Orient-Express Hotels Reports First Quarter 2008 Results
HAMILTON, Bermuda, May 7, 2008 - Orient-Express Hotels Ltd. (NYSE:
OEH) (http://www.orient-express.com), 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 first quarter
ended March 31, 2008.
First Quarter 2008 highlights
-
First Quarter Total Revenues of US$119.9 Million, Up 23% Over Prior Year
-
Same Store RevPAR up 14% in U.S. Dollars, 12% in Local Currency
-
EBITDA of US$16.4 Million, Up 8% Over Prior Year
-
First Quarter Net Loss From Continuing Operations of US$2.4 Million, Compared
With a Net Loss From Continuing Operations of US$2.5 Million in the Prior
Year
-
EPS Loss From Continuing Operations of US$0.06 per Common Share. Adjusted
EPS Loss of US$0.09 per Common Share
The first quarter is traditionally a loss-making period for the Company
because several of its European hotels are closed for most of the quarter
and the Venice Simplon-Orient-Express and Royal Scotsman tourist trains
and Afloat in France canal cruises do not operate for most of the quarter.
The net loss for the period was US$4.3 million (loss of US$0.10 per
common share) on revenue of US$119.9 million, compared with a net loss
of US$3.7 million (loss of US$0.09 per common share) on revenue of US$97.7
million in the first quarter of 2007. The net loss from continuing operations
for the period was US$2.4 million (loss of US$0.06 per common share) compared
with a net loss of US$2.5 million (loss of US$0.06 per common share) in
the first quarter of 2007. The adjusted net loss from continuing operations
for the period was US$4.0 million (loss of US$0.09 per common share) compared
with an adjusted net loss of US$2.6 million (loss of US$0.06 per common
share) in the first quarter of 2007.
Business Highlights
Revenue from Owned Hotels was up US$17.4 million or 23% over the prior
year quarter, with growth across all regions.
In Europe, Grand Hotel Europe in St. Petersburg showed the strongest
revenue growth with revenues up US$3.3 million, or 53% (41% in local currency).
Reid's Palace Hotel in Madeira, La Residencia, Mallorca and Le Manoir aux
Quat'Saisons, Oxfordshire each recorded revenue growth.
In the North American region, every property showed revenue growth,
with same store RevPAR up 12%. The performance of Maroma Resort and Spa,
Riviera Maya, and Casa de Sierra Nevada, San Miguel de Allende, both Mexican
properties;
La Samanna, St Martin, French West Indies; and The Inn at Perry Cabin,
St Michaels, Maryland underpinned the US$3.5 million or 15% revenue growth.
In the Rest of World region revenue increased by US$7.9 million or 24%
with Southern Africa, South America and Asia Pacific regions all performing
ahead of 2007 levels.
EBITDA before Real Estate was US$16.9 million, up 8% year-over-year.
EBITDA margins in the U.S. were up from 26% to 27%. Overall, margins were
down from 16% to 14%, impacted by the open but not yet refurbished Hotel
das Cataratas at Iguacu Falls, Brazil, the impact of the strong Euro on
properties closed during the quarter and increased lower-margin non-room
revenues. EBITDA after Real Estate for the quarter was US$16.4 million,
up 8% year-over-year.
Paul White, President and Chief Executive Officer, said: "Overall, revenues
in our traditional first quarter earning businesses have grown as expected.
Same store Owned Hotels total revenues, which were up 18%, grew faster
than same store RevPAR growth of 14%. This performance indicates progress
in our strategy and in various initiatives for maximizing all revenues
from both room-related and non-room activities."
In recent weeks, the Company has:
-
Opened Las Casitas del Colca, a luxury 20-room eco-style lodge in the heart
of the rural Andes in Peru.
-
Agreed in principle to acquire the 14-room Royal Chundu Lodge in Zambia,
situated next to the Zambezi River and a short drive from the famous Victoria
Falls. The hotel site includes a half-mile long island of pristine jungle
and is due to open in early 2009 when it will extend the Orient-Express
Safaris experience for high-end travelers.
-
Agreed in principle to acquire a 50% stake coupled with a management agreement
for a new built, 126-key resort in Puglia, Italy. The property, which will
complement the Company's existing Italian hotels, is due to open in mid-2009.
It comprises a mix of hotel rooms and houses built in traditional Puglianese
"village" style, includes extensive spa and resort facilities, with access
to an 18-hole championship golf course and direct access to the Adriatic
Sea.
-
Completed the first phase of its detailed review of real estate opportunities.
