October 31, 2013 05:05 PM Eastern Daylight Time
- Third quarter same store revenue per available room ("RevPAR") up 20% in US dollars and 19% in local currency compared to prior-year quarter
- Third quarter total revenue up 19% to $191.2 million from $161.0 million in prior-year quarter
- Third quarter adjusted EBITDA up 28% to $53.1 million from $41.6 million in prior-year quarter
- Net debt to adjusted EBITDA of 4.0 times at September 30, 2013, down from 4.8 times at December 31, 2012
For the full earnings statement and tables please visit: http://www.orient-expresshotelsltd.com/phoenix.zhtml?c=122664&p=irol-newsArticle&ID=1871145&highlight=
HAMILTON, Bermuda--Orient-Express Hotels Ltd. (NYSE: OEH, www.orient-express.com) (the "Company"), owners, part-owners or managers of 45 luxury hotel, restaurant, tourist train and river cruise properties operating in 22 countries, today announced its results for the third quarter ended September 30, 2013.
Total revenue was $191.2 million in the third quarter of 2013, up $30.2 million or 19% from $161.0 million in the third quarter of 2012. Revenue from owned hotels for the third quarter was $159.2 million, up $28.2 million or 22% from $131.0 million in the third quarter of 2012 due largely to 20% growth in US dollar same store owned hotels RevPAR. Trains & cruises revenue in the third quarter was $27.2 million, up 5% from $26.0 million in the third quarter of 2012.
Adjusted EBITDA was $53.1 million for the third quarter of 2013, up $11.5 million from $41.6 million in the prior-year period. This 28% growth was buoyed by across-the-board increases at the Company's owned hotels in Europe, which collectively grew 25% year-over-year, with the most meaningful EBITDA increases at Grand Hotel Europe, St. Petersburg, Russia ($2.9 million); the Company's two hotels in Sicily, Italy ($1.5 million); Hotel Cipriani, Venice, Italy ($1.4 million); and Hotel Splendido, Portofino, Italy ($1.1 million). The Company's two Sicilian hotels and Hotel Splendido are on track to set new full year EBITDA records in 2013. Additionally, Charleston Place, South Carolina continued its own record year with a $1.1 million or 34% year-over-year increase in EBITDA for the quarter.
Adjusted net earnings from continuing operations for the third quarter of 2013 was $18.5 million ($0.18 per common share) compared with $15.9 million ($0.15 per common share) in the third quarter of 2012.
John Scott, president and chief executive officer, commented: "We are pleased with our third quarter results. Indications earlier this year of an uptick in demand for our European hotels were affirmed in the second quarter and reinforced in the third quarter. We saw growth not only at our Italian hotels, but also, importantly, at our other European hotels. RevPAR for the region was up 22% year-over-year, showing healthy growth for our most significant EBITDA region. Our North American and rest of world hotels also performed well, driven by Charleston Place, which remains on track for a record year, and Copacabana Palace, Rio de Janeiro, Brazil, which was fully operational with a substantially improved room product this quarter after being partially closed for a planned renovation in the second half of 2012.
"Following impressive year-to-date results, where adjusted EBITDA exceeded the prior-year period by 17%, we are forecasting to close out 2013 solidly, with expected owned hotels RevPAR growth of 5% to 7% for the fourth quarter.
"I'm pleased to say that we achieved our near-term leverage target of 4.0 times net debt to adjusted EBITDA at the end of the quarter. This change represents a marked decrease from 4.8 times at the end of 2012 and shows our continued commitment to reducing leverage, which has come down from nearly 10.0 times in early 2010 to less than 5.0 times in 2011 and now to 4.0 times. This most recent improvement is the result of a $31.7 million reduction in net debt since year end as well as a $14.3 million or 14% increase in adjusted EBITDA for the trailing twelve-month period."
During the third quarter, the Company commenced its previously announced phased, three-year renovation of Grand Hotel Europe that is being funded with $26.0 million of proceeds from a $50.0 million loan facility. Also during the quarter, the Company began its phased, three-year rooms refurbishment at Charleston Place. The Company is utilizing $9.2 million of funds borrowed in December 2012 to finance the first phase of this project, which consists of 145 rooms. Both the Grand Hotel Europe and Charleston Place renovations have been scheduled to limit disruption on hotel operations.
In September 2013, Copacabana Palace marked the 90th anniversary of the hotel's inauguration with a celebratory ball that generated significant media coverage in the domestic market. During the quarter, the Company also began development of a new pan-Asian restaurant at the hotel under the direction of celebrity chef Ken Hom, which is planned to open in the first quarter of 2014.
