##### 



EXHIBIT 99.1 (FAIRMONT LOGO) For immediate release FAIRMONT HOTELS & RESORTS INC.
REPORTS FIRST QUARTER RESULTS  Hotel ownership
EBITDA increases 11% 
 Company secures management contracts on three hotel
developments  TORONTO, April 27, 2004  Fairmont Hotels & Resorts Inc. (FHR or the
Company) (TSX/NYSE: FHR) today announced its unaudited financial results for
the first quarter ended March 31, 2004 using Canadian generally accepted
accounting principles. All amounts are expressed in U.S. dollars. We are encouraged by the solid recovery in industry fundamentals leading to
travel demand increases throughout the United States. This has been reflected
in considerable occupancy improvements at our U.S. and international hotels,
with most of these properties also posting increases in average daily rates
(ADR), said William R. Fatt, FHRs Chief Executive Officer. Our overall
results met our expectations for the first quarter, which is traditionally one
of the Companys lowest earnings periods. On a comparable basis, revenue per available room (RevPAR) for Fairmonts
managed hotels increased 12.4% and RevPAR at the Companys owned portfolio
improved 12.9% in the first quarter. Favorable foreign exchange movements
continued to contribute to an improvement in operating statistics for the
Canadian properties. Commenting on todays development announcements [see Announcements and
Corporate Activities], Mr. Fatt said, We have been working on growing our
pipeline of development opportunities and are delighted to expand our portfolio
to include a number of purpose-built luxury properties in such exclusive
locations as the Mayan Riviera in Mexico and The Palm, Jumeirah in Dubai. We
look forward to working with our new partners on these exciting developments
and for the opportunity to work together on future projects. On April 12, The Fairmont Southampton opened on schedule after seven months of
repairs following the hurricane in Bermuda last September. The Company has
extensive insurance coverage for both property damage and business
interruption. In the first quarter, hotel ownership expenses were reduced by
business interruption insurance recoveries, restoring
EBITDA1 generated by The
Fairmont Southampton to previously expected levels. First Quarter Consolidated Results Operating revenues2 were up slightly to $168.2 million from $167.9 million in
2003. Lower revenues from real estate activities offset improved hotel
operating results during the quarter. First quarter EBITDA of $34.1 million
was down from $42.2 million in the previous year. This decline relates
exclusively to lower land sales in 2004. Net loss for the quarter was $0.6
million ($0.01 loss per share) compared to net income of $12.5 million ($0.16
earnings per share) in the same period of 2003. EBITDA and net income (loss)
include earnings from real estate activities of $0.4 million ($0.01 per share)
and $9.3 million ($0.12 per share) in 2004 and 2003, respectively. 1




