Fairmont Hotels & Resorts Inc. (“FHR” or the “Company”) (TSX/NYSE: FHR)
today announced its unaudited financial results for the fourth quarter and
year ended December 31, 2003. All amounts are expressed in U.S. dollars.
FHR expects to release its 2003 annual report in March and will hold its
annual general meeting at 10:00 a.m. on April 27, 2004 at The Fairmont
Royal York in Toronto.
“Our full-year 2003 EBITDA(1) of $142.4 million met our revised guidance
of $140 - $150 million,” said William R. Fatt, Chief Executive Officer for
FHR. “2003 proved to be one of the most difficult years for the Company
given the number of challenges we faced, particularly the hurricane damage
in Bermuda and the impact of severe acute respiratory syndrome (“SARS”).
Despite these external factors, improving industry fundamentals in the
third quarter led to improved demand trends in the fourth quarter.”
As previously announced, The Fairmont Southampton is closed for repairs
until the spring following hurricane damage in Bermuda. The Fairmont
Hamilton Princess is now fully operational. The Company has extensive
insurance coverage for both property damage and business interruption
relating to the hurricane damage in Bermuda. The insurance deductible and
uninsured items previously estimated at $10 - $12 million have been
revised to $9.0 million, of which $1.6 million was recorded in the fourth
quarter and the balance in the third quarter. This expense is included in
FHR`s fourth quarter and full- year EBITDA.
On a comparable basis, revenue per available room (“RevPAR”) for
Fairmont`s managed hotels increased 5.0% and RevPAR at FHR`s owned
portfolio improved 8.8% in the fourth quarter. Both the owned and managed
portfolios continue to experience a trend of year-over-year RevPAR gains.
Favorable foreign exchange movements continued to contribute to an
improvement in overall operating statistics.
Operating revenues(2) were up 9.2% to $137.1 million in 2003. Increased
revenues from the two recent acquisitions, The Fairmont Copley Plaza
Boston and The Fairmont Orchid, Hawaii, provided the majority of this
improvement. The appreciation in the Canadian dollar offset the decline in
Canadian operating revenues and increased Canadian expenses in the
quarter. Fourth quarter EBITDA of $9.9 million was down from $32.8 million
in the previous year.
The major components of the quarter-over-quarter
- $8.0 million from real estate activities resulting from a
$2.2 million loss in the fourth quarter of 2003 compared to a
$5.8 million gain on a real estate sale in Bermuda in 2002.
- $7.0 million from equity investments and other, resulting primarily
from a loss from the Company`s investment in Legacy Hotels Real
Estate Investment Trust (“Legacy”).
- $5.1 million from hotel management operations, including increased
pension expenses and unrecoverable marketing costs that resulted
from foreign exchange fluctuations and reduced revenues.
Revenues from hotel ownership improved 12.2% to $122.4 million compared to
$109.1 million in 2002. This increase relates primarily to the recent
acquisitions. In addition, The Fairmont Kea Lani Maui and The Fairmont
Scottsdale Princess both produced strong quarterly operating results,
which somewhat offset the lost revenues from The Fairmont Southampton as
the resort was closed for repairs due to hurricane damage. While the
appreciation in the Canadian dollar was a key driver of increased
revenues, it had a considerable impact on expenses in the fourth quarter.
RevPAR of $97.79 was up 8.8% in the fourth quarter, resulting from an
11.7% improvement in average daily rate (“ADR”) that offset a 1.3 point
drop in occupancy. After adjusting for the foreign exchange impact, RevPAR
for the owned portfolio was up approximately 2%. This was the first time
in 2003 that the owned portfolio posted a quarterly RevPAR increase when
measured in local currencies. The Canadian owned hotels had RevPAR growth
of 18.6%, driven by the appreciation in the Canadian dollar and offset
slightly by an occupancy drop of 1.0 points. The Fairmont Kea Lani Maui
and The Fairmont Scottsdale Princess continued to post strong rate growth
in the quarter contributing to a 3.3% RevPAR improvement at the U.S. and
International comparable portfolio.
Equity losses generated from FHR`s investment in Legacy were $4.4 million
compared to losses of $0.5 million in the same period last year. The
equity loss includes $2.5 million relating to Legacy`s refinancing of its
unsecured debentures in December 2003.
In a continued effort to divest of non-hotel assets, FHR sold numerous
small parcels of land that were inherited from the Canadian Pacific
reorganization in 2001. None of the parcels sold were from FHR`s interest
in the Toronto or Vancouver lands. These sales contributed to a $2.2
million loss in EBITDA from real estate activities compared to $5.8
million earned in 2002.