Fairmont Hotels & Resorts Inc. Reports First Quarter 2005
Results - Comparable Hotel RevPAR Increases 10% - TORONTO, May 3
/PRNewswire-FirstCall/ -- Fairmont Hotels & Resorts Inc. ("FHR"
or the "Company") (TSX/NYSE: FHR) today announced its unaudited
financial results for the first quarter ended March 31, 2005. These
financial results have been prepared in accordance with Canadian
generally accepted accounting principles. All amounts are expressed
in U.S. dollars. "We are benefiting from robust industry
fundamentals. Our first quarter earnings before interest, taxes and
amortization of $22.2 million was in line with our expectations,"
said William R. Fatt, FHR's Chief Executive Officer. "It is
important to note that our first quarter results are not indicative
of the results that may be expected for the full year due to the
seasonality associated with our portfolio. Additionally, the
comparability of our 2005 results, specifically, our hotel
ownership operations are affected by the two hotels we disposed of
in 2004. Our quarterly and annual earnings will continue to
fluctuate as we execute our strategy of disposing of stabilized
assets while retaining the long-term management contracts."
Revenues (In millions of U.S. dollars) Three months ended March 31
2005 2004 Revenues $ 179.3 $ 177.1 Less: amounts attributable to
hotels sold in 2004 - (24.3) ---------------------------- Revenues
adjusted for hotels sold $ 179.3 $ 152.8
---------------------------- Basic loss per share Three months
ended March 31 2005 2004 Basic loss per share $ (0.05) $ (0.01)
Less: amounts attributable to hotels sold in 2004 - (0.05)
---------------------------- Basic loss per share adjusted for
hotels sold $ (0.05) $ (0.06) ---------------------------- "We are
especially pleased with the results of our comparable U.S. and
International owned portfolio, which experienced RevPAR improvement
of 12.0%. Our significant exposure to the leisure segment of the
business allows us to benefit from the ongoing strength in travel
demand in the U.S., particularly for luxury hotels," said Mr. Fatt.
First Quarter Ownership Operations First quarter revenues from
hotel ownership were $148.7 million, compared to $155.4 million in
the prior year. Excluding the two hotels sold in 2004 and The
Fairmont Southampton, which was closed for hurricane repairs during
the first quarter of 2004, consolidated hotel ownership revenues
were up 9.0% and U.S. and International owned hotel revenues
improved 8.3%. The Fairmont Copley Plaza Boston and The Fairmont
Orchid, Hawaii contributed most significantly to this improvement
with revenue growth of approximately 30% and 16%, respectively.
Operating results for the Canadian owned hotels were impacted by
the 7% appreciation of the Canadian dollar when compared to the
first quarter of 2004. Revenues for this geographic segment were up
10.4%, with the appreciation of the Canadian dollar accounting for
approximately two-thirds of this growth. The balance of the
improvement was primarily driven by The Fairmont Chateau Lake
Louise, which enjoyed revenue growth of approximately 20%, largely
as a result of the resort's additional guestrooms. EBITDA from
hotel ownership was $26.9 million compared to $35.2 million for the
same period in 2004. Excluding the two hotels sold and The Fairmont
Southampton, EBITDA increased 8.7% to $31.1 million. Improvements
in EBITDA were driven primarily by the performance of the U.S. and
International owned hotels as well as a $1.5 million increase in
income from equity investments (excluding Legacy). These
improvements were offset by EBITDA declines at the Canadian owned
properties. Excluding the two hotels sold and The Fairmont
Southampton, hotel ownership EBITDA margin of 21.9% was unchanged
when compared to the same period in 2004. Revenue per available
room(2) ("RevPAR") for the comparable owned portfolio increased
10.1% in the first quarter, driven primarily by a 6.9% increase in
average daily rate ("ADR"). The U.S. and International owned
comparable portfolio enjoyed considerable leisure demand, which
drove both ADR and occupancy and resulted in a robust 12.0% RevPAR
improvement. Canadian owned hotels generated both RevPAR and ADR
improvements of 7.8%, with occupancy flat compared to last year.
Adjusting for the foreign exchange impact, RevPAR for the Canadian
portfolio was relatively unchanged. Rooms revenue typically
represents approximately 50%-60% of total revenues for our owned
hotels. FHR's investment in Legacy generated an equity loss of $7.0
million, compared to an equity loss of $7.3 million in the same
period last year. Real estate activities in the first quarter
produced revenues of $7.5 million and a $1.1 million contribution
to EBITDA. This was generated primarily by Fairmont Heritage Place
("FHP"), FHR's vacation ownership business. During the quarter,
construction was completed on the second phase of FHP Acapulco.
