Fairmont Hotels & Resorts Inc., the owners of the Fairmont Southampton and the Hamilton Princess, saw its quarterly profit cut by 70 percent in what is usually its strongest quarter, blaming lingering effects of SARS in Toronto and hurricane-damaged hotels in Bermuda.

Fairmont yesterday reported earnings for the third quarter ended September 30 of $11.6 million, or 15 cents a share. That compared to a profit of $39 million, or 50 cents a share a year ago.

Fairmont blamed the cost of repairs to its hotels in Bermuda not covered by insurance for the revision as well as a downturn in booking its hotels in Canada after the outbreak of SARS.

The international hotel owner and operator had $179.4 million in revenue, compared to $172.4 in the previous year's third quarter.

The company pointed to two of its hotels in Bermuda that were severely damaged by Hurricane Fabian in September. One of the two properties - the Fairmont Southampton - is closed for repairs until spring 2004. The Hamilton Princess is operating at reduced capacity for the rest of 2003.

Fairmont said it will have to pay $10 to $12 million for deductible insurance costs and uninsured items at the hotels. Of that sum, $7.4 million was accounted for in the third quarter. The rest will be recorded by the end of the year.

"While demand continues to improve as a result of improving US and global economies, a challenging operating environment persisted throughout the third quarter," William Fatt, chief executive of Fairmont, said in a news release.

"As anticipated, the lingering impact of severe acute respiratory syndrome had a significant effect on our Canadian business. Our Canadian properties continued to suffer from the considerable decline in international travellers during what is traditionally the strongest quarter for these hotels."

The company lowered its year-end guidance to between $140 million and $150 million from the previously anticipated $155 million to $165 million. In January, the company predicted its annual earnings would be between $215 million and $225 million.

The forecast reflected ongoing weakness in the North American lodging industry for the rest of the year, however, the company said it expected to enjoy a "sharp recovery" in 2004 relative to its poor performance in 2003.

Fairmont's management portfolio consists of 81 luxury and first-class properties in Canada, the United States, Mexico, Bermuda, Barbados and the United Arab Emirates and 41 city-centre and resort hotels, including The Fairmont Banff Springs in Alberta and Fairmont Le Chateau Frontenac in Quebec City.