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 Orient-Express Hotels Reports First Quarter 2007 Net Loss of $3.7 Million,
an Improvement of $3.7 Million Over Prior Year
Expects to Win 20 Year Lease on the Famous Hotel Cataratas at
Iguassu Falls in Brazil
HAMILTON, Bermuda, May 3, 2007 - 

Reconciliation and Adjustments

    $'000 - except per share amounts      Three months ended March 31
                                               2007            2006

    US GAAP reported net earnings            (3,681)         (7,401)
    Adjusted items:
    (*) FIN 48 charge                           232               -
    (*) Forex (gain) net of tax                 (67)           (551)

    Adjusted net earnings                    (3,516)         (7,952)

    Adjusted EPS - $                          (0.08)          (0.20)
    Reported EPS - $                          (0.09)          (0.19)
    Number of shares (millions)                42.3            39.4

First quarter highlights:
    - EBITDA up 68% to $14.3 million compared to the same quarter last year
    - EBITDA growth in all regions, EBITDA margin up 390 bps over last year
    - Local currency same store RevPAR increases by 7%
    - Highest bid on Cataratas Hotel

Orient-Express Hotels Ltd. (NYSE: OEH;, owners or part-owners and managers of luxury hotels, restaurants, tourist trains and river cruise properties in 25 countries, today announced its results for the quarter ended March 31, 2007.

The net loss for the period was $3.7 million (loss of $0.09 per common share) on revenue of $99.4 million, compared with a net loss of $7.4 million (loss of $0.19 per common share) on revenue of $81.5 million in the first quarter of 2006. The adjusted net loss for the period was $3.5 million (loss of $0.08 per common share) compared with an adjusted net loss of $8.0 million (loss of $0.20 per common share) in the first quarter of 2006. The first quarter is a traditional loss-making period for the company because many of its northern hemisphere hotels are closed and the Venice Simplon-Orient-Express tourist train, The Royal Scotsman and Afloat in France canal cruises do not operate for most of the quarter.

Total revenue was up $17.9 million over the prior year quarter and all regions contributed to this 22% revenue growth. Europe showed the strongest revenue growth with revenues at the recently refurbished Reids Palace Hotel in Madeira up over $4 million. The hotel was closed for much of the first quarter in 2006. In the North American region, particularly encouraging was the recovery of Maroma post-hurricane, reporting $2.7 million revenue growth, more than double the prior year quarter. In the Rest of World region the addition of the newly acquired Asian hotels portfolio added $4.2 million of revenue. Worldwide same store RevPAR increased 7% measured in local currency.

Mr. Simon M C Sherwood, President and Chief Executive Officer, said that he was pleased with the company's performance in the first quarter. "The good news is that we are successfully converting extra revenue to improved profits as the company's EBITDA margin for the quarter was up 4 percentage points over the prior year quarter. As a result, EBITDA for the quarter has grown $5.8 million, or 68%, to $14.3 million."

Mr. Sherwood continued: "We are pleased to announce that today in Brasilia the latest stage of the bid process was completed for the world famous Hotel Cataratas, situated directly beside the Iguassu Falls in Brazil. This 203 room hotel is the only one located inside the national park and Orient-Express Hotels bid was the highest and we expect to sign a 20 year lease for the property in the next 90 days." 

He reviewed performance by region, as follows:

Europe: EBITDA of owned hotels in Europe was a loss of $3.6 million, a $3.6 million improvement over the prior year period, due primarily to Reid's Palace Hotel being open for the quarter, along with excellent performances from the Grand Hotel Europe and Le Manoir aux Quat'Saisons.

North America: EBITDA of owned hotels was $6.1 million, a $0.8 million improvement over the prior year period mostly due to a strong first quarter high season at Maroma Resort and Spa in Mexico, despite a $0.5 million decline from the Windsor Court in New Orleans. The Windsor Court's main competitor was re-opened and will likely impact results until demand recovers to pre-hurricane Katrina levels.

Southern Africa: EBITDA of owned hotels was up 7% at $4.3 million compared with $4.0 million in the prior year period. The Westcliff Hotel in Johannesburg and Orient-Express Safaris were responsible for the growth.

South America: The Copacabana Palace is having another strong high season and EBITDA for the area grew to $5.6 million from $5.2 million.

Asia Pacific: EBITDA of owned hotels was $1.3 million compared with $0.4 million in the prior year period. All of the improvement came from the Asian hotels portfolio that was acquired in July 2006.

Hotel management fees and part-ownership interests: EBITDA was $4.6 million compared with $3.4 million in the year earlier period. Earnings from Charleston Place were up 28%, earnings from the Peruvian hotels joint venture were up 17% and the Ritz in Madrid also showed marked improvement.

