Orient-Express Hotels Announces First Quarter Results
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Orient-Express Hotels Announces First Quarter Results
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Category: Worldwide -
This is a press release selected by our editorial committee and published online for free on 2007-05-04
Orient-Express Hotels Ltd. (NYSE: OEH,
www.orient-express.com), 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.” See our website for some pictures of this hotel.
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.
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