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##### 



First Quarter Ownership Operations Revenues from hotel ownership improved 10.7% to $155.4 million in the first
quarter. The increase was driven by solid improvements in the performance of
the U.S. and international properties. All of the major U.S. and international
hotels posted double digit revenue growth with the exception of The Fairmont
Southampton, which was closed for repairs due to Hurricane Fabian. The
appreciation in the Canadian dollar offset the decline in Canadian operating
revenues and increased Canadian expenses in the quarter. Canadian ski
destinations experienced weaker U.S. leisure demand primarily as a result of
strong U.S. competition. In addition, the Canadian resorts had a solid first
quarter in 2003 prior to the impact of world events. When compared to the
first quarter of 2003, the average Canadian dollar exchange rate for the
quarter appreciated approximately 14% against the U.S. dollar. RevPAR of $139.34 was up 12.9% in the first quarter, resulting from a 3.9 point
improvement in occupancy combined with a 6.0% increase in average daily rate
(ADR). The Fairmont Scottsdale Princess posted strong rate and occupancy
growth in the quarter contributing to a 15.0% RevPAR improvement at the U.S.
and International comparable portfolio. The Canadian owned hotels had RevPAR
growth of 8.8%, driven by the appreciation in the Canadian dollar and offset
slightly by an occupancy drop of 0.3 points. Adjusting for the foreign
exchange impact, RevPAR for the Canadian portfolio was down approximately 5%. Equity losses generated from FHRs investment in Legacy Hotels Real Estate
Investment Trust (Legacy or the Trust) were $7.3 million compared to losses
of $6.3 million in the same period last year. Legacys performance was
comparable to 2003, however the appreciation in the Canadian dollar exaggerated
this loss. In a continued effort to divest of non-hotel assets, FHR completed the sale of
a parcel of land that was inherited upon the Canadian Pacific reorganization in
2001. This parcel was not part of the Companys interest in the Toronto or
Vancouver lands. This sale contributed to the $0.4 million in EBITDA from real
estate activities compared to $9.3 million earned in 2003. First Quarter Management Operations Fairmont Revenues under management of $374 million increased 21% over 2003, half of
which was driven by the addition of two new management contracts since last
summer. Management fee revenues were up 20.2% to $12.5 million, in line with
the increase in revenues under management. For the Fairmont managed portfolio, RevPAR increased 12.4% to $106.93. RevPAR
for the U.S. and International portfolio showed solid improvement with RevPAR
up 11.9%, driven by a 5.8 point occupancy gain. The Canadian comparable
portfolio reported a 13.2% RevPAR improvement, driven by increases in ADR and
occupancy of 9.2% and 2.1 points, respectively. Adjusting for the foreign
exchange impact, RevPAR at the Canadian portfolio was relatively unchanged from
2003. Delta In the first quarter, Deltas revenues under management increased by $12
million to $80 million. Management fee revenues of $2.5 million were down $0.6
million from last year when a one-time payout relating to the termination of
two management contracts was received. During the quarter, RevPAR increased
13.9% resulting from an 11.2% ADR increase and a 1.3 point improvement in
occupancy. Adjusting for the foreign exchange impact, RevPAR was unchanged in
2003. Capital Expenditures Hotel related capital expenditures for the quarter totaled $19.8 million.
Several projects were underway during the quarter including: 2




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##### 




    
    The renovation of the meeting rooms and final phase of the
guestrooms at The Fairmont Copley Plaza Boston (completed in
mid-April); and
    
    The construction of the meeting facility at The Fairmont Chateau
Lake Louise (to open in mid-May). FHR currently expects that total hotel capital expenditures in 2004 will be $90
- $100 million, including approximately $15 million that was originally
expected to be spent in 2003. Announcements and Corporate Activities The Company announced today that it has entered into an agreement with Obrascón
Huarte Laín, S.A. to manage a resort near Playa del Carmen in Mayakoba, Mexico.
Located 40 miles from Cancun on the Mayan Riviera, this 401-room luxury resort
is expected to open in late 2005 and will be flagged The Fairmont Mayakoba,
Riviera Maya. FHR will invest approximately $10 million for an equity
interest of about 15% in the resort. FHR has also entered into a joint venture with Nile City Investment Company to
manage a 552-room luxury hotel on the Nile River in central Cairo, Egypt. FHR
and Kingdom Hotel Investment Group (KHI), the chairman of which is His Royal
Highness Prince Alwaleed Bin Talal Bin Abdulaziz al Saud, will each invest
approximately $10 million for an equity interest of about 15% each in the
property, which is anticipated to open in 2006. The Company has also entered into a strategic alliance with Kuwait-based
International Financial Advisors Company (IFA) through IFA Hotels & Resorts
to open a resort in Dubai on The Palm, Jumeirah, an extensive development
project in the Arabian Gulf that is currently being completed. Situated on the
best location of The Palm, Jumeirah, the Fairmont project will include a
300-room luxury resort and 460 vacation residences. The Fairmont Palm
Jumeirah Resort, Dubai is expected to open in late 2006. FHR and KHI will
each invest approximately $15 million for a 10% equity interest each in this
development. IFA, KHI and the Company are also exploring other resort projects
in the Middle East, East Africa and South Africa. FHR has entered into an agreement with a syndicate of banks for a three-year
$400 million unsecured revolving term credit facility. The credit facility
bears interest at floating rates and replaces the Companys existing credit
facility that would have matured in September. The credit facility is available
for general corporate purposes. FHR has not repurchased any shares under its normal course issuer bid in 2004. Investment in Legacy In 1997, FHR was instrumental in the creation of Legacy. Since that time, the
Company has held an approximate one-third interest in the equity of the Trust
and Legacy and the Company have had a mutually beneficial strategic
relationship during which time Legacy has acquired 15 hotels from FHR from
inception until 2001 and is currently the largest third party owner of Fairmont
properties. To date, FHR has accounted for its investment in Legacy on an equity basis.
Pursuant to recent changes in accounting rules that came into effect in 2004
under U.S. GAAP and which will come into effect in 2005 under Canadian GAAP,
FHR will likely be required to consolidate within its financial statements
Legacys financial results. FHR believes that consolidating Legacy would
complicate investors ability to assess FHRs financial performance. Based on
the Companys analysis to date, were FHR to reduce its equity investment in
Legacy to less than 25%, the Company could continue to equity account for its
Legacy holding without consolidation. 3




