Orient-Express Hotels to Acquire Luxury Canal and River Cruise Company

26th May 2004

Orient-Express Hotels Ltd. , investors in 44 luxury leisure
properties worldwide of which 39 are managed by the company, today
announced it had entered into an agreement with the owners of “Afloat in
France” to acquire their business on a part cash, part earn-out basis. Afloat in France owns the five most luxurious canal barges in France which
regularly cruise the canals of Burgundy and Provence during the tourist
season. The barges can accommodate between 6 and 12 passengers each and
several have their own swimming pools on board.

Americans are the primary guests on board France’s canal tourist barges.
This market has suffered a drop due to the French government’s position
over the Iraq War and the strength of the Euro against the U.S. dollar,
making trips to Europe more expensive in dollar terms. As a result,
“Afloat in France” has recently been unprofitable and is unlikely to move
back into profit before next year. Nonetheless, the high quality of the
cruising experience remains unchanged and Orient-Express Hotels feels it
should acquire the business and its assets now to be in a position to
benefit from the market recovery. The acquisition has been structured as a
50% down payment of $3 million and a subsequent payment based on a
multiple of 7x 50% of the company’s EBITDA in three to five years’ time.

The company may use the “Afloat in France” acquisition as the core of a
larger investment in this sector of the cruising business. Orient-Express
Hotels’ tourist train and cruise division today embraces the famed Venice
Simplon-Orient-Express train in Europe, two day trains in Britain, the
Eastern & Oriental Express which operates between Singapore and Bangkok,
tourist trains in Peru and the river cruise ship Road to Mandalay in
Burma. This division accounts for about 20% of the revenue of the company. 

The itineraries of “Afloat in France” are tailor made to reach into the
heart of rural France. Burgundy, Provence, the Rhone Valley and
Languedoc-Roussillion all feature extensively, usually with a week long
cruise on a fully inclusive basis. Three and six night cruises can be
combined with an optional stay in Orient-Express Hotels’ Hotel de la Cite
in Carcassonne on the Canal du Midi. Guests are met off their arriving
flights in Paris and are personally escorted to the vessels and back again
to their Paris hotels at the end of every cruise. Every day features a
side trip to a famous landmark or restaurant. Guests can bicycle along the
tow paths if they wish. It is an experience of serenity and scenery
combined with delicious French cuisine.


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