Fairmont Hotels & Resorts Inc. Reports Second Quarter 2005
Results TORONTO, July 26 /PRNewswire-FirstCall/ -- Fairmont Hotels
& Resorts Inc. ("FHR" or the "Company") (TSX/NYSE: FHR) today
announced its unaudited financial results for the three and six
months ended June 30, 2005. These financial results have been
prepared in accordance with Canadian generally accepted accounting
principles. All amounts are expressed in U.S. dollars. Second
Quarter 2005 Highlights - Diluted income per share ("diluted EPS")
increased 25% over second quarter 2004. Excluding the impact of
sold hotels, a real estate gain and tax recovery, diluted EPS rose
24%. - Excluding the impact of sold hotels and land sale proceeds
in 2004, total revenues improved 13.1%. - Revenue per available
room(1) ("RevPAR") for the comparable managed portfolio improved
8.3%, driven by RevPAR growth of 9.4% at the comparable U.S. and
International managed portfolio. The Canadian managed portfolio
experienced RevPAR increases of 6.9%. - Assumed management of the
former Sutton Place Hotel in Newport Beach, California. - Expanded
the Fairmont brand to Africa by assuming management of five
properties in Kenya. - Repurchased 0.8 million common shares for a
total cost of $28 million. "Our second quarter earnings before
interest, taxes, other expenses and amortization of $50.5 million
were in line with our expectations," said William R. Fatt, FHR's
Chief Executive Officer. "It is important to note that the
comparability of our 2005 results, specifically our hotel ownership
operations, are affected by the two hotels we sold in 2004."
Revenues Three months ended Six months ended (In millions of U.S.
dollars) June 30 June 30 2005 2004 2005 2004 ---- ---- ---- ----
Reported Revenues $ 205.7 $ 219.2 $ 385.0 $ 396.3 Less: Amounts
attributable to hotels sold in 2004 - 23.3 - 47.7 Proceeds from
sale of undeveloped land - 14.1 - 15.4
-------------------------------------- Revenues adjusted for hotels
sold and land sale $ 205.7 $ 181.8 $ 385.0 $ 333.2
-------------------------------------- Diluted income per share
Three months ended Six months ended June 30 June 30 2005 2004 2005
2004 ---- ---- ---- ---- Diluted income per share $ 0.45 $ 0.36 $
0.39 $ 0.36 Less: Amounts attributable to hotels sold in 2004 -
0.05 - 0.10 Gain on sale of undeveloped land - 0.10 - 0.11 Tax
recovery 0.19 - 0.19 - --------------------------------------
Diluted income per share adjusted for hotels sold, land sale and
tax recovery $ 0.26 $ 0.21 $ 0.20 $ 0.15
-------------------------------------- Second Quarter Ownership
Operations Hotel ownership revenues: ------------------------
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Comparable(2) revenues Canada U.S. International Total
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Increase (decrease) from second quarter 2004 12.1% 12.1% (1.2%)
9.3%
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- Canadian Owned Hotels: Revenues for the Canadian owned hotels
were impacted by the 8% appreciation of the Canadian dollar against
the U.S. dollar when compared to the second quarter of 2004. The
balance of the increase was primarily driven by The Fairmont
Chateau Lake Louise, which enjoyed revenue growth of approximately
22.1%, largely due to the resort's additional guestrooms and
meeting facility. - Comparable U.S. Owned Hotels: Revenue
improvements for the comparable U.S. owned hotels were led by The
Fairmont Copley Plaza Boston and The Fairmont Orchid, Hawaii with
revenue growth of 16% and 17%, respectively. - Comparable
International Owned Hotels: The decrease in revenues for the
comparable International owned hotels was due to a 3.7% decline in
revenues at the Mexican resorts. While the Mexican resorts
experienced lower leisure transient demand in the second quarter
compared to the prior year, expectations are that the resorts will
experience strong full year growth on a year over year basis. Hotel
ownership EBITDA(3): ----------------------
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Comparable EBITDA Canada U.S. International Total
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Increase (decrease) from second quarter 2004 6.6% 19.3% (14.3%)
5.9%
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- Canadian Owned Hotels: EBITDA for the Canadian owned hotels was
boosted by an appreciation of the Canadian dollar, which affected
both revenues and expenses at these hotels. When denominated in
Canadian dollars, EBITDA was relatively unchanged. - Comparable
U.S. Owned Hotels: All the comparable U.S. owned properties
contributed to this improvement led by The Fairmont Orchid, which
experienced an 11.9% increase in RevPAR. - Comparable International
Owned Hotels: The decrease in EBITDA was due to weaker year over
year operating performance at the Mexican resorts, which
experienced a 4.2% decline in RevPAR. Hotel ownership EBITDA
margin: -----------------------------
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Comparable EBITDA margin Canada U.S. International Total
-------------------------------------------------------------------------
