SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 40-F

FAIRMONT HOTELS & RESORTS INC.

100 Wellington St. W., Suite 1600, TD Center, Toronto, Ontario, Canada M5K 1B7 — (416) 874-2600
(Address and telephone number of Registrant’s principal executive offices)

CT Corporation System, 1025 Vermont Avenue N.W., Washington, D.C. 20005 — (800) 955-5219
(Name, address (including zip code) and telephone number (including area code) of Agent for Service in the United States)

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act: None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None

For annual reports, indicate by check mark the information filed with this form:

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.

At December 31, 2002, 78,779,622 Common Shares were issued and outstanding.

Indicate by check mark whether the Registrant by filing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934 (the “Exchange Act”). If “Yes” is marked, indicate the file number assigned to the registrant in connection with such Rule.

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

PRIOR FILINGS MODIFIED AND SUPERSEDED

     The Registrant’s Annual Report on Form 40-F for the year ended December 31, 2002, at the time of filing with the Securities and Exchange Commission, modifies and supersedes all prior Annual Reports on Form 40-F for purposes of any Registration Statement under the Securities Act of 1933 of the Registrant, including without limitation the following: Form F-9 No. 33-62424, Form F-9 No. 333-11456 and Form S-8 No. 333-13960.

CONSOLIDATED AUDITED ANNUAL FINANCIAL STATEMENTS AND
MANAGEMENT’S DISCUSSION AND ANALYSIS

A.

Audited Annual Financial Statements

     For consolidated audited financial statements, including the report of independent chartered accountants with respect thereto, see Annex A attached hereto and included herein. See Note 26 of the Notes to Consolidated Financial Statements set forth in such Annex A for a reconciliation of the important differences between Canadian and United States generally accepted accounting principles.

B.

Management’s Discussion and Analysis

     For management’s discussion and analysis, see Annex A attached hereto and included herein under the heading “Management’s Discussion and Analysis”.

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     Evaluation of Disclosure Controls and Procedures. The Chief Executive Officer and Chief Financial Officer of the Corporation have evaluated the effectiveness of the Corporation’s disclosure controls and procedures (as such term is defined in Rules 13a-14(c) and 15d-14(c) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), as of a date within 90 days prior to the date of this report (the “Evaluation Date”). Based on such evaluation, such officers have concluded that, as of the Evaluation Date, the Corporation’s disclosure controls and procedures are effective in alerting them on a timely basis to material information relating to the Corporation required to be included in the Corporation’s reports filed or submitted under the Exchange Act.

     Changes in Internal Controls. Since the Evaluation Date, there have not been any significant changes in the Corporation’s internal controls or in other factors that could significantly affect such controls.

UNDERTAKING

     The Registrant undertakes to make available, in person or by telephone, representatives to respond to inquiries made by the Commission staff, and to furnish promptly, when requested to do so by the Commission staff, information relating to: the securities registered pursuant to Form 40-F; the securities in relation to which the obligation to file an Annual Report on Form 40-F arises; or transactions in said securities.

SIGNATURES

     Pursuant to the requirements of the Exchange Act, the Registrant certifies that it meets all of the requirements for filing on Form 40-F and has duly caused this Annual Report to be signed on its behalf by the undersigned, thereto duly authorized, in the City of Toronto, Province of Ontario, Canada.

CERTIFICATIONS

     I, William R. Fatt, Chief Executive Officer of Fairmont Hotels & Resorts Inc., certify that:

1.		I have reviewed the report on Form 40-F of Fairmont Hotels & Resorts Inc. (the “Report”);
2.		Based on my knowledge, the Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by the Report;
3.		Based on my knowledge the financial statements, and other financial information included in the Report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in the Report;
4.		The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

	(a)		designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which the Report is being prepared;
	(b)		evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of the Report (the “Evaluation Date”); and
	(c)		presented in the Report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5.

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (and persons performing the equivalent function):

(a)

all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

(b)

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

6.

The registrant’s other certifying officer and I have indicated in the Report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: May 15, 2003

     I, M. Jerry Patava, Chief Financial Officer of Fairmont Hotels & Resorts Inc., certify that:

1.		I have reviewed the report on Form 40-F of Fairmont Hotels & Resorts Inc. (the “Report”);
2.		Based on my knowledge, the Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by the Report;
3.		Based on my knowledge the financial statements, and other financial information included in the Report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in the Report;
4.		The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

	(a)		designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which the Report is being prepared;
	(b)		evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of the Report (the “Evaluation Date”); and
	(c)		presented in the Report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5.

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (and persons performing the equivalent function):

	(d)		all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and
	(e)		any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

6.

The registrant’s other certifying officer and I have indicated in the Report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: May 15, 2003

DOCUMENTS FILED AS PART OF THIS REPORT

1.		Annual Information Form of Fairmont Hotels & Resorts Inc. for the year ended December 31, 2002.
2.		Audited Consolidated Financial Statements of Fairmont Hotels & Resorts Inc. as of December 31, 2002 and for each of the three years then ended and the related Management’s Discussion and Analysis (Annex A).

LIST OF EXHIBITS

A.		Consent of PricewaterhouseCoopers, Independent Accountants.
99.1		Certification of William R. Fatt, Chief Executive Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
99.2		Certification of M. Jerry Patava, Chief Financial Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

FAIRMONT HOTELS & RESORTS INC.

ANNUAL INFORMATION FORM

May 1, 2003

TABLE OF CONTENTS

Notes:

(1)		In this Annual Information Form, all dollar amounts are in United States dollars unless stated otherwise.
(2)		In this Annual Information Form, information is given as at May 1, 2003 unless stated otherwise.

FORWARD-LOOKING INFORMATION

     This Annual Information Form contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (United States) relating, but not limited, to Fairmont Hotels & Resorts Inc. and its subsidiaries’ (“FHR” or the “Corporation”) operations, anticipated financial performance, business prospects and strategies. Forward-looking information typically contains statements with words such as “anticipate”, “believe”, “expect”, “plan” or similar words suggesting future outcomes.

     Readers are cautioned not to place undue reliance on forward-looking information because it is possible that predictions, forecasts, projections and other forms of forward-looking information will not be achieved by FHR. By its nature, the Corporation’s forward-looking information involves numerous assumptions, inherent risks and uncertainties including, but not limited to, the following factors: adverse factors generally encountered in the lodging industry; significant regulation of the lodging industry; the risks associated with environmental regulation; the risks associated with real estate investments; the risks associated with world events including war, terrorism, international conflicts and contagious illness outbreaks; significant competition; failure to obtain new or maintain existing management contracts; FHR’s acquisition, expansion and development strategy being less successful than expected; the seasonality of FHR’s business and operations; the impact of extreme weather conditions and natural

disasters; the potential negative effects of strikes and work stoppages; vacation ownership is subject to extensive regulation; currency fluctuations; debt financing risks; FHR’s ability to obtain capital to finance the growth of its business; potential covenants in FHR’s financing agreements limiting its discretion; and the inability of FHR to assure investors that a judgment of a United States court for liabilities under U.S. securities laws would be enforceable in Canada, or that an original action can be brought in Canada by investors for liabilities under U.S. securities laws.

     The Corporation undertakes no obligation to update publicly or otherwise revise any forward-looking information, whether as a result of new information, future events or otherwise, or the foregoing list of factors affecting such information.

RISK FACTORS

     This section describes some, but not all, of the risks associated with an investment in FHR’s securities. The order in which these risks are listed does not necessarily indicate their relative importance. Investors should carefully consider these risks in addition to the other information contained in this Annual Information Form.

     If any event arising from these risks occurs, FHR’s business, prospects, financial condition, results of operations or cash flows could be materially adversely affected, and therefore the market price of the Corporation’s securities could decline.

FHR’s operations are subject to adverse factors generally encountered in the lodging industry.

     The Corporation manages and owns hotels and resorts in both the luxury and first-class segments of the lodging industry. This subjects FHR to the operating risks inherent in the industry. In addition to the other risk factors discussed in more detail elsewhere in this Annual Information Form, these risk factors include:

	•		cyclical downturns arising from changes in general and local economic conditions;
	•		varying levels of demand for rooms and related services caused by changes in popular travel patterns;
	•		the financial condition of the airline industry and the resulting impact on air travel;
	•		periodic local oversupply of guest accommodations, which may adversely affect occupancy rates and room rates achieved;
	•		competition from other luxury and first-class hotels and resorts;
	•		the impact of internet intermediaries on pricing;
	•		the recurring need for the renovation, refurbishment and improvement of hotel and resort properties;
	•		changes in wages, prices, construction and maintenance costs that may result from inflation, government regulations, changes in interest rates or currency fluctuations;
	•		the availability of financing for operating or capital requirements;

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	•		seasonal variations in cash flow; and
	•		other factors including war, international conflicts, terrorism, contagious illness outbreaks, natural disasters, extreme weather conditions and labor shortages, work stoppages or disputes.

     The effect of these factors varies among FHR’s hotels based on their geographic diversity and mix between management and ownership businesses.

The lodging industry is subject to significant regulation.

     The Corporation is subject to numerous laws and regulations in all of the jurisdictions in which it operates, including those relating to the preparation and sale of food and beverages, such as health and liquor licensing laws. FHR’s properties are also subject to laws and regulations governing relationships with employees in such areas as minimum wage and maximum working hours, overtime, working conditions, hiring and terminating of employees and work permits. Furthermore, the success of the Corporation’s strategy to expand its existing properties, acquire new properties or to open newly-constructed properties is contingent upon, among other things, receipt of all required licenses, permits and authorizations, including local land use permits, building and zoning permits, health and safety permits and liquor licenses. Changes or concessions required by regulatory authorities could also involve significant additional costs and delay or prevent completion of the construction or opening of a project or could result in the loss of an existing license. As a result of the geographic diversity of FHR’s businesses, these regulatory matters arise in a number of jurisdictions, many of which have distinctive regulatory regimes.

     Under the Americans with Disabilities Act (United States) (“ADA”) and similar state legislation, all public accommodations in the U.S. are required to meet various requirements related to access and use by disabled persons. If a U.S. court or administrative agency determines that any of FHR’s hotels in the U.S. are not in compliance with the ADA, the result could be a judicial or administrative order requiring compliance, imposition of a fine or an award of damages to private litigants, including possible class damages. The Corporation has responsibilities under the ADA for both its owned and managed hotels in the United States. However, under the management agreements for FHR’s managed hotels in the U.S., costs associated with the ADA are generally borne by the owner.

