STRONG INCREASE IN MANAGEMENT EARNINGS

    Total revenues of all hotels under management increased 22% to $724 million for the quarter ended June 30, 2000, as compared to the second quarter of 1999. Total revenues of all managed hotels increased 19.9% to $1.4 billion for the six months ended June 30, 2000, as compared to $1.1 billion for the comparable period in 1999. Management fee revenues increased 34.2% to $47.5 million for the quarter ended June 30, 2000, and 27% to $86.7 million for the six months ended June 30, 2000, as compared to the comparable periods in 1999.
    Four Seasons management earnings before other operating items for the second quarter of 2000 increased 47.5% to $31.9 million, as compared to $21.6 million in the second quarter of 1999. Management earnings before other operating items for the six months ended June 30, 2000, were $56.7 million, a 39.2% increase, as compared to $40.7 million for the same period in 1999.
    The growth in management earnings is attributable to a solid operating performance of the Company's Core Hotels [1] resulting in a significant improvement in incentive fees and to increases in management fees in recently opened properties. Royalty fees from the Four Seasons residence club projects in Aviara, California and Scottsdale, Arizona also contributed to management fee revenue growth in the quarter.
    General and administrative expenses increased approximately 13.3% in the second quarter of 2000, as compared to the same period in 1999. The largest component of these increased costs related to additional costs in the Company's residence club division. The profit margin of the Company's management business for the quarter ended June 30, 2000 was 67.2%, as compared to 61.2% for the same period in 1999, and 65.5% for the six months ended June 30, 2000, as compared to 59.7% for the same period in 1999.

OPERATING IMPROVEMENTS

    The US Core Hotels continued their solid operating performance in the second quarter of 2000, with improvements in RevPAR [2], on a US$ basis, of 13.3% and strong improvements in gross operating profits of 16.6%. For the first six months of the year, RevPAR of US Core Hotels, on a US$ basis, increased 12.4% and gross operating profits increased 18.0%, as compared to the same period in 1999.
    In the second quarter of 2000, Other North American Core Hotels [3] realized improvements in RevPAR, on a US$ basis, of 5.4%, and in gross operating profits of 11.9%. For the first six months of 2000, Other North American Core Hotels experienced an increase in RevPAR, on a US$ basis, of 4.3%, and a 9.4% increase in gross operating profits, as compared to the same period in 1999.
    Despite the weakening of the Euro during the second quarter, the European Core Hotels experienced an increase in RevPAR of 8.0%, on a US$ basis, for the second quarter of 2000 and a 16.9% increase in gross operating profits, as compared to the same period in 1999. For the six months ended June 30, 2000, RevPAR of the European Core Hotels, on a US$ basis, increased 9.6% and gross operating profits increased 22.8%, as compared to the same period in 1999.
    For the second quarter of 2000, RevPAR in the Asian Core Hotels, on a US$ basis, increased 15.8% and gross operating profits increased 39.1%, as compared to the second quarter of 1999. For the first six months of 2000, RevPAR for the Asian Core Hotels, on a US$ basis, increased 14.9% and gross operating profits increased 33.9%, as compared to the same period in 1999.

OWNERSHIP OPERATIONS

    Ownership earnings before other operating items were $3.7 million in the second quarter of 2000, as compared to $743,000 in the second quarter of 1999. This reflects strong operating results at The Pierre hotel in New York and improved results at the Four Seasons Hotel Vancouver.
    Although The Regent Hong Kong had sufficient operating earnings and cash reserves, the majority owner of that hotel did not declare a dividend for the second quarter of 2000. As such, no dividend was accrued by the Company from that hotel for the quarter. By comparison, the 1999 second quarter dividend from The Regent Hong Kong was $752,000.
    Ownership earnings before other operating items for the first six months of 2000 were $1.6 million, as compared to a loss of $4.1 million for the comparable period in 1999. In the third quarter of 2000, ownership earnings will be negatively affected by the hotel strike in Vancouver, which began July 1 and ended July 29, and affected a number of hotels in that market, including the Four Seasons Hotel Vancouver.

LOWER NET INTEREST COSTS

    Net interest income for the quarter ended June 30, 2000 was $765,000, as compared to net interest expense of $515,000 for the same period in 1999. For the six months ended June 30, 2000, net interest income was $1.5 million, as compared to net interest expense of $1.6 million for the same period in 1999. These improvements in net interest are the result of increased interest income from cash deposits and investments made in notes receivable in connection with certain new projects.

INCOME TAXES

    The Company's effective tax rate during the second quarter and six months ended June 30, 2000 was approximately 25%, as compared to approximately 2.5% and 3.2% for the respective periods in 1999. Income tax expense increased by $8.5 million in the second quarter of 2000, and $13.1 million for the six months ended June 30, 2000, as compared to the respective periods in 1999.
    The increase in the effective tax rate is due to the utilization in 1999 of the benefits of the unrecorded tax losses created by the write-down in hotel investment values in 1993 and 1995 and the implementation of the new Canadian income tax accounting standards (see note 1(a) to the consolidated financial statements.)