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##### 



Accordingly, FHR may, subject to favorable market conditions, reduce its
investment in the Trust during 2004, pursuant to one or several transactions.
FHR believes that the mutual benefits of their relationship would remain
substantially unchanged notwithstanding a reduction in its equity interest. Outlook We expect that the improving industry fundamentals and economic environment
will continue to translate into a strong recovery. Our existing bookings for
our critical group business throughout our portfolio continue to be ahead of
levels at this time last year for 2003, commented Mr. Fatt. In addition, we
are excited about the opportunity for our recently renovated resort portfolio
to benefit from improving business conditions and growing leisure travel demand
that is expected over the long-term. Continued Mr. Fatt, We are however cautious about the level of U.S. leisure
business coming into the Canadian resorts during the critical summer season.
We will have a better indication of this customer segments demand levels later
in the spring. The Companys full-year guidance is unchanged. FHR estimates that 2004 EBITDA
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%. It is the Companys intention to adopt U.S. GAAP in 2004. This change will
simplify comparisons of FHRs financial statements with those of its peers and
is not expected to have a significant impact on net earnings or the Companys
financial condition. The growth of the Fairmont brand remains a major focus for the Company and we
are encouraged by the improvement in brand awareness. In 2004, we intend to
add two to four properties to our portfolio while continuing to seek
development opportunities in resort destinations and further increase the
exposure of our existing portfolio, said Mr. Fatt. About Fairmont Hotels & Resorts Inc. FHR is one of North Americas leading owner/operators of luxury hotels and
resorts. FHRs managed portfolio consists of 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, April 27, 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 April 27, 2004
through to May 4, 2004 by dialing 416.695.5800 or 1.800.408.3053 using the
reservation #3030016. 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. 4




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##### 



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 endedMarch 31, 20042004
    
    2003
    
    VarianceOWNED HOTELSWorldwideRevPAR
    
    $
    139.34
    
    
    $
    123.39
    
    
    
    12.9
    %ADR
    
    
    215.21
    
    
    
    203.03
    
    
    
    6.0
    %Occupancy
    
    
    64.7%
    
    
    
    60.8%
    
    
    3.9 pointsCanadaRevPAR
    
    $
    93.86
    
    
    $
    86.27
    
    
    
    8.8
    %ADR
    
    
    154.37
    
    
    
    141.25
    
    
    
    9.3
    %Occupancy
    
    
    60.8%
    
    
    
    61.1%
    
    
    (0.3 points)U.S. and InternationalRevPAR
    
    $
    181.01
    
    
    $
    157.35
    
    
    
    15.0
    %ADR
    
    
    264.80
    
    
    
    260.10
    
    
    
    1.8
    %Occupancy
    
    
    68.4%
    
    
    
    60.5%
    
    
    7.9 pointsFAIRMONT MANAGED HOTELSWorldwideRevPAR
    
    $
    106.93
    
    
    $
    95.17
    
    
    
