Canadian hotel stocks fell sharply in the face of uncertainties about how the travel and lodging industry will be affected by Tuesday's horrific attacks on the World Trade Center in New York and the Pentagon in Washington.

Fairmont Hotels & Resorts Inc. acknowledged those uncertainties yesterday and warned investors that the earnings guidance it previously had given will be modified. It said it will provide revised estimates "as soon as possible."

But it also said that "it may take several weeks before the full impact of this week's events can be assessed."

Shares of Toronto-based Fairmont, which will be spun off by Canadian Pacific Ltd. next month, dropped $4.75 to $27.25 on the Toronto Stock Exchange, its lowest close since they began trading on a when-issued basis Aug. 21. Shares of Toronto-based Four Seasons Hotels Inc., which is also in the luxury hotel business, fell to $60, a 52-week intraday low, before recovering a little to close at $61, down $7.

Trading in both issues was heavy, with 1.6 million Fairmont shares and about 402,000 Four Seasons shares changing hands. Fairmont trades about 480,000 shares on a normal day, Four Seasons about 40,000.

Fairmont, one of North America's leading owner/operators of luxury hotels and resorts, operates luxury hotels and resorts in Canada, the United States, Mexico, Bermuda and Barbados.

Four Seasons manages 51 properties in 23 countries.

Fairmont also said in its news release yesterday that it expects Tuesday's events will lead to reduced travel, which will affect earnings performance in the travel and lodging industry as a whole.

Fairmont "does not expect to be affected more severely than the industry."

Rossa O'Reilly, a managing director with CIBC World Markets Inc., said that airlines and lodgings are "front and centre" in terms of being affected by the attacks. "The effects on consumer and corporate psychology from those events are immediately reflected in curtailed travel on the airlines, which, of course, feed into the hotel systems."

In the very short term, the hotels have benefited from the fact that people have been stranded with the cessation of air travel, he said. But "once the flights start off, the hotels, which get a short-term boost from those travellers being marooned there, will rapidly start to lose occupancy -- and it will be, I think, a few weeks of extremely depressed occupancies in hotels and very depressed airline travel as people are preoccupied with watching the events and curtailing unessential travel."

Within a few quarters, things should start to move back to more normal activity, he said.