Increase (decrease) from second quarter 2004 (30bp) 130bp (300bp)
(60bp)
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- Canadian Owned Hotels: EBITDA margins for the Canadian owned
hotels decreased slightly primarily as a result of a 1.8 percentage
point decrease in occupancy and higher costs resulting from the
appreciation of the Canadian dollar. - Comparable U.S. Owned
Hotels: Strong occupancy growth of 5.4 percentage points was the
key driver of EBITDA margin improvement for this region. -
Comparable International Owned Hotels: The comparable International
owned portfolio experienced a decline in margins primarily due to
the RevPAR decline at the Mexican resorts. 90% of the RevPAR
decrease at the Mexican resorts was driven by a drop in average
daily rate ("ADR"). Comparable Owned Portfolio Operating
Statistics: -----------------------------------------------
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Increase (decrease) from Canada U.S. International Total second
quarter 2004
-------------------------------------------------------------------------
RevPAR 5.6% 8.1% (1.0%) 4.7%
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ADR 8.5% 0.4% (0.8%) 4.5%
-------------------------------------------------------------------------
Occupancy (1.8) points 5.4 points (0.8) points 0.1 points
-------------------------------------------------------------------------
- Canadian Owned Hotels: The improvement in ADR is as a result of
the appreciation of the Canadian dollar. A decline in leisure
transient demand resulted in a 1.8 percentage point decline in
occupancy compared to last year. Adjusting for the foreign exchange
impact, RevPAR for the Canadian owned portfolio was down 3.3%. -
Comparable U.S. Owned Hotels: The U.S. owned comparable portfolio
enjoyed strong occupancy driven by increased group demand from both
the tour and business meetings segments. - Comparable International
Owned Hotels: The International owned comparable portfolio was
impacted by a year over year decrease in leisure business at the
Mexican resorts. Real estate activities: Real estate activities in
the second quarter produced revenues of $2.0 million and a $0.4
million loss to EBITDA. This was generated primarily by Fairmont
Heritage Place, FHR's vacation ownership business. Real estate
activities for the same period in 2004 generated $18.1 million in
revenues and an $8.3 million contribution to EBITDA, as a result of
the sale of a block of undeveloped land in Vancouver for proceeds
of $14.1 million and a gain of $8.3 million. Second Quarter
Management Operations
---------------------------------------------------------- Increase
(decrease) from second quarter 2004 Fairmont Delta
---------------------------------------------------------- Revenues
under management 11.9% 16.1%
----------------------------------------------------------
Management fee revenues 17.5% (5.6%)
----------------------------------------------------------
Worldwide RevPAR 8.3% 13.4%
----------------------------------------------------------
Worldwide ADR 7.3% 9.7%
----------------------------------------------------------
Worldwide Occupancy 0.6 points 2.3 points
---------------------------------------------------------- Fairmont
- Revenues under management of $498 million increased 11.9% 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, all
contributed to this increase. - Management fee revenues were up
17.5% to $16.1 million, largely due to the increase in revenues
under management. - For the Fairmont comparable managed portfolio,
RevPAR increased 8.3% to $128.03. RevPAR for the comparable U.S.
and International portfolio showed solid improvement up 9.4%,
resulting from a 5.9% increase in ADR combined with an occupancy
gain of 2.2 percentage points. The Canadian comparable portfolio
reported a 6.9% RevPAR improvement, driven primarily by an increase
in ADR of 8.4% while occupancy was down 1.0 percentage point.
Adjusting for the foreign exchange impact, RevPAR for the Canadian
portfolio was down 2.1% for the quarter. Delta - Delta's revenues
under management increased 16.1% to $108 million, primarily due to
the appreciation of the Canadian dollar. - Management fee revenues
for the second quarter were $3.4 million compared to $3.6 million
in the same period in 2004. The decrease in management fee revenues
relates to an early termination payment of $0.5 million received
during the second quarter of 2004. - RevPAR increased 13.4% over
the second quarter of 2004 resulting from a 9.7% ADR increase and a
2.3 percentage point improvement in occupancy. Adjusting for the
foreign exchange impact, RevPAR was up approximately 4%. Other
expenses During the second quarter, the Company pursued a major
portfolio acquisition opportunity, which it did not complete. $3.3
million (diluted EPS of $0.04) of development costs primarily
associated with this activity were expensed in the quarter. Income
tax expense (recovery) Income tax recovery for the second quarter
was $9.3 million versus an income tax expense of $6.5 million in
