The third quarter typically means a slowdown in business travel, a key profit driver in the hotel industry. But strong demand for rooms that started in late Q2 helped power a net profit for Four Seasons (NYSE:FS) in Q3, according to the financial results the company reported today. The highly regarded chain managed to turn its first quarterly net profit of 2003.

Occupancy and room rates are rising. The U.S. market is performing well. Even the Asia/Pacific region, devastated by the SARS scare earlier this year, is seeing business comparable to the hotels in the Four Seasons' other markets. CFO Donald Ludwig is encouraged by "concrete signs that the major global economies are recovering." (We've also seen signs of recovering business travel in the airline business, as discussed in an October story about America West (NYSE:AWA) and others.)

Four Seasons' managed operations are performing well and turning in solid profit margins. Now the company needs to continue improving performance -- or making "should-they-stay-or-should-they-go" decisions -- at its company-owned properties, which lost money in Q3.

The company continues to make changes in its portfolio. Last quarter, it discussed not only a broad range of investments in existing properties, but plans to open a significant number of new hotels and resorts in locations around the world through 2004. Meanwhile, the status of several of its properties is up in the air: It's looking to "change or restructure" its investments in the Four Seasons hotels in Berlin and Vancouver and, especially, the Pierre in New York, which lost nearly $11 million in 2003.

Despite that, Four Seasons is clearly focused on growth in a cautiously improving economic backdrop. If the company can continue funding its expansion internally while improving occupancy and room rates and acquiring more business travelers, the company -- like its guests at one of its resorts in Bali -- will be sitting pretty.

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Dave Marino-Nachison doesn't own any of the companies in this story. He can be reached at