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

Hotel Online Special Report

advertisement
..
..

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

HAMILTON, Bermuda, February 22, 2005 - Orient-Express Hotels Ltd. (NYSE: OEH), investor in 49 deluxe hotel, restaurant, tourist train and river cruise properties in 25 countries, today announced its results for the fourth quarter and year ended December 31, 2004. For the quarter, net earnings were $8.4 million ($0.25 per common share) compared with $8.6 million ($0.27 per common share) for the fourth quarter of 2003 (which included a $4.3 million gain on the sale of a hotel equal to $0.13 per common share). Excluding the gain on sale, net earnings for the period increased 91% from $4.4 million to $8.4 million. Revenue was up 13% to $95.8 million from $84.9 million in the prior year period.

For the year ended December 31, 2004 net earnings were $28.2 million ($0.82 per common share) compared with $23.6 million ($0.76 per common share) in the prior year. Excluding the gain on the sale of a hotel in 2003, net earnings were up 46% from $19.4 million to $28.2 million. Revenue for 2004 was up 12% from $329.5 million to $369.0 million.

Mr. James B. Sherwood, Chairman, said that the fourth quarter finished strongly in all regions except Europe. EBITDA in North America more than doubled from $2.3 million in the fourth quarter of 2003 to $5.6 million in the fourth quarter of 2004. South Pacific properties had a similar percentage increase from an EBITDA of $0.4 million in the fourth quarter of 2003 to $1 million in the fourth quarter of 2004. South American hotels showed a significant increase despite the Miraflores Park Hotel in Lima being closed for major upgrade during most of the period. Tourist trains registered EBITDA of $4.2 million compared with $2.9 million in the year earlier period and restaurants were up 22% due to improving results from La Cabana in Buenos Aires which only opened late in 2003.

"I have personally inspected 14 of our properties in the last 90 days and they have uniformly reported significant fourth quarter gains over the prior year and perhaps more importantly, are forecasting a strong 2005. Although we are concerned about the strength of the Euro against the dollar and its impact on European travel in 2005, bookings for our European based Venice Simplon-Orient-Express tourist train are currently 10% higher than at this time last year. Our most recent acquisition, the 301 room Grand Hotel Europe in St. Petersburg, was made and financed in U.S. dollars and its room revenues are dollar denominated (food and beverage revenue is rouble denominated).

"We are seeing exceptional growth in the Latin American market, fuelled not only by visitors from North America but also from Europe and regional clients. We are investing in our existing properties in this region and are also looking seriously at acquisitions. Additional rooms are being built at Maroma, we are adding locomotives and passenger cars to our Machu Picchu railway in Peru, a new spa is being created in the Copacabana Palace and the new conference and restaurant facilities at the Miraflores Park Hotel in Lima will come on stream when the hotel reopens in a few days' time.

"Thankfully, our Pansea Orient-Express Hotels affiliate in southeast Asia was unaffected by the tsunami which hit the region in December. EBITDA for Pansea in 2004 increased by 100% over 2003 to $2.4 million. Pansea results are not consolidated into the results of Orient-Express Hotels except to the extent of interest earned on the convertible loan to that company.

"Overall, I consider 2004 to have been a highly satisfactory year for the company. Although EBITDA for our European hotels (excluding the hotel sold in 2003) was flat compared with 2003, EBITDA for our European based tourist trains was up a remarkable $4.8 million, a 139% increase, making Europe as a whole well ahead of prior year. North American hotels increased their EBITDA by $3.9 million, southern Africa by $1.9 million (despite considerable strengthening of the local currencies against the U.S. dollar), South Pacific was up by a solid $2.6 million, South American hotels were up $2.4 million and South American trains by $2.8 million, restaurants were up $1.3 million and management fees were up $1.4 million. Our capacity was not stretched which means the upside potential is excellent as occupancy rises. We made a number of excellent acquisitions and have begun to develop our land resources in St. Martin while our property sales program in Charlottesville has gained momentum. The Grand Hotel Europe in St. Petersburg, the "icon" of all hotels in Russia, was acquired earlier this month at a pro-forma 2004 EBITDA multiple of 6. The outlook for the full year 2005 is exceptionally promising," he concluded.

Mr. Simon M.C. Sherwood, President, said that in 2004's fourth quarter same store RevPAR increased by 18% to $204 from $169 in the prior year period. Average daily rate increased by 7.5% from $320 to $344. EBITDA margin for the quarter was 20% compared with 17% in the prior year period (excluding the gain on sale of a hotel).

He reviewed full year performance by region as follows:

Owned European hotels. For the year EBITDA was $29.9 million, the same as in 2003 (excluding the hotel sold in 2003). Portuguese hotels continued to under-perform but the slack was taken up by better results from Italian and French hotels.

Owned North American hotels. EBITDA for 2004 was $15.0 million compared with $11.1 million in 2003. All properties registered gains but the largest was a $1.5 million improvement at the Maroma Resort & Spa on the Riviera Maya on Mexico's Yucatan Peninsula. This improvement was due to addition of rooms and improvement of other facilities. A magnificent spa has just been opened at this property with treatments derived from ancient Mayan practices.