2004. FHR reached a settlement with Canadian tax authorities in the
quarter and booked a $14.6 million tax recovery to partially
reflect this settlement. Adjusting for this tax recovery, the
effective tax rate for the second quarter would be 21%. In the
second quarter, FHR's International owned hotels in non-taxable
jurisdictions usually produce a greater portion of pre-tax income
than in other quarters. As a result, the effective tax rate for the
second quarter is lower than the expected full-year tax rate of
approximately 27%. Six Months Consolidated Results For the six
months ended June 30, 2005 consolidated EBITDA was $72.7 million
compared to $96.6 million for the same period in 2004. Excluding
the two hotels sold, The Fairmont Southampton and the gain on sale
of undeveloped land in 2004, EBITDA increased 2.1% to $66.8
million. General and administrative expenses for the first half of
the year were $18.3 million compared to $12.1 million for the same
period in 2004. General and administrative expenses for the first
six months of 2005 include a $2.9 million charge relating to stock
appreciation rights granted to certain former Canadian Pacific
Limited ("CPL") 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 $3.3 million. The appreciation of the Canadian dollar also
had a negative impact on expenses, the majority of which are
incurred in Canada. Net income for the first half of the year was
$30.1 million (diluted EPS of $0.39), compared to the prior year's
net income of $28.4 million (diluted EPS of $0.36). Excluding the
impact of sold hotels, real estate gains and the tax recovery,
diluted EPS increased 33% from $0.15 to $0.20. Capital Expenditures
Capital expenditures for the three and six months ended June 30,
2005, totaled $13.6 million and $40.2 million, respectively. 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 July 14th, FHR sold a
parcel of land in Vancouver for net proceeds and an after-tax gain
of $17 million, which will be recorded in the third quarter. The
Company continues to have one significant block of land in
Vancouver's Coal Harbour which is zoned for mixed use hotel, office
and residential development. FHR assumed management of the 444-room
hotel formerly known as the "Sutton Place Hotel" in Newport Beach,
California on July 12th. A $22 million phased renovation of the
hotel's guestrooms, public areas and facilities has commenced. On
May 11th, FHR assumed management of The Norfolk Hotel, Mount Kenya
Safari Club, The Aberdare Country Club, The Ark and the Mara Safari
Club, all located in Kenya. Following approximately $25 million in
enhancements which are expected to be completed in mid-2006, this
collection of properties will be rebranded Fairmont hotels. The
five hotels were acquired by a corporation formed by FHR, Kingdom
Hotel Investments and IFA Hotels & Resorts. FHR holds an
approximate 15% equity interest in the joint venture. During the
quarter, FHR repurchased 0.8 million shares under its normal course
issuer bid for a total cost of $28 million. For the first half of
the year, FHR has repurchased 1.8 million shares at a cost of $60.7
million. Approximately 4.9 million shares remain available for
repurchase under the Company's existing normal course issuer bid
authorization. Outlook "We are delighted to add Newport Beach and
Kenya this quarter to our growing list of Fairmont destinations,"
noted Mr. Fatt. "The growth of the Fairmont brand continues to
remain 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." "RevPAR for our Canadian owned resorts
continue to perform in-line with their specific North American
competitive set but operating costs are increasing as a result of
the appreciation of the Canadian dollar," said Mr. Fatt. "U.S.
travel to Canada is down on a year over year basis and our Canadian
owned resorts and managed properties in major Canadian gateway
cities rely heavily on this traffic, particularly in the second and
third quarters. At our owned resorts, the decrease has been
somewhat offset by growth in Asian and European demand." "There are
currently two major challenges impacting our Canadian city- center
managed properties, the first being the year over year decrease in
U.S. travel to Canada, particularly short-haul traffic.
Appreciation of the Canadian dollar and border hassles are two
important factors that are deterring short-haul travelers to
Canada," commented Mr. Fatt. "The second challenge is the softness
in convention activity at city-center properties in Toronto,
Montreal and Vancouver, which are being affected by the
after-effects of severe acute respiratory syndrome Canada
experienced in 2003." "We expect our U.S. and International hotels
to continue to benefit from strong industry fundamentals and
perform to our original expectations," said Mr. Fatt. "We now
anticipate softer U.S. travel to Canada and as a result are
revising our previous guidance to reflect these conditions." FHR's
previous 2005 EBITDA guidance of $185 - $195 million has been
revised to reflect currently lower expectations with regard to U.S.
