Orient-Express Hotels Announces Second Quarter Results

HAMILTON, August 2 /PRNewswire/ --

- Adjusted EBITDA US$50.6 Million, 23% Over Prior Year.

- Pre-Tax Earnings US$29.8 Million, Up 20% on 2006.

- Net Earnings of US$19.7 Million.

- Adjusted Net Earnings of US$20.3 Million.

- Reconciliation and Adjustments

US$'000 - except per share Three months ended Six months ended amounts June 30 June 30 2007 2006 2007 2006 49,693 47,717 63,997 56,250 EBITDA Adjustment - gain on asset - (6,619) - (6,619) sale Adjustment - management 872 - 872 - restructuring charges Adjusted EBITDA 50,565 41,098 64,869 49,631 19,703 20,081 16,022 12,680 U.S. GAAP reported net earnings Adjusted items - net of tax: - Gain on asset sale - (3,294) - (3,294) - Foreign exchange loss (gain) (797) 2,782 (758) 2,181 - FIN 48 charge 475 - 707 - - Management restructuring 872 - 872 - charges Adjusted net earnings 20,253 19,569 16,843 11,567 Adjusted EPS 0.48 0.50 0.40 0.29 Reported EPS 0.46 0.51 0.38 0.32 Number of shares (millions) 42.4 39.5 42.3 39.4

Second quarter highlights:

- Revenue up 20% over prior year

- Adjusted EBITDA up 23% over prior year

- World-wide same store RevPAR up 12% in local currency

- Margin growth continues

- Brazilian projects moving ahead

Orient-Express Hotels Ltd. (NYSE: OEH, http://www.orient-express.com), owners or part-owners and managers of 49 luxury hotel, restaurant, tourist train and river cruise properties in 25 countries, today announced its results for the second quarter ended June 30, 2007.

For the second quarter net earnings were US$19.7 million (US$0.46 per common share) on revenue of US$168.0 million, a decrease of 2% against net earnings of US$20.1 million (US$0.51 per common share) in the same quarter in 2006. Adjusted net earnings were US$20.3 million (US$0.48 per common share) compared to adjusted net earnings of US$19.6 million (US$0.50 per common share) in the prior year period. In 2006 the quarter results included the impact of the sale of the company's interest in Harry's Bar.

Net earnings for the six months were US$16.0 million (US$0.38 per common share) on revenue of US$267.4 million, an increase in net earnings of 26% from US$12.7 million in the year earlier period. Earnings per common share increased 19% and revenue was up 21% over the first six months of 2006.

Adjusted net earnings for the six months were US$16.8 million (US$0.40 per common share), compared to adjusted net earnings of US$11.6 million (US$0.29 per common share) in the first six months of 2006.

President and CEO designate, Paul White, said, "Overall, the results of the quarter showed good growth and the performance of the European portfolio was excellent. Worldwide same store RevPAR growth in local currency increased 12% over the same period in 2006. South Africa, Asia and Trains and Cruises reported particularly strong results. The results of the quarter were underpinned by strong European and US demand. EBITDA margins grew to 30% in the quarter."

In Brazil, Orient-Express Hotels expects to take over the operation of the 203 room Hotel Des Cataratas in Iguaçu, the only hotel located in the national park and adjacent to Iguaçu Falls, in early September 2007. A plan to renovate the hotel has been submitted and, subject to approval, works will begin in early 2008. It is not anticipated that any closure of the hotel will be required.

Progress has also been made on the acquisition of a 185,000 sq. m. (46 acres) parcel of land in Buzios, one of the most popular upscale destinations in Brazil, 180 km. (112 miles) north-east of Rio de Janeiro. The land will be used for the development of an all suite boutique resort of 40 rooms, along with a real estate development of 17 villas varying in size from 200-400 sq. m. (2,200-4,400 sq.ft.) Once the necessary permits have been granted, it is estimated that the resort will take 20 months to construct.

In addition, the company has successfully leased an additional 11,300 sq. m. (3 acres) of land abutting its hotel Jimbaran Puri Bali in Bali, Indonesia. Plans are being developed to build 22 new pool villas on this site to meet strong demand at this property.

