##### 



(FAIRMONT HOTELS AND RESORTS LOGO)

|                      |  |                 
|--------------------- |  | ----------------
|For immediate release |  | Exhibit No. 99.1

FAIRMONT HOTELS & RESORTS INC. REPORTS
FOURTH QUARTER AND YEAR-END 2003 RESULTS

TORONTO, January 28, 2004 Fairmont Hotels & Resorts Inc. (FHR or the
Company) (TSX/NYSE: FHR) today announced its unaudited financial results for
the fourth quarter and year ended December 31, 2003. All amounts are expressed
in U.S. dollars. FHR expects to release its 2003 annual report in March and
will hold its annual general meeting at 10:00 a.m. on April 27, 2004 at The
Fairmont Royal York in Toronto.

Our full-year 2003 EBITDA1 of $142.4 million met our revised guidance of $140
- $150 million, said William R. Fatt, Chief Executive Officer for FHR. 2003
proved to be one of the most difficult years for the Company given the number
of challenges we faced, particularly the hurricane damage in Bermuda and the
impact of severe acute respiratory syndrome (SARS). Despite these external
factors, improving industry fundamentals in the third quarter led to improving
demand trends in the fourth quarter.

As previously announced, The Fairmont Southampton is closed for repairs until
the spring following hurricane damage in Bermuda. The Fairmont Hamilton
Princess is now fully operational. The Company has extensive insurance
coverage for both property damage and business interruption relating to the
hurricane damage in Bermuda. The insurance deductible and uninsured items
previously estimated at $10 - $12 million have been revised to $9.0 million, of
which $1.6 million was recorded in the fourth quarter and the balance in the
third quarter. This expense is included in FHRs fourth quarter and full-year
EBITDA.

On a comparable basis, revenue per available room (RevPAR) for Fairmonts
managed hotels increased 5.0% and RevPAR at FHRs owned portfolio improved 8.8%
in the fourth quarter. Both the owned and managed portfolios continue to
experience a trend of year-over-year RevPAR gains. Favorable foreign exchange
movements continued to contribute to an improvement in overall operating
statistics.

|                                            |  |                    |       |             |  |      |       |      |  |   |       |  |  |   |       | 
|------------------------------------------- |  | ------------------ | ----- | ----------- |  | ---- | ----- | ---- |  | - | ----- |  |  | - | ----- | 
|                                            |  | Three months ended |       | Year ended 
|(In millions except EPS amounts)            |  | December 31        |       | December 31
|                                            |  |                    |       |            
|                                            |  | 2003               |       | 2002        |  | 2003 |       | 2002
|                                            |  |                    |       |             |  |      |       |     
|Operating Revenues                          |  | $                  | 137.1 |             |  | $    | 125.6 |      |  | $ | 658.8 |  |  | $ | 590.6 | 
|EBITDAa                                     |  |                    | 9.9   |             |  |      | 32.8  |      |  |   | 142.4 |  |  |   | 198.3 | 
|Net income (loss)a, b                       |  |                    | (13.5 | )           |  |      | 11.0  |      |  |   | 50.7  |  |  |   | 92.5  | 
|Basic earnings (loss) per share (EPS)a, b |  | $                  | (0.17 | )           |  | $    | 0.14  |      |  | $ | 0.64  |  |  | $ | 1.18  | 



---

|a. |  | EBITDA and net income for the three months and year ended December 31,
2003 include expenses of $1.6 million ($0.02 per share) and $9.0 million
($0.11 per share) respectively, relating to hurricane damage in Bermuda.
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|b. |  | Net income for the year ended December 31, 2003 includes a $24.4 million
($0.31 per share) income tax recovery recorded in June 2003.                                                                                   





---



##### 



Fourth Quarter Consolidated Results

Operating revenues2 were up 9.2% to $137.1 million in 2003. Increased revenues
from the two recent acquisitions, The Fairmont Copley Plaza Boston and The
Fairmont Orchid, Hawaii, provided the majority of this improvement. The
appreciation in the Canadian dollar offset the decline in Canadian operating
revenues and increased Canadian expenses in the quarter. Fourth quarter EBITDA
of $9.9 million was down from $32.8 million in the previous year. The major
components of the quarter-over-quarter decline were:



| |  | $8.0 million from real estate activities resulting from a $2.2 million
loss in the fourth quarter of 2003 compared to a $5.8 million gain on
a real estate sale in Bermuda in 2002.         
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | $7.0 million from equity investments and other, resulting primarily
from a loss from the Companys investment in Legacy Hotels Real Estate
Investment Trust (Legacy).                     
| 
| |  | $5.1 million from hotel management operations, including increased
pension expenses and unrecoverable marketing costs that resulted from
foreign exchange fluctuations and reduced revenues.

Fourth Quarter Ownership Operations

Revenues from hotel ownership improved 12.2% to $122.4 million compared to
$109.1 million in 2002. This increase relates primarily to the recent
acquisitions. In addition, The Fairmont Kea Lani Maui and The Fairmont
Scottsdale Princess both produced strong quarterly operating results, which
somewhat offset the lost revenues from The Fairmont Southampton as the resort
was closed for repairs due to hurricane damage. While the appreciation in the
Canadian dollar was a key driver of increased revenues, it had a considerable
impact on expenses in the fourth quarter.

RevPAR of $97.79 was up 8.8% in the fourth quarter, resulting from an 11.7%
improvement in average daily rate (ADR) that offset a 1.3 point drop in
occupancy. After adjusting for the foreign exchange impact, RevPAR for the
owned portfolio was up approximately 2%. This was the first time in 2003 that
the owned portfolio posted a quarterly RevPAR increase when measured in local
currencies. The Canadian owned hotels had RevPAR growth of 18.6%, driven by the
appreciation in the Canadian dollar and offset slightly by an occupancy drop of
1.0 points. The Fairmont Kea Lani Maui and The Fairmont Scottsdale Princess
continued to post strong rate growth in the quarter contributing to a 3.3%
RevPAR improvement at the U.S. and International comparable portfolio.

Equity losses generated from FHRs investment in Legacy were $4.4 million
compared to losses of $0.5 million in the same period last year. The equity
loss includes $2.5 million relating to Legacys refinancing of its unsecured
debentures in December 2003.

In a continued effort to divest of non-hotel assets, FHR sold numerous small
parcels of land that were inherited from the Canadian Pacific reorganization in
2001. None of the parcels sold were from FHRs interest in the Toronto or
Vancouver lands. These sales contributed to a $2.2 million loss in EBITDA from
real estate activities compared to $5.8 million earned in 2002.

Fourth Quarter Management Operations

Fairmont

Revenues under management of $356 million increased 10.1% over 2002, mainly
from the addition of three new management contracts since late 2002.
Management fee revenues were down 0.9% to $10.9 million. Incentive fee
thresholds that are typically achieved during the fourth quarter were not
reached due to the impact of SARS on the Canadian hotel operations.

For the Fairmont portfolio, RevPAR increased 5.0% to $98.96. The Canadian
comparable portfolio reported a 13.8% RevPAR improvement, driven entirely by an
increase in ADR of 17.5%. Adjusting for the foreign exchange impact, the
Canadian portfolio experienced a RevPAR decline of approximately 5%. RevPAR
for





---



##### 



the U.S. and International portfolio was relatively unchanged as both ADR and
occupancy were essentially unchanged in the quarter.

Delta

In the fourth quarter, Deltas revenues under management increased by $10
million to $83 million and management fee revenues of $2.9 million were up 3.6%
from 2002 levels. Incentive fee thresholds that are typically achieved during
the fourth quarter were not reached due to the impact of SARS on Canadian
tourism. In December, the Delta Fredericton joined the portfolio under a
franchise agreement.

Year-end Consolidated Results

For the year ended December 31, 2003, operating revenues increased 11.5% to
$658.8 million from $590.6 million. Recent acquisitions, solid results at The
Fairmont Kea Lani Maui and a stronger Canadian dollar generated the majority of
this increase. As a result of the difficult operating environment in 2003,
particularly in the second and third quarters, EBITDA of $142.4 million was
down 28.2% from last year. EBITDA included a $9.0 million expense related to
the hurricane damage in Bermuda.

Equity losses generated from FHRs investment in Legacy were $8.6 million
compared to equity income of $6.4 million in 2002. The impact of SARS on
Legacys portfolio was considerable given its significant exposure to Toronto
and other major Canadian cities. The equity loss includes $2.5 million
relating to Legacys refinancing of its unsecured debentures in December 2003.

In 2003, FHR disposed of two blocks of the Coal Harbour lands in Vancouver, one
block of the Southtown lands in Toronto as well as a number of smaller land
holdings. These sales contributed to $12.7 million in EBITDA from real estate
activities.

Net income of $50.7 million was down 45.2% compared to the prior year while
basic EPS was $0.64 in 2003 compared to $1.18 in 2002. Net income included a
$24.4 million, or $0.31 per share, income tax recovery from a favorable tax
reassessment recorded in June 2003 and $9.0 million, or $0.11 per share,
expenses related to the hurricane damage.

Capital Expenditures

Hotel related capital expenditures for the quarter and full year totaled $31.7
million and $87.2 million, respectively. Several projects were underway during
the quarter including:



| |  |  | The renovation of the meeting rooms and final phase of the guestrooms
at The Fairmont Copley Plaza Boston (to be completed in the spring);                                                                 
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | The ongoing construction of the meeting facility at The Fairmont
Chateau Lake Louise (to be completed in the spring); and                                                                                  
|
| |  |  | The renovations at The Fairmont Orchid, Hawaii, which included 100
guestrooms, the restaurant, the refurbishment of the spa and the
conversion of one guest floor to Fairmont Gold (completed in December).

