Orient-Express Hotels Ltd. investor in 47 leisure properties
in 21 countries (39 of which it manages) announced today the acquisition
of the El Encanto Hotel and Garden Villas in Santa Barbara, California for
US$26 million. The company plans to invest US$10 million in the upgrade of
the property.

El Encanto is located in the Santa Barbara hills, above the beautifully
restored Mission Santa Barbara, and commands spectacular views of the
Pacific Ocean. Built in 1913 on a 7 acre site, the mature gardens greatly
enhance the property.

Santa Barbara is a community which has been kept in excellent appearance
through strict town planning controls. El Encanto is part of the Historic
Hotels of America, a program of the National Trust. It features two styles
of early Santa Barbara architecture, California Craftsman and Spanish
Colonial Revival. The hotel has 88 rooms in cottages and low rise
buildings spread throughout the gardens and has permission to increase
rooms to 97.

Santa Barbara has a year round season which is especially strong in the
summer when Angelinos seek to escape the heat of the Los Angeles valley
and other resorts to the east such as Palm Springs and Las Vegas are
unbearable. It takes only 90 minutes to drive to El Encanto from Hollywood.

Orient-Express Hotels has been in negotiation for several years to acquire
the property, interrupted by the tragic death of Eric Friden, the previous
owner. Five star hotels in the Santa Barbara area enjoy 75% occupancy and
average rate of $400. Once the upgrade of El Encanto is completed the
company believes it will not only achieve this level of occupancy but an
even higher average rate.

Mr. Friden had made considerable progress on plans to upgrade the property
at the time of his death and these include:

- Renovation of all guest accommodation.

- Addition of 5 cottages and relocation of 3 cottages.

- New pool and relaxation area in the main garden.

- Construction of conference and breakout rooms under the main restaurant.

- Addition of spa facilities.

The hotel will be closed in the next low season for the major works and
minor works will be completed in subsequent low seasons while the property
remains open.

El Encanto falls within the North America division of the company which
includes Charleston Place in Charleston, South Carolina, ‘21’ Club in New
York City, Keswick Hall & Club in Charlottesville, Virginia, the Windsor
Court in New Orleans, the Inn at Perry Cabin in St. Michael’s, Maryland,
La Samanna in St. Martin and Maroma Resort & Spa on the Riviera Maya coast
of Mexico. This division is managed by Dean P. Andrews, Vice President -
North America based in New York City.
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