This summary is based on the second quarter fiscal 2007 earnings call conducted by Orient Express Hotels (OEH) on August 2, 2007.
Chairman: Jim Hurlock
Chief Financial Officer and CEO Designate: Paul White
Company Secretary: Ned Hetherington
Key Investors Issues
- Earnings per share dropped to 46 cents from 51 cents in the prior year quarter.
- Quarterly revenue rose 20% over last year to $168 million.
- At the end of June 2007, the firm had cash of $86.8 million versus $79.3 million at the end of December 2006.
Second Quarter Fiscal 2007 Financial Highlights
For the second quarter, net earnings were $19.7 million 46 cents per common share on revenue of $168 million.
This represents a decrease of 2% against net earnings of $20.1 million or 51 cents per common share in the same quarter in 2006. Adjusted net earnings were $20.3 million or 48 cents per common share compared to adjusted net earnings of $19.6 million or 50 cents 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.
Excluding the impact of the sale of Harry’s Bar and the cost incurred due to management changes, the EBIDTA for the quarter rose by 23%. Revenue was up 20%, margins grew 1% to 30% and same store RevPar was up 12% in local currency, which translates to 17% in dollars. The RevPar growth was primarily rate driven with 75% rate and 25% occupancy. Both the Afloat in France and Royal Scotsman investments completed in the quarter has been absorbed into the OEH family, and are producing good results.
The company has had a strong start to the European season.
In Italy same-store RevPar grew 11% in local currency to just short of a $1000, that’s RevPar of a $1000, not rate. Occupancy grew 2% and you can see that rate was the key driver here.
In Portugal, same-store RevPar in local currency grew 19%, due in the main to the recovery of Reid’s Hotel in Madeira. The hotel was closed in the first quarter of 2006 for major renovations, which included the building of a new spa, the rebuild of the pools and some room and public area work. The results of this work, has showed immediate return with occupancy 10% up in the second quarter this year.
The renovations at La Residencia in Mallorca, which will increase the suite count by a further eight suites will be completed this month. The second phase of refurbishment in the Grand Hotel in St Petersburg was completed in May. The company has now refurbished 200 of 301 rooms at the Grand Hotel and its expected $40 premium on a refurbished room has been quite easily achieved and under-pinned the results that the Grand has shown this quarter.
In the rest of Europe, same-store RevPar in local currency was up 14%, and margins in Europe increased 1% to 41%.
In the quarter, North America has proven to be a challenging one.
New Orleans as a city does have challenges, and the change in the mix of travelers that the company had hoped for has not yet materialized. In the aftermath of hurricanes Katrina and Rita, the hotel was filled with a combination of insurance professionals, oil industry personnel and the like and the firm run the property very much as a no-frills experience in line with market demand. However, moving forward, as the firm sees the changing client base, it is now positioning the property back at the high end, with obviously some short term cost consequences.
Elsewhere in North American portfolio, the recovery of Maroma has been excellent, with results well ahead of 2006. Similarly Keswick Hall has performed well, and overall the North American portfolio produced a respectful 6%, thanks to a RevPar growth.
Booking for the firm’s own properties in the U.S. show 11% percent growth on a 12-month rolling basis. The developments in North America are moving ahead nicely, at El Encanto, the firm remains on track for an early 2009 opening, and Casa Sierra Nevada will see the first phase of the renovation plan complete in September of this year. The firm anticipates the Casa Sierra Nevada becoming a key destination in its own right.
In real estate, the firm reported approximately $1 million of revenue in the first quarter, which was all from the Keswick Hall developments.
