Orient-Express Hotels Announces Second Quarter and Six Months Results
HAMILTON, Bermuda, Orient-Express Hotels Ltd., luxury hotel, restaurant, tourist train and river cruise ship operator OEH today announced its results for the second quarter and six months ended June 30, 2002. Net earnings were $11.6 million ($0.38 per common share) in the second quarter compared with $14.4 million ($0.47 per common share) in the second quarter of 2001. Revenue was up 3% to $79.1 million compared with $76.
For the six months ended June 30, 2002 net income was $12.0 million ($0.39 per common share) on revenue of $132.8 million, compared with net income of $19.3 million ($0.62 per common share) on revenue of $134.6 million in the year earlier period.
Mr. James B. Sherwood, Chairman, said that the second quarter had performed to expectation. Lower earnings year on year were due to the lingering effects of September 11th and the conscious decision of the company to close the Inn at Perry Cabin for construction which is doubling the number of keys, and delayed openings at the Villa San Michele for major rooms addition and at the Hotel Cipriani, also because of major works at the property.
He indicated that same store RevPAR in the second quarter was down 8% from the year earlier period, indicating continuing recovery from September 11th. Same store RevPAR was down 17% in the fourth quarter of 2001 and 12% in the first quarter of 2002. He said that second quarter earnings were in line with "street consensus".
Mr. Sherwood indicated that travel patterns had remained unchanged from previous observations, meaning that Americans and Japanese seem to be less on the move to overseas destinations, with arrivals of Americans in Europe down about 20% from the same period of 2001. Travel by Europeans within Europe is strong, as is travel by Americans within the U.S.
Business travel in the U.S. also seems weaker as many of the IT and telecoms companies reduce spending. Orient-Express Hotels differs from many of its competitors in that 65% of its guests are leisure as distinct from business travellers.
Mr. Sherwood said that negotiations were progressing satisfactorily with respect to acquisition of additional properties in the U.S., Europe and Asia but it is unlikely that any will be concluded until later in the year so there would be no earnings implications for 2002.
Mr. Sherwood advised that effective July 22, 2002 a subsidiary of Orient- Express Hotels had acquired 18,044,478 Class B shares in Orient-Express Hotels from Sea Containers Ltd. under an agreement that had been put in place before the initial public offering of Orient-Express Hotels in August 2000. These shares may be voted by the subsidiary but are not counted for purposes of earnings per share calculations in accordance with U.S. generally accepted accounting practices, while the subsidiary owns them.
The significance of this transaction is twofold. First, voting control of Orient-Express Hotels is no longer in the hands of Sea Containers Ltd., and second, in a takeover situation, the board of Orient-Express Hotels' subsidiary holding the Class B shares would be able to assure the highest price was achieved for all shareholders.
Mr. Simon M.C. Sherwood, President, summarized the second quarter results as follows:
Owned European hotels. EBITDA was $11.4 million compared with $11.8 million in the second quarter of 2001. Weakness in Italian hotels caused by closures and less arrivals from the U.S. was offset by earnings from Le Manoir and La Residencia, both acquired early in 2002.
Owned North American hotels. EBITDA was $3.6 million compared with $4.8 million in the prior year period. La Samanna was particularly hard hit by September 11th and closure of the Inn at Perry Cabin was also a factor.
Owned Southern Africa hotels. EBITDA was $0.2 million, up from a loss of $0.1 million in the prior year period. Southern Africa is showing strong growth and the South African Rand has strengthened although it is still lower in value than in 2001.
Owned South American hotels. EBITDA was $1.2 million, down from $1.6 million in the prior year period due to continued weakness in the Brazilian Real and less business travel to South America, reflecting economic concerns in the region.
Owned South Pacific hotels. EBITDA was $0.4 million compared with $0.8 million. These long haul destinations have been badly hit by September 11th.
Management and part ownership interests. EBITDA was $3.6 million compared with $3.3 million in the year earlier period, reflecting solid performance from Charleston Place and improved results at Peruvian hotels.
Restaurants. EBITDA was $1.4 million, unchanged from the year earlier period.
Tourist trains and river cruise ship. EBITDA was $3.7 million compared with $3.5 million in the year earlier period. European tourist trains were ahead of the year earlier period.
Simon Sherwood indicated that same store RevPAR in the second quarter was $169 compared with $184 in the second quarter of 2001. Rooms sold were 117,000, the same as in the year earlier period and ADR was $291 compared with $300.
He indicated that work is proceeding on both the La Cabana restaurant in Buenos Aires and the Hotel Caruso in Ravello, Italy with a view to opening both properties in 2003. Tourism to Argentina is rising rapidly in the wake of the devalued peso. The Amalfi coast is still experiencing a shortage of five star hotel accommodation.
He said that booking patterns remain unpredictable due to stock market and recession jitters, with last minute bookings becoming the norm rather than the exception. Nonetheless, the company's properties seem to fill. He said that the company had just acquired six beautiful "Shasta" cars for a new day trip tourist train operation in the U.S. The train will be based in New York City and will be operated in much the same way as the British Pullman train is operated out of London.
He stressed that the company has a very well balanced portfolio of 41 properties in 16 countries and is not over-dependent on any one market. He said that the company's strategy of investing in hotels capable of expansion is paying dividends and that much of the company's future investment would be directed to this.
