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Orient-Express Hotels Reports 2007 Full-year Net Earnings of $33.6 million,
Down from $39.8 million Prior Year; Opening Hotels in Santa Barbara,
New York City, Brazil, Bali, and Peru

HAMILTON, Bermuda, February 25, 2008 - 

Fourth Quarter 2007 highlights

  • Fourth quarter total revenues of $151.2 million, up 12% over prior year
  • Fourth quarter net earnings from continuing operations of $10.2 million, up 53% over prior year
  • EPS from continuing operations of $0.24. Adjusted EPS of $0.25
  • World-wide same store RevPAR up 10% in local currency, 14% in U.S. dollars
  • Completed acquisition of land to develop a new '21' hotel in New York
  • Completed takeover of Hotel das Cataratas, Iguacu Falls, Brazil
Full-Year highlights
  • Full-year total revenues of $599.6 million, up 21% over prior year
  • Full-year net earnings from continuing operations of $50.3 million, up 37% over prior year
  • EPS from continuing operations of $1.19. Adjusted EPS of $1.25
  • Full-year EBITDA of $154.1 million up 13%, adjusted EBITDA up 19% over prior year
  • World-wide same store RevPAR up 11% in local currency, 15% in U.S. dollars
  • Accelerated acquisitions of The Royal Scotsman and Afloat in France businesses in Europe
  • Acquired land to build a hotel in Buzios, Brazil
Orient-Express Hotels Ltd. (NYSE: OEH,, owners or part-owners and managers of 51 luxury hotels, restaurants, tourist trains and river cruise properties operating in 25 countries, today announced its results for the fourth quarter and full year ended December 31, 2007.

For the fourth quarter, Orient-Express realized a GAAP net loss of $4.9 million (loss of $0.12 per common share) on revenue of $151.2 million compared with net earnings of $6.7 million ($0.16 per common share) on revenue of $135.2 million in the prior year period. Adjusted net earnings from continuing operations which exclude certain items, including an impairment charge related to a strategic review of Bora Bora Lagoon Resort, were $10.4 million ($0.25 per common share) for the quarter, compared to adjusted net earnings from continuing operations of $9.2 million ($0.22 per common share) the previous year. Revenue was up 12% over the fourth quarter of 2006.

For the year ended December 31, 2007 net earnings were $33.6 million ($0.79 per common share) compared with net earnings of $39.8 million ($0.98 per common share) in 2006. Revenue increased 21% from $497.1 million in 2006 to $599.6 million in 2007. Same store RevPAR increased 15% (11% in local currency) and EBITDA rose 13% from $136.7 million to $154.1 million. Adjusted net earnings from continuing operations were $53.0 million ($1.25 per common share) compared to adjusted net earnings from continuing operations of $41.4 million ($1.02 per common share) in 2006. Adjusted EBITDA was $155.2 million, an increase of 19% over 2006.

Adjusted EBITDA for the quarter was $31.0 million compared with $32.9 million for the same period in 2006. The 2007 results were impacted by the unforeseen conflict in Burma which resulted in EBITDA $1.9 million lower than for the same period in 2006. Additionally, the 2006 EBITDA included asset sales of $1.1 million and insurance credits of $2.7 million.

"We are extremely pleased to see that the luxury market continues to show strength, as reflected in Orient-Express' year-end and fourth quarter results," said Orient-Express Hotels President and CEO, Paul White. "We believe that there will continue to be numerous opportunities for growth through acquisitions of properties, as well as through strategic organic expansion into key geographic markets."

Business Highlights

Orient-Express continues to show strong progress in its existing pipeline of new properties, including those in Santa Barbara, California; New York; Brazil; Bali; and Peru, with properties progressing well within their schedules. The most imminent opening is of Las Casitas del Colca, the luxury 20-room lodge in Peru's Colca Canyon, which is scheduled to open on time in April 2008.

In Brazil, the company is reviewing some exciting contemporary designs for its planned boutique hotel and villa development in Buzios. Work is scheduled to begin shortly on the renovation of the first 100 rooms at Hotel das Cataratas at Iguacu Falls, of which the company took over management in October 2007.

In 2007, the company opened the purpose built spas at The Inn at Perry Cabin in St Michaels, Maryland and at the Copacabana Palace in Rio de Janeiro, Brazil. The Copacabana Palace will be the site of a 'destination bar' which is scheduled to open in the second half of 2008. Next month, the Librisa Spa at the Mount Nelson Hotel in Cape Town, South Africa, will be opening. All of these projects reflect Orient-Express' commitment to continue to focus on revenue growth across property types and regions.

