$12.9 million Up 37% Over the Year Earlier, Sees
Greater Demand for Quality at a Higher Price;
U.S. Owned Hotels ADR $377, Up from $357
|HAMILTON, Bermuda, August 4, 2004 - Orient-Express Hotels Ltd. (NYSE:
OEH, http://www.orient-express.com), owners of 45 deluxe hotel, restaurant,
tourist train and river cruise properties (38 of which it manages) in 21
countries, today announced its results for the second quarter and six months
ended June 30, 2004.
For the quarter net earnings were $12.9 million ($0.38 per common share) on revenue of $104.2 million, an increase of 37% over net earnings of $9.4 million in the year earlier period. Earnings per common share were up 23% and revenue was up 13% over the second quarter of 2003.
Net earnings for the six months were $8.3 million ($0.24 per common share) on revenue of $170.3 million, an increase of 22% over net earnings of $6.8 million in the year earlier period. Earnings per common share were up 9% and revenue was up 11% over the first six months of 2003.
Mr. James B. Sherwood, Chairman, said that the company was experiencing a broad recovery of demand for all its products in all its markets. Although operating profits in Europe from hotels were slightly down, this was due to absence of the Hotel Quinta do Lago's earnings since that property was sold late in 2003. Operating profits from tourist trains, which are largely based in Europe, more than doubled from $2 million to $4.6 million in the quarter. The Madrid railway bombings in March impacted the Hotel Ritz in April but results were back to normal in June and July.
He said that operating profits from North American hotels were up 33% to $4.7 million from $3.6 million in the prior year quarter while hotels in the rest of the world improved six-fold to $2.5 million from $0.4 million. Management and part-ownership interests were marginally ahead at $4.8 million vs. $4.6 million and restaurants were up 29% to $1.3 million from $1 million.
"Operating profits of the Pansea hotels in southeast Asia have more than doubled in the first six months of this year from $0.4 million to $0.8 million partially due to the absence of the SARS epidemic which occurred in 2003. We do not consolidate Pansea results in our own except to the extent of interest earned on our convertible loan to that company. The important thing is that Pansea is building value for our ultimate acquisition," he said.
Mr. Sherwood indicated that capital expenditure in existing properties is beginning to produce solid returns. "It currently appears that we will be able to complete the Hotel Caruso in Ravello, Italy in time for the summer season of 2005. A June, 2005 opening is planned".
"The company is currently pursuing acquisitions in Europe, North America and southeast Asia, both in hotels and tourist trains and river cruising," he said.
Mr. Simon M.C. Sherwood, President, said that average daily room rate of owned hotels in U.S. dollars was up 6% in the second quarter to $377 from $357 in the prior year period. Same store RevPAR in U.S. dollars was up 18% to $224 from $190 in the year earlier period. EBITDA margin for the quarter was 26% compared with 24% in the prior year period.
He reviewed performance by region as follows:
Europe. EBITDA of owned hotels in Europe was $12.9 million compared with $13.9 million in the year earlier period. Absence of the Quinta do Lago property accounted for the entire difference. Italian hotels were about $1 million ahead of the prior year while minor weaknesses in other countries were an offset.
North America. EBITDA for the quarter of owned hotels in North America was $4.7 million compared with $3.6 million in the prior year period. The Windsor Court in New Orleans, La Samanna in St. Martin and Maroma in Mexico all contributed to the improved results.
Southern Africa. EBITDA of owned hotels was $0.2 million compared with a loss of $0.2 million in the prior year period. The Westcliff in Johannesburg accounted for the entire improvement, due partially to the new conference and banqueting center which was opened in the third quarter of 2003. The second quarter is low season for Cape Town and Botswana.
South America. EBITDA of owned hotels was strongly ahead at $2.1 million compared with $1.4 million in the prior year period. Both the Copacabana Palace in Rio de Janeiro and the Miraflores Park in Lima contributed to the increase.
South Pacific. EBITDA of owned hotels was $0.2 million compared with a $0.8 million loss in the second quarter of 2003. The strong improvement was shared by all three properties: The Observatory in Sydney, Lilianfels in Australia's Blue Mountains and Bora Bora Lagoon Resort in French Polynesia.
Hotel management and part-ownership. EBITDA was relatively flat at $4.8 million compared with $4.6 million in the prior year period. Improved results in Peru were offset by effects of the Madrid bombing on the Ritz in Madrid.
Restaurants. EBITDA from restaurants was $1.3 million compared with $1 million in the year earlier period. '21' Club in New York accounted for most of the improvement although Harry's Bar in London was also slightly ahead.
Tourist trains and river cruises. EBITDA in the quarter was $4.6 million compared with $2 million in the year earlier period. The Venice Simplon-Orient-Express in Europe and PeruRail accounted for most of the increase, although U.K. trains also showed good gains. The river cruise operation in Burma had a difficult season due to exceptionally low water which resulted in cancelled trips.
Financial costs were flat year on year while depreciation in the quarter increased $0.5 million over the prior year period due to increased investment.
"The forward booking position looks healthy and we are well on the way to recovering the ground lost since 2000. We see corporate business increasing with a greater demand for quality at a higher price. We are strengthening our sales and marketing organization to handle our increased number of properties and are investing in improved information technology to support this program," he concluded.
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 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.
|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. Invests in Hosia Company Ltd., Operator of 5 Unique Hotels in Southeast Asia Under the Brand Name Pansea / February 2004|