|CALGARY - April 19, 1999 - Canadian Pacific Limited ("Canadian
Pacific"), and its wholly-owned subsidiary, Canadian Pacific Hotels &
Resorts Inc. ("CPH") today announced that CPH has entered into an agreement
in principle with Kingdom Hotels (USA) Ltd. and Maritz Wolff & Co.,
the owners of Fairmont Hotel Management L.P. ("Fairmont L.P.") to create
a new hotel management company to be called Fairmont Hotels and Resorts
The transaction will combine the management of two prestigious hotel groups and create a collection of luxury hotels across North America, Mexico and the Caribbean. The existing Canadian Pacific Hotels portfolio, including the recently acquired Princess Hotels, will be combined with seven landmark Fairmont Hotels which are located in US gateway cities and include such famous properties as The Plaza in New York and The Fairmont in San Francisco.
CPH will hold a 67% interest in Fairmont, while Kingdom Hotels (USA) Ltd. and Maritz Wolff & Co. will each have a 16.5% interest. CPH will contribute management contracts for 28 hotels to the new company and Fairmont L.P. will contribute the management contracts of their properties as well as the Fairmont brand name. Real estate ownership of the properties will not be affected. The transaction is expected to close by mid year.
"This is an important step in the continuing growth of Canadian Pacific Hotels. Our hotel strategy is to focus principally on hotel management, strengthen brand recognition and expand our reach into international markets. With today's transaction we are making progress on all three fronts," said David O'Brien, Chairman, President and Chief Executive Officer of Canadian Pacific. "While the Canadian Pacific Hotels name is strong in Canada, having a well known US retail brand and landmark hotels in key US cities will significantly enhance our ability to grow in North America and beyond."
CPH has been pursuing strategic growth opportunities for the past year. In the second quarter of 1998 the company strengthened its Canadian presence with the purchase of Delta Hotels & Resorts ("Delta"), a first class, full service hotel management company, doubling the number of hotels under management and gaining entry in to a new market segment. In August 1998 CPH purchased the seven warm weather resort properties of Princess Hotels, expanding its network beyond Canada to the US, Mexico, Bermuda and the Caribbean.
Fairmont Hotels will be the global brand used by the group to grow internationally, and the Canadian Pacific Hotels name will remain as a local brand within Canada. All hotels in the Fairmont group, including such icons as the Scottsdale Princess, the Chateau Lake Louise or the Copley Plaza, will offer a high degree of luxury, exemplary service and standardized operations. Six of the existing CPH hotels will be moved to Delta, thereby enhancing the company's full service brand while ensuring product consistency.
According to Bill Fatt, Chairman and Chief Executive Officer of Canadian Pacific Hotels, the Fairmont Hotels provide an excellent fit with the company's existing portfolio. "We are proud to link icon hotels like The Plaza in New York with our own historic properties such as the Banff Springs or the Chateau Frontenac. We anticipate that guests who are used to the Fairmont style of service and accommodations will be delighted to discover our Canadian hotels, and vice versa. Marketing and sales efforts will be facilitated by the fact that our hotels have so much in common in terms of customer base and culture."
Upon completion of the transaction, CPH will have four principle areas of activity: a 67% interest in Fairmont; 100% ownership of Delta; ownership of the 18 existing properties (5 are partially owned) of CPH and a 34% interest in Legacy Hotels, a hotel real estate investment trust which owns 14 city-center hotel properties across Canada.
In 1998, Fairmont L.P. had revenues under management of $630 million (U.S.$420 million). The management contracts to be contributed by CPH represented revenues under management of $1,036 million (U.S.$690 million). Total revenues under management for Fairmont are therefore anticipated to be in excess of $1.66 billion (U.S.$1.11 billion).
The Fairmont Hotels, with 4,500 employees, are located in Boston, Chicago, Dallas, New Orleans, New York, San Francisco and San Jose. Fairmont L.P's current shareholders are Maritz Wolff & Co. and Kingdom Hotels (USA) Ltd. Kingdom Hotels (USA) Ltd. is the investment company of HRH Prince Alwaleed bin Talal bin Abdulaziz Alsaud. Prince Alwaleed is a well-known investor who has significant investments in Citigroup, Four Seasons Hotels, Disneyland Paris and various real estate assets. Maritz Wolff & Co. is a hotel investment partnership that owns several exclusive hotels under various brands.
Based in Toronto, CPH is Canada's largest owner-operator of full service hotels, with approximately 25,000 rooms at 65 hotels and 21,500 employees across Canada, the United States, Mexico, Bermuda, Barbados and Asia. Following the close of the transaction, these figures will increase to 29,400 rooms, 73 hotels and 26,400 employees. A full listing of CPH properties follows at the end of this document.
Calgary-based Canadian Pacific is a diversified operating company active in transportation, energy and hotels. The Canadian Pacific group of companies includes Canadian Pacific Railway, CP Ships, PanCanadian Petroleum, Fording and Canadian Pacific Hotels.
Canadian Pacific shares are listed on the Toronto, Montreal, Alberta,
Vancouver and New York stock exchanges under the symbol "CP".
|Also See:||Maritz, Wolff Co. Reaches Agreement to Acquire 50% Stake in Fairmont Hotels / March 1998|
|Rosewood Hotels & Resorts and Maritz Wolff & Co., Joint Venture Takes Ownership of Little Dix Bay / Aug 1998|