##### 



(FAIRMONT HOTELS & RESORTS LOGO) For immediate release FAIRMONT HOTELS & RESORTS INC.
THIRD QUARTER EARNINGS RISE SHARPLY
- As a result of improved operating performance and hotel sales - TORONTO, October 27, 2004 Fairmont Hotels & Resorts Inc. (FHR or the
Company) (TSX/NYSE: FHR) today announced its unaudited financial results for
the third quarter ended September 30, 2004 using Canadian generally accepted
accounting principles. All amounts are expressed in U.S. dollars. Third Quarter 2004 Highlights  
    
    Operating revenues1 improved 9.9% to $197.1 million.
    
    EBITDA2 increased 35.4% to $63.5 million. Excluding the $7.4 million
provision taken in 2003 related to hurricane damage in Bermuda, EBITDA
rose 16.9% in the quarter.
    
    Entered into an agreement to manage Londons renowned Savoy Hotel.
    
    Sold real estate interests in two resorts for gross proceeds of $387.1
million while maintaining long term-management contracts.
    
    Revenue per available room (RevPAR) for the comparable owned portfolio
improved 17.1%. Occupancy improved 5.6 points (9.2%) and average daily
rate (ADR) increased 7.1%.
    
    Net income of $131.8 million and diluted earnings per share (EPS) of
$1.66 include a $75.7 million, or $0.95 per share, gain from the two hotel
sales in the quarter and a $27.6 million, or $0.35 per share, gain from
the sale of Legacy units. 2003 net income and EPS include a $7.4 million
provision for hurricane damage. Excluding these items, EPS rose 50% over
2003 levels. We continue to benefit from the ongoing strength in travel demand,
particularly for luxury properties, and from our exposure to the leisure
segment of the business. Our Canadian properties have experienced a solid
rebound over last year and our U.S. and international hotels continue to
produce considerable RevPAR growth driven by both occupancy and rate increases
in most markets, said William R. Fatt, FHRs Chief Executive Officer. During the third quarter, our Canadian owned properties performed to
expectation however, our overall results were affected by lower than
anticipated earnings from our investment in Legacy Hotels Real Estate
Investment Trust (Legacy or the Trust), whose portfolio was impacted by
weaker than expected U.S. travel to Canada. In addition, the recent reduction
in our ownership position in the Trust also reduced the earnings from this
investment, said Mr. Fatt. Third Quarter Ownership Operations Revenues from hotel ownership improved 6.9% to $180.3 million, despite the lost
revenues from the two hotel sales in the third quarter. The increase was
driven by a 14.6% improvement performance at our Canadian properties. In
particular, The Fairmont Chateau Lake Louise enjoyed considerable revenue
growth as a result of ongoing strength in Asian tour business and from the
addition of the resorts new meeting facility and additional guestrooms.
Excluding the two resorts sold, U.S. and International hotel revenues were up
almost 25%, with several hotels generating double-digit improvements over 2003.




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EBITDA from hotel ownership operations of $50.3 million increased 43.7%
compared to 2003 when the Company recorded a $7.4 million provision related to
the hurricane damage in Bermuda. Excluding the hurricane provision, hotel
ownership EBITDA rose 18.6% in 2004. Owned hotel EBITDA margin improved
considerably to 27.9% from 20.8% in the third quarter last year. Excluding the
hurricane provision, margins improved 280 basis points as a result of
portfolio-wide increases in both occupancy and ADR. RevPAR for the comparable owned portfolio increased 17.1% in the third quarter,
resulting from the combination of a 5.6 point improvement in occupancy and a
7.1% increase in ADR. The U.S. and International owned comparable portfolio
enjoyed solid leisure demand, which drove both occupancy and ADR and resulted
in a robust 22.8% RevPAR increase. Occupancy growth at all of the major
Canadian owned hotels generated a RevPAR improvement of 13.8%. When compared
to the third quarter of 2003, the average Canadian dollar exchange rate for the
quarter appreciated approximately 5% against the U.S. dollar. Adjusting for
the foreign exchange impact, RevPAR for the Canadian portfolio was up
approximately 8%. Equity income generated from FHRs investment in Legacy was $3.7 million
compared to $2.6 million in the same period last year. Legacys portfolio
continues to show significant growth over 2003 levels given its recovery from
the impact of SARS. FHRs reduced ownership in Legacy from 35% to 24% during
the quarter impacted the Companys equity income from its investment. In the third quarter, there were no land sales. Overall real estate
activities, generated primarily by FHRs vacation ownership business in the
third quarter of 2004, produced $4.8 million in revenues and a $0.6 million
loss compared to $0.2 million in revenues and a $1.0 million loss in 2003. Third Quarter Management Operations Fairmont
Revenues under management of $454 million increased 15% over 2003. Improved
operating results and the addition of two new management contracts contributed
to this increase. Management fee revenues were up 12.8% to $14.1 million,
commensurate with the increase in revenues under management and an improvement
in incentive fees. For the Fairmont comparable managed portfolio, RevPAR increased 12.8% to
$133.71. RevPAR for the U.S. and International portfolio showed solid
improvement with RevPAR up 10.8%, resulting from a 7.9% increase in ADR
combined with an occupancy gain of 1.6 points. The Canadian comparable
portfolio reported a 14.6% RevPAR improvement, driven by increases in ADR and
occupancy of 10.7% and 2.5 points, respectively. Adjusting for the foreign
exchange impact, RevPAR at the Canadian portfolio was up approximately 9% over
2003. Delta
In the third quarter, Deltas revenues under management increased 16% to $105
million. Management fee revenues of $3.5 million were up 16.7% from last year.
During the quarter, RevPAR increased 18.2% resulting from a 6.6% ADR increase
and a 7.2 point improvement in occupancy. Adjusting for the foreign exchange
impact, RevPAR was up approximately 12%. Nine Months Consolidated Results For the nine months ended September 30, 2004, operating revenues increased
10.3% to $575.6 million from $521.7 million in the prior period, despite the
lost revenues from the two recent hotel sales. All owned properties contributed
to this growth led by The Fairmont Chateau Lake Louise, The Fairmont Scottsdale
Princess and The Fairmont Orchid. EBITDA of $160.1 million was up 20.8% from
last year. Excluding the 2003 hurricane provision, EBITDA rose 14.4% in 2004.