The company also made significant investments in existing room stock and property enhancement last year and this will continue into the first quarter of 2008. These investments include the opening of eight new suites at La Residencia, Majorca; the establishment of the Windsor Court Club Floors comprising 59 rooms and suites over four floors at the hotel in New Orleans; the renovation of Casa Limon and the new restaurant Andanza at Casa de Sierra Nevada in San Miguel de Allende, Mexico; the second phase renovation of room stock at the Grand Hotel Europe in St Petersburg, Russia; renovation of 12 rooms in the 48-room Governor's Residence in Rangoon, Burma; and the creation of four new suites and junior suites at Hotel Cipriani in Venice, Italy. The company expects all of these projects to bring additional guests and revenue to the various properties in both the short and longer term.

The company's Real Estate developments in St. Martin continue to move ahead on plan, with one of the seven villas being built at La Samanna scheduled to be ready for occupation in the third quarter. The Cupecoy Yacht Club development is progressing well, with construction forecasts showing completion on time and within budget. The company is now beginning the process of letting retail, restaurant and marina space.

Following a strategic review of the company's assets, it has been decided to initiate a sale of Bora Bora Lagoon Resort. Net earnings reflect an impairment charge to bring the property to current fair market value. This impairment charge and the net earnings of the operation for 2007 and 2006 are shown in discontinued operations net of tax. The amount included in discontinued operations, net of tax, was a loss of $16.6 million for the year 2007 and a gain of $3.1 million in 2006.

"As we described to our shareholders in our November investor day meeting, we have conducted strategic reviews of all our assets and set out specific plans for enhancing or divesting them based on their fit within our long-term objectives," continued Paul White. "While our prime focus is on increasing returns on core properties and other assets, as well as select acquisitions, we will give consideration to disposing of properties which do not fit our plans or otherwise merit further investment. Bora Bora is the most recent example of that process."

Regional Performance

In the quarter overall, same store RevPAR growth was up 14% in U.S. dollars (10% in local currency), while for the year, same store RevPAR increased 15% in U.S. dollars (11% in local currency). These increases were driven entirely by rate with Europe showing the strongest RevPAR growth in the fourth quarter of 21% in U.S. dollars (12% in local currency), compared with the Rest of World RevPAR growth of 15% in U.S. dollars (12% in local currency) while the North America region was flat.

Europe: For the fourth quarter, revenues were up 28% from $34.2 million in 2006 to $43.7 million in 2007. EBITDA increased $1.4 million or 46% to $4.6 million. The Italian hotels were substantially closed in the fourth quarter. All other properties in the region showed solid revenue growth with the Hotel de la Cite, Carcassonne, France; The Grand Hotel Europe, St Petersburg, Russia; and La Residencia, Majorca performing significantly ahead of their respective 2006 results. For the year, EBITDA grew 35%, or $18.3 million to $71.0 million. Every European property contributed to this growth, underpinned by same store RevPAR growth of 17% in U.S. dollars (10% in local currency).

North America: EBITDA of owned hotels was $2.9 million in the fourth quarter, down $2.7 million on the 2006 result of $5.6 million. The 2006 results included business interruption insurance proceeds of $2.7 million for Maroma Resort and Spa in Mexico. For the year, EBITDA decreased $6.4 million to $13.2 million, due primarily to the performance of the Windsor Court hotel in New Orleans.

Southern Africa: EBITDA in South Africa grew $0.5 million to $5.0 million in the fourth quarter, primarily due to better earnings at the Mount Nelson Hotel. Orient-Express Safaris also experienced another strong quarter in this region, with EBITDA growing 97% to $0.6 million. For the full year, EBITDA grew 28% to $13.5 million, with all five properties showing growth.

South America: Revenues at the South American properties grew 40% to $17.3 million in the fourth quarter, which included $2.0 million from Cataratas, which recorded a loss at the EBITDA level. Net of that loss, EBITDA declined $0.6 million to $4.7 million for the quarter. For the year, EBITDA was $14.0 million, down $1.1 million on the same period in 2006. The shortfall was a combination of the impact of the strong Brazilian Real on earnings in Brazil and the impact of the Cataratas acquisition.

Asia Pacific: EBITDA for the region was flat compared to 2006. The conflicts in Burma were reflected in a poor quarter for The Governor's Residence which offset good growth for the Observatory Hotel. EBITDA for the year was $2.1 million ahead of 2006. Every hotel in the region showed growth with the exception of The Governor's Residence.