travel into Canada and greater than forecasted costs associated
with stock appreciation rights ($3 million). FHR now estimates that
2005 EBITDA will be approximately $192 million, including the $17
million gain on the land sale which will be recorded in the third
quarter. This guidance does not assume any additional real estate
sales in the year. Estimates for net income and diluted earnings
per share have been adjusted to $96 million and $1.24 respectively,
to reflect the change in EBITDA expectations, a further tax
recovery associated with the tax settlement reached in the second
quarter that the Company is expecting to record in 2005 and certain
other items. Excluding the tax recovery and the land sale gain, FHR
has assumed a 2005 full-year tax rate of approximately 27%. 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, 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, July 26, at 2:00
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 July 26, 2005 through to
August 2, 2005 by dialing 416.695.5800 or 1.800.408.3053 using the
reservation No. 3155938. 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", "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 the securities regulators. All forward-looking
statements in this news release are qualified by these cautionary
statements. The 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. 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 financial
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: - The Fairmont Kea
Lani Maui (sold July 2004) - The Fairmont Glitter Bay (sold July
2004) - The Fairmont Southampton (reopened on April 11, 2004 after
hurricane damage repairs) 3. EBITDA is defined as earnings before
interest, taxes, other expenses and amortization. Income or loss
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, EBITDA 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
others. The table below provides a reconciliation of EBITDA to net
income:
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Three months Six months ended June 30 ended June 30
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(In millions of dollars) 2005 2004 2005 2004
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EBITDA $ 50.5 $ 62.5 $ 72.7 $ 96.6 Deduct: Other expenses 3.3 - 3.3
- Amortization 16.4 18.0 32.9 37.5
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Operating income 30.8 44.5 36.5 59.1 Interest expense, net 6.0 9.0
13.2 19.0 Income tax (recovery) expense (9.3) 6.5 (6.8) 11.7
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Net income $ 34.1 $ 29.0 $ 30.1 $ 28.4
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Fairmont Hotels & Resorts Inc. Consolidated Balance Sheets
(Stated in millions of U.S. dollars) ASSETS June 30 December 31
2005 2004 ---------- ---------- (Unaudited) Current assets Cash and
cash equivalents $ 69.9 $ 99.1 Accounts receivable 107.1 90.2
Inventory 15.4 15.5 Prepaid expenses and other 17.1 11.2 ----------
---------- 209.5 216.0 Investments in partnerships and corporations
(note 3) 94.5 90.7 Investment in Legacy Hotels Real Estate
Investment Trust 63.3 70.0 Non-hotel real estate 96.8 100.3
Property and equipment 1,426.6 1,435.5 Goodwill 162.0 162.8
Intangible assets (notes 3 and 4) 276.7 245.0 Other assets and
deferred charges (notes 3 and 4) 116.0 82.3 ---------- ---------- $
2,445.4 $ 2,402.6 ---------- ---------- ---------- ----------
LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Accounts
payable and accrued liabilities $ 143.8 $ 123.9 Taxes payable (note
5) 16.3 35.3 Dividends payable 4.5 4.6 Current portion of long-term
debt 4.2 4.1 ---------- ---------- 168.8 167.9 Long-term debt 475.1
398.0 Other liabilities 96.1 95.7 Future income taxes 94.2 90.6
---------- ---------- 834.2 752.2 ---------- ----------
Shareholders' Equity (note 6) 1,611.2 1,650.4 ---------- ----------
$ 2,445.4 $ 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 Six months ended June 30
June 30 2005 2004 2005 2004 -------- -------- -------- --------
Revenues Hotel ownership operations (note 8 (d)) $ 177.5 $ 180.6 $
326.2 $ 336.0 Management operations 14.6 11.6 27.1 21.1 Real estate
activities 2.0 18.1 9.5 21.4 -------- -------- -------- --------
194.1 210.3 362.8 378.5 Other revenues from managed and franchised
properties 11.6 8.9 22.2 17.8 -------- -------- -------- --------
205.7 219.2 385.0 396.3 Expenses Hotel ownership operations 131.3
129.2 249.2 243.5 Management operations 4.7 3.9 10.4 8.7 Real
estate activities 2.4 9.8 8.8 13.2 General and administrative 7.7
8.4 18.3 12.1 Other (note 10) 3.3 - 3.3 - Amortization 16.4 18.0
32.9 37.5 -------- -------- -------- -------- 165.8 169.3 322.9
315.0 Other expenses from managed and franchised properties 11.2
9.1 21.8 18.2 -------- -------- -------- -------- 177.0 178.4 344.7
333.2 Income (loss) from equity investments 2.1 3.7 (3.8) (4.0)
-------- -------- -------- -------- Operating income 30.8 44.5 36.5
59.1 Interest expense, net 6.0 9.0 13.2 19.0 -------- --------
-------- -------- Income before income tax expense (recovery) 24.8
35.5 23.3 40.1 -------- -------- -------- -------- Income tax
expense (recovery) Current (note 5) (13.6) 2.6 (9.3) 5.5 Future 4.3
3.9 2.5 6.2 -------- -------- -------- -------- (9.3) 6.5 (6.8)
11.7 -------- -------- -------- -------- Net income $ 34.1 $ 29.0 $
30.1 $ 28.4 -------- -------- -------- -------- -------- --------
-------- -------- Weighted average number of common shares
outstanding (in millions) (note 6) Basic 75.0 79.1 75.5 79.1
Diluted 76.1 79.9 76.5 79.9 Basic income per common share $ 0.45 $
0.37 $ 0.40 $ 0.36 Diluted income per common share $ 0.45 $ 0.36 $
0.39 $ 0.36 Fairmont Hotels & Resorts Inc. Consolidated