FHR’s operations are subject to laws and regulations relating to environmental matters.

     As the current or previous owner or operator of certain hotels, FHR could be liable for the clean up of contamination and other corrective actions under various laws, ordinances and regulations relating to environmental matters. These laws, ordinances and regulations often impose liability without regard to whether the owner or operator knew of, or was responsible for, the condition requiring the environmental response. The presence of contamination from hazardous or toxic substances, or the failure to remediate a contaminated property properly may affect an owner’s ability to sell or rent the property, to use the property for its intended purpose, or to borrow using the property as collateral. In addition, as FHR arranges for the disposal or treatment of hazardous or toxic substances, it may be liable for the cost of removal or remediation of substances at the disposal or treatment facility, regardless of whether the facility is or was owned or operated by them. As the manager or owner of various hotels, the Corporation could be held liable for the cost of remedial action with respect to environmental matters.

     Environmental laws require abatement or removal of certain asbestos-containing material (“ACM”) in the event of damage, demolition or renovation. FHR has an asbestos abatement program and

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continues to manage ACM in many of its hotels. The costs associated with managing this program have not been, and are not anticipated to become, material.

     Each year, every property, whether managed, franchised or owned, is required to complete an environmental questionnaire which covers such items as the training of employees in the handling and disposal of hazardous materials, whether there have been any environmental incidents and, if so, the remedial action taken, as well as environmental initiatives introduced by the hotel. This questionnaire also identifies any new laws or regulations being imposed by local, state, provincial or federal governments and a property’s proposed response to such laws or regulations. Laws and regulations change over time and the Corporation may become subject to more stringent environmental laws and regulations and may also face broader environmental liability under common law. FHR is presently not aware of any potential material environmental liabilities for which it will be responsible with respect to any of the properties which it currently or has previously managed or owned, but such liabilities may exist.

Real estate investments are subject to numerous risks.

     As FHR owns and leases hotels and owns other real property, it is subject to the risks that generally relate to investments in real property. The investment returns available from equity investments in real estate depend in large part on the amount of income earned and capital appreciation generated by the related properties, as well as the expenses incurred. In addition, a variety of other factors affect income from properties and real estate values, including governmental regulations, zoning, tax and eminent domain laws, interest rate levels and the availability of financing. For example, new or existing zoning or tax laws can make it more expensive and/or time-consuming to develop real property or expand, modify or renovate properties. When interest rates increase, the cost of acquiring, developing, expanding or renovating real property increases and real property values may decrease as the number of potential buyers decreases. Similarly, as financing becomes less available, it becomes more difficult both to acquire and to sell real property. Finally, governments can, under eminent domain laws, expropriate or take real property for less compensation than an owner believes the property is worth. Any of these factors could have a material adverse impact on the Corporation’s results of operations or financial condition. In addition, as FHR’s equity real estate investments are in the luxury and first-class segments and are to some extent located outside of North America, they may be relatively difficult to sell quickly. Further, any additional properties the Corporation acquires may be subject to the same risks. If FHR’s properties do not generate revenue sufficient to meet operating expenses, including debt service and capital expenditures, its income will be adversely affected.

World events have an impact on our industry.

     Various events, including war, international conflicts, terrorism and contagious illness outbreaks (such as Severe Acute Respiratory Syndrome), or the perceived threat of these events, may cause disruption in domestic and international travel. Recent world events have negatively impacted the lodging industry and could have a material adverse impact on FHR’s results of operations or financial condition.

There is a great deal of competition in the lodging industry.

     There is intense competition between the operators of both luxury and first-class hotels for guests, to secure new management contracts and to acquire hotels. Competition for guests is based primarily on brand name recognition, convenience of location, quality of the property, room rates and the range and quality of food, services and amenities offered. Demographic, political or other changes in one or more of FHR’s markets could adversely affect the convenience or desirability of its properties.

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     FHR also competes for management contracts and acquisition opportunities with other luxury and first-class hotel managers and owners who may have substantially greater financial resources. This competition may have the effect of reducing the number of suitable investment opportunities available to the Corporation and increasing its acquisition costs.

Failure to obtain new or maintain existing management contracts could adversely affect FHR’s results of operations.

     Management contracts expire or are acquired, terminated or renegotiated in the normal course of business. FHR manages hotels for various third party hotel owners subject to the terms of each property’s management contract. These contracts can generally be terminated by the non-defaulting party upon default in payment or unremedied failure to comply with the terms of the contract. Typically, the Corporation’s management contracts are subject to economic performance tests that, if not met or remedied, could allow a contract to be terminated by the owner prior to the expiration of its term. Failure to maintain the standards specified in the contract or to meet the other terms and conditions of a contract could result in the loss or cancellation of a management contract. Some management contracts can also be terminated if the owner sells the property to a new owner that does not want to retain the existing contract. In certain cases, these contracts provide for a termination payout upon cancellation of the contract.

     In many jurisdictions, in the event of bankruptcy or insolvency proceedings in respect of a hotel, a management contract may be subject to termination or may not be enforceable against a trustee in bankruptcy or other similar representative of the owner. In such circumstances, the management company would generally have an unsecured claim for breach of contract against the owner of the property or its estate.

     Further, in the event of enforcement proceedings by a secured lender in respect of a hotel, a management contract may not be enforceable by FHR against the lender unless, to the extent permitted by applicable bankruptcy or insolvency laws, the lender has executed a non-disturbance agreement. Generally, FHR attempts to obtain non-disturbance agreements with lenders to the owners of hotels that the Corporation manages. However, in the absence of a non-disturbance agreement, the risk of loss of a management contract increases when the property’s owner incurs debt that cannot be adequately serviced.

     Both Fairmont Hotels Inc. (“Fairmont”) and Delta Hotels Limited (“Delta”) manage properties for third party owners. The average remaining length of Fairmont’s management contracts is more than 40 years while the average remaining length of Delta’s management contracts is more than 10 years. Approximately 65% of Fairmont and Delta’s management revenues are insulated against the potential loss of these management contracts as 46 of the hotels and resorts presently managed by Fairmont and Delta are directly or indirectly owned by FHR or Legacy.

FHR’s acquisition, expansion and development strategy may be less successful than expected, and therefore growth may be limited.

     FHR intends to increase revenues and net income by increasing the number of hotels under management through the acquisition of new properties, the expansion of existing properties, the securing of new management agreements and strategic partnerships for new development. The Corporation’s ability to successfully pursue new growth opportunities will depend on its ability to identify appropriate management opportunities and properties suitable for acquisition and expansion, to negotiate management or construction contracts or purchases on satisfactory terms, to obtain the necessary financing and permits and to integrate new management contracts or properties into its operations.

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FHR’s business and operations are seasonal.

     FHR’s hotels are affected by normal recurring seasonal patterns. The Canadian and U.S. city center properties tend to experience a slowdown in demand during the December through March period. As a result, the majority of these properties typically incur a loss in the first quarter of each year. This negative impact on operations at the city center hotels is offset, to some degree, by increased travel to the Corporation’s warm weather and ski resorts in these months and may, in the future, be offset to a greater extent if FHR expands its portfolio of resort properties.

Operations may be adversely affected by extreme weather conditions and the impact of natural or other disasters.

     FHR operates properties in a variety of locales, some of which are subject to extreme weather patterns that may affect the hotels as well as customer travel. Extreme weather conditions can, from time to time, have a significant adverse financial impact upon individual properties or particular regions. However, the effect of any particular event is mitigated by the geographic diversity of the Corporation’s hotel portfolio.

     Properties may also be vulnerable to the effects of destructive forces, such as earthquakes, fire, storms and flooding. Although FHR’s properties are insured against property damage, damages resulting from so-called “acts of God” or otherwise, including acts of terrorism, may exceed the limits of the insurance coverage or be outside the scope of that coverage.

FHR’s ability to operate its facilities may be adversely affected if relations with employees were to deteriorate.

     Relations with employees in various countries, including the more than 14,000 employees represented by 22 labor unions, could deteriorate due to disputes related to, among other things, wage or benefit levels or FHR’s response to changes in government regulation of workers and the workplace. FHR’s operations rely heavily on employees, whether they are employed directly or supervised by Fairmont or Delta, and these employees’ ability to provide high-quality personal service to guests. Any labor shortage or stoppage caused by disagreements with employees, including those represented by labor unions, could adversely affect FHR’s ability to provide these services and could result in the temporary closure of a particular hotel, reduce occupancy and room revenue or potentially damage FHR’s reputation. Management of FHR believes that its relationships with employees are generally favorable. Various programs maintained by Fairmont and Delta contribute to these relationships and mitigate to some extent against potential labor disputes.

Vacation Ownership is subject to extensive regulation.

     FHR intends to develop and operate vacation ownership resorts and is therefore subject to extensive government regulation in the jurisdiction where the vacation ownership resorts are located and in which vacation ownership interests (“VOIs”) are marketed and sold. In addition, the laws of many jurisdictions in which FHR may sell VOIs grant the purchasers of this type of interest the right to rescind the purchase contract at any time within a statutory rescission period. Although management believes that FHR is in material compliance with all applicable laws and regulations to which vacation ownership marketing, sales and operations are currently subject to, changes in these requirements or a determination by a regulatory authority that FHR is not in compliance could adversely affect the Corporation. Additionally, if the purchaser of a VOI defaults, FHR may not have recovered its marketing, selling and general and administrative costs related to the sale of the VOI.

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Currency fluctuations may have a material adverse effect on FHR’s financial statements.

     FHR has hotel management and ownership operations in Canada, the United States, Mexico, Bermuda, Barbados and the United Arab Emirates and records sales and liabilities in the currencies of these jurisdictions, while it reports earnings in U.S. dollars. As a result, the Corporation’s earnings and financial position could be affected by foreign exchange rate fluctuations, specifically changes in the value of the U.S. dollar, through both (i) translation risk, which is the risk that financial statements for a particular period or as of a certain date depend on the prevailing exchange rate of the various currencies against the U.S. dollar; and (ii) transaction risk, which is the risk that the currency of costs and liabilities fluctuates in relation to the currency of revenues and assets, which may adversely affect operating margins.

