Orient-Express Hotels Announces Fourth Quarter and Full Year 2004 Results
Excluding Gain on Hotel Sale in 2003, Net Earnings for Fourth Quarter Were Up 91% and for Full Year Were Up 46%
HAMILTON, Bermuda, Orient-Express Hotels Ltd. (NYSE: OEH, www.orient-express.com), investor in 49 deluxe hotel, restaurant, tourist train and river cruise properties in 25 countries, today announced its results for the fourth quarter and year ended December 31, 2004. For the quarter, net earnings were $8.4 million ($0.25 per common share) compared with $8.6 million ($0.27 per common share) for the fourth quarter of 2003 (which included a $4.
For the year ended December 31, 2004 net earnings were $28.2 million ($0.82 per common share) compared with $23.6 million ($0.76 per common share) in the prior year. Excluding the gain on the sale of a hotel in 2003, net earnings were up 46% from $19.4 million to $28.2 million. Revenue for 2004 was up 12% from $329.5 million to $369.0 million.
Mr. James B. Sherwood, Chairman, said that the fourth quarter finished strongly in all regions except Europe. EBITDA in North America more than doubled from $2.3 million in the fourth quarter of 2003 to $5.6 million in the fourth quarter of 2004. South Pacific properties had a similar percentage increase from an EBITDA of $0.4 million in the fourth quarter of 2003 to $1 million in the fourth quarter of 2004. South American hotels showed a significant increase despite the Miraflores Park Hotel in Lima being closed for major upgrade during most of the period. Tourist trains registered EBITDA of $4.2 million compared with $2.9 million in the year earlier period and restaurants were up 22% due to improving results from La Cabana in Buenos Aires which only opened late in 2003.
"I have personally inspected 14 of our properties in the last 90 days and they have uniformly reported significant fourth quarter gains over the prior year and perhaps more importantly, are forecasting a strong 2005. Although we are concerned about the strength of the Euro against the dollar and its impact on European travel in 2005, bookings for our European based Venice Simplon-Orient-Express tourist train are currently 10% higher than at this time last year. Our most recent acquisition, the 301 room Grand Hotel Europe in St. Petersburg, was made and financed in U.S. dollars and its room revenues are dollar denominated (food and beverage revenue is rouble denominated).
"We are seeing exceptional growth in the Latin American market, fuelled not only by visitors from North America but also from Europe and regional clients. We are investing in our existing properties in this region and are also looking seriously at acquisitions. Additional rooms are being built at Maroma, we are adding locomotives and passenger cars to our Machu Picchu railway in Peru, a new spa is being created in the Copacabana Palace and the new conference and restaurant facilities at the Miraflores Park Hotel in Lima will come on stream when the hotel reopens in a few days' time.
"Thankfully, our Pansea Orient-Express Hotels affiliate in southeast Asia was unaffected by the tsunami which hit the region in December. EBITDA for Pansea in 2004 increased by 100% over 2003 to $2.4 million. Pansea results are not consolidated into the results of Orient-Express Hotels except to the extent of interest earned on the convertible loan to that company.
"Overall, I consider 2004 to have been a highly satisfactory year for the company. Although EBITDA for our European hotels (excluding the hotel sold in 2003) was flat compared with 2003, EBITDA for our European based tourist trains was up a remarkable $4.8 million, a 139% increase, making Europe as a whole well ahead of prior year. North American hotels increased their EBITDA by $3.9 million, southern Africa by $1.9 million (despite considerable strengthening of the local currencies against the U.S. dollar), South Pacific was up by a solid $2.6 million, South American hotels were up $2.4 million and South American trains by $2.8 million, restaurants were up $1.3 million and management fees were up $1.4 million. Our capacity was not stretched which means the upside potential is excellent as occupancy rises. We made a number of excellent acquisitions and have begun to develop our land resources in St. Martin while our property sales program in Charlottesville has gained momentum. The Grand Hotel Europe in St. Petersburg, the "icon" of all hotels in Russia, was acquired earlier this month at a pro-forma 2004 EBITDA multiple of 6. The outlook for the full year 2005 is exceptionally promising," he concluded.
Mr. Simon M.C. Sherwood, President, said that in 2004's fourth quarter same store RevPAR increased by 18% to $204 from $169 in the prior year period. Average daily rate increased by 7.5% from $320 to $344. EBITDA margin for the quarter was 20% compared with 17% in the prior year period (excluding the gain on sale of a hotel).
