Orient Express Q1 loss widens to $14.6 mn

Luxury hotel chain operator Orient Express, where Indian conglomerate Tata Group holds a significant stake, reported on Thursday a decline in its revenues and widening of its net loss to $14.6 million for the quarter ended March 31, 2009, amid the global meltdown.

In the first quarter of 2008, the company had a net loss of $4.3 million, Orient Express said.

"While we and our industry, continue to feel the effects of the global economic downturn with revenues declining, we have reduced the impact to EBITDA through stringent cost controls," Orient Express president and chief executive officer Paul White said while commenting on the results.

The net loss from continuing operations for the period was $13.6 million compared with a net loss of $2.4 million in the first quarter of 2008.

Meanwhile, Orient Express' revenue declined 24.10 per cent to $91 million, from $119.9 million in the first quarter of 2008.

"First quarter is traditionally a loss-making period for the company because several of its European hotels are closed for most of the quarter and the Venice Simplon-Orient-Express and Royal Scotsman tourist trains and Afloat in France canal cruises do not operate," the statement added.

Tata Group's hospitality arm Indian Hotels has hiked its stake in Orient Express to 9.7 per cent, with the purchase of 2.25 million shares for $12.93 million.

At the end of March 31, 2009, the company had a total debt of $843.8 million, working capital loans of $59.5 million and cash balances of $54.8 million, giving a total net debt of $848.5 million. The total net debt of $835.3 million at the end of the fourth quarter of 2008.

In a bid to reduce debt reduction and general corporate purposes, on May 4 this year, the company completed its public offering of 25.87 lakh class A common shares.

Currently, Orient Express is also in talks with a lender to borrow $15 million and is negotiating a new $18 million term facility relating to its two Australian hotels.

Proceeds of this loan would be used to pay existing debt of $15 million that matures in 2010. No assurance can be given that the company will be successful in closing the loan agreements that it is currently negotiating, the company said.

The revenue, excluding real estate revenue, was $91 million in the first quarter of 2009, said Orient Express which owns or part-owns 51 luxury hotels, restaurants, tourist trains and river cruise properties operating in 25 countries.

"We also experienced some encouraging signs in our real estate business this quarter. We expect to complete the Porto Cupecoy project later this year and sold 11 condominiums in this quarter. . . We are also seeing progress in our strategy to sell non-core assets," White added.

Revenue from Owned Hotels for Q1 2009 was $80.2 million, while trains and cruises revenue reported a decline of 43 per cent.