Hotel management and part-ownership interests: Fourth quarter EBITDA was $6.4 million compared with $5.6 million in the year earlier period. Hotel Ritz Madrid and the hotels in Peru were largely responsible for these gains. For the full year, EBITDA grew 20% to $23.8 million. Half of this growth was derived from the performance of the Hotel Ritz, Madrid.

Restaurants: EBITDA was $2.6 million compared with $4.1 million in the same quarter last year. The 2006 result included a gain on sale of assets of $1.1 million. For the year as a whole, the combination of the asset sales and the absence of earnings from Harry's Bar in the first half of the year, when compared to 2006, saw EBITDA contract by $2.0 million to $4.6 million.

Tourist trains and river cruises: This sector of the business had an exceptional year, with a fourth quarter EBITDA of $6.1 million, compared to $5.8 million in the prior year period. Improvements from all areas of the portfolio were partially offset by the impact of the crisis in Burma on the Road to Mandalay. For the full year, EBITDA grew 39% to $25.5 million, this growth being underpinned by the excellent performance of all of the train products.

Real Estate: In the fourth quarter, Cupecoy Yacht Club recorded an EBITDA of $1.6 million, compared to a loss of $0.1 million in the same period in 2006. In the fourth quarter of 2006, the company sold the sample villa at St. Martin and there were 4 lot sales at Keswick. There were no lot sales recorded in the fourth quarter of 2007. Full year EBITDA was $4.1 million, up 17% on 2006. This was primarily due to the Cupecoy Yacht Club.

Tax: The company's reported tax rate for the full year was 29%, inclusive of FIN 48 credits of $7.1 million. This led to the company recording a tax credit of $0.4 million in the fourth quarter.

The appointment of Martin O'Grady as Chief Financial Officer in March 2008, which was announced in late 2007, completes the realignment of the Orient-Express' senior management team.

The company noted that it expects business fundamentals to remain consistent with expectations, and that 2008 full year guidance on both RevPAR and EBITDA remain unchanged.

    Reconciliation and Adjustments
    $'000 - except per share         Three months           Twelve months
    amounts                             ended                   ended
                                      December 31             December 31
                                      2007         2006       2007      2006
    EBITDA                          30,489       32,019    154,128   136,677
    Adjusted items:
    Management restructuring and
     related charges (1)               501            -      3,352         -
    Insurance related gain (2)           -            -     (2,312)        -
    UK pension closure costs (3)         -          841          -       841
    Gain on asset sales (4)              -            -          -    (6,619)
    Adjusted EBITDA                 30,990       32,860    155,168   130,899
    US GAAP reported net earnings   (4,933)       6,657     33,642    39,767
    Discontinued operations net
     of tax                         15,156           39     16,621    (3,102)
    Net earnings from continuing
    operations                      10,223        6,696     50,263    36,665
    Adjusted items:
    Management restructuring and       501            -      3,352         -
    related charges (1)
    Insurance related gain (2)           -            -     (1,664)        -
    UK pension closure costs (3)         -          841          -       841
    Gain on asset sales (net of
     tax) (4)                            -            -          -    (3,294)
    Forex loss/(gain) net of tax
     (5)                              (306)        (366)     1,096     3,281
    Write-off of deferred finance
     costs (6)                           -        1,671          -     3,546
    Depreciation write-off on El
     Encanto (7)                         -          401          -       401
    Adjusted net earnings from
     continuing operations          10,418        9,243     53,047    41,440
    Reported EPS                     (0.12)        0.16       0.79      0.98
    Reported EPS from continuing
     operations                       0.24         0.16       1.19      0.90
    Adjusted EPS                      0.25         0.22       1.25      1.02
    Number of shares (millions)       42.5         42.2       42.4      40.7

1. The company incurred costs in 2007 relating to the restructuring of senior management made up principally of executive recruitment fees and additional director, legal and other advisory fees.

2. In 2007, the company recorded a gain on the settlement of insurance proceeds received for hurricane-damaged assets at Maroma Resort and Spa.

3. These costs were incurred in 2006 when the company closed its UK defined benefit pension plan to future benefit accrual.

4. In June 2006, the company sold at a gain its 49% investment in Harry's Bar in London.

5. Foreign exchange, net of tax, is a non-cash item arising on the translation of certain assets and liabilities denominated in currencies other than the reporting currency of the entity concerned.

