Orient-Express Hotels Ltd. (NYSE: OEH, http://www.orient-express.com), owners or part-owners and managers of 50 luxury hotel, restaurant, tourist train and river cruise properties operating in 25 countries, today announced expansion plans in Italy. The Company has signed a binding agreement to purchase two distinctive properties in Taormina, Sicily from The Framon Group subject to completion conditions.

The 83-key Grand Hotel Timeo (http://www.grandhoteltimeo.com) is widely considered the most luxurious hotel in Taormina and the nearby 78-key Villa Sant’Andrea (http://www.villasantandreahotel.com) has a private beach on the Bay of Mazzaro. Under the agreement, scheduled for completion in late January, Orient-Express Hotels will acquire both properties for a combined price of EUR81million ($117 million) including the assumption of existing financing of EUR44 million ($64 million), a new medium term bank loan of EUR6 million ($9 million) and vendor financing of EUR5 million ($7 million). The Company plans to invest EUR11 million ($16 million) in a major refurbishment program, to take place over three consecutive winter closures. The hotels will reopen to Orient-Express Hotels’ standard in time for the 2010 summer season.

Commenting on the transaction, Paul White, President and Chief Executive of Orient-Express Hotels said, “Having significantly strengthened our balance sheet in 2009 through the sale of non-core assets, we have identified this rare opportunity to acquire the internationally renowned Grand Hotel Timeo, with its sister hotel, Villa Sant’Andrea. Elements of this transaction meet every one of Orient-Express Hotels’ investment criteria, including the unique and iconic status of the Grand Hotel Timeo; the location of the properties not only in Sicily, one of Italy’s fast growing tourist destinations, but in Taormina itself; the financial upside; and of course, barriers to entry.

“These hotels typify Orient-Express Hotels’ core business - established properties with history and personality. Currently, they both punch below their weight and because they occupy a premier position in the Sicilian market, we are confident we can make significant improvements in performance, as we integrate the properties into the Orient-Express Hotels collection and bring RevPAR and operating margins in line with our existing Italian portfolio,” White continued.

“Our prudent approach to funding this financially accretive acquisition, along with the Company’s continued disposal of non-core assets and sales of developed Real Estate, should ensure that we remain on track to achieve our key financial objective of deleveraging the Company’s balance sheet by the end of 2011.”