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Hotel Industry News |
Friday August 22nd, 2008 |
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Orient-Express Hotels Announces Third Quarter and Nine Months Results |
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Third Quarter Net Earnings Up 40% Over Prior Year |
Click here for financial tables
Orient-Express Hotels Ltd. (NYSE: OEH, www.orient-express.com), owners of 46 deluxe hotel, restaurant, tourist train and river cruise properties (38 of which it manages) in 21 countries, today announced its results for the third quarter and nine months ended September 30, 2004.
For the quarter net earnings were $11.5 million ($0.34 per common share) on revenue of $103 million, an increase of 40% over net earnings of $8.2 million in the year earlier period. Earnings per common share were up 26% and revenue was up 13% over the third quarter of 2003.
Net earnings for the nine months were $19.8 million ($0.58 per common share) on revenue of $273.3 million, an increase of 32% over net earnings of $15 million in the year earlier period. Earnings per common share were up 18% and revenue was up 12% over the first nine months of 2003.
Mr. James B. Sherwood, Chairman, said the results indicate the pace of recovery of the company's earnings has increased compared with that of the second quarter. He said if anything the underlying results are understated because of hurricanes which brushed near the company's resorts in St. Martin and the Yucatan, and New Orleans where Hurricane Ivan caused a loss of business equal to two cents per share in earnings for the quarter when two city-wide conventions were cancelled.
He indicated that European hotels had performed strongly in the quarter with EBITDA of $19.6 million, compared with $16.6 million in the prior year period (excluding the Hotel Quinta do Lago which was sold last November), an improvement of 18%. South Pacific hotels reported an EBITDA of $1.1 million compared with breakeven a year earlier. Hotel results from all regions were ahead of the prior year period.
Trains and Cruises had an EBITDA of $4.6 million in the quarter, up 140% over the prior year's EBITDA of $1.9 million.
Operating results of Pansea hotels in southeast Asia increased threefold in the quarter and 150% in the nine months to $0.7 million and $1.5 million respectively. 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.
"Not only are we seeing an across-the-board improvement in all our business segments, we continue to grow by acquisition and enhancement of existing properties. We expect to announce next week the acquisition of our first property on the U.S. West Coast as well as an addition to our Trains and Cruises business. A further major hotel acquisition may be concluded before year end or early next year," Mr. Sherwood said.
"Investors may wish to keep in mind that one of the reasons we own our assets rather than act merely as a management company is that real estate values rise and those values can often be unlocked. Our St. Martin tourist village, marina and residential housing development is progressing to the point where we may see earnings already in late 2005. Land sales at Keswick are gaining pace".
Mr. Simon M.C. Sherwood, President, said that average daily room rate of owned hotels in U.S. dollars was up 8% in the third quarter to $414 from $382 in the prior year period. Same store RevPAR in U.S. dollars was up 18% from $205 to $241. EBITDA margin for the quarter was 25% compared with 23% in the prior year period.
He reviewed performance by region as follows:
Europe. EBITDA of owned hotels in Europe was $19.6 million compared with $16.6 million in the year earlier period (excluding the Hotel Quinta do Lago which was sold). All European hotels except Reid's Palace in Madeira registered solid gains while Reid's was flat compared with prior year. Madeira is suffering from access problems created by the Portuguese government's protection of the national airline TAP.
North America. EBITDA of owned hotels was $0.4 million compared with an EBITDA loss of $0.1 million in the year earlier period. This quarter is the low period for the company's hotels due to summer heat and lack of corporate business due to the summer holidays.
Southern Africa. EBITDA of owned hotels was $0.6 million compared with an EBITDA loss of $0.2 million in the prior year period. Both Orient-Express Safaris which encompass the company's three Botswana game lodges and the Westcliff in Johannesburg contributed to the improvement.
South America. EBITDA of owned hotels was $1.3 million compared with $1 million in the prior year. The Copacabana Palace Hotel in Rio de Janeiro was largely responsible for the improvement.
South Pacific. EBITDA of owned hotels was $1.1 million compared with breakeven in the prior year period. The largest gain came from the Bora Bora Lagoon Resort in French Polynesia where the major upgrade completed earlier this year has received acclaim from the travel agents and tour operators. Australian hotels were also ahead.
Hotels management and part-ownership. EBITDA was flat at $2.9 million compared with $3 million in the prior year period. The Ritz in Madrid underperformed vs. the prior year but outperformed its competitive set. Peruvian hotels and Charleston Place outpaced the prior year.
Restaurants. EBITDA was a loss of $0.4 million, a slight improvement over the loss of $0.5 million in the prior year period. '21' Club in New York traditionally incurs a loss in this period when New Yorkers, both business and resident, are on summer holiday, however, '21' Club's EBITDA for the nine months was $1 million ahead of the prior year period and the autumn season appears to be strong.
Tourist trains and river cruises. EBITDA was $4.6 million, a sparkling 140% improvement over the prior year period. The improvement was concentrated in the Venice Simplon-Orient-Express, the two U.K. based tourist trains (British Pullman and Northern Belle) and PeruRail, with similar gains for each of these units.
Financial charges. Depreciation in the quarter was $7.2 million compared with $6.7 million in the prior year period. Interest was $4.8 million compared with $4.6 million. Tax was $2.5 million compared with $1.6 million and central overhead was $4.1 million compared with $3.1 million.
"Central costs have risen both through inflation and strengthening of the British pound against the U.S. dollar. Our main offices are located in London, England," Simon Sherwood said.
"We are expecting continued improvement in the fourth quarter. The corporate market appears firm. We are particularly pleased with the strong performance from our European properties in the third quarter despite the lower number of arrivals from the U.S. due to the weak dollar and strong Euro and British pound. Taken together our European hotels and tourist trains were ahead by more than $5 million at the EBITDA level in the third quarter compared to the prior year period. Less than $2 million of this improvement was due to strengthening European currencies against the dollar".
"For 2005 we look forward to substantial profit improvement from the recent doubling of rooms at the Inn At Perry Cabin, property sales at Keswick and La Samanna, increase of rooms at Maroma, completion of the upgrade of Lilianfels and acquisitions to be announced shortly. We also expect improved results from all our other properties if current trends continue, and we plan to open the Hotel Caruso in Ravello, Italy in time for the peak season next year."
In 2004 the company paid a quarterly dividend on its common shares through the dividend paid on October 20. For 2005 the schedule will be amended slightly by paying the dividend in the second month of each calendar quarter rather than the first month as in 2004. The quarterly declaration and record dates in 2005 will be adjusted accordingly. This change allows the dividend to be recorded in the quarter when it is paid.
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