Statements of Cash Flows (Stated in millions of U.S. dollars)
(Unaudited) Three months ended Six months ended June 30 June 30
2005 2004 2005 2004 -------- -------- -------- -------- Cash
provided by (used in) Operating activities Net income $ 34.1 $ 29.0
$ 30.1 $ 28.4 Items not affecting cash Amortization of property and
equipment 15.8 17.3 31.6 36.1 Amortization of intangible assets 0.6
0.7 1.3 1.4 (Income) loss from equity investments (2.1) (3.7) 3.8
4.0 Future income taxes 4.3 3.9 2.5 6.2 Tax recovery (note 5)
(14.6) - (14.6) - Unrealized foreign exchange loss 8.3 10.2 8.1
10.2 Other (1.7) (3.5) (1.3) (1.0) Distributions 2.3 - 4.0 -
Changes in non-hotel real estate (0.9) 0.5 2.1 0.3 Changes in
non-cash working capital items (note 7) (20.6) (45.3) (7.4) (36.3)
-------- -------- -------- -------- 25.5 9.1 60.2 49.3 --------
-------- -------- -------- Investing activities Additions to
property and equipment (13.6) (24.2) (40.2) (44.0) Proceeds from
sale of property and equipment 0.1 - 8.8 - Investments in
partnerships and corporations (7.0) - (11.2) - Collection of loans
receivable - 0.1 - 8.9 Issuance of loans receivable (1.2) (2.0)
(32.8) (7.0) Investments in intangible assets (3.9) - (26.7) -
-------- -------- -------- -------- (25.6) (26.1) (102.1) (42.1)
-------- -------- -------- -------- Financing activities Issuance
of long-term debt 31.2 2.8 79.8 82.7 Repayment of long-term debt
(1.0) (2.0) (4.5) (65.6) Issuance of common shares 1.4 0.3 2.8 0.6
Repurchase of common shares (27.9) (5.4) (60.7) (5.4) Dividends
paid - - (4.6) (3.2) -------- -------- -------- -------- 3.7 (4.3)
12.8 9.1 -------- -------- -------- -------- Effect of exchange
rate changes on cash (0.1) (0.1) (0.1) (0.2) -------- --------
-------- -------- (Decrease) increase in cash 3.5 (21.4) (29.2)
16.1 Cash and cash equivalents - beginning of period 66.4 69.2 99.1
31.7 -------- -------- -------- -------- Cash and cash equivalents
- end of period $ 69.9 $ 47.8 $ 69.9 $ 47.8 -------- --------
-------- -------- -------- -------- -------- -------- Fairmont
Hotels & Resorts Inc. Consolidated Statements of Retained
Earnings (Stated in millions of U.S. dollars) (Unaudited) Three
months ended Six months ended June 30 June 30 2005 2004 2005 2004
-------- -------- -------- -------- Balance - Beginning of period $
164.7 $ 77.5 $ 189.2 $ 78.1 Net income 34.1 29.0 30.1 28.4 --------
-------- -------- -------- 198.8 106.5 219.3 106.5 Repurchase of
common shares (note 6) (15.3) (2.2) (35.8) (2.2) Dividend (4.5)
(3.2) (4.5) (3.2) -------- -------- -------- -------- Balance - End
of period $ 179.0 $ 101.1 $ 179.0 $ 101.1 -------- --------
-------- -------- -------- -------- -------- -------- 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 June 30, 2005, FHR managed or franchised 87
luxury and first-class hotels. FHR owns Fairmont Hotels Inc.
("Fairmont") which, as at June 30, 2005, managed 49 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 June 30, 2005.
In addition to hotel and resort management, as at June 30, 2005,
FHR had hotel ownership interests ranging from approximately 15% to
100% in 28 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 June 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 six months ended June
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 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 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. 3. In May
2005, FHR invested $10.0 in cash for five management contracts, a
loan and an approximate 15% interest in a corporation 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. The properties are being managed
by Fairmont under long-term management contracts. Based on the
relative fair value of the management contracts, the investment
interest and the loan, $4.6 of the $10.0 was allocated to the
management contracts. The investment of $4.2 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 June 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. During 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. In
the third quarter, the Company expects to record an additional
recovery. 6. Shareholders' equity June 30, December 31, 2005 2004
------------ ------------ Common shares $ 1,135.3 $ 1,163.1 Other
equity 19.2 19.2 Treasury Stock - (5.6) Contributed surplus 142.7
142.4 Foreign currency translation adjustments 135.0 142.1 Retained
earnings 179.0 189.2 ------------ ------------ $ 1,611.2 $ 1,650.4
------------ ------------ The diluted weighted-average number of
common shares outstanding is calculated as follows: Three months
ended Six months ended June 30 June 30 2005 2004 2005 2004 --------
-------- -------- -------- (in millions) (in millions)
Weighted-average number of common shares outstanding - basic 75.0
79.1 75.5 79.1 Stock options 1.1 0.8 1.0 0.8 -------- --------
-------- -------- Weighted-average number of common shares
outstanding - diluted 76.1 79.9 76.5 79.9 -------- --------
-------- -------- 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. During
the six months ended June 30, 2005, FHR repurchased 1,849,300
shares (823,300 during the second 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 $60.7 ($27.9 for the second quarter), of
which $27.9 was charged to common shares ($12.6 for the second
quarter) and $32.8 was charged to retained earnings ($15.3 for the
second 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 six months ended June 30,
2005, FHR issued 140,053 shares (66,528 for the second quarter)
pursuant to the Key Employee Stock Option Plan for which $2.8 was
credited to common shares ($1.4 for the second quarter) for
proceeds from options exercised. At June 30, 2005, 74,518,001
common shares were outstanding (December 31, 2004 - 76,393,348).