     With respect to the translation risk, even though the fluctuations of currencies against the U.S. dollar can be substantial and therefore significantly impact comparisons with prior periods, the translation impact is a reporting consideration and does not affect the underlying results of operations, as is the case with transaction risk. FHR endeavors to match foreign currency revenues and costs, and assets and liabilities, to provide a natural hedge against translation and transaction risks, although this is not a perfect hedge.

     In addition to translation risk and transaction risk, a significant increase in the value of the Canadian dollar may have an adverse impact on the level of foreign demand at Canadian hotels. However, given that these hotels target an affluent clientele, the risk of a significant decline in foreign demand is reduced.

FHR is subject to a number of risks associated with debt financing.

     As a result of incurring debt, FHR is subject to a number of risks associated with debt financing, including the risk that cash flow from operations will be insufficient to meet required payments of principal and interest; the risk that, to the extent that it maintains floating rate indebtedness, interest rates will fluctuate; and risks resulting from the fact that the agreements governing loan and credit facilities contain covenants imposing certain limitations on the Corporation’s ability to acquire and dispose of assets.

     Although it anticipates that it will be able to repay or refinance existing indebtedness and any other indebtedness when it matures, there can be no assurance that FHR will be able to do so or that the terms of such refinancings will be favorable. FHR’s leverage may have important consequences. For example, FHR’s ability to obtain additional financing for acquisitions, working capital, capital expenditures or other purposes, if necessary, may be impaired or financing may not be available on favorable terms. A substantial decrease in operating cash flow or an increase in expenses could make it difficult for the Corporation to meet its debt service requirements and force it to modify its operations. FHR may have higher levels of debt than some of its competitors, placing it at a competitive disadvantage to those competitors with lower amounts of indebtedness and/or higher credit ratings.

There can be no assurance that FHR will be able to obtain the necessary additional capital to finance the growth of its business.

     The acquisition and expansion of hotels, as well as the ongoing renovations, refurbishment and improvements required to maintain or upgrade existing properties, are capital intensive. Such costs are funded from operating cash flow and financings. The availability of future borrowings and access to the capital markets for financing depends on prevailing market conditions and the acceptability of financing terms offered. FHR cannot ensure that future debt or equity financings will be available, or available on

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acceptable terms, in an amount sufficient to fund its needs. In addition, an inability to obtain financing for a project could cause cancellation or short-term interruption of construction or development of projects.

Covenants in FHR’s financing agreements could limit its discretion in operating its businesses.

     FHR’s financing agreements contain covenants that include limits on additional debts secured by mortgaged properties, limits on liens on property, minimum EBITDA to interest coverage ratios and limits on mergers, asset sales and capital expenditures. Future financing agreements may contain similar, or even more restrictive, provisions and covenants. If the Corporation fails to comply with the restrictions in present or future financing agreements, a default may occur. A default could allow creditors to accelerate the related debt as well as any other debt to which a cross-acceleration or cross-default provision applies. A default could also allow creditors to foreclose on the properties securing such debt. Credit facilities typically require the repayment of funds or cash flow sweeps when certain coverage ratios are not met.

FHR cannot assure investors that a judgment of a United States court for liabilities under U.S. securities laws would be enforceable in Canada, or that an original action can be brought in Canada by investors for liabilities under U.S. securities laws.

     FHR is a Canadian corporation. A majority of its directors and officers are residents of Canada and most of the Corporation’s assets and the assets of its directors and officers are located outside the United States. As a result, it may be difficult for investors to effect service of process within the United States on FHR or its directors and officers or enforce judgments obtained in U.S. courts against the Corporation or its directors and officers based upon the civil liability provisions of U.S. federal or state securities laws.

     The Corporation has been advised by counsel that there is doubt as to whether a judgment of a U.S. court based solely upon the civil liability provisions of U.S. federal or state securities laws would be enforceable in Canada against it or its directors and officers. There is also doubt as to whether an original action could be brought in Canada against FHR or its directors and officers to enforce liabilities based solely upon U.S. federal or state securities laws.

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CURRENCY EXCHANGE RATES

     Except where otherwise indicated, all dollar amounts used in this Annual Information Form are expressed in United States dollars and “$” and US$ means United States dollars. The following table sets out: (i) the noon rates of exchange for the United States dollar, expressed in United States dollars per Canadian dollar, in effect at the end of the periods indicated; (ii) the average noon exchange rates for these periods; and (iii) the high and low exchange rates during these periods, based on the rates quoted by the Bank of Canada.

     On May 1, 2003, the rate of exchange based on the noon rate as quoted by the Bank of Canada was US$0.7048. On June 30, 2001, the rate of exchange based on the noon rate as quoted by the Bank of Canada was US$0.6589. All historical financial information in this document up to June 30, 2001 has been converted into United States currency using this exchange rate. After June 30, 2001, financial information has been converted based on actual noon rates or average noon rates for the period as appropriate.

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ITEM 1: CORPORATE STRUCTURE

     The issuer’s full corporate name is Fairmont Hotels & Resorts Inc. FHR is incorporated under the Canada Business Corporations Act.

     The articles of the Corporation provide for authorized capital of an unlimited number of common shares, an unlimited number of first preferred shares and an unlimited number of second preferred shares.

     As of May 1, 2003 the intercorporate relationships among FHR, its principal subsidiaries and Legacy Hotels Real Estate Investment Trust (“Legacy”) are depicted in the diagram below.

ITEM 2: GENERAL DEVELOPMENT OF THE BUSINESS

     FHR has operated and owned hotels and resorts for over 115 years. Until September 2001, the Corporation was known as Canadian Pacific Limited (“CPL”). Effective October 1, 2001, pursuant to the plan of arrangement approved by the shareholders of CPL and by the court, CPL completed a major reorganization (the “Arrangement”), which divided CPL into five new public companies – Canadian Pacific Railway Limited, CP Ships Limited, PanCanadian Energy Corporation and Fording Inc., while retaining its investment in Canadian Pacific Hotels & Resorts Inc. which has since been renamed FHR Holdings Inc. (“FHRHI”).

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     In 1997, FHRHI was a Canadian hotel management and ownership business with 25 properties, with approximately 11,000 guestrooms and one luxury brand, Canadian Pacific Hotels. The portfolio was primarily a combination of FHR’s original Canadian Pacific properties and seven hotels purchased from Canadian National Railway Co. in 1988. In November 1997, FHR sold 11 city center business hotels to Legacy concurrent with Legacy’s commencement of operations and initial public offering. FHR acquired an approximate 33% interest in Legacy under this offering. In 1998, FHR purchased Delta, which at the time had 27 hotels and 10,000 guestrooms under management or franchise. Also in 1998, FHR purchased the Princess hotel portfolio, a group of seven warm weather resorts in Mexico, Bermuda, Barbados and the United States.

     In October 1999, Fairmont was created through the combination of FHR’s luxury hotel management business with that of Fairmont Hotel Management L.P. (“Fairmont L.P.”), a U.S. based luxury hotel manager. Fairmont immediately became the largest luxury hotel management company in North America as measured by the number of rooms under management. FHR contributed management contracts for 27 luxury properties while Fairmont L.P. contributed management contracts for seven hotels in key United States gateway cities and all rights to the Fairmont brand. This acquisition provided FHR with an international luxury brand under which it now operates its world-class hotels and its luxury hotel management business.

Significant Acquisitions

     In November 2000, FHR acquired the remaining 80% of The Fairmont Chateau Whistler for approximately $94 million.

     In January 2001, FHR acquired the remaining 51% of its Barbados hotels, The Fairmont Royal Pavilion and The Fairmont Glitter Bay for approximately $20 million. In February 2001, FHR acquired The Fairmont Kea Lani Maui on the Wailea coast in Maui, Hawaii for approximately $215 million. In July 2001, FHR purchased a 50% equity interest in The Fairmont Copley Plaza Boston for $21 million in cash from interests controlled by Prince Alwaleed Bin Talal Bin Abdulaziz Al Saud (“Prince Alwaleed”). In February 2003, FHR acquired the remaining 50% equity interest controlled by Prince Alwaleed. The total purchase price for 100% of The Fairmont Copley Plaza Boston was approximately $117 million and was satisfied by the issuance of one million common shares, the assumption of a mortgage at $64.5 million and cash paid of $30.7 million. In November 2001, FHR made a $29 million investment to secure the long-term, incentive-based management contract of The Fairmont Dubai, which opened in February 2002. Subsequently, $7 million of this investment was allocated to another management contract on similar terms for a property that will be built in Abu Dhabi, United Arab Emirates. In addition, a further $7 million will be repaid to FHR if a third management contract is not provided by January 2008.

     In September 2002, FHR acquired the 16.5% interest in Fairmont held by a subsidiary of Kingdom Hotels (USA), Ltd. (“Kingdom”), an affiliate of a trust created by Prince Alwaleed. In consideration for the shares of Fairmont, FHR issued 2,875,000 shares to Kingdom equivalent to approximately 3.7% of FHR’s issued and outstanding shares. As a result of this transaction, FHR increased its controlling interest in Fairmont to 83.5%. The remaining 16.5% of Fairmont is held by one of the original owners of Fairmont L.P., a fund represented by Maritz, Wolff & Co. (“Maritz Wolff”). FHR and Maritz Wolff are parties to a shareholders agreement in respect of Fairmont which addresses various governance matters and provides the parties with certain rights including the right of Maritz Wolff to put its Fairmont shares to Fairmont for U.S. $69 million at any time prior to October 1, 2004. The shareholders agreement also provides each party with the right to acquire the other’s shares at fair market value (as defined in the shareholders agreement) in certain limited circumstances including in the event the other party becomes insolvent or commits an act of bankruptcy, or is acquired, whether directly or indirectly, by a competitor of Fairmont.

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     In September 2002, FHR invested $8 million for a 19.9% interest in The Fairmont Sonoma Mission Inn & Spa in Sonoma County California and secured a long-term management contract for the property. FHR has committed to advance a loan of $10 million on arms-length commercial terms to this hotel. In December 2002, FHR acquired The Fairmont Orchid, Hawaii for approximately $140 million. See “Owned Hotels”.

Significant Dispositions

     In February 2001, FHR sold The Fairmont Empress in Victoria, British Columbia and Fairmont Le Château Frontenac in Quebec City, Quebec to Legacy for approximately $200 million, while retaining the long-term management contracts, each of which had a remaining term of 49 years at the time of sale.

