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Orient-Express Hotels announced 2001 net earnings down 25%

Orient-Express Hotels<.> Ltd., owner-operator of 40 deluxe hotels, restaurants, tourist trains and river cruise ship in 15 countries, announced…

Orient-Express Hotels<.> Ltd., owner-operator of 40 deluxe hotels, restaurants, tourist trains and river cruise ship in 15 countries, announced its results for the quarter and year ended December 31, 2001.



Net earnings for the full year 2001 were $29.9 million ($0.97 per common share), down 25% from the prior year`s net earnings of $40 million ($1.43 per common share.) Revenue declined 5% to $261.3 million from $276.4 million in 2000. Devaluations of the South Africa Rand and Brazilian Real and a stronger than expected value of the U.S. dollar in relation to European currencies contributed to the earnings decline, however, the principal cause was the after-effect of the September 11th terrorist attacks.



This after-effect is demonstrated by the fourth quarter`s results which were net earnings of $3 million ($0.10 per common share) compared with $11.9 million ($0.38 per common share) in the fourth quarter of 2000.



Same store REVPAR declined 9% in 2001 from 2000 (6% if calculated in local currencies), however, the decline was more pronounced in the fourth quarter in isolation where it was down 17% (16% in local currencies).



At the EBITDA level, European hotels were little changed from the prior year. The main brunt of September 11th fell on U.S. hotels and `21` Club in New York, which came as no surprise in light of the magnitude of the disaster and consequent travel disruption having occurred within the U.S. Fourth quarter North America REVPAR fell 15% on a same store basis which is encouraging as it indicates the company`s properties are more resilient than those of its competitors. Fourth quarter bookings of Americans on the Venice Simplon-Orient-Express train and Road to Mandalay river cruise ship were cancelled but most travellers indicated they would re-book their trips in 2002 and current booking patterns confirm this.



PeruRail was slightly ahead of the prior year. There was no significant change to earnings from management of part-ownership interests.



Mr. James B. Sherwood, Chairman, said Nearly six months have now elapsed since the September 11th tragedy and we have seen month by month recovery in demand for our leisure products. I think investors must treat September 11th as an extraordinary event which will hopefully never be repeated so we must now look to the future and not the past. We have been able to acquire two splendid properties in recent days, La Residencia in Mallorca and Le Manoir aux Quat` Saisons in England at reasonable prices, partially as a result of September 11th. The luxury hotel market has excellent fundamentals in that very little new supply is coming into the market. Low interest rates are another positive influence on profitability. We are close to completion of our 41st property acquisition and have other interesting prospects.



Mr. Simon M.C. Sherwood, President, said that fourth quarter results at 10 cents per share net earnings were ahead of `Street` consensus of eight cents per share. He indicated that major construction has started at the Inn at Perry Cabin for an increase in rooms from 41 to 81. A significant expansion is underway at the Villa San Michele near Florence, Italy with the addition of 8 suites. The first phases of upgrade to the company`s Bora Bora and Katoomba, Australia properties are underway. This summer the traditional quiet dining room will be reinstated in part of the second floor at `21` Club and a further banqueting room will be created as a result of rationalization of offices and staff facilities on the fourth floor. Six extraordinary new suites have just been opened in the Hotel Monasterio in Cuzco, Peru and 60 rooms will be oxygenated from this April for use by guests suffering from the high altitude of the Andes. The collapse of the Argentine peso will both stimulate tourism to Argentina and substantially reduce construction costs so work will start soon on the La Cabana restaurant in Buenos Aires looking to a 2003 opening. Construction will also start shortly on the new conference center for the Westcliff Hotel in Johannesburg.



Simon Sherwood said that La Residencia, Le Manoir and a third property now in the contract stage would represent a $47.5 million investment. Upgrade investment in existing properties in 2002 is expected to be about $30 million. All these investments have been largely financed by banks at reasonable interest rates.

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