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Exhibit A (FAIRMONT HOTELS & RESORTS INC. LOGO) FAIRMONT HOTELS & RESORTS INC. ANNUAL INFORMATION FORM May 17, 2004




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TABLE OF CONTENTS FORWARD-LOOKING INFORMATION
    
    
    1RISK FACTORS
    
    
    2CURRENCY EXCHANGE RATES
    
    
    8ITEM 1: CORPORATE STRUCTURE
    
    
    9ITEM 2: GENERAL DEVELOPMENT OF THE BUSINESS
    
    
    9ITEM 3: NARRATIVE DESCRIPTION OF THE BUSINESS
    
    
    11ITEM 4: SELECTED CONSOLIDATED FINANCIAL INFORMATION
    
    
    33ITEM 5: MANAGEMENTS DISCUSSION AND ANALYSIS
    
    
    35ITEM 6: DESCRIPTION OF SHARE CAPITAL, DIVIDEND POLICY AND MARKETS FOR SECURITIES
    
    
    35ITEM 7: DIRECTORS AND SENIOR OFFICERS
    
    
    35ITEM 8: ADDITIONAL INFORMATION
    
    
    39
 Notes:(1)
    
    In this Annual Information Form, all dollar amounts are in United States
dollars unless stated otherwise.(2)
    
    In this Annual Information Form, information is given as at May 17, 2004
unless stated otherwise.
 FORWARD-LOOKING INFORMATION This Annual Information Form contains certain forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995
(United States) relating, but not limited, to Fairmont Hotels & Resorts Inc.
and its subsidiaries (FHR or the Corporation) operations, anticipated
financial performance, business prospects and strategies. Forward-looking
information typically contains statements with words such as anticipate,
believe, expect, plan or similar words suggesting future outcomes. Readers are cautioned not to place undue reliance on forward-looking
information because it is possible that predictions, forecasts, projections and
other forms of forward-looking information will not be achieved by FHR. By its
nature, the Corporations forward-looking information involves numerous
assumptions, inherent risks and uncertainties including, but not limited to,
the following factors: adverse factors generally encountered in the lodging
industry; significant regulation of the lodging industry; the risks associated
with environmental regulation; the risks associated with real estate
investments; the risks associated with world events including war, terrorism,
international conflicts and contagious illness outbreaks; significant
competition; failure to obtain new or maintain existing management contracts;
FHRs acquisition, expansion and development strategy being less successful
than expected; the




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seasonality of FHRs business and operations; the impact of extreme
weather conditions and natural disasters; the potential negative effects of
strikes and work stoppages; vacation ownership is subject to extensive
regulation; currency fluctuations; debt financing risks; FHRs ability to
obtain capital to finance the growth of its business; potential covenants in
FHRs financing agreements limiting its discretion; and the inability of FHR to
assure investors that a judgment of a United States court for liabilities under
U.S. securities laws would be enforceable in Canada, or that an original action
can be brought in Canada by investors for liabilities under U.S. securities
laws. The Corporation undertakes no obligation to update publicly or otherwise
revise any forward-looking information, whether as a result of new information,
future events or otherwise, or the foregoing list of factors affecting such
information. RISK FACTORS This section describes some, but not all, of the risks associated with an
investment in FHRs securities. The order in which these risks are listed does
not necessarily indicate their relative importance. Investors should carefully
consider these risks in addition to the other information contained in this
Annual Information Form. If any event arising from these risks occurs, FHRs business, prospects,
financial condition, results of operations or cash flows could be materially
adversely affected, and therefore the market price of the Corporations
securities could decline. This section describes the major risks associated with our operations that
could cause reported financial information to not necessarily be indicative of
future operating results. The order in which these risks are listed does not
necessarily indicate their relative importance. If any event arising from
these risks were to occur, our business, prospects, financial condition,
results of operations or cash flows could be materially adversely affected. Our operations are subject to adverse factors generally encountered in the
lodging industry. We manage and own hotels in both the luxury and first-class segments of
the lodging industry. This subjects us to the operating risks inherent in the
industry. Besides the specific conditions discussed in more detail below,
these risk factors include:  
    
    cyclical downturns arising from changes in general and local
economic conditions;
    
    varying levels of demand for rooms and related services caused by
changes in popular travel patterns;
    
    the financial condition of the airline industry and the resulting
impact on air travel;
    
    periodic local oversupply of guest accommodations, which may
adversely affect occupancy rates and actual room rates achieved;
    
    competition from other luxury and first-class hotels and resorts;
    
    the impact of internet intermediaries on pricing; 2




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
    
    the recurring need for the renovation, refurbishment and
improvement of hotel and resort properties;
    
    changes in wages, prices, construction and maintenance costs that
may result from inflation, government regulations, changes in interest
rates or currency fluctuations;
    
    the availability of financing for operating or capital requirements;
    
    seasonal variations in cash flow; and
    
    other factors including war, international conflicts, terrorism,
contagious illness outbreaks, natural disasters, extreme weather
conditions and labor shortages, work stoppages or disputes. The effect of these factors on the Company varies on a hotel-by-hotel
basis depending on its geographic location and whether we own or manage the
property. The lodging industry is subject to significant regulation. We are subject to numerous laws and regulations in all of the
jurisdictions in which we operate, including those relating to the preparation
and sale of food and beverages, such as health and liquor licensing laws. Our
properties are also subject to laws and regulations governing relationships
with employees in such areas as minimum wage and maximum working hours,
overtime, working conditions, hiring and terminating of employees and work
permits. Furthermore, the success of our strategies to expand existing
properties, acquire new properties or to open newly-constructed properties is
contingent upon, among other things, receipt of all required licenses, permits
and authorizations, including local land use permits, building and zoning
permits, health and safety permits and liquor licenses. Changes or concessions
required by regulatory authorities could also involve significant additional
costs and delay or prevent completion of the construction or opening of a
project or could result in the loss of an existing license. As a result of the
geographic diversity of our businesses, these regulatory matters arise in a
number of jurisdictions, many of which have distinctive regulatory regimes. Under the United States Americans with Disabilities Act (ADA) and
similar state legislation, all public accommodations in the U.S. are required
to meet various requirements related to access and use by disabled persons. If
a U.S. court or administrative agency determines that any of our U.S. hotels
are not in compliance with the ADA, the result could be a judicial or
administrative order requiring compliance, imposition of a fine or an award of
damages to private litigants, including possible class damages. We have
responsibilities under the ADA for both our owned and managed hotels in the
United States. Under the management agreements for our managed hotels in the
U.S., costs associated with the ADA are generally borne by the owner, however,
any adverse rulings could have an adverse effect on the fees we earn on such
management contracts. Operations are subject to laws and regulations relating to environmental matters. As the current or previous owner or operator of certain hotels, we could
also be liable for the clean up of contamination and other corrective actions
under various laws, ordinances and regulations relating to environmental
matters. These laws, ordinances and regulations often impose liability without
regard to whether the owner or operator knew of, or was responsible for, the
condition requiring the environmental response. The presence of contamination
from hazardous or toxic substances, or the failure to remedy a contaminated
property properly, may affect an owners ability to sell or rent the property,
to use the property for its intended purpose, or to borrow using the property
as a collateral. In 3




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addition, as we arrange for the disposal or treatment of hazardous or
toxic substances, we may be liable for the cost of removal or remediation of
substances at the disposal or treatment facility, regardless or whether the
facility is or was owned or operated by us. As the manager or owner of various
hotels, we could be held liable for the cost of remedial action with respect to
environmental matters. Environmental laws require abatement or removal of certain
asbestos-containing material (ACM) in the event of damage, demolition or
renovation. We have an asbestos abatement program and continue to manage ACM
in many of our hotels. Laws and regulations change over time and we may become subject to more
stringent environmental laws and regulations and may also face broader
environmental liability under common law. We are presently not aware of any
potential material environmental liabilities for which we will be responsible
with respect to any of the properties which we currently or had previously
managed or owned, but such liabilities may exist and may be material. Each year, every property, whether managed, franchised or owned, is
required to complete an environmental questionnaire which covers such items as
the training of employees in the handling and disposal of hazardous materials,
whether there have been any environmental incidents and, if so, the remedial
action taken, as well as environmental initiatives introduced by the hotel.
This questionnaire also identifies any new laws or regulations being imposed by
local, state or provincial governments and a propertys proposed response to
such laws or regulations. We are not aware of any potential material
environmental liabilities for which we will be responsible with respect to any
of the properties which we currently or have previously managed or owned. Real estate investments are subject to numerous risks. We own and lease hotels and are therefore subject to the risks that
generally relate to investments in real property. The investment returns
available from equity investments in real estate depend in large part on the
amount of income earned and capital appreciation generated by the related
properties, as well as the expenses incurred. In addition, a variety of other
factors affect income from properties and real estate values, including
governmental regulations, zoning, tax and eminent domain laws, interest rate
levels and the availability of financing. For example, new or existing zoning
or tax laws can make it more expensive and/or time-consuming to develop real
property or expand, modify or renovate properties. When interest rates
increase, the cost of acquiring, developing, expanding or renovating real
property increases and real property values may decrease as the number of
potential buyers decreases. Similarly, as financing becomes less available, it
becomes more difficult both to acquire and to sell real property. Governments
can, under eminent domain laws, expropriate or take real property for less
compensation than an owner believes the property is worth. Any of these
factors could have a material adverse impact on our results of operations or
financial condition, as well as on our ability to make distributions to
shareholders. In addition, as our hotel real estate investments are in the
luxury and first-class segments and include some properties located outside of
North America, they may be relatively difficult to sell in a timely manner.
Further, any additional properties we acquire may be subject to the same risks.
If our properties do not generate revenue sufficient to meet operating
expenses, including debt service and capital expenditures, our income will be
adversely affected. Further, any additional properties acquired will be
subject to the same risks. World events have an impact on our industry. Various events including war, international conflicts, terrorism and
contagious illness outbreaks (such as SARS), or the perceived threat of these
events, may cause disruption in domestic and international travel. Recent
world events have negatively impacted on the lodging industry and have had 4




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an adverse impact on our results of operations and financial condition.
The continued weakness of the lodging industry, or future world events, could
have a material adverse impact on our results of operations, financial
condition and cash flow. There is a great deal of competition in the lodging industry. There is intense competition between the operators of both luxury and
first-class hotels for guests, to secure new management contracts and to
acquire hotels. Competition is based primarily on brand name recognition,
convenience of location, quality of the property, room rates and the range and
quality of food, services and amenities offered. Demographic, political or
other changes in one or more of our markets could adversely affect the
convenience or desirability of our properties. We also compete for management contracts and acquisition opportunities
with other luxury and first-class hotel managers and owners who may have
substantially greater financial resources. This competition may have the
effects of reducing the number of suitable investment opportunities available
to us and increasing our cost to acquire investments. Failure to obtain new or maintain existing management contracts could adversely affect our results of operations. Management contracts expire or are acquired, terminated or renegotiated in
the normal course of business. We manage hotels for various third party hotel
owners subject to the terms of each propertys management contract. These
contracts can generally be terminated by the non-defaulting party upon default
in payment or unremedied failure to comply with the terms of the contract.
Typically, our management contracts are subject to economic performance tests
that, if not met or remedied, could allow a contract to be terminated by the
owner prior to the expiration of its term. Failure to maintain the standards
specified in the contract or to meet the other terms and conditions of a
contract could result in the loss or cancellation of a management contract.
Some management contracts can also be terminated if the owner sells the
property to a new owner that does not want to retain the existing contract. In
certain cases, these contracts provide for a termination payout upon
cancellation of the contract. In many jurisdictions, in the event of bankruptcy or insolvency
proceedings in respect of a hotel, a management contract may be subject to
termination or may not be enforceable against a trustee in bankruptcy or other
similar representative of the owner. In such circumstances, the management
company would generally have an unsecured claim for breach of contract against
the owner of the property or its estate. Further, in the event of enforcement proceedings by a secured lender in
respect of a hotel, a management contract may not be enforceable by us against
the lender unless, to the extent permitted by applicable bankruptcy or
insolvency laws, the lender has executed a non-disturbance agreement. Our acquisition, expansion and development strategy may be unsuccessful. We intend to increase revenues and net income by increasing the number of
hotels under management through securing new management agreements, strategic
partnerships for new hotel development, the acquisition of new properties and
the expansion of existing properties. It is not possible to assure that future
management or acquisition opportunities will exist on acceptable terms, that
any newly managed or acquired properties will be successfully integrated into
our operations or that we will fully realize the intended results of our
strategy. We cannot give assurance that we will be able to secure necessary
financing upon acceptable terms. 5




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Our business and operations are seasonal. Our hotels are affected by normal recurring seasonal patterns. The
Canadian and U.S. city center properties tend to experience a slowdown in
demand during the December through March period. As a result, the majority of
these properties typically incur a loss in the first quarter of each year.
Revenues are typically lower in the first and fourth quarters and higher in the
second and third quarters of the year. As a result of this seasonability, our
working capital needs fluctuate significantly during the year. Furthermore,
adverse business or economic conditions during the second and third quarters
could have a material adverse effect on results of operations for the full
year. Operations may be adversely affected by extreme weather conditions and the impact of natural or other disasters. We operate properties in a variety of locales, some of which are subject
to extreme weather patterns that may affect the hotels as well as customer
travel. Extreme weather conditions can, from time to time, have a significant
adverse financial impact upon individual properties or particular regions. Properties may also be vulnerable to the effects of destructive forces,
such as earthquakes, hurricanes, fire, storms and flooding. For example, our
two owned properties in Bermuda suffered extensive hurricane damage in
September 2003 resulting in $9 million of uninsured costs. Although our
properties are insured against property damage, damages resulting from
so-called acts of God or otherwise, including acts of terrorism, may exceed
the limits of the insurance coverage or be outside the scope of that coverage. Our ability to operate our facilities may be adversely affected if relations with employees were to deteriorate. Relations with employees in various countries, including the more than
14,000 employees represented by 22 labor unions, could deteriorate due to
disputes related to, among other things, wage or benefit levels or our response
to changes in government regulation of workers and the workplace. Our
operations rely heavily on employees, whether they are employed directly or
supervised by Fairmont or Delta, and the employees ability to provide
high-quality personal service to guests. Any labor shortage or stoppage caused
by disagreements with employees, including those represented by labor unions,
could adversely affect our ability to provide these services and could result
in the temporary closure of a particular hotel, reduce occupancy and room
revenue or potentially damage our reputation. Vacation Ownership is subject to extensive regulation. We are developing and will operate vacation ownership resorts and are
subject to extensive government regulation in the jurisdictions where the
vacation ownership resorts will be located and in which VOIs are marketed and
sold. In addition, the laws of many jurisdictions in which we may sell VOIs
grant the purchaser the right to rescind the purchase contract at any time
within a statutory rescission period. Although we believe that we are in
material compliance with all applicable laws and regulations to which vacation
ownership marketing, sales and operations are currently subject to, changes in
these requirements or a determination by a regulatory authority that we are not
in compliance could adversely affect the Company. Additionally, if the
purchaser of a VOI defaults, we may not have recovered marketing, selling and
general and administrative costs related to the sale of the VOI. 6




