Net Earnings of $18.5 Million, Up 43%
Over Prior Year
|HAMILTON, Bermuda, August 3, 2005 - Orient-Express Hotels Ltd. (NYSE:
OEH, ), owners of 49 deluxe hotel, restaurant, tourist train and river
cruise properties in 25 countries, today announced its results for the
second quarter and six months ended June 30, 2005.
For the quarter net earnings were $18.5 million ($0.47 per common share) on revenue of $130.5 million, an increase of 43% over net earnings of $12.9 million in the year earlier period. Earnings per common share were up 24% and revenue was up 25% over the second quarter of 2004.
Net earnings for the six months were $16.9 million ($0.46 per common share) on revenue of $212.7 million, an increase of 104% over net earnings of $8.3 million in the year earlier period. Earnings per common share were up 92% and revenue was up 25% over the first six months of 2004.
Mr. James B. Sherwood, Chairman, said that improved earnings had been achieved all across the world, but notable was Europe which benefited from the Grand Hotel Europe, St. Petersburg acquisition in the first quarter, plus an exceptionally strong result from the Hotel Cipriani in Venice. Reid's Palace in Madeira and La Residencia in Mallorca, Spain were both comfortably ahead of the prior year period. The company was required to expense in the period $1 million (equivalent to $0.03 per share) of start-up costs of the Hotel Caruso Belvedere in Ravello, Italy which successfully re-opened on June 21st and is already receiving a rapturous press.
Joint venture and management interests were approximately $1 million ahead of the prior year quarter, all restaurants showed improved results, while trains and river cruises were $0.6 million ahead.
"There were no adverse variances worthy of mention. The group performed very much according to plan in a strengthening market.
"The London bombings should have no significant impact on our U.K. business since our U.K. hotel, the Manoir aux Quat' Saisons, is 50 miles outside London and our London restaurant, Harry's Bar, is a membership club and not dependent on visitors to the city.
"Hurricane Emily passed over our Riviera Maya property, Maroma Resort and Spa, on July 18th but fortunately no serious damage was caused and it was low season. We estimate the earnings impact will be less than $400,000 in the third quarter. Most of the gardens will have to be replanted but they grow quickly in the tropical climate.
"The U.S. dollar has appreciated recently against most European currencies and this seems to be stimulating U.S. travel to Europe. If this continues it should be excellent news for 2006.
"Pansea Orient-Express Hotels opened their sixth property, Ubud Hanging Gardens in Bali, on July 14th. This is their second Bali property, the first being Jimbaran Puri Bali. Orient-Express Hotels has invested in Pansea through an $8 million convertible loan and only records the interest on that loan until conversion expected in 2007.
"Our property development on the Dutch side of St. Martin, Cupecoy Village, proceeds apace with over one third of the 169 units already pre-sold. Infrastructure is well under construction, including the marina, roads, foundations and services. The linkage of this development with La Samanna next door, being the main luxury hotel on the island, helps to support the prices we are able to obtain. Our French side development of luxury villas is also on schedule.
"Our search continues for more additions to our portfolio and we have several interesting acquisitions under study," he concluded.
Mr. Simon M.C. Sherwood, President, said that the average daily room rate of owned hotels in U.S. dollars was up 5% to $395 from $377 in the same period of 2004. Same store RevPAR in U.S. dollars was up 9% to $244 from $223 in the year earlier period. EBITDA margin for the quarter was up 3% to 29%.
He reviewed performance by region as follows:
Europe. EBITDA of owned hotels was $21.1 million compared with $12.9 million in the year earlier period. The Grand Hotel Europe and Hotel Cipriani largely accounted for the favorable variances. Hotel Caruso Belvedere start-up costs offset improvements from other hotel properties.
North America. EBITDA for the quarter of owned hotels was $5.3 million compared with $4.7 million in the year earlier period. The Windsor Court in New Orleans had a weaker second quarter, as expected, but this was more than compensated by improvements at all the other hotels. A strong third quarter is expected for the Windsor Court.
Southern Africa. EBITDA of owned hotels was $0.3 million compared with $0.1 million in the prior year period. This is low season for The Mount Nelson in Cape Town, but the Westcliff in Johannesburg and the safari properties in Botswana reported good gains on the prior year.
South America. EBITDA of owned hotels was $2.3 million, $0.2 million ahead of the prior year period. The Copacabana Palace in Rio de Janeiro was responsible for the increase.
Permission has now been received for renovation of the old casino rooms at the back of the Copacabana Palace which will help greatly to meet the hotel's increasing demand for banqueting space. Construction will not disturb the operation of the main hotel as it is indoor work at considerable distance from the guest rooms and public areas.
South Pacific. EBITDA of owned hotels was $0.4 million, up $0.2 million from the prior year. Lilianfels in Katoomba in Australia's Blue Mountains is benefiting from completion of a major upgrade of the property.
Hotel management and part-ownership. EBITDA was $5.7 million, $1 million ahead of the prior year period. Charleston Place and the Peruvian hotels registered most of the gain, while the Ritz in Madrid was flat year on year.
Restaurants. EBITDA from restaurants was $1.6 million compared with $1.3 million in the prior year period. All three properties reported gains, with La Cabana in Buenos Aires registering the largest increase.
Tourist trains and river cruises. EBITDA for the quarter was $5.2 million compared with $4.6 million in the prior year period. British tourist trains registered a strong gain while the Venice Simplon-Orient-Express was slightly down.
Financial costs were up $1.4 million due primarily to the Grand Hotel Europe acquisition and taxes were $1.6 million higher. Depreciation was $1.6 million higher due to the larger asset base.
"We are well into the third quarter now, and occupancies and rate remain strong. We have a number of construction projects in the pipeline, with work to start in the low seasons, such as the annex to the Windsor Court, the new spa and pool complex at Reid's, addition of rooms to La Residencia and the Caruso Belvedere, the casino rooms at the Copacabana Palace and the Nazarenas addition to the Hotel Monasterio in Cuzco. All this is in addition to our major property development in St. Martin. These investments will generate increased profitability in the years ahead," Simon Sherwood concluded.
Management believes that EBITDA (net earnings adjusted
for interest, 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, 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. generally accepted accounting principles for purposes of evaluating
Orient Express Hotels Ltd.
|Also See:||Orient-Express Hotels Reports Net Earnings of $28.2 million For the Year 2004 Compared with $23.6 million in the Prior Year; Maintained Worldwide Average Daily Rate of $366 / February 2005|
|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|