Condé Nast Traveler magazine recently announced the results of its annual Readers' Choice Awards. Derived from one of the largest independent consumer surveys in the United States, second in size only to the census, the poll ranked 17 of the Company's properties among the best in their locations, including two voted number one in their regions. The Inn at Perry Cabin, St. Michaels, Maryland was voted the number one hotel in the Mid-Atlantic and Grand Hotel Timeo, Taormina, Sicily the number one hotel in Italy. This is the first time Grand Hotel Timeo, acquired in 2010 and subsequently refurbished by the Company, has appeared in the awards.
In keeping with the Company's continued focus on enhancing corporate governance, the board of directors in September approved a retirement age policy of 75 years for directors. At the same time, Georg Rafael, vice chairman of the board and a director since 2002, notified the Company that he will not stand for re-election at the 2014 annual general meeting. The board expects to nominate a new director candidate in due course.
In the third quarter of 2013, revenue from owned hotels was $97.3 million, up $13.8 million or 17% from $83.5 million in the third quarter of 2012. Grand Hotel Europe and Hotel Cipriani saw the most meaningful revenue growth, with year-over-year increases of $4.7 million and $2.8 million, respectively.
Same store RevPAR in Europe was up 22% compared to the prior-year quarter in US dollars and 19% in local currency due to a 15% increase in average daily rate ("ADR") in US dollars (12% in local currency) and a five percentage point increase in occupancy.
EBITDA for the third quarter of $43.1 million was $8.6 million or 25% greater than the $34.5 million recorded for the third quarter of 2012. Growth was driven equally by the Company's Italian hotels and its rest of Europe hotels. Grand Hotel Europe recorded the largest EBITDA increase in the region, with a $2.9 million or 70% increase due to 91% local currency RevPAR growth primarily as a result of the 2013 G20 Summit, which was held in St. Petersburg in September.
Revenue from owned hotels for the third quarter of 2013 was $30.0 million, up $8.4 million or 39% from $21.6 million in the third quarter of 2012. Revenue growth in the third quarter was driven by El Encanto, Santa Barbara, California, which had revenue for the quarter of $5.5 million during its first year of operations, and Charleston Place, which generated revenue growth of $2.1 million or 17%.
Same store RevPAR in the region increased by 9% in US dollars and 8% in local currency due to a five percentage point increase in occupancy and a 1% increase in ADR in both US dollars and local currency.
EBITDA for the region was $3.5 million in the quarter, up $1.7 million or 94% from $1.8 million in the third quarter of 2012 primarily due to EBITDA growth of $1.1 million at Charleston Place, which saw a year-over-year occupancy increase of seven percentage points, and $0.4 million at El Encanto, which opened in March 2013.
Revenue from owned hotels for the third quarter of 2013 was $8.3 million, a decrease of $0.1 million or 1% compared to $8.4 million in the third quarter of 2012. Continued healthy growth in Myanmar was offset by marginal year-over-year declines in Laos and Bali.
Same store RevPAR for the region was down 3% in US dollars but up 3% in local currency due to a five percentage point decrease in occupancy offset by 5% growth in ADR in US dollars (11% in local currency).
EBITDA decreased by $0.5 million to $2.3 million in the third quarter of 2013 due primarily to a $0.4 decrease in EBITDA at Jimbaran Puri Bali, Indonesia, primarily due to an 8% revenue decrease plus an increase in administrative and fuel costs as compared to the prior-year quarter.
Third quarter 2013 revenue from owned hotels was $5.4 million, up $1.5 million or 38% from $3.9 million in the third quarter of 2012. Revenue at the Company's three safari camps in Botswana increased by $1.6 million due largely to a 26% increase in RevPAR in US dollars plus revenue from third-party air services provided to guests previously reported net of related costs. The growth at the safari camps was partially offset by a $0.1 million decrease in revenue at Mount Nelson Hotel, Cape Town, South Africa, as a result of the year-over-year weakening of the South African rand versus the US dollar. Excluding the effect of currency movements, revenue in the region was $2.1 million ahead of last year.
Same store RevPAR for the region increased by 22% in US dollars and 40% in local currency due to an 8% increase in ADR in US dollars (24% in local currency) and a 3 percentage point increase in occupancy.
EBITDA for the third quarter was $0.9 million, an increase of $0.6 million over the third quarter of 2012 due primarily to cost savings at Mount Nelson Hotel following first quarter management restructuring actions and the revenue increase at the safari camps.
Third quarter 2013 revenue from owned hotels was $18.3 million, up $4.7 million or 35% from $13.6 million in the third quarter of 2012. This increase was primarily the result of a $4.8 million increase in revenue from Copacabana Palace, where the main building of the hotel was closed for a planned renovation for the majority of the second half of 2012.