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Equity losses generated from FHRs investment in Legacy were $0.8 million
compared to equity losses of $4.2 million in 2003. Legacys portfolio
continues to gain momentum after a challenging year in 2003 given the travel
concerns relating to SARS. To date in 2004, FHR has disposed of one block of the Coal Harbour lands in
Vancouver and another parcel of land that was not part of the Companys
principal real estate holdings in Toronto or Vancouver. Overall real estate
activities generated $26.2 million in revenues and $8.2 million in EBITDA
compared to $31.4 million and $14.9 million in 2003, respectively. Net income of $160.2 million (diluted EPS of $2.01) includes a $75.7 million
net gain from the two hotel sales ($0.95 per share) and a $27.6 million gain
from the sale of Legacy units ($0.35 per share). Net income in 2003 included
a $24.4 million ($0.31 per share) income tax recovery from a favorable tax
reassessment recorded in June and a $7.4 million provision for hurricane damage
in the third quarter. Excluding the 2004 gains and the 2003 tax recovery and
provision, 2004 net income for the nine months was ahead of last year by
approximately 20%. Capital Expenditures Hotel related capital expenditures for the quarter totaled $14.2 million. The
Company expects that 2004 capital expenditures will be in the range
of $75  $85 million. After five years of extensive capital investment, FHR has
completed all of its major renovation plans. As a result, the Company expects
its 2005 capital budget to be more modest, likely in the range of approximately
$55  $65 million. Announcements and Corporate Activities On September 13, 2004, FHR announced that the Company has entered into an
agreement to manage The Savoy Hotel in London, England. Concurrently, a company
affiliated with His Royal Highness Prince Alwaleed Bin Talal Bin Abdulaziz Al
Saud and Bank of Scotland Corporate, part of HBS plc, have entered into
discussion with the hotel owner, Quinlan Private, to purchase the hotel.
Subject to the successful sale of the property, Fairmont will assume the
management responsibilities of The Savoy in January 2005. On September 13, 2004, FHR completed the sale of 12 million units of Legacy in
a block trade resulting in total proceeds of approximately $63 million and a
gain of $27.6 million. The Companys equity interest in Legacy is now 23.7%. On August 25, 2004, FHR completed the acquisition of the 16.5% minority
interest in the Fairmont management company from Maritz, Wolff & Co. for
approximately $70 million. The Company now owns 100% of the Fairmont brand and
management company. On July 15, 2004, FHR sold its real estate interest in The Fairmont Kea Lani
Maui to Host Marriott Corporation for approximately $355 million, resulting in
a pre-tax gain of $108.7 million. Our third quarter earnings include an
after-tax gain on the sale of approximately $68 million. The resort will
continue to be known as The Fairmont Kea Lani Maui and will be managed by
Fairmont under the existing long-term management contract, which expires in
2051. On July 9, 2004, FHR sold The Fairmont Glitter Bay in Barbados to a group of
investors for $31.7 million. The sale resulted in a non-taxable gain of about
$8 million that is reflected in our third quarter earnings. The resort
continues to be managed by the Company as The Fairmont Glitter Bay under the
existing long-term management contract. These two recent hotel sales and the block trade of Legacy units generated
significant cash proceeds, a portion of which was used in the third quarter to
repay outstanding debt on our bank lines and mortgages on the properties sold.
The Company intends to invest a portion of the proceeds to continue the growth
of the




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Fairmont brand. At the end of the third quarter, total debt was $369.1 million
and cash and cash equivalents totaled $167.8 million compared to $673.2 million
in debt and $47.8 million in cash at June 30, 2004. During the quarter, FHR repurchased 1,737,900 shares under its normal course
issuer bid at a total cost of $46.4 million. The Company has repurchased a
total of 1,946,300 shares at a total cost of $51.8 million during 2004.
Subsequent to the third quarter, FHR announced a new normal course issuer bid
effective October 29, 2004, authorizing the Company to purchase up to 10% of
its public float in the twelve-month period following the bids effective date. Outlook This is an exciting time for our industry and for our Company. Lodging
fundamentals remain solid, particularly for the luxury category where there is
minimal new hotel supply expected for several years. Our recently renovated
portfolio combined with the long-term strength in the leisure segment of the
business ideally position us for above average growth, said Mr. Fatt. In
particular, we anticipate a substantial improvement in performance in 2005 at
our Lake Louise and Boston properties following the completion of their
renovation programs as well as at The Fairmont Orchid. As a result of FHRs reduced ownership position in Legacy and the softness in
the Trusts performance in the third quarter, FHR expects to be at the lower
end of its previous 2004 EBITDA guidance range of $185  $195 million. This
guidance includes approximately $7 million from real estate activities. Including the gains from the sale of the Legacy units and the two resorts of
$103.3 million ($1.30 per share), net income is now estimated to be between
$160  $166 million and diluted EPS to be in the range of $2.01  $2.09. The
guidance assumes a full-year tax rate of approximately 29%, down slightly from
the previous estimate reflecting the sale of Legacy units. We remain focused on growing the Fairmont brand. By leveraging the strength
of our balance sheet and our growing number of capital partners, we are poised
to further expand our portfolio. The addition of Londons Savoy Hotel will
provide us with the opportunity to extend our distinctive collection of
properties in this critically strategic market, provide the ideal platform for
further expansion in Europe and position the Fairmont brand for continued
international growth, said Mr. Fatt. About Fairmont Hotels & Resorts Inc. FHR is one of North Americas leading owner/operators of luxury hotels and
resorts. FHRs managed portfolio consists of 82 luxury and first-class
properties with more than 33,000 guestrooms in the United States, Canada,
Mexico, Bermuda, Barbados and the United Arab Emirates. FHR owns Fairmont
Hotels Inc., North Americas largest luxury hotel management company, as
measured by rooms under management, with 44 distinctive city center and resort
hotels such as The Fairmont San Francisco, The Fairmont Banff Springs and The
Fairmont Scottsdale Princess. FHR also owns Delta Hotels, Canadas largest
first-class hotel management company, which manages and franchises 38 city
center and resort properties in Canada. In addition to hotel management, FHR
holds real estate interests in 22 properties and an approximate 24% investment
interest in Legacy Hotels Real Estate Investment Trust, which owns 24
properties. FHR will hold a conference call today, October 27, 2004 at 1:00 p.m. Eastern
Time to discuss its results. To participate, please dial 416.405.9328 or
1.800.387.6216. You will be requested to identify yourself and the
organization on whose behalf you are participating. A recording of this call
will be made available beginning at 4:30 p.m. Eastern Time on October 27, 2004
through to November 3, 2004 by dialing 416.695.5800 or 1.800.408.3053 using the
reservation #3101928. A live audio webcast of the conference call will be
available via FHRs website (www.fairmont.com/investor). An archived recording
of the webcast will remain available on FHRs website following the conference
call. This press release contains certain forward-looking statements relating, but not limited to, FHRs operations, anticipated financial performance, business prospects and strategies. Forward-looking information typically contains statements with words such as anticipate, believe, expect, plan or similar words suggesting




