Orient-Express Hotels Acquires El Encanto Hotel in Santa Barbara, California

Orient-Express Hotels Ltd. (NYSE: OEH - News) announced today the acquisition of the El Encanto Hotel and Garden Villas in Santa Barbara, California for $26 million.

Orient-Express The company plans to invest $10 million in the upgrade of the property.

El Encanto is located in the Santa Barbara hills, above the beautifully restored Mission Santa Barbara, and commands spectacular views of the Pacific Ocean. Built in 1913 on a 7 acre site, the mature gardens greatly enhance the property.

Santa Barbara is a community which has been kept in excellent appearance through strict town planning controls. El Encanto is part of the Historic Hotels of America, a program of the National Trust. It features two styles of early Santa Barbara architecture, California Craftsman and Spanish Colonial Revival. The hotel has 88 rooms in cottages and low rise buildings spread throughout the gardens and has permission to increase rooms to 97.

Santa Barbara has a year round season which is especially strong in the summer when Angelinos seek to escape the heat of the Los Angeles valley and other resorts to the east such as Palm Springs and Las Vegas are unbearable. It takes only 90 minutes to drive to El Encanto from Hollywood.

Orient-Express Hotels has been in negotiation for several years to acquire the property, interrupted by the tragic death of Eric Friden, the previous owner. Five star hotels in the Santa Barbara area enjoy 75% occupancy and average rate of $400. Once the upgrade of El Encanto is completed the company believes it will not only achieve this level of occupancy but an even higher average rate.

Mr. Friden had made considerable progress on plans to upgrade the property at the time of his death and these include:

Renovation of all guest accommodation.
Addition of 5 cottages and relocation of 3 cottages.
New pool and relaxation area in the main garden.
Construction of conference and breakout rooms under the main restaurant.
Addition of spa facilities.
The hotel will be closed in the next low season for the major works and minor works will be completed in subsequent low seasons while the property remains open.

El Encanto falls within the North America division of the company which includes Charleston Place in Charleston, South Carolina, '21' Club in New York City, Keswick Hall & Club in Charlottesville, Virginia, the Windsor Court in New Orleans, the Inn at Perry Cabin in St. Michael's, Maryland, La Samanna in St. Martin and Maroma Resort & Spa on the Riviera Maya coast of Mexico. This division is managed by Dean P. Andrews, Vice President - North America based in New York City.

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