During the six months ended June 30, 2005, 300,000 stock options
were granted (nil in the second 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 Six months ended June 30 June 30 2005
2004 2005 2004 -------- -------- -------- -------- Reported net
income $ 34.1 $ 29.0 $ 30.1 $ 28.4 Net income assuming fair value
method used $ 34.0 $ 28.9 $ 29.9 $ 28.2 Assuming fair value method
used Basic earnings per share $ 0.45 $ 0.37 $ 0.40 $ 0.36 Diluted
earnings per share $ 0.45 $ 0.36 $ 0.39 $ 0.35 7. Changes in
non-cash working capital: Three months ended Six months ended June
30 June 30 2005 2004 2005 2004 -------- -------- -------- --------
Decrease (increase) in current assets Accounts receivable $ (29.4)
$ (25.9) $ (18.5) $ (25.2) Inventory (0.9) (0.9) - (1.3) Prepaid
expenses and other (7.4) (8.9) (6.2) (7.9) Increase (decrease) in
current liabilities Accounts payable and accrued liabilities 17.5
(9.6) 21.2 (1.9) Taxes payable (0.4) - (3.9) - -------- --------
-------- -------- $ (20.6) $ (45.3) $ (7.4) $ (36.3) --------
-------- -------- -------- 8. 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 28 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, other expenses and
amortization. EBITDA includes income or loss 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 June 30, 2005
---------------------------------------------- Ownership Management
----------------------------- ---------------- Hotel Real estate
Ownership Legacy activities Fairmont Delta --------- --------
---------- --------- ------ Operating revenues (d) $ 177.5 $ - $
2.0 $ 16.1 $ 3.4 Other revenues from managed and franchised
properties - - - 9.1 2.5 Income from equity investments 1.0 1.1 - -
- EBITDA (b) 42.3 1.1 (0.4) 12.5 2.3 Total assets (c) 1,809.1 63.3
102.1 452.2 78.4 Capital expenditures 9.3 - - 4.3 -
--------------------------------------- Corporate general and
Inter-segment administrative elimination (a) Total ---------------
-------------- -------- Operating revenues (d) $ - $ (4.9) $ 194.1
Other revenues from managed and franchised properties - - 11.6
-------- 205.7 Income from equity investments - 2.1 EBITDA (b)
(7.7) 0.4 50.5 Total assets (c) - (59.7) 2,445.4 Capital
expenditures - - 13.6 Three months ended June 30, 2004
---------------------------------------------- Ownership Management
----------------------------- ---------------- Hotel Real estate
Ownership Legacy activities Fairmont Delta --------- --------
---------- --------- ------ Operating revenues (d) $ 180.6 $ - $
18.1 $ 13.7 $ 3.6 Other revenues from managed and franchised
properties - - - 6.2 2.7 Income from equity investments 0.9 2.8 - -
- EBITDA (b) 46.6 2.8 8.3 10.8 2.6 Total assets (c) 1,925.2 96.9
95.9 363.6 73.2 Capital expenditures 23.9 - - 0.3 -
--------------------------------------- Corporate general and
Inter-segment administrative elimination (a) Total ---------------
-------------- -------- Operating revenues (d) $ - $ (5.7) $ 210.3
Other revenues from managed and franchised properties - - 8.9
-------- 219.2 Income from equity investments - - 3.7 EBITDA (b)
(8.4) (0.2) 62.5 Total assets (c) - (21.1) 2,533.7 Capital
expenditures - - 24.2 Six months ended June 30, 2005
---------------------------------------------- Ownership Management
----------------------------- ---------------- Hotel Real estate
Ownership Legacy activities Fairmont Delta --------- --------
---------- --------- ------ Operating revenues (d) $ 326.2 $ - $