FHR currently expects that total capital expenditures in 2004 will be $90 -
$100 million, including approximately $15 million that was initially expected
to be spent in 2003. These figures exclude all of the Bermuda repairs related
to hurricane damage.

Announcements and Corporate Activities

FHR secured a long-term management contract for the Turnberry Isle Resort &
Club in Florida effective January 1, 2004. The resort will be officially
flagged The Fairmont Turnberry Isle Resort & Club, Miami, Florida on January
30, 2004.





---



##### 



In December, FHR issued $270 million of convertible senior notes. The 20-year
notes bear interest of 3.75%. The net proceeds of the offering were used to
reduce borrowings under the Companys credit facility and for general corporate
purposes.

During the quarter, FHR did not repurchase any shares under its normal course
issuer bid. The Company repurchased a total of 747,100 shares at a total cost
of $16.8 million during 2003.

Outlook

Commented Mr. Fatt, We continue to be encouraged by a number of positive signs
that point to a recovery this year. Existing bookings for our critical group
business are ahead of levels at this time last year for 2003, despite all of
the issues that have impacted demand from this segment over the past year.
Leisure demand levels are also encouraging, however booking lead time remains
short.

In addition to the widely anticipated economic rebound this year, there are a
number of drivers that are expected to lead the Company to a sharp improvement
in 2004 performance:



| |  |  | A substantial recovery from SARS will allow the Canadian tourism
industry to recover from one of its most devastating years;                                              
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Following years of significant capital investment in FHRs owned
portfolio, 2004 will be the first year with minimal disruption from
renovations; and finally             
|
| |  |  | A considerable improvement in the operating performance at The
Fairmont Orchid, Hawaii and The Fairmont Copley Plaza Boston is
projected following the challenges of 2003.

In order to simplify comparisons of FHRs financial statements with those of
its peers, starting in 2004 the Company has adopted U.S. GAAP. As a result,
all future financial information, including the 2004 earnings guidance, will be
based on current U.S. GAAP reporting. FHR does not expect this change to have
a significant impact on net earnings or the Companys financial condition.

Based on these assumptions, FHR estimates that full-year EBITDA in 2004 will be
in the range of $210 - $220 million, including approximately $9 million from
real estate activities. Net income is estimated to be between $65 and $71
million and basic EPS to be in the range of $0.82 - $0.90, assuming a full-year
tax rate of 28%.

Despite the numerous challenges the Company faced in 2003, we made significant
progress during the year in building brand strength and capabilities. We are
encouraged by the marked improvement in Fairmonts brand awareness over the
last few years, said Mr. Fatt. These ongoing improvements should facilitate
additional management contracts on new and existing luxury properties, which
are expected to further grow FHRs distribution and increase the exposure of
the existing portfolio. In 2004, we intend to add two to four hotels to the
Fairmont portfolio.

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 83 luxury and first-class
properties with more than 33,000 guestrooms in the United States, Canada,
Mexico, Bermuda, Barbados and the United Arab Emirates. It holds an 83.5%
controlling interest in Fairmont Hotels Inc., North Americas largest luxury
hotel management company, as measured by rooms under management. Fairmont
manages 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 39 city center and resort properties in
Canada. In addition to hotel management, FHR holds real estate interests in 23
properties and an approximate 35% investment interest in Legacy Hotels Real
Estate Investment Trust, which owns 24 properties.





---



##### 



FHR will hold a conference call today, January 28, 2004 at 1:30 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 January 28, 2004
through to February 4, 2004 by dialing 416.695.5800 or 1.800.408.3053 using the
reservation #1518838. 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 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 |        |      |  |          |        | Year ended        |  |              |      |         
|                        |           |  | December 31, 2003  |        |      |  |          |        | December 31, 2003 |  |              |      |         
|                        |           |  |                    |        |      |  |          |        |                   |  |              |      |         
|                        |           |  | 2003               |        | 2002 |  | Variance |        | 2003              |  | 2002         |      | Variance
|                        |           |  |                    |        |      |  |          |        |                   |  |              |      |         
|OWNED HOTELS            |           |  |                    |        |      |  |          |        |                   |  |              |      |          |      |   |        |  |      |   |        |              |  |  |     
|Worldwide               |           |  |                    |        |      |  |          |        |                   |  |              |      |          |      |   |        |  |      |   |        |              |  |  |     
|                        | RevPAR    |  | $                  | 97.79  |      |  | $        | 89.86  |                   |  |              | 8.8  | %        |      | $ | 114.78 |  |      | $ | 111.53 |              |  |  | 2.9  | % 
|                        | ADR       |  |                    | 184.27 |      |  |          | 165.04 |                   |  |              | 11.7 | %        |      |   | 197.43 |  |      |   | 182.44 |              |  |  | 8.2  | % 
|                        | Occupancy |  |                    | 53.1   | %    |  |          | 54.4   | %                 |  | (1.3 points) |      |          | 58.1 | % |        |  | 61.1 | % |        | (3.0 points)
|Canada                  |           |  |                    |        |      |  |          |        |                   |  |              |      |          |      |   |        |  |      |   |        |              |  |  |     
|                        | RevPAR    |  | $                  | 72.98  |      |  | $        | 61.51  |                   |  |              | 18.6 | %        |      | $ | 99.67  |  |      | $ | 95.14  |              |  |  | 4.8  | % 
|                        | ADR       |  |                    | 136.18 |      |  |          | 112.74 |                   |  |              | 20.8 | %        |      |   | 163.44 |  |      |   | 145.16 |              |  |  | 12.6 | % 
|                        | Occupancy |  |                    | 53.6   | %    |  |          | 54.6   | %                 |  | (1.0 points) |      |          | 61.0 | % |        |  | 65.5 | % |        | (4.5 points)
|U.S. and International  |           |  |                    |        |      |  |          |        |                   |  |              |      |          |      |   |        |  |      |   |        |              |  |  |     
|                        | RevPAR    |  | $                  | 124.63 |      |  | $        | 120.62 |                   |  |              | 3.3  | %        |      | $ | 131.12 |  |      | $ | 129.33 |              |  |  | 1.4  | % 
|                        | ADR       |  |                    | 237.38 |      |  |          | 222.05 |                   |  |              | 6.9  | %        |      |   | 238.17 |  |      |   | 229.53 |              |  |  | 3.8  | % 
|                        | Occupancy |  |                    | 52.5   | %    |  |          | 54.3   | %                 |  | (1.8 points) |      |          | 55.1 | % |        |  | 56.3 | % |        | (1.2 points)
|                       
|FAIRMONT MANAGED HOTELS |           |  |                    |        |      |  |          |        |                   |  |              |      |          |      |   |        |  |      |   |        |              |  |  |     
|Worldwide               |           |  |                    |        |      |  |          |        |                   |  |              |      |          |      |   |        |  |      |   |        |              |  |  |     
|                        | RevPAR    |  | $                  | 98.96  |      |  | $        | 94.29  |                   |  |              | 5.0  | %        |      | $ | 103.85 |  |      | $ | 105.28 |              |  |  | (1.4 | %)
|                        | ADR       |  |                    | 171.14 |      |  |          | 159.48 |                   |  |              | 7.3  | %        |      |   | 171.43 |  |      |   | 163.18 |              |  |  | 5.1  | % 
|                        | Occupancy |  |                    | 57.8   | %    |  |          | 59.1   | %                 |  | (1.3 points) |      |          | 60.6 | % |        |  | 64.5 | % |        | (3.9 points)
|Canada                  |           |  |                    |        |      |  |          |        |                   |  |              |      |          |      |   |        |  |      |   |        |              |  |  |     
|                        | RevPAR    |  | $                  | 75.27  |      |  | $        | 66.12  |                   |  |              | 13.8 | %        |      | $ | 86.39  |  |      | $ | 86.63  |              |  |  | (0.3 | %)
|                        | ADR       |  |                    | 129.39 |      |  |          | 110.12 |                   |  |              | 17.5 | %        |      |   | 140.38 |  |      |   | 127.41 |              |  |  | 10.2 | % 
|                        | Occupancy |  |                    | 58.2   | %    |  |          | 60.0   | %                 |  | (1.8 points) |      |          | 61.5 | % |        |  | 68.0 | % |        | (6.5 points)
|U.S. and International  |           |  |                    |        |      |  |          |        |                   |  |              |      |          |      |   |        |  |      |   |        |              |  |  |     
|                        | RevPAR    |  | $                  | 127.50 |      |  | $        | 128.36 |                   |  |              | (0.7 | %)       |      | $ | 124.96 |  |      | $ | 127.95 |              |  |  | (2.3 | %)
|                        | ADR       |  |                    | 222.15 |      |  |          | 221.24 |                   |  |              | 0.4  | %        |      |   | 210.31 |  |      |   | 212.22 |              |  |  | (0.9 | %)
|                        | Occupancy |  |                    | 57.4   | %    |  |          | 58.0   | %                 |  | (0.6 points) |      |          | 59.4 | % |        |  | 60.3 | % |        | (0.9 points)
|                       
|DELTA MANAGED HOTELS    |           |  |                    |        |      |  |          |        |                   |  |              |      |          |      |   |        |  |      |   |        |              |  |  |     
|Worldwide               |           |  |                    |        |      |  |          |        |                   |  |              |      |          |      |   |        |  |      |   |        |              |  |  |     
|                        | RevPAR    |  | $                  | 55.22  |      |  | $        | 47.75  |                   |  |              | 15.6 | %        |      | $ | 56.40  |  |      | $ | 54.18  |              |  |  | 4.1  | % 
|                        | ADR       |  |                    | 92.33  |      |  |          | 79.62  |                   |  |              | 16.0 | %        |      |   | 91.83  |  |      |   | 84.93  |              |  |  | 8.1  | % 
|                        | Occupancy |  |                    | 59.8   | %    |  |          | 60.0   | %                 |  | (0.2 points) |      |          | 61.4 | % |        |  | 63.8 | % |        | (2.4 points)





