Fairmont Hotels & Resorts

Fairmont Hotels & Resorts

February 24, 2006 09:04 ET

Fairmont Hotels & Resorts Inc. Reports Fourth Quarter 2005 Results

RevPAR Increased 11.8% Driven By Solid U.S. and International Performance




TORONTO, ONTARIO--(CCNMatthews - Feb. 24, 2006) –

Attention Business/Financial Editors:

Fairmont Hotels & Resorts Inc. ("FHR" or the"Company") (TSX:FHR)(NYSE:FHR)
today announced its financial results for the three months and year ended
December 31, 2005. These financial results have been prepared in accordance
with Canadian generally accepted accounting principles.
All amounts are expressed in U.S. dollars.

Fourth Quarter 2005 Highlights

- Diluted income per share ("diluted EPS") for the fourth quarter was
$0.88 compared to a diluted loss per share of $0.06 for the same
period in 2004. Excluding the effect of hotels sold in 2004 and 2005,
gains on asset sales, a tax recovery and other non-operating items,
diluted EPS rose to $0.12 from a diluted loss per share of $0.05 in
the fourth quarter of 2004.

- Revenues increased 40.9% to $232.4 million. Excluding the effect on
revenues of hotels sold in 2004 and 2005 and the proceeds from land
sales, revenues were up 16.8%.

- Revenue per available room(1) ("RevPAR") for the comparable(2)
Fairmont managed portfolio improved 11.8% driven by RevPAR growth of
15.4% at the comparable U.S. and International managed portfolios.

- EBITDA(3) for the fourth quarter was $116.2 million compared to
$20.4 million for the same period in 2004. Fourth quarter EBITDA
included a gain on asset sales of $122.9 million in 2005 and a loss of
$0.5 million in 2004. As a result of the sale of The Fairmont Orchid,
Hawaii on December 23, EBITDA and Adjusted EBITDA in the fourth
quarter were $2.0 million lower than previously expected due to lost
real estate earnings from the resort during the holiday season.

- Adjusted EBITDA(3) for the fourth quarter of 2005 was $31.6 million
compared to $34.2 million for the same period in 2004. Adjusted EBITDA
increased 9.9% when excluding the impact of the hotels sold in 2004
and 2005 and The Fairmont Southampton, which was closed for hurricane
repairs during the first quarter of 2004 and therefore was excluded
from FHR's comparable portfolio.

- FHR sold its real estate interest in The Fairmont Orchid for a gain of
$105.8 million while maintaining a long-term management contract.

- The Company entered into six agreements for hotel and/or residential
developments, all opening between 2007 and 2009.

- FHR completed the sale of two blocks of land in Toronto's Southtown
for gross proceeds of $42.8 million.

- The Company announced an Acquisition Agreement with Kingdom Hotels
International and Colony Capital for all of FHR's outstanding common
shares at a price of $45.00 per share in cash (see Announcements and
Corporate Activities).

"Our U.S. properties continue to benefit from the robust U.S. lodging
fundamentals. In the fourth quarter, our comparable U.S. managed and owned
portfolios experienced RevPAR growth of 15.0% and 9.6%, respectively,
primarily driven by strong occupancy gains across all markets," said William
R. Fatt, FHR's Chief Executive Officer. "Our International portfolio also had
significant gains, with RevPAR at the managed and owned portfolios up 17.0%
and 11.3%, respectively."

"Looking ahead to 2006, we expect current industry trends to continue
with ongoing strength in our U.S. and International properties. As our
Canadian portfolio earns such a significant portion of its annual earnings in
the third quarter, it is too early to provide details on performance," said
Mr. Fatt. "Going forward, we remain focused on enhancing the performance of
our portfolio, building on the success of our brand and expanding into new key
city center and resort destinations. We are excited about the opportunity to
combine the Fairmont and Raffles portfolios to create a global luxury hotel
leader. These two brands are an excellent strategic fit with rich histories,
global brand recognition and complementary destinations."

<<

Three months ended Year ended
Revenues December 31 December 31
(In millions of U.S. dollars) 2005 2004 2005 2004
---- ---- ---- ----

Reported Revenues $ 232.4 $ 164.9 $ 857.5 $ 768.7
Less:
Amounts attributable
to hotels sold 13.3 14.0 63.9 106.5
Proceeds from sale of
undeveloped land 42.8 - 60.7 15.4
----------------------------------------------
Revenues adjusted for
hotels sold and land
sales $ 176.3 $ 150.9 $ 732.9 $ 646.8
----------------------------------------------


Three months ended Year ended
Diluted income December 31 December 31
(loss) per share 2005 2004 2005 2004
---- ---- ---- ----
Diluted income (loss)
per share $ 0.88 $ (0.06) $ 2.16 $ 1.92
Less:
Amounts attributable to
hotels sold (0.01) 0.00 (0.02) 0.10
Gains on asset sales 0.98 0.01 1.17 1.29
Other non-operating items(i) (0.24) - (0.40) -
Tax recovery - - 0.49 -
----------------------------------------------
Diluted income (loss) per
share adjusted for hotels
sold, gains on asset
sales, tax recovery
and other non-operating
items $ 0.12 $ (0.05) $ 0.87 $ 0.45
----------------------------------------------

(i) 2005 results include a number of non-operating items: transactions
costs (Q2); a legal provision (Q3); restructuring and lease
termination costs (Q4); one-time pension costs (Q4); advisory fees
relating to a strategic review undertaken by the Board of
Directors (Q4); and a provision related to an impairment of
long-term advances receivable (Q4).
(ii) Totals may not add due to rounding and the exclusion of any
anti-dilutive impact.

Fourth Quarter Ownership Operations

The Company's hotel ownership results are affected by the seasonal nature
of the assets owned. The table below presents, by quarter, the comparable
hotel ownership EBITDA contribution by region.

-------------------------------------------------------------------------
Interna-
2005 Canada U.S. tional
-------------------------------------------------------------------------
First quarter 21% 35% 44%
-------------------------------------------------------------------------
Second quarter 50% 31% 19%
-------------------------------------------------------------------------
Third quarter 88% 6% 6%
-------------------------------------------------------------------------
Fourth quarter 14% 46% 40%
-------------------------------------------------------------------------
Full-year 53% 24% 23%
-------------------------------------------------------------------------

Comparable owned hotels revenues:
--------------------------------

-------------------------------------------------------------------------
Comparable revenues Canada U.S. International Total
-------------------------------------------------------------------------
Increase from fourth
quarter 2004 4.6% 16.7% 14.5% 10.8%
-------------------------------------------------------------------------

- Canadian Owned Hotels: Revenues for the Canadian owned hotels were
impacted by the 3.8% appreciation of the Canadian dollar against the
U.S. dollar when compared to the fourth quarter of 2004. The balance
of the increase was primarily driven by The Fairmont Chateau Lake
Louise, which experienced revenue growth of 9.3% and a 10.2%
improvement in RevPAR.
- U.S. Owned Hotels: This portfolio's revenue improvements were largely
driven by The Fairmont Scottsdale Princess, which enjoyed RevPAR
growth of 14.3%.
- International Owned Hotels: Increased revenues for the International
owned portfolio was the result of double-digit RevPAR growth at all
properties in this portfolio. In Mexico, The Fairmont Acapulco
Princess and The Fairmont Pierre Marques experienced RevPAR increases
of 11.2% and 11.7%, respectively.

Comparable owned hotels operating statistics:
--------------------------------------------

-------------------------------------------------------------------------
Increase (decrease)
from fourth
quarter 2004 Canada U.S. International Total
-------------------------------------------------------------------------
RevPAR 6.7% 9.6% 11.3% 8.8%
-------------------------------------------------------------------------
Average daily rate ("ADR") 5.8% (3.5%) 4.2% 3.8%
-------------------------------------------------------------------------
Occupancy 0.5 8.5 3.7 2.8
points points points points
-------------------------------------------------------------------------

- Canadian Owned Hotels: The improvement in ADR is primarily a result of
the appreciation of the Canadian dollar. Adjusting for the
appreciation of the Canadian dollar, RevPAR for this portfolio was up
2.6%.
- U.S. Owned Hotels: Solid occupancy growth continued to be the driver
for the U.S. owned portfolio as a result of increased leisure and
group demand.
- International Owned Hotels: The International owned portfolio's
performance was primarily impacted by a considerable increase in
leisure demand in Acapulco compared to the same quarter last year.

Comparable owned hotels EBITDA(3):
----------------------------------

-------------------------------------------------------------------------
Comparable EBITDA Canada U.S. International Total
-------------------------------------------------------------------------
Increase (decrease)
from fourth quarter 2004 (42.1%) 31.2% (0.2%) (2.1%)
-------------------------------------------------------------------------

- Canadian Owned Hotels: EBITDA for the Canadian owned hotels decreased
$2.4 million to $3.3 million as a result of recent restructuring costs
across the portfolio and fewer U.S. leisure travelers over the holiday
period. Excluding the restructuring costs, EBITDA was down
approximately $2 million or 35%.
- U.S. Owned Hotels: EBITDA for this portfolio, which excludes
The Fairmont Orchid, was up $2.0 million to $8.4 million in the fourth
quarter. The Fairmont Scottsdale Princess reported significant EBITDA
growth as a result of a 10.1 percentage point occupancy improvement.
- International Owned Hotels: EBITDA was essentially flat for this
portfolio as all of these properties incurred restructuring costs in
the quarter. Excluding these costs, EBITDA increased about
$1.9 million or 26%.