9.5 $ 30.9 $ 6.1 Other revenues from managed and franchised
properties - - - 16.8 5.4 Income (loss) from equity investments 2.1
(5.9) - - - EBITDA (b) 69.2 (5.9) 0.7 22.7 3.9 Total assets (c)
1,809.1 63.3 102.1 452.2 78.4 Capital expenditures 34.7 - - 5.5 -
--------------------------------------- Corporate general and
Inter-segment administrative elimination (a) Total ---------------
-------------- -------- Operating revenues (d) $ - $ (9.9) $ 362.8
Other revenues from managed and franchised properties - - 22.2
-------- 385.0 Income (loss) from equity investments - - (3.8)
EBITDA (b) (18.3) 0.4 72.7 Total assets (c) - (59.7) 2,445.4
Capital expenditures - - 40.2 Six months ended June 30, 2004
---------------------------------------------- Ownership Management
----------------------------- ---------------- Hotel Real estate
Ownership Legacy activities Fairmont Delta --------- --------
---------- --------- ------ Operating revenues (d) $ 336.0 $ - $
21.4 $ 26.2 $ 6.1 Other revenues from managed and franchised
properties - - - 12.7 5.1 Income (loss) from equity investments 0.5
(4.5) - - - EBITDA (b) 81.8 (4.5) 8.2 19.5 4.1 Total assets (c)
1,925.2 96.9 95.9 363.6 73.2 Capital expenditures 43.5 - - 0.5 -
--------------------------------------- Corporate general and
Inter-segment administrative elimination (a) Total ---------------
-------------- -------- Operating revenues (d) $ - $ (11.2) $ 378.5
Other revenues from managed and franchised properties - - 17.8
-------- 396.3 Income (loss) from equity investments - - (4.0)
EBITDA (b) (12.1) (0.4) 96.6 Total assets (c) - (21.1) 2,533.7
Capital expenditures - - 44.0 (a) Operating revenues include
management fees that are charged by Fairmont of $4.8 (2004 - $5.6)
and $9.7 (2004 - $11.1) for the three and six months ended June 30,
2005 respectively, and Delta of $0.1 (2004 - $0.1) and $0.2 (2004 -
$0.1) for the three and six months ended June 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 Six months ended June 30 June 30 2005
2004 2005 2004 -------- -------- -------- -------- EBITDA $ 50.5 $
62.5 $ 72.7 $ 96.6 Less: Other 3.3 - 3.3 - Amortization 16.4 18.0
32.9 37.5 -------- -------- -------- -------- Operating income 30.8
44.5 36.5 59.1 Interest expense, net 6.0 9.0 13.2 19.0 Income tax
expense (recovery) (9.3) 6.5 (6.8) 11.7 -------- -------- --------
-------- Net income $ 34.1 $ 29.0 $ 30.1 $ 28.4 -------- --------
-------- -------- (c) Hotel ownership assets include $93.9 (2004 -
$63.6) 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 Six months ended June 30 June 30
2005 2004 2005 2004 -------- -------- -------- -------- Rooms
revenue $ 89.3 $ 98.4 $ 169.6 $ 186.7 Food and beverage revenue
64.0 59.4 113.8 108.0 Other 24.2 22.8 42.8 41.3 -------- --------
-------- -------- $ 177.5 $ 180.6 $ 326.2 $ 336.0 -------- --------
-------- -------- 9. FHR recorded pension and other post employment
benefit expenses as follows: Three months ended Six months ended
June 30 June 30 2005 2004 2005 2004 -------- -------- --------
-------- Pension $ 0.5 $ 0.5 $ 0.9 $ 1.0 Other post-employment
benefits 0.1 0.1 0.2 0.2 -------- -------- -------- -------- $ 0.6
$ 0.6 $ 1.1 $ 1.2 -------- -------- -------- -------- 10. During
the second quarter, the Company undertook certain development
activities related to a major portfolio acquisition, which the
Company did not complete. As a result, $3.3 has been expensed
relating to the costs that were incurred for this activity. 11.