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##### 



future outcomes. Such forward-looking statements are subject to risks,
uncertainties and other factors, which could cause actual results to differ
materially from future results expressed, projected or implied by such
forward-looking statements. Such factors include, but are not limited to
economic, competitive and lodging industry conditions. FHR disclaims any
responsibility to update any such forward-looking statements. Three months ended
    
    
    
    
    
    Nine months endedSeptember 30
    
    
    
    
    
    September 302004
    
    2003
    
    Variance
    
    2004
    
    2003
    
    VarianceOWNED
HOTELSWorldwide
13 properties/6,364 roomsRevPAR
    
    
    136.82
    
    
    
    116.85
    
    
    
    17.1
    %
    
    
    123.83
    
    
    
    104.73
    
    
    
    18.2
    %ADR
    
    
    205.99
    
    
    
    192.32
    
    
    
    7.1
    %
    
    
    192.50
    
    
    
    182.65
    
    
    
    5.4
    %Occupancy
    
    
    66.4
    %
    
    
    60.8
    %
    
    5.6 points
    
    
    64.3
    %
    
    
    57.3
    %
    
    7.0 pointsCanada
7 properties/3,336 roomsRevPAR
    
    
    173.78
    
    
    
    152.77
    
    
    
    13.8
    %
    
    
    125.19
    
    
    
    108.67
    
    
    
    15.2
    %ADR
    
    
    220.81
    
    
    
    207.67
    
    
    
    6.3
    %
    
    
    180.95
    
    
    
    171.20
    
    
    
    5.7
    %Occupancy
    
    
    78.7
    %
    
    
    73.6
    %
    
    5.1 points
    
    
    69.2
    %
    
    
    63.5
    %
    
    5.7 pointsU.S. and International
6 properties/3,028 roomsRevPAR
    
    
    96.07
    
    
    
    78.23
    
    
    
    22.8
    %
    
    
    122.35
    
    
    
    100.50
    
    
    
    21.7
    %ADR
    
    
    181.67
    
    
    
    166.49
    
    
    
    9.1
    %
    
    
    207.19
    
    
    
    198.03
    
    
    
    4.6
    %Occupancy
    
    
    52.9
    %
    
    
    47.0
    %
    
    5.9 points
    
    
    59.1
    %
    
    
    50.8
    %
    
    8.3 pointsFAIRMONT MANAGED
HOTELSWorldwide
40 hotels/19,885 roomsRevPAR
    
    
    133.71
    
    
    
    118.58
    
    
    
    12.8
    %
    
    
    121.50
    
    
    
    106.30
    
    
    
    14.3
    %ADR
    
    
    194.17
    
    
    
    177.71
    
    
    
    9.3
    %
    
    
    183.90
    
    
    
    172.38
    
    
    
    6.7
    %Occupancy
    
    
    68.9
    %
    
    
    66.7
    %
    
    2.2 points
    
    
    66.1
    %
    
    
    61.7
    %
    
    4.4 pointsCanada
20 properties/10,099 roomsRevPAR
    
    
    137.64
    
    
    
    120.15
    
    
    
    14.6
    %
    
    
    105.08
    
    
    
    90.12
    
    
    
    16.6
    %ADR
    
    
    184.41
    
    
    
    166.60
    
    
    
    10.7
    %
    
    
    156.16
    
    
    
    143.81
    
    
    
    8.6
    %Occupancy
    
    
    74.6
    %
    
    
    72.1
    %
    
    2.5 points
    
    
    67.3
    %
    
    
    62.7
    %
    
    4.6 pointsU.S. and International
20 properties/9,786 roomsRevPAR
    
    
    129.66
    
    
    
    116.99
    
    
    
    10.8
    %
    
    
    138.10
    
    
    
    122.55
    
    
    
    12.7
    %ADR
    
    
    206.08
    
    
    
    190.94
    
    
    
    7.9
    %
    
    
    212.99
    
    
    
    202.01
    
    
    
    5.4
    %Occupancy
    
    
    62.9
    %
    
    
    61.3
    %
    
    1.6 points
    
    
    64.8
    %
    
    
    60.7
    %
    
    4.1 pointsDELTA MANAGED
HOTELSWorldwide
28 properties/8,296 roomsRevPAR
    
    
    76.74
    
    
    
    64.95
    
    
    
    18.2
    %
    
    
    65.04
    
    
    
    55.31
    
    
    
    17.6
    %ADR
    
    
    103.21
    
    
    
    96.83
    
    
    
    6.6
    %
    
    
    97.67
    
    
    
    91.43
    
    
    
    6.8
    %Occupancy
    
    
    74.3
    %
    
    
    67.1
    %
    
    7.2 points
    
    
    66.6
    %
    
    
    60.5
    %
    
    6.1 points




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Comparable hotels and resorts are considered to be properties that were
fully open under FHR management for at least the entire current and prior
period. Comparable hotels and resorts statistics exclude properties under
major renovation that would have a significant adverse effect on the
properties primary operations. The following properties were excluded: Owned:
    
    The Fairmont Southampton; The Fairmont Copley Plaza Boston;
The Fairmont Kea Lani Maui (sold July 2004); The Fairmont
Glitter Bay (sold July 2004)Fairmont Managed:
    
    The Fairmont Southampton; The Fairmont Olympic Hotel,
Seattle; The Fairmont Turnberry Isle Resort & Club, MiamiDelta Managed:
    
    None (excludes Delta franchised hotels)
 FHRs 2003 quarterly operating statistics for its 2004 comparable hotel
portfolios as at September 30, 2004 are available on the Companys website
(www.fairmont.com/investor). Quarterly statistics have been revised to reflect
the recent asset sales.  1.
    
    Operating revenues excludes other revenues from managed and franchised
properties (consists of direct and indirect costs relating primarily to
marketing and reservation services that are reimbursed by hotel owners on
a cost recovery basis). Management considers that the exclusion of such
revenues provides a meaningful measure of operating performance, however,
it is not a defined measure of operating performance under Canadian GAAP.
It is likely that FHRs calculation of operating revenues is different
than the calculation used by other entities.2.
    