Comparable owned hotels EBITDA margin:
--------------------------------------

-------------------------------------------------------------------------
Comparable EBITDA
margin Canada U.S. International Total
-------------------------------------------------------------------------
Increase (decrease)
from fourth quarter 2004 (560bp) 270bp (320bp) (220bp)
-------------------------------------------------------------------------

- Canadian Owned Hotels: EBITDA margins for the Canadian owned hotels
decreased relative to the fourth quarter of 2004 due to softness in
American leisure business as well as restructuring costs incurred
during the quarter. Both of these factors had a considerable impact
given that the fourth quarter is not a significant earnings period for
the Canadian portfolio. Excluding the restructuring costs, the EBITDA
margin was down 480 basis points.
- U.S. Owned Hotels: Solid revenue growth of 16.7% was the key driver of
EBITDA margin improvement for this portfolio.
- International Owned Hotels: Like the Canadian portfolio, the
International owned assets experienced a decline in EBITDA margins as
a result of restructuring costs during the fourth quarter of 2005.
Excluding these costs, margins increased by 240 basis points.

Real estate activities: Real estate activities in the fourth quarter
produced revenues of $49.4 million and a $16.9 million contribution to EBITDA.
This was generated primarily by two land sales in Toronto, which yielded net
proceeds and after-tax gains of $17.1 million. Real estate activities for the
same period in 2004, primarily from Fairmont Heritage Place, generated
$4.8 million in revenues and a $1.6 million loss to EBITDA.

Fourth Quarter Management Operations

-------------------------------------------------------------------------
Increase from fourth quarter 2004 Fairmont Delta
-------------------------------------------------------------------------
Revenues under management 5.7% 7.5%
-------------------------------------------------------------------------
Management fee revenues 42.4% 18.8%
-------------------------------------------------------------------------
Comparable worldwide RevPAR 11.8% 13.3%
-------------------------------------------------------------------------
Comparable worldwide ADR 6.8% 7.8%
-------------------------------------------------------------------------
Comparable worldwide Occupancy 2.8 points 3.1 points
-------------------------------------------------------------------------

Fairmont Management Operations
- Revenues under management of $448 million increased 5.7% over 2004.
The addition of The Savoy, A Fairmont Hotel, Fairmont Monte Carlo,
Fairmont Newport Beach, five hotels in Kenya and improved operating
results at the U.S. hotels, all contributed to this increase.
- Management fee revenues were up 42.4% to $20.5 million, as a number of
annual incentive thresholds were surpassed during the quarter.
- EBITDA margin of 46.8% was down from 64.6% in the prior year primarily
due to higher incentive compensation costs as a result of the
Company's higher share price in the fourth quarter of 2005.
- For the Fairmont comparable managed portfolio, RevPAR increased 11.8%
to $118.70. The comparable International managed portfolio experienced
solid RevPAR growth of 17.0%, driven by a 15.3% improvement in ADR.
The comparable U.S. managed hotels also showed strong growth with
RevPAR up 15.0%, resulting from a 4.2% increase in ADR combined with
an occupancy gain of 6.2 percentage points. The comparable Canadian
managed portfolio reported a 6.9% RevPAR improvement, driven primarily
by an increase in ADR of 5.2%. Adjusting for the appreciation of the
Canadian dollar, RevPAR for the Canadian portfolio was up 2.8% for the
quarter.

Delta Management Operations
- Delta's revenues under management increased 7.5% to $108 million,
primarily due to improved operating results and the appreciation of
the Canadian dollar.
- Management fee revenues for the fourth quarter were $3.8 million
compared to $3.2 million for the same period in 2004. This 21.4%
increase in management fee revenues relates primarily to a number of
properties exceeding their annual incentive fee thresholds in the
fourth quarter.
- RevPAR increased 13.3% over the fourth quarter of 2004 resulting from
a 7.8% increase in ADR and a 3.1 percentage point improvement in
occupancy. Adjusting for the appreciation of the Canadian dollar,
RevPAR was up approximately 8.9%.

General and Administrative Expenses

General and administrative expenses for the quarter were $14.7 million
compared to $9.2 million for the same period in 2004. Increased incentive
compensation costs as a result of the Company's higher share price and
one-time pension plan costs were the primary drivers.

Year-end Consolidated Results

For the year ended December 31, 2005, EBITDA was $264.8 million compared
to $324.7 million for the same period in 2004. EBITDA for both periods
includes gains on asset sales of $140.8 million and $152.6 million,
respectively. Adjusted EBITDA was $203.1 million compared to $216.0 million
for the same period in 2004. Excluding the three hotels sold and The Fairmont
Southampton, which was closed for hurricane repairs during the first quarter
of 2004, Adjusted EBITDA increased 4.6% to $185.4 million.

Net income for the year was $167.5 million (diluted EPS of $2.16),
compared to the prior year's net income of $155.8 million (diluted EPS of
$1.92). Excluding the impact of hotels sold, gains on asset sales, other non-
operating items and the tax recovery, diluted EPS increased 93% to $0.87 from
$0.45.

Announcements and Corporate Activities

On December 9, 2005, Icahn Partners LP and Icahn Partners Master Fund LP
commenced a formal unsolicited partial takeover bid for approximately 41% of
the outstanding common shares of the Company at a price of $40.00 per share.
On December 22, 2005, Fairmont's Board of Directors issued its Circular
recommending that the Icahn offer be rejected, as it was not in the best
interest of its shareholders. At the same time, the Board of Directors
disclosed that it was actively exploring strategic alternatives to maximize
value for shareholders, which might include a possible transaction with one or
more third parties.

On January 30, 2006, Fairmont announced that it had entered into an
Acquisition Agreement with a Canadian company owned by Kingdom Hotels
International and Colony Capital, which is expected to acquire all of
Fairmont's outstanding common shares at a price of $45.00 per share in cash.
The total value of this transaction, including debt is $3.9 billion. The
transaction was unanimously approved by Fairmont's Board of Directors
following receipt of the recommendation of a Special Committee of the Board.
Fairmont's Board has agreed to recommend to its shareholders that they vote in
favor of the transaction.

The closing of the transaction, which is expected to occur in May, is not
subject to any financing condition. The closing is subject to certain other
customary conditions, including regulatory approvals. The proposed transaction
is expected to close in the second quarter of 2006, shortly after receipt of
shareholder and court approvals. The transaction is to be carried out by way
of a statutory plan of arrangement and, accordingly, will be subject to the
approval of 66 2/3% of the votes cast by Fairmont's shareholders at a meeting
of shareholders scheduled for April 18, 2006 as well as court approval.

Fairmont has been advised by Kingdom and Colony of their intention to
combine the Fairmont and Raffles portfolios following the completion of the
transaction, transforming the companies into a global luxury hotel leader with
120 hotels in 24 countries. Fairmont will continue as a hotel management
company headquartered in Canada and Raffles, based in Singapore, will also
retain its separate brand identity. Raffles owns and manages a portfolio of 33
properties located primarily across Asia and Europe, including its flagship
property built in 1887, the Raffles Hotel, Singapore.

New Developments
----------------

The Company has entered into an agreement to manage a mixed-use luxury
development in the Turks & Caicos Islands to be branded the "Fairmont Three
Cays". The project will include 300 guestroom units, several Fairmont branded
residential developments including Fairmont Heritage Place, a Willow Stream
spa and a championship golf course, all of which will be managed by FHR. The
Company will make an investment for a 19.9% equity interest in the resort when
the property opens in 2009.

We announced an agreement to manage a luxury mixed-use property within
Tamarack Resort, an all-season mountain destination located 90 miles north of
Boise, Idaho. When the property opens in 2008, it will include a 225-room
condo hotel, a spa and several residential components.

The Company has entered into an agreement to manage a mixed-use project
located in South Africa's province of KwaZulu-Natal. Projected to open in
2009, the development will include a luxury resort, a championship golf
course, a spa and vacation ownership products.

We announced an agreement to manage Fairmont's first branded luxury
condominium development. The 129 residences will be built in southern
California on a 20-acre site in the exclusive community of Indian Wells and
are expected to open in late 2007.

We announced that the Company had entered into an agreement to once again
manage The Plaza in New York City when it reopens in 2007. The Plaza is
currently undergoing an extensive $350 million renovation, which will include
282 guestroom units. The restored Plaza will also contain elegant residential
condominiums and high-end retail space.