Restaurants: EBITDA decreased $0.2 million to $0.9 million. The decrease in EBITDA is primarily due to the effect of the sale of the company's interest in Harry's Bar during the second quarter of 2006.

Tourist trains and river cruises: EBITDA was $1.1 million compared with a prior year EBITDA of $0.2 million. The company's Peruvian rail operations showed $0.6 million EBITDA growth, an increase of 38%. The European luxury tourist trains' EBITDA was also up for this the low season and bookings continue strong for the high season.

Real Estate: The company did not record any real estate revenues in the first quarter as timing of construction means we expect these earnings will only be recognized from the second quarter onwards. Cupecoy and the French-side villa developments in St. Martin are both progressing smoothly, with Phase 1 of the French-side villas selling very quickly. We have buyers and deposits for 75% of the villas.
Regarding new investment, the company managed to accelerate the acquisitions of its joint venture holdings in Afloat in France and The Royal Scotsman. While small, both deals were done at very attractive multiples and will, therefore, be immediately accretive to results. The major refurbishment work at El Encanto in Santa Barbara is well underway and due to be completed in the first quarter of 2008 when the hotel will reopen with 92 luxury rooms. The company has also reached agreement in principle to develop a boutique property and surrounding villas in Buzios, one of the most popular up-market destinations in Brazil, not far from Rio de Janeiro. It is expected that a definitive agreement will be announced in coming weeks.

Mr. Sherwood ended by commenting: "Worldwide hotel bookings are up 5% but the overall number masks the strong growth in bookings at our European hotels which are currently up 16%. This bodes well for an excellent high season at these properties. Bookings for our Trains and Cruises operations are up 27% which further confirms that we should expect a strong outturn in 2007 from our key European businesses."

Mr. James B Sherwood, Chairman, indicated that the Nominating and Governance Committee of the Board, composed of independent directors, has commenced a search for a new Chief Executive to replace Simon Sherwood. Candidates from both within the company and outside are being interviewed with the assistance of an executive search firm.

Management believes that EBITDA (net earnings adjusted for interest expense, foreign currency, tax, depreciation and amortization) is a useful measure of operating performance, for example 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, although the company's EBITDA may not be comparable in all instances to that disclosed by other companies. EBITDA does not represent net cash provided by operating, investing and financing activities under U.S. generally accepted accounting principles (U.S. GAAP), 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 or net earnings under U.S. GAAP for purposes of evaluating operating performance.

Adjusted net earnings and adjusted E.P.S. are non-GAAP financial measures and do not have any standardized meaning prescribed by U.S. GAAP. It is, therefore, unlikely to be comparable to similar measures presented by other companies, which may be calculated differently, and should not be considered as an alternative to net earnings, cash flow from operating activities or any other measure of performance prescribed by U.S. GAAP. Management considers adjusted net earnings be a meaningful indicator of operations and uses it as a measure to assess operating performance. Adjusted net earnings and adjusted E.P.S. are also used by investors, analysts and lenders as a measure of financial performance.

Orient-Express Hotels Ltd
Three Months ended March 31, 2007
Summary of Operating Results

                                                       Three months ended
                                                             March 31
    $'000 - except per share amount                      2007        2006
    Revenue and earnings from unconsolidated
    Owned hotels
    - Europe                                           21,115      12,385
    - North America                                    23,138      20,709
    - Rest of World                                    34,645      29,828
    Hotel management & part ownership interests         4,647       3,370
    Restaurants                                         5,295       5,388
    Trains & Cruises                                   10,575       7,615
    Real Estate                                             -       2,196
    Total (1)                                          99,415      81,491

    Analysis of earnings
    Owned hotels
    - Europe                                          (3,555)     (7,167)
    - North America                                     6,120       5,302
    - Rest of World                                    11,215       9,577
    Hotel management & part ownership interests         4,647       3,370
    Restaurants                                           868       1,098
    Trains & Cruises                                    1,148         166
    Real Estate                                         (458)         719
    Central overheads                                 (5,681)     (4,532)
    EBITDA                                             14,304       8,533
    Depreciation & amortization                       (9,068)     (8,606)
    Interest                                         (10,561)     (9,770)
    Foreign exchange                                      102         682
    Earnings before tax                               (5,223)     (9,161)
    Tax                                                 1,542       1,760
    Net earnings on common shares                     (3,681)     (7,401)
    Earnings per common share                         ($0.09)     ($0.19)
                                                         42.3        39.4

    Number of shares - millions

    (1) Comprises earnings from unconsolidated companies of $3,489,000 (2006
    -$2,240,000) and revenue of $95,926,000 (2006 - $79,251,000).