Mr. White reviewed performance by region, as follows:

Europe: EBITDA of owned hotels grew 31% to US$31.8 million. Key contributors to the growth were the Italian hotels (up US$4.1 million), the Portuguese properties (up US$1.7 million) and the Grand Hotel Europe (up US$1.9 million). Same store RevPAR in Europe grew by 13% in local currency and 20% in U.S. dollars.

North America: EBITDA of owned hotels was US$3.3 million, a drop of US$1.0 million over the prior year period. This was primarily due to the results of the Windsor Court Hotel in New Orleans. The city continues to recover more slowly than originally expected following the 2005 hurricanes. Maroma Resort and Spa in Mexico recorded EBITDA growth of US$0.5 million in the quarter as it continues to show recovery post hurricane. Same store RevPAR in North America grew 6%.

Southern Africa: EBITDA of the Southern Africa portfolio grew by US$1.4 million to US$2.0 million, in what is traditionally the low season. The performance was underpinned by a strong quarter for the Mount Nelson.

South America: EBITDA for the quarter was US$0.2 million below that of the same period in 2006, due mainly to the impact of a very strong Brazilian Real on the U.S. Dollar earnings of the Copacabana Palace.

Asia Pacific: EBITDA of owned hotels was US$0.2 million ahead of the prior year period at US$0.8 million. The Asian properties performed well, with positive rate movement in the region.

Hotel management fees and part-ownership interests: EBITDA was US$7.0 million compared with US$6.3 million in the year earlier period. Earnings from Charleston Place were up 6% and earnings from Hotel Ritz Madrid were up 69%, as the hotel and city of Madrid see market improvements.

Restaurants: EBITDA decreased US$0.2 million to US$1.3 million. The decrease in EBITDA was primarily due to the loss of earnings from Harry's Bar following the sale of the company's interest during the second quarter of 2006.

Tourist trains and river cruises: EBITDA was US$8.7 million compared with a prior year EBITDA of US$5.4 million, a 61% increase. The performance of the Venice Simplon-Orient-Express, the U.K. day trains and the fully acquired Royal Scotsman have contributed to this result. The company's Peruvian rail operations contributed US$3.0 million, a growth of US$1.0 million over the same period in 2006.

Real Estate: The company recorded US$0.8 million of real estate revenues in the second quarter relating to sales at Keswick Hall, Virginia. Both Cupecoy and the French-side villa developments in St. Martin continue to progress in line with management's expectations.

Earnings before tax for the six months were US$24.6 million, an increase of US$8.8 million from US$15.8 million in the first six months of 2006. The tax charge for the six months was US$8.6 million compared to US$3.1 million in the prior year. The 2007 charge reflects continued net operating loss utilization and increased profitability in tax paying countries, particularly in Europe. The 2007 charge includes a tax charge of US$0.7 million in respect of the company's FIN 48 liability. The company adopted FIN 48 on January 1, 2007, so there was no comparable tax cost in the prior year. The 2006 tax charge included a US$3 million tax credit arising on the recognition of tax losses carried forward at Bora Bora Lagoon Resort.

Executive Succession: As previously announced, the Board of Directors of Orient-Express Hotels has appointed Paul White as President and Chief Executive Officer, effective August 10, 2007, to succeed Simon Sherwood.

James B. Hurlock, Chairman of the Board of Orient-Express Hotels, said, "Our customers, shareholders, and employees will benefit from Paul's 16 years' experience with Orient-Express Hotels. He is steeped in its culture and has already proved his ability to deliver profits in the regions he has managed. Paul and the Board have a shared vision for the future and we have every confidence that he will lead the company very successfully into its next stage of growth."

The Board of Directors, working closely with management, is in the process of recruiting a new Chief Financial Officer.

Mr. Hurlock concluded, "The Board of Orient-Express Hotels sincerely thanks Simon Sherwood for his exceptional contribution in positioning the company at the forefront of luxury tourism and wishes him well in his future endeavors."

Management believes that EBITDA (net earnings adjusted for interest expense, foreign currency, tax, depreciation and amortization) is a useful measure of operating performance, for example to help determine the ability to incur capital expenditure or service indebtedness, because it is not affected by non-operating factors such as leverage and the historic cost of assets. EBITDA is also a financial performance measure commonly used in the hotel and leisure industry, although the company's EBITDA may not be comparable in all instances to that disclosed by other companies. EBITDA does not represent net cash provided by operating, investing and financing activities under U.S. generally accepted accounting principles (U.S. GAAP), is not necessarily indicative of cash available to fund all cash flow needs, and should not be considered as an alternative to earnings from operations or net earnings under U.S. GAAP for purposes of evaluating operating performance.