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Currency fluctuations may have a material adverse effect on our financial statements. We have hotel management and ownership operations in Canada, the United
States, Mexico, Bermuda, Barbados and the United Arab Emirates and record
financial results for operations in each country in the currencies of these
jurisdictions, while reporting consolidated financial results in U.S. dollars.
As a result, our earnings and financial position could be affected by foreign
exchange rate fluctuations, specifically changes in the value of the U.S.
dollar, through both (i) translation risk, which is the risk that financial
statements for a particular period, or as of a certain date, depend on the
prevailing exchange rate of the various currencies against U.S. dollar; and
(ii) transaction risk, which is the risk that the currency of costs and
liabilities fluctuates in relation to the currency of revenues and assets,
which may adversely affect operating margins. With respect to translation risk, fluctuations of currencies against the
U.S. dollar can be substantial and therefore our reported results could
fluctuate materially as a result of foreign exchange fluctuations. We endeavor
to match foreign currency revenues and costs, and assets and liabilities, to
provide a natural hedge against translation and transaction risks, although
there can be no assurance that these measures will be effective in the
management of these risks. In addition to translation risk and transaction risk, a significant
increase in the value of a currency in the countries we operate in, such as the
22% increase in the Canadian dollar from January 2, 2003 to December 31, 2003,
may have an adverse impact on the level of demand at some of our hotels. We are subject to a number of risks associated with debt financing. As a result of incurring debt, we are subject to a number of risks
associated with debt financing, including the risk that cash flow from
operations will be insufficient to meet required payments of principal and
interest; the risk that, to the extent that we maintain floating rate
indebtedness, interest rates will fluctuate; and risks resulting from the fact
that the agreements governing loan and credit facilities contain covenants
imposing certain limitations on our ability to acquire and dispose of assets. There can be no assurance that we will be able to repay or refinance
existing indebtedness and any other indebtedness when it matures or that the
terms upon refinancing will be favorable. Our leverage may have important
consequences. For example, our ability to obtain additional financing for
acquisitions, working capital, capital expenditures or other purposes, if
necessary, may be impaired or financing may not be available on favorable
terms. A substantial decrease in operating cash flow or an increase in
expenses could make it difficult for us to meet its debt service requirements
and force us to modify our operations. We may have higher levels of debt than
some of our competitors, placing us at a competitive disadvantage. There can be no assurance that we will be able to obtain the necessary additional capital to finance the growth of our business. The acquisition and expansion of hotels, as well as the ongoing
renovations, refurbishment and improvements required to maintain or upgrade
existing properties, are capital intensive. Such costs are funded from
operating cash flow and financing. The availability of future borrowings and
access to the capital markets for financing depends on prevailing market
conditions and the acceptability of financing terms offered. There can be no
assurance that future debt or equity financings will be available, or available
on acceptable terms, in an amount sufficient to fund its needs. In addition,
an inability to obtain financing for a project could cause cancellation or
short-term interruption of construction or development of projects. 7




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Covenants in our financing agreements could limit our discretion in operating our businesses. Our financing agreements contain covenants that include limits on
additional debts secured by mortgage properties, limits on liens on property,
minimum EBITDA to interest coverage ratios, maximum debt to EBITDA ratios and
limits on mergers, asset sales and capital expenditures. Future financing
agreements may contain similar, or even more restrictive, provisions and
covenants. If we fail to comply with the restrictions in present or future
financing agreements, a default may occur. A default could allow creditors to
accelerate the related debt as well as any other debt to which a
cross-acceleration or cross-default provision applies. A default could also
allow creditors to foreclose on the properties securing such debt. Credit
facilities typically require the repayment of funds or cash flow sweeps when
certain coverage ratios are not met. We cannot assure investors that a judgement of a United States court for liabilities under U.S. securities laws would be enforceable in
Canada, or that an original action can be brought in Canada by investors for liabilities under U.S. securities laws. We are a Canadian corporation. A majority of our directors and officers
are residents of Canada and most of our assets and the assets of our directors
and officers are located outside the United States. As a result, it may be
difficult for investors to effect service of process within the United States
on us or our directors and officers or enforce judgements obtained in U.S.
courts against FHR or its directors and officers based upon the civil liability
provision of U.S. federal or state securities laws. We have been advised by counsel that there is doubt as to whether a
judgment of a U.S. court based solely upon the civil liability provision of
U.S. federal or state securities laws would be enforceable in Canada against
FHR or its directors and officers. There is also doubt as to whether an
original action could be brought in Canada against FHR or its directors and
officers to enforce liabilities based solely upon U.S. federal or state
securities laws. CURRENCY EXCHANGE RATES Except where otherwise indicated, all dollar amounts used in this Annual
Information Form are expressed in United States dollars and $ and US$ means
United States dollars. The following table sets out: (i) the noon rates of
exchange for the United States dollar, expressed in United States dollars per
Canadian dollar, in effect at the end of the periods indicated; (ii) the
average noon exchange rates for these periods; and (iii) the high and low
exchange rates during these periods, based on the rates quoted by the Bank of
Canada. January 1, 2004
    
    Years ended December 31throughU.S. Dollar per Canadian Dollar
    
    May 17, 2004
    
    2003
    
    2002
    
    2001Noon rate at end of period
    
    US$
    0.7220
    
    
    US$
    0.7738
    
    
    US$
    0.6331
    
    
    US$
    0.6279Average noon rate for period
    
    
    0.7518
    
    
    
    0.7135
    
    
    
    0.6368
    
    
    
    0.6446High for period
    
    
    0.7879
    
    
    
    0.7738
    
    
    
    0.6598
    
    
    
    0.6697Low for period
    
    
    0.7159
    
    
    
    0.6350
    
    
    
    0.6179
    
    
    
    0.6241
 On May 17, 2004, the rate of exchange based on the noon rate as quoted by
the Bank of Canada was US$0.7220. On June 30, 2001, the rate of exchange based
on the noon rate as quoted by the Bank of Canada was US$0.6589. All historical
financial information in this document up to June 30, 2001 has been converted
into United States currency using this exchange rate. After June 30, 2001,
financial information has been converted based on actual noon rates or average
noon rates for the period as appropriate. 8




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ITEM 1: CORPORATE STRUCTURE The issuers full corporate name is Fairmont Hotels & Resorts Inc. FHR is
incorporated under the Canada Business Corporations Act. The articles of the Corporation provide for authorized capital of an
unlimited number of common shares, an unlimited number of first preferred
shares and an unlimited number of second preferred shares. As of May 17, 2004 the intercorporate relationships among FHR, its
principal subsidiaries and Legacy Hotels Real Estate Investment Trust
(Legacy) are depicted in the diagram below. (FLOWCHART) FHR Properties Inc. (FHRPI) (Canada) 100%
Fairmont Hotels & Resorts Inc. (FHR) (Canada)
FHR Holdings Inc. . (FHRHI) (Canada) 100%
Fairmont Hotels Inc. (Fairmont) (Canada) 83.5%
Delta Hotels Limited (Delta) (Ontario) 100%FHR Real Estate Corporation (FHRREC)(Canada) 100%Legacy Hotels Real Estate Investment Trust
(Legacy)(Alberta) 35%   (1)
    
    FHRPI holds FHRs interests in the Southtown and Coal Harbour lands.(2)
    
    Legacy is an unincorporated closed-end real estate investment trust formed
under the laws of the Province of Alberta. ITEM 2: GENERAL DEVELOPMENT OF THE BUSINESS FHR has operated and owned hotels and resorts for over 116 years. Until
September 2001, the Corporation was known as Canadian Pacific Limited (CPL).
Effective October 1, 2001, pursuant to the plan of arrangement approved by the
shareholders of CPL and by the court, CPL completed a major reorganization (the
Arrangement), which divided CPL into five new public companies  Canadian
Pacific Railway Limited, CP Ships Limited, PanCanadian Energy Corporation and
Fording Inc., while retaining its investment in Canadian Pacific Hotels &
Resorts Inc. which has since been renamed FHR Holdings Inc. (FHRHI). 9




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In 1997, FHRHI was a Canadian hotel management and ownership business
with 25 properties, with approximately 11,000 guestrooms and one luxury brand,
Canadian Pacific Hotels. The portfolio was primarily a combination of FHRs
original Canadian Pacific properties and seven hotels purchased from Canadian
National Railway Co. in 1988. In November 1997, FHR sold 11 city center
business hotels to Legacy concurrent with Legacys commencement of operations
and initial public offering. FHR acquired an approximate 33% interest in
Legacy under this offering. In 1998, FHR purchased Delta, which at the time
had 27 hotels and 10,000 guestrooms under management or franchise. Also in
1998, FHR purchased the Princess hotel portfolio, a group of seven warm weather
resorts in Mexico, Bermuda, Barbados and the United States. In October 1999, Fairmont was created through the combination of FHRs
luxury hotel management business with that of Fairmont Hotel Management L.P.
(Fairmont L.P.), a U.S. based luxury hotel manager. Fairmont immediately
became the largest luxury hotel management company in North America, as
measured by the number of rooms under management. FHR contributed management
contracts for 27 luxury properties while Fairmont L.P. contributed management
contracts for seven hotels in key United States gateway cities and all rights
to the Fairmont brand. This acquisition provided FHR with an international
luxury brand under which it now operates its world-class hotels and its luxury
hotel management business. Significant Acquisitions In January 2001, FHR acquired the remaining 51% of its Barbados hotels,
The Fairmont Royal Pavilion and The Fairmont Glitter Bay for approximately $20
million. In February 2001, FHR acquired The Fairmont Kea Lani Maui on the
Wailea coast in Maui, Hawaii for approximately $215 million. In July 2001, FHR
purchased a 50% equity interest in The Fairmont Copley Plaza Boston for $21
million in cash from interests controlled by Prince Alwaleed Bin Talal Bin
Abdulaziz Al Saud (Prince Alwaleed). In February 2003, FHR acquired the
remaining 50% equity interest controlled by Prince Alwaleed. The total
purchase price for 100% of The Fairmont Copley Plaza Boston was approximately
$117 million and was satisfied by the issuance of one million common shares,
the assumption of a mortgage at $64.5 million and cash paid of $30.7 million.
In November 2001, FHR made a $29 million investment to secure the long-term,
incentive-based management contract of The Fairmont Dubai, which opened in
February 2002. Subsequently, $7 million of this investment was allocated to
another management contract on similar terms for a property that will be built
in Abu Dhabi, United Arab Emirates. In addition, a further $7 million will be
repaid to FHR if a third management contract is not provided by January 2008. In September 2002, FHR acquired the 16.5% interest in Fairmont held by a
subsidiary of Kingdom Hotels (USA), Ltd. (Kingdom), an affiliate of a trust
created by Prince Alwaleed. In consideration for the shares of Fairmont, FHR
issued 2,875,000 shares to Kingdom, equivalent to approximately 3.7% of FHRs
issued and outstanding shares. As a result of this transaction, FHR increased
its controlling interest in Fairmont to 83.5%. The remaining 16.5% of Fairmont
is held by one of the original owners of Fairmont L.P., a fund represented by
Maritz, Wolff & Co. (Maritz Wolff). FHR and Maritz Wolff are parties to a
shareholders agreement in respect of Fairmont which addresses various
governance matters and provides the parties with certain rights including the
right of Maritz Wolff to put its Fairmont shares to Fairmont for $69 million at
any time prior to October 1, 2004. The shareholders agreement also provides
each party with the right to acquire the others shares at fair market value
(as defined in the shareholders agreement) in certain limited circumstances
including in the event the other party becomes insolvent or commits an act of
bankruptcy, or is acquired, whether directly or indirectly, by a competitor of
Fairmont. On April 6, 2004, Maritz Wolff and FHR agreed that Maritz Wolff will
sell its Fairmont shares to FHR by no later than October 1, 2004 for $70
million. Upon such purchase, the shareholders agreement will terminate. 10




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In September 2002, FHR invested $8 million for a 19.9% interest in The
Fairmont Sonoma Mission Inn & Spa in Sonoma County California and secured a
long-term management contract for the property. FHR has committed to advance a
loan of $10 million on arms-length commercial terms to this hotel. In December
2002, FHR acquired The Fairmont Orchid, Hawaii for approximately $140 million.
See Owned Hotels. Significant Dispositions In February 2001, FHR sold The Fairmont Empress in Victoria, British
Columbia and Fairmont Le Château Frontenac in Quebec City, Quebec to Legacy for
approximately $200 million, while retaining the long-term management contracts,
each of which had a remaining term of 49 years at the time of sale. ITEM 3: NARRATIVE DESCRIPTION OF THE BUSINESS Overview FHR is one of North Americas leading managers of luxury hotels. FHR
currently has 82 luxury and first-class hotels and resorts in its portfolio,
representing more than 33,000 rooms. The properties are located in Canada, the
United States, Mexico, Bermuda, Barbados and the United Arab Emirates. An
additional two properties are currently under development. FHR has operated
and owned hotels for over 116 years and currently manages properties
principally under the Fairmont and Delta brand names. Hotel Ownership FHR has real estate ownership interests ranging from approximately 19.9%
to 100% in 23 properties. This distinctive collection of hotel properties is
located primarily in exclusive resort destinations or key North American
gateway cities. All of FHRs hotel ownership interests are held directly or
indirectly by FHR Real Estate Corporation (FHRREC), with the exception of The
Fairmont Chateau Lake Louise, and the equity interest in The Fairmont Sonoma
Mission Inn & Spa, which are held by other subsidiaries of FHR. Fairmont
manages the 21 luxury properties and Delta manages the two first-class
properties. The majority of FHRs income before interest, taxes, amortization, other
income and expenses and reorganization and corporate expenses (EBITDA) are
generated by its ownership operations. Approximately 55% of gross revenue from
hotel ownership is generated from room revenue and 30% is generated from food
and beverage services. Other revenue streams such as spa facilities, golf
courses, retail operations, parking and laundry, contribute the balance of
revenues earned by the owned properties. Approximately 65-70% of FHRs EBITDA is generated by hotel ownership
interest in 11 properties in seven locations. The Fairmont Banff Springs and
The Fairmont Chateau Lake Louise, located in Banff National Park in the
Canadian Rockies, are protected by high barriers to entry since development in
the park is controlled by the Government of Canada. The Fairmont Chateau
Whistler is in Whistler, British Columbia, a year-round resort widely
recognized as one of North Americas best ski destinations. The Whistler hotel
market is nearing full development capacity, which will restrict new supply
growth. The Fairmont Scottsdale Princess is a Five Diamond hotel in the
upper-upscale market in the growing Scottsdale, Arizona market, which has
recently experienced new hotel supply. The Fairmont Hamilton Princess and The
Fairmont Southampton are located in Bermuda, where FHR enjoys favorable income
tax treatment on its earnings. The Fairmont Acapulco Princess and The Fairmont
Pierre Marques in Acapulco, Mexico represent an opportunity to create increases
in the value of FHRs portfolio through 11