---



##### 



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 Orchid, Hawaii;
The Fairmont Copley Plaza Boston                                                                                             
|                  |  |                                                                                                                                                                                     
|Fairmont Managed: |  | The Fairmont Southampton; The Fairmont Orchid, Hawaii;
The Fairmont Washington, D.C.; The Fairmont Olympic
Hotel, Seattle; The Fairmont Sonoma Mission Inn & Spa;
The Fairmont Dubai
|                  |  |                                                                                                                                                                                     
|Delta Managed:    |  | Delta Sun Peaks Resort; Delta St. Eugene Mission Resort                                                                                                                             

FHRs 2003 operating statistics for its 2004 comparable hotel portfolios are
now available on the Companys website (www.fairmont.com/investor).



|1. |  | EBITDA is defined as earnings before interest, taxes, amortization, other
income and expenses and reorganization and corporate expenses. 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.
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | 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.                                     

-30-

|          |  |                             |  |                                      
|--------- |  | --------------------------- |  | -------------------------------------
|Contacts: |  | M. Jerry Patava             |  | Emma Thompson                        
|          |  | Executive Vice President    |  | Executive Director Investor Relations
|          |  | and Chief Financial Officer |  | Tel: 416.874.2485                    
|          |  | Tel: 416.874.2450           |  | Email: investor@fairmont.com         
|          |  |                             |  | Website: www.fairmont.com            





---



##### 



Fairmont Hotels & Resorts Inc.
Consolidated Balance Sheets
(Stated in millions of U.S. dollars)
(Unaudited)

|                                                         |                                            |   |             |       |             |   |         |       | 
|-------------------------------------------------------- | ------------------------------------------ | - | ----------- | ----- | ----------- | - | ------- | ----- | 
|                                                         |                                            |   | December 31 |       | December 31
|                                                         |                                            |   | 2003        |       | 2002       
|                                                         |                                            |   |             |       |            
|ASSETS                                                   |                                            |   |             |       |             |   |         |      
|Current assets                                           |                                            |   |             |       |             |   |         |      
|                                                         | Cash and cash equivalents                  |   | $           | 31.7  |             |   | $       | 49.0  | 
|                                                         | Accounts receivable                        |   |             | 64.1  |             |   |         | 47.0  | 
|                                                         | Inventory                                  |   |             | 14.2  |             |   |         | 12.5  | 
|                                                         | Prepaid expenses and other                 |   |             | 24.6  |             |   |         | 10.9  | 
|                                                         |                                            |   |             |       |             |   |         |       | 
|                                                         |                                            |   | 134.6       |       |             |   | 119.4   |      
|Investments in partnerships and corporations             |                                            |   | 53.1        |       |             |   | 68.9    |      
|Investment in Legacy Hotels Real Estate Investment Trust |                                            |   | 105.9       |       |             |   | 96.4    |      
|Non-hotel real estate                                    |                                            |   | 95.1        |       |             |   | 88.8    |      
|Property and equipment                                   |                                            |   | 1,656.2     |       |             |   | 1,441.1 |      
|Goodwill                                                 |                                            |   | 132.0       |       |             |   | 123.0   |      
|Intangible assets                                        |                                            |   | 216.7       |       |             |   | 201.7   |      
|Other assets and deferred charges (note 4)               |                                            |   | 109.4       |       |             |   | 83.7    |      
|                                                         |                                            |   |             |       |             |   |         |       | 
|                                                         |                                            | $ | 2,503.0     |       |             | $ | 2,223.0 |      
|                                                         |                                            |   |             |       |             |   |         |       | 
|                                                         |                                            |   |             |       |             |   |         |      
|LIABILITIES AND SHAREHOLDERS EQUITY                     |                                            |   |             |       |             |   |         |      
|Current liabilities                                      |                                            |   |             |       |             |   |         |      
|                                                         | Accounts payable and accrued liabilities   |   | $           | 121.3 |             |   | $       | 101.3 | 
|                                                         | Taxes payable                              |   |             | 2.7   |             |   |         | 5.3   | 
|                                                         | Dividends payable                          |   |             | 3.2   |             |   |         | 2.4   | 
|                                                         | Current portion of long-term debt (note 6) |   |             | 117.8 |             |   |         | 72.3  | 
|                                                         |                                            |   |             |       |             |   |         |       | 
|                                                         |                                            |   | 245.0       |       |             |   | 181.3   |      
|Long-term debt                                           |                                            |   | 539.8       |       |             |   | 463.2   |      
|Other liabilities                                        |                                            |   | 91.4        |       |             |   | 82.8    |      
|Future income taxes (note 7)                             |                                            |   | 80.9        |       |             |   | 96.4    |      
|                                                         |                                            |   |             |       |             |   |         |       | 
|                                                         |                                            |   | 957.1       |       |             |   | 823.7   |      
|                                                         |                                            |   |             |       |             |   |         |       | 
|Shareholders equity (note 8)                            |                                            |   | 1,545.9     |       |             |   | 1,399.3 |      
|                                                         |                                            |   |             |       |             |   |         |       | 
|                                                         |                                            | $ | 2,503.0     |       |             | $ | 2,223.0 |      
|                                                         |                                            |   |             |       |             |   |         |       | 





---



##### 



Fairmont Hotels & Resorts Inc.
Consolidated Statements of Income
(Stated in millions of U.S. dollars)
(Unaudited)