The Company has entered into a joint venture to develop and manage its
first urban private residence club in San Francisco's historic Ghirardelli
Square. As part of the agreement, FHR will make a minority equity investment
in the development, which is expected to open in mid-2007.

Dispositions
------------

We sold The Fairmont Orchid, Hawaii to Westbrook Partners for gross
proceeds of $250 million and continue to manage the resort under a long-term
management contract. The Company realized a pre-tax gain of $105.8 million on
the sale of this property, which it purchased in December 2002 for
$140 million.

The Company completed the sale of two blocks of land in Toronto's
Southtown for gross proceeds of $42.8 million, resulting in an after-tax gain
of approximately $17.1 million.

Other Activities
----------------

During the quarter, FHR entered into a mortgage loan for $75.0 million
secured by The Fairmont Scottsdale Princess. The proceeds were used to repay a
$59.9 million mortgage on The Fairmont Copley Plaza, Boston with the balance
to be used for general corporate purposes.

During the quarter, FHR repurchased 450,400 shares under its normal
course issuer bid for a total cost of $14.9 million. During the year, FHR
repurchased 4.4 million shares at a cost of $141.2 million. The Company ceased
purchasing shares under its normal course issuer bid following the 13D filing
of Mr. Carl Icahn on November 7, 2005.

About Fairmont Hotels & Resorts Inc.

FHR is a leading owner/operator of luxury hotels and resorts. FHR's
managed portfolio consists of 87 luxury and first-class properties with
approximately 34,000 guestrooms in the United States, Canada, Mexico, Bermuda,
Barbados, United Kingdom, Monaco, Kenya and the United Arab Emirates as well
as two vacation ownership properties managed by Fairmont Heritage Place. FHR
owns Fairmont Hotels Inc., North America's largest luxury hotel management
company, as measured by rooms under management, with 49 distinctive city
center and resort hotels including The Fairmont San Francisco, The Fairmont
Banff Springs and The Fairmont Scottsdale Princess. FHR also owns Delta
Hotels, Canada's largest first-class hotel management company, which manages
and franchises 38 city center and resort properties in Canada. In addition to
hotel management, FHR holds real estate interests in 21 properties and an
approximate 24% investment interest in Legacy Hotels Real Estate Investment
Trust, which owns 24 properties. FHR owns FHP Management Company LLC, a
private residence club management company that operates Fairmont Heritage
Place, a vacation ownership business.

This news 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", "estimate", "guidance", "aim" 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. These risks are further described in FHR's
filings with Canadian securities regulatory authorities (www.sedar.com) and
with the U.S. Securities and Exchange Commission website (www.sec.gov). All
forward-looking statements in this news release are qualified by these
cautionary statements. These statements are made as of the date of this news
release and except as required by applicable law, FHR disclaims any
responsibility to update any such forward-looking statements, whether as a
result of new information, future events or otherwise.

1. RevPAR is calculated as room revenue divided by the number of room
nights available. Management considers RevPAR to be a meaningful
indicator of hotel operations because it measures the
period-over-period change in room revenues relative to the number of
room nights available. Investors and analysts also use it as a measure
of the Company's operating performance. However, RevPAR is not a
defined measure of operating performance under Canadian Generally
Accepted Accounting Principles ("GAAP"). It is likely that FHR's
calculation of RevPAR is different than the calculations used by
others.

2. Comparable information is considered to be information for properties
that were wholly-owned or fully open under FHR management for at least
the entire current and prior year. Comparable information also
excludes properties under major renovation that would have a
significant adverse effect on the properties' primary operations. We
present these results on a comparable basis because we believe that
doing so provides investors and management with useful information for
evaluating the period-to-period performance of our hotels. When
presenting comparable information for this quarter, the following
properties have been excluded:

Owned hotels
------------
- The Fairmont Orchid, Hawaii (sold December 2005)
- The Fairmont Kea Lani, Maui (sold July 2004)
- The Fairmont Glitter Bay (sold July 2004)
- The Fairmont Southampton (reopened April 2004 after hurricane damage
repairs)

Fairmont Managed Hotels
-----------------------
- The Fairmont Southampton (reopened April 2004 after hurricane damage
repairs)
- Fairmont Monte Carlo (assumed management December 2004)
- The Savoy, A Fairmont Hotel (assumed management January 2005)
- The Plaza (ceased management April 2005)
- The Norfolk Hotel, Mount Kenya Safari Club, The Aberdare Country Club,
The Ark and the Mara Safari Club (assumed management May 2005)
- The Fairmont Glitter Bay (ceased management June 2005)
- Fairmont Newport Beach (assumed management July 2005)
- The Fairmont New Orleans (closed in September 2005 due to hurricane
damage)

Delta Managed Hotels
--------------------
- Delta Meadowvale (assumed management September 2004)
- Delta franchised properties

3. EBITDA is defined as earnings before interest, taxes and amortization.
Management considers EBITDA to be a meaningful indicator of operations
and uses it as the primary measure to assess the operating performance
of the Company's business segments. EBITDA provides us with an
understanding of the Company's operating results before the impact of
investing and financing transactions and income taxes. It also
facilitates comparisons between the Company and its competitors.

Management adjusts EBITDA when evaluating operating performance
because it believes that the inclusion or exclusion of certain items
such as gains and losses on asset sales and other non-operating items,
is necessary to provide a more accurate measure of our core business
operating results. It is also a means to evaluate period-over-period
results. We adjust our reported EBITDA, as set forth above, for
certain items and refer to this measure as Adjusted EBITDA. The
principal adjustments we make are to eliminate (i) gains and losses
from asset sales; (ii) amortization, net interest expense and income
taxes in calculating our earnings from equity investments and (iii)
other non-operating items.

We have chosen to provide this information to investors to enable them
to perform more meaningful comparisons of past, present and future
core business operating results. Adjusted EBITDA may also be used by
investors and analysts in their valuation of the Company.

EBITDA and Adjusted EBITDA are not defined measures of operating
performance under Canadian GAAP. It is likely that FHR's calculations
of EBITDA and Adjusted EBITDA are different than the calculations used
by others.

The table below provides a reconciliation of Adjusted EBITDA and EBITDA
to net income:

-------------------------------------------------------------------------
Three months ended Year ended
December 30 December 31
-------------------------------------------------------------------------
(In millions of dollars) 2005 2004 2005 2004
-------------------------------------------------------------------------
Net income (loss) $ 68.4 $ (4.4) $ 167.5 $ 155.8
Add (Deduct):
Interest expense, net 3.2 7.4 22.4 33.1
Income tax expense
(recovery) 24.2 (2.2) 4.4 61.9
Amortization 20.4 19.6 70.5 73.9
-------------------------------------------------------------------------
EBITDA 116.2 20.4 264.8 324.7
Add (Deduct):
(Gains) losses on asset
sales (122.9) 0.5 (140.8) (152.6)
Proportional amortization,
interest expense and
income taxes included
in the results of equity
investments 10.2 11.0 36.9 41.4
Stock appreciation rights (0.4) 2.3 (0.9) 2.5
Other non-operating items(1) 28.5 - 43.1 -
-------------------------------------------------------------------------
Adjusted EBITDA $ 31.6 $ 34.2 $ 203.1 $ 216.0
-------------------------------------------------------------------------

(1) Other non-operating items include:
Fourth quarter - expenses relating to financial and legal advisory fees
related to services provided to the Special Committee and Board of
Directors during the review of shareholder value-creating strategic
options; restructuring and lease termination costs; a one-time pension
plan cost; and a provision related to an impairment of long-term advances
receivable.
Third quarter - a legal provision associated with a predecessor company
of Fairmont.
Second quarter - advisory and other expenses related to a major portfolio
acquisition that FHR did not complete.