This review covered existing projects in St Martin and at Keswick Hall,
Charlottesville, as well as potential projects in Mexico, Portugal and
Thailand. As a result of this process, the Company has contracted with
S&P Real Estate, an international full-service real estate company
that specializes in the envisioning, design, marketing and sale of resort
and luxury real estate properties ( http://www.sprealestate.com ). S&P
Real Estate will begin immediately marketing the Cupecoy Yacht Club condominiums
and have been helping the Company to assess the phasing and pricing of
future sales in light of current market conditions.
Regional Performance
In the quarter overall, revenues were up 23% from US$97.7 million to
US$119.9 million. EBITDA for the quarter was up 8% from US$15.2 million
to US$16.4 million. Same store RevPAR growth of Owned Hotels was up 14%
in U.S. dollars (12% in local currency).
Europe: For the first quarter, revenues from Owned Hotels were up 28%
year-over-year from US$21.1 million to US$27.1 million. The EBITDA loss
was US$3.7 million in 2008 versus US$3.6 million in the prior year. Same
store RevPAR increased by 30% in U.S dollars and by 16% in local currency.
This local currency growth was primarily driven by Grand Hotel Europe,
which benefited from a strong local market, the addition of 98 renovated
rooms, and the introduction of an historic floor concept offering full
butler service. However, as for many businesses operating in Russia, high
inflation is becoming a challenge. Reid's Palace, La Residencia and Le
Manoir aux Quat'Saisons all had good year-on-year revenue growth. At Le
Manoir aux Quat'Saisons, the Company has signed an agreement with its founder
and two Michelin star chef Raymond Blanc, extending his services until
2012. The Italian hotels were, as in previous years, closed for most of
the first quarter, thereby generating EBITDA losses due to their fixed
cost bases. The overall EBITDA loss for Europe was higher than the prior
year when reported in U.S. dollars due to the 14% year-on-year appreciation
of the Euro versus the U.S. dollar.
North America: Revenue increased by 15% to US$26.7 million compared
with the first quarter of 2007, and EBITDA increased by 19% to US$7.3 million.
Same store RevPAR for the region increased by 12% from US$285 to US$319.
In particular, Maroma Resort and Spa continued to perform well, driven
by rate, occupancy and non-room revenues. Casa de Sierra Nevada also performed
well, having completed refurbishments in 2007, contributing a positive
EBITDA compared with an EBITDA loss in the first quarter of 2007. Windsor
Court in New Orleans was impacted by the early timing of Easter in the
first quarter but was able to sustain revenues at the same level as last
year.
Southern Africa: Revenue increased by 10% to US$11.7 million compared
with 2007, and EBITDA increased by 6% to US$4.5 million. Same store RevPAR
for the region increased by 11% from US$181 to US$202 (16% in local currency).
The Mount Nelson in Cape Town celebrated the opening of the new Librisa
Spa, which has been eagerly anticipated by guests and locals alike.
South America: Revenue increased to US$17.6 million from US$12.6 million
in the first quarter of 2007. EBITDA was US$5.6 million in both 2008 and
the prior year. Same store RevPAR for the region increased by 6% from US$336
to US$357. Hotel das Cataratas was acquired in October 2007 (and so is
not included in the prior year results) generating US$3.3 million of revenue
in the quarter. The hotel is currently trading around the breakeven level
and will commence its refurbishment program in the second quarter.
Asia Pacific: Revenue for the first quarter increased by 20% to US$11.5
million when compared with last year. EBITDA increased 16% from US$2.2
million to US$2.6 million. Same store RevPAR for the region increased by
15% from US$138 to US$159 (10% in local currency). The region continued
to be impacted in the current quarter by the recent civil unrest in Burma.
Excluding the Governor's Residence in Rangoon, the region recorded an EBITDA
increase of 25%. The other hotels in the region performed well when compared
with last year, except for the Observatory in Sydney which benefited from
a major sports tournament in the first quarter of 2007 and experienced
a tighter corporate market in the current year.
Hotel management and part-ownership interests: First quarter EBITDA
was US$5.2 million compared with US$4.6 million last year. Approximately
half of the growth over last year was driven by the performance of the
Peru hotels, with Hotel Ritz Madrid and Charleston Place also showing improved
performance over last year.
Restaurants: Revenue from restaurants in the first quarter was US$4.9
million compared with US$5.3 million last year, and EBITDA was US$0.6 million
compared with US$0.9 million last year. The results of '21' Club were impacted
by a reduction in volume of corporate customers, although the average check
was almost in line with last year.