|                                                                            |                                                       |   |                                |       |                        |   |       |       |      |   |       |       |   |   |       |       | 
|--------------------------------------------------------------------------- | ----------------------------------------------------- | - | ------------------------------ | ----- | ---------------------- | - | ----- | ----- | ---- | - | ----- | ----- | - | - | ----- | ----- | 
|                                                                            |                                                       |   | Three months ended December 31 |       | Year ended December 31
|                                                                            |                                                       |   |                                |       |                       
|                                                                            |                                                       |   | 2003                           |       | 2002                   |   | 2003  |       | 2002
|                                                                            |                                                       |   |                                |       |                        |   |       |       |     
|Revenues                                                                    |                                                       |   |                                |       |                        |   |       |       |      |   |       |       |   |   |       |      
|                                                                            | Hotel ownership operations                            |   | $                              | 122.4 |                        |   | $     | 109.1 |      |   | $     | 584.9 |   |   | $     | 516.6 | 
|                                                                            | Management operations                                 |   |                                | 9.8   |                        |   |       | 10.5  |      |   |       | 37.6  |   |   |       | 36.1  | 
|                                                                            | Real estate activities                                |   |                                | 4.9   |                        |   |       | 6.0   |      |   |       | 36.3  |   |   |       | 37.9  | 
|                                                                            |                                                       |   |                                |       |                        |   |       |       |      |   |       |       |   |   |       |       | 
|Operating revenues                                                          |                                                       |   | 137.1                          |       |                        |   | 125.6 |       |      |   | 658.8 |       |   |   | 590.6 |      
|                                                                            | Other revenues from managed and franchised properties |   |                                | 7.8   |                        |   |       | 6.7   |      |   |       | 32.6  |   |   |       | 27.7  | 
|                                                                            |                                                       |   |                                |       |                        |   |       |       |      |   |       |       |   |   |       |       | 
|                                                                            |                                                       |   | 144.9                          |       |                        |   | 132.3 |       |      |   | 691.4 |       |   |   | 618.3 |      
|Expenses                                                                    |                                                       |   |                                |       |                        |   |       |       |      |   |       |       |   |   |       |      
|                                                                            | Hotel ownership operations                            |   |                                | 107.2 |                        |   |       | 92.3  |      |   |       | 460.9 |   |   |       | 367.9 | 
|                                                                            | Management operations                                 |   |                                | 6.7   |                        |   |       | 2.3   |      |   |       | 22.5  |   |   |       | 14.4  | 
|                                                                            | Real estate activities                                |   |                                | 7.1   |                        |   |       | 0.2   |      |   |       | 23.6  |   |   |       | 26.4  | 
|                                                                            |                                                       |   |                                |       |                        |   |       |       |      |   |       |       |   |   |       |       | 
|Operating expenses                                                          |                                                       |   | 121.0                          |       |                        |   | 94.8  |       |      |   | 507.0 |       |   |   | 408.7 |      
|                                                                            | Other expenses from managed and franchised properties |   |                                | 9.5   |                        |   |       | 7.2   |      |   |       | 35.1  |   |   |       | 29.0  | 
|                                                                            |                                                       |   |                                |       |                        |   |       |       |      |   |       |       |   |   |       |       | 
|                                                                            |                                                       |   | 130.5                          |       |                        |   | 102.0 |       |      |   | 542.1 |       |   |   | 437.7 |      
|Income (loss) from equity investments and other                             |                                                       |   | (4.5                           | )     |                        |   | 2.5   |       |      |   | (6.9  | )     |   |   | 17.7  |      
|                                                                            |                                                       |   |                                |       |                        |   |       |       |      |   |       |       |   |   |       |       | 
|Operating income before undernoted items                                    |                                                       |   | 9.9                            |       |                        |   | 32.8  |       |      |   | 142.4 |       |   |   | 198.3 |      
|Amortization                                                                |                                                       |   | 16.5                           |       |                        |   | 10.5  |       |      |   | 67.5  |       |   |   | 52.4  |      
|Other (income) expenses, net                                                |                                                       |   | 2.1                            |       |                        |   | 0.8   |       |      |   | 2.1   |       |   |   | (4.9  | )    
|Reorganization and corporate expenses                                       |                                                       |   |                               |       |                        |   | 0.9   |       |      |   |      |       |   |   | 2.2   |      
|Interest expense, net                                                       |                                                       |   | 10.5                           |       |                        |   | 5.6   |       |      |   | 33.6  |       |   |   | 19.1  |      
|                                                                            |                                                       |   |                                |       |                        |   |       |       |      |   |       |       |   |   |       |       | 
|Income (loss) before income tax expense and non-controlling interest        |                                                       |   | (19.2                          | )     |                        |   | 15.0  |       |      |   | 39.2  |       |   |   | 129.5 |      
|                                                                            |                                                       |   |                                |       |                        |   |       |       |      |   |       |       |   |   |       |       | 
|Income tax expense (recovery)                                               |                                                       |   |                                |       |                        |   |       |       |      |   |       |       |   |   |       |      
|                                                                            | Current                                               |   |                                | 3.8   |                        |   |       | 3.0   |      |   |       | 12.8  |   |   |       | 12.0  | 
|                                                                            | Future (note 7)                                       |   |                                | (9.5  | )                      |   |       | 1.1   |      |   |       | (24.3 | ) |   |       | 23.8  | 
|                                                                            |                                                       |   |                                |       |                        |   |       |       |      |   |       |       |   |   |       |       | 
|                                                                            |                                                       |   | (5.7                           | )     |                        |   | 4.1   |       |      |   | (11.5 | )     |   |   | 35.8  |      
|                                                                            |                                                       |   |                                |       |                        |   |       |       |      |   |       |       |   |   |       |       | 
|Non-controlling interest                                                    |                                                       |   |                               |       |                        |   | (0.1  | )     |      |   |      |       |   |   | 1.2   |      
|                                                                            |                                                       |   |                                |       |                        |   |       |       |      |   |       |       |   |   |       |       | 
|Net income (loss)                                                           |                                                       | $ | (13.5                          | )     |                        | $ | 11.0  |       |      | $ | 50.7  |       |   | $ | 92.5  |      
|                                                                            |                                                       |   |                                |       |                        |   |       |       |      |   |       |       |   |   |       |       | 
|Weighted average number of common shares outstanding (in millions) (note 8) |                                                       |   |                                |       |                        |   |       |       |      |   |       |       |   |   |       |      
|                                                                            | Basic                                                 |   |                                | 79.1  |                        |   |       | 78.6  |      |   |       | 79.2  |   |   |       | 78.4  | 
|                                                                            | Diluted                                               |   |                                | 79.1  |                        |   |       | 79.6  |      |   |       | 80.0  |   |   |       | 79.7  | 
|Basic earnings (loss) per common share                                      |                                                       | $ | (0.17                          | )     |                        | $ | 0.14  |       |      | $ | 0.64  |       |   | $ | 1.18  |      
|Diluted earnings (loss) per common share                                    |                                                       | $ | (0.17                          | )     |                        | $ | 0.14  |       |      | $ | 0.63  |       |   | $ | 1.16  |      





---



##### 



Fairmont Hotels & Resorts Inc.
Consolidated Statements of Cash Flows
(Stated in millions of U.S. dollars)
(Unaudited)

|                                                          |                                                 |   |                                |      |                        |   |        |       |      |   |        |       |   |   |        |       |  
|--------------------------------------------------------- | ----------------------------------------------- | - | ------------------------------ | ---- | ---------------------- | - | ------ | ----- | ---- | - | ------ | ----- | - | - | ------ | ----- | -
|                                                          |                                                 |   | Three months ended December 31 |      | Year ended December 31
|                                                          |                                                 |   |                                |      |                       
|                                                          |                                                 |   | 2003                           |      | 2002                   |   | 2003   |       | 2002
|                                                          |                                                 |   |                                |      |                        |   |        |       |     
|Cash provided by (used in)                                |                                                 |   |                                |      |                        |   |        |       |      |   |        |       |   |   |        |      
|Operating activities                                      |                                                 |   |                                |      |                        |   |        |       |      |   |        |       |   |   |        |      
|Net income (loss)                                         |                                                 | $ | (13.5                          | )    |                        | $ | 11.0   |       |      | $ | 50.7   |       |   | $ | 92.5   |      
|Items not affecting cash                                  |                                                 |   |                                |      |                        |   |        |       |      |   |        |       |   |   |        |      
|                                                          | Amortization of property and equipment          |   |                                | 15.7 |                        |   |        | 9.9   |      |   |        | 64.8  |   |   |        | 50.0  |  
|                                                          | Amortization of intangible assets               |   |                                | 0.8  |                        |   |        | 0.6   |      |   |        | 2.7   |   |   |        | 2.4   |  
|                                                          | (Income) loss from equity investments and other |   |                                | 4.5  |                        |   |        | (2.5  | )    |   |        | 6.9   |   |   |        | (17.7 | )
|                                                          | Future income taxes                             |   |                                | (9.5 | )                      |   |        | 1.1   |      |   |        | (24.3 | ) |   |        | 23.8  |  
|                                                          | Non-controlling interest                        |   |                                |     |                        |   |        | (0.1  | )    |   |        |      |   |   |        | 1.2   |  
|                                                          | Distributions from investments                  |   |                                | 2.3  |                        |   |        | 7.2   |      |   |        | 6.7   |   |   |        | 15.1  |  
|                                                          | Other                                           |   |                                | (2.6 | )                      |   |        | (13.9 | )    |   |        | (11.6 | ) |   |        | (22.3 | )
|Change in non-hotel real estate                           |                                                 |   | 5.9                            |      |                        |   | (0.2   | )     |      |   | 13.3   |       |   |   | 6.9    |      
|Changes in non-cash working capital items (note 10)       |                                                 |   | 19.2                           |      |                        |   | 20.5   |       |      |   | (0.3   | )     |   |   | (10.5  | )    
|                                                          |                                                 |   |                                |      |                        |   |        |       |      |   |        |       |   |   |        |      
|                                                          |                                                 |   | 22.8                           |      |                        |   | 33.6   |       |      |   | 108.9  |       |   |   | 141.4  |      
|                                                          |                                                 |   |                                |      |                        |   |        |       |      |   |        |       |   |   |        |      
|Investing activities                                      |                                                 |   |                                |      |                        |   |        |       |      |   |        |       |   |   |        |      
|Additions to property and equipment                       |                                                 |   | (31.7                          | )    |                        |   | (18.7  | )     |      |   | (87.2  | )     |   |   | (84.3  | )    
|Acquisitions, net of cash acquired (note 3)               |                                                 |   |                               |      |                        |   | (136.0 | )     |      |   | 6.0    |       |   |   | (136.0 | )    
|Issuance of notes receivable                              |                                                 |   | (3.0                           | )    |                        |   |       |       |      |   | (31.3  | )     |   |   |       |      
|Collection of notes receivable                            |                                                 |   | 7.2                            |      |                        |   |       |       |      |   | 7.2    |       |   |   |       |      
|Investments in Legacy Hotels Real Estate Investment Trust |                                                 |   |                               |      |                        |   | (31.9  | )     |      |   |       |       |   |   | (37.8  | )    
|Investments in partnerships and corporations              |                                                 |   | (0.9                           | )    |                        |   |       |       |      |   | (1.6   | )     |   |   | (8.9   | )    
|Other                                                     |                                                 |   |                               |      |                        |   | (1.0   | )     |      |   |       |       |   |   | (1.0   | )    
|                                                          |                                                 |   |                                |      |                        |   |        |       |      |   |        |       |   |   |        |      
|                                                          |                                                 |   | (28.4                          | )    |                        |   | (187.6 | )     |      |   | (106.9 | )     |   |   | (268.0 | )    
|                                                          |                                                 |   |                                |      |                        |   |        |       |      |   |        |       |   |   |        |      
|Financing activities                                      |                                                 |   |                                |      |                        |   |        |       |      |   |        |       |   |   |        |      
|Issuance of long-term debt                                |                                                 |   | 1.2                            |      |                        |   | 141.4  |       |      |   | 162.7  |       |   |   | 238.4  |      
|Repayment of long-term debt                               |                                                 |   | (272.7                         | )    |                        |   | (6.0   | )     |      |   | (423.9 | )     |   |   | (43.9  | )    
|Net proceeds from issuance of convertible notes           |                                                 |   | 262.5                          |      |                        |   |       |       |      |   | 262.5  |       |   |   |       |      
|Issuance of common shares                                 |                                                 |   | 0.4                            |      |                        |   | 4.2    |       |      |   | 1.0    |       |   |   | 4.7    |      
|Repurchase of common shares                               |                                                 |   |                               |      |                        |   |       |       |      |   | (16.8  | )     |   |   | (73.2  | )    
|Dividends paid                                            |                                                 |   |                               |      |                        |   |       |       |      |   | (4.8   | )     |   |   | (3.2   | )    
|                                                          |                                                 |   |                                |      |                        |   |        |       |      |   |        |       |   |   |        |      
|                                                          |                                                 |   | (8.6                           | )    |                        |   | 139.6  |       |      |   | (19.3  | )     |   |   | 122.8  |      
|                                                          |                                                 |   |                                |      |                        |   |        |       |      |   |        |       |   |   |        |      
|Effect of exchange rate changes on cash                   |                                                 |   | (3.5                           | )    |                        |   | (0.4   | )     |      |   |       |       |   |   | 0.1    |      
|                                                          |                                                 |   |                                |      |                        |   |        |       |      |   |        |       |   |   |        |      
|Decrease in cash                                          |                                                 |   | (17.7                          | )    |                        |   | (14.8  | )     |      |   | (17.3  | )     |   |   | (3.7   | )    
|Cash  beginning of period                                |                                                 |   | 49.4                           |      |                        |   | 63.8   |       |      |   | 49.0   |       |   |   | 52.7   |      
|                                                          |                                                 |   |                                |      |                        |   |        |       |      |   |        |       |   |   |        |      
|Cash   end of period                                     |                                                 | $ | 31.7                           |      |                        | $ | 49.0   |       |      | $ | 31.7   |       |   | $ | 49.0   |      
|                                                          |                                                 |   |                                |      |                        |   |        |       |      |   |        |       |   |   |        |      