Certain of the prior period figures have been reclassified to
conform with the presentation adopted for 2005. 12. Subsequent
event On July 14, 2005, FHR disposed of a parcel of land in
Vancouver for net proceeds and an after-tax gain of approximately
$17. (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 six months ended
June 30, 2005 ii 2004 hotel ownership revenues and EBITDA adjusted
for assets sales iii 2005 portfolio seasonality information iv
Comparable operating statistics for hotel portfolio as of June 30,
2005 v Summary of hotel portfolio at June 30, 2005 and 2004 vi
Fairmont Hotels & Resorts Inc. Comparable operating statistics
for the three and six months ended June 30, 2005
-------------------------------------------------------------------------
Three months ended Six months ended June 30 June 30 2005 2004
Variance 2005 2004 Variance
-------------------------------------------------------------------------
OWNED HOTELS
-------------------------------------------------------------------------
Worldwide 14 properties/ 6,746 rooms
-------------------------------------------------------------------------
RevPAR 121.88 116.37 4.7% 125.12 116.51 7.4%
-------------------------------------------------------------------------
ADR 192.43 184.22 4.5% 197.30 186.65 5.7%
-------------------------------------------------------------------------
Occupancy 63.3% 63.2% 0.1 63.4% 62.4% 1.0 points points
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Canada 7 properties/ 3,336 rooms
-------------------------------------------------------------------------
RevPAR 112.21 106.23 5.6% 106.73 100.08 6.6%
-------------------------------------------------------------------------
ADR 170.27 156.93 8.5% 168.42 155.72 8.2%
-------------------------------------------------------------------------
Occupancy 65.9% 67.7% (1.8) 63.4% 64.3% (0.9) points points
-------------------------------------------------------------------------
-------------------------------------------------------------------------
U.S. and International 7 properties/ 3,410 rooms
-------------------------------------------------------------------------
RevPAR 131.34 126.12 4.1% 143.10 132.22 8.2%
-------------------------------------------------------------------------
ADR 215.92 214.43 0.7% 225.50 218.00 3.4%
-------------------------------------------------------------------------
Occupancy 60.8% 58.8% 2.0 63.5% 60.7% 2.8 points points
-------------------------------------------------------------------------
-------------------------------------------------------------------------
FAIRMONT MANAGED HOTELS(1)
-------------------------------------------------------------------------
Worldwide 40 hotels/ 19,843 rooms
-------------------------------------------------------------------------
RevPAR 128.03 118.24 8.3% 122.58 111.81 9.6%
-------------------------------------------------------------------------
ADR 188.35 175.47 7.3% 189.88 174.41 8.9%
-------------------------------------------------------------------------
Occupancy 68.0% 67.4% 0.6 64.6% 64.1% 0.5 points points
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Canada 20 properties/ 10,095 rooms
-------------------------------------------------------------------------
RevPAR 108.17 101.20 6.9% 95.17 88.29 7.8%
-------------------------------------------------------------------------
ADR 158.57 146.22 8.4% 152.91 139.05 10.0%
-------------------------------------------------------------------------
Occupancy 68.2% 69.2% (1.0) 62.2% 63.5% (1.3) points points
-------------------------------------------------------------------------
-------------------------------------------------------------------------
U.S. and International 20 properties/ 9,945 rooms
-------------------------------------------------------------------------
RevPAR 148.23 135.48 9.4% 150.29 135.44 11.0%
-------------------------------------------------------------------------
ADR 218.87 206.75 5.9% 224.65 209.26 7.4%
-------------------------------------------------------------------------
Occupancy 67.7% 65.5% 2.2 66.9% 64.7% 2.2 points points
-------------------------------------------------------------------------
-------------------------------------------------------------------------
DELTA MANAGED HOTELS(1)
-------------------------------------------------------------------------
Worldwide 27 properties/ 8,175 rooms
-------------------------------------------------------------------------
RevPAR 74.18 65.43 13.4% 66.80 59.70 11.9%
-------------------------------------------------------------------------
ADR 105.74 96.40 9.7% 103.38 94.58 9.3%
-------------------------------------------------------------------------
Occupancy 70.2% 67.9% 2.3 64.6% 63.1% 1.5 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 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 $ 176.8 $ 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
---------------------------------------------------- Fairmont
Hotels & Resorts Inc. 2005 portfolio seasonality information
First Second Third Fourth 2005 quarterly EBITDA(1) Quarter Quarter
Quarter Quarter Year range guidance -------- -------- --------
-------- -------- Mid-point of range for hotel operations (excludes
gain on land sale) 13% 29% 41% 17% $175 million(2) Tax rate(3)
(excludes tax recovery and gain on land sale) - 21% 24% 38% 27%
Notes: (1) Given the seasonality of FHR's portfolio, the
information above provides insight into the estimated quarterly
breakdown of FHR's earnings. (2) This amount represents the
mid-point of the range which may fluctuate +/-$10 million of the
mid-point. (3) 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 June 30, 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 $105.32 $118.24 $128.74 $106.02 $114.64
-------------------------------------------------------------------------
ADR 191.61 173.22 175.47 189.00 177.85 179.14
-------------------------------------------------------------------------
Occupancy 61.1% 60.8% 67.4% 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 $135.40 $135.48 $119.62 $126.67 $129.26
-------------------------------------------------------------------------
ADR 230.63 211.83 206.75 194.72 211.58 206.24
-------------------------------------------------------------------------
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.
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 Delta Managed: Delta Meadowvale, Delta Kitchener and
Delta franchised hotels Fairmont Hotels & Resorts Inc. Summary
of Hotel Portfolios -------------------------------------------
June 30 ------------------------------------------- 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 49 44
------------------------------------------- No. of Rooms 22,081
21,643 -------------------------------------------
------------------------------------------- Canada
------------------------------------------- No. of Properties 21 21
------------------------------------------- No. of Rooms 10,418
10,422 -------------------------------------------
------------------------------------------- U.S. and International
------------------------------------------- No. of Properties 28 23
------------------------------------------- No. of Rooms 11,663
11,221 -------------------------------------------
------------------------------------------- DELTA MANAGED HOTELS(1)
------------------------------------------- Worldwide
------------------------------------------- No. of Properties 38 38
------------------------------------------- No. of Rooms 11,243
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