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Orient-Express Hotels Ltd. Q2 2010 Earnings Call Transcript

Orient-Express Hotels Ltd. Q2 2010 Earnings Call Transcript

Orient-Express Hotels Ltd. (OEH)

Q2 2010 Earnings Call

August 4, 2010 10:30 AM ET


Pippa Isbell – Vice President of Corporate Communications

Paul M. White – President and Chief Executive Officer

Martin O'Grady – Chief Financial Officer


Joe Grass – JPMorgan

Chris Woronka – Deutsche Bank



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Good day ladies and gentlemen and welcome to the Second Quarter 2010 Earnings Conference Call for Orient-Express Hotels. Today's conference is being recorded. At this time, I would like to turn the conference over to Pippa Isbell, Vice President of Corporate Communications for Orient Hotels, Express Hotels. Please go ahead.

Pippa Isbell

Thank you very much indeed operator. Good morning, ladies and gentlemen and our apologies to keeping you waiting. As the operator indicated, this is the second quarter earnings conference call for Orient-Express Hotels. We issued our news release last night and its available on our website at, as well as on the SEC website.

For anyone who has not yet seen it, the summary is as follows. Second quarter total revenues excluding real estate up 13% to $146 million. Revenue from owned hotels up 15%, same stores RevPAR up 12% to local currency up 13% in U.S. dollars.

Adjusted EBITDA before real estate up $32.4 million up 22%.[audio gap]

Act of 1995. In the course of remarks due today by Orient-Express Hotels management and answering your questions they may make forward-looking statements concerning Orient-Express Hotels such as its earnings outlook, future investment plans and other matters that are not historic facts

We caution that actual results of Orient-Express Hotels may differ materially from these forward-looking statements. Information about factors that could cause actual results to differ is set out in today's news release, the company's latest annual report to shareholders and the filings of the company with the Securities and Exchange Commission. So I have and will now turn the call over to Paul White, our CEO.

Paul M. White

Thanks, Ned. Good morning everyone. Inline with recent quarters, I think another quarter which demonstrate the steady progress by the industry and Orient-Express are making as we encounter economic recovery around the world. This is our second successive quarter double digit RevPAR growth and coupled with continue positive booking trends, means that 2010 is now beginning to exceed our own internal expectations. This despite some external issues outside of our areas of influence such as the political situation in Bangkok, floods in Peru, volcanic ash cloud and airline strikes in Europe.

Despite these being major press stories and as I reported on the last quarter, having some impact on our second quarter results cumulatively this was washed out as the bounce back was quite strong in all areas. Overall, the results that Pippa summarized earlier on the call along with the excellent progress that Martin and his team have made on the refinancing of the company's long-term debt

means that

[audio gap]

first time in recent years, I think I can summarized the quarter more towards being good rather then just solid. Martin will give more color on the refinancing and debt issues later in the call.

In my own discussions with investors its clear that the main concern remained a medium term outlook and in particular the situation on outside of the Atlantic over here in Europe. Just to bring you first, we'll ride up today we have our July numbers just in. RevPAR in July actually grew by 19% and interestingly over 80% of our business is around the world reported growth.

So let's drilled down into the second quarter numbers starting with Europe. Where second quarter same store RevPAR was up 1% and same stores EBITDA grew 4 to 17.8 million. RevPAR gains in U.K., Russia and France, all reporting greater than 15% growth in local currency was somewhat offset by Spain and Portugal both down by more than 10%. Italy was slightly down in the quarter.

The RevPAR movement was driven by higher occupancies, as more aggressive pricing strategies resulting a 7% increase in volumes on a same-store basis. It should noted that quarter two really is a shoulder season in Europe and our strategy in the low and shoulder seasons it designed around volume growth.

July however rate presents high season and the results have showed a mark difference. Revenue is up more than 10% in Europe in July with Italy the real highlight. We are pleased to get the two Sicilian properties open on schedule of the end of May, most the early weeks of slow, business and importantly average rate is on the rise.

A few other positive signs to [inaudible] second best ever year ever month sorry at July reporting 94 % occupancy at an average room mate of $1500 but the RevPAR in U.S $1,419. Business in Italy is coming from the U.S up 28% in Venice and up 60% in Rebelo and form South America and encouragingly from Italy itself.

Those of you familiar with Orient-Express story in recent years know that we strongly believe that building domestic business is key to building sustainable demand in the future. Booking as of the end of June on the same-store basis is 17% ahead of this time last year with Italy 18% ahead. Only Reid to Madeira is trucking behind last years pace. On a 12 months basis bookings are 4% ahead.

Moving to North America, RevPAR for the quarter was up 16% dominates by an excellent 28% growth adjust in place. Domestic North America overall showed 21% growth with Mexico and Caribbean slightly down, as with Europe showed season demand volume was the main driver. Average rate was essentially flat for the quarter.

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