---



##### 



Fairmont Hotels & Resorts Inc.
Consolidated Statements of Retained Earnings (Deficit)
(Stated in millions of U.S. dollars)
(Unaudited)

|                                     |  |                                |       |                         |  |      |      |      |  |   |      |   |  |   |       |  
|------------------------------------ |  | ------------------------------ | ----- | ----------------------- |  | ---- | ---- | ---- |  | - | ---- | - |  | - | ----- | -
|                                     |  | Three months ended December 31 |       | Years ended December 31
|                                     |  |                                |       |                        
|                                     |  | 2003                           |       | 2002                    |  | 2003 |      | 2002
|                                     |  |                                |       |                         |  |      |      |     
|Balance  Beginning of period        |  | $                              | 94.8  |                         |  | $    | 29.9 |      |  | $ | 38.5 |   |  | $ | (19.6 | )
|Net income (loss)                    |  |                                | (13.5 | )                       |  |      | 11.0 |      |  |   | 50.7 |   |  |   | 92.5  |  
|                                     |  |                                |       |                         |  |      |      |      |  |   |      |   |  |   |       |  
|                                     |  |                                | 81.3  |                         |  |      | 40.9 |      |  |   | 89.2 |   |  |   | 72.9  |  
|Repurchase of common shares (note 8) |  |                                |      |                         |  |      |     |      |  |   | (5.5 | ) |  |   | (30.4 | )
|Dividends                            |  |                                | (3.2  | )                       |  |      | (2.4 | )    |  |   | (5.6 | ) |  |   | (4.0  | )
|                                     |  |                                |       |                         |  |      |      |      |  |   |      |   |  |   |       |  
|Balance  End of period              |  | $                              | 78.1  |                         |  | $    | 38.5 |      |  | $ | 78.1 |   |  | $ | 38.5  |  
|                                     |  |                                |       |                         |  |      |      |      |  |   |      |   |  |   |       |  





---



##### 



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 116 years and currently manages properties principally under the
Fairmont and Delta brands. At December 31, 2003, FHR managed or franchised 82
luxury and first-class hotels. FHR owns 83.5% of Fairmont Hotels Inc.
(Fairmont), which at December 31, 2003, managed 43 luxury 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 39 Canadian
hotels and resorts at December 31, 2003.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | As at December 31, 2003, FHR had hotel ownership interests ranging from
approximately 20% to 100% in 23 properties, located in Canada, the United
States, Mexico, Bermuda and Barbados. FHR also has an approximate 35% 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, as well as a vacation ownership product, which has commenced
construction at its first location in Acapulco, Mexico.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|  
|   |  | Results for the three months ended December 31, 2003 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 in
contrast to fixed costs such as amortization and interest, which are not
significantly impacted by seasonal or short-term variations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|  
|2. |  | These interim consolidated financial statements do not include all
disclosures as required by Canadian generally accepted accounting principles
for annual consolidated financial statements and should be read in conjunction
with the audited consolidated financial statements for the year ended December
31, 2002 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, 2002 audited consolidated
financial statements, except as discussed below.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|  
|   |  | Long-lived assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|  
|   |  | Effective January 1, 2003, FHR adopted the new recommendations of The
Canadian Institute of Chartered Accountants (CICA) with respect to accounting
for the impairment of long-lived assets. This standard requires that
long-lived assets be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. Long-lived assets are grouped at the lowest level for which
identifiable cash flows are largely independent, when testing for and measuring
impairment. Under the new standard, a two-step process is used to assess the
impairment of long-lived assets held for use, with the first step determining
when impairment is recognized and the second step measuring the amount of the
impairment. Impairment losses are recognized when the carrying amount of
long-lived assets exceeds the sum of the undiscounted cash flows expected to
result from their use and eventual disposition and are measured as the amount
by which the long-lived assets carrying amount exceeds its fair
value. Adoption of this new standard did not have an impact on
FHRs financial position, results of operations or cash flows.
|  
|   |  | Also effective January 1, 2003, FHR adopted the new CICA recommendations
relating to the disposal of long-lived assets and discontinued operations.
Subject to certain criteria, long-lived assets and any associated assets or
liabilities that management expects to dispose of by sale are classified as
held for sale. The related results of operations from these assets classified
as held for sale are reported in discontinued operations if certain criteria
are met, with reclassification of prior years related operating results.
Assets to be disposed of are reported at the lower of the carrying amount and
fair value less costs to sell. Adoption of this new standard did not have an
impact on FHRs financial position, results of operations or cash flows.                                                                                                                                                                                                                                                                                                                                                                                                                             
|  
|   |  | Asset Retirement Obligations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|  
|   |  | Effective January 1, 2003, FHR adopted the new recommendations of the CICA
with respect to accounting for asset retirement obligations. This standard
requires that the fair value of a liability for an asset retirement obligation
be recognized in the period in which it is incurred if a reasonable estimate of
fair value can be made. The associated asset retirement costs are capitalized
as part of the carrying amount of the long-lived asset and subsequently
amortized over the assets useful life. Adoption of this new standard
resulted in an increase to property and equipment and other liabilities of $0.7.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|  
|   |  | Stock-based Compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|  
|   |  | Effective January 1, 2003, FHR prospectively adopted, the new
recommendations of the CICA with respect to accounting for stock-based
compensation. This standard requires that compensation expense be recognized
in the consolidated statements of income using the fair value based method for
stock options granted in 2003 onward. Adoption of this new standard resulted
in an increase to hotel ownership expenses in 2003 of $0.4 and contributed
surplus of $0.4. Proforma disclosures of net earnings and earnings per share
have been provided as if the fair value based accounting method had been used
to account for stock-based compensation for any options granted after January
1, 2002 and but before January 1, 2003.                                                                                                                                                                                                                                                                                                                                                                                                                                                                        





---



##### 



Fairmont Hotels & Resorts Inc.
Notes to Consolidated Financial Statements
(Stated in millions of U.S. dollars)
(Unaudited)



|   |  | Vacation Ownership                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | Revenues related to vacation ownership are recognized when a minimum of
10% of the purchase price for the vacation ownership interest has been received
in cash, the period of cancellation with refund has expired, receivables are
deemed collectible, and certain minimum sales and construction levels have been
attained. Revenues related to projects still under construction are recognized
under the percentage-of-completion method. For sales that do not meet these
criteria, revenue is deferred.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|  
|3. |  | Acquisition                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|  
|   |  | In February 2003, FHR acquired the remaining 50% equity interest in The
Fairmont Copley Plaza Boston from entities controlled by Prince Alwaleed Bin
Talal Bin Abdulaziz Al Saud of Saudi Arabia. The total purchase price for 100%
of The Fairmont Copley Plaza Boston, including the 50% already owned, was
approximately $117.0 and was satisfied by the issuance of one million common
shares at a fair market value of $21.49 per share, the assumption of a mortgage
at $64.5 and cash paid of $30.7. FHR purchased the initial 50% equity
interest in the hotel in July 2001 for cash. The acquisition was accounted for
using the step purchase method, and 100% of the results of the hotel have been
included in the consolidated statements of income from February 10, 2003. The
mortgage, secured by substantially all assets and an assignment of auxiliary
rents of The Fairmont Copley Plaza Boston, is due March 5, 2007 and bears
interest at floating rates based on LIBOR plus 225 basis points. FHR has
entered into an interest rate contract to cap the LIBOR rate at 6.5%.
|  
|   |  | The total cost of the hotel, including the 50% interest already owned,
less cash acquired of $14.8, has been allocated to the identifiable tangible
assets acquired and liabilities assumed on the basis of their respective
estimated fair values on the acquisition date, as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