Trains and Cruises: Revenue increased by 6% to US$11.2 million compared
with the first quarter in 2007, and EBITDA increased by 34% to US$1.5 million.
As in the prior quarter, this segment, which includes the Road to Mandalay
cruise operation, was impacted year-over-year by the unrest in Burma. Excluding
this operation, the Trains and Cruises business increased revenues by 13%,
with strong growth from PeruRail and early signs of a strong season for
the Venice Simplon-Orient-Express.
Central costs: In the first quarter, central costs were US$6.8 million
and US$5.7 million in first quarter of 2007. The charge in the current
quarter reflects the high sterling based component of central costs and
also includes, as required under SFAS 123R, a charge for stock options
and performance share awards issued of US$0.8 million.
Real Estate: In the first quarter, Cupecoy Yacht Club recorded an EBITDA
loss of US$0.4 million compared with a loss of US$0.2 million in the same
period in 2007. The pace of sales was slower than previously anticipated
due to property market conditions affected by the global credit crunch.
We now anticipate sales this year will be lower than previously expected.
There were no recorded sales of the villas at La Samanna. There was one
lot sale at Keswick Hall (none in the first quarter of last year).
Interest: The interest charge for the quarter was US$12.9 million compared
with US$11.4 million in the fourth quarter of 2007 and US$10.5 million
in the first quarter of 2007. The increased charge reflects higher borrowings
to finance the Company's investments as well as the currency impact of
non-U.S. dollar borrowings.
Tax: The tax benefit reported by the Company in the first quarter was
US$2.4 million compared with a tax benefit of US$1.5 million in the prior
year. The Company's reported tax rate, including earnings from consolidated
and unconsolidated operations and also discontinued operations, was 35.4%
in 2008, compared with 29.5% for the same period in 2007. The difference
in the reported tax rates over the two years reflects changes to the mix
of income from lower to higher tax rate jurisdictions.
Discontinued Operations: The charge in the first quarter was US$2.0
million. This represents the Bora Bora Lagoon Resort, French Polynesia,
which is in the early stages of being marketed for sale by Jones Lang LaSalle.
Investment: Total capital expenditure in the first quarter was US$20.8
million, which included various projects at, in particular, El-Encanto,
Hotel Cipriani, Grand Hotel Europe, Copacabana Palace, Le Manoir aux Quat'Saisons
and Hotel de la Cite.
A total of US$8.4 million was invested during the quarter in the Company's
real estate developments at Cupecoy Yacht Club and the villas at La Samanna.
Balance Sheet: At March 31, 2008, the Company's total debt was US$848.3
million and cash balances amounted to US$102.3 million, giving a total
net debt of US$746.0 million compared with total net debt of US$692.0 million
at the end of 2007.
At March 31, 2008, debt was approximately 19% fixed and 81% floating.
The weighted average maturity of the debt was 3.7 years and the weighted
average interest rate (including margin) was 5.82%. The Company had cash
and funds available under revolving credit facilities totaling US$137.2
million.
Subsequent Events:
In April 2008, the Company renewed a US$47 million term loan secured
on the Windsor Court hotel for a further 5 years. Also, in April 2008,
the Company fixed its floating interest rates (excluding margin) on US$151.3
million of U.S. dollar debt at a weighted average rate of 3.74% for a weighted
average term of 4.2 years.
On Saturday, May 3, 2008, the southern part of Burma was hit by tropical
cyclone Nargis. The Road to Mandalay river cruise ship was in Rangoon for
a scheduled dry-docking. The ship was caught in the storm and sustained
damage, the severity of which is currently being assessed. The Governor's
Residence also sustained some light damage, and will be repaired during
the hotel's scheduled closure in May and June. Both assets are covered
under the Company's insurance program.