Owned Southern Africa hotels. EBITDA for 2004 was $6.2 million compared with $4.3 million in 2003. The principal gain arises from the Westcliff in Johannesburg with its new banqueting and conference facility. This property is also benefiting from the urban renewal of downtown Johannesburg, as it is located much closer to the center of the city than competing upscale hotels.

Owned South American hotels. EBITDA was $10.0 million compared with $7.5 million in 2003. The Copacabana Palace Hotel in Rio de Janeiro accounted for nearly all the improvement in light of temporary closure of the Miraflores Park Hotel in Lima. Food and beverage, particularly banqueting, account for 40% of the Copacabana Palace's profits. It is considered the leading banqueting venue in Brazil.

Owned South Pacific Hotels. EBITDA was $1.9 million compared with a loss of $0.7 million in 2003. Solid gains were recorded at all properties, however, Bora Bora Lagoon Resort recorded the largest improvement. Capital expenditure at these hotels is translating into good earnings gains.

Management and part ownership interests. EBITDA for 2004 was $14.9 million compared with $13.5 million in 2003. The largest gain of $1.6 million was recorded from Peruvian hotels. The Ritz in Madrid was slightly down due to the effects of the train bombings early in the year but this was offset by improvement at Charleston Place.

"We intend to commence construction of the Nazarenas annex to our Hotel Monasterio in Cuzco, Peru in the middle of this year with a view to completion of the first phase of 60 rooms by the end of 2006. We are having to increase capacity of both hotels and trains in the Peruvian Andes to meet the demands of the growing market."

Restaurants. EBITDA for the year was $3.9 million compared with $2.6 million in 2003. '21' Club in New York City accounted for most of the increase. Although La Cabana in Buenos Aires recorded a loss in its first year of operation, results have been improving quarter by quarter.

Tourist trains & river cruising. EBITDA in 2004 was $13.1 million compared with $6.0 million in 2003. The Venice Simplon-Orient-Express and PeruRail were each more than $2 million ahead of 2003. The British Pullman and Northern Belle tourist trains in the U.K. were both more than $1 million ahead of 2003.

"Depreciation increased by $3.1 million in 2004 over 2003 as a result of our capital investment program. Taxes rose by $2.2 million to $5.2 million in 2004 as a result of higher profits.

"Although we do not brand our individual properties as "Orient-Express" we have been using the Orient-Express name much more widely in our sales and marketing, which is increasing the cross-sell between our properties and creating a higher definition of the company within the travel community. We are beginning to see the benefits of this strategy. We have also been successful in reducing our reliance upon tour operators in certain markets. There remains much to be done in these areas but these efforts should help to accelerate our profitability," he concluded.

ORIENT-EXPRESS HOTELS LTD
Three Months ended December 31, 2004
SUMMARY OF OPERATING RESULTS                                                   Three months ended
                                                      December 31
    $'000 - except per share amount                2004        2003
    Revenue and earnings
    from unconsolidated companies
    Owned hotels
    - Europe                                         20,024      19,247
    - North America                                  21,942      16,786
    - Rest of World                                  24,064      19,733
    Hotel management & part ownership interests       4,314       3,464
    Restaurants                                       7,367       6,838
    Trains & Cruises                                 18,056      14,541
    Gain on sale of Quinta do Lago                        -       4,250
    Total (1)                                        95,767      84,859

    Analysis of earnings
    Owned hotels
    - Europe                                            416       1,914
    - North America                                   5,569       2,268
    - Rest of World                                   6,910       4,714
    Hotel management & part ownership interests       4,314       3,464
    Restaurants                                       2,377       1,956
    Trains & Cruises                                  4,156       2,867
    Central Overheads                               (4,151)     (3,128)
    Gain on sale of Quinta do Lago                        -       4,250
    EBITDA                                           19,591      18,305
    Depreciation & Amortization                     (7,198)     (6,586)
    Interest                                        (2,618)     (2,919)
    Earnings before Tax                               9,775       8,800
    Tax                                             (1,353)       (182)
    Net earnings on common shares                     8,422       8,618
    Earnings per common share, basic & diluted         0.25        0.27
                                                      34.30       32.15

Number of shares - millions

    (1) Comprises earnings from unconsolidated companies of $2,882,000 (2003:
$2,901,000) and revenue of $92,885,000 (2003: $81,958,000).
                            ORIENT-EXPRESS HOTELS LTD
                      Three Months Ended December 31, 2004
                SUMMARY OF OPERATING INFORMATION FOR OWNED HOTELS
                           Three months ended
                               December 31
                             2004      2003
    Average Daily Rate

    (in dollars)
    Europe                       541       480
    North America                325       319
    Rest of World                280       243
    Worldwide                    344       320

    Rooms Sold (thousands)
    Europe                        20        23
    North America                 38        31
    Rest of World                 49        46
    Worldwide                    107       100