|                                  |  |   |       |  
|--------------------------------- |  | - | ----- | -
|Land                              |  | $ | 25.1  |  
|Building                          |  |   | 77.8  |  
|Furniture, fixtures and equipment |  |   | 2.5   |  
|Long-term debt                    |  |   | (64.5 | )
|Current assets                    |  |   | 3.2   |  
|Current liabilities               |  |   | (6.8  | )
|                                  |  |   |       |  
|                                  |  | $ | 37.3  |  
|                                  |  |   |       |  



|4. |  | Other assets and deferred charges at December 31, 2003, includes $2.4 in
cash which is held in reserve. This cash is to be used for certain capital
expenditures.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|5. |  | On December 8, 2003, FHR issued $270.0 of convertible senior notes
(Convertible Notes). The Convertible Notes mature on December 1, 2023 and
bear interest of 3.75% per annum. Interest is payable semiannually in arrears
on June 1 and December 1 of each year. FHR may call the Convertible Notes in
exchange for cash any time after January 20, 2009 for a price equal to 100% of
the principal amount of Convertible Notes plus accrued and unpaid interest.
Holders may put the Convertible Notes to FHR in exchange for cash on January
20, 2009, December 1, 2013 and 2018 at a purchase price equal to 100% of the
principal amount of the Convertible Notes plus accrued and unpaid interest.
Upon occurrence of certain events, holders of the Convertible Notes will have
the right to convert them to common shares at an initial conversion price of
approximately $37.73 per common share. The Convertible Notes are senior
unsecured obligations and rank equally with all existing and future unsecured
and unsubordinated indebtedness.
|  
|   |  | The Convertible Notes have been allocated between debt and equity elements
classified separately on the balance sheet. Upon issuance $19.2 was recorded as
other equity and $250.8 was recorded as long-term debt.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|  
|6. |  | Borrowings under a bank credit facility that expires on September 10, 2004
are classified as current debt. FHR is currently negotiating a new bank
facility.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|  
|7. |  | A $24.4 recovery of future income tax was recorded in June 2003 as a result
of a favorable tax reassessment.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                





---



##### 



Fairmont Hotels & Resorts Inc.
Notes to Consolidated Financial Statements
(Stated in millions of U.S. dollars)
(Unaudited)



|8. |  | Shareholders equity
|-- |  | --------------------

|                                         |  |              |         |      |  |   |         | 
|---------------------------------------- |  | ------------ | ------- | ---- |  | - | ------- | 
|                                         |  | December 31,
|                                         |  |             
|                                         |  | 2003         |         | 2002
|                                         |  |              |         |     
|Common shares                            |  | $            | 1,202.2 |      |  | $ | 1,191.5 | 
|Other equity (note 5)                    |  |              | 19.2    |      |  |   |        | 
|Contributed surplus                      |  |              | 142.3   |      |  |   | 141.9   | 
|Foreign currency translation adjustments |  |              | 104.1   |      |  |   | 27.4    | 
|Retained earnings                        |  |              | 78.1    |      |  |   | 38.5    | 
|                                         |  |              |         |      |  |   |         | 
|                                         |  | $            | 1,545.9 |      |  | $ | 1,399.3 | 
|                                         |  |              |         |      |  |   |         | 



| |  | The diluted weighted-average number of common shares outstanding is
calculated as follows:
| |  | ------------------------------------------------------------------------------------------

|                                                               |  |                                |      |                        |  |      |      |      |  |  |      |  |  |  |      | 
|-------------------------------------------------------------- |  | ------------------------------ | ---- | ---------------------- |  | ---- | ---- | ---- |  |  | ---- |  |  |  | ---- | 
|                                                               |  | Three months ended December 31 |      | Year ended December 31
|                                                               |  |                                |      |                       
|                                                               |  | 2003                           |      | 2002                   |  | 2003 |      | 2002
|                                                               |  |                                |      |                        |  |      |      |     
|                                                               |  | (in millions)                  |      | (in millions)         
|Weighted-average number of common shares
outstanding  basic   |  |                                | 79.1 |                        |  |      | 78.6 |      |  |  | 79.2 |  |  |  | 78.4 | 
|Stock options(1)                                               |  |                                | 0.8  |                        |  |      | 1.0  |      |  |  | 0.8  |  |  |  | 1.3  | 
|                                                               |  |                                |      |                        |  |      |      |      |  |  |      |  |  |  |      | 
|Weighted-average number of common shares
outstanding  diluted |  |                                | 79.9 |                        |  |      | 79.6 |      |  |  | 80.0 |  |  |  | 79.7 | 
|                                                               |  |                                |      |                        |  |      |      |      |  |  |      |  |  |  |      | 

| | 
| | 

| | (1) |  | The calculation of diluted loss per common share for the three months
ended December 31, 2003 excludes stock options as the impact of these exercises
would be anti-dilutive.
| | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Effective October 8, 2003, FHR received regulatory approval for the
repurchase for cancellation of up to approximately 3.9 million or 5% of its
outstanding common shares. For the year ended December 31, 2003, FHR
repurchased 747,100 shares (nil for the fourth quarter) for total consideration
of $16.8 ($nil for the fourth quarter), of which, $11.3 was charged to common
shares and $5.5 was charged to retained earnings. During the year ended
December 31, 2003, FHR issued 73,755 shares (26,118 shares in the fourth
quarter) pursuant to the Key Employee Stock Option Plan. $1.0 ($0.4 for the
fourth quarter) was credited to common shares for proceeds from options
exercised. At December 31, 2003, 79,106,277 common shares were outstanding
(2002  78,779,622).
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | During the year ended December 31, 2003, 107,000 (nil in the fourth
quarter) stock options were granted. Compensation expense for these options has
been recognized using the fair value based method.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| |  | 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 December 31, |       | Year ended December 31,
|                                                  |  |                                 |       |                        
|                                                  |  | 2003                            |       | 2002                    |  | 2003 |      | 2002
|                                                  |  |                                 |       |                         |  |      |      |     
|Reported net income (loss)                        |  | $                               | (13.5 | )                       |  | $    | 11.0 |      |  | $ | 50.7 |  |  | $ | 92.5 | 
|Net income (loss) assuming fair value method used |  | $                               | (13.7 | )                       |  | $    | 11.0 |      |  | $ | 50.1 |  |  | $ | 92.1 | 
|Assuming fair value method used                   |  |                                 |       |                         |  |      |      |      |  |   |      |  |  |   |      | 
|Basic earnings (loss) per share                   |  | $                               | (0.17 | )                       |  | $    | 0.14 |      |  | $ | 0.64 |  |  | $ | 1.17 | 
|Diluted earnings (loss) per share                 |  | $                               | (0.17 | )                       |  | $    | 0.14 |      |  | $ | 0.63 |  |  | $ | 1.16 | 



| |  | The weighted-average fair value of options granted during 2003 was
Cdn$10.12 (2002  Cdn$12.73) per option.
| |  | -----------------------------------------------------------------------------------------------------------





---



##### 



Fairmont Hotels & Resorts Inc.
Notes to Consolidated Financial Statements
(Stated in millions of U.S. dollars)
(Unaudited)



|9.  |  | In September 2003, FHRs two owned properties in Bermuda suffered extensive
damage from Hurricane Fabian. FHR has insurance coverage for both property
damage and business interruption, subject to deductible amounts and uninsured
costs. For the year ended December 31 2003, hotel ownership expenses include a
charge of $9.0 ($1.6 for the fourth quarter) related to FHRs insurance
deductible and uninsured costs.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|10. |  | Changes in non-cash working capital:                                                                                                                                                                                                                                                                                                                                                                                       

|                                           |  |                                |      |                        |  |      |      |      |  |   |      |   |  |   |       |  
|------------------------------------------ |  | ------------------------------ | ---- | ---------------------- |  | ---- | ---- | ---- |  | - | ---- | - |  | - | ----- | -
|                                           |  | Three months ended December 31 |      | Year ended December 31
|                                           |  |                                |      |                       
|                                           |  | 2003                           |      | 2002                   |  | 2003 |      | 2002
|                                           |  |                                |      |                        |  |      |      |     
|Decrease (increase) in current assets      |  |                                |      |                        |  |      |      |      |  |   |      |   |  |   |       |  
|Accounts receivable                        |  | $                              | 3.4  |                        |  | $    | 14.7 |      |  | $ | 4.3  |   |  | $ | 1.2   |  
|Inventory                                  |  |                                | (0.3 | )                      |  |      | (0.9 | )    |  |   |     |   |  |   | (0.9  | )
|Prepaid expenses and other                 |  |                                | 4.8  |                        |  |      | 8.6  |      |  |   | 3.9  |   |  |   | (2.1  | )
|Increase (decrease) in current liabilities |  |                                |      |                        |  |      |      |      |  |   |      |   |  |   |       |  
|Accounts payable and accrued liabilities   |  |                                | 8.4  |                        |  |      | (1.8 | )    |  |   | (8.9 | ) |  |   | (11.9 | )
|Taxes payable                              |  |                                | 2.9  |                        |  |      | (0.1 | )    |  |   | 0.4  |   |  |   | 3.2   |  
|                                           |  |                                |      |                        |  |      |      |      |  |   |      |   |  |   |       |  
|                                           |  | $                              | 19.2 |                        |  | $    | 20.5 |      |  | $ | (0.3 | ) |  | $ | (10.5 | )
|                                           |  |                                |      |                        |  |      |      |      |  |   |      |   |  |   |       |  