ITEM 3: NARRATIVE DESCRIPTION OF THE BUSINESS

Overview

     FHR is one of North America’s leading managers of luxury hotels. FHR currently has 80 luxury and first-class hotels and resorts in its portfolio, representing more than 31,000 rooms. The properties are located in Canada, the United States, Mexico, Bermuda, Barbados and the United Arab Emirates. An additional two properties are currently under development. FHR has operated and owned hotels for over 115 years and currently manages properties principally under the Fairmont and Delta brand names.

Hotel Ownership

     FHR has real estate ownership interests ranging from approximately 13% to 100% in 24 properties. This distinctive collection of hotel properties is located primarily in exclusive resort destinations or key North American gateway cities. All of FHR’s hotel ownership interests are held directly or indirectly by FHR Real Estate Corporation (“FHRREC”), with the exception of The Fairmont Chateau Lake Louise, and the equity interest in The Fairmont Sonoma Mission Inn & Spa, which are held by other subsidiaries of FHR. Fairmont manages the 22 luxury properties and Delta manages the two first-class properties.

     The majority of FHR’s income before interest, taxes, amortization, other income and expenses and reorganization and corporate expenses (“EBITDA”) are generated by its ownership operations. Approximately 55% of gross revenue from hotel ownership is generated from room revenue and 30% is generated from food and beverage services. Other revenue streams such as spa facilities, golf courses, retail operations, parking and laundry contribute the remainder of revenues earned by the owned properties.

     A significant portion of EBITDA generated by FHR’s hotel ownership interest comes from 11 properties in seven locations. The Fairmont Banff Springs and The Fairmont Chateau Lake Louise, located in Banff National Park in the Canadian Rockies, are protected by high barriers to entry since development in the park is controlled by the Government of Canada. The Fairmont Chateau Whistler is in Whistler, British Columbia, a year-round resort widely recognized as one of North America’s best ski destinations. The Whistler hotel market is nearing full development capacity, which will restrict new supply growth. The Fairmont Scottsdale Princess is a Five Diamond hotel in the growing Scottsdale, Arizona market, which has recently experienced significant new hotel supply. The Fairmont Hamilton Princess and The Fairmont Southampton are located in Bermuda, where FHR enjoys favorable income tax treatment on its earnings. The Fairmont Acapulco Princess and The Fairmont Pierre Marques in Acapulco, Mexico represent an opportunity to create increases in the value of FHR’s portfolio through the continuing development of these resorts. The Fairmont Kea Lani Maui, an all-suite hotel located in

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Wailea, Maui and The Fairmont Orchid, Hawaii are both located in some of Hawaii’s most sought after locations. The Fairmont Copley Plaza in Boston is being renovated to restore the hotel to its original grandeur.

Investment in Legacy

     FHR also has an approximate 35% equity interest in Legacy, which owns 22 hotels across Canada and one in the United States, all of which are managed by either Fairmont or Delta. FHR accounts for its ownership interest in Legacy on an equity basis.

     Legacy and FHR are parties to a strategic alliance agreement, which provides Legacy with the right to participate in any new investments made by FHR in resorts or city center hotels located in Canada. This agreement provides FHR with a potential buyer for FHR’s stabilized hotels while enabling FHR to retain long-term management contracts for these properties. In the event that a hotel is sold to Legacy, FHR has the ability to participate in up to 54% of the future profitability of the property through management fees and its ownership interest in Legacy. In addition, FHR could receive a significant portion of the sale proceeds on a tax-deferred basis. As a capital partner, Legacy also provides FHR with additional management contract opportunities.

Real Estate Activities

     FHR also holds other real estate assets, which consist primarily of the Southtown lands in Toronto, Ontario and the Coal Harbour lands in Vancouver, British Columbia. FHR owns 100% of the Toronto lands and a 75% interest in the Vancouver lands. Currently there are no formal plans to build new hotels at these locations. FHR expects to sell the remaining land blocks in Vancouver and Toronto over the next four years.

     The Southtown lands are located in the core of downtown Toronto between the financial district and Lake Ontario and is in close proximity to the Air Canada Centre. The site is located south of Union Station and north of the Gardiner Expressway, primarily on either side of York Street. To date, FHR has disposed of two parcels of the Southtown lands and is party to ongoing discussions with several prospective parties who have expressed interest in purchasing the remaining sites for future hotel, office and residential developments. The remaining lands are zoned for the development of 4.9 million square feet of commercial and residential space which is subdivided into six parcels.

     The Coal Harbour lands in downtown Vancouver, stretch over one kilometer along Burrard Inlet west of The Fairmont Waterfront and are in close proximity to Stanley Park. To date, FHR has sold all the land except for two remaining residential sites contracted for sale by 2004 and one site zoned for hotel development, which combined allow for the development of 1.3 million square feet.

     Management has launched a vacation ownership product, Fairmont Heritage Place, which it believes will allow FHR to compete for new development opportunities and improve its return on owned assets by better leveraging its existing hotel infrastructure. Construction is underway for the first phase of FHR’s first vacation ownership project, which is located in Acapulco, Mexico. Management has also identified potential vacation ownership opportunities in Scottsdale, Bermuda and Barbados.

Management Operations

     FHR manages hotels under two subsidiaries, Fairmont and Delta, each with their own distinct brand identity. Under their respective management contracts, Fairmont and Delta generally oversee all aspects of the day-to-day operations of each property on behalf of the owner, including hiring, training and supervising staff, maintaining sales and marketing efforts, providing accounting and budgeting functions, providing support for management information systems and applications and the safekeeping, repair and maintenance of the physical assets. For these services, Fairmont and Delta earn a base fee,

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which is typically in the range of 2.5% to 3.5% of a property’s gross revenues and can earn an incentive fee based on the property achieving certain operating performance targets.

Fairmont

     Fairmont is North America’s largest luxury hotel management company as measured by rooms under management. Currently, Fairmont manages more than 20,000 rooms at 41 luxury properties in major city centers and resort destinations throughout Canada, the United States, Mexico, Bermuda, Barbados and the United Arab Emirates. Fairmont caters to the luxury segment of the market, which is sometimes referred to as four or five star. Luxury hotels are full service properties offering an exceptional level of personalized service and a complete range of amenities and facilities, including food and beverage outlets, meeting rooms and recreational activities. The hotel staff to guest ratio tends to be higher at luxury hotels in order to allow for more personalized service.

     Fairmont’s incentive-based management contracts have an average remaining term of more than 40 years, which management believes are among the longest in the industry. In 2003, FHR expects about a third of Fairmont’s management contracts to earn incentive fees. Within the next two to three years, the majority of current contracts are expected to earn incentive fees. Most of these contracts have set thresholds that do not change over the life of the contract unless significant renovations are made to the managed hotel. Fairmont participates in up to 30% of earnings above the threshold on most of its management contracts.

     One of Fairmont’s strengths is the diversity of its revenue base, which is relatively balanced between individual and group travel and between business and leisure travel. The individual or transient traveler is typically less price sensitive, whereas the group travel business helps fill rooms in off-peak seasons, providing stability in earnings and occupancy. Business travel accounts for approximately half of Fairmont’s revenues under management and the balance is derived from leisure travel. Further diversification is provided to Fairmont as approximately 55% of revenues are derived from city center locations and the balance from resort properties. The resorts attract both corporate travelers for offsite retreats and leisure customers who take advantage of the activities and amenities offered by these locations.

     Fairmont enjoys a considerable competitive advantage in the group business segment of the industry over other luxury four or five star brands, due to its large meeting facilities and greater number of guestrooms. Fairmont’s average number of rooms per hotel is approximately 500, whereas Fairmont’s major competitors, including Ritz-Carlton, Four Seasons, Sheraton Luxury Collection and Preferred Hotels and Resorts, generally range between 200 to 330 rooms per hotel. See “Hotels Under Management”.

     Fairmont has certain amenities and expertise in diverse areas that distinguish it in the luxury sector. For example, its Fairmont Gold product has carved out a niche that competes with other luxury hotels. This “hotel within a hotel”, typically one or two floors of a Fairmont property, has its own check-in desk, lounge area, upgraded amenities in each guestroom and offers superior personalized service. This product commands a higher rate and competes with the upper end of the luxury hotel segment from both a service and room rate perspective.

     Fairmont also has resources dedicated to both golf and spa operations. FHR has operated golf courses since 1911 and its courses, situated in some of North America’s finest natural settings, are designed by some of the world’s foremost golf course architects. Fairmont has considerable experience in golf course management and maintenance and retail golf operations. FHR is Canada’s leading operator of high-end resort golf courses. Over the past six years, FHR has completed major renovation and modernization to some of its classic golf courses and is currently renovating a golf course in Acapulco.

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     Fairmont introduced its new spa product, “Willow Stream The Spas At Fairmont”, with the opening of Willow Stream the spa at The Fairmont Scottsdale Princess in December 2001. In 2002, Fairmont expanded its spa product to The Fairmont Empress, The Fairmont Dubai, The Fairmont Southampton, The Fairmont Acapulco Princess and The Fairmont Banff Springs. Fairmont is planning on converting the existing spa at The Fairmont Orchid, Hawaii in 2003.

Delta

     Delta is Canada’s largest first-class hotel management company, with over 11,000 rooms at 38 managed and franchised properties across Canada. Since FHR acquired Delta in 1998, FHR has upgraded its portfolio of properties and enhanced the reputation of the Delta brand. Delta strengthens FHR’s leadership position in the Canadian marketplace, adds a complementary brand to its portfolio and allows FHR to achieve significant economies of scale.

     Delta’s incentive-based management contracts have an average remaining term of more than 10 years. In 2003, approximately half of Delta’s managed hotels are expected to earn incentive fees. Delta participates in up to 30% of earnings above the threshold on some of its management contracts.

     Delta has certain amenities and expertise in diverse areas that distinguish it in the first-class sector. For example, Delta’s Signature Club combines the exclusive use of a private lounge and upgraded guestrooms and amenities. Signature Club guestrooms achieve premium rates, enabling Delta to increase revenues. Delta has a strong regional sales network across Canada and is recognized for its brand strength and property distribution within its marketplace. Delta’s major brand competitors are Hilton, Radisson and Sheraton.

Competitive Strengths

     The hotel industry is highly competitive. FHR believes that it has several distinguishing competitive strengths, including the following.