    12.4
    %ADR
    
    
    174.79
    
    
    
    166.26
    
    
    
    5.1
    %Occupancy
    
    
    61.2%
    
    
    
    57.2%
    
    
    4.0 pointsCanadaRevPAR
    
    $
    75.18
    
    
    $
    66.42
    
    
    
    13.2
    %ADR
    
    
    130.30
    
    
    
    119.37
    
    
    
    9.2
    %Occupancy
    
    
    57.7%
    
    
    
    55.6%
    
    
    2.1 pointsU.S. and InternationalRevPAR
    
    $
    138.49
    
    
    $
    123.71
    
    
    
    11.9
    %ADR
    
    
    214.26
    
    
    
    210.29
    
    
    
    1.9
    %Occupancy
    
    
    64.6%
    
    
    
    58.8%
    
    
    5.8 pointsDELTA MANAGED HOTELSCanadaRevPAR
    
    $
    53.37
    
    
    $
    46.87
    
    
    
    13.9
    %ADR
    
    
    92.29
    
    
    
    82.99
    
    
    
    11.2
    %Occupancy
    
    
    57.8%
    
    
    
    56.5%
    
    
    1.3 points
 5




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##### 



Comparable hotels and resorts are considered to be properties that were fully
open under FHR management for at least the entire current and prior period.
Comparable hotels and resorts statistics exclude properties under major
renovation that would have a significant adverse effect on the properties
primary operations. The following properties were excluded: Owned:
    
    The Fairmont Southampton; The Fairmont Copley Plaza BostonFairmont Managed:
    
    The Fairmont Southampton; The Fairmont Olympic Hotel, Seattle; The Fairmont Turnberry Isle Resort & Club,
MiamiDelta Managed:
    
    None
 FHRs 2003 quarterly operating statistics for its 2004 comparable hotel
portfolios are available on the Companys website (www.fairmont.com/investor).  1.
    
    EBITDA is defined as earnings before interest, taxes and amortization.
Income from investments and other is included in EBITDA. Management
considers EBITDA to be a meaningful indicator of hotel operations and uses
it as the primary measurement of operating segment profit and loss.
However, it is not a defined measure of operating performance under
Canadian generally accepted accounting principles (Canadian GAAP). It
is likely that FHRs calculation of EBITDA is different than the
calculations used by other entities. EBITDA is represented on the
consolidated statements of income as operating income before undernoted
items.Reconciliation of EBITDA to net income (loss): Three months ended March 31In millions of dollars
    
    2004
    
    2003EBITDA
    
    $
    34.1
    
    
    $
    42.2Deduct:Amortization
    
    
    19.5
    
    
    
    16.3Interest expense, net
    
    
    10.0
    
    
    
    5.9Income tax expense
    
    
    5.2
    
    
    
    7.5Net income (loss)
    
    $
    (0.6
    )
    
    $
    12.5
  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 ThompsonExecutive Vice President
    
    Executive Director Investor Relationsand Chief Financial Officer
    
    Tel: 416.874.2485Tel: 416.874.2450
    
    Email:  investor@fairmont.comWebsite:  www.fairmont.com
 6




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##### 



Fairmont Hotels & Resorts Inc.
Consolidated Balance Sheets
(Stated in millions of U.S. dollars)
(Unaudited) ASSETS March 31
    
    December 312004
    
    2003Current assetsCash and cash equivalents
    
    $
    69.2
    
    
    $
    31.7Accounts receivable
    
    
    62.7
    
    
    
    64.1Inventory
    
    
    14.6
    
    
    
    14.2Prepaid expenses and other
    
    
    14.8
    
    
    
    24.6161.3
    
    
    
    134.6Investments in partnerships and
corporations
    
    
    51.6
    
    
    
    53.1Investment in Legacy Hotels Real EstateInvestment Trust
    
    
    98.4
    
    
    
    105.9Non-hotel real estate
    
    
    94.6
    
    
    
    95.1Property and equipment
    
    
    1,653.3
    
    
    
    1,656.2Goodwill
    
    
    131.6
    
    
    
