1999 Annual Report - Four Seasons Hotels and Resorts

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HOTELS AND RESORTS FOUR SEASONS HOTELS AND RESORTS FOUR SEASONS HOTELS AND RESORTS FOUR SEASONS HOTELS AND RESORTS FOUR SEASONS HOTELS AND RESORTS Annual Information Form Management’s Discussion and Analysis (continued) (continued) Asian Asset Exposure As a result of the significant currency devaluations and continuing economic downturn in parts of Asia, the Corporation in 1998 reassessed the estimated recoverable amounts of its assets located in, or related to, Asia. These assets consist primarily of the Corporation’s investment in The Regent Hong Kong and its investments in management agreements related to Asia. Based on these revised estimates, the Corporation determined that certain of these assets were not recoverable from future cash flows. Accordingly, provisions for loss against these assets were recognized in 1998 (see note 2 to the consolidated financial statements). The Corporation performed a similar reassessment in 1999 and concluded that the book value of its remaining assets located in, or related to, Asia should be recoverable from future cash flows. However, these estimates are based on projections regarding future revenues of hotels located in Asia, which, in turn, are based on assumptions regarding future economic conditions in Asia. Should the underlying assumptions change, the estimated recoverable amounts would have to be adjusted accordingly, and the adjustments could be material. Seasonality Four Seasons’ hotels are affected by normally recurring seasonal patterns and, for most of the hotels, demand is lower in December through March than during the remainder of the year. The Corporation’s ownership operations are particularly affected by seasonal fluctuations, with lower revenue, operating profit and cash flow in the first and fourth quarters; ownership positions typically incur an operating loss in the first quarter of each year. Management operations also are somewhat seasonal in nature, as fee revenues are affected by the seasonality of hotel revenues and operating results. Urban hotels generally experience lower revenues and operating results in the first and fourth quarters thereby negatively impacting management revenues. However, this negative impact on management revenues is offset, to some degree, by increased travel to resorts in those months and may be offset to a greater extent as the portfolio of resort properties managed by Four Seasons increases. Intellectual Property In the highly competitive service industry in which Four Seasons operates, Four Seasons has a significant number of trade names, trademarks and service marks, and significant time and effort are spent each year on surveillance, registration and protection of trade names and service marks. The loss or infringement of any of Four Seasons’ trade names, trademarks and service marks could have a material adverse effect on Four Seasons. Risks Associated with Residence Club Business Four Seasons currently operates one Residence Club project, and is expanding its presence in the luxury segment of the interval and fractional ownership industry with two other projects currently under construction. The same risk factors affecting the luxury segment of the hotel industry, as more fully outlined above and in this “Operating Risks” section, also affect the interval and fractional ownership industry. In particular, “Lodging Industry Conditions,” “Competition,” “Dependence on Management Agreements,” “Risk Associated with Expansion, Growth and New Construction,” “Investments and Advances,” “Government Regulation,” “Political Risk,” “Insurance,” “Currency Exposure,” “Seasonality” and “Intellectual Property” also apply to the interval and fractional ownership industry. Accordingly, Four Seasons’ ability to successfully develop and sell interests in Residence Clubs that are built, and the various fees earned by Four Seasons from each Residence Club project, could be adversely and materially harmed by one or any combination of the above factors. Dependence on Key Employees The success of Four Seasons depends in part on its senior executives. In particular, senior management of Four Seasons is responsible for the development and maintenance of relationships with investors in the hotels and resorts that are managed by Four Seasons. The unanticipated departure of individuals responsible for those relationships could have a material and adverse effect for some period of time on relationships affecting properties that are, or that will be, managed by Four Seasons. F our Seasons Hotels Inc. fifty
