Orient-Express Hotels Ltd. ( OEH)

Q2 2011 Earnings Call

August 3, 2011 10:00 am ET


Victoria Legg – Director of Corporate Communications

Ned Hetherington – General Council and Company Secretary

Bob Lovejoy – Interim CEO

Filip Boyen – VP and COO

Martin O’Grady – VP and CFO


Kevin Milota – JPMorgan

Stephane Nahum – Reuben Brothers

Josh Attie – Citi

David Katz – Jefferies & Co

Chris Jones – Telsey Advisory Group



This is the second quarter 2011 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 Victoria Legg, Director Corporate Communications. Please go ahead.

Victoria Legg

Ladies and gentlemen, good morning. This is the second quarter earnings conference call for Orient-Express Hotels. We issued our earnings release last night. The release is available on our website at orient-expresshotelsltd.com as well as on the SEC website.

On the call today are Bob Lovejoy, Chairman and Interim Chief Executive Officer; Filip Boyen, Chief Operating Officer; Martin O’Grady, Chief Financial Officer; and Ned Hetherington, Company Secretary, to whom I now hand over for the usual housekeeping announcements.

Ned Hetherington

Thank you, Vicky. Our usual housekeeping matter is our cautionary statement under the Private Securities Litigation Reform Act of 1995. In the course of the remarks here today about or by Orient-Express Hotel’s management and in 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. That’s all I have, I will now turn the call over to Bob Lovejoy our Interim CEO.

Bob Lovejoy

Thank you very much Ned. Good morning ladies and gentlemen and thank you for taking the time to join us for the Orient-Express earnings call this morning. As you know, we announced second quarter 2011 results yesterday afternoon. The most recent quarter reflected strong growth in the luxury leisure travel markets in most of our important geographies. Orient-Express delivered its sixth consecutive quarter of RevPAR growth with a 20% increase in same store RevPAR in U.S. dollars and a 14% increase in local currencies compared with last year’s second quarter.

Our revenue for the second quarter increased by 23%, compared to the second quarter of 2010 and revenue for owned hotels grew by 25%. For the second quarter, adjusted EBITDA before real estate was up 28% to $41.1 million and net earnings from continuing operations was $7.5 million, compared to $3.3 million in 2010. Orient-Express continues to benefit from a generally good demand picture for our properties. We see the growth in operating results continuing as we move into our very important third quarter.

In July, revenues for Orient-Express’ owned properties were about 20% up from last year. The bookings picture presents another good indicator and keep in mind that bookings represent room nights and therefore are an indicator of volume rather than price. As of July 31, same store bookings compared to the prior year were up 18% in Europe, up 14% in North America, up 6% for rest of the world and up 11% across the entire portfolio. And those figures cover the 11 month period from August 1 to July 30 of next year.

With regard to pricing, thus far we see essentially the same trends continuing into Q3 that we have observed and by in large benefited from in the second quarter. We also see excellent opportunities to generate increased revenues through our marketing and brand building initiatives and through incremental targeted investments. We will roll out an innovative internet-based (Inaudible) brand building campaign, which will be focused initially on the United States markets in September. This is going to focus on people’s attention on our very special style of experiential luxury travel and we think it is going to generate a lot of interest.

In addition, our customer relationship management database is coming on stream over the course of this year and is already hooked up in about a third of the properties. As just one example of our investment program, we plan to build five sensational new suites at the hotel Splendido in Portofino during the upcoming winter closing. We expect to earn back the total cost of these suits about once every three years. We also see good scope to continue to improve operating efficiencies.

In addition, we recently sold another non-core property producing over $12 million of net cash for the company and our balance sheet picture continues to improve and our investing discipline are more rigorous with every week. Let me also update you on our search for a permanent Chief Executive Officer. As previously announced, our board has appointed a search committee, which is moving promptly through the process and recently completed the selection of an executive search firm. We will be actively in the market with this search in a matter of days. We will continue to move quickly through the process but we intend to be thorough. We have no set timetable other than to find the best possible leader for this business as soon as we can.

While the search continues, my focus and the focus of all our senior management team will be on keeping the company moving forward, building on the positive momentum of a good demand picture and the company’s six consecutive quarters of RevPAR growth and building on the unique market position that our iconic property gives us.

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