    Orient-Express Hotels Ltd

    Three Months ended March 31, 2007

    Summary of Operating Information for Owned Hotels

                                    Three months ended
                                          March 31
                                     2007         2006
    Average Daily Rate
    (in U.S. dollars)
    Europe                            398          314
    North America                     438          347
    Rest of World                     284          310
    Worldwide                         346          323

    Rooms Available (000's)
    Europe                             63           47
    North America                      55           49
    Rest of World                     110           86
    Worldwide                         228          182

    Rooms Sold (000's)
    Europe                             26           16
    North America                      36           38
    Rest of World                      74           58
    Worldwide                         136          112

    RevPAR (in U.S. dollars)
    Europe                            157          108
    North America                     280          266
    Rest of World                     189          210
    Worldwide                         202          199

                                                             Change %
    Same Store RevPAR                                    Dollar     Local
    (in U.S. dollars)                                            currency
    Europe                            108          103       4%        0%
    North America                     395          369       7%        7%
    Rest of World                     207          210      -1%        7%
    Worldwide                         229          227       1%        7%

    Orient-Express Hotels Ltd

    Consolidated and Condensed Balance Sheets

                                                         March 31 December 31
    $'000                                                    2007        2006


    Cash                                                   59,473      79,318
    Accounts receivable                                    76,203      74,327
    Due from related parties                               20,741      19,939
    Prepaid expenses and other                             15,929       9,485
    Inventories                                            39,003      35,789
    Real estate assets                                     39,696      35,821
    Total current assets                                  251,045     254,679

    Property, plant & equipment, net book value         1,204,357   1,183,400
    Investments                                           131,916     130,124
    Goodwill                                              122,143     121,651
    Other intangible assets                                20,390      20,149
    Other assets                                           44,575      41,660
                                                        1,774,426   1,751,663

    Liabilities and Shareholders' Equity

    Working capital facilities                             66,590      46,590
    Accounts payable                                       25,449      26,227
    Due to related parties                                  1,580       1,249
    Accrued liabilities                                    53,195      55,916
    Deferred revenue                                       36,214      25,501
    Current portion of long-term debt and capital          82,028      83,397
    Total current liabilities                             265,056     238,880

    Long-term debt and obligations under capital          585,861     586,300
    Deferred income taxes                                 105,367     106,598
    Other liabilities                                      40,308      11,007
    Minority interest                                       1,702       1,882

    Shareholders' equity                                  776,132     806,996
                                                        1,774,426   1,751,663

This news release contains, in addition to historical information, forward-looking statements that involve risks and uncertainties. These include statements regarding earnings outlook, investment plans and similar matters that are not historical facts. These statements are based on management's current expectations and are subject to a number of uncertainties and risks that could cause actual results to differ materially from those described in the forward-looking statements. Factors that may cause a difference include, but are not limited to, those mentioned in the news release, unknown effects on the travel and leisure markets of terrorist activity and any police or military response, varying customer demand and competitive considerations, realization of hotel bookings and reservations and planned property development sales as actual revenue, inability to sustain price increases or to reduce costs, fluctuations in interest rates and currency values, uncertainty of negotiating and completing proposed capital expenditures and acquisitions, adequate sources of capital and acceptability of finance terms, possible loss or amendment of planning permits and delays in construction schedules for expansion or development projects, delays in reopening properties closed for repair or refurbishment and possible cost overruns, shifting patterns of tourism and business travel and seasonality of demand, adverse local weather conditions, uncertainty of recovering on insurance claims for property damage and lost earnings, changing global and regional economic conditions, and legislative, regulatory and political developments. Further information regarding these and other factors is included in the filings by the company with the U.S. Securities and Exchange Commission.
Orient-Express Hotels will conduct a conference call on May 4, 2007 at 10.00 AM (EDT) which is accessible at +1-866-220-1452 (US toll free) or +44- 1452-542300 (Standard International access). A re-play of the conference call will be available until 5.00pm (EDT) Friday, May 11, 2007 and can be accessed by calling +1-866-247-4222 (US toll free) or +44-1452-550-000 (Standard International) and entering replay access number 7362669. A re-play will also be available on the company's website:


Orient Express Hotels Ltd


Also See: James B. Sherwood, Founder and Chairman of Orient-Express Hotels to Retire from Executive Duties with the Company / December 2006
Orient-Express Hotels Acquires 75% Shareholding in Casa de Sierra Nevada, San Miguel de Allende, Mexico, its 50th Property / February 2006


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