|11. |  | In February 2003, FHR completed a $120.0 financing secured by substantially
all assets and an assignment of auxiliary rents of The Fairmont Kea Lani Maui.
The mortgage is due March 1, 2006 and bears interest at the greater of 4.25%
and LIBOR plus 310 basis points. FHR has entered into an interest rate contract
to cap the LIBOR rate at 9.0%.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|12. |  | Guarantees
Significant guarantees that have been provided to third parties include
the following:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   
|    |  | Debt guarantees                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   
|    |  | FHR has provided guarantees totaling $12.0 related to debts incurred by
certain hotels in which FHR holds a minority equity interest. In the event that
one of these hotels fails to meet certain financial obligations, the lenders
may draw upon these guarantees. The term of these guarantees are equal to the
terms of the related debts, which are all due on demand. FHR has collateral
security on the underlying hotel assets if the guarantees are drawn upon. No
amounts have been recorded in the financial statements for amounts that may be
potentially owed under these guarantees.                                                                                                                                                                                                                                                                                                                                                      
|   
|    |  | Business dispositions                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   
|    |  | In the sale of all or a part of a business, FHR may agree to indemnify
against claims related to the period the business was owned by FHR, in the
areas of tax and environmental matters. The terms of such indemnification
agreements are subject to certain actions that are under the control of the
acquirer and the amount of the indemnification is not limited. The nature of
these indemnification agreements prevents FHR from estimating the maximum
potential liability that it could be required to pay to counter parties. FHR
has accruals in its financial statements of approximately $9 related to
potential claims under the indemnifications made to date.                                                                                                                                                                                                                                                                            
|   
|    |  | Director and officer indemnification agreements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   
|    |  | FHR has entered into indemnification agreements with its current and
former directors and officers to indemnify them, to the extent permitted by
law, against any and all charges, costs, expenses, amounts paid in settlement
and damages incurred by the directors and officers as a result of any lawsuit
or any other judicial, administrative or investigative proceeding in which the
directors and officers are sued as a result of their service. These
indemnification claims will be subject to any statutory or other legal
limitation period. The nature of the indemnification agreements prevents FHR
from making a reasonable estimate of the maximum potential amount it could be
required to pay to counter parties. FHR has purchased directors and officers
liability insurance. No amount has been recorded in the financial statements
with respect to these indemnification agreements as no claims are outstanding
at this date.
|   
|    |  | Other indemnification agreements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   
|    |  | In the normal course of operations, FHR may provide indemnification
agreements, other than those listed above, to counterparties that would require
FHR to compensate them for costs incurred as a result of changes in laws and
regulations or as a result of litigation claims or statutory sanctions that may
be suffered by the counter party as a consequence of the transaction. The
terms of these indemnification agreements will vary based upon the contract.
The nature of the indemnification agreements prevents FHR from making a
reasonable estimate of the maximum potential amount it could be required to pay
to counter parties. No amount has been recorded in the financial statements
with respect to these indemnification agreements.                                                                                                                                                                                            





---



##### 



Fairmont Hotels & Resorts Inc.
Notes to Consolidated Financial Statements
(Stated in millions of U.S. dollars)
(Unaudited)



|13. |  | Derivative financial instruments such as swaps, options and forward
contracts are used by FHR in the management of its foreign currency and
interest rate exposures. FHRs policy is to not use derivative financial
instruments for trading or speculative purposes.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | At the inception of a hedge, FHR documents the relationship between the
hedging instruments and the hedged items. This process includes linking the
derivatives to specific assets and liabilities on the balance sheet or to
specific firm commitments or forecasted transactions. FHR assesses the
effectiveness of the hedge at the inception and throughout the contract period
by considering factors such as the term of the instrument, the notional
settlement amount of the derivative as compared to the dollar amount of the
item being hedged and any other applicable factors. At the end of each period,
FHR records any changes in fair value related to the portion of the derivative
instruments that is no longer deemed to be effective or does not meet the
criteria of a hedge in the consolidated statement of income.
|   
|    |  | FHR designates its interest rate instruments as hedges of the interest
expense on the underlying debt. Interest expense on the underlying debt is
adjusted to include the payments made or received under the interest rate
instruments. Foreign exchange translation gains or losses on foreign currency
denominated derivative financial instruments used to hedge anticipated foreign
currency cash flows are recognized as adjustments to revenues or expenses, as
applicable, when the cash flows are recorded.                                                                                                                                                                                                                                                                                                                        
|   
|    |  | At December 31, 2003, FHR had outstanding, two interest rate hedges to cap
LIBOR at 6.5% on the mortgage secured by The Fairmont Copley Plaza Boston and
to cap LIBOR at 9.0% on the mortgage secured by The Fairmont Kea Lani Maui. At
December 31, 2003, the fair market value of the interest rate hedge agreements
approximates their carrying value.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   
|    |  | At December 31, 2003, FHR had outstanding, several forward foreign
currency contracts. The aggregate fair value of these contracts outstanding at
December 31, 2003 was a liability of $7.6, which was expensed in 2003. These
contracts mature in the first quarter of 2004.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   
|14. |  | Certain of the prior period figures have been reclassified to conform with
the presentation adopted for 2003.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   
|15. |  | Segmented Information                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   
|    |  | FHR 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
20% to 100% in 23 properties. The investment in Legacy consists of an
approximate 35% 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. 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, taxes, amortization, other income and expenses and reorganization and
corporate expenses. EBITDA includes income from investments 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 December 31, 2003
|                                                      |  |                                     
|                                                      |  | Ownership                            |         | Management |  |            |       |             |  |       |       |                
|                                                      |  |                                      |         |            |  |            |       |             |  |       |       |                
|                                                      |  | Hotel                                |         |            |  |            |       | Real estate |  |       |       |                 |  |       |       |  |  | Inter-segment |      |  |  |  
|                                                      |  | Ownership                            |         | Legacy     |  | activities |       | Fairmont    |  | Delta |       | elimination (a) |  | Total
|                                                      |  |                                      |         |            |  |            |       |             |  |       |       |                 |  |      
|Operating revenues                                    |  | $                                    | 122.4   |            |  | $          |      |             |  | $     | 4.9   |                 |  | $     | 10.9  |  |  | $             | 2.9  |  |  | $ | (4.0  | ) |  | $ | 137.1   |  
|Other revenues from
managed and
franchised
properties |  |                                      |        |            |  |            |      |             |  |       |      |                 |  |       | 5.8   |  |  |               | 2.0  |  |  |   |      |   |  |   | 7.8     |  
|                                                      |  |                                      |         |            |  |            |       |             |  |       |       |                 |  |       |       |  |  |               |      |  |  |   |       |   |  |   |         |  
|                                                      |  |                                      |         |            |  |            |       |             |  |       |       |                 |  |       |       |  |  |               |      |  |  |   |       |   |  |   | 144.9   |  
|Income (loss) from equity investments
and other       |  |                                      | (0.1    | )          |  |            | (4.4  | )           |  |       |      |                 |  |       |      |  |  |               |     |  |  |   |      |   |  |   | (4.5    | )
|EBITDA                                                |  |                                      | 11.1    |            |  |            | (4.4  | )           |  |       | (2.2  | )               |  |       | 5.0   |  |  |               | 2.1  |  |  |   | (1.7  | ) |  |   | 9.9     |  
|Total assets (b)                                      |  |                                      | 1,916.5 |            |  |            | 105.9 |             |  |       | 101.8 |                 |  |       | 350.8 |  |  |               | 75.8 |  |  |   | (47.8 | ) |  |   | 2,503.0 |  
|Capital expenditures                                  |  |                                      | 29.9    |            |  |            |      |             |  |       |      |                 |  |       | 1.8   |  |  |               |     |  |  |   |      |   |  |   | 31.7    |  





---



##### 



Fairmont Hotels & Resorts Inc.
Notes to Consolidated Financial Statements
(Stated in millions of U.S. dollars)
(Unaudited)



|15. |  | Segmented Information (continued)
|--- |  | ---------------------------------

