------------------------------------
Occupancy 63.5% 63.3% 61.7% 63.2% 66.7% 57.1% 62.2%
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Canada
-------------------------------------------------------------------------
RevPAR $101.18 $112.21 $ 93.86 $106.23 $173.78 $ 84.76 $114.93
-------------------------------------------------------------------------
ADR 166.38 170.27 154.37 156.93 220.81 149.14 174.01
-------------------------------------------------------------------------
Occupancy 60.8% 65.9% 60.8% 67.7% 78.7% 56.8% 66.0%
-------------------------------------------------------------------------
-------------------------------------------------------------------------
U.S.
-------------------------------------------------------------------------
RevPAR $190.55 $167.85 $169.12 $155.34 $118.11 $144.87 $146.78
-------------------------------------------------------------------------
ADR 265.89 221.20 259.42 220.38 192.60 235.16 227.09
-------------------------------------------------------------------------
Occupancy 71.7% 75.9% 65.2% 70.5% 61.3% 61.6% 64.6%
-------------------------------------------------------------------------
-------------------------------------------------------------------------
International
-------------------------------------------------------------------------
RevPAR $124.58 $100.11 $111.96 $101.10 $ 91.97 $ 99.81 $101.18
-------------------------------------------------------------------------
ADR 202.98 208.76 186.04 207.08 185.61 185.79 190.69
-------------------------------------------------------------------------
Occupancy 61.4% 48.0% 60.2% 48.8% 49.6% 53.7% 53.1%
-------------------------------------------------------------------------
-------------------------------------------------------------------------
FAIRMONT MANAGED HOTELS(1)
-------------------------------------------------------------------------
Worldwide
-------------------------------------------------------------------------
RevPAR $117.44 $129.05 $105.43 $118.23 $131.72 $106.13 $115.44
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ADR 192.72 189.82 173.54 176.36 190.54 178.35 180.30
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Occupancy 60.9% 68.0% 60.8% 67.0% 69.1% 59.5% 64.1%
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Canada
-------------------------------------------------------------------------
RevPAR $ 81.84 $108.17 $ 75.18 $101.20 $137.64 $ 85.61 $100.18
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ADR 145.86 158.57 130.30 146.22 184.41 144.21 153.43
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Occupancy 56.1% 68.2% 57.7% 69.2% 74.6% 59.4% 65.3%
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U.S.
-------------------------------------------------------------------------
RevPAR $158.24 $163.75 $143.88 $146.77 $134.55 $134.07 $137.79
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ADR 241.69 227.99 228.66 218.65 207.66 226.41 220.11
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Occupancy 65.5% 71.8% 62.9% 67.1% 64.8% 59.2% 63.5%
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International
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RevPAR $149.23 $117.60 $120.44 $107.70 $ 97.85 $112.17 $109.52
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ADR 218.94 210.52 179.05 187.35 168.84 184.00 179.81
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Occupancy 68.2% 55.9% 67.3% 57.5% 58.0% 61.0% 60.9%
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DELTA MANAGED HOTELS(1)
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Worldwide
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RevPAR $ 59.30 $ 74.18 $ 53.98 $ 65.43 $ 77.25 $ 60.95 $ 64.43
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ADR 100.53 105.74 92.47 96.40 103.51 100.52 98.53
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Occupancy 59.0% 70.2% 58.4% 67.9% 74.6% 60.6% 65.4%
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(1) Includes hotels owned by Fairmont Hotels & Resorts Inc.
Comparable hotels and resorts are considered to be properties that
were wholly-owned by or fully open under FHR management for at
least the entire current and prior period. Comparable hotels and
resorts statistics exclude properties under major renovation that
would have a significant adverse effect on the properties' primary
operations. The following properties were excluded: Owned: The
Fairmont Southampton; The Fairmont Kea Lani Maui (sold July 2004);
The Fairmont Glitter Bay (sold July 2004) Fairmont Managed: The
Fairmont Southampton, The Fairmont Monte Carlo, The Savoy, A
Fairmont Hotel, The Norfolk Hotel, Mount Kenya Safari Club, The
Aberdare Country Club, The Ark, Mara Safari Club, The Fairmont
Glitter Bay, The Fairmont New Orleans, The Fairmont Newport Beach,
The Plaza Delta Managed: Delta Meadowvale, Delta Kitchener and
Delta franchised hotels Fairmont Hotels & Resorts Inc. Summary
of Hotel Portfolios ----------------------------------------------
September 30 ---------------------------------------------- 2005
2004 ---------------------------------------------- OWNED HOTELS
---------------------------------------------- Worldwide
---------------------------------------------- No. of Properties 15
15 ---------------------------------------------- No. of Rooms
7,339 7,343 ----------------------------------------------
---------------------------------------------- Canada
---------------------------------------------- No. of Properties 7
7 ---------------------------------------------- No. of Rooms 3,336
3,336 ----------------------------------------------
---------------------------------------------- U.S. and
International ---------------------------------------------- No. of
Properties 8 8 ---------------------------------------------- No.
of Rooms 4,003 4,007 ----------------------------------------------
---------------------------------------------- FAIRMONT MANAGED
HOTELS (1) ---------------------------------------------- Worldwide
---------------------------------------------- No. of Properties 50
44 ---------------------------------------------- No. of Rooms
22,525 21,643 ----------------------------------------------
---------------------------------------------- Canada
---------------------------------------------- No. of Properties 21
21 ---------------------------------------------- No. of Rooms
10,418 10,422 ----------------------------------------------
---------------------------------------------- U.S. and
International ---------------------------------------------- No. of
Properties 29 23 ---------------------------------------------- No.
of Rooms 12,107 11,221
----------------------------------------------
---------------------------------------------- DELTA MANAGED
HOTELS(1) ---------------------------------------------- Worldwide
---------------------------------------------- No. of Properties 38
38 ---------------------------------------------- No. of Rooms
11,243 11,163 ----------------------------------------------
---------------------------------------------- (1) Includes hotels
owned by Fairmont Hotels & Resorts Inc. DATASOURCE: Fairmont
Hotels & Resorts Inc. CONTACT: Denise Achonu, Executive
Director Investor Relations, Tel: (416) 874-2485, Email: , Website:
http://www.fairmont.com/
Copyright