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 seven landmark Fairmont Hotels, which are located in US gateway cities and include such famous 
properties as The Fairmont in San Francisco and The Plaza in New York, will be combined with 28 hotels from the Canadian Pacific Hotels portfolio which includes the famous Chateau Frontenac, The Banff Springs and Chateau Lake Louise. The new management company will also include the Canadian Pacific-owned Princess resorts in Scottsdale AZ, Bermuda, Barbados and Acapulco. The deal is expected to close mid-year. 

"We have agreed, in principle, to a business combination with Canadian Pacific that not only expands our portfolio of luxury properties nearly five fold, but also puts Fairmont into the resort category," said Lewis Wolff, Chairman of Fairmont Hotels and Co-founder and Chairman of Maritz, Wolff  Co. "And all this is only the beginning of the Fairmont brand's expansion." 

"We welcome the enormous opportunities that this venture with Canadian Pacific presents," said Edward E. Mace, President and Chief Executive Officer of Fairmont Hotel Management L.P. "This is a win-win for everyone - our guests, employees, and property owners. Our guests will enjoy a much broader selection of Fairmont luxury hotels and resorts to choose from, while our employees and property owners will benefit from being part of a larger hospitality operation." 

According to Bill Fatt, Chairman and Chief Executive Officer of Canadian Pacific Hotels, the Fairmont properties 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 Royal York or the Hamilton Princess. We anticipate that guests who are used to the Fairmont style of service and accommodations will be delighted to discover our Canadian hotels or our warm weather resorts -- 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." 

CPH will hold a 67% interest in Fairmont, while Kingdom Hotels (USA) Ltd. and Maritz Wolff  Co. will each have a 16.5% interest. The owners of Fairmont L.P. will contribute the management contracts of their properties and the Fairmont brand name, and CPH will contribute the management contracts of 28 hotels. Real estate ownership of the properties will not change. 

"This is wonderful news for the Fairmont brand," said HRH Prince Alwaleed bin Talal bin Abdulaziz Alsaud, Chairman of Kingdom Hotels (USA) Ltd. "The international nature of this agreement allows us to draw customers from across North America and results in a world class collection of resorts and city hotels in five countries - a marvelous step forward for Fairmont!" 

As a result of this transaction, key executives from both entities will assume new titles and roles. William R. Fatt, Chairman and CEO of CPH will assume the same positions at Fairmont Hotels Resorts. Chris J. Cahill, current President and COO of CPH will serve as President and COO of Fairmont Hotels  Resorts, reporting to Mr. Fatt, and will have direct responsibility for Canada and the Caribbean. Edward E. Mace will continue in his current role as President of Fairmont Hotels  Resorts in the United States and additionally Mexico and will also report to Mr. Fatt. Fairmont Hotels Resorts' corporate headquarters will be based in Toronto, while the 
U.S. head office will remain in San Francisco. 

Mr. Mace points out that, much like Fairmont, CPH has been pursuing strategic growth opportunities for the past year. In the second quarter of 1998 CPH strengthened its Canadian presence with the purchase of Delta Hotels  Resorts (Delta), a full service, first class hotel management company, which doubled its hotels under management and provided a platform for growth in 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 had revenues of $420 million 1998. The Fairmont Hotels, with 4,263 rooms and 4,500 employees, are located in Boston, Chicago, Dallas, New Orleans, New York, San Francisco and San Jose. Fairmont's current partners are a Maritz Wolff fund and Kingdom Hotels (USA). 
Kingdom Hotels (USA) is affiliated with HRH Prince Al Waleed, a well-known investor who has significant investments in Citigroup, Four Seasons Hotels, Disneyland Paris and various real estate assets. Maritz Wolff 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 1998 revenues of $690 million. CPH has approximately 25,000 rooms at 65 hotels and 21,500 employees across Canada, the United States, Mexico, Bermuda, Barbados and Asia. 

Fairmont currently operates seven luxury hotels in Boston, Chicago, Dallas, New Orleans, The Plaza Hotel in New York, San Francisco and San Jose/Silicon Valley. More information about Fairmont can be found at www.fairmont.com.