T EAM S YNERGOS F OUR S EASONS 1 Economic Outlook ® Four Seasons and the Hospitality Industry Team...

TTEAM EAM SSYNERGOS YNERGOS FFOUR OUR SSEASONSEASONS1

Economic OutlookEconomic Outlook®®

Four Seasons and the Four Seasons and the Hospitality IndustryHospitality Industry

Team SynergosTeam SynergosPresentsPresents

March 3, 2006


AgendaAgenda

• IntroductionsIntroductions

• Hospitality Industry AnalysisHospitality Industry Analysis

• Firm AnalysisFirm Analysis

• Forecasts, Projections & RecommendationsForecasts, Projections & Recommendations

• Economic EnvironmentEconomic Environment

• Macro SummaryMacro Summary


Hospitality Hospitality

Industry Industry

AnalysisAnalysis


U.S. U.S. hotel industryhotel industry consists of about 48,000 companies consists of about 48,000 companies with combined annual revenue of $90 billion.with combined annual revenue of $90 billion.

Hospitality IndustryHospitality Industry

Lodging OperationsLodging Operations Travel/TourismTravel/TourismFood/Beverage Service

Food/Beverage Service

MotelsMotels

HotelsHotels

ResortsResorts

Motor HotelsMotor Hotels

CampsCamps

Luxury HotelsFour Seasons


RestaurantsRestaurants

CateringCatering

Bars/TavernsBars/Taverns

VendingVending

Retail StoresRetail Stores

Recreation SitesRecreation Sites

TransportationTransportation

Travel AgenciesTravel Agencies

Hospitality IndustryHospitality Industry

Lodging OperationsLodging Operations Travel/TourismTravel/TourismFood/Beverage Service

Food/Beverage Service

MotelsMotels

HotelsHotels

ResortsResorts

Motor HotelsMotor Hotels

CampsCamps



RestaurantsRestaurants

CateringCatering

Bars/TavernsBars/Taverns

VendingVending

Retail StoresRetail Stores

Recreation SitesRecreation SitesRecreation SitesRecreation Sites

TransportationTransportationTransportationTransportation

Travel AgenciesTravel AgenciesTravel AgenciesTravel Agencies

4


The Hospitality IndustryThe Hospitality Industry

Hospitality Industry

(includes lodging operations, food/beverage service, and travel/tourism)

Luxury LodgingSegment

5 Basic Types of Hotels

commercial, resort, residential, extended-stay, and casino


Market StructureMarket Structure

32%

14%10%

4%

9%

31%

Suburban

Highway

Urban

Airport

Resort

Small Metro/Town

Hotel Property Locations

30%

9%2% 1%

58%

Under 75 rooms

75–149 rooms

150–299 rooms

300–500 rooms

Over 500 rooms 503478,561

Types of Rooms

17%

33%30%

18%2%

Under $30

$30–$44.99

$45–$59.99

$60–$85

Over $85

Room Rates

Hotel Base: 48,000

Source: U.S. Department of Commerce, International Trade Administration, Office of Travel & Tourism Industries


Distribution of Lodging Customer Distribution of Lodging Customer Base Base

Year Biz Travel Leisure Travel

Age/% of Total

Average Income (HH) in USD

Average Number of Nights

2004 50% 50% 35-54/52% 72,600 => 3 (37%) Biz

=> 3 (27%) Leisure

2003 52% 48% 35-54/53% 82,800 => 3 (36%) Biz

=> 3 (27%) Leisure

2002 54% 46% 35-54/54% 81,600 => 3 (33%) Biz

=> 3 (27%) Leisure

2001 57% 43% 35-54/53% 69,147 => 3 (33%) Biz

=> 3 (26%) Leisure

Source: AHLA, 2004

Leisure travel has increased and business travel Leisure travel has increased and business travel has decreased as a percent of travelhas decreased as a percent of travel


Lodging Industry Spending (as % of Real Lodging Industry Spending (as % of Real GDP)GDP)

0.9500%

1.0000%

1.0500%

1.1000%

1.1500%

% C

han

ge

2000 2001 2002 2003 2004 2005

%Change in Lodging Spending (as % of GDP)

% of GDP

Impact of World Events (such as 9/11, SARs), Tech Bubble Impact of World Events (such as 9/11, SARs), Tech Bubble Burst, Travel Anxiety, Tightening of Security, Visa Burst, Travel Anxiety, Tightening of Security, Visa

RestrictionsRestrictions Source from: Bureau of Economics, 2005


Expense Structure of the Lodging Expense Structure of the Lodging IndustryIndustry

36%

9%11%

23%

21%

Salaries and Wages

Employee Benefits

Advertising

Selling

Other

Lodging Expense Composition

Source from: PKF Hospitality Research

Labor comprises 45% of the lodging industry annual expense.


