The following is the 2004 projected income statement for Fairmont Hotel.

2004 Fairmont Hotel Projected Income Statement Operating Incomes Net Revenue Cost of Sales Payroll Other Income/Loss Rooms $ 20,100,000.00 $ 3,015,000.00 $ 1,005,000.00 $ 16,080,000.00 Food and Beverage $ 6,000,000.00 $ 2,500,000.00 $ 1,920,000.00 $ 580,000.00 $ 1,000,000.00 Telephone $ 800,000.00 $ 700,000.00 $ 300,000.00 $ (200,000.00) Rental $ 1,000,000.00 $ 1,000,000.00 Total Revenue $ 27,900,000.00 $ 3,200,000.00 $ 5,235,000.00 $ 1,585,000.00 $ 17,880,000.00 Undistributed Operating Expenses

Marketing $ 2,000,000.00 $ 2,000,000.00 Admin & General $ 4,000,000.00 $ 4,000,000.00 Property & Operation

Maintenance $ 2,000,000.00 $ 2,000,000.00

Electric and Water $ 2,000,000.00 $ 2,000,000.00 Total Undistributed

Operating Expenses $ 10,000,000.00

Fixed Expenses Mortgage $ 1,000,000.00 $ 1,000,000.00 Property Taxes $ 1,500,000.00 $ 1,500,000.00 Insurance $ 2,000,000.00 $ 2,000,000.00 Interest $ 1,500,000.00 $ 1,500,000.00 Depreciation $ 750,000.00 $ 750,000.00 Total Fixed Expenses $ 6,750,000.00 Income Before Income Taxes

$ 1,130,000.00

Tax 25% $ 282,500.00 Net Income $ 1,130,000.00

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Based on the new calculations, the projected income statement for Fairmont Hotel is shown below (for calculations please see the attached doc).

2005 Fairmont Hotel Projected Income Statement Operating Incomes Net Revenue Cost of Sales Payroll Other Income/Loss Rooms $ 24,190,816.65 $ 3,628,622.50 $ 1,209,540.83 $ 19,352,653.32 Food and Beverage $ 6,000,000.00 $ 2,625,000.00 $ 2,016,000.00 $ 609,000.00 $ 750,000.00 Telephone $ 800,000.00 $ 700,000.00 $ 300,000.00 $ (200,000.00) Rental $ 1,000,000.00 $ 1,000,000.00 Total Revenue $ 31,990,816.65 $ 3,325,000.00 $ 5,944,622.50 $ 1,818,540.83 $ 20,902,653.32 Undistributed Operating Expenses

Marketing $ 2,300,000.00 $ 2,300,000.00 Admin & General $ 4,000,000.00 $ 4,000,000.00 Property & Operation

Maintenance $ 2,000,000.00 $ 2,000,000.00

Electric and Water $ 2,000,000.00 $ 2,000,000.00 Total Undistributed Operating

Expenses $ 10,300,000.00

Fixed Expenses Mortgage $ 1,250,000.00 $ 1,250,000.00 Property Taxes $ 1,500,000.00 $ 1,500,000.00 Insurance $ 2,000,000.00 $ 2,000,000.00 Interest $ 1,824,392.00 $ 1,824,392.00 Depreciation $ 750,000.00 $ 750,000.00 Total Fixed Expenses $ 7,324,392.00 Income Before Income Taxes

$ 3,278,261.32

Tax 25% $ 819,565.33 Net Income $ 3,278,261.32

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In order to show the difference in revenue, I have generated a comparative analysis of Fairmont Hotel for the years of 2004 and 2005.

Comparative Projected Income Statement Fairmont Hotel

2004 Income/Loss 2005 Income/Loss

Amount PercentageOperating Incomes Rooms $ 16,080,000.00 $ 19,352,653.32 $ 3,272,653.32 20.4% Food and Beverage $ 1,000,000.00 $ 750,000.00 $ (250,000.00) -25.0% Telephone $ (200,000.00) $ (200,000.00) $ - 0.0% Rental $ 1,000,000.00 $ 1,000,000.00 $ - 0.0% Total Revenue $ 17,880,000.00 $ 20,902,653.32 $ 3,022,653.32 16.9%

Undistributed Operating Expenses

Marketing $ 2,000,000.00 $ 2,300,000.00 $ 300,000.00 15.0% Admin & General $ 4,000,000.00 $ 4,000,000.00 $ - 0.0% Property & Operation

Maintenance $ 2,000,000.00 $ 2,000,000.00 $ - 0.0%

Electric and Water $ 2,000,000.00 $ 2,000,000.00 $ - 0.0% Total Undistributed Operating

