Orient-Express Hotels Ltd. (NYSE: OEH,?www.orient-express.com) (the ?Company?), owners, part-owners or managers of 45 luxury hotel, restaurant, tourist train and river cruise properties operating in 22 countries, today announced its results for the second quarter ended June 30, 2013.
Total revenue was $174.3 million in the second quarter of 2013, up $10.5 million or 6% from $163.8 million in the second quarter of 2012. Revenue from owned hotels for the second quarter was $143.0 million, up $12.3 million or 9% from $130.7 million in the second quarter of 2012 due largely to 9% growth in same store owned hotels RevPAR. Trains & cruises revenue in the second quarter was $25.0 million, down 7% from $27.0 million in the second quarter of 2012.
Adjusted EBITDA was $41.4 million for the second quarter, up $1.5 million or 4% from $39.9 million in the prior-year period. The largest increases, which were at Charleston Place, South Carolina (up $1.7 million), Hotel Cipriani, Venice, Italy (up $1.2 million), and Hotel Splendido, Portofino, Italy (up $0.8 million), were offset by decreases at Venice Simplon-Orient-Express (down $0.9 million), Grand Hotel Europe, St. Petersburg, Russia (down $0.6 million), and the UK day trains (down $0.5 million).
Adjusted net earnings from continuing operations for the second quarter was $17.9 million ($0.17 per common share) compared with $14.7 million ($0.14 per common share) in the second quarter of 2012.
John Scott, president and chief executive officer, commented: ?Our second quarter 2013 results were positive, with revenue and adjusted EBITDA growth of 6% and 4%, respectively. The strength of our European hotels was particularly encouraging and was driven by our Italian portfolio, which showed an impressive 15% year-over-year EBITDA growth in the second quarter. Representing 37% of full year 2012 revenue, our European hotels are an important contributor to our overall success, and the strength of these hotels in the second quarter, coupled with positive forward booking trends, is a promising indicator for our full year 2013 performance and signals that demand for European hotels is recovering well. I?m equally encouraged by the success of Charleston Place, which had 28% EBITDA growth in the second quarter, and is making significant strides towards a record EBITDA year.
?During the quarter,? Mr. Scott continued, ?we took additional steps in the board?s continuing evolution with the election of a new independent director, Roland Hernandez, to the Company?s board of directors and his subsequent appointment by the board as its chairman. Roland brings a wealth of leadership and public company board experience. I am excited to work with him towards our collective goal of the Company?s long-term success.?
Company highlights
The Company continues to see strong media coverage for its two newest hotels, El Encanto in Santa Barbara, California, which opened in March 2013, and Palacio Nazarenas in Cuzco, Peru, which opened in June 2012, receiving positive recognition and awareness from guests and international media during the quarter. Both hotels appeared in?Travel + Leisure?magazine?s 2013 It List of the coolest hotel openings, and Palacio Nazarenas was also included in?Cond? Nast Traveller?magazine?s 2013 Hot List.
During the second quarter, the Company completed the restoration of the neoclassical fa?ade of Grand Hotel Europe, which was designed in the 1830s by Italian architect Carlo Rossi. In the coming months, the Company will commence its previously announced phased, three-year renovation plan to be funded with $26.0 million of proceeds from a new $50.0 million loan facility. Also during the quarter, the Company prepared for a phased, three-year rooms refurbishment at Charleston Place, now expected to commence at the beginning of August. The Company will utilize $9.2 million of funds borrowed in December 2012 to finance the first phase of this project. Both the Grand Hotel Europe and Charleston Place renovations have been scheduled to have limited disruption on hotel operations.
On July 22nd, the Company launched Orcaella, a 50-passenger river cruiser in Myanmar, with an eleven-night journey departing from Mandalay and navigating up the Chindwin River. Orcaella is the Company?s second river cruise operation in Myanmar and, along with its existing hotel in Yangon, gives the Company an additional opportunity to capitalize on the recent surge in tourism in the country. The new ship has already received extraordinary global media attention and bookings are well ahead of the Company?s plan.
