Orient-Express Hotels Ltd., owners or part-owners and managers of 49 luxury hotels, restaurants, tourist trains and river cruise properties operating in 25 countries, reported a net loss for the third quarter of $13 million (a loss of $0.17 per common share) on revenue of $144.2 million, compared with net earnings of $6.4 million ($0.15 per common share) on revenue of $176.7 million in the third quarter of 2008. The net loss from continuing operations for the period was $2.7 million (loss of $0.04 per common share) compared with net earnings from continuing operations of $20.6 million ($0.48 per common share) in the third quarter of 2008.

The adjusted net earnings from continuing operations for the period was $1.4 million ($0.02 per common share) compared with adjusted net earnings from continuing operations of $22.6 million ($0.53 per common share) in the third quarter of 2008. Commenting on the quarter, President and CEO Paul White said: "The third quarter has again demonstrated the resilience of the Orient-Express business model. Our focus on the high-end leisure traveler and our international diversification translated into revPAR declines that were not as steep as those experienced by the luxury sector in general or the 'big brand' operators that rely heavily on group and corporate business. Nevertheless, the quarter was another challenging trading period for the company and the industry as a whole. During the quarter we continued to expedite the sale of non-core assets, with $86.3 million of sales completed so far this year. A non-binding letter of intent has since been signed for the sale of a third non-core hotel asset, and total proceeds are expected to rise to over $100 million by the end of 2009. The completed sales -- coupled with the equity raised in April -- have helped to reduce our net debt from $835.3 million at Dec. 31, 2008, to $705.8 million.”

Revenue, excluding real estate revenue, was $142.5 million in the third quarter of 2009, down $30.8 million from the third quarter of 2008. On a same-store basis, revenue, excluding real estate revenue, was down by 22 percent in U.S. dollars or by $37.7 million. Revenue from owned hotels for the third quarter was $116.5 million, including $10 million from Charleston Place. This excludes revenue from Windsor Court Hotel, which has been accounted for as a discontinued operation. On a same-store basis, revenue from owned hotels declined by 21 percent year over year. Owned hotels same-store revPAR declined by 20 percent in local currency (26 percent in U.S. dollars). Trains and cruises revenue fell by 23 percent, or $7 million. These operations have a high variable cost component and EBITDA fell by only $2.6 million. Adjusted EBITDA before real estate and impairment was $30.6 million compared to $51.3 million in the prior year.

The principal variances from the third quarter of 2008 included results from owned hotels in Italy (down $3.9 million); Reid's Palace, Madeira (down $1.2 million); Grand Hotel Europe, St Petersburg (down $2.9 million); La Residencia, Mallorca (down $1.8 million); La Samanna, St. Martin (down $1.2 million); Orient-Express Safaris, Botswana (down $1.2 million); and the Venice Simplon-Orient-Express (down $2.7 million). The results for the third quarter include a non-cash fixed asset impairment charge of $9.8 million relating to the company's ownership of Lilianfels Blue Mountains, Katoomba, Australia. During the quarter, work started on a fully financed $14.1 million, 56-key hotel Palacio Nazarenas, Cuzco, Peru, scheduled for completion in 2011. The hotel, a conversion of an historic convent, will complement the company’s next-door Hotel Monasterio with a presidential suite, 29 junior suites, nine suites and 17 deluxe oxygen-enriched rooms. The entirely refurbished Road to Mandalay river cruise ship in Burma returned to service in August 2009, after an absence of more than 12 months, following damage sustained during Cyclone Nargis. A new Governor's Suite and five additional state cabins have been created. Deluxe cabins have been reduced in number and expanded to improve the guest experience.

In the third quarter, revenues from owned hotels in Europe were $67.5 million, down 23 percent from $88.1 million in the third quarter of 2008. EBITDA was $25.6 million in 2009 versus $35.9 million in the prior year. Same-store RevPAR decreased by 18 percent in local currency (26 percent in U.S. dollars). Overall, the Italian hotels experienced a 12 percent fall in local currency RevPAR (19 percent in U.S. dollars). Reid's Palace, which is heavily dependent on the weakened U.K. outbound market, experienced a 35 percent fall in local currency RevPAR (39 percent in U.S. dollars). Similarly, La Residencia, which is also largely dependent on the U.K. market, experienced a 31 percent fall in local currency RevPAR (36 percent in U.S. dollars). Grand Hotel Europe, St Petersburg continued to be adversely affected by the global recession and suffered a 28 percent fall in local currency RevPAR (44 percent in U.S. dollars). The depreciation of the ruble had a $1.4 million adverse impact on the hotel's EBITDA.

Revenue for North America was $19.9 million, including $10 million with respect to Charleston Place, South Carolina, which was consolidated from Jan. 1, 2009. Excluding this hotel, revenue was 25 percent lower than the third quarter of 2008. Excluding EBITDA of $1.8 million from Charleston Place, there was an EBITDA decrease of $2.2 million. Same-store RevPAR for the region fell by 31 percent. The region includes La Samanna, St. Martin, which was significantly impacted by the economic downturn as well as the closure of the property for one week due to a hurricane threat. Consequently, the hotel suffered a 41 percent fall in RevPAR. Revenue of $7.2 million for South Africa was 29 percent lower year over year, and EBITDA of $1.1 million was 58 percent lower than in the third quarter of 2008. In South America, revenue decreased by 10 percent to $11.3 million in the third quarter of 2009, from $12.5 million in the third quarter of 2008. EBITDA was $0.9 million, compared to $1.9 million last year.

Copacabana Palace had a RevPAR decrease of 19 percent in local currency, and EBITDA was down by $0.5 million. The region's EBITDA results were impacted by a $1.6 million EBITDA loss at Hotel das Cataratas which was relaunched under the Orient-Express brand in October 2009. In Asia Pacific, revenue for the third quarter of 2009 was $10.7 million, a decrease of 2 percent year over year. EBITDA was $2.8 million compared to $2.2 million in the third quarter of 2008. Same-store RevPAR in local currency for the region fell by 4 percent from $172 to $166.

Discontinued operations in the third quarter include the results of Windsor Court Hotel, New Orleans; Bora Bora Lagoon Resort; and La Cabana, Buenos Aires. The charge included an operating loss in the quarter of $0.4 million and impairment charges, net of tax, of $5.4 million relating to La Cabana and $4.5 million relating to Bora Bora Lagoon Resort. Capital expenditure in the third quarter was $10.4 million which was necessary to complete projects at, in particular, Grand Hotel Europe and Copacabana Palace. This also included $5.9 million for Road To Mandalay, which is fully covered by insurance. There was an additional $9 million deposit for the New York hotel project. In addition, the company invested $8.9 million during the quarter in the company's development at Porto Cupecoy, and $3.5 million was invested in Hotel das Cataratas.

"As we enter the low-season period, we see business conditions continuing to stabilize. Bookings remain very last minute, a trend we expect to continue into 2010," said White. "We maintain our tight control of costs and capital expenditures and are pursuing the sale of non-core assets and developed real estate in line with our strategy. Having achieved key milestones in all three of these areas, with further progress expected in the coming months, the company can now begin to evaluate growth opportunities in management, ownership or a combination of both. Our aim continues to be to deleverage the company significantly by the end of 2011, with a targeted four to five times ratio of debt to EBITDA on a stabilized basis." For more information, visit www.orient-express.com.

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