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the continuing development of these resorts. The Fairmont Kea Lani Maui,
an all-suite resort located in Wailea, Maui and The Fairmont Orchid, Hawaii are
both located in some of Hawaiis most sought after locations. The Fairmont
Copley Plaza in Boston recently completed a major renovation program restoring
the hotel to its original grandeur. Investment in Legacy FHR also has an approximate 35% equity interest in Legacy, which owns 22
hotels across Canada and two in the United States, all of which are managed by
either Fairmont or Delta. To date, FHR has accounted for its ownership
interest in Legacy on an equity basis. Pursuant to recent changes in
accounting rules that came into effect in 2004 under U.S. generally accepted
accounting principles and which will come into effect in 2005 under Canadian
generally accepted accounting principles, FHR has determined that it will be required to
consolidate within its financial statements Legacys financial results. FHR
believes that consolidating Legacy would complicate investors ability to
assess FHRs financial performance. Based on FHRs analysis to date, were FHR
to reduce its equity investment in Legacy to less than 25%, the Company could
continue to equity account for its Legacy holding without consolidation.
Accordingly, on April 27, 2004, FHR announced that it may, subject to
favourable market conditions, reduce its investment in Legacy during 2004,
pursuant to one or several transactions. FHR believes that the mutual benefits
of their relationship would remain substantially unchanged notwithstanding a
reduction in its equity interest. Legacy and FHR are parties to a strategic alliance agreement, which
provides Legacy with the right to participate in any new investments made by
FHR in resorts or city center hotels located in Canada. This agreement
provides FHR with a potential buyer for FHRs stabilized hotels while enabling
FHR to retain long-term management contracts for these properties. As a
capital partner, Legacy also provides FHR with additional management contract
opportunities. Real Estate Activities FHR also holds other real estate assets, which consist primarily of the
Southtown lands in Toronto, Ontario and the Coal Harbour lands in Vancouver,
British Columbia. FHR owns 100% of the Toronto lands and a 75% interest in the
Vancouver lands. Currently there are no formal plans to build new hotels at
these locations. FHR expects to sell the remaining lands over the next four
years. The Southtown lands are located in the core of downtown Toronto between
the financial district and Lake Ontario and are in close proximity to Air
Canada Centre. More specifically, the site is located south of Union Station
and north of the Gardiner Expressway, primarily on both sides of York Street.
To date, FHR has disposed of two parcels of the Southtown lands and is party to
ongoing discussions with several prospective parties who have expressed
interest in purchasing certain of the remaining sites. The remaining seven
parcels of land are zoned for the development of 4.9 million square feet of
hotel, office, and residential uses. The Coal Harbour lands in downtown Vancouver, are located along the
Burrard Inlet waterfront, west of The Fairmont Waterfront Hotel and overlook
the harbour and Stanley Park. To date, FHR has sold all the land except for
one remaining residential site contracted for sale by the summer of 2004 and
one site zoned for hotel development, which combined, allow for the development
of 1.1 million square feet. A number of prospective parties have recently
expressed an interest in the hotel site. Management has launched a vacation ownership product, Fairmont Heritage
Place, which it believes will allow FHR to compete for new development
opportunities and improve its return on owned assets by better leveraging its
existing hotel infrastructure. Construction is underway for the first phase of
FHRs first vacation ownership project, which is located in Acapulco, Mexico.
Management has also identified potential vacation ownership opportunities in
Scottsdale, Bermuda and Barbados. 12




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Management Operations FHR manages hotels under two subsidiaries, Fairmont and Delta, each with
their own distinct brand identity. Under their respective management
contracts, Fairmont and Delta generally oversee all aspects of the day-to-day
operations of each property on behalf of the owner, including hiring, training
and supervising staff, maintaining sales and marketing efforts, providing
accounting and budgeting functions, providing support for management
information systems and applications and the safekeeping, repair and
maintenance of the physical assets. For these services, Fairmont and Delta
earn a base fee, which is typically in the range of 2.5% to 3.5% of a
propertys gross revenues and can earn an incentive fee based on the property
achieving certain operating performance targets. Fairmont Fairmont is North Americas largest luxury hotel management company as
measured by rooms under management. Currently, Fairmont manages more than
21,000 rooms at 44 luxury properties in major city centers and resort
destinations throughout Canada, the United States, Mexico, Bermuda, Barbados
and the United Arab Emirates. Fairmont caters to the luxury segment of the
market, which is sometimes referred to as four or five star. Luxury hotels are
full service properties offering an exceptional level of personalized service
and a complete range of amenities and facilities, including food and beverage
outlets, meeting rooms and recreational activities. The hotel staff to guest
ratio tends to be higher at luxury hotels in order to allow for more
personalized service. Fairmonts incentive-based management contracts have an average remaining
term of more than 40 years, which management believes are among the longest in
the industry. In 2004, FHR expects about 30% of Fairmonts management
contracts to earn incentive fees. Within the next one to two years, the
majority of current contracts are expected to earn incentive fees. Most of
these contracts have set thresholds that do not change over the life of the
contract unless significant renovations are made to the managed hotel.
Fairmont participates in up to 30% of earnings above the threshold on most of
its management contracts. One of Fairmonts strengths is the diversity of its revenue base, which is
relatively balanced between individual and group travel and between business
and leisure travel. The individual or transient traveler is typically less
price sensitive, whereas the group travel business helps build occupancy in
off-peak seasons, providing stability in earnings. Business travel accounts
for approximately half of Fairmonts revenues under management and the balance
is derived from leisure travel. Further diversification is provided to
Fairmont as approximately 55% of revenues are derived from city center
locations and the balance from resort properties. The resorts attract both
corporate travelers for offsite retreats and leisure customers who take
advantage of the activities and amenities offered by these locations. Fairmont enjoys a considerable competitive advantage in the group business
segment of the industry over other luxury four or five star brands, due to its
large meeting facilities and greater number of guestrooms. Fairmonts average
number of rooms per hotel is approximately 500, whereas Fairmonts major
competitors, including Ritz-Carlton, Four Seasons, Sheraton Luxury Collection
and Preferred Hotels and Resorts, generally range between 200 to 330 rooms per
hotel. See Hotels Under Management. Fairmont has certain amenities and expertise in diverse areas that
distinguish it in the luxury sector. For example, its Fairmont Gold product
has carved out a niche that competes with other luxury hotels. This hotel
within a hotel, typically one or two floors of a Fairmont property, has its
own check-in desk, lounge area, upgraded amenities in each guestroom and offers
superior personalized service. This product commands a higher rate and
competes with the upper end of the luxury hotel segment from both a service and
room rate perspective. 13




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Fairmont also has resources dedicated to both golf and spa operations.
FHR has operated golf courses since 1911 and its courses, situated in some of
North Americas finest natural settings, are designed by some of the worlds
foremost golf course architects. Fairmont has considerable experience in golf
course management and maintenance and retail golf operations. FHR is Canadas
leading operator of high-end resort golf courses. Over the past six years, FHR
has completed major renovation and modernization to some of its classic golf
courses and is currently renovating a golf course in Acapulco. Fairmont introduced its new spa product, Willow Stream The Spas At
Fairmont, with the opening of Willow Stream the spa at The Fairmont Scottsdale
Princess in December 2001. In 2002, Fairmont expanded its spa product to The
Fairmont Empress, The Fairmont Dubai, The Fairmont Southampton, The Fairmont
Acapulco Princess and The Fairmont Banff Springs. Fairmont has converted the
existing spa at The Turnberry Isle Resort & Club in 2004. Delta Delta is Canadas largest first-class hotel management company, with over
11,000 rooms at 38 managed and franchised properties across Canada. Since FHR
acquired Delta in 1998, FHR has upgraded its portfolio of properties and
enhanced the reputation of the Delta brand. Delta strengthens FHRs leadership
position in the Canadian marketplace, adds a complementary brand to its
portfolio and allows FHR to achieve significant economies of scale. Deltas incentive-based management contracts have an average remaining
term of more than 10 years. In 2004, approximately one-third of Deltas
managed hotels are expected to earn incentive fees. Delta participates in up
to 30% of earnings above the threshold on some of its management contracts. Delta has certain amenities and expertise in diverse areas that
distinguish it in the first-class sector. For example, Deltas Signature Club
combines the exclusive use of a private lounge and upgraded guestrooms and
amenities. Signature Club guestrooms achieve premium rates, enabling Delta to
increase revenues. Delta has a strong regional sales network across Canada and
is recognized for its brand strength and property distribution within its
marketplace. Deltas major brand competitors are Hilton, Radisson and
Sheraton. Competitive Strengths The hotel industry is highly competitive. FHR believes that it has
several distinguishing competitive strengths, including the following. Irreplaceable Collection of Distinctive Assets FHR manages and owns a portfolio of unique, high quality hotels in
exceptional locations that provide it with an unrivaled presence throughout
North America. Fairmonts managed assets principally consist of historic
landmark properties in prime locations in major city centers or resort
destinations. Its properties are typically renowned assets with long-standing
traditions and reputations, such as The Fairmont San Francisco, The Fairmont
Banff Springs in the Canadian Rockies and Fairmont Le Château Frontenac in
Quebec City. FHRs portfolio of owned assets are located primarily in
exclusive resort locations where their competitive position is strengthened by
high barriers to entry, such as The Fairmont Banff Springs and The Fairmont
Chateau Lake Louise, which are situated on National Park land owned and
controlled by the Government of Canada and The Fairmont Kea Lani Maui. 14




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Growing Fairmont Brand Position Management believes that Fairmonts current brand positioning has poised
FHR for above average growth in earnings. Fairmont enjoys a prominent position
in the luxury market segment by virtue of its distinctive collection of 43
properties and a reputation for excellence in people, product and service. The
Fairmont name dates back to 1907 and is well known in the United States.
Although Fairmont is the largest North American luxury hotel management
company, management believes that Fairmont is still in the early stages of
building consumer awareness of the brand. Many of Fairmonts properties are
icons and landmarks in their own right and, as the connection between the brand
and these assets is solidified, its strength and value should continue to grow.
FHR also believes that there continues to be significant growth potential in
the United States and internationally. Currently, 13 of the top 25 U.S.
markets do not have a Fairmont property. Strategic Relationships Strategic relationships are an important source of financing and future
growth opportunities for FHRs hotel management and ownership businesses.
FHRs strategic alliance agreement with Legacy provides FHR with a potential
buyer for FHRs stabilized real estate assets while enabling it to retain
long-term management contracts for these properties. This allows FHR to
generate significant capital which can be reinvested to fund future growth and
expand the Fairmont brand presence. Since the establishment of the strategic
alliance, Legacy has purchased six properties from FHR for an aggregate
consideration of approximately $250 million. In addition, FHR has established
partnerships with institutional and private equity sources, including Kingdom,
controlled by Prince Alwaleed, The Royal Family of Abu Dhabi and the
Kuwait-based International Financial Advisors Company (IFA). These partners
are a potential source of capital to develop luxury and first-class hotel
properties and can also facilitate FHRs entry into new markets. In early 2001, Fairmont became a founding member of Avendra, LLC, a North
American purchasing consortium that combines the purchasing powers of its
founders, Fairmont, Hyatt, ClubCorp, Six Continents and Marriott, to bring each
member and their hotels anticipated savings in the cost of goods. All founding
members in Avendra, LLC are guaranteed the same purchasing benefits. Focused Acquisition Strategy FHR has developed a five-step process for acquiring and repositioning
underperforming real estate assets which has allowed it to maximize the
revenues it receives from its owned properties, while following its strategy of
increasing the management segment of its business. This five-step process
consists of: acquiring an asset and managing it in the short term to increase
its revenues; rebranding the asset as either a Fairmont or a Delta property;
repositioning and enhancing the revenue potential of the asset through capital
investment; aggressively managing the asset to optimize cash flows and
operating margins; and monetizing the appreciated value of the stabilized asset
by selling it to Legacy or a third party, which enables FHR to use the proceeds
to make further acquisitions and equity investments, as well as reinvesting in
existing assets. FHRs intention is to retain long-term management contracts
on the assets it sells. Conservative Capital Structure FHR believes it has a conservative capital structure. As at December 31,
2003, the Corporation had approximately $658 million total outstanding debt,
resulting in a debt to total capitalization of approximately 30%, one of the
lowest among major publicly-traded North American lodging companies. This
capital structure provides FHR with a financial advantage relative to many of
its competitors,