Irreplaceable Collection of Distinctive Assets

     FHR manages and owns a portfolio of unique, high quality hotels in exceptional locations that provide it with an unrivaled presence throughout North America. Fairmont’s managed assets principally consist of historic landmark properties in prime locations in major city centers or resort destinations. Its properties are typically renowned assets with long-standing traditions and reputations, such as The Fairmont San Francisco, The Fairmont Banff Springs in the Canadian Rockies, The Fairmont Royal York in Toronto and Fairmont Le Château Frontenac in Quebec City. FHR’s portfolio of owned assets are located primarily in exclusive resort locations where their competitive position is strengthened by high barriers to entry, such as The Fairmont Banff Springs and The Fairmont Chateau Lake Louise, which are situated on National Park land owned and controlled by the Government of Canada and The Fairmont Kea Lani Maui.

Growing Fairmont Brand Position

     Management believes that Fairmont’s current brand positioning has poised FHR for above average growth in earnings. Fairmont enjoys a prominent position in the luxury market segment by virtue of its distinctive collection of 41 properties and a reputation for excellence in people, product and service. The Fairmont name dates back to 1907 and is well known in the United States. FHR has leveraged this strong brand recognition by rebranding 30 properties in Canada, the U.S., Mexico, Bermuda and Barbados as Fairmont properties. Although Fairmont is the largest North American luxury hotel management company, management believes that Fairmont is still in the early stages of building

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consumer awareness of the brand. Many of Fairmont’s properties are icons and landmarks in their own right and, as the connection between the brand and these assets is solidified, its strength and value should continue to grow. FHR also believes that there continues to be significant growth potential in the United States and internationally. Currently, 14 of the top 25 U.S. markets do not have a Fairmont property.

Strategic Relationships

     Strategic relationships are an important source of financing and future growth opportunities for FHR’s hotel management and ownership businesses. FHR’s strategic alliance agreement with and approximate 35% interest in Legacy provides FHR with a potential buyer for FHR’s stabilized real estate assets while enabling it to retain long-term management contracts for these properties. In the event of a sale of an owned asset to Legacy, FHR has the ability to participate, through its ownership interest in Legacy and through base and incentive management fees, in up to 54% of the future increases in operating profits of the property, in addition to receiving a significant portion of its proceeds from the sale on a tax-efficient basis. This allows FHR to generate significant capital which can be reinvested to fund future growth and expand the Fairmont brand presence. Since the establishment of the strategic alliance, Legacy has purchased six properties from FHR for an aggregate consideration of approximately $250 million. In addition, FHR has established strong partnerships with institutional and private equity sources, including Kingdom, controlled by Prince Alwaleed, and Maritz Wolff. These partners are a potential source of capital to develop luxury and first-class hotel properties and can also facilitate FHR’s entry into new markets.

     In early 2001, Fairmont became a founding member of Avendra, LLC, a North American purchasing consortium that combines the purchasing powers of its founders, Fairmont, Hyatt, ClubCorp, Six Continents and Marriott, to bring each member and their hotels anticipated savings in the cost of goods. All founding members in Avendra, LLC are guaranteed the same purchasing benefits.

Focused Acquisition Strategy

     FHR has developed a five-step process for acquiring and repositioning underperforming real estate assets which has allowed it to maximize the revenues it receives from its owned properties, while following its strategy of increasing the management segment of its business. This five-step process consists of: acquiring an asset and managing it in the short term to increase its revenues; rebranding the asset as either a Fairmont or a Delta property; repositioning and enhancing the revenue potential of the asset through capital investment; aggressively managing the asset to optimize cash flows and operating margins; and monetizing the appreciated value of the stabilized asset by selling it to Legacy or a third party, which enables FHR to use the proceeds to make further acquisitions and equity investments, as well as reinvesting in existing assets. FHR’s intention is to retain long-term management contracts on the assets it sells.

Conservative Capital Structure

     FHR believes it has a conservative capital structure. As at December 31, 2002, the Corporation had approximately $536 million total outstanding debt, resulting in a debt to total capitalization of approximately 24%, one of the lowest among major publicly-traded North American lodging companies. This capital structure provides FHR with a financial advantage relative to many of its competitors, enabling the Corporation to use its balance sheet to aggressively grow its business both through the refurbishment and expansion of existing properties and through selective acquisitions.

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Long-Term, Incentive-Based Management Contracts

     Fairmont and Delta both earn management fees for services they provide to properties owned by FHR, Legacy and third parties. Base fees are typically calculated as a percentage of a property’s gross revenues and provide earnings and cash flow stability. Incentive fees are earned as a result of improvements in financial performance, usually above a pre-determined level, and provide significant opportunities for cash flow and earnings growth. Generally, the longer the term of the management contract, the greater the opportunity for increased incentive fees.

     Fairmont’s incentive-based management contracts have an average remaining term of more than 40 years, which management believes are among the longest in the industry. In 2003, Fairmont expects that about one-third of its management contracts will earn incentive fees. Within the next two to three years, Fairmont expects that the majority of its current contracts will be earning incentive fees. Almost all of these contracts have set thresholds that do not change over the life of the contract except, in certain cases, for adjustments corresponding to significant capital expenditures. Fairmont participates in up to 30% of earnings above the threshold on most of its management contracts. Delta’s incentive-based management contracts have an average remaining term of more than 10 years. In 2003, approximately half of Delta’s managed hotels are expected to earn incentive fees.

Proven Management Team

     FHR has been providing outstanding service in the lodging sector for over 115 years. FHR’s senior management team has, since 1997, successfully completed the initial public offering of Legacy, the acquisitions of Delta and the Princess hotel portfolio, the creation of Fairmont and the transition from being privately-held to being a publicly-traded corporation pursuant to the Arrangement. Also during this period, FHR has reported strong operating and financial performance. The senior management team is supported by 14 corporate vice presidents and by 13 regional vice presidents, and oversees a workforce of over 30,000 employees.

Growth Strategy

     In addition to benefiting from the overall growth trends of the luxury segment of the market, FHR intends to grow revenue and profits through a comprehensive growth strategy.

Maximize Operating Performance of Existing Assets

     FHR continues to grow revenues and earnings by maximizing the operating performance of its managed and owned hotels through profit-enhancing capital improvements and more focused marketing programs and sales efforts. FHR also anticipates that the Fairmont brand will continue to enhance revenue opportunities through a consistent brand image and increased North American and international recognition of the properties in the portfolio.

     FHR also expects that the rebranding of newly-acquired assets will leverage the operating performance of its existing properties. Not only will the rebranding enhance the revenue opportunities of the new assets through their immediate association with the Fairmont brand but, in addition, it will raise the profile of the rest of the Fairmont properties by raising the profile of the Fairmont brand as a whole.

Invest Capital to Expand, Reposition and Refurbish Existing Assets

     A number of FHR’s owned and managed assets have recently undergone or are currently undergoing major renovation programs which has affected operating revenues. Once these renovations

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are completed, FHR expects that it will earn significant returns on the capital invested. One example of this strategy was the expansion of The Fairmont Chateau Whistler. With the growing recognition of Whistler as a world-class destination resort in the early 1990s, FHR determined that increasing demand warranted an addition of guestrooms and meeting space. In September 1997, the hotel opened 216 new guestrooms. In 2002, operating and financial results supported the expansion as EBITDA had more than doubled since 1996 and revenue per available room (“RevPAR”) had risen significantly. A further example of this strategy, was the complete renovation of the two Bermuda properties. As part of these renovations, guestrooms, lobbies and meeting space were refurbished and a Willow Stream spa was opened at The Fairmont Southampton. The completion of these programs have resulted in the hotels average daily rates (“ADR”) increasing by 20% since 1999.

Broaden Revenue Streams

     Incremental investments in spas, golf courses, residential and retail enhance the Fairmont brand and are also attractive investment opportunities, as the hotel infrastructure and land are already in place. There are currently seven large luxury spas under management and one under development. In addition, FHR operates nine golf courses and has developed expertise in this area. FHR is focusing its acquisition strategy to target hotels that already have spas and golf courses in place or have the space to accommodate these facilities. FHR also continues to evaluate opportunities to develop residential accommodations at certain of its resort properties. Several of FHR’s existing properties, such as The Fairmont Royal Pavilion and The Fairmont Scottsdale Princess could accommodate residential development. Fairmont currently has a large portfolio of retail shops within its hotels, providing rental income for FHR. The Fairmont Scottsdale Princess and The Fairmont Banff Springs currently operate their own retail shops. Fairmont will continue to pursue opportunities for future growth in retail revenue, through both leased tenancies and owned and operated stores.

Growth Through New Incentive-Based Management Contracts

     FHR intends to further develop and leverage the Fairmont brand by seeking new single and multiple incentive-based management contract opportunities. The Corporation believes it has substantial growth potential in the United States as 14 of the top 25 markets currently do not have a Fairmont property. FHR also intends to capitalize on opportunities outside North America.

     Fairmont is well positioned to attract hotel owners and new partners through its management expertise, unique portfolio of properties and service culture. In addition, it has established a scalable technology infrastructure that supports management information systems which are critical to the globalization of the brand.

     Delta has proven its ability to secure new management contracts within Canada, with seven new management contracts being entered into since January 1, 2001.

Growth Through Acquisitions

     To support and complement the growth of its management business, FHR will continue to use its financial position and management capabilities to make selective acquisitions in key North American gateway cities, destination resorts and strategic international markets. FHR intends to focus on assets that are consistent in size, quality and customer base with its existing portfolio, or that are in protected markets or have significant development potential.

     Once an acquired asset has been stabilized, FHR will consider selling the asset to Legacy or a third party. As part of the sale agreement, FHR would retain a long-term management contract. The cash

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generated from the sale of stabilized properties would then be redeployed into new investment opportunities. This strategy was used with the sale of The Fairmont Empress and Fairmont Le Château Frontenac to Legacy where the proceeds were used for the subsequent purchase of The Fairmont Kea Lani Maui, thereby expanding FHR’s presence in a key resort market.

Minority Equity Investments

     FHR also plans to leverage its financial position by increasing the use of minority equity investments. This will enable FHR to secure long-term management contracts with only a modest capital investment. For instance, FHR acquired an approximate 20% interest in The Fairmont Sonoma Mission Inn & Spa while securing a long-term management contract at this property.

     Although the Corporation is focused on expanding primarily in the United States, FHR will also consider strategic acquisitions outside of North America. In 2002, The Fairmont Dubai opened. The joint venture involved a minority equity investment and a long-term management contract. FHR views this project as the first step in a strategic alliance between the private office of His Highness Dr. Sheikh Sultan bin Khalifa Al Nahyan and Fairmont to build and operate a number of luxury hotels in the region and other international markets.