These units were 100% pre-sold and as such, the majority of the
related revenues and expenses were recognized in the quarter. Real
estate activities for the same period in 2004 generated $3.3
million in revenues and a $0.1 million loss to EBITDA. First
Quarter Management Operations Fairmont Revenues under management of
$434 million increased 16.0% over 2004. The addition of The Savoy,
A Fairmont Hotel, The Fairmont Monte Carlo, the reopening of The
Fairmont Southampton and improved operating results at the U.S. and
International hotels, in particular The Fairmont Dubai, all
contributed to this increase. Management fee revenues were up 18.4%
to $14.8 million, commensurate with the increase in revenues under
management. For the Fairmont comparable managed portfolio, RevPAR
increased 9.8% to $120.47. RevPAR for the U.S. and International
portfolio showed solid improvement up 10.5%, resulting from a 7.9%
increase in ADR combined with an occupancy gain of 1.6 points. The
Canadian comparable portfolio reported an 8.9% RevPAR improvement,
driven primarily by an increase in ADR of 11.9% while occupancy was
down 1.6 points. Adjusting for the foreign exchange impact, RevPAR
for the Canadian portfolio was virtually unchanged compared to
2004. Delta In the first quarter, Delta's revenues under management
increased 5.2% to $84 million, primarily due to the appreciation of
the Canadian dollar. Management fee revenues of $2.7 million were
up 8.0% compared to the same period in 2004. During the quarter,
RevPAR increased 9.9% resulting from an 8.7% ADR increase and a 0.6
point improvement in occupancy. Adjusting for the foreign exchange
impact, RevPAR was up approximately 1.3%. First Quarter
Consolidated Results First quarter 2005 consolidated EBITDA was
$22.2 million compared to $34.1 million for the same period in
2004. Excluding the two hotels sold in 2004 and The Fairmont
Southampton, EBITDA decreased $1.1 million or 4.0%, largely as a
result of increased general and administrative expenses. General
and administrative expenses for the quarter were $10.6 million
compared to $3.7 million for the same period in 2004. First quarter
2005 general and administrative expenses include a $2.5 million
charge relating to stock appreciation rights granted to certain
former Canadian Pacific Limited employees prior to the 2001
reorganization that continue to be an obligation of FHR. The
remainder of the increase relates to higher development and long-
term incentive compensation costs of $2.3 million and $0.7 million
related to the appreciation of the Canadian dollar, as the majority
of these expenses are denominated in Canadian dollars. Income tax
expense for the quarter was $2.5 million versus $5.2 million in
2004. In the first quarter, our international hotels in non-taxable
jurisdictions typically generate losses and our equity investments
usually produce non-taxable losses. Adjusting for these factors,
our effective tax rate would be more in line with the expected
full-year tax rate of 30%. FHR's first quarter 2005 net loss was
$4.0 million (basic loss per share of $0.05), compared to the prior
year's loss of $0.6 million (basic loss per share of $0.01).
Adjusting 2004 first quarter results for the impact of the two
hotels sold in 2004, basic loss per share would have been $0.06.
Capital Expenditures Capital expenditures for the quarter totaled
$26.6 million. The Company expects its 2005 hotel related capital
budget to be in the range of approximately $55 - $65 million. The
majority of the capital budget is expected to be spent on
maintenance projects. Announcements and Corporate Activities On
April 20, FHR announced that it has entered into an agreement to
manage the 444-room Sutton Place Hotel in Newport Beach,
California. Sunstone Hotel Investors, Inc. is currently under
contract to purchase the property with closing currently scheduled
for early June. The property is expected to undergo a major
renovation of its guestrooms and public areas, after which it will
be rebranded "The Fairmont Newport Beach". During the quarter, FHP
assumed management of the Franz Klammer Lodge in Telluride,
Colorado. This 63-residence, ski-in, ski-out property is located in
Telluride's exclusive Mountain Village, and was rebranded "Fairmont
Heritage Place Franz Klammer Lodge" on February 15. FHR announced
on January 19, that it has assumed management of The Savoy Hotel,
one of London's most-recognized luxury hotel properties. The hotel
is now known as "The Savoy, A Fairmont Hotel". During the quarter,
FHR repurchased 1.0 million shares under its normal course issuer
bid at a total cost of $32.8 million. Approximately 5.7 million
shares remain available for repurchase under the Company's existing
normal course issuer bid authorization. Outlook "We expect our U.S.