15



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enabling the Corporation to use its balance sheet to aggressively grow its
business both through the refurbishment and expansion of existing properties
and through selective acquisitions. Long-Term, Incentive-Based Management Contracts Fairmont and Delta both earn management fees for services they provide to
properties owned by FHR, Legacy and third parties. Base fees are typically
calculated as a percentage of a propertys gross revenues and provide earnings
and cash flow stability. Incentive fees are earned as a result of improvements
in financial performance, usually above a pre-determined level, and provide
significant opportunities for cash flow and earnings growth. Generally, the
longer the term of the management contract, the greater the opportunity for
increased incentive fees. Fairmonts incentive-based management contracts have an average remaining
term of more than 40 years, which management believes are among the longest in
the industry. In 2004, Fairmont expects that about 30% of its management
contracts will earn incentive fees. Within the next one to two years, Fairmont
expects that the majority of its current contracts will be earning incentive
fees. Almost all of these contracts have set thresholds that do not change
over the life of the contract except, in certain cases, for adjustments
corresponding to significant capital expenditures. Fairmont participates in up
to 30% of earnings above the threshold on most of its management contracts.
Deltas incentive-based management contracts have an average remaining term of
more than 10 years. In 2004, approximately one-third of Deltas managed hotels
are expected to earn incentive fees. Proven Management Team FHR has been providing outstanding service in the lodging sector for over
116 years. FHRs executive management team has, since 1997, successfully
completed the initial public offering of Legacy, the acquisitions of Delta and
the Princess hotel portfolio, the creation of Fairmont and the transition from
being privately-held to being a publicly-traded corporation pursuant to the
Arrangement. Also during this period, FHR has reported strong operating and
financial performance. The executive management team is supported by 12
corporate vice presidents and by 13 regional vice presidents, and oversees a
workforce of over 30,000 employees. Growth Strategy In addition to benefiting from the overall growth trends of the luxury
segment of the market, FHR intends to grow revenue and profits through a
comprehensive growth strategy. Maximize Operating Performance of Existing Assets FHR continues to grow revenues and earnings by maximizing the operating
performance of its managed and owned hotels through profit-enhancing capital
improvements and more focused marketing programs and sales efforts. FHR also
anticipates that the Fairmont brand will continue to enhance revenue
opportunities through a consistent brand image and increased North American and
international recognition of the properties in the portfolio. FHR also expects that the rebranding of newly-acquired assets will
leverage the operating performance of its existing properties. Not only will
the rebranding enhance the revenue opportunities of the new assets through
their immediate association with the Fairmont brand but, in addition, it will
raise the profile of the rest of the Fairmont properties by raising the profile
of the Fairmont brand as a whole. 16




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Invest Capital to Expand, Reposition and Refurbish Existing Assets A number of FHRs owned and managed assets have recently undergone or are
currently undergoing major renovation programs which has affected operating
revenues. Once these renovations are completed, FHR expects that it will earn
significant returns on the capital invested. Broaden Revenue Streams Incremental investments in spas, golf courses, residential and retail
enhance the Fairmont brand and are also attractive investment opportunities, as
the hotel infrastructure and land are already in place. There are currently
seven large luxury spas under management and one under development. In
addition, FHR operates ten golf courses and has developed expertise in this
area. FHR is focusing its acquisition strategy to target hotels that already
have spas and golf courses in place or have the space to accommodate these
facilities. FHR also continues to evaluate opportunities to develop
residential accommodations at certain of its resort properties. Several of
FHRs existing properties, such as The Fairmont Royal Pavilion and The Fairmont
Scottsdale Princess could accommodate residential development. Fairmont
currently has a large portfolio of retail shops within its hotels, providing
rental income for FHR. The Fairmont Scottsdale Princess and The Fairmont Banff
Springs currently operate their own retail shops. Fairmont will continue to
pursue opportunities for future growth in retail revenue, through both leased
tenancies and owned and operated stores. Growth Through New Incentive-Based Management Contracts FHR intends to further develop and leverage the Fairmont brand by seeking
new single and multiple incentive-based management contract opportunities. The
Corporation believes it has substantial growth potential in the United States
as 13 of the top 25 markets currently do not have a Fairmont property. FHR
also intends to capitalize on opportunities outside North America. Fairmont is well positioned to attract hotel owners and new partners
through its management expertise, unique portfolio of properties and service
culture. In addition, it has established a scalable technology infrastructure
that supports management information systems which are critical to the
globalization of the brand. Delta has proven its ability to secure new management contracts within
Canada, with eight new management contracts being entered into since January 1,
2001. Growth Through Acquisitions To support and complement the growth of its management business, FHR will
continue to use its financial position and management capabilities to make
selective acquisitions in key North American gateway cities, destination
resorts and strategic international markets. FHR intends to focus on assets
that are consistent in size, quality and customer base with its existing
portfolio, or that are in protected markets or have significant development
potential. Once an acquired asset has been stabilized, FHR will consider selling the
asset. As part of the sale agreement, FHR would retain a long-term management
contract. The cash generated from the sale of stabilized properties would then
be redeployed into new investment opportunities. This strategy was used with
the sale of The Fairmont Empress and Fairmont Le Château Frontenac to Legacy
where the proceeds were used for the subsequent purchase of The Fairmont Kea
Lani Maui, thereby expanding FHRs presence in a key resort market. 17




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Minority Equity Investments FHR also plans to leverage its financial position by increasing the use of
minority equity investments. This will enable FHR to secure long-term
management contracts with only a modest capital investment. For instance, FHR
acquired an approximate 20% interest in The Fairmont Sonoma Mission Inn & Spa
while securing a long-term management contract at this property. Although the Corporation is focused on expanding primarily in the United
States, FHR will also consider strategic acquisitions outside of North America.
In 2002, The Fairmont Dubai opened. This joint venture involved FHR taking a
minority equity position in the property as well as entering into a long-term
management contract. FHR views this project as the first step in a strategic
alliance between the private office of His Highness Dr. Sheikh Sultan bin
Khalifa Al Nahyan and Fairmont to build and operate a number of luxury hotels
in the region and other international markets. FHR has entered into an agreement with Obrascón Hurate Laín, S.A. to
manage a resort near Playa del Carmen in Mayakoba, Mexico. Located 40 miles
from Cancun on the Mayan Riviera, this 401-room luxury resort is expected to
open in late 2005 and will be flagged The Fairmont Mayakoba, Riviera Maya.
FHR will invest approximately $10 million for an equity interest of about 15%
in the resort. FHR has also entered into a joint venture with Nile City Investment
Company to manage a 552-room luxury hotel on the Nile River in central Cairo,
Egypt. FHR and Kingdom Hotel Investment Group (KHI), the chairman of which
is Prince Alwaleed, will each invest approximately $10 million for an equity
interest of about 15% each in the property, which is anticipated to open in
2006. FHR has also entered into a strategic alliance with IFA through IFA Hotels
& Resorts to open a resort in Dubai on The Palm, Jumeirah, an extensive
development project in the Arabian Gulf that is currently being completed.
Situated on the best location of The Palm, Jumeirah, the Fairmont project will
include a 300-room luxury resort and 460 vacation residences. The Fairmont
Palm Jumeirah Resort, Dubai is expected to open in late 2006. FHR and KHI
will each invest approximately $15 million for a 10% equity interest each in
this development. IFA, KHI and the Company are also exploring other resort
projects in the Middle East, East Africa and South Africa. Hotels Under Management The following tables provide certain information relating to each property
managed by Fairmont and Delta as of May 17, 2004. Fairmont
    
    Year
    
    
    
    
    
    Total
    
    Fairmont Gold
    
    Meeting Rooms/Property
    
    Opened
    
    Ownership(1)
    
    Rooms
    
    Rooms
    
    Sq. FootageThe Fairmont Kea Lani Maui
    
    
    1991
    
    
    FHRREC
    
    
    450
    
    
    
    
    
    
    
    4/11,300Wailea,
Maui, HawaiiThe Fairmont Orchid, Hawaii
    
    
    1991
    
    
    FHRREC
    
    
    540
    
    
    
    45
    
    
    
    12/29,000Kohala
Coast, HawaiiThe Fairmont San Francisco
    
    
    1907
    
    
    
    
    
    
    
    591
    
    
    
    
    
    
    
    21/53,000San
Francisco, CaliforniaThe Fairmont Sonoma Mission Inn & Spa
    
    
    1927
    
    
    FHRREC
    
    
    228
    
    
    
    
    
    
    
    11/11,000Sonoma
County, California
    
    
    
    
    
    
    19.9
    %The Fairmont Olympic Hotel, Seattle
    
    
    1924
    
    
    Legacy
    
    
    450
    
    
    
    
    
    
    
    14/26,700Seattle,
WashingtonThe Fairmont San Jose
    
    
    1987
    
    
    
    
    
    
    
    808
    
    
    
    
    
    
    
    24/70,000
 18




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##### 



Fairmont
    
    Year
    
    
    
    
    
    Total
    
    Fairmont Gold
    
    Meeting Rooms/Property
    
    Opened
    
    Ownership(1)
    
    Rooms
    
    Rooms
    
    Sq. FootageSan Jose,
CaliforniaThe Fairmont Miramar Hotel Santa Monica
    
    
    1921
    
    
    
    
    
    
    
    302
    
    
    
    
    
    
    
    16/22,500Santa Monica, CaliforniaThe Fairmont Scottsdale Princess
    
    
    1987
    
    
    FHRREC
    
    
    651
    
    
    
    
    
    
    
    29/68,000Scottsdale, ArizonaThe Fairmont Dallas
    
    
    1969
    
    
    
    
    
    
    
    551
    
    
    
    
    
    
    
    26/77,000Dallas, TexasThe Fairmont Kansas City At The Plaza
    
    
    1972
    
    
    
    
    
    
    
    366
    
    
    
    
    
    
    
    20/28,400Kansas City, MissouriThe Fairmont New Orleans
    
    
    1893
    
    
    
    
    
    
    
    701
    
    
    
    
    
    
    
    21/70,000New Orleans, LouisianaThe Fairmont Chicago
    
    
    1987
    
    
    
    
    
    
    
    692
    
    
    
    
    
    
    
    14/62,000Chicago, IllinoisThe Fairmont Turnberry Isle Resort & Club
    
    
    1972
    
    
    
    
    
    
    
    392
    
    
    
    
    
    
    
    21/45,000Miami, FloridaThe Plaza, A Fairmont Managed Hotel
    
    
    1907
    
    
    
    
    
    
    
    806
    
    
    
    
    
    
    
    13/31,300New York, New YorkThe Fairmont Washington, D.C.
    
    
    1985
    
    
    Legacy
    
    
    415
    
    
    
    39
    
    
    
    17/29,000Washington, District of ColumbiaThe Fairmont Copley Plaza Boston
    
    
    1912
    
    
    FHRREC
    
    
    386
    
    
    
    59
    
    
    
    13/21,000Boston, MassachusettsThe Fairmont Empress
    
    
    1908
    
    
    Legacy
    
    
    477
    
    
    
    40
    
    
    
    6/10,500Victoria, British ColumbiaThe Fairmont Chateau Whistler
    
    
    1989
    
    
    FHRREC
    
    
    550
    
    
    
    57
    
    
    
    23/28,000Whistler, British ColumbiaThe Fairmont Hotel Vancouver
    
    
    1939
    
    
    Legacy
    
    
    556
    
    
    
    36
    
    
    
    15/37,000Vancouver, British ColumbiaThe Fairmont Waterfront
    
    
    1991
    
    
    Legacy
    
    
    489
    
    
    
    48
    
    
    
    11/24,000Vancouver, British ColumbiaThe Fairmont Vancouver Airport
    
    
    1999
    
    
    FHRREC
    
    
    392
    
    
    
    34
    
    
    
    14/7,000Richmond, British ColumbiaThe Fairmont Jasper Park Lodge
    
    
    1922
    
    
    FHRREC
    
    
    451
    
    
    
    
    
    
    
    13/26,000Jasper, AlbertaThe Fairmont Chateau Lake Louise
    
    
    1890
    
    
    FHRREC
    
    
    550
    
    
    
    19
    
    
    
    14/17,500Lake Louise, AlbertaThe Fairmont Banff Springs
    
    
    1888
    
    
    FHRREC
    
    
    770
    
    
    
    
    
    
    
    36/75,000Banff, AlbertaThe Fairmont Palliser
    
    
    1914
    
    
    Legacy
    
    
    405
    
    
    
    43
    
    
    
    14/21,700Calgary, AlbertaThe Fairmont Hotel Macdonald
    
    
    1915
    
    
    Legacy
    
    
    198
    
    
    
    
    
    
    
    8/10,600Edmonton, AlbertaThe Fairmont Winnipeg
    
    
    1970
    
    
    Legacy
    
    
    340
    
    
    
    36
    
    
    
    14/24,700Winnipeg, ManitobaThe Fairmont Royal York
    
    
    1929
    
    
    Legacy
    
    
    1,365
    
    
    
    84
    
    
    
    41/81,000Toronto, OntarioFairmont Château Laurier
    
    
    1912
    
    
    Legacy
    
    
    430
    
    
    
    33
    
    
    
    16/32,800Ottawa, OntarioFairmont Le Château Montebello and Kenauk
    
    
    1930
    
    
    FHRREC
    
    
    211
    
    
    
    
    
    
    
    17/14,200Montebello, QuebecFairmont The Queen Elizabeth
    
    
    1958
    
    
    Legacy
    
    
    1,039
    
    
    
    76
    
    
    
    31/46,600Montreal, QuebecFairmont Tremblant
    
    
    1997
    
    
    FHRREC
    
    
    314
    
    
    
    28
    
    
    
    19/16,000Mont Tremblant, Quebec
    
    
    
    
    
    
    19.9
    %Fairmont Le Château Frontenac
    
    
    1893
    
    
    Legacy
    
    
    621
    
    
    
    55
    
    
    
    14/22,000Quebec City, QuebecFairmont Le Manoir Richelieu
    
    
    1899
    
    
    FHRREC
    
    
    405
    
    
    
    21
    
    
    
    12/22,000Charlevoix, Quebec
    
    
    
    
    
    
    25
    %
 19




---



##### 



Fairmont
    
    Year
    
    
    
    
    
    Total
    
    Fairmont Gold
    
    Meeting Rooms/Property
    
    Opened
    
    Ownership(1)
    
    Rooms
    
    Rooms
    
    Sq. FootageThe Fairmont Algonquin
    
    
    1889
    
    
    
    
    
    
    
    234
    
    
    
    
    
    
    
    8/19,000St. Andrews By-the-Sea, New BrunswickThe Fairmont Newfoundland
    
    
    1982
    
    
    FHRREC
    
    
    302
    
    
    
    57
    
    
    
    17/20,000St. Johns, Newfoundland
    
    
    
    
    
    
    25
    %The Fairmont Acapulco Princess
    
    
    1971
    
    
    FHRREC
    
    
    1,017
    
    
    
    
    
    
    
    15/88,200Acapulco, MexicoThe Fairmont Pierre Marques
    
    
    1958
    
    
    FHRREC
    
    
    335
    
    
    
    
    
    
    
    5/9,500Acapulco, MexicoThe Fairmont Southampton
    
    
    1972
    
    
    FHRREC
    
    
    593
    
    
    
    58
    
    
    
    12/35,500Southampton, BermudaThe Fairmont Hamilton Princess
    
    
    1884
    
    
    FHRREC
    
    
    410
    
    
    
    87
    
    
    
    9/19,000Hamilton, BermudaThe Fairmont Royal Pavilion
    
    
    1987
    
    
    FHRREC
    
    
    75
    
    
    