    EBITDA is defined as earnings before interest, taxes, amortization and
gain on sales of investments and hotel assets. Income from investments and
other is included in EBITDA. Management considers EBITDA to be a
meaningful indicator of hotel operations and uses it as the primary
measurement of operating segment profit and loss. However, it is not a
defined measure of operating performance under Canadian generally accepted
accounting principles (Canadian GAAP). It is likely that FHRs
calculation of EBITDA is different than the calculations used by other
entities. EBITDA is represented on the consolidated statements of income
as operating income before undernoted items. Reconciliation of EBITDA to net income: Three months ended
    
    Nine months endedSeptember 30
    
    September 30In millions of dollars
    
    2004
    
    2003
    
    2004
    
    2003EBITDA
    
    $
    63.5
    
    
    $
    46.9
    
    
    $
    160.1
    
    
    $
    132.5Deduct (Add):Gain on sales of investments and hotel assets
    
    
    (144.2
    )
    
    
    
    
    
    
    (144.2
    )
    
    
    Amortization
    
    
    16.8
    
    
    
    17.5
    
    
    
    54.3
    
    
    
    51.0Interest expense, net
    
    
    6.7
    
    
    
    8.9
    
    
    
    25.7
    
    
    
    23.1Income tax expense (recovery)
    
    
    52.4
    
    
    
    8.9
    
    
    
    64.1
    
    
    
    (5.8
    )Net income
    
    $
    131.8
    
    
    $
    11.6
    
    
    $
    160.2
    
    
    $
    64.2
 -30- Contacts:
    
    M. Jerry Patava
    
    Emma ThompsonExecutive Vice President
    
    Executive Director Investor Relationsand Chief Financial Officer
    
    Tel: 416.874.2485Tel: 416.874.2450
    
    Email: investor@fairmont.comWebsite: www.fairmont.com




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##### 



Summary of Hotel Portfolios At September 302004
    
    2003OWNED HOTELSWorldwideNo. of Properties
    
    
    15
    
    
    
    17No. of Rooms
    
    
    7,343
    
    
    
    7,787CanadaNo. of Properties
    
    
    7
    
    
    
    7No. of Rooms
    
    
    3,336
    
    
    
    3,268U.S. and InternationalNo. of Properties
    
    
    8
    
    
    
    10No. of Rooms
    
    
    4,007
    
    
    
    4,519FAIRMONT MANAGED
HOTELSWorldwideNo. of Properties
    
    
    44
    
    
    
    43No. of Rooms
    
    
    21,643
    
    
    
    21,182CanadaNo. of Properties
    
    
    21
    
    
    
    21No. of Rooms
    
    
    10,422
    
    
    
    10,361U.S. and InternationalNo. of Properties
    
    
    23
    
    
    
    22No. of Rooms
    
    
    11,221
    
    
    
    10,821DELTA MANAGED
HOTELSWorldwideNo of Properties
    
    
    38
    
    
    
    39No. of Rooms
    
    
    11,163
    
    
    
    11,465




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##### 



Fairmont Hotels & Resorts Inc.
Consolidated Balance Sheets
(Stated in millions of U.S. dollars) ASSETSSeptember 30
    
    December 312004
    
    2003(Unaudited)Current assetsCash and cash equivalents
    
    $
    167.8
    
    
    $
    31.7Accounts receivable
    
    
    94.2
    
    
    
    64.1Inventory
    
    
    14.8
    
    
    
    14.2Prepaid expenses and other
    
    
    15.5
    
    
    
    24.6292.3
    
    
    
    134.6Investments in partnerships and
corporations (note 6)
    
    
    71.9
    
    
    
    53.1Investment in Legacy Hotels Real Estate
Investment Trust (note 4)
    
    
    70.8
    
    
    
    105.9Non-hotel real estate
    
    
    97.6
    
    
    
    95.1Property and equipment (note 3)
    
    
    1,409.7
    
    
    
    1,656.2Goodwill
    
    
    160.3
    
    
    
    132.0Intangible assets
    
    
    218.5
    
    
    
    216.7Other assets and deferred charges (note 6)
    
    
    98.9
    
    
    
    109.4$
    2,420.0
    
    
    $
    2,503.0LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilitiesAccounts payable and accrued liabilities
    
    $
    123.1
    
    
    $
    121.3Taxes Payable
    
    
    52.1
    
    
    
    2.7Dividends payable
    
    
    
    
    
    
    3.2Current portion of long-term debt (note 7)
    
    
    4.0
    
    
    
    117.8179.2
    
    
    
    245.0Long-term debt (note 3 and 5)
    
    
    365.1
    
    
    
    539.8Other liabilities
    
    
    91.3
    
    
    
    91.4Future income taxes
    
    
    120.9
    
    
    
    80.9756.5
    
    
    
    957.1Shareholders Equity (note 8)
    
    
    1,663.5
    
    
    
    1,545.9$
    2,420.0
    
    
    $
    2,503.0




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##### 



Fairmont Hotels & Resorts Inc.
Consolidated Statements of Income
(Stated in millions of U.S. dollars, except per share amounts)
(Unaudited) Three months ended September 30
    
    Nine months ended September 302004
    
    2003
    
    2004
    
    2003RevenuesHotel ownership operations
    
    $
    180.3
    
    
    $
    168.6
    
    
    $
    516.3
    
    
    $
    462.5Management operations
    
    
    12.0
    
    
    
    10.6
    
    
    
    33.1
    
    
    
    27.8Real estate activities
    
    
    4.8
    
    
    
    0.2
    
    
    
    26.2
    
    
    
    31.4Operating revenues
    
    
    197.1
    
    
    
    179.4
    
    
    
    575.6
    
    
    
    521.7Other revenues from managed and franchised properties
    
    
    10.4
    
    
    
    9.2
    
    
    
    28.2
    
    
    
    23.7207.5
    
    
    
    188.6
    
    
    
    603.8
    
    
    
    545.4ExpensesHotel ownership operations
    
    
    125.9
    
    
    
    130.0
    
    
    
    377.9
    
    
    
    353.7Management operations
    
    
    7.5
    
    
    
    4.7
    
    
    
    20.4
    
    
    
    15.7Real estate activities
    
    
    5.4
    
    
    
    1.2
    
    
    
    18.0
    
    
    
    16.5Operating expenses
    
    
    138.8
    
    
    
    135.9
    
    
    
    416.3
    
    
    
    385.9Other expenses from managed and franchised properties
    
    
    10.4
    
    
    