6. Deferred finance costs were written off in 2006 when the related indebtedness was refinanced.

7. In 2006, El Encanto closed for extensive renovation and certain fixtures and fittings were written off.

Management evaluates the operating performance of the company's segments on the basis of segment net earnings before interest, foreign currency, tax (including tax on unconsolidated companies), depreciation and amortization (EBITDA), and believes that EBITDA 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, adjusted net earnings from continuing operations, and adjusted E.P.S. are non-GAAP financial measures and do not have any standardized meanings prescribed by U.S. GAAP. They are, 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, adjusted net earnings from continuing operations, and adjusted E.P.S. to be meaningful indicators of operations and uses them as measures to assess operating performance because, when comparing current period performance with prior periods and with budgets, management does so after having adjusted for non-recurring items, foreign exchange (a non-cash item) and significant disposals of assets or investments, which could otherwise have a material effect on the comparability of the company's core operations. Adjusted net earnings, adjusted net earnings from continuing operations, and adjusted E.P.S. are also used by investors, analysts and lenders as measures of financial performance because, as adjusted in the foregoing manner, the measures provide a consistent basis on which the performance of the company can be assessed.

This news release and related oral presentations by management contain, 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, failure to realize 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, 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 Tuesday, 26 February, 2008 at 10.00 hrs ET (15.00 GMT) which is accessible at +1-866-966-9439 (US toll free) or +44(0)1452-555-566 (Standard International access). The conference ID is 30317904. A re-play of the conference call will be available until 5.00pm (ET) Tuesday, 4 March, 2008 and can be accessed by calling +1-866-247-4222 (US toll free) or +44(0)1452-550-000 (Standard International) and entering replay access number 30317904. A re-play will also be available on the company's website:

                            Orient-Express Hotels Ltd
                      Three Months ended December 31, 2007
                          Summary of Operating Results
                                                       Three months ended
                                                           December 31
    $'000 - except per share amount                      2007        2006
    Revenue and earnings from unconsolidated
    Owned hotels
    - Europe                                           43,680      34,219
    - North America                                    22,379      22,599
    - Rest of World                                    41,790      33,589
    Hotel management & part ownership interests         6,407       5,567
    Restaurants                                         8,261       8,194
    Trains & Cruises                                   23,724      19,469
    Real Estate                                         4,988      11,606
    Total (1)                                         151,229     135,243
    Analysis of earnings
    Owned hotels
    - Europe                                            4,556       3,123
    - North America                                     2,859       5,614
    - Rest of World                                    11,900      12,357
    Hotel management & part ownership interests         6,407       5,567
    Restaurants                                         2,645       4,069
    Trains & Cruises                                    6,066       5,787
    Real Estate                                         1,443       2,758
    Central overheads                                  (5,387)     (7,256)
    EBITDA                                             30,489      32,019
    Depreciation & amortization                       (10,471)     (9,085)
    Interest                                          (11,359)    (11,998)
    Foreign exchange                                    1,138         938
    Earnings before tax                                 9,797      11,874
    Tax                                                   426      (5,178)
    Net earnings from continuing operations            10,223       6,696
    Discontinued operations                           (15,156)        (39)
    Net earnings on common shares                      (4,933)      6,657
    Earnings per common share                           (0.12)       0.16
    Number of shares - millions                         42.46       42.16

(1) Comprises earnings from unconsolidated companies of $5,315,000 (2006 - $4,469,000) and revenue of $145,913,000 (2006 - $130,774,000).

                            Orient-Express Hotels Ltd
                      Three Months Ended December 31, 2007
                Summary of Operating Information for Owned Hotels
                                    Three months ended
                                        December 31
                                     2007         2006
    Average Daily Rate
    (in U.S. dollars)
    Europe                            577          478
    North America                     387          348
    Rest of World                     323          267
    Worldwide                         408          340
    Rooms Available (000's)
    Europe                             78           72
    North America                      56           54
    Rest of World                     106          106
    Worldwide                         240          232
    Rooms Sold (000's)
    Europe                             38           36
    North America                      34           35
    Rest of World                      68           71
    Worldwide                         140          142
    RevPAR (in U.S. dollars)
    Europe                            283          236
    North America                     239          223
    Rest of World                     207          180
    Worldwide                         239          208
                                                              Change %
    Same Store RevPAR                                     Dollar    Local
    (in U.S. dollars)                                              currency
    Europe                            241          199      21%       12%
    North America                     215          216       0%        0%
    Rest of World                     207          180      15%       12%
    Worldwide                         219          192      14%       10%
                            Orient-Express Hotels Ltd
                      Twelve Months ended December 31, 2007
                          Summary of Operating Results
                                                      Twelve months ended
                                                          December 31
    $'000 - except per share amount                      2007        2006
    Revenue and earnings from unconsolidated
    Owned hotels
    - Europe                                          228,522     180,365
    - North America                                    85,411      85,492
    - Rest of World                                   128,771     101,979
    Hotel management & part ownership interests        23,840      19,932
    Restaurants                                        22,638      22,821
    Trains & Cruises                                   90,522      70,342
    Real Estate                                        19,908      16,144
    Total (1)                                         599,612     497,075
    Analysis of earnings
    Owned hotels
    - Europe                                           71,033      52,708
    - North America                                    13,238      19,652
    - Rest of World                                    35,611      31,615
    Hotel management & part ownership interest         23,840      19,932
    Restaurants                                         4,564       6,530
    Trains & Cruises                                   25,481      18,316
    Real Estate                                         4,121       3,514
    Central overheads                                 (26,072)    (22,209)
    Gain on sale of investment                              -       6,619
    Gain on disposal of fixed assets                    2,312           -
    EBITDA                                            154,128     136,677
    Depreciation & amortization                       (38,947)    (34,503)
    Interest                                          (45,436)    (44,367)
    Foreign exchange                                      917      (4,610)
    Earnings before tax                                70,662      53,197
    Tax                                               (20,399)    (16,532)
    Net earnings from continuing operations            50,263      36,665
    Discontinued operations                           (16,621)      3,102
    Net earnings on common shares                      33,642      39,767
    Earnings per common share                            0.79        0.98
    Number of shares - millions                         42.39       40.69

