The owner of the Southampton and Hamilton Princesses, Fairmont Hotels & Resorts, yesterday reported a drop in sales for the fourth quarter of 2001.

But the company, which spun off last year from conglomerate Canadian Pacific, would have reported a loss before an income tax recovery padded its bottom line.

Occupancy rates at its hotels fell 5.2 percent to 56 percent for the three months ended December 31, hurting sales, which were down 13 percent at $100.8 million from $115.4 million in the same quarter a year earlier.

The company said its 2001 earnings before interest, taxation, depreciation and amortisation (EBITDA) - a measure of profitability - were $165.2 million, at the higher end of previous guidance.

For the quarter ended December 31, Fairmont, which operates luxury hotels and resorts across Canada, the United States, Mexico, Bermuda and Barbados, earned $49.6 million, or 63 cents a share, compared with a profit of $400.1 million, or $5.07 a share, in the year-ago quarter.

The profit resulted from an income tax recovery of Cnd $51.4 million related to favourable reassessments after the reorganisation of Canadian Pacific.

Fairmont had a loss of $2.7 million before income tax expense, minority interest and goodwill charges.

"Clearly the whole industry hit bottom after September 11. It is still difficult to ascertain exactly how quickly the industry will recover," said Sam Damiani, an analyst at TD Securities.

"Fairmont did have a large drop in occupancy rates. But in light of September 11 ,it is totally understandable," said Mr. Damiani.

William Fatt, chief executive of Fairmont, said he expects the company to earn between 79 cents a share and 87 cents a share during 2002.

For the first quarter, he expects earnings per-share at three cents. He said: "Our balance sheet will allow us to manage through current market conditions and expand our luxury brand in key US markets by acquisition."

The results hit the share price of the company, dropping 75 Canadian cents, or two percent, to $36.30 Canadian on the Toronto Stock Exchange.

On the New York Stock Exchange, the shares were down 1.1 percent, or 25 cents, at $22.70.

But the shares are well above their September low of Cnd $20.49, reached in the aftermath of the September 11 attacks by hijacked airliners, which saw a plunge in travel bookings that pummelled airline and hotel companies.