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

ASSETS


December 31 December 31
2005 2004
(Unaudited)
----------- -----------

Current assets
Cash and cash equivalents $ 279.2 $ 99.1
Accounts receivable 91.7 90.2
Inventory 13.7 15.5
Prepaid expenses and other 14.6 11.2
----------- -----------
399.2 216.0
Investments in partnerships and
corporations (note 4) 155.1 160.7

Non-hotel real estate (note 7) 100.2 100.3

Property and equipment (note 3) 1,308.8 1,435.5

Goodwill 164.8 162.8

Intangible assets (notes 4, 5 and 8) 284.8 245.0

Other assets and deferred charges
(notes 4 and 5) 111.0 82.3
----------- -----------

$ 2,523.9 $ 2,402.6
----------- -----------
----------- -----------


LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities
Accounts payable and accrued liabilities $ 156.6 $ 127.9
Income taxes payable (note 3) 57.8 31.3
Dividends payable 4.3 4.6
Current portion of long-term debt 2.8 4.1
----------- -----------
221.5 167.9

Long-term debt (note 15) 388.4 398.0

Other liabilities 123.5 95.7

Future income taxes 99.5 90.6
----------- -----------

832.9 752.2
----------- -----------

Shareholders' Equity (note 9) 1,691.0 1,650.4
----------- -----------

$ 2,523.9 $ 2,402.6
----------- -----------
----------- -----------



Fairmont Hotels & Resorts Inc.
Consolidated Statements of Income
(Stated in millions of U.S. dollars, except per share amounts)
(Unaudited)


Three months ended Year ended
December 31 December 31
2005 2004 2005 2004
---------- ---------- ---------- ----------
Revenues
Hotel ownership
operations (note 11(d)) $ 150.8 $ 137.8 $ 670.2 $ 654.1
Management operations 19.7 13.2 62.0 46.3
Real estate activities
(note 7) 49.4 4.8 78.2 31.0
---------- ---------- ---------- ----------
219.9 155.8 810.4 731.4
Other revenues from managed
and franchised properties 12.5 9.1 47.1 37.3
---------- ---------- ---------- ----------
232.4 164.9 857.5 768.7

Expenses
Hotel ownership operations 128.7 110.8 509.3 474.8
Management operations 11.8 6.3 26.3 19.4
Real estate activities 32.5 6.4 44.9 25.2
General and administrative 14.7 9.2 36.8 29.6
Other (notes 13 and 14) 19.6 - 34.1 -
Amortization 20.4 19.6 70.5 73.9
---------- ---------- ---------- ----------
227.7 152.3 721.9 622.9
Other expenses from managed
and franchised properties 12.9 9.9 47.1 38.5
---------- ---------- ---------- ----------
240.6 162.2 769.0 661.4
Loss from equity investments
and other (1.8) (1.4) - (0.2)
---------- ---------- ---------- ----------

Operating (loss) income (10.0) 1.3 88.5 107.1

Interest expense, net 3.2 7.4 22.4 33.1
(Gain) loss on sales of
investments and hotel
assets (105.8) 0.5 (105.8) (143.7)
---------- ---------- ---------- ----------
Income (loss) before income
tax expense (recovery) 92.6 (6.6) 171.9 217.7

Income tax expense (recovery)
Current (note 6) 53.8 4.4 (4.2) 54.4
Future (29.6) (6.6) 8.6 7.5
---------- ---------- ---------- ----------
24.2 (2.2) 4.4 61.9

Net income (loss) $ 68.4 $ (4.4) $ 167.5 $ 155.8
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------

Weighted average number of
common shares outstanding
(in millions) (note 9)
Basic 72.2 76.8 74.3 78.4
Diluted 80.5 85.0 82.5 86.4

Basic earnings (loss)
per common share $ 0.95 $ (0.06) $ 2.25 $ 1.99
Diluted earnings (loss)
per common share $ 0.88 $ (0.06) $ 2.16 $ 1.92



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


Three months ended Year ended
December 31 December 31
2005 2004 2005 2004
---------- ---------- ---------- ----------
Cash provided by (used in)

Operating activities
Net income (loss) $ 68.4 $ (4.4) $ 167.5 $ 155.8
Items not affecting cash
Amortization of property
and equipment 19.7 18.7 68.0 70.8
Amortization of
intangible assets 0.7 0.9 2.5 3.1
Loss from equity
investments 1.8 1.4 - 0.2
Future income taxes (29.6) (6.6) 8.6 7.5
Unrealized foreign
exchange loss (gain) 0.8 (16.9) (6.8) (20.0)
(Gain) loss on sales of
investments and hotel
assets (105.8) 0.5 (105.8) (143.7)
Other 21.2 (1.9) 23.4 5.9
Distributions from
investments 2.7 2.9 8.1 7.1
Changes in non-hotel real
estate 19.2 2.0 16.7 1.6
Changes in non-cash working
capital items (note 10) 100.4 (33.6) 54.6 (17.9)
---------- ---------- ---------- ----------

99.5 (37.0) 236.8 70.4
---------- ---------- ---------- ----------
Investing activities
Additions to property and
equipment (20.1) (16.1) (71.5) (74.3)
Proceeds from sale of
property and equipment - - 8.8 -
Investments in partnerships
and corporations - (29.7) (11.2) (34.6)
Sales of investments and
hotel assets 245.6 (0.9) 248.6 442.7
Collection of loans
receivable - 15.2 - 24.2
Issuance of loans receivable (0.4) - (33.5) (7.0)
Acquisitions of intangible
assets (0.3) (3.2) (32.3) (3.2)
---------- ---------- ---------- ----------

224.8 (34.7) 108.9 347.8
---------- ---------- ---------- ----------
Financing activities
Issuance of long-term debt 75.0 33.2 179.5 115.9
Repayment of long-term debt (195.1) (1.1) (200.9) (380.6)
Issuance of common shares 3.7 2.0 6.6 2.9
Repurchase of common shares (14.9) (32.7) (141.2) (84.5)
Dividends paid - - (9.1) (6.4)
---------- ---------- ---------- ----------

(131.3) 1.4 (165.1) (352.7)
---------- ---------- ---------- ----------
Effect of foreign exchange
rate changes on cash and
cash equivalents - 1.6 (0.5) 1.9
---------- ---------- ---------- ----------
Increase (decrease) in cash
and cash equivalents 193.0 (68.7) 180.1 67.4

Cash and cash equivalents -
beginning of period 86.2 167.8 99.1 31.7
---------- ---------- ---------- ----------
Cash and cash equivalents -
end of period $ 279.2 $ 99.1 $ 279.2 $ 99.1
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------



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


Three months ended Year ended
December 31 December 31
2005 2004 2005 2004
---------- ---------- ---------- ----------
Balance - Beginning
of period $ 213.5 $ 214.7 $ 189.2 $ 78.1

Net income (loss) 68.4 (4.4) 167.5 155.8
---------- ---------- ---------- ----------

281.9 210.3 356.7 233.9

Repurchase of common
shares (note 9) (8.1) (16.5) (78.4) (36.9)
Dividend (4.3) (4.6) (8.8) (7.8)
---------- ---------- ---------- ----------

Balance - End of period $ 269.5 $ 189.2 $ 269.5 $ 189.2
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------


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

1. Fairmont Hotels & Resorts Inc. ("FHR" or the "Company") has operated
and owned hotels and resorts for over 118 years, and currently
manages properties, principally under the Fairmont and Delta brands.
As at December 31, 2005, FHR managed or franchised 88 luxury and
first-class hotels. FHR owns Fairmont Hotels Inc. ("Fairmont") which,
as at December 31, 2005, managed 50 luxury properties in major city
centers and key resort destinations throughout Canada, the United
States, Mexico, Bermuda, Barbados, the United Kingdom, Monaco, Kenya
and the United Arab Emirates. Delta Hotels Limited ("Delta"), a
wholly-owned subsidiary of FHR, managed or franchised 38 Canadian
hotels and resorts as at December 31, 2005.

In addition to hotel and resort management, as at December 31, 2005,
FHR had hotel ownership interests ranging from approximately 15% to
100% in 21 properties, located in Canada, the United States, Mexico,
Bermuda, Barbados, Monaco and the United Arab Emirates. FHR also has
an approximate 24% equity interest in Legacy Hotels Real Estate
Investment Trust ("Legacy") as at December 31, 2005, which owns
24 hotels and resorts across Canada and the United States. FHR also
owns real estate properties that are suitable for either commercial
or residential development, and has a vacation ownership product.

Results for the three months ended December 31, 2005 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 certain equity investments usually
produce losses without tax benefits.

2. These quarterly 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, 2004. The accounting
policies used in the preparation of these quarterly consolidated
financial statements are consistent with the accounting policies used
in the December 31, 2004 audited consolidated financial statements,
except as discussed below.

Computation of diluted earnings per share
The Emerging Issues Committee of the Canadian Institute of Chartered
Accountants ("CICA") issued Abstract 155 "The Effect of Contingently
Convertible Instruments on the Computation of Diluted Earnings Per
Share" ("EIC 155") in September 2005. This guidance requires the
inclusion of contingently convertible debt securities with a market
price trigger to be included in the computation of diluted earnings
per common share, as determined under the if-converted method. The
guidance is effective for interim and annual periods beginning on or
after October 1, 2005 with retroactive restatement of previously
reported earnings per share. FHR has adopted this guidance for
December 31, 2005 (note 9) resulting in a decrease to previously
reported diluted earnings per share of $0.05 for the year ended
December 31, 2004.

Liabilities and equity
Effective January 1, 2005, FHR adopted the CICA's new accounting
requirements on the classification of financial instruments as
liabilities or equity. The CICA amended its disclosure requirements
surrounding the presentation of financial instruments that may be
settled in cash or by an issuer's own equity instruments, at the
issuer's discretion, as liabilities. Adoption of this new standard
did not have an impact on the Company's financial statements.

Determining whether an arrangement contains a lease
In December 2004, the Emerging Issues Committee issued Abstract 150,
"Determining whether an Arrangement Contains a Lease" ("EIC 150"). An
entity may enter into certain arrangements comprising a transaction
or a series of related transactions that does not take the legal form
of a lease but conveys a right to use a tangible asset (e.g. an item
of property, plant or equipment) in return for a payment or series of
payments. The Company is required to adopt the recommendations of EIC
150 for affected transactions commencing or modified after
December 9, 2004. Adoption of this new standard did not have an
impact on the Company's financial statements.