Industry Expense ChallengesIndustry Expense Challenges

Water Heating 40.3%Lighting 18.2%Space Heating 17.7%Cooling 6.2%Cooking 5.2%Office Equipment 3.0%Refrigeration 1.7%Ventilation 1.3%Other 6.4%

Source: U.S. Environmental Protection Agency's Star Buildings Partnership

Hotel Energy Consumption Hotel Energy Usage Breakdown as a % of an an average Hotel's Budget


LuxurySegment Analysis

11


Market Profile – Demographics & Market Profile – Demographics & TastesTastes

KEY ATTITUDE % AGREELuxury is good 95%I have a long list of places I want to travel 85%Even when the economy bad, I will spend on luxuries 85%

KEY ATTITUDE % AGREELuxury is good 95%I have a long list of places I want to travel 85%Even when the economy bad, I will spend on luxuries 85%

KEY FACTORS IN CHOOSING A HOTELSCORE

(OUT OF 10)

Impeccable service 9.5Is welcoming 9.4Consistent in providing service that exceeds my needs 9.4

KEY FACTORS IN CHOOSING A HOTELSCORE

(OUT OF 10)

Impeccable service 9.5Is welcoming 9.4Consistent in providing service that exceeds my needs 9.4

Source: Cornell University

Average Age 43

Average Annual HH Income 440,000$

Average Net Worth 3,400,000$

Average Age 43

Average Annual HH Income 440,000$

Average Net Worth 3,400,000$

Gender

60%

40%

Male Female

12


Major Players in Luxury Segment Major Players in Luxury Segment

• Four Seasons Le Merdien• Ritz-Carlton The Peninsula• Fairmont Loews• Starwood St. Regis

Top players comprise 17% of total hotel market share

Source from: Urban Land Institute Survey, 2004


Luxury segment enjoys higher profit Luxury segment enjoys higher profit marginsmargins

While profits margins have shrunk from 01 to 03, While profits margins have shrunk from 01 to 03, there was a rebound in 2004.there was a rebound in 2004.

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

2001 2002 2003 2004Four Seasons Hilton Starwood Fairmont Hotel Industry

GO

P M

arg

ins

Source from: Four Seasons Investor Relations14


Willkommen

Willkommen Akwaba

Mingalaba

Beinv'nu

Maliu mai

Ukwemukela

WelcomWelcom

e to e to

Four Four

SeasonsSeasons


Four Seasons Mission and Overall Four Seasons Mission and Overall GoalGoal

TTEAM EAM SSYNERGOS YNERGOS FFOUR OUR SSEASONSEASONSSource from: Four Seasons

16




17

Highest Employee Satisfaction

Low Turnover




18

Value of the Brand

Global Presence

Operations Expertise




19

Industry Leading Margins

Smart Investments




20

Selection of Property Sites

Preferred Partner




21

Significant Growth

Leverage Expertise




22

The Golden Rule


Business Model: Management vs. Business Model: Management vs. OwnershipOwnership

2004 EBITDA Distribution9%

91%Management Ownership

1992 EBITDA Distribution

68%

32%

Management Ownership

Management allows lower

capital expenses.

1990 EBITDA Distribution

39%

61%

Management Ownership

TTEAM EAM SSYNERGOS YNERGOS FFOUR OUR SSEASONSEASONSSource from: UBS Investment Research, 200623


Firm Analysis - Corporate Expenses Firm Analysis - Corporate Expenses

Increase in corporate expenses to support new hotel growth and expansion - mainly staffing.

0

10

20

30

40

Mil

lio

ns

US

$

2001 2002 2003 2004

Corporate Expense in US $

TTEAM EAM SSYNERGOS YNERGOS FFOUR OUR SSEASONSEASONSSource from: Cornell University – Four Seasons Analysis

Four Seasons Corporate Expense ($US)

24


Brand Strength and StrategiesBrand Strength and Strategies

• Four Seasons Hotels and Resorts ranks

highest in overall guest satisfaction

• Company Values

– Employees focus on customer service

– The Golden Rule

• Strategic Partnership with Investors

• Marketing Strategy

– Outperformed all competitors – highest RevPAR

TTEAM EAM SSYNERGOS YNERGOS FFOUR OUR SSEASONSEASONS26 TTEAM EAM SSYNERGOSYNERGOS

ForecastingForecasting

Projections Projections

RecommendatioRecommendatio

nsns26


ForecastingForecasting


GDP ForecastGDP Forecast

0

2

4

6

8

10

12

14

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006E

2007E

2008E

Year

GD

P (

Tri

llio

ns)