    9.7
    
    
    
    28.6
    
    
    
    24.6149.2
    
    
    
    145.6
    
    
    
    444.9
    
    
    
    410.5Income (loss) from equity investments and other
    
    
    5.2
    
    
    
    3.9
    
    
    
    1.2
    
    
    
    (2.4
    )Operating income before undernoted items
    
    
    63.5
    
    
    
    46.9
    
    
    
    160.1
    
    
    
    132.5Amortization
    
    
    16.8
    
    
    
    17.5
    
    
    
    54.3
    
    
    
    51.0Interest expense, net
    
    
    6.7
    
    
    
    8.9
    
    
    
    25.7
    
    
    
    23.1Gain on sales of investments and hotel assets (note 3 and 4)
    
    
    (144.2
    )
    
    
    
    
    
    
    (144.2
    )
    
    
    Income before income tax expense
    
    
    184.2
    
    
    
    20.5
    
    
    
    224.3
    
    
    
    58.4Income tax expense (recovery)Current
    
    
    44.5
    
    
    
    2.5
    
    
    
    50.0
    
    
    
    9.0Future
    
    
    7.9
    
    
    
    6.4
    
    
    
    14.1
    
    
    
    (14.8
    )52.4
    
    
    
    8.9
    
    
    
    64.1
    
    
    
    (5.8
    )Net income
    
    $
    131.8
    
    
    $
    11.6
    
    
    $
    160.2
    
    
    $
    64.2Weighted average number of common shares outstanding (in millions) (note 8)Basic
    
    
    78.4
    
    
    
    79.1
    
    
    
    78.9
    
    
    
    79.2Diluted
    
    
    79.3
    
    
    
    79.9
    
    
    
    79.7
    
    
    
    80.0Basic earnings per common share
    
    $
    1.68
    
    
    $
    0.15
    
    
    $
    2.03
    
    
    $
    0.81Diluted earnings per common share
    
    $
    1.66
    
    
    $
    0.15
    
    
    $
    2.01
    
    
    $
    0.80




---



##### 



Fairmont Hotels & Resorts Inc.
Consolidated Statements of Cash Flows
(Stated in millions of U.S. dollars)
(Unaudited) Three months ended September 30
    
    Nine months ended September 302004
    
    2003
    
    2004
    
    2003Cash provided by (used in)Operating activitiesNet Income
    
    $
    131.8
    
    
    $
    11.6
    
    
    $
    160.2
    
    
    $
    64.2Items not affecting cashAmortization of property and equipment
    
    
    16.0
    
    
    
    16.9
    
    
    
    52.1
    
    
    
    49.1Amortization of intangible assets
    
    
    0.8
    
    
    
    0.6
    
    
    
    2.2
    
    
    
    1.9(Income) loss from equity investments and other
    
    
    (5.2
    )
    
    
    (3.9
    )
    
    
    (1.2
    )
    
    
    2.4Future income taxes
    
    
    7.9
    
    
    
    6.4
    
    
    
    14.1
    
    
    
    (14.8
    )Unrealized foreign exchange gain
    
    
    (13.3
    )
    
    
    
    
    
    
    (3.1
    )
    
    
    Gain on sales of investments and hotel assets
    
    
    (144.2
    )
    
    
    
    
    
    
    (144.2
    )
    
    
    Distributions from investments
    
    
    4.2
    
    
    
    
    
    
    
    4.2
    
    
    
    4.4Other
    
    
    5.8
    
    
    
    (2.8
    )
    
    
    7.8
    
    
    
    (9.0
    )Changes in non-hotel real estate
    
    
    (0.7
    )
    
    
    (2.7
    )
    
    
    (0.4
    )
    
    
    7.4Changes in non-cash working capital items (note 9)
    
    
    52.0
    
    
    
    15.1
    
    
    
    15.7
    
    
    
    (19.5
    )55.1
    
    
    
    41.2
    
    
    
    107.4
    
    
    
    86.1Investing activitiesAdditions to property and equipment
    
    
    (14.2
    )
    
    
    (19.9
    )
    
    
    (58.2
    )
    
    
    (55.5
    )Acquisitions, net of cash acquired
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6.0Investments in partnerships and corporations
    
    
    (1.9
    )
    
    
    
    
    
    
    (4.9
    )
    
    
    (0.7
    )Sales of investments and hotel assets
    
    
    443.6
    
    
    
    
    
    
    
    443.6
    
    
    
    Collection of loans receivable
    
    
    0.1
    
    
    
    
    
    
    
    9.0
    
    
    
    Issuance of loans receivable
    
    
    
    
    
    
    (26.8
    )
    
    
    (7.0
    )
    
    
    (28.3
    )427.6
    
    
    
    (46.7
    )
    
    
    382.5
    
    
    
    (78.5
    )Financing activitiesIssuance of long-term debt
    
    
    
    
    
    
    14.8
    
    
    
    82.7
    
    
    
    161.5Repayment of long-term debt
    
    
    (313.9
    )
    
    
    (7.7
    )
    
    
    (379.5
    )
    
    
    (151.2
    )Issuance of common shares
    
    
    0.3
    
    
    
    0.5
    
    
    
    0.9
    
    
    
    0.6Repurchase of common shares
    
    
    (46.4
    )
    
    
    
    
    
    
    (51.8
    )
    
    
    (16.8
    )Dividends paid
    
    
    (3.2
    )
    
    
    (2.4
    )
    
    
    (6.4
    )
    
    
    (4.8
    )(363.2
    )
    
    
    5.2
    
    
    
    (354.1
    )
    
    
    (10.7
    )Effect of exchange rate changes on cash
    
    
    0.5
    
    
    
    
    
    
    
    0.3
    
    
    
    3.5Increase (decrease) in cash
    
    
    120.0
    
    
    
    (0.3
    )
    
    
    136.1
    
    
    
    0.4Cash and cash equivalents  beginning of period
    
    
    47.8
    
    
    
    49.7
    
    
    
    31.7
    
    
    
    49.0Cash and cash equivalents   end of period
    
    $
    167.8
    
    
    
    49.4
    
    
    $
    167.8
    
    
    $
    49.4




---



##### 



Fairmont Hotels & Resorts Inc.
Consolidated Statements of Retained Earnings
(Stated in millions of U.S. dollars)
(Unaudited) Three months ended September 30
    
    Nine months ended September 302004
    
    2003
    
    2004
    
    2003Balance  Beginning of period
    
    $
    101.1
    
    
    $
    83.2
    
    
    $
    78.1
    
    
    $
    38.5Net
income
    
    
    131.8
    
    
    
    11.6
    
    
    
    160.2
    
    
    
    64.2232.9
    
    
    
    94.8
    
    
    
    238.3
    
    
    
    102.7Repurchase of common shares (note 8)
    
    
    (18.2
    )
    
    
    
    
    
    
    (20.4
    )
    
    
    (5.5
    )Dividends
    
    
    
    
    
    
    
    
    
    
    (3.2
    )
    
    
    (2.4
    )Balance  End of period
    
    $
    214.7
    
    
    $
    94.8
    
    
    $
    214.7
    
    
    $
    94.8




---



##### 



Fairmont Hotels & Resorts Inc.
Notes to Consolidated Financial Statements
(Stated in millions of U.S. dollars)
(Unaudited)  1.
    