Variable interest entities
Effective January 1, 2005, the Company adopted Accounting Guideline
No. 15, "Consolidation of Variable Interest Entities" ("AcG-15"),
which established criteria to identify variable interest entities
("VIE") and the primary beneficiary of such entities. Entities that
qualify as VIEs must be consolidated by their primary beneficiary.
Adoption of this new standard did not have an impact on the Company's
financial statements.

3. On December 23, 2005, FHR completed the sale of The Fairmont Orchid,
Hawaii for gross cash proceeds of $250.0. Working capital adjustments
and transaction costs resulted in net cash proceeds of $240.6. The
property had a net book value of approximately $141. FHR recognized a
gain of $105.8, before income taxes of approximately $44. The
proceeds of The Fairmont Orchid, Hawaii sale were paid to a Qualified
Intermediary on closing of the sale in anticipation of the company
undertaking a like-kind exchange, as defined for U.S. tax purposes.
The required Identification Statement was filed on February 6, 2006.
Where identified properties are acquired on a timely basis, the full
amount of the cash tax related to the sale will be deferred. The
resort is being managed by Fairmont under a long-term management
contract.

4. In May 2005, FHR entered into long-term contracts to manage five
properties in Kenya. FHR invested $10.0 in connection with the five
management contracts. A portion of the investment was funded as a
loan and a portion of the investment financed the acquisition of an
approximate 15% interest in a corporation owned jointly with Kingdom
Hotels Investments and IFA Hotels & Resorts. The corporation holds an
ownership interest in five Kenyan properties known as The Norfolk
Hotel, Mount Kenya Safari Club, The Aberdare Country Club, The Ark
and the Mara Safari Club. Based on the relative fair value of the
management contracts and the loan, $3.8 of the $10.0 was allocated to
the management contracts. The investment of $5.0 was accounted for
using the equity method due to significant influence through
contractual arrangements. $1.2 was allocated to the loan, which has a
face value of $5.0, bears no interest and is payable in 2020.

In November 2005, the Company sold its 15% equity interest in the
corporation for $5.0, resulting in no gain or loss on the sale.

In 2005, FHR invested an additional $5.7 relating to the 19.9%
interest in the Fairmont Mayakoba, Riviera Maya and a management
contract. The investment is accounted for using the equity method due
to significant influence through contractual arrangements. The resort
will be managed by Fairmont under a long-term management contract.
Based on the relative fair value of the management contract,
approximately $3.7 of the $5.7 was allocated to intangible assets
relating to the management contract.

5. In January 2005, FHR entered into a long-term contract to manage The
Savoy in London, England. In connection with this, FHR agreed to
invest approximately $63.0 to obtain the management contract and
provide loans to the hotel's owners. As at December 31, 2005, FHR had
funded $54.3 of the total commitment, of which $22.8 related to the
management contract, and $31.5 related to a loan receivable, due in
2015 and bearing interest at 7.75%.

6. In the quarter ended June 30, 2005, the Company reached a favorable
tax settlement with the Canada Revenue Agency and recorded a $14.6
recovery of current income taxes. During the quarter ended
September 30, 2005, the Company recorded an additional income tax
recovery of $26.1, net of income taxes payable of approximately
$2.1 on interest income, to reflect the final assessment.

7. During the quarter ended December 31, 2005, FHR sold two parcels of
land in Toronto for proceeds of $42.8, including a vendor take-back
mortgage of $5.4 due in 2006. FHR recorded an after-tax gain of $17.1
related to these transactions. In July 2005, FHR sold a parcel of
land in Vancouver for net proceeds and an after-tax gain of $17.9.
These transactions did not give rise to any income taxes payable.

8. In July 2005, FHR invested $3.3 to secure a long-term management
contract related to the Fairmont Newport Beach.

9. Shareholders' equity
December 31, December 31,
2005 2004
------------- -------------
Common shares $ 1,101.3 $ 1,163.1
Other equity 19.2 19.2
Treasury stock - (5.6)
Contributed surplus 144.1 142.4
Foreign currency translation adjustments 156.9 142.1
Retained earnings 269.5 189.2
------------- -------------

$ 1,691.0 $ 1,650.4
------------- -------------

Diluted earnings (loss) is calculated as follows:

Three months ended Year ended
December 31 December 31
2005 2004 2005 2004
---------- ---------- ---------- ----------
Reported net income
(loss) $ 68.4 $ (4.4) $ 167.5 $ 155.8
Interest expense
adjustment(1) 2.6 2.6 10.4 10.3
---------- ---------- ---------- ----------
Adjusted net income
(loss) $ 71.0 $ (1.8) $ 177.9 $ 166.1
---------- ---------- ---------- ----------

The diluted weighted-average number of common shares outstanding
(in millions) is calculated as follows:

Three months ended Year ended
December 31 December 31
2005 2004 2005 2004
---------- ---------- ---------- ----------
(restated) (restated)
Weighted-average number
of common shares
outstanding - basic 72.2 76.8 74.3 78.4
Stock options(1) 1.1 1.0 1.0 0.8
Dilutive effect of
contingently convertible
debt(1) 7.2 7.2 7.2 7.2
---------- ---------- ---------- ----------
Weighted-average number
of common shares
outstanding - diluted 80.5 85.0 82.5 86.4
---------- ---------- ---------- ----------
(1) For the three months ended December 31, 2004, the impact of
stock options and contingently convertible debt has been
excluded from the calculation of diluted loss per common share,
as their effect is anti-dilutive.

Effective October 31, 2005, FHR may repurchase for cancellation up to
10% of its outstanding common shares. The amounts and timing of
repurchases are at FHR's discretion. During the year ended December
31, 2005, under the current and previous normal course issuer bids,
FHR repurchased 4,376,000 shares (450,400 during the fourth quarter).
Also, an additional 166,100 shares that were classified as treasury
stock at December 31, 2004, were cancelled in 2005. Total
consideration relating to the repurchase amounted to $141.2 ($14.9
for the fourth quarter), of which $65.8 was charged to common shares
($6.8 for the fourth quarter) and $75.4 was charged to retained
earnings ($8.1 for the fourth quarter). Of the $5.6 of treasury stock
outstanding at December 31, 2004, $2.6 was reclassified to common
shares and $3.0 to retained earnings in 2005. During the year ended
December 31, 2005, FHR issued 320,487 shares (173,797 for the fourth
quarter) pursuant to the Stock Option Plan for which $6.6 was
credited to common shares ($3.7 for the fourth quarter) for proceeds
from options exercised. At December 31, 2005, 72,171,735 common
shares were outstanding (December 31, 2004 - 76,393,348).

During the twelve months ended December 31, 2005, 320,000 stock
options were granted (nil in the fourth quarter), and the cost of
this stock-based compensation was recorded based on the estimated
fair value of these options. 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 (loss) and basic and diluted earnings
(loss) per share would have been:

Three months ended Year ended
December 31 December 31
2005 2004 2005 2004
---------- ---------- ---------- ----------
Reported net income
(loss) $ 68.4 $ (4.4) $ 167.5 $ 155.8
Net income (loss)
assuming fair value
method used $ 68.3 $ (4.5) $ 167.1 $ 155.4

Assuming fair value
method used
Basic earnings (loss)
per share $ 0.95 $ (0.06) $ 2.25 $ 1.98
Diluted earnings
(loss) per share $ 0.88 $ (0.06) $ 2.15 $ 1.92


10. Changes in non-cash working capital:

Three months ended Year ended
December 31 December 31
2005 2004 2005 2004
---------- ---------- ---------- ----------
(Increase) decrease
in current assets
Accounts receivable $ 8.5 $ 8.4 $ 1.6 $ (22.7)
Inventory 0.5 - 1.4 (1.2)
Prepaid expenses
and other (0.7) 5.0 (3.4) 3.7

Increase (decrease)
in current liabilities
Accounts payable and
accrued liabilities 8.6 (2.1) 29.3 1.0
Income taxes payable 83.5 (44.9) 25.7 1.3
---------- ---------- ---------- ----------

$ 100.4 $ (33.6) $ 54.6 $ (17.9)
---------- ---------- ---------- ----------

11. Segmented Information

FHR has four reportable segments in two core business activities,
ownership and management operations. The segments are hotel
ownership, real estate activities, Fairmont and Delta. Results of
individual properties comprise one operating segment. Hotel ownership
consists of real estate interests ranging from approximately 15% to
100% in 21 properties and an approximate 24% equity interest in
Legacy, which owns 24 hotels and resorts across Canada and the United
States. Real estate activities consist primarily of two undeveloped
land blocks in Toronto and Vancouver and a vacation ownership
product. Fairmont is an international 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 by management primarily
on earnings before interest, taxes and amortization ("EBITDA"), which
management defines as income before interest, income taxes and
amortization. EBITDA includes income or loss from equity investments.
General and administrative expenses, other expenses, gain on sales of
investments and hotel assets, 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 December 31, 2005
------------------------------------------------------
Ownership Management
--------------------- ---------------------
General
and
Real adminis-
estate trative
Hotel acti- and
Ownership vities Fairmont Delta other (e)
---------- ---------- ---------- ---------- ----------
Operating
revenues (d) $ 150.8 $ 49.4 $ 20.5 $ 3.8 $ -