and International hotels to continue benefiting from strong
industry fundamentals in the U.S. and that improving industry
fundamentals in Canada will enhance year-over-year growth for our
Canadian portfolio," commented Mr. Fatt. "We are satisfied with our
expectations for the year which assumes significant growth over
last year for our comparable owned hotels," continued Mr. Fatt,
"For our busy summer season, we are encouraged by early signs that
a number of our segments look strong compared to last year while we
continue to be cautious about U.S. leisure transient travel to
Canada. However, we will have a better indication of this segment's
demand levels later in the spring." 2005 full-year EBITDA guidance
is unchanged and expected to be in the range of $185 - $195
million. Expected ranges for net income and diluted earnings per
share have been adjusted upwards to $62 - $69 million and $0.84 -
$0.93 respectively, to reflect lower amortization expense
expectations. The 2005 guidance does not include any real estate
gains. FHR has provided its 2005 portfolio seasonality information
under "Supplementary Financial and Operating Information" (See
below). "The growth of the Fairmont brand remains a key focus for
the Company as we aim to increase the distribution of the brand and
further raise the exposure of our existing portfolio," noted Mr.
Fatt. FHR will be holding its Annual General Meeting today at 10:00
a.m. Eastern Time at The Fairmont Royal York in Toronto. About
Fairmont Hotels & Resorts Inc. FHR is a leading owner/operator
of luxury hotels and resorts. FHR's managed portfolio consists of
82 luxury and first-class properties with approximately 33,000
guestrooms in the United States, Canada, Mexico, Bermuda, Barbados,
United Kingdom, Monaco 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 45
distinctive city center and resort hotels such as 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 37 city
center and resort properties in Canada. In addition to hotel
management, FHR holds real estate interests in 23 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. FHR will hold a conference call
today, May 3, at 1:30 p.m. Eastern Time to discuss its results. To
participate, please dial 416.405.9328 or 1.800.387.6216. 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 May 3, 2005
through to May 10, 2005 by dialing 416.695.5800 or 1.800.408.3053
using the reservation No. 3147803. A live audio webcast of the
conference call will 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. This press 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", "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 Fairmont Hotels
& Resorts Inc. filings with the securities regulators. FHR
disclaims any responsibility to update any such forward-looking
statements. 1. EBITDA is defined as earnings before interest, taxes
and amortization. Income from investments and other is included in
EBITDA. Management considers EBITDA to be a meaningful indicator of
operations and uses it as the primary measure to assess the
operating performance of our business segments. It is also used by
investors, analysts and our lenders as a measure of the Company's
financial performance. However, it is not a defined measure of
operating performance under Canadian GAAP. It is likely that FHR's
calculation of EBITDA is different than the calculations used by
other entities. The table below provides a reconciliation of EBITDA
to net income: Three months ended March 31
---------------------------------------------------------------------
In millions of dollars 2005 2004
---------------------------------------------------------------------
EBITDA $ 22.2 $ 34.1 Deduct: Amortization 16.5 19.5
---------------------------------------------------------------------
Operating income 5.7 14.6 Interest expense, net 7.2 10.0 Income tax
expense 2.5 5.2
---------------------------------------------------------------------
Net loss $ (4.0) $ (0.6)
---------------------------------------------------------------------
2. 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 financial
performance. However, it is not a defined measure of operating
performance under Canadian GAAP. It is likely that FHR's
calculation of RevPAR is different than the calculations used by
other entities. Fairmont Hotels & Resorts Inc. Consolidated
Balance Sheets (Stated in millions of U.S. dollars) ASSETS March 31
December 31 2005 2004 ------------ ------------ (Unaudited) Current
assets Cash and cash equivalents $ 66.4 $ 99.1 Accounts receivable