    Fairmont Hotels & Resorts Inc. (FHR) has operated and owned hotels and resorts for over 116
years and currently manages properties principally under the Fairmont and Delta brands. At
September 30, 2004, FHR managed or franchised 82 luxury and first-class hotels. FHR owns
Fairmont Hotels Inc. (Fairmont), which at September 30, 2004, managed 44 properties in major
city centers and key resort destinations throughout Canada, the United States, Mexico, Bermuda,
Barbados and the United Arab Emirates. Delta Hotels Limited (Delta), a wholly owned subsidiary
of FHR, managed or franchised 38 Canadian hotels and resorts at September 30, 2004.In addition to hotel and resort management, as at September 30, 2004, FHR had hotel ownership
interests ranging from approximately 15% to 100% in 22 properties, located in Canada, the United
States, Mexico, Bermuda, Barbados and the United Arab Emirates. FHR also has an approximate 24%
equity interest in Legacy Hotels Real Estate Investment Trust (Legacy), which owns 24 hotels
and resorts across Canada and the United States. FHR also owns real estate properties that are
suitable for either commercial or residential development, and has a vacation ownership product.Results for the three and nine months ended September 30, 2004 are not necessarily indicative of
the results that may be expected for the full year due to seasonal and short-term variations.
Revenues are typically higher in the second and third quarters versus the first and fourth
quarters of the year.2.
    
    These interim consolidated financial statements do not include all disclosures as required by
Canadian generally accepted accounting principles
(GAAP) for annual consolidated financial statements and should be read in conjunction with the
audited consolidated financial statements for the year ended December 31, 2003 presented in the
annual report. The accounting policies used in the preparation of these interim consolidated
financial statements are consistent with the accounting policies used in the December 31, 2003
audited consolidated financial statements, except as discussed below.Hedging Relationships
Effective January 1, 2004, FHR implemented new guidance on accounting for hedging relationships.
The new guidelines specify the circumstances in which hedge accounting is appropriate, including
the identification, documentation, designation and effectiveness of hedges and also the
discontinuance of hedge accounting. The adoption of this accounting guidance did not have an
impact on the Companys financial statements.Generally Accepted Accounting Principles and General Standards of Financial Statement Presentation
The Canadian Institute of Chartered Accountants has issued new accounting standards surrounding
GAAP and financial statement presentation. These standards lay out a framework for the
application of GAAP and the fair presentation of financial standards in accordance with GAAP and
are effective for years beginning January 1, 2004. No changes to accounting principles or
financial statement presentation were required.Assets Held for Sale
Long-lived assets are classified as held for sale when specific GAAP criteria are met. Assets held for sale are measured at the
lower of their carrying amounts and fair values less costs to dispose and are no longer amortized. Assets classified as held for
sale and liabilities related to these assets are reported separately on the balance sheet. A component of FHR that is held for
sale is reported as a discontinued operation if the operations and cash flows of the component will be eliminated from ongoing
operations as a result of the sale and FHR will not have a significant continuing involvement in the operations of the component
after the sale.3.
    
    On July 15, 2004, FHR finalized the sale of The Fairmont Kea Lani Maui for cash proceeds of $355.4. The mortgage of $120.0 on
this property was repaid. FHR recognized a gain on the sale of $67.8, net of income taxes of $41.0. The resort will continue
to be managed by Fairmont under a long-term management contract.On July 9, 2004, FHR finalized the sale of The Fairmont Glitter Bay for cash proceeds of approximately $31.7. The mortgage of
$5.2 on this property was repaid. FHR recognized a non-taxable gain on the sale of $7.9. The resort will continue to be managed
by Fairmont under a long-term management contract.4.
    
    On September 13, 2004, FHR sold 12,000,000 units of Legacy for approximately $63.0 in cash and recognized a gain of $27.6. The
sale decreases FHRs investment in Legacy to 23.7% from approximately 35%. As at September 30, 2004, FHR owned 24,639,143 units
of Legacy.5.
    
    In March 2004, FHR entered into a new $400.0 unsecured credit facility due March 2007. The interest rate is floating and is
calculated based on the borrowers choice of prime rate, bankers acceptance or LIBOR plus a spread.6.
    
    In April 2004, FHR finalized an agreement to invest $15.6 for a 14.5% interest in The Fairmont Dubai. This investment is accounted
for using the equity method due to significant influence and through contractual arrangements. In the second quarter, $15.6 was
reclassified from Other assets and deferred charges to Investments in partnerships and corporations.7.
    
    On August 23, 2004, FHR purchased the remaining 16.5% of outstanding shares of Fairmont from Maritz, Wolff & Co. for approximately
$70.0 in cash. FHR now owns 100% of Fairmont. The company had already been consolidating 100% of Fairmont, by previously having
recorded an obligation of $69.0 representing the minimum amount a minority shareholder was entitled to receive under a put option.
During the third quarter, FHR increased its previously reported goodwill and future income tax balances by $16.7. As a result of
this transaction, current portion of long-term debt decreased by $69.0.




---



##### 



Fairmont Hotels & Resorts Inc.
Notes to Consolidated Financial Statements
(Stated in millions of U.S. dollars)
(Unaudited)  8.
    