Other revenues
from managed
and
franchised
properties - - 9.9 2.6 -

Loss from equity
investments
and other (1.8) - - - -
EBITDA (b) 15.7 16.9 9.6 2.9 71.5
Total
assets (c) 1,904.5 104.2 455.8 81.9 -
Capital
expenditures 18.6 - 1.5 - -


Inter-
segment
elimina-
tion (a) Total
---------- ----------
Operating
revenues (d) $ (4.6) $ 219.9

Other revenues
from managed
and
franchised
properties - 12.5
----------
232.4
Loss from
equity
investments
and other - (1.8)
EBITDA (b) (0.4) 116.2
Total
assets (c) (22.5) 2,523.9
Capital
expenditures - 20.1



Three months ended December 31, 2004
------------------------------------------------------
Ownership Management
--------------------- ---------------------
General
and
Real adminis-
estate trative
Hotel acti- and
Ownership vities Fairmont Delta other (e)
---------- ---------- ---------- ---------- ----------

Operating
revenues (d) $ 137.8 $ 4.8 $ 14.4 $ 3.2 $ -

Other revenues
from managed
and
franchised
properties - - 6.8 2.3 -

Loss from
equity
investments
and other (1.4) - - - -
EBITDA (b) 21.2 (1.6) 9.3 2.0 (9.7)
Total
assets (c) 1,871.6 100.1 365.9 79.4 -
Capital
expenditures 14.5 - 1.5 - -


Inter-
segment
elimina-
tion (a) Total
---------- ----------

Operating
revenues (d) $ (4.4) $ 155.8

Other revenues
from managed
and
franchised
properties - 9.1
----------
164.9
Loss from
equity
investments
and other - (1.4)
EBITDA (b) (0.8) 20.4
Total
assets (c) (14.4) 2,402.6
Capital
expenditures - 16.0



Year ended December 31, 2005
------------------------------------------------------
Ownership Management
--------------------- ---------------------
General
and
Real adminis-
estate trative
Hotel acti- and
Ownership vities Fairmont Delta other (e)
---------- ---------- ---------- ---------- ----------

Operating
revenues(d) $ 670.2 $ 78.2 $ 68.2 $ 13.9 $ -

Other revenues
from managed
and
franchised
properties - - 36.1 11.0 -


Loss from
equity
investments
and other - - - - -
EBITDA (b) 140.8 33.3 45.9 9.9 34.9
Total
assets (c) 1,904.5 104.2 455.8 81.9 -
Capital
expenditures 62.6 - 8.9 - -


Inter-
segment
elimina-
tion (a) Total
---------- ----------

Operating
revenues (d) $ (20.1) $ 810.4
Other revenues
from managed
and
franchised
properties - 47.1
----------
857.5
Loss from
equity
investments
and other - -
EBITDA (b) - 264.8
Total
assets (c) (22.5) 2,523.9
Capital
expenditures - 71.5



Year ended December 31, 2004
------------------------------------------------------
Ownership Management
--------------------- ---------------------
General
and
Real adminis-
estate trative
Hotel acti- and
Ownership vities Fairmont Delta other (e)
---------- ---------- ---------- ---------- ----------
Operating
revenues (d) $ 654.1 $ 31.0 $ 54.6 $ 12.8 $ -

Other revenues
from managed
and
franchised
properties - - 27.7 9.6 -


Loss from
equity
investments
and other (0.2) - - - -
EBITDA (b) 158.0 5.8 40.0 8.0 114.1
Total
assets (c) 1,871.6 100.1 365.9 79.4 -
Capital
expenditures 70.1 - 4.2 - -


Inter-
segment
elimina-
tion (a) Total
---------- ----------
Operating
revenues (d) $ (21.1) $ 731.4

Other revenues
from managed
and
franchised
properties - 37.3
----------
768.7
Loss from
equity
investments
and other - (0.2)
EBITDA (b) (1.2) 324.7
Total
assets (c) (14.4) 2,402.6
Capital
expenditures - 74.3

(a) Operating revenues include management fees that are charged by
Fairmont of $4.5 (2004 - $4.3) and $19.6 (2004 - $20.7) for the three
months and year ended December 31, 2005, respectively, and Delta of
$0.1 (2004 - $0.1) and $0.5 (2004 - $0.4) for the three months and
year ended December 31 2005, respectively, to the hotel ownership
operations, which are eliminated on consolidation. EBITDA includes
expenses not reimbursed relating to marketing and reservation
services performed by FHR under the terms of its hotel management and
franchise agreements. Total assets have been reduced for the
elimination of corporate assets and inter-segment loans.

(b) A reconciliation of aggregate EBITDA of the reportable segments
to net income is as follows:

Three months ended Year ended
December 31 December 31
2005 2004 2005 2004
---------- ---------- ---------- ----------

EBITDA $ 116.2 $ 20.4 $ 264.8 $ 324.7
Amortization (20.4) (19.6) (70.5) (73.9)
Interest expense, net (3.2) (7.4) (22.4) (33.1)
Income tax (expense)
recovery (24.2) 2.2 (4.4) (61.9)
---------- ---------- ---------- ----------
Net income (loss) $ 68.4 $ (4.4) $ 167.5 $ 155.8
---------- ---------- ---------- ----------

(c) Hotel ownership assets include $154.5 (2004 - $158.3) of
investments accounted for using the equity method.

(d) A breakdown of the Company's hotel ownership operations revenues
are as follows:

Three months ended Year ended
December 31 December 31
2005 2004 2005 2004
---------- ---------- ---------- ----------

Rooms revenue $ 73.6 $ 68.8 $ 346.4 $ 356.2
Food and beverage
revenue 57.4 50.8 233.5 214.7
Other 19.8 18.2 90.3 83.2
---------- ---------- ---------- ----------
$ 150.8 $ 137.8 $ 670.2 654.1
---------- ---------- ---------- ----------

(e) General and administrative and other includes general and
administrative expenses, other expenses, as well as gain on sales of
investments and hotel assets of $105.8 (2004-$143.7).

(f) In 2004, hotel ownership expenses were reduced by business
interruption insurance proceeds of $10.8 relating to the impact
Hurricane Fabian had on FHR's two Bermuda hotels.

12. FHR recorded pension and other post employment benefit expenses as
follows:

Three months ended Year ended
December 31 December 31
2005 2004 2005 2004
---------- ---------- ---------- ----------
Pension $ 9.0 $ (0.8) $ 10.4 $ 0.1
Other post-employment
benefits 0.1 0.1 0.4 0.4
---------- ---------- ---------- ----------
$ 9.1 $ (0.7) $ 10.8 $ 0.5
---------- ---------- ---------- ----------

13. In November 2005, FHR initiated a restructuring plan. In connection
with this plan, the Company incurred $3.3 of severance costs and $1.2
of lease termination costs of which $0.9 has been recorded as an
accrued liability at December 31, 2005. Approximately $0.8 of the
accrued liability relates to severance costs. No additional costs are
expected from this plan. Of the $3.3 of severance costs, $2.5 were
expensed to hotel ownership and $0.8 were expensed to management
operations and general and administrative. Lease termination costs of
$1.2 were expensed to other.

14. Other
During the fourth quarter, the Company's Board of Directors formed a
Special Committee to review a number of shareholder value-creating
strategic options in response to a take over bid. In connection with
the evaluation of alternatives, FHR incurred an expense of $10.7
relating to financial and legal advisory fees for services rendered
to assist the Special Committee and Board of Directors.

During the fourth quarter, the Company recorded a provision of $7.6
related to the impairment of long-term advances receivable.

During the third quarter, the Company recorded a provision of $11.2
related to outstanding legal obligations associated with a
predecessor company of Fairmont. During the second quarter, the
Company undertook certain development activities related to a major
portfolio acquisition, which the Company did not complete. A total of
$3.4 was expensed relating to transaction costs.

15. During the fourth quarter, FHR entered into a mortgage loan for
$75.0. The mortgage, which is secured by a second charge against The
Fairmont Scottsdale Princess and is non-recourse to FHR, bears
interest at one month LIBOR plus 195 basis points and is due
January 1, 2009. FHR has entered into an interest rate contract to
cap the LIBOR rate at 7.5%. The term of the mortgage is extendible by
up to two years subject to meeting certain conditions. The proceeds
from the loan were used to repay the outstanding mortgage of $59.9 on
The Fairmont Copley Plaza, Boston and for general corporate purposes.