    132.0Intangible assets
    
    
    216.7
    
    
    
    216.7Other assets and deferred charges
    
    
    115.4
    
    
    
    109.4$
    2,522.9
    
    
    $
    2,503.0LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilitiesAccounts payable and accrued
liabilities
    
    $
    131.9
    
    
    $
    124.0Dividends payable
    
    
    
    
    
    
    3.2Current portion of long-term debt
    
    
    77.5
    
    
    
    117.8209.4
    
    
    
    245.0Long-term debt (note 3)
    
    
    596.8
    
    
    
    539.8Other liabilities
    
    
    91.2
    
    
    
    91.4Future income taxes
    
    
    83.4
    
    
    
    80.9980.8
    
    
    
    957.1Shareholders Equity (note 4)
    
    
    1,542.1
    
    
    
    1,545.9$
    2,522.9
    
    
    $
    2,503.0




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##### 



Fairmont Hotels & Resorts Inc. Consolidated Statements of Income
(Stated in millions of U.S. dollars, except per share amounts)
(Unaudited) Three months ended March 312004
    
    2003RevenuesHotel ownership operations
    
    $
    155.4
    
    
    $
    140.4Management operations
    
    
    9.5
    
    
    
    8.6Real estate activities
    
    
    3.3
    
    
    
    18.9Operating revenues
    
    
    168.2
    
    
    
    167.9Other revenues from
managed and franchised
properties
    
    
    8.9
    
    
    
    7.0177.1
    
    
    
    174.9ExpensesHotel ownership operations
    
    
    116.7
    
    
    
    105.5Management operations
    
    
    6.6
    
    
    
    4.0Real estate activities
    
    
    2.9
    
    
    
    9.6Operating expenses
    
    
    126.2
    
    
    
    119.1Other expenses from
managed and franchised
properties
    
    
    9.1
    
    
    
    6.9135.3
    
    
    
    126.0Loss from equity investments and other
    
    
    (7.7
    )
    
    
    (6.7
    )Operating income before undernoted items
    
    
    34.1
    
    
    
    42.2Amortization
    
    
    19.5
    
    
    
    16.3Interest expense, net
    
    
    10.0
    
    
    
    5.9Income before income tax expense
    
    
    4.6
    
    
    
    20.0Income tax expenseCurrent
    
    
    2.9
    
    
    
    5.3Future
    
    
    2.3
    
    
    
    2.25.2
    
    
    
    7.5Net income (loss)
    
    $
    (0.6
    )
    
    $
    12.5Weighted average number of common shares outstanding
(in millions) (note 4)Basic
    
    
    79.1
    
    
    
    79.3Diluted
    
    
    79.1
    
    
    
    80.0Basic earnings (loss) per common share
    
    $
    (0.01
    )
    
    $
    0.16Diluted earnings (loss) per common share
    
    $
    (0.01
    )
    
    $
    0.16




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##### 



Fairmont Hotels & Resorts Inc. Consolidated Statements of Cash Flows
(Stated in millions of U.S. dollars)
(Unaudited) Three months ended March 312004
    
    2003Cash provided by (used in)Operating activitiesNet Income (loss)
    
    $
    (0.6
    )
    
    $
    12.5Items not affecting cashAmortization of property and equipment
    
    
    18.8
    
    
    
    15.6Amortization of intangible assets
    
    
    0.7
    
    
    
    0.7Loss from equity investments and other
    
    
    7.7
    
    
    
    6.7Future income taxes
    
    
    2.3
    
    
    
    2.2Other
    
    
    2.5
    
    
    
    2.7Changes in non-hotel real estate
    
    
    (0.2
    )
    
    
    7.4Changes in non-cash working capital items (note 5)
    
    
    9.0
    
    
    
    (11.7
    )40.2
    
    
    
    36.1Investing activitiesAdditions to property and equipment
    
    
    (19.8
    )
    
    
    (15.8
    )Acquisitions, net of cash acquired
    
    
    
    
    
    
    6.0Investments in partnerships and corporations
    
    
    
