Orient-Express Hotels Announces Third Quarter

12th Nov 2003

PRNewswire-FirstCall HAMILTON, Bermuda Nov. 12 :

Orient-Express Hotels Ltd. , owner of 39 deluxe hotel, restaurant, tourist
train and river cruise properties in 17 countries, today announced its
results for the third quarter and nine months ended September 30, 2003.

Net earnings for the quarter were $8.2 million ($0.27 per common share) on
revenue of $91.1 million, compared with net earnings of $9.1 million
($0.30 per common share) on revenue of $83.1 million in the third quarter
of 2002. For the nine months net earnings were $15 million ($0.49 per
common share) on revenue of $244.6 million, compared with net earnings of
$21.1 million ($0.69 per common share) on revenue of $215.9 million in the
first nine months of 2002.
Mr. James B. Sherwood, Chairman, said that third quarter results were
adversely impacted by Hurricane Isabel in September which caused heavy
cancellations at Charleston Place in Charleston, S.C., The Inn at Perry
Cabin in St. Michael`s, Maryland and Keswick Hall in Charlottesville,
Virginia. “Had it not been for this hurricane Orient-Express Hotels would
have achieved third quarter earnings on a par with those in the third
quarter of 2002,” he said.
Mr. Sherwood said that the new La Cabana restaurant in Buenos Aires held
its official opening on October 16th with a gala black tie party attended
by many of Argentina`s most distinguished residents. La Cabana originally
opened in 1933 and is the most famous restaurant in Argentina. It ceased
operations in the 1990s and the name and contents were acquired by
Orient-Express Hotels, a new location was purchased in the most
fashionable district of Buenos Aires and the restaurant was reconstructed
at reasonable cost after the collapse of the peso. Buenos Aires had 1.9
million visitors in 2002 and should achieve 3 million in 2003 and possibly
4 million in 2004. In addition to the main a la carte restaurant there are
four banqueting rooms and an outdoor terrace offering a total of 200
Mr. Sherwood announced that the board has decided to implement a program
of quarterly cash dividends. Until now the company has not paid dividends
since its initial public offering in August, 2000. The initial quarterly
dividend has been set at 2.5 cents per common share. “Although it was
fashionable during the last stock market “bubble” to reinvest all cash in
the business for earnings growth, the new low U.S. tax rate on dividends
and the fact that our competitors pay cash dividends have convinced the
board it is time to commence a cash dividend payout to shareholders,” Mr.
Sherwood said. The first quarterly dividend will be paid on January 20,
2004 to shareholders of record January 5, 2004.

Mr. Sherwood indicated that planning issues at the company`s Hotel Caruso
property in Ravello, Italy are finally being resolved and construction
will shortly recommence. The hotel is expected to open in the spring of
He also indicated that the company has signed a letter of intent which
should lead to the acquisition of a group of unique hotel properties.
Completion of the transaction is planned before year end. The
confidentiality agreement signed with vendors prohibits disclosure until a
binding contract is executed.

Mr. Sherwood said that worldwide tourism and local conference and
banqueting markets are holding up well, while international business
travel is still weak. He said that Orient-Express Hotels is less reliant
on international business travel than many other operators in the luxury
On November 6th the company announced it had sold the Quinta do Lago Hotel
in the Algarve, Portugal for strategic reasons and would report a
significant gain in the fourth quarter. The price achieved was 16 times
current year EBITDA. It also announced it had filed a registration
statement for the sale of 3 million Class A common shares. The proceeds of
these sales will be used primarily to fund acquisitions and expansion. “A
number of interesting opportunities for investment are currently available
and there are several important improvements to existing properties which
will need funding additional to mortgage finance,” he said.


Mr. Simon M.C. Sherwood, President, said that average daily room rate of
owned hotels in U.S. dollars was up 19% in the third quarter to $382 from
$321 in the year earlier period. Same store RevPAR in U.S. dollars was up
9% to $212 from $194 in the year earlier period.

He reviewed performance by region as follows:

Europe. EBITDA of owned hotels in Europe was $19 million in the third
quarter compared with $16.6 million in the year earlier period. Italy and
Spain were very strong, Portugal and France were weak and the U.K. was
flat. Interestingly, there was a large increase in affluent Russian guests
which helped to offset weaker demand from the U.S.

North America. EBITDA for the third quarter of owned hotels in North
America was close to breakeven, slightly up on the year earlier period.
This is low season for the company`s Caribbean hotels and New Orleans
because of the heat.

Southern Africa. EBITDA was close to breakeven in the third quarter, about
$0.7 million worse than the year earlier period. The paucity of American
tourists to African game reserves reduced earnings at the company`s
Botswana game lodges.
South America. EBITDA of owned hotels was $1 million compared with $1.5
million in the year earlier period, however, joint venture hotels and
PeruRail results fully compensated for the decline so taken together the
results were flat.
South Pacific. EBITDA for the third quarter was breakeven, down $0.8
million from the year earlier period. Major works are being undertaken at
the Lilianfels and Bora Bora properties.
Hotel management and part ownership. Income was $3 million in the third
quarter compared with $2.8 million in the year earlier period. Weakness in
Charleston caused by the hurricane was more than offset by the Hotel Ritz
in Madrid and Peruvian hotels.
Restaurants. EBITDA from restaurants in the third quarter was a loss of
$0.5 million, a $0.2 million improvement over the prior year period. Both
`21` Club and Harry`s Bar are closed for part of the third quarter each
Tourist trains and river cruises. EBITDA in the third quarter was $1.9
million compared with $2.5 million in the year earlier period. Fewer
Americans travelling on the Venice Simplon-Orient-Express were largely
responsible for the decline. This was part of the general shunning of
France by Americans which occurred this year due to French policy with
respect to the Iraq war.
Simon Sherwood indicated that depreciation in the third quarter had
increased by $1.6 million over the prior year period, taxes were $0.2
million higher and finance costs were $0.7 million lower.
“Revenue in the third quarter showed a healthy 10% increase over the prior
year period from $83.1 million to $91.3 million but much of this increase
was exchange rate related and was accompanied by corresponding cost
increases. EBITDA was up 1% but larger depreciation and tax charges
resulted in a 10% decline in net earnings. I think it is important to note
that we have made a material increase in capacity this year which will
translate into improved profits when that capacity is filled,” he




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