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Fairmont Shareholders Approve Kingdom Hotels and Colony Capital Acquisition

Deal provides Fairmont with a significant footprint on the international stage. Hotel Interactive®'s Bettina Marks reports.

Friday, April 28, 2006
Bettina Marks
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Fairmont Shareholders Approve Kingdom Hotels and Colony Capital Acquisition

Fairmont Hotels & Resorts Inc. ("Fairmont" or the "Company today announced that the Ontario Superior Court of Justice has issued the final order approving the acquisition of all of Fairmont's outstanding common shares by a company (the "Purchaser") owned by affiliates of Kingdom Hotels International and Colony Capital.

Under the terms of the Arrangement, the Company's shareholders will receive US$45.00 in cash for each Fairmont common share.

According to CEO, William Fatt, "This deal gives Fairmont a global presence, while providing immediate and significant value for all of our shareholders."

The deal encountered some delay and negotiation when Fairmont first announced on April 14 that a group holding approximately US$145,000,000 of its US$270,000,000 principal amount 3.75% Convertible Senior Notes due 2023 planned to oppose the transaction at the April 20 court hearing. The note holders withdrew their opposition to the plan on April 18 when the Purchaser increased its offer to purchase all of the Notes by 25 basis points in what became known as the "Revised Offer."

"This is a defining moment for our company, "says CEO, Fatt. "The unification of the Fairmont and Raffles portfolios provides us with critical mass, something that would have taken each brand many years to acquire on their own. Given that neither Kingdom Hotels nor Colony Capital have the current resources in place to operate a global portfolio of this magnitude, both are looking to take advantage of Fairmont's infrastructure. Both parties fully endorse our business model, current approach to operations and our goal of growing the company. "

Fairmont is a leading owner/operator of luxury hotels and resorts. Fairmont's managed portfolio consists of 88 luxury and first-class properties with approximately 33,500 guestrooms in the United States, Canada, Mexico, Bermuda, Barbados, United Kingdom, Monaco, Kenya and the United Arab Emirates as well as two vacation ownership properties managed by Fairmont Heritage Place.

Fairmont owns Fairmont Hotels Inc., North America's largest luxury hotel management company, as measured by rooms under management, with 50 distinctive city center and resort hotels including The Fairmont San Francisco, The Fairmont Banff Springs and The Fairmont Scottsdale Princess.

Fairmont also owns Delta Hotels, Canada's largest first-class hotel management company, which manages and franchises 38 city center and resort properties in Canada. In addition to hotel management, Fairmont holds real estate interests in 21 properties and an approximate 24% investment interest in Legacy Hotels Real Estate Investment Trust, which owns 24 properties. Fairmont owns FHP Management Company LLC, a private residence club management company that operates Fairmont Heritage Place, a vacation ownership business.

HI: Fairmont was a strong brand before the merger. Why was this strategy the most optimum position for them to take?

FAIRMONT: We needed to continue growing the company in order for our strategy to work. Less than a decade ago, Fairmont was a domestic chain of seven iconic hotels in the United States. Since then, the brand has undergone a transformation into one of the key players in the luxury hotel market in North America, acquiring major brands such as Delta and Princess, and merging with Canadian Pacific Hotels in 1999. The deal by Kingdom and Colony will continue upon this path and provide us with a significant footprint on the international stage.

HI: Can you elaborate please on the exact short term and long term objectives of the merger? What exactly does Fairmont gain?

FAIRMONT: Our familiarity with the purchasers and their financial backgrounds present the company with a solid platform from which to continue to grow. From a cost standpoint, operating efficiencies will certainly be realized by bringing all of the assets under one umbrella. That said, our focus will not be on disrupting guest touch points, but on maximizing the bench strength and infrastructure available to us - behind the scenes areas such design and construction, technology services, finance and accounting, and legal. Savings in these areas will enable us to apportion more monies for external communication devices such as marketing and sales.

"The growth potential provided by this transaction and other synergies such as cross-marketing opportunities will enable us to expose our existing client base to new and exciting destinations with different cultures," says William Fatt.

Business strategies for these and other initiatives are in the formative stages.

Fairmont Hotels & Resorts open the doors to some of the world's most celebrated addresses. Fairmont is committed to growing its portfolio and will soon reflag five hotels in Kenya and anticipates the 2007 re-opening of New York's famed Plaza Hotel.

Future Fairmont Hotels & Resorts also include locations in Cairo, Turks & Caicos, Abu Dhabi and Dubai's Palm Islands.

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