    
    
    
    (0.1
    )Collection of loans receivable
    
    
    8.8
    
    
    
    Issuance of loans receivable
    
    
    (5.0
    )
    
    
    (16.0
    )
    
    
    (9.9
    )Financing activitiesIssuance of long-term debt
    
    
    79.9
    
    
    
    123.5Repayment of long-term debt
    
    
    (63.6
    )
    
    
    (142.5
    )Issuance of common shares
    
    
    0.3
    
    
    
    Repurchase of common shares
    
    
    
    
    
    
    (5.0
    )Dividends paid
    
    
    (3.2
    )
    
    
    (2.4
    )13.4
    
    
    
    (26.4
    )Effect of exchange rate changes on cash
    
    
    (0.1
    )
    
    
    1.5Increase in cash
    
    
    37.5
    
    
    
    1.3Cash and cash equivalents  beginning of period
    
    
    31.7
    
    
    
    49.0Cash and cash equivalents   end of period
    
    $
    69.2
    
    
    $
    50.3




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##### 



Fairmont Hotels & Resorts Inc. Consolidated Statements of Retained Earnings
(Stated in millions of U.S. dollars)
(Unaudited) Three months ended March 312004
    
    2003Balance  Beginning of period
    
    $
    78.1
    
    
    $
    38.5Net income (loss)
    
    
    (0.6
    )
    
    
    12.577.5
    
    
    
    51.0Repurchase of common shares
    
    
    
    
    
    
    (1.2
    )Balance  End of period
    
    $
    77.5
    
    
    $
    49.8




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##### 



Fairmont Hotels & Resorts Inc.
Notes to Consolidated Financial Statements
(Stated in millions of U.S. dollars)
(Unaudited)  1.
    
    Fairmont Hotels & Resorts Inc. (FHR) has operated and owned hotels and resorts for over 116
years and currently manages properties principally under the Fairmont and Delta brands. At March
31, 2004, FHR managed or franchised 83 luxury and first-class hotels. FHR owns 83.5% of Fairmont
Hotels Inc. (Fairmont), which at March 31, 2004, managed 44 properties in major city centers
and key resort destinations throughout Canada, the United States, Mexico, Bermuda, Barbados and
the United Arab Emirates. Delta Hotels Limited (Delta), a wholly owned subsidiary of FHR,
managed or franchised 39 Canadian hotels and resorts at March 31, 2004.In addition to hotel and resort management, as at March 31, 2004, 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, and has developed a vacation ownership product.Results for the three months ended March 31, 2004 are not necessarily indicative of the results
that may be expected for the full year due to seasonal and short-term variations. Revenues are
typically higher in the second and third quarters versus the first and fourth quarters of the
year. The income tax rate is also higher in the first quarter as hotels in non-taxable
jurisdictions typically generate losses and equity investments usually produce non-taxable
losses.2.
    
    These interim consolidated financial statements do not include all disclosures as required by
Canadian generally accepted accounting principles (GAAP) for annual consolidated financial
statements and should be read in conjunction with the audited consolidated financial statements
for the year ended December 31, 2003 presented in the annual report. The accounting policies
used in the preparation of these interim consolidated financial statements are consistent with
the accounting policies used in the December 31, 2003 audited consolidated financial statements,
except as discussed below.Hedging RelationshipsEffective January 1, 2004, FHR implemented new guidance on accounting for hedging relationships.
The new guidelines specify the circumstances in which hedge accounting is appropriate, including
the identification, documentation, designation and effectiveness of hedges and also the
discontinuance of hedge accounting. The adoption of this accounting guidance did not have a
material impact on operations or financial statement presentation.Generally Accepted Accounting Principles and General Standards of Financial Statement PresentationThe Canadian Institute of Chartered Accountants has issued new accounting standards surrounding
GAAP and financial statement presentation. These standards lay out a framework for the
application of GAAP and the fair presentation of financial standards in accordance with GAAP and
are effective for years beginning January 1, 2004. No changes to financial statement
presentation were required as FHR was already in full compliance with these new standards.3.
    
