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Orient-Express Hotels Reports Second Quarter
Net Earnings of $18.5 Million, Up 43%
Over Prior Year
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HAMILTON, Bermuda, August 3, 2005 - Orient-Express Hotels Ltd. (NYSE: OEH, ), owners of 49 deluxe hotel, restaurant, tourist train and river cruise properties in 25 countries, today announced its results for the second quarter and six months ended June 30, 2005.
    
For the quarter net earnings were $18.5 million ($0.47 per common share) on revenue of $130.5 million, an increase of 43% over net earnings of $12.9 million in the year earlier period. Earnings per common share were up 24% and revenue was up 25% over the second quarter of 2004.
    
Net earnings for the six months were $16.9 million ($0.46 per common share) on revenue of $212.7 million, an increase of 104% over net earnings of $8.3 million in the year earlier period. Earnings per common share were up 92% and revenue was up 25% over the first six months of 2004.
    
Mr. James B. Sherwood, Chairman, said that improved earnings had been achieved all across the world, but notable was Europe which benefited from the Grand Hotel Europe, St. Petersburg acquisition in the first quarter, plus an exceptionally strong result from the Hotel Cipriani in Venice. Reid's Palace in Madeira and La Residencia in Mallorca, Spain were both comfortably ahead of the prior year period. The company was required to expense in the period $1 million (equivalent to $0.03 per share) of start-up costs of the Hotel Caruso Belvedere in Ravello, Italy which successfully re-opened on June 21st and is already receiving a rapturous press.
    
Joint venture and management interests were approximately $1 million ahead of the prior year quarter, all restaurants showed improved results, while trains and river cruises were $0.6 million ahead.
    
"There were no adverse variances worthy of mention. The group performed very much according to plan in a strengthening market.
    
"The London bombings should have no significant impact on our U.K.  business since our U.K. hotel, the Manoir aux Quat' Saisons, is 50 miles outside London and our London restaurant, Harry's Bar, is a membership club and not dependent on visitors to the city.
    
"Hurricane Emily passed over our Riviera Maya property, Maroma Resort and Spa, on July 18th but fortunately no serious damage was caused and it was low season. We estimate the earnings impact will be less than $400,000 in the third quarter. Most of the gardens will have to be replanted but they grow quickly in the tropical climate.
    
"The U.S. dollar has appreciated recently against most European currencies and this seems to be stimulating U.S. travel to Europe. If this continues it should be excellent news for 2006.
    
"Pansea Orient-Express Hotels opened their sixth property, Ubud Hanging Gardens in Bali, on July 14th. This is their second Bali property, the first being Jimbaran Puri Bali. Orient-Express Hotels has invested in Pansea through an $8 million convertible loan and only records the interest on that loan until conversion expected in 2007.
    
"Our property development on the Dutch side of St. Martin, Cupecoy Village, proceeds apace with over one third of the 169 units already pre-sold. Infrastructure is well under construction, including the marina, roads, foundations and services. The linkage of this development with La Samanna next door, being the main luxury hotel on the island, helps to support the prices we are able to obtain. Our French side development of luxury villas is also on schedule.
    
"Our search continues for more additions to our portfolio and we have several interesting acquisitions under study," he concluded.
    
Mr. Simon M.C. Sherwood, President, said that the average daily room rate of owned hotels in U.S. dollars was up 5% to $395 from $377 in the same period of 2004. Same store RevPAR in U.S. dollars was up 9% to $244 from $223 in the year earlier period. EBITDA margin for the quarter was up 3% to 29%.
    
He reviewed performance by region as follows:
    
Europe. EBITDA of owned hotels was $21.1 million compared with $12.9 million in the year earlier period. The Grand Hotel Europe and Hotel Cipriani largely accounted for the favorable variances. Hotel Caruso Belvedere start-up costs offset improvements from other hotel properties.
    
North America. EBITDA for the quarter of owned hotels was $5.3 million compared with $4.7 million in the year earlier period. The Windsor Court in New Orleans had a weaker second quarter, as expected, but this was more than compensated by improvements at all the other hotels. A strong third quarter is expected for the Windsor Court.
    
Southern Africa. EBITDA of owned hotels was $0.3 million compared with $0.1 million in the prior year period. This is low season for The Mount Nelson in Cape Town, but the Westcliff in Johannesburg and the safari properties in Botswana reported good gains on the prior year.
    
South America. EBITDA of owned hotels was $2.3 million, $0.2 million ahead of the prior year period. The Copacabana Palace in Rio de Janeiro was responsible for the increase.
    
Permission has now been received for renovation of the old casino rooms at the back of the Copacabana Palace which will help greatly to meet the hotel's increasing demand for banqueting space. Construction will not disturb the operation of the main hotel as it is indoor work at considerable distance from the guest rooms and public areas.
    