Expenses $ 10,000,000.00 $ 10,300,000.00 $ 300,000.00 3.0%

Fixed Expenses Mortgage $ 1,000,000.00 $ 1,250,000.00 $ 250,000.00 25.0% Property Taxes $ 1,500,000.00 $ 1,500,000.00 $ - 0.0% Insurance $ 2,000,000.00 $ 2,000,000.00 $ - 0.0% Interest $ 1,500,000.00 $ 1,824,392.00 $ 324,392.00 21.6% Depreciation $ 750,000.00 $ 750,000.00 $ - 0.0% Total Fixed Expenses $ 6,750,000.00 $ 7,324,392.00 $ 574,392.00 8.5%Income Before Income Taxes

$ 1,130,000.00 $ 3,278,261.32 $ 2,148,261.32 190.1%

Tax 25% $ 282,500.00 $ 819,565.33 $ 537,065.33 190.1%Net Income $ 1,130,000.00 $ 3,278,261.32 $ 2,148,261.32 190.1%

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Comparative Projected Income Statement Fairmont Hotel

2004 Income/Loss 2005 Income/Loss

Projections for Future Years

Amount Percentage 2006 2007 2008

Operating Incomes

Rooms $ 16,080,000.00 $ 19,352,653.32 $ 3,272,653.32 20.4% $ 19,352,653.32 $ 19,352,653.32 $ 19,352,653.32

Food and Beverage $ 1,000,000.00 $ 750,000.00 $ (250,000.00) -25.0% $ 750,000.00 $ 750,000.00 $ 750,000.00

Telephone $ (200,000.00) $ (200,000.00) $ - 0.0% $ (200,000.00) $ (200,000.00) $ (200,000.00)

Rental $ 1,000,000.00 $ 1,000,000.00 $ - 0.0% $ 1,000,000.00 $ 1,000,000.00 $ 1,000,000.00

Total Revenue $ 17,880,000.00 $ 20,902,653.32 $ 3,022,653.32 16.9% $ 20,902,653.32 $ 20,902,653.32 $ 20,902,653.32

Undistributed Operating Expenses

Marketing $ 2,000,000.00 $ 2,300,000.00 $ 300,000.00 15.0% $ 2,600,000.00 $ 2,900,000.00 $ 3,200,000.00

Admin & General $ 4,000,000.00 $ 4,000,000.00 $ - 0.0% $ 4,000,000.00 $ 4,000,000.00 $ 4,000,000.00

Property & Operation Maintenance

$ 2,000,000.00 $ 2,000,000.00 $ - 0.0% $ 2,000,000.00 $ 2,000,000.00 $ 2,000,000.00

Electric and Water $ 2,000,000.00 $ 2,000,000.00 $ - 0.0% $ 2,000,000.00 $ 2,000,000.00 $ 2,000,000.00

Total Undistributed Operating Expenses

$ 10,000,000.00 $ 10,300,000.00 $ 300,000.00 3.0% $ 10,600,000.00 $ 10,900,000.00 $ 11,200,000.00

Fixed Expenses

Mortgage $ 1,000,000.00 $ 1,250,000.00 $ 250,000.00 25.0% $ 1,500,000.00 $ 1,750,000.00 $ 2,000,000.00

Property Taxes $ 1,500,000.00 $ 1,500,000.00 $ - 0.0% $ 1,500,000.00 $ 1,500,000.00 $ 1,500,000.00

Insurance $ 2,000,000.00 $ 2,000,000.00 $ - 0.0% $ 2,000,000.00 $ 2,000,000.00 $ 2,000,000.00

Interest $ 1,500,000.00 $ 1,824,392.00 $ 324,392.00 21.6% $ 2,148,784.00 $ 2,473,176.00 $ 2,797,568.00

Depreciation $ 750,000.00 $ 750,000.00 $ - 0.0% $ 750,000.00 $ 750,000.00 $ 750,000.00

Total Fixed Expenses

$ 6,750,000.00 $ 7,324,392.00 $ 574,392.00 8.5% $ 7,898,784.00 $ 8,473,176.00 $ 9,047,568.00

Income Before Income Taxes

$ 1,130,000.00 $ 3,278,261.32 $ 2,148,261.32 190.1% $ 2,403,869.32 $ 1,529,477.32 $ 655,085.32

Tax 25% $ 282,500.00 $ 819,565.33 $ 537,065.33 190.1% $ 600,967.33 $ 382,369.33 $ 163,771.33

Net Income $ 1,130,000.00 $ 3,278,261.32 $ 2,148,261.32 190.1% $ 1,802,901.99 $ 1,147,107.99 $ 491,313.99

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