Hotel Online  Special Report

 Orient-Express Hotels Ltd. Reports $23.6 million Net
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," he concluded.

Three Months ended December 31, 2003

                                                  Three months ended

                                                         December 31
    $'000                                             2003        2002
    Owned hotels
    - Europe                                         19,247      18,954
    - North America                                  16,786      15,873
    - Rest of World                                  19,733      15,328
    Hotel management & part ownership interests       3,464       3,531
    Restaurants                                       6,838       6,390
    Trains & Cruises                                 14,541      13,374
    Total revenue                                    80,609      73,450

    Operating Profits
    Owned hotels
    - Europe                                          1,914       1,724
    - North America                                   2,268       2,372
    - Rest of World                                   4,714       3,503
    Hotel management & part ownership interests       3,464       3,525
    Restaurants                                       1,956       2,142
    Trains & Cruises                                  2,867       2,845
    Central overheads                               (3,128)     (2,452)
    Gain on sale of Quinta do Lago                    4,250           -
    EBITDA                                           18,305      13,659
    Depreciation & Amortization                     (6,586)     (5,191)
    Interest                                        (2,919)     (3,669)
    Earnings before Tax                               8,800       4,799
    Tax                                               (182)       (622)
    Net earnings on common shares                     8,618       4,177
    Earnings per common share                          0.27        0.14
    Number of shares - millions                       32.15       30.80

                            ORIENT-EXPRESS HOTELS LTD
                      Three Months Ended December 31, 2003

                           Three months ended

                                  December 31
                                 2003      2002
    Average Daily Rate

    (in dollars)
    Europe                       480       359
    North America                319       324
    Rest of World                243       195
    Worldwide                    320       276

    Rooms Sold (thousands)
    Europe                        23        29
    North America                 31        30
    Rest of World                 46        47
    Worldwide                    100       106

    RevPar (in dollars)
    Europe                       226       182
    North America                188       210
    Rest of World                126       103
    Worldwide                    169       152

                                                 Change %
    Same Store RevPAR                         Dollar   Local

    (in dollars)                                      Currency
    Europe                      232      203    15%      -3%
    North America               203      208    -3%      -3%
    Rest of World               127      102    25%       2%
    Worldwide                   171      152    12%      -1%

                            ORIENT-EXPRESS HOTELS LTD
                      Twelve Months ended December 31, 2003
                          SUMMARY OF OPERATING RESULTS

                                                  Twelve months ended

                                                        December 31
    $'000                                            2003          2002
    Owned hotels
    - Europe                                        115,884      99,939
    - North America                                  66,564      58,801
    - Rest of World                                  62,989      54,725
    Hotel management & part ownership interests      13,474      12,414
    Restaurants                                      17,595      18,115
    Trains & Cruises                                 48,712      45,308
    Total revenue                                   325,218     289,302

    Operating Profits
    Owned hotels
    - Europe                                         32,789      29,170
    - North America                                  11,097      11,149
    - Rest of World                                  11,077      12,696
    Hotel management & part ownership interests      13,474      12,408
    Restaurants                                       2,616       3,779
    Trains & Cruises                                  5,984       8,348
    Central overheads                              (12,157)    (10,509)
    Gain on sale of Quinta do Lago                    4,250           -
    EBITDA                                           69,130      67,041
    Depreciation & Amortization                    (25,265)    (19,546)
    Interest                                       (17,219)    (18,351)
    Earnings before Tax                              26,646      29,144
    Tax                                             (3,037)     (3,850)
    Net earnings on common shares                    23,609      25,294
    Earnings per common share                          0.76        0.82
    Number of shares - millions                       31.14       30.80

                      Twelve Months Ended December 31, 2003

                                 Twelve months ended

                                    December 31
                                   2003      2002
    Average Daily Rate

    (in dollars)
    Europe                         493       376
    North America                  314       314
    Rest of World                  228       186
    Worldwide                      340       286

    Rooms Sold (thousands)
    Europe                         139       157
    North America                  131       118
    Rest of World                  160       176
    Worldwide                      430       451

    RevPar (in dollars)
    Europe                         280       242
    North America                  200       206
    Rest of World                  107        96
    Worldwide                      184       168

                                                 Change %
    Same Store RevPAR                          Dollars   Local
    (in dollars)                                      Currency
    Europe                      284      247      15%      -4%
    North America               203      206      -2%      -2%
    Rest of World               107       96      12%      -5%
    Worldwide                   183      168       9%      -4%

                            ORIENT-EXPESS HOTELS LTD

                                                    December 31  December 31
    $'000                                                2003        2002
    Cash                                               $ 81,347    $ 37,860
    Accounts receivable                                  43,223      46,234
    Prepaid expenses and other                           11,717       9,090
    Inventories                                          26,115      22,838
    Total current assets                                162,402     116,022
    Real estate and other fixed assets, net book value  822,257     757,402
    Investments                                         146,495      85,159
    Intangible assets                                    29,529      29,529
    Other assets                                         12,969      10,420
                                                     $1,173,652    $998,532
    Liabilities and Shareholders' Equity
    Working capital facilities                         $ 19,165    $ 23,800
    Accounts payable                                     23,754      20,271
    Accrued liabilities                                  44,835      46,831
    Deferred revenue                                     12,617      15,107
    Current portion of long-term debt and capital        51,271      37,243
    Total current liabilities                           151,642     143,252

    Long-term debt and obligations under capital        502,917     421,773
    Deferred income taxes                                 2,846       3,330
    Minority interest                                     3,803       3,695
    Shareholders' equity                                512,444     426,482
                                                     $1,173,652    $998,532

Management believes that EBITDA (earnings before 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 measure commonly used in the hotel and leisure industry. However, EBITDA does not represent cash flow from operations as defined by US 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 US generally accepted accounting principles for purposes of evaluating results of operations. For a reconciliation of EBITDA with the company's 2003 and 2002 earnings from operations, see Item 7-Management's Discussion and Analysis in the company's Form 10-K annual report for the year ended December 31, 2003.

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

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