He reviewed full year performance by region as follows:
Owned European hotels. For the year EBITDA was $29.9 million, the same as in 2003 (excluding the hotel sold in 2003). Portuguese hotels continued to under-perform but the slack was taken up by better results from Italian and French hotels.
Owned North American hotels. EBITDA for 2004 was $15.0 million compared with $11.1 million in 2003. All properties registered gains but the largest was a $1.5 million improvement at the Maroma Resort & Spa on the Riviera Maya on Mexico's Yucatan Peninsula. This improvement was due to addition of rooms and improvement of other facilities. A magnificent spa has just been opened at this property with treatments derived from ancient Mayan practices.
Owned Southern Africa hotels. EBITDA for 2004 was $6.2 million compared with $4.3 million in 2003. The principal gain arises from the Westcliff in Johannesburg with its new banqueting and conference facility. This property is also benefiting from the urban renewal of downtown Johannesburg, as it is located much closer to the center of the city than competing upscale hotels.
Owned South American hotels. EBITDA was $10.0 million compared with $7.5 million in 2003. The Copacabana Palace Hotel in Rio de Janeiro accounted for nearly all the improvement in light of temporary closure of the Miraflores Park Hotel in Lima. Food and beverage, particularly banqueting, account for 40% of the Copacabana Palace's profits. It is considered the leading banqueting venue in Brazil.
Owned South Pacific Hotels. EBITDA was $1.9 million compared with a loss of $0.7 million in 2003. Solid gains were recorded at all properties, however, Bora Bora Lagoon Resort recorded the largest improvement. Capital expenditure at these hotels is translating into good earnings gains.
Management and part ownership interests. EBITDA for 2004 was $14.9 million compared with $13.5 million in 2003. The largest gain of $1.6 million was recorded from Peruvian hotels. The Ritz in Madrid was slightly down due to the effects of the train bombings early in the year but this was offset by improvement at Charleston Place.
"We intend to commence construction of the Nazarenas annex to our Hotel Monasterio in Cuzco, Peru in the middle of this year with a view to completion of the first phase of 60 rooms by the end of 2006. We are having to increase capacity of both hotels and trains in the Peruvian Andes to meet the demands of the growing market."
Restaurants. EBITDA for the year was $3.9 million compared with $2.6 million in 2003. '21' Club in New York City accounted for most of the increase. Although La Cabana in Buenos Aires recorded a loss in its first year of operation, results have been improving quarter by quarter.
Tourist trains & river cruising. EBITDA in 2004 was $13.1 million compared with $6.0 million in 2003. The Venice Simplon-Orient-Express and PeruRail were each more than $2 million ahead of 2003. The British Pullman and Northern Belle tourist trains in the U.K. were both more than $1 million ahead of 2003.
"Depreciation increased by $3.1 million in 2004 over 2003 as a result of our capital investment program. Taxes rose by $2.2 million to $5.2 million in 2004 as a result of higher profits.
"Although we do not brand our individual properties as "Orient-Express" we have been using the Orient-Express name much more widely in our sales and marketing, which is increasing the cross-sell between our properties and creating a higher definition of the company within the travel community. We are beginning to see the benefits of this strategy. We have also been successful in reducing our reliance upon tour operators in certain markets. There remains much to be done in these areas but these efforts should help to accelerate our profitability," he concluded.
ORIENT-EXPRESS HOTELS LTD
Three Months ended December 31, 2004
SUMMARY OF OPERATING RESULTS
Three months ended
December 31
$'000 - except per share amount 2004 2003
Revenue and earnings
from unconsolidated companies
Owned hotels
- Europe 20,024 19,247
- North America 21,942 16,786
- Rest of World 24,064 19,733
Hotel management & part ownership interests 4,314 3,464
Restaurants 7,367 6,838
Trains & Cruises 18,056 14,541
Gain on sale of Quinta do Lago - 4,250
Total (1) 95,767 84,859
Analysis of earnings
Owned hotels
- Europe 416 1,914
- North America 5,569 2,268
- Rest of World 6,910 4,714
Hotel management & part ownership interests 4,314 3,464
Restaurants 2,377 1,956
Trains & Cruises 4,156 2,867
Central Overheads (4,151) (3,128)
Gain on sale of Quinta do Lago - 4,250
EBITDA 19,591 18,305
Depreciation & Amortization (7,198) (6,586)
Interest (2,618) (2,919)
Earnings before Tax 9,775 8,800
Tax (1,353) (182)
Net earnings on common shares 8,422 8,618
Earnings per common share, basic & diluted 0.25 0.27
34.30 32.15
Number of shares - millions
- (1) Comprises earnings from unconsolidated companies of $2,882,000 (2003: $2,901,000) and revenue of $92,885,000 (2003: $81,958,000).
