Orient-Express Hotels' CEO Discusses Q3 2011 Results - Earnings Call Transcript

Orient-Express Hotels Ltd. ( OEH)

Q3 2011 Earnings Call

November 3, 2011 10:00 am ET


Vicky Legg – Director, Corporate Communications

Edwin S. Hetherington – Vice President, General Counsel, Secretary

J. Robert Lovejoy – Chairman and Interim Chief Executive Officer

Filip J. M. Boyen – Chief Operating Officer, Vice President

Martin O’Grady – Vice President and Chief Financial Officer


Sule Sauvigne – Barclays Capital

Carlo Santarelli – Deutsche Bank

Amanda Bryant – Susquehanna Financial Group

Charles Fitzgerald – V3 Capital Management

Joseph Greff – JPMorgan

Joshua Attie – Citigroup

Ross Haberman – Haberman Management Corporation



Good day, and welcome to the Third Quarter 2011 Earnings Conference Call for Orient-Express Hotels. This conference is being recorded.

I would now like to turn the conference over to Vicky Legg, Director Corporate Communications. Please go ahead.

Vic ky Legg

Ladies and gentlemen, good morning. This is the third quarter earnings conference call for Orient-Express Hotels. We issued our earnings release last night. The release is available on our website at orient-express.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.

Edwin S. Hetherington

Good everyone. I’m Ned Hetherington. Before, we get started today, I’d like to readout our usual cautionary statement under the United States Private Securities Litigation Reform Act of 1995. In the course of the remarks here today 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 Chief Executive at Orient-Express.

J. Robert Lovejoy

Thank you, Ned. Good morning, ladies and gentlemen, thank you very much for joining us this morning. Orient-Express Hotels announced third quarter 2011 results yesterday afternoon. As I’m sure you know that third quarter is our most important quarter of operations, and consistent with the first two quarters of 2011, that third quarter continued to reflect healthy demand picture, and good operating conditions in the great majority of our markets.

Revenues excluding real estate increased by 17% the quarter to $183 million and adjusted EBITDA before real estate increased by 29% to $46.7 million. Same-store RevPAR increased 19% in U.S. dollars and 14% in the local currency. And adjusted net earnings from continuing operations increased to $19.9 million from $6.1 million in the third quarter of last year.

The company's improved operations in the third quarter resulted from the same strong business conditions for our luxury leisure products that we experienced during the first half of the year. This quarter was led by the outstanding performance of our iconic Italian portfolio where most of our properties are now expecting this year to be their best ever. The company's latest revenue and bookings figures show these trends continuing.

In the month of October, total revenue before real estate was about 13% ahead of last year. And as of the end of October, revenue both achieved and on the books for the fourth quarter of 2011 is up 19%, compared to last year’s numbers and revenue on the books for the year 2012 is up 18%, compared to the figures at the same time last year.

During the third quarter, we also completed the refinancing of our Brazilian credit, which was the last significant piece of financing coming due in 2012. We in addition, completed the financing for our El Encanto property in Santa Barbara, which is under construction and expected to be completed late in 2012.

I’m also very pleased to report that on a trailing 12 months basis as of the end of the third quarter, the company’s ratio of net debt-to-EBITDA before real estate has been brought down to our year end goal of five times.

We are also pleased with the reception of the Bar '21', which is located in the front of the ground floor at the legendary '21' Club in New York City. The new bar retains the style and feel of the '21' Club, but it enlivens the arrival experience, it make the restaurant fresher and more useful.

In addition, the new bar is well on its way to producing its projected three-year payback on the total investment. I want to personally invite everyone who is on this call to come-by to '21' Club and we are going to tell the bartenders there to serve up a complimentary drink for anyone who attended. Their names are Priscilla, Ristue, Viviana and two guys named Matt, and just tell them that Bob sent you.

During the third quarter, we also launched an eight-week brand awareness campaign through the digital and social media channels in the U.S. markets. This campaign portrays the image of the Orient-Express brand of luxury, travel and sophisticated adventure. And today, it has reached over 25 million people, if you haven't done so, I encourage you to go to our homepage, click on the videos, and take a look at the campaign.

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