Same store RevPAR in the region increased by 45% in both US dollars and local currency primarily as a result of a 15 percentage point increase in occupancy, which was driven by a 34 percentage point increase in occupancy at Copacabana Palace and a 6% increase in ADR in both US dollars and local currency.
EBITDA for the quarter of $3.6 million was $2.4 million or 218% greater than in the prior-year quarter primarily due to a $2.5 million increase in EBITDA at Copacabana Palace.
EBITDA for the third quarter of 2013 of $1.5 million was $0.7 million greater than EBITDA for the third quarter of 2012 due to a $0.3 million increase from the Company's joint venture hotels in Peru primarily as a result of Palacio Nazarenas, which is in its first full year of operations, and $0.3 million of cost savings related to the closure of the Singapore development office earlier in 2013.
Revenue from '21' Club in the third quarter of 2013 of $3.0 million was $0.9 million or 43% greater than in the third quarter of 2012 primarily as a result of a one-week shorter August closure period in 2013 than in 2012 and a buyout in September 2013. An EBITDA loss of $0.6 million was flat to the third quarter of 2012, as the corresponding increase in departmental income was offset by increased local and corporate administrative and general costs as well as one-time management restructuring costs.
Revenue for the third quarter of 2013 was $27.2 million, up $1.2 million or 5% from $26.0 million in the third quarter of 2012. This increase was the result of a $1.2 million increase in revenue from the Company's PeruRail joint venture primarily due to increased passenger revenues as a result of a 13% increase in average ticket price and a 6% increase in tickets sold.
EBITDA of $7.8 million was $0.2 million or 3% lower than the $8.0 million recognized in the third quarter of 2012 primarily due to a $0.5 million EBITDA decrease for the Venice Simplon-Orient-Express train, which had higher costs as a result of an increase in the euro-sterling exchange rate, as well as a $0.1 million EBITDA loss at Orcaella, the Company's river cruise operation that launched in July in Myanmar, which is in its first quarter of operations.
In the third quarter of 2013, central overheads were $6.6 million compared to $7.1 million in the prior-year period, a savings of $0.5 million primarily due to executive recruitment costs in the third quarter of 2012 and decreased legal and professional fees.
In addition, the Company incurred $2.6 million of non-cash share-based compensation expense compared to $0.8 million in the third quarter of 2012.
The depreciation and amortization charge for the third quarter of 2013 of $10.7 million was up $0.1 million from the third quarter of 2012 as a result of the completion of several recent capital projects partially offset by a $1.1 million non-recurring reduction in depreciation following the finalization in the third quarter of a government grant at Reid's Palace.
The interest charge for the third quarter of 2013 was $8.6 million, down $0.3 million from $8.9 million in the prior year quarter. The company did not capitalize any interest related to El Encanto in the third quarter of 2013 compared to $1.0 million in the prior-year quarter.
The tax charge for the third quarter of 2013 was $13.7 million compared to a charge of $7.3 million in the same quarter in the prior year. The primary reason for the year-over-year increase in tax expense was the growth in underlying profits between the two periods.
The Company invested a total of $14.1 million in its portfolio during the third quarter of 2013, including $4.9 million for the renovation of El Encanto, $2.4 million at Charleston Place primarily for the rooms renovation project, $1.4 million at Copacabana Palace primarily for remaining payments on the main building renovation as well as the new pan-Asian restaurant, $0.7 million at Grand Hotel Europe primarily for renovating the hotel's kitchen and converting 19 historic rooms into suites, and the balance for routine capital expenditures.
At September 30, 2013, the Company had total debt (including the current portion and debt of consolidated variable interest entities) of $642.7 million, working capital loans of $nil and cash balances of $169.4 million (including $16.3 million of total restricted cash, of which $13.0 million was in other assets), resulting in total net debt of $473.3 million compared to total net debt at the end of 2012 of $505.0 million. At September 30, 2013, the ratio of net debt to trailing 12-month adjusted EBITDA was 4.0 times, down from 4.8 times at December 31, 2012.
Undrawn amounts available to the Company at September 30, 2013 under short-term lines of credit were $3.0 million, bringing total cash availability (excluding restricted cash) at September 30, 2013 to $156.1 million.
At September 30, 2013, approximately 42% of the Company's debt was at fixed interest rates and 58% was at floating interest rates. The weighted average maturity of the debt was approximately 2.2 years and the weighted average interest rate was 4.1%. The Company had $196.6 million of debt repayments due within twelve months. These obligations are expected to be met through a combination of operating cash flow, proceeds from recent divestment of non-core assets, refinancing of the facilities and utilization of available cash.