(1) Comprises earnings from unconsolidated companies of $21,197,000 (2006 - $17,711,000) and revenue of $578,415,000 (2006 - $479,364,000)

                            Orient-Express Hotels Ltd
                      Twelve Months Ended December 31, 2007
                Summary of Operating Information for Owned Hotels
                                   Twelve months ended
                                        December 31
                                     2007         2006
    Average Daily Rate
    (in U.S. dollars)
    Europe                            686          584
    North America                     371          325
    Rest of World                     272          256
    Worldwide                         428          380
    Rooms Available (000's)
    Europe                            325          298
    North America                     222          212
    Rest of World                     408          354
    Worldwide                         955          864
    Rooms Sold (000's)
    Europe                            187          175
    North America                     141          148
    Rest of World                     259          222
    Worldwide                         587          545
    RevPAR (in U.S. dollars)
    Europe                            396          342
    North America                     236          227
    Rest of World                     173          161
    Worldwide                         263          240
                                                              Change %
    Same Store RevPAR                                     Dollar    Local
    (in U.S. dollars)                                             currency
    Europe                            419          357      17%      10%
    North America                     283          272       4%       4%
    Rest of World                     189          165      15%      14%
    Worldwide                         284          248      15%      11%
                            Orient-Expess Hotels Ltd
                  Consolidated and Condensed Balance Sheets
                                                     December 31 December 31
    $'000                                                   2007        2006
    Cash                                                  94,365      77,896
    Accounts receivable                                   62,847      71,694
    Due from related parties                              30,406      19,939
    Prepaid expenses                                      16,115       9,485
    Inventories                                           45,756      34,618
    Other assets held for sale                            38,807      60,854
    Real estate assets                                    57,157      35,821
    Total current assets                                 345,453     310,307
    Property, plant & equipment, net book value        1,273,956   1,134,811
    Investments                                          147,539     130,042
    Goodwill                                             133,497     117,760
    Other intangible assets                               21,660      20,149
    Other assets                                          50,722      38,594
                                                       1,972,827   1,751,663
    Liabilities and Shareholders' Equity
    Working capital facilities                            64,419      45,107
    Accounts payable                                      30,132      25,017
    Due to related parties                                     -       1,249
    Accrued liabilities                                   62,246      54,285
    Deferred revenue                                      35,545      25,448
    Other liabilities held for sale                        5,619       4,377
    Current portion of long-term debt and capital        127,795      83,397
    Total current liabilities                            325,756     238,880
    Long-term debt and obligations under capital         658,615     586,300
    Deferred income taxes                                119,112     106,598
    Other liabilities                                     34,669      11,007
    Minority interest                                      1,754       1,882
    Shareholders' equity                                 832,921     806,996
                                                       1,972,827   1,751,663


Orient-Express Hotels Ltd.

Also See: Orient-Express Acquires the Donnell Branch of the New York Public Library for $59 million in cash; Will Build 150 room Hotel with a Rebuilt Donnell Library in Mid Manhattan Adjacent to the '21' Club / November 2007
Orient-Express Spurns Indian Hotels' Overtures; The Indian Hotels Company Acquires 10% Stake in Orient-Express Hotels for US$ 211 million Seeking Proposed Alliance / September 2007


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