Hotels Under Management

     The following tables provide certain information relating to each property managed by Fairmont and Delta as of May 1, 2003.

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Industry Awards

     FHR has developed a reputation for quality, service and innovation in the luxury and first-class markets, respectively. Its reputation has been acknowledged by the following leading surveys.

2002/2003

     Five Fairmont hotels received the 2002 Mobil Four-Star Award from Exxon Mobil Travel Publications. The Fairmont Scottsdale Princess’ La Hacienda and The Marquesa each received Mobil Four-Star Restaurants 2002, making La Hacienda North America’s only Mobil 4-Star and AAA 4-Star restaurant.

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     The Fairmont Scottsdale Princess received the AAA Five-Diamond Hotels Award, as well as The Marquesa, receiving the AAA Five-Diamond Restaurants award.

     Condé Nast Traveler 2003 annual readers’ choice poll, The Gold List, listed two-thirds of Fairmont’s portfolio on this year’s survey. FHR believes it epitomizes the gold standard, with 27 of its world-class properties making the list in 2003, up from 21 last year. Headlining this year’s list for Fairmont is The Fairmont Kea Lani Maui, scoring a perfect 100% for service, making it number one in ‘The Best by Service’ for the United States. The Fairmont Orchid, Hawaii, scored high for its luxurious rooms and scenic location and The Fairmont Banff Springs, for its outstanding picturesque location, making it the second ‘Best by Location’ for the Americas. Other notable mentions include the castle-like Fairmont Château Laurier, The Fairmont Vancouver Airport and The Fairmont Hotel Macdonald.

     Meetings & Conventions magazine awarded five Fairmont hotels and resorts with the magazine’s annual 2002 Gold Key International Award. In addition, six Fairmont properties were awarded the Gold Key Award. Celebrating the finest meeting properties world-wide, the awards are based on the overall quality of the staff, meeting rooms, food and beverage offerings and the level of service provided. Other notable mentions include The Fairmont San Francisco and The Fairmont Scottsdale Princess’ Gold Platter Award, and The Fairmont Royal York’s Gold Platter International Award.

     Travel & Leisure has named 15 Fairmont hotels and resorts to its first annual ‘T & L 500’, ‘The magazine’s ultimate guide to the best hotels in the world’. Using the 500 properties that received the highest rankings in the magazine’s 2002 World’s Best Awards Survey, the editors then added their own opinions to complete the guide. Fairmont’s Canadian properties made a strong showing in the guide, with the Fairmont Château Laurier topping the list for Fairmont, followed by The Fairmont Jasper Park Lodge and The Fairmont Banff Springs. Fairmont’s two Hawaiian resorts lead the way for the United States and The Fairmont San Francisco was dubbed a destination in and of itself.

     Travel & Leisure Magazine’s 2002 Annual ‘World’s Best Awards’ readers’ poll ranked eight Fairmont properties in their annual evaluation of prestigious hotels and resorts throughout the world. Headlining the Top 100 list was Fairmont Château Laurier, The Fairmont Jasper Park Lodge and The Fairmont Chateau Lake Louise. Delta Victoria Ocean Pointe Resort and Spa was named in the top 100 for U.S. and Canada.

     Travel & Leisure Magazine’s 2002 ‘World’s Best Values’ survey ranked five Fairmont properties in their annual evaluation of exceptional service, unique offerings and renowned hospitality at an affordable price. Topping the list was The Fairmont Southampton, scoring the highest ranking of any hotel in the Caribbean, Bermuda and the Bahamas.

     Travel & Leisure Magazine’s 2002 ‘World’s Best Spas’ named The Fairmont Banff Springs in the top ten for ‘The Best Spas for Treatments’ and ‘The Best Spas for Value’ in the U.S. and Canada.

     The Hospitality Sales & Marketing Association International (HSMAI) recognized FHR with the ‘Golden Click Best of Show Award’ for the design and development of www.fairmont.com. The Web site was selected for the honor from this year’s Platinum Golden Click Web Award winners.

     The Association of Travel Marketing Executives (ATME) recognized FHR with the 2003 ‘Gold Award’ for most effective website.

     The Discovery Travel Channel selected The Fairmont Chateau Lake Louise as one of the “World’s Top 10 Honeymoon Hot Spots”. The program recognized The Fairmont Chateau Lake Louise and nine other of the most luxurious resorts around the world as ultimate travel destinations.

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     FHR received the Natural Resources Canada Energy Innovators Awards 2002, recognized as a company leader in the hospitality industry in reducing greenhouse gas emissions.

     BC Hydro and the Manitoba Round Table for Sustainable Development recognized FHR British Columbia and The Fairmont Winnipeg for their outstanding environmental contributions as a part of Fairmont’s Green Partnership Program. The five B.C. properties have made sizeable reductions to their energy consumption, earning them BC Hydro Power Smart Certified status; and The Fairmont Winnipeg’s pioneering efforts to promote environmentally sound economic development, have been recognized with the Sustainable Development 2002 Award, Business Category.

     The Canadian Marketing Association (CMA) recognized Fairmont Hotels & Resorts with the 2002 Gold Award for their innovative and very auspicious direct marketing campaign ‘The Plaza Loves Canada’. Fairmont accepted the top honour in the Leisure/Travel Products & Services category.

     The TIA (Travel Industry Association of America) presented the Odyssey Awards 2002 — Special Recognition Award to Fairmont Hotels & Resorts for the ‘Adopt-a-Shelter’ program.

     Maclean’s selected FHR for the 2003 Edition of Canada’s Top 100 Employers. This annual guide produced by Mediacorp is a reference to best practices in recruitment and retention and includes employers that have innovative programs to attract and keep talented employees.

     The American Automobile Association (“AAA”) and the Canadian Automobile Association (“CAA”) recognized 30 Fairmont properties with Four or Five Diamond Awards.

     Successful Meetings magazine awarded 20 Fairmont properties the 2002 Pinnacle Award.

2001

     The 2001 Zagat’s travel survey of top U.S. hotels/resorts/spas ranked Fairmont fourth among lodging companies in the country. In the international edition of the acclaimed guidebook, Fairmont also ranked high with travelers with The Fairmont Empress and The Fairmont Chateau Whistler placing amongst the best hotels/resorts in Canada.

     Nine Fairmont hotels received the 2002 Mobil Four and Five-Star Award from Exxon Mobil Travel Publications. Highlighting this year’s list was The Fairmont Scottsdale Princess, which received a coveted Five-Star ranking. Additionally, two of the hotel’s restaurants, La Hacienda and The Marquesa received this distinction.

     The Corporate & Incentive Traveler magazine gave three Fairmont hotels its Award of Excellence.

     Meeting & Conventions magazine presented 15 of Fairmont’s hotels with its Gold Key Award.

     In the 2001 edition of Forbes, The Fairmont Chateau Whistler and Fairmont Tremblant were listed as two of the 10 best ski resorts in North America. The highly respected monthly magazine selected both properties for their upscale accommodations and for the quality of their nearby ski runs.

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Owned Hotels

     The following is a description of the individual hotels in which FHR currently has an ownership interest. FHRREC or one or more of its subsidiaries has a 100% interest in these properties, unless otherwise indicated.

The Fairmont Orchid

     Situated on 32 beachfront acres along the semi-tropical Kohala Coast, on the North-western coast of Hawaii, The Fairmont Orchid has 540 guestrooms and suites and offers a full-service spa and fitness center, 42,000 square feet of function space, three restaurants, ten tennis courts, and is located close to two 18-hole golf courses. The Fairmont Orchid was named to Condé Nast Traveler’s 2002 Gold List and was named ‘one of the best golf resorts’ by Condé Nast Traveler’s 2001 Top Golf Resorts readers’ survey. In October 2002, FHRREC acquired The Orchid at Mauna Lani on the Island of Hawaii from an affiliate of Colony Capital LLC.

The Fairmont Kea Lani Maui

     Known as the island’s only all-suite luxury oceanfront resort, The Fairmont Kea Lani Maui is situated on Polo Beach in the world-class destination of Wailea, on the south-western coast of Maui. With 413 one-bedroom suites and 37 private beachfront villas, the 22-acre resort offers a full-service spa and fitness center and a range of water sports. The resort is located close to Wailea’s three 18-hole championship, par 72 golf courses and 14 tennis courts. The resort appears in Condé Nast Traveler’s 2002 Gold List and scored a perfect 100% for service, making it number one in ‘The Best by Service in the U.S.’ FHRREC holds its indirect interest in the resort through a Hawaiian limited partnership, Kea Lani Limited Partnership.

The Fairmont Sonoma Mission Inn & Spa

     Long known as a historic spa destination in the heart of the California Wine Country, The Fairmont Sonoma Mission Inn & Spa is the recipient of the AAA Four-Diamond Award and Mobile Four-Star Award. The recently expanded spa facility boasts its own source of thermal mineral water. The 228-room resort includes two pools, 11 meeting rooms, and a full-service business center. Guests have preferred access to Sonoma National, a private 18-hole championship golf course. In September 2002, in addition to securing the long-term management contract, FHRREC purchased a 19.9% equity interest in the resort.

The Fairmont Scottsdale Princess

     Built in 1987, The Fairmont Scottsdale Princess is located on a 450-acre property, with the McDowell Mountains as the backdrop. The property has access to two championship golf courses which are leased by the City of Scottsdale and operated by the Tournament Players Club of Scottsdale. For several years, one of these courses has been the site of the PGA Tour’s Phoenix Open. The hotel has also been the host of the ATP/Franklin Templeton Men’s Tennis Tournament for a number of years. In 2002, the hotel appeared in Condé Nast Traveler’s Gold List. Willow Stream the spa at The Fairmont Scottsdale Princess, a 44,000 square-foot luxury spa, opened at the end of 2001. In 2002, the resort received a Mobil Five-Star Award from Exxon Mobil Travel Publications as did two of the hotel’s restaurants, La Hacienda and The Marquesa. For the eleventh consecutive year the hotel received two Five-Diamond Awards from AAA, one for the hotel’s striking and luxurious facilities and exceptionally high degree of service and the other for its signature dining room, The Marquesa. The Fairmont Scottsdale Princess is owned by the Scottsdale Princess Partnership, an Arizona partnership which is

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indirectly owned by FHRREC. The hotel is located on land leased from the City of Scottsdale, whose lease expires at the end of 2085.