Corporate Information Market for Securities The Limited Voting Shares are listed on the Toronto and New York stock exchanges. Dividend Policy The Board of Directors of FSHI has established a policy of paying a semi-annual dividend to holders of its shares. Since 1990 and until October 3, 1996, FSHI paid semi-annual cash dividends of $0.055 per Limited Voting Share and Variable Multiple Voting Share. Since October 3, 1996, the dividend entitlement in respect of the Variable Multiple Voting Shares has been reduced to 50%, on a per share basis, of the dividend entitlement on the Limited Voting Shares. The payment of dividends in the future is subject to the Corporation’s earnings and financial condition and such other factors as FSHI’s Board of Directors may deem relevant. There are no restrictions currently that prevent FSHI from continuing to pay a semi-annual dividend of $0.055 per Limited Voting Share. Directors and Officers The following table sets forth certain information regarding each of FSHI’s executive officers and directors: Name and Residence Position with FSHI Principal Occupation Isadore Sharp (1) Chairman, Chief Executive Chairman and Chief Executive Toronto, Ontario Officer and Director Officer, Four Seasons Hotels Limited Edmond M. Creed (1) Director Retired Executive Toronto, Ontario Frederick Eisen Director President and Chief Executive Officer, Toronto, Ontario The Eisen Corporation H. Roger Garland Vice Chairman and Director Vice Chairman, Toronto, Ontario Four Seasons Hotels Limited Nan-b de Gaspé Beaubien (1)(2)(3) Director President, Institute for Family Enterprise Montreal, Quebec and Vice Chairperson of Gasbeau Company Charles S. Henry (1)(3)(4) Director President, Hotel Capital Advisers, Inc. New York, New York Murray B. Koffler (3)(5) Director Partner, The Koffler Group Toronto, Ontario J. Robert S. Prichard (2)(3) Director President, University of Toronto Toronto, Ontario Lionel H. Schipper (1)(3)(5) Director President, Schipper Enterprises Inc. Toronto, Ontario Anthony Sharp Director Entrepreneur Toronto, Ontario Benjamin Swirsky (1)(5) Director Chairman and Chief Executive Officer, Toronto, Ontario ZCONNEXX Corporation Shuichiro Tamaki Director Advisor, Jowa Corporation Tokyo, Japan Simon M. Turner (4)(5) Director Principal, Hotel Capital Advisers, Inc. Rye, New York Douglas L. Ludwig Executive Vice President, Chief Financial Executive Vice President, Chief Financial Officer Toronto, Ontario Officer and Treasurer and Treasurer, Four Seasons Hotels Limited Wolf H. Hengst President and Chief Operations Officer President and Chief Operations Officer, Toronto, Ontario Four Seasons Hotels Limited Craig O. Reith Vice President Finance and Vice President Finance and Assistant Toronto, Ontario Assistant Treasurer Treasurer, Four Seasons Hotels Limited Kathleen Taylor President and Chief Corporate Officer President and Chief Corporate Officer, Toronto, Ontario Four Seasons Hotels Limited (1) Member of the Compensation and Organization Committee. (2) Elected by the holders of the Limited Voting Shares. (3) Member of the Corporate Governance Committee. (4) Nominee of Kingdom, which has the right pursuant to an agreement with Triples Holdings Limited and Isadore Sharp to elect two directors to the FSHI Board of Directors. (5) Member of the Audit Committee. HOTELS AND RESORTS FOUR SEASONS HOTELS AND RESORTS FOUR SEASONS HOTELS AND RESORTS FOUR SEASONS HOTELS AND RESORTS FOUR SEASONS HOTELS AND RESORTS F our Seasons Hotels Inc. fifty-one
Page 1 and 2: FOUR SEASONS HOTELS AND RESORTS FOU
Page 3 and 4: Table of Contents Message to Our Sh
Page 5 and 6: The fourth key decision was a low-r
Page 7 and 8: Kathleen Taylor President and Chief
Page 9 and 10: Barbara M. Talbott Executive Vice P
Page 11 and 12: Although Four Seasons stock has con
Page 13 and 14: 58 56 59 60 52 63 62 61 54 55 57 53
Page 15 and 16: As of March 1, 2000 Business of Fou
Page 17 and 18: Management Focus Four Seasons is pr
Page 19 and 20: RevPAR Statistics—Core Hotels (in
Page 21 and 22: Industry Awards Four Seasons has ga
Page 23 and 24: Approximate Approximate Hotel/Resor
Page 25 and 26: Expected Approximate Scheduled Capi
Page 27 and 28: Sales and Marketing Four Seasons is
Page 29 and 30: Intellectual Property In the highly
Page 31 and 32: (1) Consolidated revenues are compr
Page 33 and 34: Management’s Discussion and Analy
Page 35 and 36: Operational and Financial Review an
Page 37 and 38: Four Seasons Hotel Berlin In 1991 F
Page 39 and 40: On a US dollar basis, the Corporati
Page 41 and 42: Income Tax Expense The Corporation
Page 43 and 44: Net Earnings and Earnings per Share
Page 45 and 46: Fixed Asset Additions and Improveme
Page 47 and 48: Operating Risks The business of the
Page 49 and 50: Risk Associated with Expansion, Gro
Page 51: Political Risk Four Seasons current
Page 55 and 56: Additional information relating to
Page 57 and 58: Years ended December 31, 1999 and 1
Page 59 and 60: Consolidated Statements of Cash Pro
Page 61 and 62: Years ended December 31, 1999 and 1
Page 63 and 64: abandoned, any deferred charges are
Page 65 and 66: (a) The cash flow bond, which is du
Page 67 and 68: voting interest in these two compan
Page 69 and 70: 10. Long-term debt: 1999 1998 Unsec
Page 71 and 72: Unlimited Unlimited Unlimited Issue
Page 73 and 74: 13. Income taxes: Income tax expens
Page 75 and 76: espect to the financing. The Corpor
Page 77 and 78: Under its ownership operations segm
Page 79 and 80: management, including the appointme
Page 81 and 82: The Corporate Governance Committee
Page 83 and 84: Corporate Directory Corporate Offic

1999 Annual Report - Four Seasons Hotels and Resorts

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