NEW UNIT GROWTH 

    Four Seasons is continuing to expand its international presence with several new projects. Over the past 18 months, new Four Seasons hotels and resorts have been opened in Las Vegas, Punta Mita, Mexico, Scottsdale, Canary Wharf, Paris and Cairo. Other Four Seasons hotels and resorts are presently preparing to open in Caracas, Dublin and Prague. As well, the re-opening of the Four Seasons Resort Nevis is scheduled for late November of this year, and the Company recently extended its agreement for The Regent Hotel Taipei for an additional ten years.

  
 
 
             SUMMARY OF HOTEL OPERATING DATA - CORE HOTELS(1)
 
                                     Six months ended
                                         June 30,
 (Unaudited)                         2000       1999     Variance
 ---------------------------------------------------------------------
 Worldwide
  No. of Properties                   39         39         --
  No. of Rooms                    11,355     11,355         --
  Occupancy(2)                      72.4%      69.2%       3.2%
  ADR(3)    - in US dollars         $286       $267        7.0%
            - in equivalent
              Canadian dollars      $418       $398        5.3%
  RevPAR(4) - in US                 $207       $185       12.1%
            - in equivalent
              Canadian dollars      $303       $275       10.2%
  Gross operating margin(5)         37.3%      34.9%       2.4%
 United States
  No. of Properties                   20         20         --
  No. of Rooms                     6,348      6,348         --
  Occupancy(2)                      77.3%      75.2%       2.1%
  ADR(3)    - in US dollars         $339       $310        9.4%
            - in equivalent
              Canadian dollars      $496       $461        7.6%
  RevPAR(4) - in US dollars         $262       $233       12.4%
            - in equivalent
              Canadian dollars      $383       $346       10.6%
  Gross operating margin(5)         37.6%      36.0%       1.6%
 Canada/Mexico/Caribbean
  No. of Properties                    3          3         --
  No. of Rooms                     1,004      1,004         --
  Occupancy(2)                      66.6%      66.0%       0.6%
  ADR(3)    - in US dollars         $179       $173        3.4%
            - in equivalent
              Canadian dollars      $261       $257        1.7%
  RevPAR(4) - in US dollars         $119       $114        4.3%
            - in equivalent
              Canadian dollars      $174       $170        2.6%
  Gross operating margin(5)         29.8%      29.7%       0.1%
 Asia/Pacific
  No. of Properties                   11         11         --
  No. of Rooms                     3,132      3,132         --
  Occupancy(2)                      63.4%      57.9%       5.5%
  ADR(3)    - in US dollars         $180       $172        5.0%
            - in equivalent
              Canadian dollars      $264       $256        3.2%
  RevPAR(4) - in US dollars         $114        $99       14.9%
            - in equivalent
              Canadian dollars      $167       $148       13.0%
  Gross operating margin(5)         36.8%      31.7%       5.1%
 Europe
  No. of Properties                    5          5         --
  No. of Rooms                       871        871         --
  Occupancy(2)                      75.6%      68.4%       7.2%
  ADR(3)    - in US dollars         $312       $315       (0.9%)
            - in equivalent
              Canadian dollars      $458       $470       (2.5%)
  RevPAR(4) - in US dollars         $236       $216        9.6%
            - in equivalent
              Canadian dollars      $346       $321        7.8%
  Gross Operating margin(5)         41.1%      35.9%       5.2%
 
 

    2 Occupancy percentage is defined as the total number of rooms occupied divided by the total number of rooms available.

    3 ADR is defined as average daily room rate per room occupied.

    4 RevPAR is defined as average room revenue per available room. RevPAR is a commonly used indicator of market performance for hotels and represents the combination of the average daily room rate and the average occupancy rate achieved during the period. RevPAR does not
include food and beverage or other ancillary revenues generated by a hotel.

    5 Gross operating margin represents gross operating profit as a percent of gross operating revenue.
 
 

CONCLUSION

    "Looking out through the remainder of 2000, we believe that we will continue to see solid, but more moderate operating improvements at the hotels under Four Seasons management. We also expect continued fee growth from our residence clubs and from new and recently opened hotels," said Douglas Ludwig, Executive Vice President and Chief Financial Officer. "Despite the significant increase in our tax costs in fiscal 2000, our industry leading RevPAR growth, combined with strong new unit growth, has allowed us to exceed our growth target for the first half of this year."

    Four Seasons Hotels and Resorts is the world's largest operator of luxury hotels. The Company currently manages 48 hotels and resorts in 20 countries and has an additional 19 properties in an additional 12 countries under construction or in advanced stages of development.

    All dollar amounts referred to in this press release are Canadian dollars unless otherwise noted.

    Certain statements contained in this press release that do not relate to historical information are "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995 and are thus prospective.