The Fairmont Copley Plaza Boston

     Known as the “Grande Dame” of Boston, The Fairmont Copley Plaza Boston has been a landmark of elegance since its opening in 1912. The 379-room hotel was designed by the same architect as The Plaza in New York and has many similar features. The hotel is centrally located beside the Hancock Tower, the Boston Public Library and Trinity Church and is close to Beacon Hill and Newbury Street. The hotel received the AAA Four-Diamond Award in 2001. In June 2001, FHRREC acquired a 50% ownership position in the hotel, and Fairmont, which has been the manager of the hotel since 1996, entered into a new long-term management contract. In February 2003, FHRREC completed the acquisition of the remaining 50% equity interest in the property. The hotel is presently undergoing substantial renovations to its guestrooms. The property is owned by Copley Plaza 2001 LLC, a Delaware limited partnership, which is an indirect wholly-owned subsidiary of FHRREC.

The Fairmont Chateau Whistler

     Opened in 1989, The Fairmont Chateau Whistler was the first chateau-style hotel built by FHR since the turn of the century. Tourism in the Whistler area has generally been increasing and the resort has been expanded over the past decade to accommodate increased demand. Located at the base of Blackcomb Mountain, the chateau is within walking distance of Whistler Mountain. The hotel features an 18-hole championship golf course designed by Robert Trent Jones, Jr. and offers a full-service spa. The resort appeared in Condé Nast Traveler’s 2002 Gold List and was voted one of the 50 Best Golf Resorts by the magazine in 2001. In the November 2001 edition of Forbes, the resort was listed as one of the 10 best ski resorts in North America. The hotel also received the Four-Diamond Award from the CAA in 2002. All of the lands relating to the hotel property and the golf course are owned by Chateau Whistler Resort Partnership, a British Columbia partnership which is wholly-owned, directly and indirectly, by FHRREC.

The Fairmont Vancouver Airport

     Built in 1999, The Fairmont Vancouver Airport is a state-of-the-art hotel connected to the Vancouver International Airport. It is the first hotel in the world to offer an in-room airline check-in service and the first hotel in North America to introduce a satellite lobby in the airport arrival halls. With a full-service work center, spa and health club, this hotel combines all the expected amenities and facilities of a luxury hotel with the conveniences of an airport property. In 2002, the hotel earned the Four-Diamond Award from CAA. FHRREC leases the land on which the hotel is located from the Vancouver Airport Authority. The lease term expires in 2050.

The Fairmont Jasper Park Lodge

     The Fairmont Jasper Park Lodge is an alpine-like village of cedar chalets and authentic log cabins originally designed in 1922. Located near Marmot Basin Ski Resort in Jasper National Park, the property offers year-round activities including skiing and golf on its championship golf course designed by Stanley Thompson. In 2002, the hotel appeared in Condé Nast Traveler’s Gold List in addition to being ranked as one of the 50 Best Golf Resorts by the magazine in 2001. In 2001, this golf course received numerous honors including Best Golf Course, Best Canadian Golf Destination and Best Scenery in Canada by Score Golf magazine. Also in 2002, CAA presented its main restaurant, the Edith Cavell Dining Room, with the Four-Diamond Award. The resort is under a single lease with the Government of Canada, expiring March 31, 2010, with a right to an additional term of 10 years.

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The Fairmont Chateau Lake Louise

     The Fairmont Chateau Lake Louise sits on the shores of Lake Louise in the Canadian Rockies and is in close proximity to world class skiing at the Lake Louise Ski Area in Alberta. Built in 1890, the resort was expanded from a mountain chalet in 1912 and became an all-season property in 1984. The addition of a meeting facility is underway and will be completed in 2004 and Fairmont Gold will open in May 2003. In 2002, the hotel appeared in Condé Nast Traveler’s Gold List and received the Four-Diamond Award from the CAA. The Fairmont Chateau Lake Louise was selected as one of the “Ultimate 10 Hotels in the World” by The Learning Channel, recognizing the property as one of the top luxury hotels in the world. The hotel is under perpetually renewable leases with the Government of Canada, the owner of all the land in Banff National Park, with the exception of a new lease of a road right-of-way and other lands including minor portions of the hotel and a staff building which is for a fixed term of 42 years. The leases for The Fairmont Chateau Lake Louise are held by Chateau Lake Louise Corporation, a Nova Scotia corporation which is a wholly-owned subsidiary of FHR.

The Fairmont Banff Springs

     Designed and built in 1888, and often referred to as the “Castle in the Rockies”, The Fairmont Banff Springs is a year-round resort located in the Canadian Rocky Mountains in Banff National Park. The hotel is in close proximity to a number of internationally renowned ski facilities, including Sunshine Village and Lake Louise Ski Area, and has a 27-hole championship golf course designed by Stanley Thompson. In 2001, a major three-year renovation program was completed at the property, returning the resort to its original splendor including guestrooms, the lobby, public spaces and kitchens. In 2002, the hotel appeared in Condé Nast Traveler’s Gold List and received the Four-Diamond Award from the CAA in 2002. In 1995, the hotel opened Solace, a luxury spa that was ranked second in the category of “World’s Best Spa Destinations” by Condé Nast Traveler’s 2001 Readers’ Choice Awards. The spa was rebranded as a Willow Stream in 2002. The main structures of the hotel containing the reception areas, kitchen, guestrooms and the majority of the staff accommodations are subject to perpetually renewable leases with the Government of Canada. The remaining leasehold lands forming the hotel and containing the conference center, parkade, other staff accommodations, the tennis courts and the golf course are subject to a number of leases for fixed terms of up to 42 years.

Fairmont Le Château Montebello and Fairmont Kenauk at Le Château Montebello

     Located between Ottawa and Montreal, this historic resort’s focal point is its cedar log chateau built in 1930. Fairmont Le Château Montebello has approximately 65,000 acres of protected wilderness domain that is one of North America’s largest and oldest private fish and game reserves, with more than 70 lakes within its borders. The resort has an extensive recreation program and offers a Stanley Thompson championship golf course, for which it received a Double Platinum ranking from Canada’s Golf Ranking magazine.

Fairmont Tremblant

     Opened in 1997, this hotel is located at the base of Mont Tremblant in the Laurentians. In 2002, the hotel appeared in Condé Nast Traveler’s Gold List and received the CAA Four-Diamond Award. In the November 2001 edition of Forbes, the resort was listed as one of the 10 best ski resorts in North America. FHRREC has a 19.9% direct interest in Chateau M.T. Inc., a Quebec corporation, which owns the property.

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Fairmont Le Manoir Richelieu

     First established in 1899, this “Castle on the Cliff” located in Charlevoix, Québec, celebrated its centennial shortly after the completion of a major renovation. The resort offers a spa, casino and whale watching on the St. Lawrence River. In 2000, Fairmont Le Manoir Richelieu received a Double Platinum ranking from Canada’s Golf Ranking magazine for its 18-hole championship golf course, which is presently under construction for the addition of a further nine holes. The hotel and its restaurant, Le Charlevoix, each received the Four Diamond Award from CAA in 2002. FHRREC holds a 25% interest in the property through its direct ownership in Manoir Richelieu Limited Partnership, a Québec limited partnership.

The Fairmont Newfoundland

     Rebuilt in 1982, The Fairmont Newfoundland is located in the heart of St. John’s, overlooking the harbor. This modern hotel offers a 24-hour business center and all guestrooms are provided with business amenities. FHRREC holds its 25% interest directly in this property.

The Fairmont Acapulco Princess

     Designed to resemble an Aztec pyramid, The Fairmont Acapulco Princess is located on 480 tropical acres along the Revolcadero Beach. The grounds offer five freshwater pools, waterfalls and one salt-water pool, tennis, water sports and an 18-hole championship golf course. In 2002, the resort appeared in Condé Nast Traveler’s Gold List and received the Gold Key Award from Meetings & Conventions magazine and the AAA Four-Diamond Award. In 2002, the property completed a major renovation program that included the refurbishment of all guestrooms and the addition of a Willow Stream spa. The hotel and golf course are owned by Organización Ideal, S.A. de C.V. and Impulsora de Revolcadero S.A. de C.V., both Mexican corporations, which are indirect wholly-owned subsidiaries of FHRREC.

The Fairmont Pierre Marques

     Located minutes from The Fairmont Acapulco Princess on a secluded section of Revolcadero Beach, the resort was originally built in 1958 as a lavish personal hideaway for oil magnate J. Paul Getty. Previously open for only three months of the year, the property has been catering to guests year-round since it was purchased by FHR in 1998. The hotel has retained the privacy and intimacy of its original days with villas, bungalows and low-rise pavilions in a garden setting, offering three freshwater pools and an 18-hole championship golf course. In 2002, a major renovation program was completed which included all of the guestrooms, bungalows and villas, as well as the lobby. In 2002, the hotel appeared in Condé Nast Traveler’s Gold List. The hotel and golf course are owned by Impulsora de Revolcadero, S.A. de C.V., a Mexican corporation which is an indirect wholly-owned subsidiary of FHRREC. A small section of the land is held in trust from Banca Cremi, S.A. by Organización Ideal, S.A. de C.V., a Mexican corporation which is an indirect wholly-owned subsidiary of FHRREC.

The Fairmont Southampton

     Located on the south shore of Bermuda’s highest point, The Fairmont Southampton opened in 1972 overlooking approximately 100 acres of property. The hotel has a pink sand beach, tennis and an 18-hole par 3 executive golf course. In 2002, the resort completed a major renovation program including guestrooms, the lobby, restaurants and bar, as well as the addition of Fairmont Gold and a full-service Willow Stream spa. In 2002, the resort appeared in Condé Nast Traveler’s Gold List and was also named the best hotel in the Caribbean/Bermuda/Bahamas by Travel & Leisure magazine. In 2002, The Fairmont

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Southampton received the Four-Diamond Award from AAA. Westend Properties Limited, a Bermuda corporation which is an indirect wholly-owned subsidiary of FHRREC, owns the hotel.