79.3 90.2 Inventory 14.6 15.5 Prepaid expenses and other 10.0 11.2
------------ ------------ 170.3 216.0 Investments in partnerships
and corporations 90.9 90.7 Investment in Legacy Hotels Real Estate
Investment Trust 63.8 70.0 Non-hotel real estate 97.3 100.3
Property and equipment 1,437.8 1,435.5 Goodwill 162.8 162.8
Intangible assets (note 3) 272.8 245.0 Other assets and deferred
charges (note 3) 115.3 82.3 ------------ ------------ $ 2,411.0 $
2,402.6 ------------ ------------ ------------ ------------
LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Accounts
payable and accrued liabilities $ 127.6 $ 123.9 Taxes payable 31.8
35.3 Dividends payable - 4.6 Current portion of long-term debt 4.1
4.1 ------------ ------------ 163.5 167.9 Long-term debt 444.9
398.0 Other liabilities 98.4 95.7 Future income taxes 89.5 90.6
------------ ------------ 796.3 752.2 ------------ ------------
Shareholders' Equity (note 4) 1,614.7 1,650.4 ------------
------------ $ 2,411.0 $ 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
March 31 2005 2004 ------------ ------------ Revenues Hotel
ownership operations (note 6 (d)) $ 148.7 $ 155.4 Management
operations 12.5 9.5 Real estate activities 7.5 3.3 ------------
------------ 168.7 168.2 Other revenues from managed and franchised
properties 10.6 8.9 ------------ ------------ 179.3 177.1 Expenses
Hotel ownership operations 117.9 114.3 Management operations 5.7
4.8 Real estate activities 6.4 3.4 General and administrative 10.6
3.7 Amortization 16.5 19.5 ------------ ------------ 157.1 145.7
Other expenses from managed and franchised properties 10.6 9.1
------------ ------------ 167.7 154.8 Loss from equity investments
(5.9) (7.7) ------------ ------------ Operating income 5.7 14.6
Interest expense, net 7.2 10.0 ------------ ------------ (Loss)
income before income tax expense (recovery) (1.5) 4.6 ------------
------------ Income tax expense (recovery) Current 4.3 2.9 Future
(1.8) 2.3 ------------ ------------ 2.5 5.2 ------------
------------ Net loss $ (4.0) $ (0.6) ------------ ------------
------------ ------------ Weighted average number of common shares
outstanding (in millions) (note 4) Basic 75.9 79.1 Diluted 76.9
79.9 Basic loss per common share $ (0.05) $ (0.01) Diluted loss per
common share $ (0.05) $ (0.01) Fairmont Hotels & Resorts Inc.
Consolidated Statements of Cash Flows (Stated in millions of U.S.
dollars) (Unaudited) Three months ended March 31 2005 2004
------------ ------------ Cash provided by (used in) Operating
activities Net loss $ (4.0) $ (0.6) Items not affecting cash
Amortization of property and equipment 15.8 18.8 Amortization of
intangible assets 0.7 0.7 Loss from equity investments 5.9 7.7
Future income taxes (1.8) 2.3 Unrealized foreign exchange gain
(0.2) - Other 0.4 2.5 Distributions 1.7 - Changes in non-hotel real
estate 3.0 (0.2) Changes in non-cash working capital items (note 5)
13.2 9.0 ------------ ------------ 34.7 40.2 ------------
------------ ------------ ------------ Investing activities
Additions to property and equipment (26.6) (19.8) Proceeds from
sale of property and equipment 8.7 - Investments in partnerships
and corporations (4.2) - Collection of loans receivable - 8.8
Issuance of loans receivable (31.6) (5.0) Investments in intangible
assets (22.8) - ------------ ------------ (76.5) (16.0)
------------ ------------ Financing activities Issuance of
long-term debt 48.6 79.9 Repayment of long-term debt (3.5) (63.6)
Issuance of common shares 1.4 0.3 Repurchase of common shares
(32.8) - Dividends paid (4.6) (3.2) ------------ ------------ 9.1
13.4 ------------ ------------ Effect of exchange rate changes on
cash - (0.1) ------------ ------------ (Decrease) increase in cash
(32.7) 37.5 Cash and cash equivalents - beginning of period 99.1
31.7 ------------ ------------ Cash and cash equivalents - end of
period $ 66.4 $ 69.2 ------------ ------------ ------------
------------ Fairmont Hotels & Resorts Inc. Consolidated
Statements of Retained Earnings (Stated in millions of U.S.
dollars) (Unaudited) Three months ended March 31 2005 2004
------------ ------------ Balance - Beginning of period $ 189.2 $
78.1 Net loss (4.0) (0.6) ------------ ------------ 185.2 77.5
Repurchase of common shares (note 4) (20.5) - ------------
------------ Balance - End of period $ 164.7 $ 77.5 ------------
------------ ------------ ------------ 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 March 31,
2005, FHR managed or franchised 83 luxury and first-class hotels.