South Pacific. EBITDA of owned hotels was $0.4 million, up $0.2 million from the prior year. Lilianfels in Katoomba in Australia's Blue Mountains is benefiting from completion of a major upgrade of the property.
    
Hotel management and part-ownership. EBITDA was $5.7 million, $1 million ahead of the prior year period. Charleston Place and the Peruvian hotels registered most of the gain, while the Ritz in Madrid was flat year on year.
    
Restaurants. EBITDA from restaurants was $1.6 million compared with $1.3 million in the prior year period. All three properties reported gains, with La Cabana in Buenos Aires registering the largest increase.
    
Tourist trains and river cruises. EBITDA for the quarter was $5.2 million compared with $4.6 million in the prior year period. British tourist trains registered a strong gain while the Venice Simplon-Orient-Express was slightly down.
    
Financial costs were up $1.4 million due primarily to the Grand Hotel Europe acquisition and taxes were $1.6 million higher. Depreciation was $1.6 million higher due to the larger asset base.
    
"We are well into the third quarter now, and occupancies and rate remain strong. We have a number of construction projects in the pipeline, with work to start in the low seasons, such as the annex to the Windsor Court, the new spa and pool complex at Reid's, addition of rooms to La Residencia and the Caruso Belvedere, the casino rooms at the Copacabana Palace and the Nazarenas addition to the Hotel Monasterio in Cuzco. All this is in addition to our major property development in St. Martin. These investments will generate increased profitability in the years ahead," Simon Sherwood concluded.
    
 
                            ORIENT-EXPRESS HOTELS LTD
                        Three Months ended June 30, 2005
                          SUMMARY OF OPERATING RESULTS
 

                                                  Three months ended

                                                        June 30
    $'000 - except per share amount                2005        2004
    Revenue and earnings
    from unconsolidated companies
    Owned hotels
    - Europe                                         54,688      37,298
    - North America                                  23,439      19,972
    - Rest of World                                  20,229      17,431
    Hotel management & part ownership interests       5,687       4,767
    Restaurants                                       5,904       5,446
    Trains & Cruises                                 20,578      19,255
    Total (1)                                       130,525     104,169

    Analysis of earnings:
    Owned hotels
    - Europe                                         21,082      12,936
    - North America                                   5,336       4,714
    - Rest of World                                   2,944       2,497
    Hotel management & part ownership interests       5,687       4,767
    Restaurants                                       1,638       1,272
    Trains & Cruises                                  5,166       4,597
    Central overheads                               (4,654)     (3,607)
    EBITDA                                           37,199      27,176
    Depreciation & Amortization                     (8,632)     (7,014)
    Interest                                        (6,231)     (4,876)
    Earnings before Tax                              22,336      15,286
    Tax                                             (3,879)     (2,375)
    Net earnings on common shares                    18,457      12,911
    Earnings per common share                          0.47        0.38
                                                      39.31       34.25

    Number of shares - millions

    (1) Comprises earnings from unconsolidated companies of $4,273,000 (2004:
$3,633,000) and revenue of $126,252,000 (2004: $100,536,000).
                           ORIENT-EXPRESS HOTELS LTD
                          Three Months Ended June 30, 2005
                SUMMARY OF OPERATING INFORMATION FOR OWNED HOTELS
 

                             Three months ended
                                   June 30
                               2005      2004
    Average Daily Rate

    (in U.S. dollars)
    Europe                         582       657
    North America                  315       317
    Rest of World                  239       215
    Worldwide                      395       377

    Rooms Sold (thousands)
    Europe                          55        34
    North America                   43        39
    Rest of World                   45        44
    Worldwide                      143       117

    RevPar (in U.S. dollars)
    Europe                         373       375
    North America                  224       229
    Rest of World                  129       114
    Worldwide                      246       225
 
 

                                                  Change %
    Same Store RevPAR                          Dollar   Local

    (in U.S. dollars)                                  Currency
    Europe                       423      377      12%       7%
    North America                234      229       2%       2%
    Rest of World                129      114      13%      11%
    Worldwide                    244      223       9%       7%
 
 
 

                            ORIENT-EXPRESS HOTELS LTD
                         Six Months ended June 30, 2005
                          SUMMARY OF OPERATING RESULTS

                                                   Six months ended
                                                        June 30
    $'000 - except per share amount                2005        2004
    Revenue and earnings
    from unconsolidated companies
    Owned hotels
    - Europe                                         71,475      49,134
    - North America                                  46,932      39,461
    - Rest of World                                  45,430      37,503
    Hotel management & part ownership interests       8,614       7,684
    Restaurants                                      11,146      10,138
    Trains & Cruises                                 29,142      26,378
    Total (1)                                       212,739     170,298