0.0%0.5%

1.0%1.5%2.0%2.5%

3.0%3.5%4.0%

4.5%5.0%

GD

P G

row

th

GDP (Trillions) Growth Rate

TTEAM EAM SSYNERGOS YNERGOS FFOUR OUR SSEASONSEASONSSource from: Economic Forecast of the Nation; Dr. Rajeev Rhawan28

Slowing GDP

Less business income for the business traveler and slowing demand among business travelers for luxury hotels


Hotel Industry SupplyHotel Industry Supply

-10%

-5%

0%

5%

10%

15%

2000 2001 2002 2003 2004 2005E 2006E 2007E

US Lodging Luxury Upper UpscaleUpscale Midscale Economy

US. Hotel Supply Forecast

Source of segment data: PriceWaterhouse Coopers (December 2005)

Supply slows in alignment with GDP

Growth trends align with rest of segment.

Remains higher than industry due to inelasticity of price


Hotel Industry DemandHotel Industry Demand

Source of segment data: PriceWaterhouse Coopers (December 2005)

Occupancy Forecast by SegmentUS Hotel Industry

50%

55%

60%

65%

70%

75%

2000 2001 2002 2003 2004 2005E 2006E 2007E

Year

Oc

cu

pa

nc

y %

Upper Upscale Upscale Luxury US Lodging Midscale Economy



Demand Forecast of Hotel IndustryDemand Forecast of Hotel Industry

Source of segment data: PriceWaterhouse Coopers (December 2005)Source of Four Seasons: 2003 and 2004 Four Seasons Annual Reports

Revenue per Average Room (RevPAR) by SegmentUS Hotel Industry

$0

$50

$100

$150

$200

$250

$300

2000 2001 2002 2003 2004 2005E 2006E 2007EYear

Rev

PA

R

Upper Upscale Upscale Luxury US LodgingMidscale Economy Four Seasons



Expansion OpportunitiesExpansion Opportunities

*Source: Four Seasons Investor Relations

TTEAM EAM SSYNERGOS YNERGOS FFOUR OUR SSEASONSEASONS

Recommended Expansion

32

TTEAM EAM SSYNERGOS YNERGOS FFOUR OUR SSEASONSEASONS33 TTEAM EAM SSYNERGOSYNERGOS

Macro SummaryMacro Summary

33


Factors Influencing Macro Economic Factors Influencing Macro Economic ImpactsImpacts

Source: PKF Hospitality Research

OIL PricesTerrorism


Employment Growth RateEmployment Growth Rate

Source of segment data: PriceWaterhouse Coopers (December 2005) TTEAM EAM SSYNERGOS YNERGOS FFOUR OUR SSEASONSEASONS

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

1998 1999 2000 2001 2002 2003 2004 2005 2006 E 2007 E 2008 E

Year

Pe

rce

nt

Gro

wth

Ra

te

US Employment Growth Rate Leisure & Hospitality Growth Rate

35

Employment in hospitality follows trend of the overall employment growth rate but remains above rate


US Dollar to World CurrencyUS Dollar to World Currency1 US$ Is Worth

1 USD, $1.35

1 USD, $2.13

1 USD, $0.57

1 USD, $1.15

1 USD, $8.04

1 USD, $6.28

1 USD, $0.84

1 USD, $7.76

1 USD, $44.35

1 USD, $116.87

1 USD, $3.72

1 USD, $10.48

1 USD, $1.51

1 USD, $6.77

1 USD, $1.62

1 USD, $6.12

1 USD, $102.37

1 USD, $7.92

1 USD, $1.32

1 USD, $32.48

1 USD, $39.36

Australian Dollar

Brazilian Real

British Pound

Canadian Dollar

Chinese Yuan

Danish Krone

Euro

Hong Kong Dollar

Indian Rupee

Japanese Yen

Malaysian Ringgit

Mexican Peso

New Zealand Dollar

Norwegian Kroner

Singapore Dollar

South African Rand

Sri Lanka Rupee

Swedish Krona

Swiss Franc

Taiwan Dollar

Thai Baht

1 USD

36

If dollar weakens, business travel could decrease affecting international

demand


US Dollar to World CurrencyUS Dollar to World Currency

37


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T EAM S YNERGOS F OUR S EASONS 1 Economic Outlook ® Four Seasons and the Hospitality Industry Team...

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