ORIENT-EXPRESS HOTELS LTD
Three Months ended March 31, 2008
SUMMARY OF OPERATING RESULTS
(Unaudited)
Three months ended
March 31
US$'000 - except per share amount
2008 2007
Revenue and earnings from unconsolidated
companies
Owned hotels
- Europe
27,139 21,115
- North America
26,670 23,138
- Rest of World
40,767 32,888
Hotel management & part ownership
interests 5,218
4,647
Restaurants
4,866 5,295
Trains & Cruises
11,185 10,575
Revenue and earnings from unconsolidated
115,845 97,658
companies before Real Estate
Real Estate
4,083 -
Total (1)
119,928 97,658
Analysis of earnings
Owned hotels
- Europe
(3,744) (3,555)
- North America
7,300 6,120
- Rest of World
12,747 12,084
Hotel management & part ownership
interests 5,218
4,647
Restaurants
649 868
Trains & Cruises
1,543 1,148
Central overheads
(6,799) (5,681)
EBITDA before Real Estate
16,914 15,631
Real Estate
(497) (458)
EBITDA
16,417 15,173
Depreciation & amortization
(10,284) (8,775)
Interest
(12,929) (10,538)
Foreign exchange
2,045 102
Earnings before tax
(4,751) (4,038)
Tax
2,376 1,542
Net losses from continuing operations
(2,375) (2,496)
Discontinued operations
(1,963) (1,185)
Net losses
on common shares (4,338)
(3,681)
Losses per common share
(0.10) (0.09)
Number of shares - millions
42.47 42.26
(1) Comprises earnings from unconsolidated companies of
US$5,248,000 (2007 - US$3,489,000) and revenue of US$114,680,000 (2007
- US$94,169,000).
ORIENT-EXPRESS HOTELS
LTD
Three Months Ended March 31, 2008
SUMMARY OF OPERATING INFORMATION FOR OWNED HOTELS
Three months ended March
31
2008 2007
Average Daily Rate
(in U.S. dollars)
Europe
464 398
North America
470 438
Rest of World
296 280
Worldwide
372 345
Rooms Available (000's)
Europe
64 63
North America
57 55
Rest of World
123 104
Worldwide
244 222
Rooms Sold (000's)
Europe
27 26
North America
38 36
Rest of World
82 71
Worldwide
147 133
RevPAR (in U.S. dollars)
Europe
201 157
North America
314 280
Rest of World
198 191
Worldwide
226 204
Change %
Same Store RevPAR
Dollar Local
(in U.S. dollars)
currency
Europe
178 137
30% 16%
North America
319 285
12% 12%
Rest of World
212 191
11% 10%
Worldwide
231 202
14% 12%
ORIENT-EXPRESS HOTELS LTD
CONSOLIDATED AND CONDENSED BALANCE SHEETS
(Unaudited)
March 31 December 31
US$'000
2008 2007
Assets
Cash
102,315 94,365
Accounts receivable
70,529 62,847
Due from related parties
30,195 30,406
Prepaid expenses
22,412 16,115
Inventories
48,688 45,756
Other assets held for sale
58,662 54,417
Real estate assets
67,712 57,157
Total current assets
400,513 361,063
Property, plant & equipment, net
book value 1,317,040
1,273,956
Investments
150,286 147,539
Goodwill
137,123 133,497
Other intangible assets
21,805 21,660
Other assets
49,836 50,722
2,076,603 1,988,437
Liabilities and Shareholders' Equity
Working capital facilities
71,150 64,419
Accounts payable
31,698 30,132
Due to related parties
447 -
Accrued liabilities
67,102 62,246
Deferred revenue
54,005 35,545
Other liabilities held for sale
5,426 5,619
Current portion of long-term debt
and capital 171,509
127,795
leases
Total current liabilities
401,337 325,756
Long-term debt and obligations under
capital 676,741
658,615
leases
Deferred income taxes
116,136 119,112
Other liabilities
33,992 34,669
Minority interest
1,977 1,754
Shareholders' equity
846,420 848,531
2,076,603 1,988,437
Reconciliation to reported earnings
US$'000 - except per share amounts
Three months ended
March 31
2008 2007
(4,338) (3,681)
US GAAP reported net loss
Discontinued operations net of tax
1,963 1,185
Net loss from continuing operations
(2,375) (2,496)
Adjusted items:
Foreign exchange gain net of tax (1)
(1,647) (67)
Adjusted net loss from continuing
(4,022) (2,563)
operations
Reported EPS
(0.10) (0.09)
Reported EPS from continuing operations
(0.06) (0.06)
Adjusted EPS from continuing operations
(0.09) (0.06)
Number of shares (millions)
42.47 42.26
1. 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.
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 Thursday, 8th May, 2008 at 10.00 hrs ET (15.00 BST) which is accessible
at +1-866-966-9439 (US toll free) or +44-(0)1452-555-566 (Standard International
access). The conference ID is 42532465. A re-play of the conference call
will be available until 5.00pm (ET) Thursday 15th May, 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 42532465. A
re-play will also be available on the company's website: http://www.orient-expressinvestorinfo.com. |
|