The Fairmont Hamilton Princess

     Built in 1884, The Fairmont Hamilton Princess is located in the heart of Hamilton, Bermuda’s capital. In 2001, the hotel received numerous awards for its meeting facilities and services, including the Gold Key Award from Meetings & Conventions magazine and the Pinnacle Award from Successful Meetings magazine. The property has recently completed a major renovation program, including all guestrooms, the addition of Fairmont Gold, the lobby and hotel entrance. The property is owned by Hamilton Properties Limited, a Bermuda corporation, which is an indirect wholly-owned subsidiary of FHRREC.

The Fairmont Glitter Bay and The Fairmont Royal Pavilion

     These two hotels are located next to each other on a tropical estate that overlooks the Caribbean Sea, on a half-mile stretch of beach on Barbados’ west coast. The Fairmont Glitter Bay opened in 1981 and was followed by the opening of The Fairmont Royal Pavilion in 1987. The Fairmont Glitter Bay contains one, two and three-bedroom suites, some of which are privately owned. Resort amenities include tennis courts, a water sports center and fitness center. In May 2003, The Fairmont Royal Pavilion will be closed for six months for a complete renovation to the resorts’ guestrooms. In 2002, AAA presented the Four Diamond Award to The Fairmont Royal Pavilion. FHRREC’s interest in the two properties is held through its indirect wholly-owned subsidiary, CP Hotels (Barbados) Inc., a Barbados corporation.

Delta Vancouver Suites

     Delta Vancouver Suites is located in the waterfront district, close to the Vancouver Trade and Convention Centre. This all-suite hotel offers state-of-the-art technology in the heart of downtown Vancouver. FHRREC holds its 34.8% indirect interest in the property through Conference Plaza Hotel Limited Partnership, a British Columbia limited partnership.

Delta Vancouver Airport

     Located on nine acres of land on the banks of the Fraser River, the Delta Vancouver Airport is in close proximity to the Vancouver International Airport. FHR, through Delta, leases the land on which the property is situated. This lease expires in January 2009, and there are no further renewal rights.

Delta Sun Peaks Resort

     Opened in October 2002, Delta Sun Peaks Resort is located only 45 minutes away from the city of Kamloops in British Columbia’s beautiful Thompson Okanagan region. Delta Sun Peaks Resort is the largest, full-service hotel and conference centre in the quaint, European-style village of Sun Peaks at Tod Mountain. FHRREC holds a 26% interest in the property.

Fees and Services

     Under their management contracts, Fairmont and Delta generally oversee all aspects of the day-to-day operations of each property on behalf of the owner, including hiring, training, and supervising staff, maintaining sales and marketing efforts, providing accounting and budgeting functions, providing support for management information systems and applications and providing for the safekeeping, repair

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and maintenance of the physical assets. Fairmont and Delta perform these services within the guidelines contained in the annual operating and capital plans that are submitted to the owners of the properties during the last quarter of the preceding year for their review and approval. For these services, Fairmont and Delta typically earn a base fee calculated as a percentage of a property’s gross revenues and may earn an incentive fee based on certain operating results of the property.

     Fairmont and Delta provide centralized reservation services, marketing and sales programs and advertising services to properties under management. All of these services are provided by Fairmont and Delta on a cost recovery basis.

Owners’ Responsibilities

     Under Fairmont and Delta’s management contracts, the hotel owner generally is responsible for the funding of the hotel’s working capital requirements and capital expenditures. Fairmont and Delta annually prepare an operating plan and capital expenditure budget for the property owner to approve. All structural changes, major refurbishing programs and major repairs require the separate approval of a property owner prior to implementation by Fairmont or Delta. The property owner also employs the hotel staff and pays their salaries, including all benefits.

Capital Improvements and Investments

     FHR maintains the high quality of its properties through an annual maintenance program, which is funded by the owners of the properties. The annual maintenance program is based on a percentage of revenues and generally ranges from 4% to 6% of each property’s gross revenue. Other projects are undertaken in order to maximize profits. During 2002, approximately $84 million was spent on maintenance and improvements to the owned assets, the majority of which was spent on profit-enhancing projects.

Marketing and Guest Recognition Programs

     FHR has several e-commerce initiatives designed to assist in the optimization of asset performance, including a direct web-based hotel and activity booking system, a content management framework, sophisticated hotel search engines and marketing campaign management and reporting systems. Fairmont has also re-engineered its core systems to exploit the latest web-based technologies, which now operate over the Internet to any location in the world. Fairmont has built a digital infrastructure that interconnects its guestrooms, the employee base, the Internet and all the traditional travel distribution channels.

     As part of the initiatives outlined above, FHR’s existing third party web-based systems are being replaced with more sophisticated systems that will, among other things, enable guests to plan their Fairmont experience on-line. The new system includes a data warehouse which will capture the entire transaction history of guests, which will be matched with profiles that can be developed on-line. The resulting data can be leveraged to gain a larger share of guests’ spending and enhance loyalty to the brand. Guests will be able to view Fairmont’s facilities and book their rooms on-line, as well as arrange a variety of other activities both off property and at the destination, including spa appointments and golf tee times. This information will then become a part of a guest’s profile, making it possible to offer tailored packages to that guest at his or her next on-line session. Members of President’s Club, Fairmont’s guest recognition program, will have access to their own secure area of the web site where they can update their personal profiles. These enhanced profiles will then be communicated to personnel at the hotel who will “customize” the guest’s stay. In addition, this information will greatly enhance Fairmont’s ability to communicate with this very important target group, ensuring that Fairmont provides the services that

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these customers consider important. Fairmont currently has approximately 150,000 active President’s Club members. Delta Privilege, a guest recognition membership program designed for frequent business travelers, has approximately 66,000 active members.

Seasonality of Business

     FHR’s hotels are affected by normal recurring seasonal patterns. The Canadian and U.S. city center properties tend to experience a slowdown in demand during the December through March period. As a result, the majority of these properties typically incur a loss in the first quarter of each year. This negative impact on operations at the city center hotels is offset, to some degree, by increased travel to FHR’s warm weather and ski resorts in these months and may, in the future, be offset to a greater extent as FHR’s portfolio of resort properties increases.

Environmental Protection

     Environmental compliance programs are in place at all properties that FHR manages and owns. No significant issues were identified in any of these properties as a result of the 2002 environmental questionnaire completed by all the hotels.

     As part of the acquisition process of both the Princess Portfolio and Fairmont L.P., environmental assessments were reviewed for all hotels involved. Any removal or containment of hazardous materials in these hotels is being carried out during planned renovations of these properties. All of the properties purchased by Legacy are required by its Declaration of Trust to have environmental assessments.

     In addition to compliance with regulations, FHR is a leader in promoting environmentally friendly activities at its owned and managed hotels. In 1991, the Green Partnership program was launched which focused mainly on recycling. This program was extended in 1998 with the goal of including the industrial composting of organic waste, eco-friendly meeting options for guests, the donation of left-over food to food banks and used soaps and amenities to charities, or their return to the manufacturer for recycling. CP Green Tours were introduced through partnerships with local ecotourism operators.

     In March 1997, The Fairmont Château Whistler became FHR’s first golf course to earn the prestigious Audubon accreditation. In August 1999, The Fairmont Banff Springs also gained Audubon accreditation, being only the 15^th course in Canada and the 3^rd in Alberta to achieve this status. Fairmont Le Château Montebello and The Fairmont Jasper Park Lodge are the most recent members of the FHR family to achieve this prestigious title.

     In 2003, all FHR managed golf courses, including those in Bermuda and Mexico, will be working towards accreditation as wildlife sanctuaries through Audubon International.

Human Resources

     FHR currently employs or supervises more than 30,000 full-time and part-time employees. FHR encourages a strong service-based culture among employees with the goal of providing consistent, personalized service of an exceptional standard. Fairmont has developed a series of programs designed to select, train and motivate employees who will share its objective of ensuring that the expectations of guests are consistently met and exceeded. Delta has its own human resources training programs, which are similar to those at Fairmont.

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     Fairmont endeavors to ensure that it hires people that are most suited for the positions offered by requiring each candidate to undergo a screening process which has been developed by a well-known management consulting firm. Maclean’s magazine selected FHR for the 2003 edition of Canada’s “Top 100 Employers”. Delta’s dedication to being an employer of choice was recognized for the third consecutive year when The Globe and Mail’s respected Report on Business magazine named Delta one of the “Top 50 Companies To Work For” in Canada in 2002.

     Approximately 49% of the employees at FHR’s managed and owned hotels are members of collective bargaining units. These employees are represented by 22 unions, with a total of 52 bargaining units. The agreements with the various bargaining units have staggered expiry dates. In 2002, 15 Fairmont properties and six Delta hotels successfully negotiated new labor contracts while labor contracts at eight Fairmont hotels and five Delta properties expired.

Intellectual Property

     FHR believes that its brands are very important to its success. FHR has a significant number of tradenames, trademarks and service marks, including those relating to Fairmont and those acquired as a result of its purchase of the Delta and Princess portfolios. In addition, it is the owner of many Internet domain names related to its brands. FHR vigorously defends its brands and spends considerable time and resources in surveillance, registration, protection and prosecution of infringers. The “Canadian Pacific” trademark and its derivatives were transferred to Canadian Pacific Railway Company as part of the Arrangement, however FHR has secured a perpetual, royalty-free license for its continued use of these trademarks.

Insurance

     All hotels managed by FHR are insured against property damage, business interruption and liability at the expense of the owner of the hotel. Under these policies, FHR is also insured against loss of fee income in the event of a temporary business interruption arising from an insured peril at any of the properties that it manages. In addition, FHR obtains indemnities from the owners of the properties that it manages in respect of damages caused by acts, omissions and liabilities of the employees of the property or of FHR, other than damages resulting from certain actions of FHR and certain senior management personnel. FHR also maintains directors and officers liability insurance. FHR believes that its insurance coverage is adequate. However, if FHR were held liable for amounts exceeding the limits of its insurance coverage or for claims outside the scope of that coverage, its business, results of operations and financial conditions could be materially and adversely affected.

FHR’s Ownership Interests

     As at May 1, 2003, FHR had a beneficial interest in the following entities, which could be viewed as being material to the Corporation:

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ITEM 4: SELECTED CONSOLIDATED FINANCIAL INFORMATION

(Millions of dollars, except per share amounts)

     The following financial data should be read in conjunction with the consolidated financial statements and related notes thereto and Managements’ Discussion and Analysis as found in the Corporation’s Annual Report.

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Quarterly Information

     The following table sets out certain financial information for FHR on a consolidated basis for each of the quarters in 2002 and 2001.