Earnings for the Year 2003; RevPAR Up
9% to $183 from $168
Hotel Operating Statistics
|HAMILTON, Bermuda, March 3, 2004 - Orient-Express
Hotels Ltd. (NYSE: OEH), investor in 44 deluxe hotel, restaurant, tourist
train and river cruise properties in 21 countries and manager of 38 of
those properties, today announced its results for the fourth quarter and
year ended December 31, 2003. For the quarter, net earnings were $8.6 million
($0.27 per common share) compared with $4.2 million ($0.14 per common share)
for the fourth quarter of 2002. Revenue was up 10% to $80.6 million from
$73.4 million in the prior year period.
For the year ended December 31, 2003 net earnings were $23.6 million ($0.76 per common share) compared with $25.3 million ($0.82 per common share) in the year ended December 31, 2002. Revenue for 2003 was up 12% from 2002, from $289.3 million to $325.2 million. Changing currency values, particularly the Euro, British Pound and South African Rand distorted the revenue increase, while at the same time revenue from the Hotel Quinta do Lago ceased in November, 2003 upon its sale. The company realized a gain on sale of this property of $4.2 million which has been included in net earnings.
Mr. James B. Sherwood, Chairman, said that the fourth quarter results were in line with expectation. He pointed out that Bora Bora Lagoon Resort and Maroma Resort and Spa were closed for much of the period for major upgrade, and start-up costs for La CabaC1a which opened in October had to be entirely expensed in accordance with US GAAP accounting rules.
"The year 2003 has been greatly influenced by SARS at the start, the Iraq War coming at the peak booking period, strengthening of European and South African currencies, political hostilities affecting US tourism to France, and until recently weak business traveller demand. These events are changing the matrix of travel and we are moving quickly to adjust. For example, New York and the Hawaiian Islands recorded in 2003 occupancies back to 2000 levels because of the influx of Europeans to New York and Asians to the Hawaiian Islands. This shift is undoubtedly due to the strong Euro, British Pound and Japanese Yen. Our strategy is to capture European and Asian guests for our North and South American properties while at the same time taking advantage of increased domestic demand. We believe operating results in 2004 will be strong for our properties in these markets.
"In Europe, fortunately our properties largely do not depend on guests from dollar bloc countries. Only the Lisbon and Carcassonne hotels and the Venice Simplon-Orient-Express have suffered from the downturn in visitors from dollar bloc countries and we have refocused our sales and marketing more towards European and Japanese regional demand to compensate.
"Asia is seeing a resurgence of demand now that the SARS epidemic has passed. Currencies in the countries in which we operate there are generally linked to the US dollar rather than European or Japanese currencies.
"We believe that our properties in Botswana, Myanmar and French Polynesia have been held back because of poor access so we are in the process of developing new air services to support them. In my opinion these properties are unique and should be operating at capacity during their seasons. They should do so if guests have convenient access.
"The recent report from British Airways of the sharp increase in premium class bookings bodes well for our top end segment of the leisure business," he concluded.
Mr. Sherwood indicated that three investments are in active negotiation, two of which are in Europe and the third in Asia. The Asian property would complement the recently announced investment in the five Pansea hotels in Southeast Asia. Offers have also been made for one property in the US and another in South America. The company has also made an offer for a property in Eastern Europe.
Simon Sherwood, President, said that same store RevPAR was up 12% in the fourth quarter of 2003 compared with the year earlier period, to $171 from $152. For the year as a whole, RevPAR was up 9% to $183 from $168. In local currencies RevPAR was down 1% for the quarter and down 4% for the year.
He summarized full year 2003 results as follows:
Owned European hotels
For the year EBITDA was $32.8 million compared with $29.2 million in 2002. Only Portuguese and French hotels had modest earnings declines from the prior year while Italian, Spanish and U.K. properties were well ahead of 2002. The French and Portuguese properties had less US visitors for the reasons earlier mentioned. Overall, Europe had an excellent 2003.
Owned North American hotels
EBITDA for 2003 was the same as in 2002, $11.1 million. Excellent improvement at Maroma, Inn at Perry Cabin and Keswick Hall was offset by a weak corporate market in New Orleans and the impact of Euro cost translation resulting in higher dollar costs at La Samanna.
Owned Southern Africa hotels
EBITDA for 2003 was the same as in 2002, $4.3 million. Strong improvement at the Mount Nelson was offset by weaker results at Orient-Express Safaris (fewer US guests).
Owned South American hotels
EBITDA for 2003 was $7.5 million, up slightly from $7.1 million in 2002. This market holds excellent promise for 2004 because it is within the dollar bloc.
Owned South Pacific hotels
EBITDA loss was $0.7 million compared with EBITDA profit of $1.3 million in 2002. Both Lilianfels in Australia and Bora Bora Lagoon Resort were closed for part of the year for major upgrade works but lack of Japanese guests and access problems at Bora Bora were other significant factors.
Management and part ownership interests
EBITDA for the year was $13.5 million compared with $12.4 million in 2002. The improvement was largely due to management of the Hotel Ritz in Madrid which was assumed in April, 2003.
EBITDA for the year was $2.6 million compared with $3.8 million in 2002. Earnings at `21' Club slipped during the Iraq War and because of an exceptionally harsh 2002/2003 winter while start-up costs of La CabaC1a had to be expensed upon opening.
Tourist trains and river cruising
EBITDA for the year was $6 million compared to $8.3 million in 2002. The decline was largely due to reduced revenue on the Venice Simplon-Orient-Express which travels through France and depends partially on US travellers. The forward booking position for this train has recovered for 2004.
Simon Sherwood concluded by saying that depreciation costs had risen from $20 million in 2002 to $25 million in 2003 because of the heavy investment program in existing properties, acquisitions and currency factors, but this should translate into higher profits once demand returns to normal levels.
He also noted that in the fourth quarter of 2003 the company significantly strengthened its finances through sale of the Hotel Quinta do Lago for $40 million and the issue of $50 million of new equity.
"Taken together, all these factors put the company in an excellent position
to benefit from recent investment in existing properties and to fund acquisitions,"
This news release contains, in addition to historical information, forward-looking statements that involve risks and uncertainties.
Orient Express Hotels Ltd.
|Also See:||Orient-Express Hotels Ltd. Reports Net Earnings of $25.3 million for Year Ending 2002; RevPAR Down 2% for the Year / March 2003|
|Top Performing Properties for Orient-Express Hotels in 2000 Were the Cipriani, Windsor Court and Copacabana / Mar 2001|