He concluded by repeating management's earlier forecast that same store RevPAR is expected to be higher in the third and fourth quarters compared with 2001 and net earnings for the year are expected to exceed those of 2001 when the company had net income of $30 million ($0.97 per common share).
ORIENT-EXPRESS HOTELS LTD
Six Months ended June 30, 2002
SUMMARY OF OPERATING RESULTS
Six months ended
June 30
$'000 2002 2001
Revenue
Owned hotels
- Europe 41,403 36,788
- North America 30,766 35,649
- Rest of World 26,400 27,257
Hotel management & part ownership interests 6,044 5,842
Restaurants 9,549 9,749
Trains & Cruises 18,602 19,323
Total revenue 132,764 134,608
Operating Profits
Owned hotels
- Europe 10,875 11,638
- North America 9,056 12,061
- Rest of World 6,377 8,437
Hotel management & part ownership interests 6,044 5,842
Restaurants 2,316 2,399
Trains & Cruises 2,956 3,631
Central overheads (5,138) (4,554)
EBITDA 32,486 39,454
Depreciation & Amortization (9,250) (8,024)
Interest (9,367) (9,745)
Earnings before Tax 13,869 21,685
Tax (1,865) (2,378)
Net earnings on common shares 12,004 19,307
Earnings per common share 0.39 0.62
Number of shares - millions 30.80 30.90
ORIENT-EXPRESS HOTELS LTD
Six Months Ended June 30, 2002
SUMMARY OF OPERATING INFORMATION FOR OWNED HOTELS
Six months ended
June 30
2002 2001
Average Daily Rate
(in dollars)
Europe 323 318
North America 338 346
Rest of World 178 199
Worldwide 270 282
Rooms Sold (thousands)
Europe 75 74
North America 60 67
Rest of World 88 83
Worldwide 223 224
RevPar (in dollars)
Europe 211 227
North America 235 259
Rest of World 93 112
Worldwide 163 185
Same Store RevPAR Change %
(in dollars) Dollars Local
Currency
Europe 201 219 -8% -8%
North America 238 264 -10% -10%
Rest of World 89 103 -13% -6%
Worldwide 161 179 -10% -8%
ORIENT-EXPRESS HOTELS LTD
Three Months ended June 30, 2002
SUMMARY OF OPERATING RESULTS
Three months ended
June 30
$'000 2002 2001
Revenue
Owned hotels
- Europe 31,122 27,691
- North America 14,209 16,281
- Rest of World 11,856 11,731
Hotel management & part ownership interests 3,595 3,330
Restaurants 4,963 4,993
Trains & Cruises 13,349 12,671
Total revenue 79,094 76,697
Operating Profits
Owned hotels
- Europe 11,368 11,785
- North America 3,578 4,754
- Rest of World 1,772 2,328
Hotel management & part ownership interests 3,595 3,330
Restaurants 1,365 1,419
Trains & Cruises 3,687 3,485
Central overheads (2,559) (2,253)
EBITDA 22,806 24,848
Depreciation & Amortization (4,905) (4,095)
Interest (4,544) (4,634)
Earnings before Tax 13,357 16,119
Tax (1,793) (1,704)
Net earnings on common shares 11,564 14,415
Earnings per common share 0.38 0.47
Number of shares - millions 30.80 30.90
ORIENT-EXPRESS HOTELS LTD
Three Months Ended June 30, 2002
SUMMARY OF OPERATING INFORMATION FOR OWNED HOTELS
Three months ended
June 30
2002 2001
Average Daily Rate
(in dollars)
Europe 380 380
North America 295 314
Rest of World 174 184
Worldwide 291 300
Rooms Sold (thousands)
Europe 49 48
North America 30 32
Rest of World 38 37
Worldwide 117 117
RevPar (in dollars)
Europe 268 294
North America 195 223
Rest of World 80 93
Worldwide 172 195
Same Store RevPAR Change %
(in dollars) Dollar Local
Currency
Europe 266 286 -7% -8%
North America 198 221 -10% -10%
Rest of World 69 74 -7% -4%
Worldwide 169 184 -8% -8%
ORIENT-EXPESS HOTELS LTD
CONSOLIDATED AND CONDENSED BALANCE SHEETS
$'000 June 30 December 31
2002 2001
Assets
Cash 43,941 57,863
Accounts receivable 58,685 45,420
Inventories 19,961 17,463
Total current assets 122,587 120,746
Real estate and other fixed assets,
net book value 704,658 602,763
Investments 77,748 79,430
Intangible assets 29,529 29,529
Other assets 2,991 3,783
937,513 836,251
Liabilities and Shareholders' Equity
Working capital facilities 21,818 7,038
Accounts payable 17,678 19,526
Accrued liabilities 39,127 38,594
Deferred revenue 16,156 10,513
Current portion of long-term debt
and capital leases 56,328 55,695
Total current liabilities 151,107 131,366
Long-term debt and obligations
under capital leases 368,599 307,176
Deferred income taxes 5,301 3,875
Minority interest 3,753 1,247
Shareholders' equity 408,753 392,587
937,513 836,251