    Analysis of earnings
    Owned hotels
    - Europe                                         17,958       9,808
    - North America                                  11,494       9,015
    - Rest of World                                  10,038       8,089
    Hotel management & part ownership interests       8,614       7,684
    Restaurants                                       2,650       1,970
    Trains & Cruises                                  5,058       4,341
    Central overheads                               (9,151)     (7,414)
    EBITDA                                           46,661      33,493
    Depreciation & Amortization                    (16,450)    (13,969)
    Interest                                        (9,730)     (9,856)
    Earnings before Tax                              20,481       9,668
    Tax                                             (3,581)     (1,363)
    Net earnings on common shares                    16,900       8,305
    Earnings per common share                          0.46        0.24
                                                      37.05       34.25

    Number of shares - millions

    (1) Comprises earnings from unconsolidated companies of $5,998,000 (2004:
$5,928,000) and revenue of $206,741,000 (2004: $164,370,000)
                            ORIENT-EXPRESS HOTELS LTD
                         Six Months Ended June 30, 2005
                SUMMARY OF OPERATING INFORMATION FOR OWNED HOTELS

                             Six months ended

                                  June 30
                                 2005     2004
    Average Daily Rate

    (in U.S. dollars)
    Europe                        518      571
    North America                 349      346
    Rest of World                 274      236
    Worldwide                     373      351

    Rooms Sold (thousands)
    Europe                         78       49
    North America                  83       73
    Rest of World                  95       91
    Worldwide                     256      213

    RevPar (in U.S. dollars)
    Europe                        294      301
    North America                 239      236
    Rest of World                 158      130
    Worldwide                     225      205
 
 
 

                                                  Change %
    Same Store RevPAR                         Dollars   Local

    (in U.S. dollars)                                  Currency
    Europe                       341      306      12%       7%
    North America                254      236       8%       8%
    Rest of World                158      132      20%      16%
    Worldwide                    233      207      13%      10%
 
 
 

    ORIENT-EXPESS HOTELS LTD
    CONSOLIDATED AND CONDENSED BALANCE SHEETS
    (UNAUDITED)
 

                                                          June 30 December 31
    $'000                                                    2005        2004
    Assets
    Cash                                                 $ 79,145    $ 85,610
    Accounts receivable                                    51,869      34,984
    Due from related parties                               15,924      14,718
    Prepaid expenses and other                             14,141      11,914
    Inventories                                            29,720      28,965
    Total current assets                                  190,799     176,191

    Property plant & equipment, net book value            985,853     916,811
    Investments                                           125,110     123,599
    Goodwill                                               64,117      29,529
    Other assets                                           20,404      19,461
                                                       $1,386,283  $1,265,591
    Liabilities and Shareholders' Equity
    Working capital facilities                           $ 45,264    $ 42,920
    Accounts payable                                       31,523      23,839
    Due to related parties                                  5,236       5,453
    Accrued liabilities                                    53,111      37,288
    Deferred revenue                                       22,709      20,493
    Current portion of long-term debt and capital          54,436      46,245
    leases
    Total current liabilities                             212,279     176,238

    Long-term debt and obligations under capital          499,622     537,461
    leases
    Deferred income taxes                                  14,357       2,710
    Minority interest                                       4,577       4,192

    Shareholders' equity                                  655,448     544,990
                                                       $1,386,283  $1,265,591

Management believes that EBITDA (net earnings adjusted for interest, tax, depreciation and amortization) is a useful measure of operating performance, for example to help determine the ability to incur capital expenditure or service indebtedness, because it is not affected by non-operating factors such as leverage and the historic cost of assets. EBITDA is also a financial performance measure commonly used in the hotel and leisure industry, although the company's EBITDA may not be comparable in all instances to that disclosed by other companies. EBITDA does not represent net cash provided by operating, investing and financing activities under U.S. generally accepted accounting principles, is not necessarily indicative of cash available to fund all cash flow needs, and should not be considered as an alternative to earnings from operations or net earnings under U.S. generally accepted accounting principles for purposes of evaluating operating performance.
    
This news release contains, in addition to historical information, forward-looking statements that involve risks and uncertainties. These include statements regarding earnings growth, investment plans and similar matters that are not historical facts. 

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Contact:

Orient Express Hotels Ltd.
http://www.orient-express.com

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Also See: Orient-Express Hotels Reports Net Earnings of $28.2 million For the Year 2004 Compared with $23.6 million in the Prior Year; Maintained Worldwide Average Daily Rate of $366 / February 2005
Orient-Express Hotels Ltd. Reports $23.6 million Net Earnings for the Year 2003; RevPAR Up 9% to $183 from $168 / Hotel Operating Statistics / March 2004
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