|                                                      |  |                                      |         |            |  |            |      |             |  |       |      |                 |  |       |       |  |  |               |      |  |  |   |        |   |  |   |         | 
|----------------------------------------------------- |  | ------------------------------------ | ------- | ---------- |  | ---------- | ---- | ----------- |  | ----- | ---- | --------------- |  | ----- | ----- |  |  | ------------- | ---- |  |  | - | ------ | - |  | - | ------- | 
|                                                      |  | Three months ended December 31, 2002
|                                                      |  |                                     
|                                                      |  | Ownership                            |         | Management |  |            |      |             |  |       |      |                
|                                                      |  |                                      |         |            |  |            |      |             |  |       |      |                
|                                                      |  | Hotel                                |         |            |  |            |      | Real estate |  |       |      |                 |  |       |       |  |  | Inter-segment |      |  |  |  
|                                                      |  | Ownership                            |         | Legacy     |  | activities |      | Fairmont    |  | Delta |      | elimination (a) |  | Total
|                                                      |  |                                      |         |            |  |            |      |             |  |       |      |                 |  |      
|Operating revenues                                    |  | $                                    | 109.1   |            |  | $          |     |             |  | $     | 6.0  |                 |  |       | 11.0  |  |  |               | 2.8  |  |  | $ | (3.3   | ) |  | $ | 125.6   | 
|Other revenues from
managed and franchised
properties |  |                                      |        |            |  |            |     |             |  |       |     |                 |  |       | 4.9   |  |  |               | 1.8  |  |  |   |       |   |  |   | 6.7     | 
|                                                      |  |                                      |         |            |  |            |      |             |  |       |      |                 |  |       |       |  |  |               |      |  |  |   |        |   |  |   |         | 
|                                                      |  |                                      |         |            |  |            |      |             |  |       |      |                 |  |       |       |  |  |               |      |  |  |   |        |   |  |   | 132.3   | 
|Income (loss) from equity investments
and other       |  |                                      | 3.0     |            |  |            | (0.5 | )           |  |       |     |                 |  |       |      |  |  |               |     |  |  |   |       |   |  |   | 2.5     | 
|EBITDA                                                |  |                                      | 16.5    |            |  |            | (0.5 | )           |  |       | 5.8  |                 |  |       | 9.6   |  |  |               | 1.9  |  |  |   | (0.5   | ) |  |   | 32.8    | 
|Total assets (b)                                      |  |                                      | 1,879.9 |            |  |            | 96.4 |             |  |       | 95.0 |                 |  |       | 285.8 |  |  |               | 66.0 |  |  |   | (200.1 | ) |  |   | 2,223.0 | 
|Capital expenditures                                  |  |                                      | 18.1    |            |  |            |     |             |  |       |     |                 |  |       | 0.6   |  |  |               |     |  |  |   |       |   |  |   | 18.7    | 

|                                                      |  |                              |         |            |  |            |       |             |  |       |       |                 |  |       |       |  |  |               |      |  |  |   |       |   |  |   |         |  
|----------------------------------------------------- |  | ---------------------------- | ------- | ---------- |  | ---------- | ----- | ----------- |  | ----- | ----- | --------------- |  | ----- | ----- |  |  | ------------- | ---- |  |  | - | ----- | - |  | - | ------- | -
|                                                      |  | Year ended December 31, 2003
|                                                      |  |                             
|                                                      |  | Ownership                    |         | Management |  |            |       |             |  |       |       |                
|                                                      |  |                              |         |            |  |            |       |             |  |       |       |                
|                                                      |  | Hotel                        |         |            |  |            |       | Real estate |  |       |       |                 |  |       |       |  |  | Inter-segment |      |  |  |  
|                                                      |  | Ownership                    |         | Legacy     |  | activities |       | Fairmont    |  | Delta |       | elimination (a) |  | Total
|                                                      |  |                              |         |            |  |            |       |             |  |       |       |                 |  |      
|Operating revenues                                    |  | $                            | 584.9   |            |  | $          |      |             |  | $     | 36.3  |                 |  | $     | 44.2  |  |  | $             | 11.7 |  |  | $ | (18.3 | ) |  | $ | 658.8   |  
|Other
revenues from managed and franchised
properties |  |                              |        |            |  |            |      |             |  |       |      |                 |  |       | 24.4  |  |  |               | 8.2  |  |  |   |      |   |  |   | 32.6    |  
|                                                      |  |                              |         |            |  |            |       |             |  |       |       |                 |  |       |       |  |  |               |      |  |  |   |       |   |  |   |         |  
|                                                      |  |                              |         |            |  |            |       |             |  |       |       |                 |  |       |       |  |  |               |      |  |  |   |       |   |  |   | 691.4   |  
|Income (loss) from equity investments
and other       |  |                              | 1.7     |            |  |            | (8.6  | )           |  |       |      |                 |  |       |      |  |  |               |     |  |  |   |      |   |  |   | (6.9    | )
|EBITDA                                                |  |                              | 107.4   |            |  |            | (8.6  | )           |  |       | 12.7  |                 |  |       | 24.8  |  |  |               | 8.7  |  |  |   | (2.6  | ) |  |   | 142.4   |  
|Total assets (b)                                      |  |                              | 1,916.5 |            |  |            | 105.9 |             |  |       | 101.8 |                 |  |       | 350.8 |  |  |               | 75.8 |  |  |   | (47.8 | ) |  |   | 2,503.0 |  
|Capital expenditures                                  |  |                              | 84.2    |            |  |            |      |             |  |       |      |                 |  |       | 3.0   |  |  |               |     |  |  |   |      |   |  |   | 87.2    |  

|                                                      |  |                              |         |            |  |            |      |             |  |       |      |                 |  |       |       |  |  |               |      |  |  |   |        |   |  |   |         | 
|----------------------------------------------------- |  | ---------------------------- | ------- | ---------- |  | ---------- | ---- | ----------- |  | ----- | ---- | --------------- |  | ----- | ----- |  |  | ------------- | ---- |  |  | - | ------ | - |  | - | ------- | 
|                                                      |  | Year ended December 31, 2002
|                                                      |  |                             
|                                                      |  | Ownership                    |         | Management |  |            |      |             |  |       |      |                
|                                                      |  |                              |         |            |  |            |      |             |  |       |      |                
|                                                      |  | Hotel                        |         |            |  |            |      | Real estate |  |       |      |                 |  |       |       |  |  | Inter-segment |      |  |  |  
|                                                      |  | Ownership                    |         | Legacy     |  | activities |      | Fairmont    |  | Delta |      | elimination (a) |  | Total
|                                                      |  |                              |         |            |  |            |      |             |  |       |      |                 |  |      
|Operating revenues                                    |  | $                            | 516.6   |            |  | $          |     |             |  | $     | 37.9 |                 |  | $     | 41.3  |  |  | $             | 11.4 |  |  | $ | (16.6  | ) |  | $ | 590.6   | 
|Other revenues from managed and franchised
properties |  |                              |        |            |  |            |     |             |  |       |     |                 |  |       | 19.8  |  |  |               | 7.9  |  |  |   |       |   |  |   | 27.7    | 
|                                                      |  |                              |         |            |  |            |      |             |  |       |      |                 |  |       |       |  |  |               |      |  |  |   |        |   |  |   |         | 
|                                                      |  |                              |         |            |  |            |      |             |  |       |      |                 |  |       |       |  |  |               |      |  |  |   |        |   |  |   | 618.3   | 
|Income from equity investments and
other              |  |                              | 11.3    |            |  |            | 6.4  |             |  |       |     |                 |  |       |      |  |  |               |     |  |  |   |       |   |  |   | 17.7    | 
|EBITDA                                                |  |                              | 143.4   |            |  |            | 6.4  |             |  |       | 11.5 |                 |  |       | 30.2  |  |  |               | 8.1  |  |  |   | (1.3   | ) |  |   | 198.3   | 
|Total assets (b)                                      |  |                              | 1,879.9 |            |  |            | 96.4 |             |  |       | 95.0 |                 |  |       | 285.8 |  |  |               | 66.0 |  |  |   | (200.1 | ) |  |   | 2,223.0 | 
|Capital expenditures                                  |  |                              | 80.1    |            |  |            |     |             |  |       |     |                 |  |       | 4.2   |  |  |               |     |  |  |   |       |   |  |   | 84.3    | 





---



##### 



Fairmont Hotels & Resorts Inc.
Notes to Consolidated Financial Statements
(Stated in millions of U.S. dollars)
(Unaudited)



|15. |  | Segmented Information (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | (a) Revenues represent management fees that are charged by Fairmont of
$3.9 (2002  $3.2) and $18.0 (2002  $16.3) for the three months and year
ended December 31, 2003 respectively, and Delta of $0.1 (2002
 $0.1) and $0.3
(2002  $0.3) for the three months and year ended December 31, 2003
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) Hotel ownership
assets include $48.5 (2002  $64.7) of investments
accounted for using the equity method.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   
|16. |  | Related Party Transactions                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   
|    |  | In August 2003, FHR entered into a long-term, incentive-based management
contract with Legacy for The Fairmont Olympic Hotel, Seattle. This transaction
was recorded at the exchange value, which is the amount established and agreed
to by the related parties. In connection with FHR securing the management
contract on this property and another under a similar arrangement, FHR has
agreed to pay Legacy an aggregate amount of $18.0 over a three-year period.
These amounts have been accounted for as intangible assets and are amortized
over the life of the management contracts. The amortization expense is being
applied to reduce revenues from management operations. The current portion of
the liability has been recorded in accounts payable and accrued liabilities,
while the long-term portion has been recorded as other liabilities. At
December 31, 2003, FHR has a liability due to Legacy of $11.0 in connection
with various management contracts with Legacy.                                                                                                                                                              
|   
|    |  | In connection with Legacys acquisition of The Fairmont Olympic Hotel,
Seattle, FHR entered into a reciprocal loan agreement with Legacy for $19.0.
The loan matures October 2013 and bears interest at normal commercial rates
payable quarterly in arrears. In the event that either FHR or Legacy does not
make its required interest or principal payments, the other party is not
required to make its payment either. If such payment has already been made, it
must be returned. The loans meet all the requirements for the right of setoff
and are presented on a net basis in the financial statements. FHR also has a
25% participation amounting to $10.9 in the first mortgage on The Fairmont
Olympic Hotel, Seattle. This loan is due July 2006 and bears interest at the
same rate as the lender. This loan is classified in other assets and deferred
charges. In addition, at December 31, 2003, FHR has a receivable from Legacy of
$8.7, which has been classified as a loan receivable and is included in prepaid
expenses and other. This loan matures on July 31, 2004 and bears interest at the
bankers acceptance rate plus 2.75%.