    
    
    
    
    2/1,200St. James, BarbadosThe Fairmont Glitter Bay
    
    
    1981
    
    
    FHRREC(2)
    
    
    68
    
    
    
    
    
    
    
    1/2,500St. James, BarbadosThe Fairmont Dubai
    
    
    2002
    
    
    
    
    
    
    
    394
    
    
    
    66
    
    
    
    23/21,700Dubai, UAETOTAL
    
    
    
    
    
    
    
    
    
    
    21,320
    
    
    
    1,021
    
    
    
    686/1,388,400
   (1)
    
    Ownership interest is held by a third party unless otherwise indicated.(2)
    
    Some of the units at this resort are privately owned. 20




---



##### 



SignatureDelta
    
    Year
    
    
    
    Total
    
    Club
    
    Meeting Rooms/Property
    
    Opened
    
    Ownership(1)
    
    Rooms
    
    Rooms
    
    Sq. FootageDelta Sun Peaks ResortsSun Peaks, British Columbia
    
    2002
    
    FHRREC 26%
    
    220
    
    34
    
    
    9/10,900Delta Victoria Ocean Pointe
Resort and Spa,Victoria, British Columbia
    
    1992
    
    
    
    239
    
    44
    
    
    10/14,100Delta Vancouver AirportRichmond, British Columbia
    
    1973
    
    Delta
    
    412
    
    
    
    
    15/15,400Delta Vancouver SuitesVancouver, British Columbia
    
    1998
    
    FHRREC 34.8%
    
    226
    
    23
    
    
    4/3,500Delta Whistler Village SuitesWhistler, British Columbia
    
    1997
    
    
    
    207
    
    
    
    
    5/4,000Tantalus Lodge (3)Whistler, British Columbia
    
    1980
    
    
    
    76
    
    
    
    
    1/1,300Delta St. Eugene Mission ResortCranbrook, British Columbia
    
    2002
    
    
    
    125
    
    
    
    
    6/4,600Delta Bow ValleyCalgary, Alberta
    
    1981
    
    
    
    398
    
    
    
    
    11/8,200Delta Calgary AirportCalgary, Alberta
    
    1979
    
    Legacy
    
    296
    
    
    
    
    18/13,000Delta Lodge at KananaskisKananaskis Village, Alberta
    
    1988
    
    
    
    321
    
    70
    
    
    16/16,000Delta Edmonton Centre Suite
HotelEdmonton, Alberta
    
    1987
    
    
    
    169
    
    
    
    
    12/10,600Delta Edmonton South Hotel &
Conference Centre (2)Edmonton, Alberta
    
    1975
    
    
    
    237
    
    
    
    
    21/26,700Delta BessboroughSaskatoon, Saskatchewan
    
    1935
    
    Legacy
    
    225
    
    37
    
    
    13/18,600Delta Regina (2)Regina, Saskatchewan
    
    1988
    
    
    
    274
    
    34
    
    
    26/14,600Delta WinnipegWinnipeg, Manitoba
    
    1974
    
    Legacy
    
    392
    
    19
    
    
    18/18,600Delta London Armouries (2)London, Ontario
    
    1987
    
    
    
    245
    
    
    
    
    15/8,700Delta Meadowvale Resort and
Conference Centre (2)Mississauga, Ontario
    
    1981
    
    
    
    374
    
    
    
    
    41/30,200Delta Toronto Airport WestMississauga, Ontario
    
    1976
    
    Legacy
    
    297
    
    
    
    
    21/16,000Delta ChelseaToronto, Ontario
    
    1975
    
    
    
    1,590
    
    73
    
    
    18/23,000Delta Toronto EastToronto, Ontario
    
    1982
    
    Legacy
    
    368
    
    20
    
    
    27/23,700Delta Pinestone ResortHaliburton, Ontario
    
    1976
    
    
    
    103
    
    
    
    
    11/15,000Delta Sherwood InnPort Carling, Ontario
    
    1939
    
    
    
    49
    
    
    
    
    3/2,800Delta Grandview ResortHuntsville, Ontario
    
    1911
    
    
    
    125
    
    
    
    
    11/9,000Delta Rocky Crest ResortMacTier, Ontario
    
    1965
    
    
    
    65
    
    
    
    
    2/1,700Delta Ottawa Hotel and SuitesOttawa, Ontario
    
    1975
    
    Legacy
    
    328
    
    23
    
    
    13/11,600Delta Montreal (2)Montreal, Quebec
    
    1986
    
    
    
    456
    
    58
    
    
    15/15,000Delta Centre-VilleMontreal, Quebec
    
    1977
    
    Legacy
    
    711
    
    128
    
    
    24/22,600Delta Sherbrooke Hotel and
Conference CentreSherbrooke, Quebec
    
    1989
    
    
    
    178
    
    
    
    
    17/17,800Delta Trois-Rivières Hotel and
    
    1991
    
    
    
    159
    
    
    
    
    13/18,300Conference Centre




---



##### 



SignatureDelta
    
    Year
    
    
    
    Total
    
    Club
    
    Meeting Rooms/Property
    
    Opened
    
    Ownership(1)
    
    Rooms
    
    Rooms
    
    Sq. FootageTrois-Rivières, QuebecDelta Quebec(2)Quebec City, Quebec
    
    1975
    
    
    
    377
    
    44
    
    
    14/14,000Delta Fredericton(2)Fredericton, New Brunswick
    
    1992
    
    
    
    222
    
    21
    
    
    10/13,000Delta Brunswick (2)Saint John, New Brunswick
    
    1981
    
    
    
    254
    
    38
    
    
    14/8,000Delta BeauséjourMoncton, New Brunswick
    
    1972
    
    Legacy
    
    310
    
    
    
    
    14/24,000Delta HalifaxHalifax, Nova Scotia
    
    1974
    
    Legacy
    
    296
    
    
    
    
    13/9,200Delta BarringtonHalifax, Nova Scotia
    
    1980
    
    Legacy
    
    200
    
    31
    
    
    8/6,000Delta Sydney (2)Sydney, Nova Scotia
    
    1987
    
    
    
    152
    
    
    
    
    7/5,500Delta Prince EdwardCharlottetown, P.E.I.
    
    1984
    
    Legacy
    
    211
    
    
    
    
    13/20,000Delta St. Johns Hotel and
Conference Centre(2)St. Johns, Newfoundland
    
    1987
    
    
    
    276
    
    30
    
    
    17/17,200TOTAL
    
    
    
    
    
    11,163
    
    727
    
    
    526/512,400
   (1)
    
    Ownership interest is held by a third party unless otherwise indicated.(2)
    
    A Delta franchised hotel(3)
    
    A non-branded Delta managed hotel MeetingOther
    
    Year
    
    
    
    
    
    Total
    
    Club
    
    Rooms/Property
    
    Opened
    
    Ownership
    
    Rooms
    
    Suites
    
    Sq. FootageSheraton Suites Calgary Eau Claire(1)
    
    
    1998
    
    
    Legacy
    
    
    323
    
    
    
    44
    
    
    
    12/10,000Calgary, Alberta
   (1)
    
    Managed by Canadian Pacific Hotels Management Corporation 22




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##### 



Industry Awards FHR has developed a reputation for quality, service and innovation in the
luxury and first-class markets, respectively. This reputation has been
acknowledged by the following leading surveys: Hospitality Sales & Marketing Association International (HSMAI)
Top 25 Hot List In January 2004, the Hospitality Sales & Marketing Association
International (HSMAI) has published its first annual listing of the 25 Most
Extraordinary Sales and Marketing Minds in Hospitality and Travel. Two of
Fairmonts leaders have been recognized as industry stars. Thomas Storey,
Executive Vice President of Business Development and Strategy, and Jens
Thraenhart, Director of Internet Strategy, join a list of the finest strategic
and creative minds, as chosen by senior executives throughout the hospitality,
travel and tourism industries. AAA Five Diamond Awards The Fairmont Banff Springs signature dining room, the Banffshire Club,
has been recognized for the first time with the coveted 2003 AAA Five Diamond
Award. In only its second year of operation, the Banffshire Club has made the
list of North Americas top culinary destinations, selected for the superiority
of their food, service, décor and ambience. Also appearing on the elite list
were The Fairmont Olympic Hotel, Seattle, for the 20th consecutive
year, and both The Fairmont Scottsdale Princess and its Marquesa restaurant
were included for the 13th year running. Condé Nast Travelers Readers Choice Awards Twenty-three Fairmont properties were listed on the The Gold Listof the
2004 Condé Nast Travelers Readers Choice Awards. The Fairmont Chateau
Whistler captured the number one spot on the Condé Nast Travelers 2004 list of
Top 50 Ski Resorts. Canadas Top 100 Employers In 2003, Fairmont Hotels & Resorts was recognized as one of the top 100
companies to work for in Canada for the second consecutive year, according to
Canadas Top 100 Employers. Fairmont was the only hotel company featured on
this prestigious list. World Travel Awards Fairmont Hotels & Resorts was recognized in five categories at the Tenth
Annual World Travel Awards. Among the awards was the prestigious title of
North Americas Leading Hotel Group, Worlds Leading Ski Resort (The
Fairmont Chateau Whistler), North Americas Leading Hotel (The Plaza), and
North Americas Leading Resort (The Fairmont Banff Springs). Fairmont Hotels
& Resorts website was also recognized, as www.fairmont.com was named Worlds
Leading Internet Site. The World Travel Awards were initiated in 1993 to
acknowledge and celebrate excellence in the worlds travel and tourism
industry. 2003 Gold Key Awards Meetings & Conventions Magazine has awarded 7 Fairmont properties with
their prestigious 2003 Gold Key Award, including The Fairmont Acapulco
Princess, which also was honored with the magazines Gold Platter Award. Other
Fairmont hotels receiving the 2003 Gold Key Award included The 23




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##### 



Fairmont Kea Lani, Maui, The Fairmont San Francisco, The Fairmont
Scottsdale Princess, The Fairmont Banff Springs, The Fairmont Chateau Whistler,
and The Fairmont Southampton in Bermuda. Owned Hotels The following is a description of the individual hotels in which FHR
currently has an ownership interest. FHRREC or one or more of its subsidiaries
has a 100% interest in these properties, unless otherwise indicated. The Fairmont Orchid Situated on 32 beachfront acres along the sun-soaked Kohala Coast, on the
Northwestern coast of Hawaiis Big Island, The Fairmont Orchid has 540
guestrooms and suites and offers a full-service spa and fitness center, more
than 30,000 Square feet of indoor meeting space, and over 70,000 square feet of
outdoor function space, four restaurants, a deli, ten tennis courts, a 10,000
square foot oceanfront swimming pool, a protected beach and swimming lagoon,
and is located to an adjacent 36-hole championship golf course. The Fairmont
Orchid was named to Travel + LeisuresGreatest Hotels in the World 2003 and
was named one of the best golf resorts by Condé Nast Travelers2003 Top Golf
Resorts readers survey. In October 2002, FHRREC acquired The Orchid at Mauna
Lani on the Island of Hawaii from an affiliate of Colony Capital LLC. The Fairmont Kea Lani Maui Known as the islands only all-suite luxury oceanfront resort, The
Fairmont Kea Lani Maui is situated on Polo Beach in the world-class destination
of Wailea, on the southwestern coast of Maui. With 413 one-bedroom suites and
37 private beachfront villas, the 22-acre resort offers a full-service spa and
fitness center and a range of water sports. The resort is located close to
Waileas three 18-hole championship, par 72 golf courses and 14 tennis courts.
The resort appears in Condé Nast Travelers2002 Gold List and was rated as one
of the top spas in North America and the Caribbean in the April 2004 issue of
the magazine. FHRREC holds its indirect interest in the resort through a
Hawaiian limited partnership, Kea Lani Limited Partnership. The Fairmont Sonoma Mission Inn & Spa Long known as a historic spa destination in the heart of the California
Wine Country, The Fairmont Sonoma Mission Inn & Spa is the recipient of the AAA
Four-Diamond Award and Mobile Four-Star Award. The recently expanded spa
facility boasts its own source of thermal mineral water. The 228-room resort
includes three pools, 11 meeting rooms, and a full-service business center.
Guests have preferred access to the Sonoma Golf Club, a private 18-hole
championship golf course. In September 2002, in addition to securing the
long-term management contract, FHRREC purchased a 19.9% equity interest in the
resort. The Fairmont Scottsdale Princess Built in 1987, The Fairmont Scottsdale Princess is located on a 450-acre
property, with the McDowell Mountains as the backdrop. The property has access
to two championship golf courses, which are leased by the City of Scottsdale
and operated by the Tournament Players Club of Scottsdale. For several years,
one of these courses has been the site of the PGA Tours FBR Open (formerly
known as the Phoenix Open). The hotel has also been the host of the
ATP/Franklin Templeton Mens Tennis Tournament for a number of years. In 2003,
the resort appeared in Condé Nast TravelersGold List. Willow Stream the spa
at The Fairmont Scottsdale Princess, a 44,000 square-foot luxury spa, opened at 24