16. Subsequent events
On January 30, 2006, FHR announced that it has entered into an
Acquisition Agreement whereby Kingdom Hotels International and Colony
Capital will acquire all of FHR's outstanding common shares at a
price of $45.00 per share. The Board of Directors has agreed to
recommend to the shareholders that they vote in favor of the
transaction. The transaction is to be carried out by way of a
statutory plan of arrangement and, accordingly, will be subject to
the approval of 66.67% of the votes to be cast by FHR shareholders at
a meeting of shareholders anticipated to take place in April. The
proposed transaction is expected to close in the second quarter of
2006 after receipt of shareholder and court approvals. As a result of
this transaction, FHR will incur additional costs of up to $25
relating to financial and legal advisory fees for services rendered.

17. Certain of the prior period figures have been reclassified to conform
with the presentation adopted for 2005.

(xx) Index of supplementary financial and
operating information to follow (xx)



Fairmont Hotels & Resorts Inc.
Index of Supplementary Financial and Operating Information

Page
----

Comparable operating statistics for the
three months and year ended December 31, 2005 ii

2004 hotel ownership revenues and EBITDA
adjusted for assets sales iv

Comparable operating statistics for hotel
portfolio as of December 31, 2005 v

Summary of hotel portfolio at
December 31, 2005 and 2004 vii



Fairmont Hotels & Resorts Inc.
Comparable operating statistics for the
three months and the year ended December 31, 2005

-------------------------------------------------------------------------
Three months ended Year ended
December 31 December 31
-------------------------------------------------------------------------
2005 2004 Variance 2005 2004 Variance
-------------------------------------------------------------------------

OWNED
HOTELS
-------------------------------------------------------------------------
Worldwide
13 properties/
6,206 rooms
-------------------------------------------------------------------------
RevPAR $107.20 $98.53 8.8% $123.64 $116.04 6.5%
-------------------------------------------------------------------------
ADR 179.92 173.39 3.8% 195.77 186.51 5.0%
-------------------------------------------------------------------------
Occupancy 59.6% 56.8% 2.8 63.2% 62.2% 1.0
points points
-------------------------------------------------------------------------

-------------------------------------------------------------------------
Canada
7 properties/
3,336 rooms
-------------------------------------------------------------------------
RevPAR $90.47 $84.76 6.7% $122.67 $114.93 6.7%
-------------------------------------------------------------------------
ADR 157.83 149.14 5.8% 187.40 174.01 7.7%
-------------------------------------------------------------------------
Occupancy 57.3% 56.8% 0.5 65.5% 66.0% (0.5)
points points
-------------------------------------------------------------------------

-------------------------------------------------------------------------
U.S
2 properties/
1,034 rooms
-------------------------------------------------------------------------
RevPAR $154.22 $140.67 9.6% $159.00 $146.02 8.9%
-------------------------------------------------------------------------
ADR 217.80 225.67 (3.5%) 214.02 220.37 (2.9%)
-------------------------------------------------------------------------
Occupancy 70.8% 62.3% 8.5 74.3% 66.3% 8.0
points points
-------------------------------------------------------------------------

-------------------------------------------------------------------------
International
4 properties/
1,836 rooms
-------------------------------------------------------------------------
RevPAR $111.09 $99.81 11.3% $105.50 $101.18 4.3%
-------------------------------------------------------------------------
ADR 193.65 185.79 4.2% 200.16 190.69 5.0%
-------------------------------------------------------------------------
Occupancy 57.4% 53.7% 3.7 52.7% 53.1% (0.4)
points points
-------------------------------------------------------------------------

-------------------------------------------------------------------------

FAIRMONT MANAGED
HOTELS(1)
-------------------------------------------------------------------------
Worldwide
39 hotels/
19,142 rooms
-------------------------------------------------------------------------
RevPAR $118.70 $106.13 11.8% $128.37 $115.44 11.2%
-------------------------------------------------------------------------
ADR 190.49 178.35 6.8% 194.94 180.03 8.3%
-------------------------------------------------------------------------
Occupancy 62.3% 59.5% 2.8 65.8% 64.1% 1.7
points points
-------------------------------------------------------------------------

-------------------------------------------------------------------------
Canada
20 properties/
10,095 rooms
-------------------------------------------------------------------------
RevPAR $91.52 $85.61 6.9% $108.04 $100.18 7.8%
-------------------------------------------------------------------------
ADR 151.67 144.21 5.2% 165.63 153.43 8.0%
-------------------------------------------------------------------------
Occupancy 60.3% 59.4% 0.9 65.2% 65.3% (0.1)
points points
-------------------------------------------------------------------------

-------------------------------------------------------------------------
U.S.
14 properties/
6,817rooms
-------------------------------------------------------------------------
RevPAR $154.17 $134.07 15.0% $159.13 $139.79 13.8%
-------------------------------------------------------------------------
ADR 235.89 226.41 4.2% 230.75 220.11 4.8%
-------------------------------------------------------------------------
Occupancy 65.4% 59.2% 6.2 69.0% 63.5% 5.5
points points
-------------------------------------------------------------------------

-------------------------------------------------------------------------
International
5 properties/
2,230 rooms
-------------------------------------------------------------------------
RevPAR $131.23 $112.17 17.0% $125.71 $109.52 14.8%
-------------------------------------------------------------------------
ADR 212.17 184.00 15.3% 211.43 179.81 17.6%
-------------------------------------------------------------------------
Occupancy 61.8% 61.0% 0.8 59.5% 60.9% (1.4)
points points
-------------------------------------------------------------------------

-------------------------------------------------------------------------

DELTA MANAGED
HOTELS(1)
Worldwide
27 properties/
8,175 rooms
-------------------------------------------------------------------------
RevPAR $69.06 $60.95 13.3% $73.03 $64.43 13.3%
-------------------------------------------------------------------------
ADR 108.35 100.52 7.8% 107.98 98.53 9.6%
-------------------------------------------------------------------------
Occupancy 63.7% 60.6% 3.1 67.6% 65.4% 2.2
points points
-------------------------------------------------------------------------

(1) Includes hotels owned by Fairmont Hotels & Resorts Inc.

Comparable hotels and resorts are considered to be properties that were
wholly-owned by or 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 Kea Lani, Maui
(sold July 2004), The Fairmont Glitter Bay (sold July
2004), The Fairmont Orchid, Hawaii (sold December
2005)
Fairmont Managed: The Fairmont Southampton; Fairmont Monte Carlo, The
Savoy, A Fairmont Hotel, The Norfolk Hotel, Mount
Kenya Safari Club, The Aberdare Country Club, The Ark,
Mara Safari Club, The Fairmont Glitter Bay, The
Fairmont New Orleans, Fairmont Newport Beach, The
Plaza
Delta Managed: Delta Meadowvale and Delta franchised hotels



Fairmont Hotels & Resorts Inc.
2004 hotel ownership revenues and EBITDA adjusted for assets sales

2004
--------------------------------------------------

First Second Third Fourth
Revenues Quarter Quarter Quarter Quarter Year
------- ------- ------- ------- ----
(In millions of
US dollars)

Hotel ownership
revenues adjusted
for sold hotels $ 131.1 $ 157.1 $ 176.7 $ 137.9 $ 602.8
Add: hotels sold 24.3 23.4 3.6 - 51.3
--------------------------------------------------
Hotel ownership
revenues $ 155.4 $ 180.5 $ 180.3 $ 137.9 $ 654.1
--------------------------------------------------


2004
--------------------------------------------------
First Second Third Fourth
EBITDA Quarter Quarter Quarter Quarter Year
------- ------- ------- ------- ----
(In millions of
US dollars)

Hotel ownership
EBITDA adjusted
for sold hotels $ 25.4 $ 37.9 $ 54.2 $ 22.6 $ 140.1

Add: hotels sold 9.8 8.7 1.5 - 20.0
--------------------------------------------------
Hotel ownership
EBITDA 35.2 46.6 55.7 22.6 160.1
Gain on sales of
investments and
hotels sales - - 144.2 (0.5) 143.7
EBITDA contribution
(deduction) from
other segments (1.1) 15.9 7.8 (1.7) 20.9
--------------------------------------------------

Total EBITDA 34.1 62.5 207.7 20.4 324.7

Deduct (Add):
Amortization 19.5 18.0 16.8 19.6 73.9
Interest expense, net 10.0 9.0 6.7 7.4 33.1
Income tax expense
(recovery), net 5.2 6.5 52.4 (2.2) 61.9
--------------------------------------------------

Net Income (loss) $ (0.6) $ 29.0 $ 131.8 $ (4.4) $ 155.8
--------------------------------------------------



Fairmont Hotels & Resorts Inc.
Operating statistics for comparable hotels as of December 31, 2005