Adjusted net earnings and adjusted E.P.S. are non-GAAP financial measures and do not have any standardized meanings prescribed by U.S. GAAP. They are, therefore, unlikely to be comparable to similar measures presented by other companies, which may be calculated differently, and should not be considered as an alternative to net earnings, cash flow from operating activities or any other measure of performance prescribed by U.S. GAAP. Management considers adjusted net earnings and adjusted E.P.S. to be meaningful indicators of operations and uses them as measures to assess operating performance. Adjusted net earnings and adjusted E.P.S. are also used by investors, analysts and lenders as measures of financial performance.

This news release contains, in addition to historical information, forward-looking statements that involve risks and uncertainties. These include statements regarding earnings outlook, investment plans and similar matters that are not historical facts. These statements are based on management's current expectations and are subject to a number of uncertainties and risks that could cause actual results to differ materially from those described in the forward-looking statements. Factors that may cause a difference include, but are not limited to, those mentioned in the news release, unknown effects on the travel and leisure markets of terrorist activity and any police or military response, varying customer demand and competitive considerations, realization of hotel bookings and reservations and planned property development sales as actual revenue, inability to sustain price increases or to reduce costs, fluctuations in interest rates and currency values, uncertainty of negotiating and completing proposed capital expenditures and acquisitions, adequate sources of capital and acceptability of finance terms, possible loss or amendment of planning permits and delays in construction schedules for expansion or development projects, delays in reopening properties closed for repair or refurbishment and possible cost overruns, shifting patterns of tourism and business travel and seasonality of demand, adverse local weather conditions, uncertainty of recovering on insurance claims for property damage and lost earnings, changing global and regional economic conditions, and legislative, regulatory and political developments. Further information regarding these and other factors is included in the filings by the company with the U.S. Securities and Exchange Commission.

Orient-Express Hotels will conduct a conference call on August 3, 2007 at 10.00 AM (EDT) which is accessible at +1-866-220-1452 (US toll free) or +44-1452-542300 (Standard International access). The conference ID is 5667084. A replay of the conference call will be available until 5.00pm (EDT) Friday, August 10, 2007 and can be accessed by calling +1-866-247-4222 (US toll free) or +44-1452-550-000 (Standard International) and entering replay access number 5667084. A re-play will also be available on the company's website: http://www.orient-expressinvestorinfo.com.