    RevPar (in dollars)
    Europe                       245       226
    North America                237       188
    Rest of World                162       126
    Worldwide                    204       169

Change %
Same Store RevPAR Dollar Local

    (in dollars)                                       Currency
    Europe                       229      216       6%      -2%
    North America                225      191      18%      18%
    Rest of World                165      131      27%      18%
    Worldwide                    197      167      18%      12%

                            ORIENT-EXPRESS HOTELS LTD
                      Twelve Months ended December 31, 2004
                          SUMMARY OF OPERATING RESULTS
                                                  Twelve months ended
                                                      December 31
    $'000 - except per share amount                2004        2003
    Revenue and earnings
    from unconsolidated companies
    Owned hotels
    - Europe                                        116,074     115,884
    - North America                                  75,376      66,564
    - Rest of World                                  79,576      62,989
    Hotel management & part ownership interests      14,885      13,474
    Restaurants                                      20,562      17,595
    Trains & Cruises                                 62,564      48,712
    Gain on sale of Quinta do Lago                        -       4,250
    Total (1)                                       369,037     329,468

    Analysis of earnings
    Owned hotels
    - Europe                                         29,868      32,789
    - North America                                  14,951      11,097
    - Rest of World                                  18,051      11,077
    Hotel management & part ownership interests      14,885      13,474
    Restaurants                                       3,911       2,616
    Trains & Cruises                                 13,057       5,984
    Central overheads                              (15,707)    (12,157)
    Gain on sale of Quinta do Lago                        -       4,250
    EBITDA                                           79,016      69,130
    Depreciation & Amortization                    (28,349)    (25,265)
    Interest                                       (17,225)    (17,219)
    Earnings before Tax                              33,442      26,646
    Tax                                             (5,220)     (3,037)
    Net earnings on common shares                    28,222      23,609
    Earnings per common share, basic & diluted         0.82        0.76
                                                      34.30       31.14

Number of shares - millions

    (1) Comprises earnings from unconsolidated companies of $11,753,000
(2003: $9,355,000) and revenue of $357,284,000 (2003: $320,113,000).
                            ORIENT-EXPRESS HOTELS LTD
                      Twelve Months Ended December 31, 2004
                SUMMARY OF OPERATING INFORMATION FOR OWNED HOTELS
                           Twelve months ended

                               December 31
                                 2004      2003
    Average Daily Rate

    (in dollars)
    Europe                        626       493
    North America                 322       314
    Rest of World                 247       228
    Worldwide                     366       340

    Rooms Sold (thousands)
    Europe                        108       139
    North America                 142       131
    Rest of World                 183       160
    Worldwide                     433       430

    RevPar (in dollars)
    Europe                        342       280
    North America                 217       200
    Rest of World                 136       107
    Worldwide                     214       184

Change %
Same Store RevPAR Dollars Local

    (in dollars)                                       Currency
    Europe                       346      307      13%       2%
    North America                216      200       8%       8%
    Rest of World                137      106      29%      18%
    Worldwide                    213      184      16%       8%

ORIENT-EXPRESS HOTELS LTD
CONSOLIDATED AND CONDENSED BALANCE SHEETS

                                                      December 31 December 31
    $'000                                                    2004        2003
    Assets
    Cash                                                 $ 85,610    $ 81,347
    Accounts receivable                                    34,984      28,060
    Due from related parties                               14,718      10,737
    Prepaid expenses and other                             11,914      11,717
    Inventories                                            28,965      26,115
    Total current assets                                  176,191     157,976

    Property, plant & equipment, net book value           916,811     822,257
    Investments                                           123,599     146,495
    Goodwill                                               29,529      29,529
    Other assets                                           19,461      12,969
                                                       $1,265,591 $1,169,226
    Liabilities and Shareholders' Equity
    Working capital facilities                           $ 42,920    $ 19,165
    Accounts payable                                       23,839      18,830
    Due to related parties                                  5,453       4,924
    Accrued liabilities                                    37,288      40,409
    Deferred revenue                                       20,493      12,617
    Current portion of long-term debt and capital          46,245      51,271
    leases
    Total current liabilities                             176,238     147,216

    Long-term debt and obligations under capital          537,461     502,917
    leases
    Deferred income taxes                                   2,710       2,846
    Minority interest                                       4,192       3,803

Shareholders' equity 544,990 512,444
$1,265,591 $1,169,226

Management believes that EBITDA (net earnings adjusted for interest, tax, depreciation and amortization) is a useful measure of operating performance, 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. However, EBITDA does not represent cash flow from operations as defined by 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 under U.S. generally accepted accounting principles for purposes of evaluating results of operations.

This news release contains, in addition to historical information, forward-looking statements that involve risks and uncertainties.

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

Also See:	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
	Orient-Express Hotels Ltd. Reports Net Earnings of $25.3 million for Year Ending 2002; RevPAR Down 2% for the Year / March 2003

To search Hotel Online data base of News and Trends Go to Hotel.Online Search