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##### 



the end of 2001. For the thirteenth consecutive year the hotel received
two Five-Diamond Awards from AAA, one for the hotels striking and luxurious
facilities and exceptionally high degree of service and the other for its
signature dining room, The Marquesa. The Fairmont Scottsdale Princess is owned
by the Scottsdale Princess Partnership, an Arizona partnership that is
indirectly owned by FHRREC. The hotel is located on land leased from the City
of Scottsdale, whose lease expires at the end of 2085. The Fairmont Copley Plaza Boston Known as Bostons Grande Dame, The Fairmont Copley Plaza Boston has been
a landmark of elegance since its opening in 1912. The 386 room hotel was
designed by the same architect as The Plaza in New York and has many similar
features. The hotel is centrally located beside the Hancock Tower, the Boston
Public Library and Trinity Church and is close to Beacon Hill and Newbury
Street. The hotel and its restaurant, The Oak Room, are AAA Four-Diamond award
winners. In June 2001, FHRREC acquired a 50% ownership position in the hotel,
and Fairmont, which has been the manager of the hotel since 1996, entered into
a new long-term management contract. In February 2003, FHRREC completed the
acquisition of the remaining 50% equity interest in the property. The hotel
recently completed substantial renovations to its guestrooms and suites,
including the addition of Fairmont Gold. The property is owned by Copley Plaza
2001 LLC, a Delaware limited partnership, which is an indirect wholly-owned
subsidiary of FHRREC. The Fairmont Chateau Whistler Opened in 1989, The Fairmont Chateau Whistler was the first chateau-style
hotel built by FHR since the turn of the century. Conveniently located at the
base of award winning Blackcomb Mountain providing for ski in/ski out access,
the Chateau is also minutes away from the heart of Whistler Village. The hotel
features an 18-hole championship golf course designed by Robert Trent Jones,
Jr, Canadas only David Leadbetter Golf Academy, and a full-service spa. The
resort appears annually in Condé Nast TravelersGold List and was voted one of
the top 50 Golf Resorts by the magazine in 2003. In the November 2001 edition
of Forbes, the resort was listed as one of the 10 best ski resorts in North
America. The hotel also received the Four-Diamond Award from the CAA in 2002.
All of the lands relating to the hotel property and the golf course are owned
by Chateau Whistler Resort Partnership, a British Columbia partnership which is
wholly-owned, directly and indirectly, by FHRREC. The Fairmont Vancouver Airport Built in 1999, The Fairmont Vancouver Airport is a state-of-the-art hotel
located in the Vancouver International Airport, above U.S. Departures. It was
the first hotel in the world to offer an in-house airline check-in kiosk. With
a full-service work center, spa and health club, this hotel combines all the
expected amenities and facilities of a luxury hotel with the conveniences of an
airport property. In 2002, the hotel earned the Four-Diamond Award from CAA.
FHRREC leases the land on which the hotel is located from the Vancouver Airport
Authority. The lease term expires in 2050. The Fairmont Jasper Park Lodge Originally designed in 1922, The Fairmont Jasper Park Lodge now boasts 451
rooms comprised of cedar chalets and authentic log cabins set in an alpine
village setting. Located in Jasper National Park near Marmot Basin Ski Resort,
the property offers year-round activities including skiing, skating,
snowshoeing, biking, horseback riding, as well as golf on its championship golf
course designed by Stanley Thompson. Since 2003, the hotel has appeared in
Travel & Leisure magazinesT&L 500  Worlds Best Awards, in addition to being
ranked as one of the 100 Best Golf Resorts in the World by Condé Nast Traveler
in 2002 & 2003. In 2003, the golf course also received numerous honors
including 25




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##### 



Best Course, Best Resort Course, Best Value, Best Scenery, Best Condition,
and Best Course to Walk in Canada by SCOREGolfmagazines Golfers Choice
Awards. Additionally, the golf course has maintained Best Golf Resort in Canada
status by SCOREGolfmagazine since 1998. Since opening in 1988, CAA has
presented the resorts main fine dining restaurant, The Edith Cavell, with the
Four-Diamond Award. The resort is under a single lease with the Government of
Canada, expiring March 31, 2010, with a right to an additional term of 10
years. The Fairmont Chateau Lake Louise The Fairmont Chateau Lake Louise sits on the shores of Lake Louise in the
Canadian Rockies and is in close proximity to world class skiing at the Lake
Louise Ski Area in Alberta. Built in 1890, the resort was expanded from a
mountain chalet in 1912 and became an all-season property in 1982. A new
meeting facility was completed in May 2004 and Fairmont Gold opened in May
2003. In 2004, the hotel was fourth in Canada on Condé Nast TravelersGold
List and in 2002 received the Four-Diamond Award from the CAA. The Fairmont
Chateau Lake Louise was selected as one of the Ultimate 10 Hotels in the
World by The Learning Channel, recognizing the property as one of the top
luxury hotels in the world. The hotel is under perpetually renewable leases
with the Government of Canada, the owner of all the land in Banff National
Park, with the exception of a new lease of a road right-of-way and other lands
including minor portions of the hotel and a staff building which is for a fixed
term of 42 years. The leases for The Fairmont Chateau Lake Louise are held by
Chateau Lake Louise Corporation, a Nova Scotia based corporation which is a
wholly-owned subsidiary of FHR. The Fairmont Banff Springs Designed and built in 1888, and often referred to as Canadas Castle in
the Rockies, The Fairmont Banff Springs is a year-round resort located in
Banff National Park. The hotel is in close proximity to a number of
internationally renowned ski facilities, including Sunshine Village and Lake
Louise. An 18-hole championship golf course designed by Stanley Thompson and a
9-hole Bill Robinson course are considered masterpieces of mountain golf
architecture. In 2001, a major three-year renovation program, including
guestrooms the lobby, public spaces and kitchens, was completed at the
property, returning the resort to its original splendor. The resort has
received numerous accolades in the past year. Travel + Leisuremagazine rated
it in the top 10% of their Ultimate 500 worldwide awards and Condé Nast
Travelercontinues to rank the hotel, spa and golf course at the very top of
their reader choice polls. The Banffshire Club, one of only 7 restaurants in
Canada, has also been recognized with the prestigious Five Diamond Award form
AAA. In 2003, the hotel renovated its award-winning luxury spa, Willow Stream,
ensuring that the facility continues to be a benchmark for excellence within
Fairmonts signature Willow Stream brand. The main structures of the hotel
containing the reception areas, kitchen, guestrooms and the majority of the
staff accommodations are subject to perpetually renewable leases with the
Government of Canada. The remaining leasehold lands forming the hotel and
containing the conference center, parkade, other staff accommodations, the
tennis courts and the golf course are subject to a number of leases for fixed
terms of up to 42 years. Fairmont Le Château Montebello and Fairmont Kenauk at Le Château Montebello Located between Ottawa and Montreal, this historic resorts focal point is
its cedar log chateau built in 1930. Fairmont Le Château Montebello has
approximately 65,000 acres of protected wilderness domain that is one of North
Americas largest and oldest private fish and game reserves, with more than 70
lakes within its borders. The resort has an extensive recreation program and
offers a Stanley Thompson championship golf course, for which it received a
Double Platinum ranking from Canadas Golf Rankingmagazine. The resort also
appears in Condé Nast Travelers2004 Gold List. 26




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##### 



Fairmont Tremblant Opened in 1997, this hotel is located at the base of Mont Tremblant in the
Laurentians. In 2002, 2003, and 2004 the resort appeared in Condé Nast
TravelersGold List and has received the CAA Four-Diamond Award since opening.
In the November 2001 edition of Forbes, the resort was also listed as one of
the 10 best ski resorts in North America. FHRREC has a 19.9% direct interest
in Chateau M.T. Inc., a Canadian corporation, which owns the property. Fairmont Le Manoir Richelieu First established in 1899, the Fairmont Le Manoir Richelieu is located in
Charlevoix, Quebec, a region rich in cultural and natural heritage. The resort
offers a spa, casino and whale watching on the St. Lawrence River. In 2000,
Fairmont Le Manoir Richelieu received a Double Platinum ranking from Canadas
Golf Rankingmagazine for its 18-hole championship golf course, which is
presently under construction for the addition of a further nine holes. The
hotel and its restaurant, Le Charlevoix, each received the Four Diamond Award
from CAA in 2002. FHRREC holds a 25% interest in the property through its
direct ownership in Manoir Richelieu Limited Partnership, a Quebec limited
partnership. The Fairmont Newfoundland Rebuilt in 1982, The Fairmont Newfoundland is located in the heart of St.
Johns, overlooking the harbor. This modern hotel offers a 24-hour business
center and all guestrooms are provided with business amenities. FHRREC holds
its 25% interest directly in this property. The Fairmont Acapulco Princess Designed to resemble an Aztec pyramid, The Fairmont Acapulco Princess is
located on 480 tropical acres along the Revolcadero Beach. The grounds offer
five freshwater pools, waterfalls and one salt-water pool, tennis, water sports
and an 18-hole championship golf course. In 2003, the resort appeared in Condé
Nast TravelersGold List and received the Gold Key Award from Meetings &
Conventionsmagazine and the AAA Four-Diamond Award. In 2002, the property
completed a major renovation program that included the refurbishment of all
guestrooms and the addition of a Willow Stream spa. The hotel and golf course
are owned by Organización Ideal, S.A. de C.V. and Impulsora de Revolcadero S.A.
de C.V., both Mexican corporations, which are indirect wholly-owned
subsidiaries of FHRREC. The Fairmont Pierre Marques Located minutes from The Fairmont Acapulco Princess on a secluded section
of Revolcadero Beach, the resort was originally built in 1958 as a lavish
personal hideaway for oil magnate J. Paul Getty. Previously open for only
three months of the year, the property has been catering to guests year-round
since it was purchased by FHR in 1998. The hotel has retained the privacy and
intimacy of its original days with villas, bungalows and low-rise pavilions in
a garden setting, offering three freshwater pools and an 18-hole championship
golf course. In 2002, a major renovation program was completed which included
all of the guestrooms, bungalows and villas, as well as the lobby. In 2003,
the hotel appeared in Condé Nast TravelersGold List. The hotel and golf
course are owned by Impulsora de Revolcadero, S.A. de C.V., a Mexican
corporation which is an indirect wholly-owned subsidiary of FHRREC. A small
section of the land is held in trust from Banca Cremi, S.A. by Organización
Ideal, S.A. de C.V., a Mexican corporation which is an indirect wholly-owned
subsidiary of FHRREC. 27




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##### 



The Fairmont Southampton Located along Bermudas beautiful south shore, The Fairmont Southampton
overlooks 100 lush acres of tropical splendor. The hotel features an exclusive
private pink sand beach club, tennis and an 18-hole par 3 executive golf
course. The resort has just completed a renovation program which included
guestrooms, the lobby, restaurants and bar, as well as the addition of Fairmont
Gold and the full-service Willow Stream spa. In 2003, the resort appeared in
Condé Nast TravelersGold List and in 2002 was named the best hotel in the
Caribbean/Bermuda/Bahamas by Travel & Leisuremagazine. In 2003, The Fairmont
Southampton received the Four-Diamond Award from AAA. The hotel has received
numerous awards for its meeting facilities and services, including the Gold Key
Award from Meetings & Conventionsmagazine and the Pinnacle Award from
Successful Meetingsmagazine. Westend Properties Limited, a Bermuda corporation
which is an indirect wholly-owned subsidiary of FHRREC, owns the hotel. The Fairmont Hamilton Princess Bermudas only luxury urban resort, The Fairmont Hamilton Princess rests
majestically on the shore of the scenic Hamilton Harbour and just steps away
from the shopping, galleries and nightlife of the city of Hamilton. This Pink
Palace has been considered the gem of Bermuda since opening in 1885. In 2003,
the hotel received numerous awards for its meeting facilities and services,
including the Pinnacle Award from Successful Meetingsmagazine and Condé Nast
TravelersGold Reserve List for Worlds Best Places to Stay. The property has
recently completed a restoration program, including all guestrooms, the
addition of Fairmont Gold, meeting space, the lobby and hotel entrance. The
property is owned by Hamilton Properties Limited, a Bermuda corporation, which
is an indirect wholly-owned subsidiary of FHRREC. The Fairmont Glitter Bay and The Fairmont Royal Pavilion The Fairmont Glitter Bay and The Fairmont Royal Pavilion sit side-by-side
on one of the most appealing of all Caribbean shorelines  the famous West
Coast of Barbados. The Fairmont Glitter Bay opened in 1981 and was followed by
the opening of The Fairmont Royal Pavilion in 1987. The Fairmont Glitter Bay
contains one, two and three-bedroom suites, some of which are privately owned.
Resort amenities include tennis courts, a water sports center and fitness
center. In May 2003, The Fairmont Royal Pavilion, commonly referred to as the
Jewel of Barbados, completed a major refurbishment program. After a
five-month closure, the intimate resort reopened to guests with extensive
renovations to its guestrooms, two restaurants, public areas, and exterior
landscaping. In 2002, AAA presented the Four Diamond Award to The Fairmont
Royal Pavilion. FHRRECs interest in the two properties is held through its
indirect wholly-owned subsidiary, CP Hotels (Barbados) Inc., a Barbados
corporation. Delta Vancouver Suites Delta Vancouver Suites is located in the waterfront district, close to the
Vancouver Trade and Convention Centre. This all-suite hotel offers
state-of-the-art technology in the heart of downtown Vancouver. FHRREC holds
its 34.8% indirect interest in the property through Conference Plaza Hotel
Limited Partnership, a British Columbia limited partnership. 28




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Delta Vancouver Airport Located on nine acres of land on the banks of the Fraser River, the Delta
Vancouver Airport is in close proximity to the Vancouver International Airport.
FHR, through Delta, leases the land on which the property is situated. This
lease expires in January 2009, and there are no further renewal rights. Delta Sun Peaks Resort Opened in October 2002, Delta Sun Peaks Resort is located only 45 minutes
away from the city of Kamloops in British Columbias beautiful Thompson
Okanagan region. Delta Sun Peaks Resort is the largest, full-service hotel and
conference centre in the quaint, European-style village of Sun Peaks at Tod
Mountain. FHRREC holds a 26% interest in the property. Fees and Services Under their management contracts, Fairmont and Delta generally oversee all
aspects of the day-to-day operations of each property on behalf of the owner,
including hiring, training, and supervising staff, maintaining sales and
marketing efforts, providing accounting and budgeting functions, providing
support for management information systems and applications and providing for
the safekeeping, repair and maintenance of the physical assets. Fairmont and
Delta perform these services within the guidelines contained in the annual
operating and capital plans that are submitted to the owners of the properties
during the last quarter of the preceding year for their review and approval.
For these services, Fairmont and Delta typically earn a base fee calculated as
a percentage of a propertys gross revenues and may earn an incentive fee based
on certain operating results of the property. Fairmont and Delta provide centralized reservation services, marketing and
sales programs and advertising services to properties under management. All of
these services are provided by Fairmont and Delta on a cost recovery basis. Owners Responsibilities Under Fairmont and Deltas management contracts, the hotel owner generally
is responsible for the funding of the hotels working capital requirements and
capital expenditures. Fairmont and Delta annually prepare an operating plan
and capital expenditure budget for the property owner to approve. All
structural changes, major refurbishing programs and major repairs require the
separate approval of a property owner prior to implementation by Fairmont or
Delta. The property owner also employs the hotel staff and pays their
salaries, including all benefits. Capital Improvements and Investments FHR maintains the high quality of its properties through an annual
maintenance program, which is funded by the owners of the properties. The
annual maintenance program is based on a percentage of revenues and generally
ranges from 4% to 6% of each propertys gross revenue. Other projects are
undertaken in order to maximize profits. During 2003, approximately $87
million was spent on maintenance and improvements to the owned assets, the
majority of which was spent on profit-enhancing projects. 29