    Shareholders equity September 30,
    
    December 31,2004
    
    2003Common shares
    
    $
    1,175.9
    
    
    $
    1,202.2Other equity
    
    
    19.2
    
    
    
    19.2Treasury stock
    
    
    (4.2
    )
    
    
    Contributed surplus
    
    
    142.3
    
    
    
    142.3Foreign currency translation adjustments
    
    
    115.6
    
    
    
    104.1Retained earnings
    
    
    214.7
    
    
    
    78.1$
    1,663.5
    
    
    $
    1,545.9
  The diluted weighted-average number of common shares outstanding is calculated as follows: Three months ended September 30
    
    Nine months ended September 302004
    
    2003
    
    2004
    
    2003(in millions)
    
    (in millions)Weighted-average number of common shares
outstanding  basic
    
    
    78.4
    
    
    
    79.1
    
    
    
    78.9
    
    
    
    79.2Stock options
    
    
    0.9
    
    
    
    0.8
    
    
    
    0.8
    
    
    
    0.8Weighted-average number of common shares
outstanding  diluted
    
    
    79.3
    
    
    
    79.9
    
    
    
    79.7
    
    
    
    80.0
  Effective October 2004, FHR may repurchase for cancellation up to 10% of its outstanding common shares. The amounts and timing of
repurchases are at FHRs discretion. Under the previous issuer bid which ended on October 7, 2004, during the nine months ended
September 30, 2004, FHR repurchased 1,946,300 shares (1,737,900 during the third quarter). Total consideration relating to the
repurchase amounted to $51.8 ($46.4 for the third quarter), of which $27.2 was charged to common shares, $20.4 was charged to
retained earnings, and $4.2 to treasury stock. Of the 1,946,300 shares, 150,000 shares were classified as treasury stock as they
were repurchased prior to September 30, 2004 and cancelled on October 1, 2004. During the nine months ended September 30, 2004,
FHR issued 48,939 shares (10,371 shares for the third quarter) pursuant to the Key Employee Stock Option Plan of which $0.9 was
credited to common shares ($0.3 for the third quarter) for proceeds
from options exercised. At September 30, 2004, 77,366,916 common
shares were outstanding (2003  79,080,159).During the nine months ended September 30, 2004, 10,000 stock options were granted (nil in the third quarter). Assuming FHR
elected to recognize the cost of its stock-based compensation based on the estimated fair value of stock options granted after
January 1, 2002 but before January 1, 2003, net income and basic and diluted earnings per share would have been: Three months ended September 30
    
    Nine months ended September 302004
    
    2003
    
    2004
    
    2003Reported net income
    
    $
    131.8
    
    
    $
    11.6
    
    
    $
    160.2
    
    
    $
    64.2Net income assuming fair value method
used
    
    $
    131.7
    
    
    $
    11.4
    
    
    $
    159.9
    
    
    $
    63.3Basic earnings per share
    
    $
    1.68
    
    
    $
    0.14
    
    
    $
    2.03
    
    
    $
    0.80Diluted earnings per share
    
    $
    1.66
    
    
    $
    0.14
    
    
    $
    2.01
    
    
    $
    0.79
  9.
    
    Changes in non-cash working capital: Three months ended September 30
    
    Nine months ended September 302004
    
    2003
    
    2004
    
    2003Decrease (increase) in current assetsAccounts receivable
    
    $
    (5.9
    )
    
    $
    10.8
    
    
    $
    (31.1
    )
    
    $
    0.9Inventory
    
    
    0.1
    
    
    
    0.8
    
    
    
    (1.2
    )
    
    
    0.3Prepaid expenses and other
    
    
    6.6
    
    
    
    9.1
    
    
    
    (1.3
    )
    
    
    (0.9
    )Increase (decrease) in current liabilitiesAccounts payable and accrued liabilities
    
    
    2.9
    
    
    
    (6.1
    )
    
    
    
    
    
    
    (17.3
    )Taxes payable
    
    
    48.3
    
    
    
    0.5
    
    
    
    49.3
    
    
    
    (2.5
    )$
    52.0
    
    
    $
    15.1
    
    
    $
    15.7
    
    
    $
    (19.5
    )




---



##### 



Fairmont Hotels & Resorts Inc.
Notes to Consolidated Financial Statements
(Stated in millions of U.S. dollars)
(Unaudited)  10.
    
    Segmented InformationFHR has five reportable operating segments in two core business activities, ownership and management operations. The segments are hotel ownership, investment in Legacy, real
estate activities, Fairmont and Delta. Hotel ownership consists of real estate interests ranging from approximately 15% to 100% in 22 properties. The investment in Legacy
consists of an approximate 24% equity interest in Legacy, which owns 24 hotels and resorts across Canada and the United States. Real estate activities consists primarily of two
large undeveloped land blocks in Toronto and Vancouver and a vacation ownership product. Fairmont is a North American luxury hotel and resort management company and Delta is a
Canadian first-class hotel and resort management company.The performance of all segments is evaluated primarily on earnings before interest, taxes and amortization (EBITDA), which is defined as income before interest, income taxes
and amortization. EBITDA includes income from investments and other.
Amortization, interest and income taxes are not allocated to the
individual segments. All transactions among operating segments are
conducted at fair market value.The following tables present revenues, EBITDA, total assets and capital expenditures for FHRs reportable segments: Three months ended September 30, 2004Ownership
    
    ManagementHotel
    
    
    
    
    
    Real estate
    
    
    
    
    
    
    
    
    
    Inter-segmentOwnership
    
    Legacy
    
    activities
    
    Fairmont
    
    Delta
    
    elimination (a)
    
    TotalOperating revenues
    
    $
    180.3
    
    
    $
    
    
    
    $
    4.8
    
    
    $
    14.1
    
    
    $
    3.5
    
    
    $
    (5.6
    )
    
    $
    197.1Other revenues from managed and franchised
properties
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8.2
    
    
    
    2.2
    
    
    
    
    
    
    
    10.4207.5Income (loss) from equity investments and
other
    
    
    1.5
    
    
    
    3.7
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5.2EBITDA (b)
    
    
    50.3
    
    
    
    3.7
    
    
    
    (0.6
    )
    
    
    8.2
    
    
    
    1.9
    
    
    
    
    
    
    
    63.5Total assets (c)
    
    
    2,028.1
    
    
    
    70.8
    
    
    
    99.1
    
    
    
    340.0
    
    
    
    77.1
    
    
    
    (195.1
    )
    
    
    2,420.0Capital expenditures
    
    
    12.0
    
    
    
    
    
    
    
    
    
    
    
    2.2
    
    
    
    
    
    
    
    
    
    
    
    14.2
 Three months ended September 30, 2003Ownership
    
    ManagementHotel
    
    
    
    
    
    Real estate
    
    
    
    
    
    
    
    
    
    Inter-segmentOwnership
    
    Legacy
    
    activities
    
    Fairmont
    
    Delta
    
    elimination (a)
    