    In March 2004, FHR
entered into a new
$400 unsecured
credit facility due
March 2007. The
interest rate is
floating and is
calculated based on
the borrowers
choice of prime
rate, bankers
acceptance or LIBOR
plus a spread.4.
    
    Shareholders equity March 31,
    
    December 31,2004
    
    2003Common shares
    
    $
    1,202.5
    
    
    $
    1,202.2Other equity
    
    
    19.2
    
    
    
    19.2Contributed surplus
    
    
    142.3
    
    
    
    142.3Foreign currency translation adjustments
    
    
    100.6
    
    
    
    104.1Retained earnings
    
    
    77.5
    
    
    
    78.1$
    1,542.1
    
    
    $
    1,545.9
  The diluted weighted-average number of common shares outstanding is calculated as follows: Three months ended March 312004
    
    2003(in millions)Weighted-average number of common shares
outstanding  basic
    
    
    79.1
    
    
    
    79.3Stock options (1)
    
    
    0.8
    
    
    
    0.7Weighted-average number of common shares
outstanding  diluted
    
    
    79.9
    
    
    
    80.0
  
 (1)
    
    The calculation of diluted loss per common share for the three months ended March 31, 2004 excludes stock
options as the impact
of these exercises would be anti-dilutive.




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##### 



Fairmont Hotels & Resorts Inc.
Notes to Consolidated Financial Statements
(Stated in millions of U.S. dollars)
(Unaudited)  4.
    
    Shareholders equity (continued)Under a normal course issuer bid, FHR may repurchase for
cancellation up to approximately 3.9 million, or approximately 5% of its outstanding common shares. During the three months ended March 31, 2004, FHR did not repurchase any shares. During the three months ended March 31, 2004, FHR issued
17,190 shares pursuant to the Key Employee Stock Option Plan. $0.3 was credited to common shares for proceeds from options exercised. At March 31,
2004, 79,123,467 common shares were outstanding (2003 
79,532,172).During the three months ended March 31, 2004, 10,000 stock options were granted. 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 March 312004
    
    2003Reported net income (loss)
    
    $
    (0.6
    )
    
    $
    12.5Net income (loss) assuming fair value
method used
    
    $
    (0.7
    )
    
    $
    12.3Basic earnings (loss) per share
    
    $
    (0.01
    )
    
    $
    0.16Diluted earnings (loss) per share
    
    $
    (0.01
    )
    
    $
    0.15
  5.
    
    Changes in non-cash working capital: Three months ended March 312004
    
    2003Decrease (increase) in current assetsAccounts receivable
    
    $
    0.7
    
    
    $
    (9.7
    )Inventory
    
    
    (0.4
    )
    
    
    (0.8
    )Prepaid expenses and other
    
    
    1.0
    
    
    
    (0.9
    )Increase (decrease) in current
liabilitiesAccounts payable and accrued liabilities
    
    
    7.7
    
    
    
    (0.3
    )$
    9.0
    
    
    $
    (11.7
    )
  6.
    
    Segmented InformationFHR has five reportable operating segments in two core business activities, ownership and management operations. The segments are hotel ownership, investment in Legacy, real estate activities, Fairmont and Delta. Hotel ownership
consists of real estate interests ranging from approximately 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 and a vacation ownership product. Fairmont is a North American luxury hotel and resort management company and
Delta is a Canadian first-class hotel and resort management company.The performance of all segments is evaluated primarily on earnings before interest, taxes and amortization (EBITDA), which is defined as income before interest, income taxes and amortization. EBITDA includes income from
investments and other. Amortization, interest and income taxes are not allocated to the individual segments. All transactions among operating segments are conducted at fair market value.The following tables present revenues, EBITDA, total assets and capital expenditures for FHRs reportable segments: Three months ended March 31, 2004Ownership
    
    ManagementOwnership
    
    
    
    
    
    Real estate
    
    
    
    
    
    
    
    
    
    Inter-segmentHotel
    
    Legacy
    
    activities
    
    Fairmont
    
    Delta
    
    elimination (a)
    