FHR owns Fairmont Hotels Inc. ("Fairmont"), which as at March 31,
2005, managed 46 luxury properties in major city centers and key
resort destinations throughout Canada, the United States, Mexico,
Bermuda, Barbados, United Kingdom, Monaco and the United Arab
Emirates. Delta Hotels Limited ("Delta"), a wholly-owned subsidiary
of FHR, managed or franchised 37 Canadian hotels and resorts as at
March 31, 2005. In addition to hotel and resort management, as at
March 31, 2005, FHR had hotel ownership interests ranging from
approximately 15% to 100% in 23 properties, located in Canada, the
United States, Mexico, Bermuda, Barbados, Monaco and the United
Arab Emirates. FHR also has an approximate 24% equity interest in
Legacy Hotels Real Estate Investment Trust ("Legacy") as at March
31, 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 months ended
March 31, 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 presented
in the annual report. 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 The Emerging Issues Committee recently 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 if it enters into affected
transactions commencing December 9, 2004. Adoption of this new
standard did not have an impact on the Company's financial
statements. 3. 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 March 31,
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%. 4.
Shareholders' equity March 31, December 31, 2005 2004 ------------
------------ Common shares $ 1,146.6 $ 1,163.1 Other equity 19.2
19.2 Treasury Stock - (5.6) Contributed surplus 142.6 142.4 Foreign
currency translation adjustments 141.6 142.1 Retained earnings
164.7 189.2 ------------ ------------ $ 1,614.7 $ 1,650.4
------------ ------------ ------------ ------------ The diluted
weighted-average number of common shares outstanding is calculated
as follows: Three months ended March 31 2005 2004 ------------
------------ (in millions) Weighted-average number of common shares
outstanding - basic 75.9 79.1 Stock options(1) 1.0 0.8 ------------
------------ Weighted-average number of common shares outstanding -
diluted 76.9 79.9 ------------ ------------ ------------
------------ (1) The calculation of diluted loss per common share
for the three months ended March 31, 2005 and 2004 excludes stock
options as the impact of these exercises would be anti-dilutive.
Effective October 24, 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. Under the normal course issuer
bid, FHR repurchased 1,026,000 shares in the first quarter
(2004-nil). 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 $32.8,
of which $15.3 was charged to common shares, $17.5 was charged to
retained earnings. 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 three months ended March
31, 2005, FHR issued 73,525 shares pursuant to the Key Employee
Stock Option Plan of which $1.4 was credited to common shares for
proceeds from options exercised. At March 31, 2005, 75,274,773
common shares were outstanding (2004 - 79,123,467). During the
three months ended March 31, 2005, 300,000 stock options were
granted, and the cost of this stock-based compensation was 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 loss
per share would have been: Three months ended March 31 2005 2004
------------ ------------ Reported net loss $ (4.0) $ (0.6) Net
loss assuming fair value method used $ (4.1) $ (0.7) Assuming fair
value method used Basic loss per share $ (0.05) $ (0.01) Diluted
loss per share $ (0.05) $ (0.01) 5. Changes in non-cash working
capital: Three months ended March 31 2005 2004 ------------
------------ Decrease (increase) in current assets Accounts
receivable $ 10.9 $ 0.7 Inventory 0.9 (0.4) Prepaid expenses and
other 1.2 1.0 Increase (decrease) in current liabilities Accounts
payable and accrued liabilities 3.7 5.8 Taxes payable (3.5) 1.9
------------ ------------ $ 13.2 $ 9.0 ------------ ------------ 6.