    TotalOperating revenues
    
    $
    168.6
    
    
    $
    
    
    
    $
    0.2
    
    
    $
    12.5
    
    
    $
    3.0
    
    
    $
    (4.9
    )
    
    $
    179.4Other revenues from managed and franchised
properties
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7.0
    
    
    
    2.2
    
    
    
    
    
    
    
    9.2188.6Income (loss) from equity investments and
other
    
    
    1.3
    
    
    
    2.6
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3.9EBITDA (b)
    
    
    35.0
    
    
    
    2.6
    
    
    
    (1.0
    )
    
    
    8.6
    
    
    
    2.2
    
    
    
    (0.5
    )
    
    
    46.9Total assets (c)
    
    
    2,121.6
    
    
    
    105.5
    
    
    
    100.2
    
    
    
    351.5
    
    
    
    73.1
    
    
    
    (269.2
    )
    
    
    2,482.7Capital expenditures
    
    
    19.3
    
    
    
    
    
    
    
    
    
    
    
    0.6
    
    
    
    
    
    
    
    
    
    
    
    19.9
 Nine months ended September 30, 2004Ownership
    
    ManagementHotel
    
    
    
    
    
    Real estate
    
    
    
    
    
    
    
    
    
    Inter-segmentOwnership
    
    Legacy
    
    activities
    
    Fairmont
    
    Delta
    
    elimination (a)
    
    TotalOperating revenues
    
    $
    516.3
    
    
    $
    
    
    
    $
    26.2
    
    
    $
    40.2
    
    
    $
    9.6
    
    
    $
    (16.7
    )
    
    $
    575.6Other revenues from managed and franchised
properties
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    20.9
    
    
    
    7.3
    
    
    
    
    
    
    
    28.2603.8Income (loss) from equity investments and
other
    
    
    2.0
    
    
    
    (0.8
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1.2EBITDA (b)
    
    
    123.7
    
    
    
    (0.8
    )
    
    
    8.2
    
    
    
    23.4
    
    
    
    6.0
    
    
    
    (0.4
    )
    
    
    160.1Total assets (c)
    
    
    2,028.1
    
    
    
    70.8
    
    
    
    99.1
    
    
    
    340.0
    
    
    
    77.1
    
    
    
    (195.1
    )
    
    
    2,420.0Capital expenditures
    
    
    55.5
    
    
    
    
    
    
    
    
    
    
    
    2.7
    
    
    
    
    
    
    
    
    
    
    
    58.2




---



##### 



Fairmont Hotels & Resorts Inc.
Notes to Consolidated Financial Statements
(Stated in millions of U.S. dollars)
(Unaudited) 10. Segmented Information
(continued) Nine months ended September 30, 2003Ownership
    
    ManagementHotel
    
    
    
    
    
    Real estate
    
    
    
    
    
    
    
    
    
    Inter-segmentOwnership
    
    Legacy
    
    activities
    
    Fairmont
    
    Delta
    
    elimination (a)
    
    TotalOperating revenues
    
    $
    462.5
    
    
    $
    
    
    
    $
    31.4
    
    
    $
    33.4
    
    
    $
    8.7
    
    
    $
    (14.3
    )
    
    $
    521.7Other revenues from managed and franchised
properties
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17.6
    
    
    
    6.1
    
    
    
    
    
    
    
    23.7545.4Income (loss) from equity investments and
other
    
    
    1.8
    
    
    
    (4.2
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2.4
    )EBITDA (b)
    
    
    96.3
    
    
    
    (4.2
    )
    
    
    14.9
    
    
    
    19.9
    
    
    
    6.5
    
    
    
    (0.9
    )
    
    
    132.5Total assets (c)
    
    
    2,121.6
    
    
    
    105.5
    
    
    
    100.2
    
    
    
    351.5
    
    
    
    73.1
    
    
    
    (269.2
    )
    
    
    2,482.7Capital expenditures
    
    
    54.3
    
    
    
    
    
    
    
    
    
    
    
    1.2
    
    
    
    
    
    
    
    
    
    
    
    55.5
  (a)
    
    Revenues represent management fees that are charged by
Fairmont of $5.5 (2003  $4.8) and $16.4 (2003  $14.1) for the three and nine months ended September 30, 2004 respectively, and Delta
of $0.1 (2003  $0.1) and $0.3 (2003  $0.2) for the three and nine months ended September 30, 2004 respectively, to the hotel ownership operations, which are eliminated on consolidation. EBITDA
represents expenses not reimbursed relating to marketing and reservation services performed by FHR under the terms of its hotel management and franchise agreements. Total assets represent the
elimination of inter-segment loans net of corporate assets.(b)
    
    The following costs are not allocated to the individual segments in evaluating net income: Three months ended September 30
    
    Nine months ended September 302004
    
    2003
    
    2004
    
    2003Amortization
    
    $
    16.8
    
    
    $
    17.5
    
    
    $
    54.3
    
    
    $
    51.0Interest expense, net
    
    
    6.7
    
    
    
    8.9
    
    
    
    25.7
    
    
    
    23.1Income tax expense (recovery)
    
    
    52.4
    
    
    
    8.9
    
    
    
    64.1
    
    
    
    (5.8
    )Gain on sales of investments and hotel assets
    
    
    (144.2
    )
    
    
    
    
    
    
    (144.2
    )
    
    
    
  (c)
    
    Hotel ownership assets include $69.6 (2003  $51.2) of investments accounted for using the equity method.  11.
    
    As required under the terms and conditions of the 3.75% convertible senior notes due 2023, the debt and the common shares issuable upon conversion of the shares were registered
on Form F-10 with the United States Securities and Exchange Commission on April 6, 2004.12.
    
    At September 30, 2004, FHR has a payable to Legacy of $5.0 in connection with various management contracts, and reciprocal loan agreements with Legacy for $86.6.
A subsidiary of FHR has a 25% participation amounting to $10.6 in the first mortgage on The Fairmont Olympic Hotel, Seattle.13.
    
    FHR recorded pension and other post employment benefit expenses as follows: Three months ended September 30
    
    Nine months ended September 302004
    
    2003
    
    2004
    
    2003(in millions)
    
    (in millions)Pension
    
    $
    (0.1
    )
    
    $
    1.1
    
    
    $
    0.9
    
    
    $
    1.3Other post-employment benefits
    
    
    0.1
    
    
    
    
    
    
    
    0.2
    
    
    
    $
    
    
    
    $
    1.1
    
    
    $
    1.1
    
    
    $
    1.3