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Marketing and Guest Recognition Programs FHR has several e-commerce initiatives designed to assist in the
optimization of asset performance, including a direct web-based hotel and
activity booking system, a content management framework, sophisticated hotel
search engines and marketing campaign management and reporting systems.
Fairmont has also re-engineered its core systems to exploit the latest
web-based technologies, which now operate over the Internet to any location in
the world. Fairmont has built a digital infrastructure that interconnects its
guestrooms, the employee base, the Internet and all the traditional travel
distribution channels. As part of the initiatives outlined above, FHRs existing third party
web-based systems are being replaced with more sophisticated systems that will,
among other things, enable guests to plan their Fairmont experience on-line.
The new system includes a data warehouse which will capture the entire
transaction history of guests, which will be matched with profiles that can be
developed on-line. The resulting data can be leveraged to gain a larger share
of guests spending and enhance loyalty to the brand. Guests will be able to
view Fairmonts facilities and book their rooms on-line, as well as arrange a
variety of other activities both off property and at the destination, including
spa appointments and golf tee times. This information will then become a part
of a guests profile, making it possible to offer tailored packages to that
guest at his or her next on-line session. Members of Presidents Club,
Fairmonts guest recognition program, will have access to their own secure area
of the web site where they can update their personal profiles. These enhanced
profiles will then be communicated to personnel at the hotel who will
customize the guests stay. In addition, this information will greatly
enhance Fairmonts ability to communicate with this very important target
group, ensuring that Fairmont provides the services that these customers
consider important. Fairmont currently has approximately 300,000 active
Presidents Club members an increase of 100% over 2003. Delta Privilege, a
guest recognition membership program designed for frequent business travelers,
has approximately 76,000 active members up 15% over 2003. Seasonality of Business FHRs hotels are affected by normal recurring seasonal patterns. The
Canadian and U.S. city center properties tend to experience a slowdown in
demand during the December through March period. As a result, the majority of
these properties typically incur a loss in the first quarter of each year.
This negative impact on operations at the city center hotels is offset, to some
degree, by increased travel to FHRs warm weather and ski resorts in these
months and may, in the future, be offset to a greater extent as FHRs portfolio
of resort properties increases. Environmental Protection Environmental compliance programs are in place at all properties that FHR
manages and owns. No significant issues were identified in any of these
properties as a result of the 2003 environmental questionnaire completed by all
the hotels. As part of the acquisition process of both the Princess Portfolio and
Fairmont L.P., environmental assessments were reviewed for all hotels involved.
Any removal or containment of hazardous materials in these hotels is being
carried out during planned renovations of these properties. All of the
properties purchased by Legacy are required by its Declaration of Trust to have
environmental assessments. In addition to compliance with regulations, FHR is a leader in promoting
environmentally sound business practices at its owned and managed hotels. In
1991, Fairmonts Green Partnership Phase I was introduced to lead the company
to a position of environmental stewardship. The first phase of the program
focused on property level improvements in the areas of waste management, energy
conservation, 30




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water conservation and purchasing practices. In 1998, Phase II of the
program emerged in response to the successes witnessed through the first phase
and extended to include the industrial composting of organic waste,
eco-friendly meeting options for guests, the donation of left-over food to food
banks and used soaps and amenities to charities, or their return to the
manufacturer for recycling. Committed to setting the highest standard of environmentally responsible
golf course management across the continent, FHR takes a sensitive approach to
the stewardship of its recreational lands. In March 1997, The Fairmont Chateau
Whistler became FHRs first golf course to earn the prestigious Audubon
accreditation. In August 1999, The Fairmont Banff Springs also gained Audubon
accreditation, being only the 15th course in Canada and the 3rd in
Alberta to achieve this status. Fairmont Le Château Montebello and The Fairmont
Jasper Park Lodge are the most recent members of the FHR family to achieve this
prestigious title. It is FHRs goal to have all managed golf courses, including
those in Bermuda and Mexico, accredited as wildlife sanctuaries through Audubon
International. Human Resources FHR currently employs or supervises more than 30,000 full-time and
part-time employees. FHR encourages a strong service-based culture among
employees with the goal of providing consistent, personalized service of an
exceptional standard. Fairmont has developed a series of programs designed to
select, train and motivate employees who will share its objective of ensuring
that the expectations of guests are consistently met and exceeded. Delta has
its own human resources training programs, which are similar to those at
Fairmont. Fairmont endeavors to ensure that it hires people that are most suited for
the positions offered by requiring each candidate to undergo a screening
process that has been developed by a well-known management consulting firm.
FHR was selected by Macleans magazine as Canadas Top 100 Employers for a
second consecutive year. Approximately 50% of the employees at FHRs managed and owned hotels are
members of collective bargaining units. These employees are represented by 22
unions, with a total of 54 bargaining units. The agreements with the various
bargaining units have staggered expiry dates. In 2003, five Fairmont
properties and five Delta hotels successfully negotiated new labor contracts. Intellectual Property FHR believes that its brands are very important to its success. FHR has a
significant number of trade names, trademarks and service marks, including
those relating to Fairmont and those acquired as a result of its purchase of
the Delta and Princess portfolios. In addition, it is the owner of many
Internet domain names related to its brands. FHR vigorously defends its brands
and spends considerable time and resources in surveillance, registration,
protection and prosecution of infringers. The Canadian Pacific trademark and
its derivatives were transferred to Canadian Pacific Railway Company as part of
the Arrangement, however FHR has secured a perpetual, royalty-free license for
its continued use of these trademarks. Insurance All hotels managed by FHR are insured against property damage, business
interruption and liability at the expense of the owner of the hotel. Under
these policies, FHR is also insured against loss of fee income in the event of
a temporary business interruption arising from an insured peril at any of the
properties that it manages. In addition, FHR obtains indemnities from the
owners of the properties that it
manages in respect of damages caused by acts, omissions and liabilities of
the employees of the property 31




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or of FHR, other than damages resulting from
certain actions of FHR and certain senior management personnel. FHR also
maintains directors and officers liability insurance. FHR believes that its
insurance coverage is adequate. However, if FHR were held liable for amounts
exceeding the limits of its insurance coverage or for claims outside the scope
of that coverage, its business, results of operations and financial conditions
could be materially and adversely affected. FHRs Ownership Interests As at May 17, 2004, FHR had a beneficial interest in the following
entities, which could be viewed as being material to the Corporation: FHRs BeneficialEntity and Governing Jurisdiction
    
    InterestChateau Lake Louise Corporation (Nova Scotia)
    
    
    100
    %Chateau M.T. Inc. (Quebec)
    
    
    19.9
    %Chateau Whistler Resort Partnership (British Columbia)
    
    
    100
    %Conference Plaza Hotel Limited Partnership (British Columbia)
    
    
    34.8
    %Copley Plaza 2001 LLC (Delaware)
    
    
    100
    %CP Hotels (Barbados) Inc. (Barbados)
    
    
    100
    %CP Hotels (U.S.) 1998 Inc. (Delaware)
    
    
    100
    %CPH International Financing Rt. (Hungary)
    
    
    100
    %Delta Hotels Limited (Ontario)
    
    
    100
    %Fairmont Hotels Inc. (Canada)
    
    
    83.5
    %Fairmont Hotels & Resorts International Rt. (Hungary)
    
    
    83.5
    %FHIW Hotel Investments (U.S.) Inc. (Delaware)
    
    
    100
    %FHR Holdings Inc.
    
    
    100
    %FHR (ML) Hotel Holdings LLC (Delaware)
    
    
    100
    %FHR Properties Inc. (Canada)
    
    
    100
    %FHR Real Estate Corporation (Canada)
    
    
    100
    %Hamilton Properties Limited (Bermuda)
    
    
    100
    %Impulsora de Revolcadero S.A. de C.V. (Mexico)
    
    
    100
    %Kea Lani Limited Partnership (Hawaii)
    
    
    100
    %Legacy Hotels Real Estate Investment Trust (Alberta)
    
    
    35.6
    %Manoir Richelieu Limited Partnership (Quebec)
    
    
    25
    %Organización Ideal, S.A. de C.V. (Mexico)
    
    
    100
    %Scottsdale Princess Partnership (Arizona)
    
    
    100
    %SMI Real Estate LLC (Delaware)
    
    
    19.9
    %Sun Peaks Hotel Limited Partnership (British Columbia)
    
    
    29.9
    %Westend Properties Limited (Bermuda)
    
    
    100
    %
 32




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ITEM 4: SELECTED CONSOLIDATED FINANCIAL INFORMATION
(Millions of dollars, except per share amounts) The following financial data should be read in conjunction with the
consolidated financial statements and related notes thereto and Managements
Discussion and Analysis as found in the Corporations Annual Report. Year ended December 312003
    
    2002
    
    2001INCOME STATEMENT DATARevenues
    
    $
    691.4
    
    
    $
    618.3
    
    
    $
    566.7Income (loss) from equity investments and other
    
    
    (6.9
    )
    
    
    17.7
    
    
    
    18.7Income (loss) from continuing operations
    
    
    50.7
    
    
    
    92.5
    
    
    
    (28.2
    )Discontinued operations
    
    
    
    
    
    
    
    
    
    
    923.9Net income for the year(1)
    
    $
    50.7
    
    
    $
    92.5
    
    
    $
    895.7Basic earnings (loss) per common shareIncome (loss) from continuing operations
    
    $
    0.64
    
    
    $
    1.18
    
    
    $
    (0.43
    )Discontinued operations
    
    
    
    
    
    
    
    
    
    
    11.71Net income available to common shareholders
    
    
    0.64
    
    
    
    1.18
    
    
    
    11.28Diluted earnings (loss) per shareIncome (loss) from continuing operations
    
    $
    0.63
    
    
    $
    1.16
    
    
    $
    (0.43
    )Discontinued operations
    
    
    
    
    
    
    
    
    
    
    11.70Net income available to common shareholder
    
    
    0.63
    
    
    
    1.16
    
    
    
    11.27Dividends declaredPer common share
    
    $
    0.07
    
    
    $
    0.05
    
    
    $
    1.12Per preferred share
    
    
    
    
    
    
    
    
    
    
    0.8426OTHER FINANCIAL DATARevenues under management (2)
    
    $
    1,746.2
    
    
    $
    1,628.7
    
    
    $
    1,570.8EBITDA (3)
    
    
    142.4
    
    
    
    198.3
    
    
    
    163.1Operating cash flow
    
    
    108.9
    
    
    
    141.4
    
    
    
    1,821.7Capital expenditures
    
    
    87.2
    
    
    
    84.3
    
    
    
    121.8Total assets
    
    
    2,503.0
    
    
    
    2,223.0
    
    
    
    1,921.4Total debt
    
    
    657.6
    
    
    
    535.5
    
    
    
    339.7Shareholders equity
    
    
    1,545.9
    
    
    
    1,399.3
    
    
    
    1,305.4
   (1)
    
    Effective January 1, 2002, FHR adopted the new recommendations of the CICA
with respect to goodwill and other intangible assets and as such the net income
for the year does not include amortization of goodwill and brand name for 2003
and 2002 whereas the amortization of goodwill and brand name for 2001 was $3.6
million.(2)
    
    Revenues under management comprise fee-based revenue generated by all FHR
owned and franchised hotels.(3)
    
    The Corporation defines EBITDA as income before interest, taxes,
amortization, other income and expenses and reorganization and corporate
expenses. Management considers EBITDA to be a meaningful indicator of hotel
operations. However, readers are cautioned that EBITDA is not a defined
measure of operating performance under Canadian GAAP. FHRs calculation of
EBITDA may be different than the calculations used by other entities.
Supplemental information regarding the most directly comparable GAAP financial
measure and a reconciliation of EBITDA thereto is presented below. 33




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2003
    
    2002
    
    2001EBITDA
    
    $
    142.4
    
    
    $
    198.3
    
    
    $
    163.1Amortization
    
    
    67.5
    
    
    
    52.4
    
    
    
    50.7Other (income) expenses, net
    
    
    2.1
    
    
    
    (4.9
    )
    
    
    10.1Reorganization and corporate expenses
    
    
    
    
    
    
    2.2
    
    
    
    156.9Interest expense, net
    
    
    33.6
    
    
    
    19.1
    
    
    
    69.6Operating Income
    
    $
    39.2
    
    
    $
    129.5
    
    
    $
    (124.2
    )
 Quarterly Information The following table sets out certain financial information for FHR on a
consolidated basis for each of the quarters in 2003 and 2002. 2003For the three months endedMarch 31
    
    June 30
    
    September 30
    
    December 31(in millions, except amounts per share)Revenues
    
    $
    174.9
    
    
    $
    181.9
    
    
    $
    188.6
    
    
    $
    146.0EBITDA
    
    
    42.2
    
    
    
    43.4
    
    
    
    46.9
    
    
    
    9.9Net income (loss)
    
    
    12.5
    
    
    
    40.1
    
    
    
    11.6
    
    
    
    (13.5
    )Earnings per share (basic) available to
common shareholdersIncome (loss) from continuing operations
    
    
    0.16
    
    
    
    0.51
    
    
    
    0.15
    
    
    
    (0.17
    )Net income
    
    
    0.16
    
    
    
    0.51
    
    
    
    0.15
    
    
    
    (0.17
    )Weighted average number of common shares
outstanding
    
    
    79.3
    
    
    
    79.4
    
    
    
    79.1
    
    
    
    79.1
 2002For the three months endedMarch 31
    
    June 30
    
    September 30
    
    December 31(in millions, except amounts per share)Revenues
    
    $
    148.9
    
    
    $
    157.6
    
    
    $
    179.5
    
    
    $
    132.3EBITDA
    
    
    38.1
    
    
    
    53.2
    
    
    
    74.2
    
    
    
    32.8Net income
    
    
    13.6
    
    
    
    28.9
    
    
    
    39.0
    
    
    
    11.0Earnings per share (basic) available to
common shareholdersIncome (loss) from continuing operations
    
    
    0.17
    
    
    
    0.37
    
    
    
    0.50
    
    
    
    0.14Net income
    
    
    0.17
    
    
    
    0.37
    
    
    
    0.50
    
    
    
    0.14Weighted average number of common shares
outstanding
    
    
    78.6
    
    
    
    78.6
    
    
    
    77.9
    
    
    
