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Orient-Express Hotels Ltd. Invests in Hosia Company Ltd., Operator of  5 Unique Hotels in Southeast Asia
Under the Brand Name Pansea


February 2, 2004 - Orient-Express Hotels Ltd. , owner and operator of 39 luxury hotel, tourist train, cruise and restaurant properties in 17 countries today announced it has invested in Hosia Company Ltd., the Hong Kong holding company which owns or part owns and operates 5 unique hotels in southeast Asia under the brand name Pansea.
Mr. James B. Sherwood, Chairman, said that Orient-Express Hotels has been under-represented in hotels in Asia, only maintaining investments in the Eastern & Oriental Express tourist train which operates between Singapore and Bangkok and the Road to Mandalay cruise ship which operates on the Irrawaddy River between Mandalay and Pagan in Burma. Despite a number of attempts to acquire hotels in the region over the
Pansea  Yangon
35 Taw Win Road, Dagon Township
Yangon, Myanmar
years either asking prices did not correspond with earnings potential or the competitive environment was poor as a result of excess capacity. On a trip to the region in early 2003 he noted that the Pansea properties had been developed with remarkable style by the company's owners, Stanislas Rollin and Robert Molinari, and were the market leaders in each location. Although the five Pansea hotels only have a total of 234 rooms they are all capable of expansion in step with demand.

The properties are located in Luang Prabang, the ancient royal capital of Laos; Koh Samui on the Gulf of Siam in Thailand; Rangoon, Burma, in the former palace of the Shan Province governor; Siem Reap, Cambodia close to the famous temples of Angkor Wat; and Bali, Indonesia where the property occupies a beach location superior to all other hotels on the island.

Mr. Sherwood said the transaction has been structured in a way to permit the original owners to develop a number of additional unique properties in the region during a period of five years after which Orient-Express Hotels has the right to acquire 100% of the equity of Hosia. A project is well advanced to build a second hotel in Bali in the Ubud Gorge and hotels in Vietnam and Pagan, Burma are under consideration. 

Orient-Express Hotels has been separately working on a hotel project in Thailand and expects to make an announcement concerning it in the coming weeks. It is envisioned that this property would be marketed together with the Pansea Asia hotels. Until such time as Orient-Express Hotels owns 100% of Hosia the properties will be branded both as Pansea and with individual names. Orient-Express Hotels will market the hotels under the individual names as it is not the company's policy to promote brand names, believing that individual names allow higher room rates to be achieved than brand names. Hosia will continue to market under the Pansea brand name in this period.

Simon Sherwood, President of Orient-Express Hotels, explained that the company in the first phase was injecting $8 million of capital into Hosia by way of a 5% interest p.a. convertible loan. Orient-Express Hotels has the right to convert this loan into approximately 25% of Hosia's equity in three years time at a 50% premium per share on today's paid in capital. On the fifth anniversary a put/call arrangement will be exercisable for the balance of the shares based on 8x average EBITDA of Hosia in 2007 and 2008 less debt. The convertible loan is intended to be used primarily to fund additional properties and expansion of existing units.

"Although this structure provides only a low rate of return through interest on the convertible loan in the early years, it should allow Orient-Express Hotels in due course to bring onto its balance sheet a thriving group of hotels at an 8x EBITDA valuation. The investment will also serve as an important platform for growth in a region where the company has been under-represented until now. Southeast Asia is an exotic, romantic region for tourists to visit. Operating costs are low which enabled Pansea's Jimbaran Beach property in Bali to operate profitably even in the aftermath of the Bali bombing incident in 2002," he said.

William W. Galvin
tel: +1-203/618-9800
Orient-Express Hotels Inc.
Also See: Orient-Express Hotels Reports Net Income for 3rd Qtr 2003 of $8.2 million Compared with Net Income of $9.1 million Previous Year; Declares First Cash Dividend, Signs Letter Of Intent For Acquisition Of Hotel Group / November 2003
Orient-Express Hotels Ltd. Sells the Hotel Quinta do Lago, Algarve, Portugal for $40 million; 16 times Current Year EBITDA / November 2003

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