ORIENT-EXPRESS HOTELS LTD
Three Months Ended December 31, 2004
SUMMARY OF OPERATING INFORMATION FOR OWNED HOTELS
Three months ended
December 31
2004 2003
Average Daily Rate
(in dollars)
Europe 541 480
North America 325 319
Rest of World 280 243
Worldwide 344 320
Rooms Sold (thousands)
Europe 20 23
North America 38 31
Rest of World 49 46
Worldwide 107 100
RevPar (in dollars)
Europe 245 226
North America 237 188
Rest of World 162 126
Worldwide 204 169
Change %
Same Store RevPAR Dollar Local
(in dollars) Currency
Europe 229 216 6% -2%
North America 225 191 18% 18%
Rest of World 165 131 27% 18%
Worldwide 197 167 18% 12%
ORIENT-EXPRESS HOTELS LTD
Twelve Months ended December 31, 2004
SUMMARY OF OPERATING RESULTS
Twelve months ended
December 31
$'000 - except per share amount 2004 2003
Revenue and earnings
from unconsolidated companies
Owned hotels
- Europe 116,074 115,884
- North America 75,376 66,564
- Rest of World 79,576 62,989
Hotel management & part ownership interests 14,885 13,474
Restaurants 20,562 17,595
Trains & Cruises 62,564 48,712
Gain on sale of Quinta do Lago - 4,250
Total (1) 369,037 329,468
Analysis of earnings
Owned hotels
- Europe 29,868 32,789
- North America 14,951 11,097
- Rest of World 18,051 11,077
Hotel management & part ownership interests 14,885 13,474
Restaurants 3,911 2,616
Trains & Cruises 13,057 5,984
Central overheads (15,707) (12,157)
Gain on sale of Quinta do Lago - 4,250
EBITDA 79,016 69,130
Depreciation & Amortization (28,349) (25,265)
Interest (17,225) (17,219)
Earnings before Tax 33,442 26,646
Tax (5,220) (3,037)
Net earnings on common shares 28,222 23,609
Earnings per common share, basic & diluted 0.82 0.76
34.30 31.14
Number of shares - millions
- (1) Comprises earnings from unconsolidated companies of $11,753,000 (2003: $9,355,000) and revenue of $357,284,000 (2003: $320,113,000).
ORIENT-EXPRESS HOTELS LTD
Twelve Months Ended December 31, 2004
SUMMARY OF OPERATING INFORMATION FOR OWNED HOTELS
Twelve months ended
December 31
2004 2003
Average Daily Rate
(in dollars)
Europe 626 493
North America 322 314
Rest of World 247 228
Worldwide 366 340
Rooms Sold (thousands)
Europe 108 139
North America 142 131
Rest of World 183 160
Worldwide 433 430
RevPar (in dollars)
Europe 342 280
North America 217 200
Rest of World 136 107
Worldwide 214 184
Change %
Same Store RevPAR Dollars Local
(in dollars) Currency
Europe 346 307 13% 2%
North America 216 200 8% 8%
Rest of World 137 106 29% 18%
Worldwide 213 184 16% 8%
ORIENT-EXPRESS HOTELS LTD
CONSOLIDATED AND CONDENSED BALANCE SHEETS
December 31 December 31
$'000 2004 2003
Assets
Cash $ 85,610 $ 81,347
Accounts receivable 34,984 28,060
Due from related parties 14,718 10,737
Prepaid expenses and other 11,914 11,717
Inventories 28,965 26,115
Total current assets 176,191 157,976
Property, plant & equipment, net book value 916,811 822,257
Investments 123,599 146,495
Goodwill 29,529 29,529
Other assets 19,461 12,969
$1,265,591 $1,169,226
Liabilities and Shareholders' Equity
Working capital facilities $ 42,920 $ 19,165
Accounts payable 23,839 18,830
Due to related parties 5,453 4,924
Accrued liabilities 37,288 40,409
Deferred revenue 20,493 12,617
Current portion of long-term debt and capital 46,245 51,271
leases
Total current liabilities 176,238 147,216
Long-term debt and obligations under capital 537,461 502,917
leases
Deferred income taxes 2,710 2,846
Minority interest 4,192 3,803
Shareholders' equity 544,990 512,444
$1,265,591 $1,169,226