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Fairmont Reports First Quarter Results

Fairmont Hotels & Resorts
Inc. today announced its
unaudited financial results for the first quarter ended March 31, 2004
using Canadian generally accepted accounting principles. All amounts are
expressed in U.S. dollars. “We are encouraged by the solid recovery in industry fundamentals leading
to travel demand increases throughout the United States. This has been
reflected in considerable occupancy improvements at our U.S. and
international hotels, with most of these properties also posting increases
in average daily rates (“ADR”),” said William R. Fatt, FHR’s Chief
Executive Officer. “Our overall results met our expectations for the first
quarter, which is traditionally one of the Company’s lowest earnings

On a comparable basis, revenue per available room (“RevPAR”) for
Fairmont’s managed hotels increased 12.4% and RevPAR at the Company’s
owned portfolio improved 12.9% in the first quarter. Favorable foreign
exchange movements continued to contribute to an improvement in operating
statistics for the Canadian properties.

Commenting on today’s development announcements (see Announcements and
Corporate Activities), Mr. Fatt said, “We have been working on growing our
pipeline of development opportunities and are delighted to expand our
portfolio to include a number of purpose-built luxury properties in such
exclusive locations as the Mayan Riviera in Mexico and The Palm, Jumeirah
in Dubai. We look forward to working with our new partners on these
exciting developments and for the opportunity to work together on future

On April 12, The Fairmont Southampton opened on schedule after seven
months of repairs following the hurricane in Bermuda last September. The
Company has extensive insurance coverage for both property damage and
business interruption. In the first quarter, hotel ownership expenses were
reduced by business interruption insurance recoveries, restoring EBITDA(1)
generated by The Fairmont Southampton to previously expected levels.

First Quarter Consolidated Results


Operating revenues(2) were up slightly to $168.2 million from $167.9
million in 2003. Lower revenues from real estate activities offset
improved hotel operating results during the quarter. First quarter EBITDA
of $34.1 million was down from $42.2 million in the previous year. This
decline relates exclusively to lower land sales in 2004. Net loss for the
quarter was $0.6 million ($0.01 loss per share) compared to net income of
$12.5 million ($0.16 earnings per share) in the same period of 2003.
EBITDA and net income (loss) include earnings from real estate activities
of $0.4 million ($0.01 per share) and $9.3 million ($0.12 per share) in
2004 and 2003, respectively.

First Quarter Ownership Operations

Revenues from hotel ownership improved 10.7% to $155.4 million in the
first quarter. The increase was driven by solid improvements in the
performance of the U.S. and international properties. All of the major
U.S. and international hotels posted double digit revenue growth with the
exception of The Fairmont Southampton, which was closed for repairs due to
Hurricane Fabian. The appreciation in the Canadian dollar offset the
decline in Canadian operating revenues and increased Canadian expenses in
the quarter. Canadian ski destinations experienced weaker U.S. leisure
demand primarily as a result of strong U.S. competition. In addition, the
Canadian resorts had a solid first quarter in 2003 prior to the impact of
world events. When compared to the first quarter of 2003, the average
Canadian dollar exchange rate for the quarter appreciated approximately
14% against the U.S. dollar.

RevPAR of $139.34 was up 12.9% in the first quarter, resulting from a 3.9
point improvement in occupancy combined with a 6.0% increase in average
daily rate (“ADR”). The Fairmont Scottsdale Princess posted strong rate
and occupancy growth in the quarter contributing to a 15.0% RevPAR
improvement at the U.S. and International comparable portfolio. The
Canadian owned hotels had RevPAR growth of 8.8%, driven by the
appreciation in the Canadian dollar and offset slightly by an occupancy
drop of 0.3 points. Adjusting for the foreign exchange impact, RevPAR for
the Canadian portfolio was down approximately 5%.

Equity losses generated from FHR’s investment in Legacy Hotels Real Estate
Investment Trust (“Legacy” or the “Trust”) were $7.3 million compared to
losses of $6.3 million in the same period last year. Legacy’s performance
was comparable to 2003, however the appreciation in the Canadian dollar
exaggerated this loss.

In a continued effort to divest of non-hotel assets, FHR completed the
sale of a parcel of land that was inherited upon the Canadian Pacific
reorganization in 2001. This parcel was not part of the Company’s interest
in the Toronto or Vancouver lands. This sale contributed to the $0.4
million in EBITDA from real estate activities compared to $9.3 million
earned in 2003.