This is a summary of the third quarter fiscal 2007 earnings conference call conducted by Orient Express Hotels Ltd. (OEH) on November 8, 2007.
Management:
President and CEO: Paul White
VP, General Counsel and Secretary: Edwin S. Hetherington
Non-executive Chairman of the Board: James B. Hurlock
Key Investor Issues:
- Net income increased to $22.6 million, or 53 cents per share, from $20.4 million, or 49 cents per share, a year ago.
- Without an insurance-related gain, a restructuring charge and other items, earnings climbed to $25.3 million, or 60 cents per share, from $24 million, or 58 cents per share a year earlier.
- Revenue grew 26% to $189.7 million from $150.5 million a year ago.
- Worldwide same-store REVpar increased 15% in U.S. dollars and 9% in local currency.
Third Quarter Highlights
Extracting the impact of the insurance-related gains and the cost incurred due to management changes, EBITDA for quarter rose 19%.
- Revenue was up 26% from a year ago.
- Margins grew by 1 percentage point, 34%.
- Same-store RevPAR was up 9% in local currency, 15% in U.S. dollars.
- The RevPAR growth was entirely rate driven for the quarter.
Turning to the year, adjusted EBITDA was up 25% and revenues rose by 23%.
- Margins grew by 150 basis points to 28%.
- Same-store RevPAR grew 9% in local currency, almost all of which again was rate driven.
The company had a good season in Europe.
- The third quarter is the high season in most of the properties and same-store RevPAR grew 8% in local currency, that''s 15% in U.S. dollars.
- In Italy, same store RevPAR grew 13% in local currency to just short of $1,250.
- Average rates of the Italian portfolio were $1,400 for the quarter.
- Bookings for the fourth quarter are a healthy 9% ahead of this time last year.
This winter, the company will focus its capital works in Italy on the Cipriani Hotel, where it is embarking on its room renovation program, which will see 40 rooms fully refurbished over the next three winter periods, when the hotel has its annual closure.
Renovation work at La Residencia, which increased the suite count by 8 was completed in August. The property in October, the hotel is in magnificent condition, the new rooms are built in symphony with their surroundings.
Bookings in Europe are tracking 7% ahead for the quarter and 3% ahead on the rolling 12 months basis.
Increased booking numbers will translate into increased rate as management use demand to increase rates further.
In North America, the quarter is proving to be challenging, but the company is seeing some positive signs moving forward.
New Orleans has 9% more room nights booked on the rolling 12-month basis, which is a positive. New Orleans is showing signs of growth.
Elsewhere in North America the recovery of Maroma has been excellent with results well ahead of 2006.
If you pull out the $1.6 million of business interruption proceeds, which were booked in the same quarter in 2006, Charleston Place, Inn at Perry Cabin, and Keswick Hall all performed well with the Inn at Perry Cabin open in its new Linden Spa during the quarter. Overall, the North American portfolio produced incredible 11% growth in same-store RevPAR. Bookings for the company’s own properties in the U.S. of 7% ahead on a 12-month rolling basis.
In real estate, the company reported approximately $14 million of revenue in the quarter and this was mainly from the Cupecoy development in St. Martin.
This resulted in profit recognition of $3 million U.S.. Phase I of the Cupecoy project remains on target to yield an EBITDA of between $35 million and $40 million. The company expects to recognize a further $2 million of profit in the fourth quarter with the remaining profitability distributed over 2008, 2009 and 2010.