    78.6
 34




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ITEM 5: MANAGEMENTS DISCUSSION AND ANALYSIS Reference is made to the section entitled Managements Discussion and
Analysis set out at pages 17 to 45 of FHRs 2003 Annual Report, which is
incorporated by reference in this Annual Information Form. ITEM 6: DESCRIPTION OF SHARE CAPITAL, DIVIDEND POLICY
AND MARKETS FOR SECURITIES Description of Share Capital FHRs authorized capital consists of an unlimited number of common shares,
an unlimited number of first preferred shares and an unlimited number of second
preferred shares. Only common shares have been issued and are outstanding. Shareholders are entitled to receive notice of and to attend all annual
and special meetings of the shareholders of the Corporation and one vote in
respect of each share held at all such meetings. The shareholders are
entitled, at the discretion of FHRs board of directors, to receive out of any
or all profits or surplus of FHR properly available for the payment of
dividends, any dividend declared by the board and payable by FHR on the shares.
The shareholders will participate rateably in any distribution of the assets
of FHR upon the liquidation, dissolution or winding-up of FHR or other
distribution of its assets among its shareholders for the purpose of winding up
its affairs. Such participation will be subject to the rights, privileges,
restrictions and conditions attached to any securities of the Corporation
issued and outstanding at such time ranking in priority to the shares upon
liquidation, dissolution or winding-up of FHR. Dividend Policy FHRs board has established a policy to pay an annual dividend of $0.08
per share, paid semi-annually. The payment of dividends by the Corporation
will be dependent upon the financial requirements of FHR to fund future growth,
the financial condition of the Corporation and other factors the board may
consider appropriate in the circumstances. There can be no assurance that a
dividend will be declared in any given year. Market for Securities The shares are listed under the symbol FHR on the Toronto Stock Exchange
and the New York Stock Exchange. ITEM 7: DIRECTORS AND SENIOR OFFICERS The following are the names and the municipalities of residence of the
individuals who are FHRs directors and senior officers, their positions and
principal occupations within the past five years. Each of the directors will
serve his or her term in office until FHRs annual meeting in 2005. Directors Stephen E. Bachand, Ponte Vedra Beach, Florida Stephen E. Bachand, 66, Corporate Director is the former President and
Chief Executive Officer of Canadian Tire Corporation, Limited, a hard goods
retailer specializing in automotive, sports, leisure 35




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and home products. He held that position from March 1993 until August
2000. He is a director of the Bank of Montreal and Canadian Pacific Railway
Limited. Mr. Bachand was a director of CPL from 1997 until October 2001 and
has been a director of FHR since then. William R. Fatt, Toronto, Ontario William R. Fatt, 53, was appointed Chief Executive Officer and a director
of FHR on October 1, 2001. In January 1998, he was appointed Chairman and
Chief Executive Officer of FHRHI, positions he still holds. Up to October 1,
2001, he was Executive Vice President of CPL. From 1990 to his appointment to
FHRHI, Mr. Fatt had been Chief Financial Officer of CPL. He is a Trustee and
Vice Chairman of Legacy. He is also a director of EnCana Corporation, Enbridge
Inc., Sun Life Financial Services of Canada Inc., The Jim Pattison Group and
Toronto General & Western Hospital Foundation. Peter C. Godsoe, Toronto, Ontario Peter C. Godsoe, 66, Corporate Director, was Chief Executive Officer of
The Bank of Nova Scotia from 1993 until his retirement in December 2003. He
was a member of the Board of Directors of The Bank of Nova Scotia from 1982
until March 2004. He is a director of Barrick Gold Corporation, Empire Company
Limited, Ingersoll-Rand Company Limited, Lonmin PLC, Rogers Communications
Inc., Templeton Emerging Markets Investment Trust PLC and Mount Sinai Hospital.
He was appointed a FHR director in December 2003. Michael J. Kowalski, Kinnelon, New Jersey Michael J. Kowalski, 52, is Chairman and Chief Executive Officer of
Tiffany & Co., a luxury goods retailer, designer, manufacturer and distributor.
Mr. Kowalski was appointed President of Tiffany and Co. in January 1996 and
assumed the role of Chief Executive Officer in February 1999. He has been a
member of Tiffany & Co.s Board of Directors since January 1995. He also
serves on the Boards of the Bank of New York, Wildlife Conservation Society,
National Parks Conservation Association and as a Trustee for the Jewelers of
America. He was appointed a director of FHR in June 2002. David P. OBrien, Calgary, Alberta David P. OBrien, 62, is Chairman and a director of EnCana Corporation, an
oil and gas company, positions he has held since April 2002. From October 2001
to April 2002, Mr. OBrien was Chairman and Chief Executive Officer and a
director of PanCanadian Energy Corporation. Prior to October 1, 2001, Mr.
OBrien was the Chairman, President and Chief Executive Officer of CPL,
positions that he had held from May 1996. Mr. OBrien was first elected as a
director of CPL in 1995 and served until October 2001 and has been a member of
the board of FHR since then. He is also a director and Chairman of the Board
of Royal Bank of Canada, TransCanada PipeLines Limited, Inco Limited, Molson
Inc., and the C.D. Howe Institute. Karen M. Rose, San Francisco, California Karen M. Rose, 55, was Group Vice President and Chief Financial Officer of
The Clorox Company, a manufacturer of household products, until her retirement
in October 2003. She held a number of financial positions of increasing
responsibility within The Clorox Company after joining them in 1978. She is a
member of the Board of Trustees of the California College of the Arts in San
Francisco, serving on the Trustees, Advancement and Academic Committees. She
also serves on the Advisory Board of the Pathways to Learning Project at the
University of Wisconsin and is Past President of the Board of Directors of the
Magic Theatre, San Francisco. She was appointed a director of FHR in April
2004. 36




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John L. Sharpe, Scottsdale, Arizona John L. Sharpe, 61, is the former President and Chief Operating Officer of
Four Seasons Hotels Inc., a hotel management company, which position he held
from 1995 to 1999. He currently serves on the board of directors of Empire
Resorts Inc. He also served on the board of directors of Four Seasons Hotels
Inc. from 1984 to 1999. He serves as a trustee of the Culinary Institute of
America, and as Chairman of the Industry Advisory Board for the School of Hotel
Administration at Cornell University. He was appointed to the board of FHR in
October 2001. L. Peter Sharpe, Toronto, Ontario L. Peter Sharpe, 57, was appointed President and Chief Executive Officer
of Cadillac Fairview Corporation Limited, a real estate company, in April 2000.
Prior to this appointment, Mr. Sharpe was Executive Vice President of that
Company, a position he held from January 1995. Mr. Sharpe also serves as a
director of The Sunnybrook Foundation and the Canadian Institute of Public and
Private Real Estate Companies. He was appointed to the FHR board in October
2001. Robert S. Singer, Milan, Italy Robert S. Singer, 52, is the former Executive Vice President and Chief
Financial Officer of Gucci Group N.V., a luxury goods manufacturer and
retailer. He held positions with Gucci from 1995 to April 2004. Previously, he
was an Audit Partner at Coopers & Lybrand, Audit Firm, in Milan, Italy. He was
appointed to the FHR board in April 2003. Carole S. Taylor, Vancouver, British Columbia Carole S. Taylor, 58, was appointed Chair of the board of directors of
CBC/Radio-Canada, a public broadcaster, in July 2001. She was the Chair of
Canada Ports Corporation from 1997 until 1999. During that time she also
served as Chair of the Vancouver Port Corporation. Prior to her involvement
with the Ports system, she was elected to the Vancouver City Council for two
terms. She is currently the Governor of the Vancouver Board of Trade, as well
as a director of HSBC Bank USA, HSBC Bank USA Inc., HSBC North America Inc.,
and HSBC Holdings PLC. Ms. Taylor was a director of CPL from 1999 until
October 2001 and has been a director of FHR since then. Senior Officers William R. Fatt, Chief Executive Officer, Toronto, Ontario William R. Fatt, 53, was appointed Chief Executive Officer and a director
of FHR on October 1, 2001. In January 1998, he was appointed Chairman and
Chief Executive Officer of FHRHI, positions he still holds. Up to October 1,
2001, he was Executive Vice President of CPL. From 1990 to his appointment to
FHRHI, Mr. Fatt had been Chief Financial Officer of CPL. He is a Trustee and
Vice Chairman of Legacy. He is also a director of EnCana Corporation, Enbridge
Inc., Sun Life Financial Services of Canada Inc., The Jim Pattison Group and
Toronto General & Western Hospital Foundation. Chris J. Cahill, President and Chief Operating Officer, Oakville, Ontario Chris J. Cahill, 50, was appointed President and Chief Operating Officer
on October 1, 2001. In October 1999, he was appointed a director, President
and Chief Operating Officer of Fairmont, positions he still holds. He was
appointed President and Chief Operating Officer for FHRHI in January 1998, 37




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positions he still holds. Before his appointment to the position of
President and Chief Operating Officer, Mr. Cahill held the position of
Executive Vice President, FHRHI, from 1995 to 1997. M. Jerry Patava, Executive Vice President and Chief Financial Officer, Toronto,
Ontario M. Jerry Patava, 50, was appointed Executive Vice President and Chief
Financial Officer on October 1, 2001. In October 1999, he was appointed a
director, Executive Vice President and Chief Financial Officer of Fairmont,
positions he still holds. He was appointed Executive Vice President and Chief
Financial Officer of FHRHI in January 1998, positions he still holds. Terence P. Badour, Executive Vice President, Law and Administration and
Corporate Secretary, Toronto, Ontario Terence P. Badour, 47, was appointed Senior Vice President, General
Counsel and Secretary on October 1, 2001 and assumed his current title in April
2003. In October 1999, he was appointed director, Senior Vice President,
General Counsel and Secretary of Fairmont, positions he still holds. He is
also Executive Vice President and General Counsel of Legacy. He was appointed
Vice President, General Counsel and Corporate Secretary of FHRHI in 1998, and
became Senior Vice President, General Counsel and Corporate Secretary in
February 2001, and still holds these positions. Mr. Badour was appointed
Corporate Counsel and Assistant Secretary of CPL in 1996 and served in that
capacity until he joined FHRHI. John M. Johnston, Executive Vice President, Development, Toronto, Ontario John M. Johnston, 56, was appointed Executive Vice President on October 1,
2001. In October 1999, he was appointed a director of Fairmont, a position he
still holds. He was appointed President of Delta in October 1998 following its
acquisition by FHRHI, a position he held until being appointed Chairman in
January, 2003. From 1996 to 1998, Mr. Johnston served as Executive Vice
President Operations for Loews Hotels in New York, a hotel management company.
From 1990 until 1996, Mr. Johnston was Vice-President, Asia for Four Seasons
Hotels Inc., a hotel management company. Thomas W. Storey, Executive Vice President, Business Development and Strategy,
Scottsdale, Arizona Thomas W. Storey, 47, was appointed Executive Vice President, Business
Development and Strategy on October 1, 2001. He joined the Corporation as
Executive Vice President, Business Development and Strategy in February 2001.
Mr. Storey was with Promus Hotels, a hotel management and ownership company, as
Executive Vice President Strategic Planning & Venture Operations from 1998
until 2000 and Executive Vice President Marketing from 1997 to 1998. Prior to
joining Promus Hotels, he was Executive Vice President Sales and Marketing at
Doubletree Hotels. John S. Williams, Executive Vice President, Operations, Toronto, Ontario John S. Williams, 60, was appointed Executive Vice President, Operations
on October 1, 2001. He was appointed Regional Vice President, British Columbia
for FHRHI in May 1995 and held the same position for Fairmonts U.S. and
Mexican hotels from September 1998. Mr. Williams was appointed Executive Vice
President, Operations of Fairmont in August 2000, a position he still holds. 38




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Timothy J. Aubrey, Senior Vice President, Finance, Willowdale, Ontario Timothy J. Aubrey, 38, was appointed Senior Vice President, Finance in
December 2002. He has held various positions of increasing responsibility with
FHRs subsidiaries since joining the organization in 1994 including Vice
President, Technology of Fairmont. Neil J. Labatte, Senior Vice President, Real Estate, Toronto, Ontario Neil J. Labatte, 47, was appointed President and Chief Executive Officer
of Legacy on March 7, 2003. He also continues as Senior Vice President, Real
Estate of FHR, a position he was appointed to on October 1, 2001. In October
1999, he was appointed director and Senior Vice President, Real Estate of
Fairmont, positions he still holds. Mr. Labatte joined FHRHI in 1997 as Vice
President Acquisitions, and was appointed Senior Vice President, Real Estate in
February 2001, a position he still holds. He has been with Legacy since July
1999 as President and Chief Operating Officer. For the four years prior to
joining FHRHI, Mr. Labatte was a founder, principal and board member of A.E.W.
Mexico Company, a real estate investment management company. Shareholdings of Directors and Senior Officers As at May 17, 2004 the directors and senior officers, as a group,
beneficially owned, either directly or indirectly, or exercised control or
direction over less than 1% of any class of voting securities of the
Corporation or those of any subsidiaries. Committees of the Board Audit Committee: R.S. Singer (Chairman), S. E. Bachand, K. M. Rose, J.L. Sharpe
and L.P. Sharpe Corporate Governance and Nominating Committee: P.C. Godsoe (Chairman), M.J.
Kowalski, D. P. OBrien, L.P. Sharpe, and C. S. Taylor Management Resources and Compensation Committee: S.E. Bachand (Chairman), P. C.
Godsoe, M.J. Kowalski and D. P. OBrien Environmental and Safety
Committee: J.L. Sharpe (Chairman), K.M. Rose, R.S. Singer and C. S. Taylor ITEM 8: ADDITIONAL INFORMATION Copies of the following documents may be obtained upon request from the
Corporate Secretary, Fairmont Hotels & Resorts Inc., Canadian Pacific Tower,
100 Wellington Street West, Suite 1600, TD Centre, P.O. Box 40, Toronto,
Ontario, M5K 1B7:  (i)
    
    one copy of the Annual Information Form (AIF), together
with one copy of any document, or the pertinent pages of any
document, incorporated by reference in the AIF;(ii)
    
    one copy of the comparative financial statements of FHR for
its most recently completed financial year for which financial
statements have been filed together with the accompanying report of
the auditor and one copy of the most recent interim financial
statements of FHR that have been filed, if any, for any period after
the end of its most recently completed financial year; 39




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(iii)
    
    one copy of the information circular of FHR in respect of
its most recent annual meeting of shareholders that involved the
election of directors or one copy of any annual filing prepared
instead of that information circular, as appropriate; and(iv)
    
    one copy of any other documents that are incorporated by
reference into a preliminary short form prospectus or a short form
prospectus and are not required to be provided under clauses (i),
(ii) or (iii). With respect to any document referred to in clauses (i), (ii) and (iii),
FHR may require the payment of a reasonable charge if the request is made by a
person or company who is not a security holder of FHR. 40