Following its 2013 annual general meeting of shareholders on June 28th, the Company confirmed the election of eight directors to its board, including a new independent director, Roland Hernandez, who was subsequently appointed chairman of the board. Mr. Hernandez is a successful media and entertainment executive with broad public company board experience, including as the lead director of both MGM Resorts International and Vail Resorts, Inc. He founded and has been the chief executive officer of Hernandez Media Ventures since 2001 and previously served as chief executive officer of Telemundo Group, Inc. from 1995 to 2000.
Also at the conclusion of the 2013 annual general meeting, the Company?s previous chairman, J. Robert Lovejoy, and fellow board member, Philip R. Mengel, retired from the board.
Operating Performance
Europe:
In the second quarter of 2013, revenue from owned hotels was $75.2 million, up $4.3 million or 6% from $70.9 million in the second quarter of 2012. The Italian hotel portfolio recorded particularly strong results, with revenue growth of $4.0 million or 10% over the second quarter of 2012. Hotel Cipriani?s results in the quarter benefited from Venice?s Biennale arts festival, which takes place every other year.
Same store RevPAR in Europe was up 10% compared to the prior-year quarter in both US dollars and local currency due primarily to an 8% increase in average daily rate (?ADR?) in both US dollars and local currency.
EBITDA for the second quarter of $28.1 million was $1.3 million or 5% greater than the $26.8 million recorded for the second quarter of 2012 primarily as a result of $1.2 million and $0.8 million EBITDA increases at Hotel Cipriani and Hotel Splendido, respectively, partially offset by a $0.6 million EBITDA decrease at Grand Hotel Europe due primarily to an increase in payroll costs.
North America:
Revenue from owned hotels for the second quarter of 2013 was $36.1 million, up $6.1 million or 20% from $30.0 million in the second quarter of 2012. Revenue growth in the second quarter was driven by El Encanto, which recorded revenue of $4.1 million in its first full quarter of operations, and Charleston Place, which generated revenue growth of $2.4 million or 14% to $20.0 million, the hotel?s highest recorded quarterly revenue since the Company acquired it in 1995.
Same store RevPAR in the region increased by 7% in both US dollars and local currency due to a 4% increase in same store ADR in US dollars and a two percentage point increase in same store occupancy.
EBITDA for the region was $7.6 million in the quarter, up $0.7 million or 10% from $6.9 million in the second quarter of 2012 primarily as a result of the record performance of Charleston Place, partially offset by an EBITDA loss at El Encanto arising from the hotel?s initial ramp-up in operations following its March opening.
Rest of World:
Asia:
Revenue from owned hotels for the second quarter of 2013 was $6.5 million, an increase of $0.2 million or 3% compared to $6.3 million in the second quarter of 2012. Revenue growth in the region continued to be led by The Governor?s Residence, Yangon, Myanmar, which was up $0.2 million, as increased tourist demand for the country continued in the quarter.
Same store RevPAR for the region increased by 2% in US dollars and 4% in local currency due to a 6% increase in ADR in US dollars (8% in local currency), offset by a two percentage point decrease in occupancy.
EBITDA decreased by $0.3 million to $1.0 million in the second quarter of 2013 due to an EBITDA loss at Jimbaran Puri Bali, Indonesia, primarily due to a one-time adjustment for certain post-retirement obligations, as well as an increase in Asian head office costs.
Africa:
Second quarter 2013 revenue from owned hotels was $4.6 million, up $1.0 million or 28% from $3.6 million in the second quarter of 2012. Revenue at the Company?s three safari camps increased by $1.3 million due largely to higher RevPAR and revenue from third-party air services provided to guests previously reported net of related costs. The growth at the safari camps was partially offset by a $0.3 million decrease in revenue at Mount Nelson Hotel, Cape Town, South Africa, as a result of the year-over-year weakening of the South African rand versus the US dollar. Excluding the effect of currency movements, revenue in the region was $1.5 million ahead of last year.
Same store RevPAR for the region increased by 13% in US dollars and 28% in local currency primarily due to a 9% increase in ADR in US dollars (24% in local currency).
EBITDA for the second quarter was a loss of $0.1 million, representing a $0.4 million improvement from the $0.5 million loss recorded in the second quarter of 2012 due to cost savings at Mount Nelson Hotel following first quarter management restructuring actions and a rebate for past utilities charges.
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