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 23 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 from equity investments. Corporate general and
administrative expenses, 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
March 31, 2005
------------------------------------------------------ Ownership
Management -------------------------------- ---------------------
Hotel Real estate Ownership Legacy activities Fairmont Delta
---------- ---------- ---------- ---------- ---------- Operating
revenues(d) $ 148.7 $ - $ 7.5 $ 14.8 $ 2.7 Other revenues from
managed and franchised properties - - - 7.7 2.9 Income (loss) from
equity investments and other 1.1 (7.0) - - - EBITDA(b) 26.9 (7.0)
1.1 10.2 1.6 Total assets(c) 1,889.8 63.8 99.1 723.2 79.9 Capital
expenditures 25.4 - - 1.2 - --------------------------------
Corporate Inter- general segment and admin- elimi- istrative
nation(a) Total ---------- ---------- ---------- Operating
revenues(d) $ - $ (5.0) $ 168.7 Other revenues from managed and
franchised properties - - 10.6 ---------- 179.3 Income (loss) from
equity investments and other - (5.9) EBITDA(b) (10.6) - 22.2 Total
assets(c) - (444.8) 2,411.0 Capital expenditures - - 26.6 Three
months ended March 31, 2004
------------------------------------------------------ Ownership
Management -------------------------------- ---------------------
Hotel Real estate Ownership Legacy activities Fairmont Delta
---------- ---------- ---------- ---------- ---------- Operating
revenues(d) $ 155.4 $ - $ 3.3 $ 12.5 $ 2.5 Other revenues from
managed and franchised properties - - - 6.5 2.4 Loss from equity
investments and other (0.4) (7.3) - - - EBITDA(b) 35.2 (7.3) (0.1)
8.7 1.5 Total assets(c) 1,904.9 98.4 102.2 360.1 75.1 Capital
expenditures 19.6 - - 0.2 - --------------------------------
Corporate Inter- general segment and admin- elimi- istrative
nation(a) Total ---------- ---------- ---------- Operating
revenues(d) $ - $ (5.5) $ 168.2 Other revenues from managed and
franchised properties - - 8.9 ---------- 177.1 Loss from equity
investments and other - - (7.7) EBITDA(b) (3.7) (0.2) 34.1 Total
assets(c) - (17.8) 2,522.9 Capital expenditures - - 19.8 (a)
Operating revenues include management fees that are charged by
Fairmont of $4.9 (2004 - $5.4) for the three months ended March 31,
2005 and Delta of $0.1 (2004 - $0.1) for the three months ended
March 31, 2005, 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 loss is as
follows: Three months ended March 31 2005 2004 ------------
------------ EBITDA $ 22.2 $ 34.1 less: amortization 16.5 19.5
------------ ------------ Operating Income 5.7 14.6 Interest
expense, net 7.2 10.0 Income taxes 2.5 5.2 ------------
------------ Net loss $ (4.0) $ (0.6) ------------ ------------
------------ ------------ (c) Hotel ownership assets include $90.3
(2004 - $88.3) 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 March 31 2005 2004
------------ ------------ Rooms revenue $ 80.3 $ 88.3 Food and
beverage revenue 49.8 48.6 Other 18.6 18.5 ------------
------------ $ 148.7 $ 155.4 ------------ ------------ ------------
------------ 7. FHR recorded pension and other post employment
benefit expenses as follows: Three months ended March 31 2005 2004
------------ ------------ Pension $ 0.4 $ 0.5 Other post-employment
benefits 0.1 0.1 ------------ ------------ $ 0.5 $ 0.6 ------------
------------ ------------ ------------ 8. 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 Item ------ Comparable operating statistics for hotel
portfolio as of March 31, 2005 I 2004 hotel ownership revenues and
EBITDA adjusted for assets sales II 2005 portfolio seasonality
information III Comparable operating statistics for hotel portfolio
as of May 1, 2005 IV Summary of hotel portfolio at March 31, 2005
and 2004 V Item I Fairmont Hotels & Resorts Inc. Comparable
operating statistics for hotel portfolio as of March 31, 2005
-------------------------------------------------------------------------
Three months ended March 31
-------------------------------------------------------------------------
2005 2004 Variance
-------------------------------------------------------------------------
OWNED HOTELS
-------------------------------------------------------------------------
Worldwide 14 properties/6,746 rooms
-------------------------------------------------------------------------
RevPAR $ 128.41 $ 116.64 10.1%
-------------------------------------------------------------------------
ADR 202.22 189.14 6.9%
-------------------------------------------------------------------------
Occupancy 63.5% 61.7% 1.8 points
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Canada 7 properties/3,336 rooms
-------------------------------------------------------------------------
RevPAR $ 101.18 $ 93.86 7.8%
-------------------------------------------------------------------------
ADR 166.38 154.37 7.8%
-------------------------------------------------------------------------
Occupancy 60.8% 60.8% -
-------------------------------------------------------------------------
-------------------------------------------------------------------------
U.S. and International 7 properties/3,410 rooms