ORIENT-EXPRESS HOTELS LTD Three Months ended June 30, 2007 SUMMARY OF OPERATING RESULTS Three months ended June 30 US$'000 - except per share amount 2007 2006 Revenue and earnings from unconsolidated companies Owned hotels - Europe 76,999 61,192 - North America 21,986 21,026 - Rest of World 28,706 22,383 Hotel management & part ownership interests 7,029 6,274 Restaurants 5,643 5,728 Trains & Cruises 26,755 21,396 Real Estate 847 1,955 Total (1) 167,965 139,954 Analysis of earnings Owned hotels - Europe 31,778 24,268 - North America 3,315 4,340 - Rest of World 4,930 3,564 Hotel management & part ownership interests 7,029 6,274 Restaurants 1,288 1,491 Trains & Cruises 8,712 5,362 Real Estate (24) 1,154 Central overheads (7,335) (5,355) Gain on sale of investment - 6,619 EBITDA 49,693 47,717 Depreciation & amortization (10,067) (8,702) Interest (10,938) (10,575) Foreign exchange 1,151 (3,478) Earnings before tax 29,839 24,962 Tax (10,136) (4,881) Net earnings on common shares 19,703 20,081 Earnings per common share 0.46 0.51 42.40 39.47 Number of shares - millions (1) Comprises earnings from unconsolidated companies of US$5,611,000 (2006 - US$5,249,000) and revenue of US$162,354,000 (2006 - US$134,705,000). ORIENT-EXPRESS HOTELS LTD Three Months Ended June 30, 2007 SUMMARY OF OPERATING INFORMATION FOR OWNED HOTELS Three months ended June 30 2007 2006 Average Daily Rate (in U.S. dollars) Europe 737 627 North America 356 320 Rest of World 245 248 Worldwide 458 417 Rooms Available (000's) Europe 91 87 North America 56 55 Rest of World 104 83 Worldwide 251 225 Rooms Sold (000's) Europe 61 57 North America 37 39 Rest of World 62 49 Worldwide 160 145 RevPAR (in U.S. dollars) Europe 495 413 North America 235 228 Rest of World 147 146 Worldwide 292 269 Change % Same Store RevPAR Dollar Local (in U.S. dollars) currency Europe 476 396 20 13 North America 321 303 6 6 Rest of World 163 146 12 10 Worldwide 315 270 17 12 ORIENT-EXPRESS HOTELS LTD Six Months ended June 30, 2007 SUMMARY OF OPERATING RESULTS Six months ended June 30 US$'000 - except per share amount 2007 2006 Revenue and earnings from unconsolidated companies Owned hotels - Europe 98,114 73,577 - North America 45,124 41,735 - Rest of World 63,351 52,211 Hotel management & part ownership interests 11,676 9,644 Restaurants 10,938 11,116 Trains & Cruises 37,330 29,011 Real Estate 847 4,151 Total (1) 267,380 221,445 Analysis of earnings Owned hotels - Europe 28,223 17,101 - North America 9,435 9,642 - Rest of World 16,145 13,141 Hotel management & part ownership interests 11,676 9,644 Restaurants 2,156 2,589 Trains & Cruises 9,860 5,528 Real Estate (482) 1,873 Central overheads (13,016) (9,887) Gain on sale of investment - 6,619 EBITDA 63,997 56,250 Depreciation & amortization (19,135) (17,308) Interest (21,499) (20,345) Foreign exchange 1,253 (2,796) Earnings before tax 24,616 15,801 Tax (8,594) (3,121) Net earnings on common shares 16,022 12,680 Earnings per common share 0.38 0.32 42.33 39.44 Number of shares - millions (1) Comprises earnings from unconsolidated companies of US$9,100,000 (2006 - US$7,489,000) and revenue of US$258,280,000 (2006 - US$213,956,000) ORIENT-EXPRESS HOTELS LTD Six Months Ended June 30, 2007 SUMMARY OF OPERATING INFORMATION FOR OWNED HOTELS Six months ended June 30 2007 2006 Average Daily Rate (in U.S. dollars) Europe 639 558 North America 396 333 Rest of World 266 282 Worldwide 407 376 Rooms Available (000's) Europe 154 134 North America 112 104 Rest of World 215 169 Worldwide 481 407 Rooms Sold (000's) Europe 86 73 North America 73 77 Rest of World 136 107 Worldwide 295 257 RevPAR (in U.S. dollars) Europe 356 307 North America 257 246 Rest of World 168 178 Worldwide 249 238 Change % Same Store RevPAR Dollar Local (in U.S. dollars) currency Europe 437 363 20 13 North America 352 336 5 5 Rest of World 189 178 6 8 Worldwide 284 253 12 10 ORIENT-EXPESS HOTELS LTD CONSOLIDATED AND CONDENSED BALANCE SHEETS (UNAUDITED) June 30 December 31 US$'000 2007 2006 Assets Cash 86,805 79,318 Accounts receivable 66,212 74,327 Due from related parties 25,247 19,939 Prepaid expenses 21,698 9,485 Inventories 40,416 35,789 Real estate assets 45,731 35,821 Total current assets 286,109 254,679 Property plant & equipment, net book value 1,240,349 1,183,400 Investments 140,553 130,124 Goodwill 136,870 121,651 Other intangible assets 21,833 20,149 Other assets 54,095 41,660 1,879,809 1,751,663 Liabilities and Shareholders' Equity Working capital facilities 83,379 46,590 Accounts payable 27,037 26,227 Due to related parties - 1,249 Accrued liabilities 63,365 55,916 Deferred revenue 40,971 25,501 Current portion of long-term debt and capital 144,033 83,397 leases Total current liabilities 358,785 238,880 Long-term debt and obligations under capital 548,525 586,300 leases Deferred income taxes 112,605 106,598 Other liabilities 41,396 11,007 Minority interest 1,584 1,882 Shareholders' equity 816,914 806,996 1,879,809 1,751,663

HAMILTON, August 2 /PRNewswire/ --