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"In what is traditionally Orient-Express' quiet quarter, it was pleasing to see revenues begin to show growth, with system-wide same store local currency RevPAR growing at 5%, underpinned by growth in Rest of World of 16%. The Company has ended the quarter well positioned for growth and of course, we are now moving into our strong trading season. Our 2011 goals remain unchanged. We are focused on maximizing revenue, continuing sales of non-core assets and developed Real Estate, with the aim of continuing to reduce net debt to within an acceptable range of 4 to 5x EBITDA." 

- Paul White, President and Chief Executive Officer of Orient-Express Hotels


  • Owned Hotels same store RevPAR was up 5% in local currency and up 12% in US dollars
  • Most PeruRail services to Machu Picchu have resumed. It is estimated that it will be possible to make the entire journey from Poroy station in Cuzco to Machu Picchu by rail from July 2010, subject to favorable weather conditions enabling completion of the track repair work.
  • The Peru hotels joint venture was out of compliance with financial covenants in a loan agreement of the joint venture amounting to $27.8 million. Discussions with the banks are ongoing and an ultimately successful
  • The closure of European airspace due to the eruption of the Eyjafjallajoekull volcano in Iceland in mid-April caused travel chaos and resulted in lost revenue estimated at $0.8 million to the end of April.
  • Awarded GBP7.7 million ($10.5 million) in a legal action to protect the "Cipriani" trademark
  • Completed sale of Lilianfels Blue Mountains in Australia for AUD21 million ($19.3 million)


  • Bookings pace is strong
  • Madeira REVPAR down 30% YoY... should see recovery later in 2010
  • As REVPAR grows, we see occupancy growth as key driver in 2010
  • Margins
    • Large negative impacted from FX; should see it flatten out over the course of the year
    • net-net: EBITDA margin down 2%;
  • Strategy
    • Can't cut costs further; revenue will drive results now
  • Employee costs will begin to rise with inflation going forward
  • Port Cupecoy; 21 out of remaining 99 units had been sold as of April 2010; expect that 78 remaining units will be sold by 2012
  • Outlook
    • As of April 30, 2010:
      • Overall Bookings Q2 +19% YoY; Q3 +15% YoY;
      • Europe Q2: +22% YoY; Q3: +12% YoY;
      • US: Q2 +14%, Q3: +38%--driven by Washington and Charleston
    • Trains and Cruises: 70% of annual budget is already on books; 80% of VSOE is already on books.
  • Debt/EBITDA: 9.9x (includes $78 MM debt from Sicilian acquisition); excluding this acquisition leverage would be 8.8x
  • Debt coverage ratio: 2.4x
  • Debt Maturities: 2010- 57MM; 2011- 525MM
  • Net debt repayments: 15MM in Q
  • Expected cash taxes of $12-14MM (for 3Q); for FY 2010: $20-22MM
  • Market interest for CMBS much stronger
  • Will renew credit facility: L + 350bps

Q& A

  • In Madeira- no local Portuguese business.
  • Booking window: starting to lengthen; although it is still far from 2007 levels
    • Curuso in Italy: 63% YoY bookings higher.
  • Two new Italian hotels:
    • Bookings in-line; Sant'Andrea sold out for first week;
    • Improving room stock; Sant'Andrea turning rooms into suites; 3MM euros more investment for next winter.  Have $11MM more investment in property.
  • Expenses in-line with local inflation
    • fixed-cost model for luxury business
    • may contract slightly in US with occupancy higher
  • Overall, as much as 80% of REVPAR will be driven by occupancy.
  • EBITDA expectations for 2010:
    • Higher expectations than 3 months ago
    • Peru: $2.5MM cost in Q2;
  • M&A: Need to see US domestic market to open up again
  • In 2009, biggest source market that is down was the UK;
  • Biggest thing to keep an eye on is recovery of UK traveler: 20-22% of business
  • Hotel RE market transactions
    • In Europe, not much distressed sales; not much opportunity; low interest rates
    • In US, a lot of distress sales but not much interest at any property; need to see a "special" property i.e. Sicily properties.