-------------------------------------------------------------------------
First Second Third First Second Third
Quarter Quarter Quarter Quarter Quarter Quarter
2005 2005 2005 2004 2004 2004
-------------------------------------------------------------------------
OWNED HOTELS
-------------------------------------------------------------------------
Worldwide
-------------------------------------------------------------------------
RevPAR $121.77 $118.12 $147.35 $112.17 $113.62 $139.68
-------------------------------------------------------------------------
ADR 195.42 187.51 217.61 183.02 180.08 206.50
-------------------------------------------------------------------------
Occupancy 62.3% 63.0% 67.7% 61.3% 63.1% 67.6%
-------------------------------------------------------------------------

-------------------------------------------------------------------------
Canada
-------------------------------------------------------------------------
RevPAR $101.18 $112.21 $186.11 $93.86 $106.23 $173.78
-------------------------------------------------------------------------
ADR 166.38 170.27 239.58 154.37 156.93 220.81
-------------------------------------------------------------------------
Occupancy 60.8% 65.9% 77.7% 60.8% 67.7% 78.7%
-------------------------------------------------------------------------

-------------------------------------------------------------------------
U.S.
-------------------------------------------------------------------------
RevPAR $183.05 $169.16 $130.22 $170.08 $159.34 $114.38
-------------------------------------------------------------------------
ADR 266.03 210.61 168.69 262.47 215.69 178.45
-------------------------------------------------------------------------
Occupancy 68.8% 80.3% 77.2% 64.8% 73.9% 64.1%
-------------------------------------------------------------------------

-------------------------------------------------------------------------
International
-------------------------------------------------------------------------
RevPAR $124.58 $100.11 $86.59 $111.96 $101.10 $91.97
-------------------------------------------------------------------------
ADR 202.98 208.76 195.27 186.04 207.08 185.61
-------------------------------------------------------------------------
Occupancy 61.4% 48.0% 44.3% 60.2% 48.8% 49.6%
-------------------------------------------------------------------------

-------------------------------------------------------------------------
FAIRMONT
MANAGED
HOTELS(1)
-------------------------------------------------------------------------
Worldwide
-------------------------------------------------------------------------
RevPAR $117.44 $129.05 $147.88 $105.43 $118.23 $131.72
-------------------------------------------------------------------------
ADR 192.72 189.82 205.35 173.54 176.36 190.54
-------------------------------------------------------------------------
Occupancy 60.9% 68.0% 72.0% 60.8% 67.0% 69.1%
-------------------------------------------------------------------------

-------------------------------------------------------------------------
Canada
-------------------------------------------------------------------------
RevPAR $81.84 $108.17 $149.35 $75.18 $101.20 $137.64
-------------------------------------------------------------------------
ADR 145.86 158.57 196.85 130.30 146.22 184.41
-------------------------------------------------------------------------
Occupancy 56.1% 68.2% 75.9% 57.7% 69.2% 74.6%
-------------------------------------------------------------------------

-------------------------------------------------------------------------
U.S.
-------------------------------------------------------------------------
RevPAR $158.24 $163.75 $160.38 $143.88 $146.77 $134.55
-------------------------------------------------------------------------
ADR 241.69 227.99 219.27 228.66 218.65 207.66
-------------------------------------------------------------------------
Occupancy 65.5% 71.8% 73.1% 62.9% 67.1% 64.8%
-------------------------------------------------------------------------

-------------------------------------------------------------------------
International
-------------------------------------------------------------------------
RevPAR $149.23 $117.60 $105.2 $120.44 $107.70 $97.85
-------------------------------------------------------------------------
ADR 218.94 210.52 201.88 179.05 187.35 168.84
-------------------------------------------------------------------------
Occupancy 68.2% 55.9% 52.1% 67.3% 57.5% 58.0%
-------------------------------------------------------------------------

-------------------------------------------------------------------------
DELTA
MANAGED
HOTELS (1)
-------------------------------------------------------------------------
Worldwide
-------------------------------------------------------------------------
RevPAR $59.30 $74.18 $89.17 $53.98 $65.43 $77.25
-------------------------------------------------------------------------
ADR 100.53 105.74 115.22 92.47 96.40 103.51
-------------------------------------------------------------------------
Occupancy 59.0% 70.2% 77.4% 58.4% 67.9% 74.6%
-------------------------------------------------------------------------

---------------------------------
Fourth 2004
Quarter Full
2004 Year
---------------------------------
OWNED HOTELS
---------------------------------
Worldwide
---------------------------------
RevPAR $98.53 $116.04
---------------------------------
ADR 173.39 186.51
---------------------------------
Occupancy 56.8% 62.2%
---------------------------------

---------------------------------
Canada
---------------------------------
RevPAR $84.76 $114.93
---------------------------------
ADR 149.14 174.01
---------------------------------
Occupancy 56.8% 66.0%
---------------------------------

---------------------------------
U.S.
---------------------------------
RevPAR $140.67 $146.02
---------------------------------
ADR 225.67 220.37
---------------------------------
Occupancy 62.3% 66.3%
---------------------------------

---------------------------------
International
---------------------------------
RevPAR $99.81 $101.18
---------------------------------
ADR 185.79 190.69
---------------------------------
Occupancy 53.7% 53.1%
---------------------------------

---------------------------------
FAIRMONT
MANAGED
HOTELS(1)
---------------------------------
Worldwide
---------------------------------
RevPAR $106.13 $115.44
---------------------------------
ADR 178.35 180.30
---------------------------------
Occupancy 59.5% 64.1%
---------------------------------

---------------------------------
Canada
---------------------------------
RevPAR $85.61 $100.18
---------------------------------
ADR 144.21 153.43
---------------------------------
Occupancy 59.4% 65.3%
---------------------------------

---------------------------------
U.S.
---------------------------------
RevPAR $134.07 $137.79
---------------------------------
ADR 226.41 220.11
---------------------------------
Occupancy 59.2% 63.5%
---------------------------------

---------------------------------
International
---------------------------------
RevPAR $112.17 $109.52
---------------------------------
ADR 184.00 179.81
---------------------------------
Occupancy 61.0% 60.9%
---------------------------------

---------------------------------
DELTA
MANAGED
HOTELS (1)
---------------------------------
Worldwide
---------------------------------
RevPAR $60.95 $64.43
---------------------------------
ADR 100.52 98.53
---------------------------------
Occupancy 60.6% 65.4%
---------------------------------

(1) Includes hotels owned by Fairmont Hotels & Resorts Inc.

Comparable hotels and resorts are considered to be properties that
were wholly-owned by or 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 Kea Lani, Maui (sold
July 2004); The Fairmont Glitter Bay (sold July 2004), The
Fairmont Orchid, Hawaii (sold December 2005)
Fairmont
Managed: The Fairmont Southampton, Fairmont Monte Carlo, The Savoy, A
Fairmont Hotel, The Norfolk Hotel, Mount Kenya Safari Club,
The Aberdare Country Club, The Ark, Mara Safari Club, The
Fairmont Glitter Bay, The Fairmont New Orleans, Fairmont
Newport Beach, The Plaza
Delta
Managed: Delta Meadowvale and Delta franchised hotels



Fairmont Hotels & Resorts Inc.
Summary of Hotel Portfolios

-------------------------------------------------------------------------
December 31
-------------------------------------------------------------------------
2005 2004
-------------------------------------------------------------------------
OWNED HOTELS
-------------------------------------------------------------------------
Worldwide
-------------------------------------------------------------------------
No. of Properties 14 15
-------------------------------------------------------------------------
No. of Rooms 6,799 7,343
-------------------------------------------------------------------------

-------------------------------------------------------------------------
Canada
-------------------------------------------------------------------------
No. of Properties 7 7
-------------------------------------------------------------------------
No. of Rooms 3,336 3,336
-------------------------------------------------------------------------

-------------------------------------------------------------------------
U.S. and International
-------------------------------------------------------------------------
No. of Properties 7 8
-------------------------------------------------------------------------
No. of Rooms 3,463 4,007
-------------------------------------------------------------------------

-------------------------------------------------------------------------
FAIRMONT MANAGED
HOTELS (1)
-------------------------------------------------------------------------
Worldwide
-------------------------------------------------------------------------
No. of Properties 50 45
-------------------------------------------------------------------------
No. of Rooms 22,525 22,262
-------------------------------------------------------------------------

-------------------------------------------------------------------------
Canada
-------------------------------------------------------------------------
No. of Properties 21 21
-------------------------------------------------------------------------
No. of Rooms 10,418 10,422
-------------------------------------------------------------------------

-------------------------------------------------------------------------
U.S. and International
-------------------------------------------------------------------------
No. of Properties 29 24
-------------------------------------------------------------------------
No. of Rooms 12,107 11,840
-------------------------------------------------------------------------

-------------------------------------------------------------------------
DELTA MANAGED
HOTELS (1)
-------------------------------------------------------------------------
Worldwide
-------------------------------------------------------------------------
No. of Properties 38 37
-------------------------------------------------------------------------
No. of Rooms 11,243 11,038
-------------------------------------------------------------------------

(1) Includes hotels owned by Fairmont Hotels & Resorts Inc.

Contact Information