OEH "YOUTUBE"

In preparation for OEH's Q1 earnings on Thursday, we've highlighted management's forward looking commentary from its Q4 conference call. 

TRENDS & GUIDANCE:

• "To drive revenue and EBITDA, we have minimal opportunities now to cut cost further.  It’s now about the revenue line."
• "The key focus in 2010 will now be on the sale of developed real estate.  In January, we completed the first phase of Porto Cupecoy, our 184 condominium development on the Dutch side of St. Martin in the Caribbean. To-date, 99 apartments have been sold and closings have now commenced."
  • "Gross sales to-date are over $68 million, of which $34 million has been received and invested in the project.  This leaves the further $34 million of closing proceeds, which will be received over the next few months as units are handed over to the buyer.  This will be sufficient to repay the outstanding debt and the residual construction costs, which means that we will then have further 85 units left to sell, three of that which should generate free cash flows of approximately $60 million.  This cash flow does not include additional projected sales of our mega-yacht marina slips, all commercial component, which we anticipate to produce the further $15 million of net cash...We will definitely sell the units within the two-year period. "
• "So, the weather, has hit us on three fronts in 2010.  Firstly in Peru, major flooding, we have to close the Cuzco-Machu Picchu railroad, which will be reopened in early April.  This will have an impact on our hotels business, and whilst it is, we hope a non-recurring item... Net of insurance, we expect to lose between $2 to $4 million of EBITDA for the year."
• "We completed two great acquisitions in January, the Grand Hotel Timeo and the Villa Sant’Andrea in Sicily, backed by successful equity raise from our shareholders.  Both properties are currently closed and will reopen in late May as Orient-Express property.  These along with the new Peru Hotel, Rio Sagrado, Hotel das Cataratas in Brazil, the villas at Jimbaran Puri Bali and the expanded Cambodian property will add to our portfolio in 2010."
• "Our January revenues were up just over 10% ....  This growth was dominated by our rest-of-the-world properties, particularly the southern hemisphere ones, which are currently in high season."
  • "Copacabana Palace was up almost 40%, Russia up a healthy 6%, and both Africa and Asia in positive territories."
•  "Quarter one bookings are currently tracking 6% ahead of the same time in 2009.  However, we expect ADR to be slightly lower in the first quarter, due in part to aggressive pricing decisions for shoulder season months. Quarter two bookings are currently tracking 10% below 2009 levels, but this gap is closing each month. One month ago, the gap was 60%. The equivalent numbers for quarter three, 8% down at the moment and this was 14% one month ago; obviously the third quarter is our high season quarter."
• "Bookings for our Trains and Cruises businesses, 23% ahead of this time last year, and this is on a revenue basis. And VSOE, 25% ahead, encouraging news."
• "The bulk of the Sicilian debt falls into the after-2012 category. The $60 million repayable in 2010 includes $27 million drawn on the Cupecoy project, which will be repaid over the next six months as the sold units are delivered and the final installments are collected from buyers."
• "At this early stage, we’re expecting cash tax in 2010 to be in the range of 12 to $14 million."
• "The largest maturing loan in 2011 is the European facility... it remains our intention to have this debt refinanced by no later than early in the fourth quarter of this year."
• Properties update:
  • "Reid's and Madeira, La Residencia, Ritz Madrid, even Grand Hotel have big occupancy drops, but only small drops in rate.  I think actually the Grand has a slight increase in rate because the rooms mix change so much. So, I think having experienced a 15% drop in occupancy and only 5% drop in rate, one would like to think that the occupancy numbers would come back quicker and rate tends to follow."
    
• "Booking windows in Brazil have been very short.  Copacabana Palace is sitting 16% up on rooms booked at the moment, but that is a small proportion of the overall number of rooms that they would book for the year.  On the other hand, the Peruvian hotels tend to be booked sort of eight, nine months on average in advance and they are sitting mainly because of the closure of the train line at the moment; they are sitting between 10 and 15% down.
• Lender refinancing to credit facility: " The tone is very good.  Clearly, the pricing is going to be difference to the current pricing which is I think 70 – 90 basis points on that facility.  A year ago, it was going to be, if we’d done it a year ago, [inaudible] we would have been easily over 300 basis points, but I still feel today we can achieve something in mid-200s."
• Portfolio customer breakout: "It’s about 40% North America, 40% Europe, and 20% Rest of the World, and it’s quite interesting when you look at the spend per capita. I was in Russia recently and at the top of the league table were the Russians, lined number two were the Americans, UK was number three. We came to see that in the domestic market, the domestic customer is the higher spender followed by Americans."