-------------------------------------------------------------------------
RevPAR $ 154.99 $ 138.33 12.0%
-------------------------------------------------------------------------
ADR 234.41 221.35 5.9%
-------------------------------------------------------------------------
Occupancy 66.1% 62.5% 3.6 points
-------------------------------------------------------------------------
-------------------------------------------------------------------------
FAIRMONT MANAGED HOTELS(1)
-------------------------------------------------------------------------
Worldwide 42 hotels/20,713 rooms
-------------------------------------------------------------------------
RevPAR $ 120.47 $ 109.76 9.8%
-------------------------------------------------------------------------
ADR 196.23 178.90 9.7%
-------------------------------------------------------------------------
Occupancy 61.4% 61.4% -
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Canada 20 properties/10,095 rooms
-------------------------------------------------------------------------
RevPAR $ 81.84 $ 75.18 8.9%
-------------------------------------------------------------------------
ADR 145.86 130.30 11.9%
-------------------------------------------------------------------------
Occupancy 56.1% 57.7% (1.6) points
-------------------------------------------------------------------------
-------------------------------------------------------------------------
U.S. and International 22 properties/10,618 rooms
-------------------------------------------------------------------------
RevPAR $ 156.34 $ 141.44 10.5%
-------------------------------------------------------------------------
ADR 235.81 218.58 7.9%
-------------------------------------------------------------------------
Occupancy 66.3% 64.7% 1.6 points
-------------------------------------------------------------------------
-------------------------------------------------------------------------
DELTA MANAGED HOTELS(1)
-------------------------------------------------------------------------
Worldwide 27 properties/8,175 rooms
-------------------------------------------------------------------------
RevPAR $ 59.30 $ 53.98 9.9%
-------------------------------------------------------------------------
ADR 100.53 92.47 8.7%
-------------------------------------------------------------------------
Occupancy 59.0% 58.4% 0.6 points
-------------------------------------------------------------------------
(1) includes hotels owned by Fairmont Hotels & Resorts Inc.
Comparable hotels and resorts are considered to be properties that
were 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 Delta Managed: Delta Meadowvale and Delta franchised
hotels Item II 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 $ 176.8
$ 137.8 $ 602.8 Add: hotels sold 24.3 23.4 3.6 - 51.3
------------------------------------------------------ Hotel
ownership revenues $ 155.4 $ 180.5 $ 180.4 $ 137.8 $ 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 EBITDA contribution
(deduction) from other segments (1.1) 15.9 7.8 (1.7) 20.9
------------------------------------------------------ Total EBITDA
34.1 62.5 63.5 20.9 181.0 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 Gain on sales
of investments and hotels sales - - (144.2) 0.5 (143.7) 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
------------------------------------------------------
------------------------------------------------------ Item III
Fairmont Hotels & Resorts Inc. 2005 portfolio seasonality
information First Second Third Fourth Quarter Quarter Quarter
Quarter Year ------- ------- ------- ------- ---- (In millions 2005
quarterly except tax EBITDA(1) range rate guidance information) Low
7% 25% 41% 16% $ 185 High 12% 30% 47% 22% $ 195 Tax rate(2) - 18%
27% 43% 30% Notes: (1) Given the seasonality of FHR's portfolio,
the information above provides insight into the estimated quarterly
breakdown of FHR's earnings. (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
unusually 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. Item IV
Fairmont Hotels & Resorts Inc. Operating statistics for
comparable hotels as of May 1, 2005
-------------------------------------------------------------------------
First First Second Third Fourth 2004 Quarter Quarter Quarter
Quarter Quarter Full 2005 2004 2004 2004 2004 Year
-------------------------------------------------------------------------
OWNED HOTELS
-------------------------------------------------------------------------
Worldwide
-------------------------------------------------------------------------
RevPAR $ 128.41 $ 116.64 $ 116.37 $ 138.53 $ 102.88 $ 118.63
-------------------------------------------------------------------------
ADR 202.22 189.14 184.22 207.65 180.19 190.85
-------------------------------------------------------------------------
Occupancy 63.5% 61.7% 63.2% 66.7% 57.1% 62.2%
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Canada
-------------------------------------------------------------------------
RevPAR $ 101.18 $ 93.86 $ 106.23 $ 173.78 $ 84.76 $ 114.93
-------------------------------------------------------------------------
ADR 166.38 154.37 156.93 220.81 149.14 174.01
-------------------------------------------------------------------------