    TotalOperating revenues
    
    $
    155.4
    
    
    $
    
    
    
    $
    3.3
    
    
    $
    12.5
    
    
    $
    2.5
    
    
    $
    (5.5
    )
    
    $
    168.2Other revenues from
managed and
franchised
properties
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6.5
    
    
    
    2.4
    
    
    
    
    
    
    
    8.9177.1Loss from equity
investments and
other
    
    
    (0.4
    )
    
    
    (7.3
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7.7
    )EBITDA (b)
    
    
    32.8
    
    
    
    (7.3
    )
    
    
    0.4
    
    
    
    6.9
    
    
    
    1.5
    
    
    
    (0.2
    )
    
    
    34.1Total assets (c)
    
    
    1,904.9
    
    
    
    98.4
    
    
    
    102.2
    
    
    
    360.1
    
    
    
    75.1
    
    
    
    (17.8
    )
    
    
    2,522.9Capital expenditures
    
    
    19.6
    
    
    
    
    
    
    
    
    
    
    
    0.2
    
    
    
    
    
    
    
    
    
    
    
    19.8




---



##### 



6.
    
    Segmented Information (continued) Three months ended March 31, 2003Ownership
    
    ManagementOwnership
    
    
    
    
    
    Real estate
    
    
    
    
    
    
    
    
    
    Inter-segmentHotel
    
    Legacy
    
    activities
    
    Fairmont
    
    Delta
    
    elimination (a)
    
    TotalOperating revenues
    
    $
    140.4
    
    
    $
    
    
    
    $
    18.9
    
    
    $
    10.4
    
    
    $
    3.1
    
    
    $
    (4.9
    )
    
    $
    167.9Other revenues from
managed and franchised
properties
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4.8
    
    
    
    2.2
    
    
    
    
    
    
    
    7.0174.9Loss from equity
investments and other
    
    
    (0.4
    )
    
    
    (6.3
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6.7
    )EBITDA (b)
    
    
    29.6
    
    
    
    (6.3
    )
    
    
    9.3
    
    
    
    7.0
    
    
    
    2.5
    
    
    
    0.1
    
    
    
    42.2Total assets (c)
    
    
    1,983.5
    
    
    
    97.8
    
    
    
    89.8
    
    
    
    328.6
    
    
    
    69.5
    
    
    
    (206.2
    )
    
    
    2,363.0Capital expenditures
    
    
    15.6
    
    
    
    
    
    
    
    
    
    
    
    0.2
    
    
    
    
    
    
    
    
    
    
    
    15.8
  
 (a)
    
    Revenues represent management fees that are charged by Fairmont of $5.4 (2003  $4.8) for the three months ended March 31, 2004 and Delta of $0.1 (2003  $0.1) for the three months ended March 31, 2004, to the hotel ownership operations, which are eliminated on consolidation.
EBITDA represents expenses not reimbursed relating to marketing and reservation services performed by FHR under the terms of its hotel management and franchise agreements. Total assets represent the elimination of inter-segment loans net of corporate assets.(b)
    
    The following costs are not allocated to the individual segments in evaluating net income (loss):
 Three months ended March 312004
    
    2003Amortization
    
    $
    19.5
    
    
    $
    16.3Interest expense, net
    
    
    10.0
    
    
    
    5.9Income taxes
    
    
    5.2
    
    
    
    7.5
  (c)
    
    Hotel ownership assets include $49.3 (2003  $46.7) of investments accounted for using the equity method.  7.
    
    As required under the terms and conditions of the 3.75% convertible senior notes due 2023, the debt and the common shares issuable upon conversion of the shares have been registered on a Form F-10 with the SEC on April 6, 2004.8.
    
    At March 31, 2004, FHR has a payable to Legacy of $9.0 in connection with various management contracts, and reciprocal loan agreements with Legacy for $86.6.
A subsidiary of FHR has a 25% participation amounting to $10.8 in the first mortgage on The Fairmont Olympic Hotel, Seattle.