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TheStreet Open House

Orient-Express Hotels Reports Third Quarter 2012 Results

Stocks in this article: OEH

HAMILTON, BERMUDA, November 1, 2012 /PRNewswire/ --

  • Same store revenue per available room ("RevPAR") in local currency equal to year-ago quarter; up 5% excluding impact of partial closure of Copacabana Palace in Rio de Janeiro
  • Strong performance in North America and Asia-Pacific, with same store RevPAR up 12% in both regions
  • Resilient performance in Europe despite poor macro-economic conditions, with revenue from owned hotels, same store RevPAR and EBITDA all ahead of 2011 on a local currency basis
  • Third quarter total revenue before real estate down 8% to $160.4 million from $173.5 million; up 1% excluding effects of currency and partial closure of Copacabana Palace
  • Third quarter adjusted EBITDA before real estate down 10% to $41.6 million from $46.1 million; up 2% excluding effects of currency and the partial closure of Copacabana Palace
  • Central overheads down $2.0 million from the year-ago quarter
  • Proceeds of $42.1 million received from completion of sale of The Observatory Hotel, Sydney;  $11.2 million of proceeds used to repay debt
  • Announced new river cruise operation in Myanmar that will commence operations in July 2013
  • Completed €35.0 million ( $44.4 million) refinancing of loans secured on Grand Hotel Timeo and Villa Sant'Andrea, both in Sicily
  • Positive early indications for overall 2013 bookings; up 11% for total owned hotels from the same time last year

Orient-Express Hotels Ltd. (NYSE: OEH, http://www.orient-express.com) (the "Company"), owners or part-owners and managers of 45 luxury hotel, restaurant, tourist train and river cruise properties operating in 22 countries, today announced its results for the third quarter ended September 30, 2012.

Revenue before real estate was $160.4 million in the third quarter of 2012, down $13.1 million or 8% from $173.5 million in the third quarter of 2011. Excluding the effects of weaker local currencies compared to the US dollar and the temporary partial closure of the Copacabana Palace, revenue before real estate was up by 1% compared to the third quarter of 2011.

Revenue from owned hotels for the third quarter was $131.1 million, down $9.2 million or 7% from $140.3 million in the third quarter of 2011. On a same store basis, owned hotels RevPAR was flat in local currency and down 6% in US dollars. Excluding the impact of the partial closure of Copacabana Palace, same store RevPAR in local currency was 5% ahead.

Trains & cruises revenue in the third quarter was $26.0 million compared to $28.9 million in the third quarter of 2011, a decrease of 9% in local currency or 10% in US dollars.

Adjusted EBITDA before real estate was $41.6 million for the third quarter, down $4.5 million from $46.1 million in the prior year period. The principal decrease from the prior year quarter was at Copacabana Palace, where EBITDA was down $2.1 million as it was partially closed for renovation. Other notable decreases were at Hotel Cipriani, Venice (down $1.6 million), share of earnings from Hotel Ritz, Madrid (down $0.6 million) and British Pullman (down $0.5 million). These decreases were partially offset by increases at the two Sicilian hotels (up $0.9 million), Hotel das Cataratas, Iguassu Falls (up $0.8 million) and Charleston Place, South Carolina (up $0.6 million).

Adjusted net earnings from continuing operations for the third quarter were $14.5 million ( $0.14 per common share) compared with $20.5 million ( $0.20 per common share) in the third quarter of 2011.

"Despite continuing economic uncertainty in Europe, revenues held up well and same store RevPAR in local currency was unchanged from last year on a global basis," said Philip Mengel, Director and Interim Chief Executive Officer. "In fact, in local currency and excluding the effects of the temporary closure of Copacabana Palace as part of its planned refurbishment, same store RevPAR was up 5% from the prior year quarter, reflecting the tremendous strength and guest appeal of our unmatched collection of iconic assets. In Europe, revenues from owned hotels were up by $2.6 million on a local currency basis even with the tough macro-economic conditions in that market.

"We continue to make good progress on our program of reinvestment in core properties with important investments underway or completed at Mount Nelson Hotel, La Samanna, El Encanto and '21' Club as well as Copacabana Palace. The formal opening of Palacio Nazarenas in September further strengthens our luxury presence in Peru.

"We are seeing the benefits of our investments in the financial performance of many properties. In Sicily, for example, our local currency RevPAR in the third quarter was 19% ahead of the prior year, reflecting completion of the refurbishment of the Grand Hotel Timeo and Villa Sant'Andrea. Looking forward, we expect to realize the benefits of this year's renovation projects starting in the current quarter.  Early indications for 2013 bookings across the collection are positive, with bookings for total owned hotels 11% ahead of where they were at the same time last year."

Company Highlights

The Company has continued to execute its strategy of redeploying capital and reducing debt through targeted divestments. During the quarter, the Company completed the sale of The Observatory Hotel.  The proceeds from the sale were $42.1 million, of which $11.2 million was used to repay associated debt. As previously reported in the second quarter earnings release, the Company entered into an agreement in July to sell The Westcliff, Johannesburg. The process of securing certain regulatory approvals necessary under that contract is underway and the transaction is currently expected to close by the end of the year.

As part of its strategy to redeploy capital, the Company has continued to invest capital into enhancing the existing portfolio to support growth in average daily rate ("ADR") and occupancy. Work continued during the quarter on the refurbishment of all rooms and suites in the main building of Copacabana Palace, which is scheduled for completion in early December in time for the high season. In late September, a portion of rooms in the main building were reopened, along with a restyled lobby that has been enlarged to offer 80% more floor space and two new mezzanine levels. The interruption at Copacabana Palace had a major impact on third quarter earnings, and the Company will benefit significantly going forward from its re-opening.

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