Occupancy 60.8% 60.8% 67.7% 78.7% 56.8% 66.0%
-------------------------------------------------------------------------
-------------------------------------------------------------------------
U.S. & International
-------------------------------------------------------------------------
RevPAR $ 154.99 $ 138.33 $ 126.12 $ 104.03 $ 120.60 $ 122.21
-------------------------------------------------------------------------
ADR 234.41 221.35 214.43 189.21 210.25 209.27
-------------------------------------------------------------------------
Occupancy 66.1% 62.5% 58.8% 55.0% 57.4% 58.4%
-------------------------------------------------------------------------
-------------------------------------------------------------------------
FAIRMONT MANAGED HOTELS(1)
-------------------------------------------------------------------------
Worldwide
-------------------------------------------------------------------------
RevPAR $ 117.03 $ 106.02 $ 118.43 $ 128.73 $ 106.02 $ 114.85
-------------------------------------------------------------------------
ADR 191.61 174.35 175.85 189.01 177.85 179.50
-------------------------------------------------------------------------
Occupancy 61.1% 60.8% 67.3% 68.1% 59.6% 64.0%
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Canada
-------------------------------------------------------------------------
RevPAR $ 81.84 $ 75.18 $ 101.20 $ 137.64 $ 85.61 $ 100.18
-------------------------------------------------------------------------
ADR 145.86 130.30 146.22 184.41 144.21 153.43
-------------------------------------------------------------------------
Occupancy 56.1% 57.7% 69.2% 74.6% 59.4% 65.3%
-------------------------------------------------------------------------
-------------------------------------------------------------------------
U.S. & International
-------------------------------------------------------------------------
RevPAR $ 152.37 $ 136.56 $ 135.75 $ 119.60 $ 126.67 $ 129.63
-------------------------------------------------------------------------
ADR 230.63 213.72 207.36 194.73 211.58 206.89
-------------------------------------------------------------------------
Occupancy 66.1% 63.9% 65.5% 61.4% 59.9% 62.7%
-------------------------------------------------------------------------
-------------------------------------------------------------------------
DELTA MANAGED HOTELS(1)
-------------------------------------------------------------------------
Worldwide
-------------------------------------------------------------------------
RevPAR $ 59.30 $ 53.98 $ 65.43 $ 77.25 $ 60.95 $ 64.43
-------------------------------------------------------------------------
ADR 100.53 92.47 96.40 103.51 100.52 98.53
-------------------------------------------------------------------------
Occupancy 59.0% 58.4% 67.9% 74.6% 60.6% 65.4%
-------------------------------------------------------------------------
(1) Includes hotels owned by Fairmont Hotels & Resorts Inc. 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 Plaza Delta Managed: Delta Meadowvale and Delta
franchised hotels Item V Fairmont Hotels & Resorts Inc. Summary
of Hotel Portfolios ------------------------------------------- At
March 31 ------------------------------------------- 2005 2004
-------------------------------------------
------------------------------------------- OWNED HOTELS
------------------------------------------- Worldwide
------------------------------------------- No. of Properties 15 17
------------------------------------------- No. of Rooms 7,339
7,861 -------------------------------------------
------------------------------------------- Canada
------------------------------------------- No. of Properties 7 7
------------------------------------------- No. of Rooms 3,336
3,336 -------------------------------------------
------------------------------------------- U.S. and International
------------------------------------------- No. of Properties 8 10
------------------------------------------- No. of Rooms 4,003
4,525 -------------------------------------------
------------------------------------------- FAIRMONT MANAGED
HOTELS(1) ------------------------------------------- Worldwide
------------------------------------------- No. of Properties 46 44
------------------------------------------- No. of Rooms 22,511
21,182 -------------------------------------------
------------------------------------------- Canada
------------------------------------------- No. of Properties 21 21
------------------------------------------- No. of Rooms 10,418
10,422 -------------------------------------------
------------------------------------------- U.S. and International
------------------------------------------- No. of Properties 25 23
------------------------------------------- No. of Rooms 12,093
11,221 -------------------------------------------
------------------------------------------- DELTA MANAGED HOTELS(1)
------------------------------------------- Worldwide
------------------------------------------- No. of Properties 37 39
------------------------------------------- No. of Rooms 11,042
11,451 ------------------------------------------- (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