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Orient to Sell The Observatory Hotel

Zacks Equity Research

Hamilton, Bermuda-based Orient-Express Hotels Ltd. (OEH) recently announced the sale of its ‘The Observatory Hotel’ to an international world class luxury hotel group. The transaction is expected to close on August 8, 2012 and till then Orient-Express will manage the operations of the hotel.

The Observatory Hotel, located in Sydney, is well known for its customer service and luxurious amenities. The proximity of hotel to the most enviable tourist locations in Australia like the historic Rocks, Sydney Harbour and the world famous Harbour Bridge has been a major reason for its strong customer base. Equipped with world class facilities, the hotel caters efficiently to both the business and leisure travelers.

The sale of the hotel is a part of the company’s long-term strategy of portfolio optimization through disposition of non-core assets for reinvestment of capital in acquisitions and balance sheet improvement. Management remains optimistic on growth potential of the hotel and expects it to flourish going forward on the back of strong management team of its new owner.

Since its inception in 1971, Orient-Express along with its subsidiaries owns, manages and invests in individual luxury restaurants, hotels and resorts, tourist trains, and cruise businesses. The company operates in Europe, North America, and other major international markets. As of now, Orient-Express owns 46 hotel, cruise and luxury rail businesses in 23 countries. The company also operates two river cruise operations, six luxury tourist trains and other iconic restaurants and watering holes.

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The company, which competes with the likes of Wyndham Worldwide Corporation (WYN) and Marriott International, Inc. (MAR), reported first quarter 2012 adjusted loss from continuing operation of 16 cents per share, narrower than the Zacks Consensus Estimate of a loss of 18 cents. The company expects financials in 2012 to benefit from portfolio optimization activity and stabilization of global economic environment, especially outside Europe. The Zacks Consensus estimates for 2012 and 2013 are pegged at 14 cents and 36 cents, respectively.

Orient-Express currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. We are also maintaining our long-term Neutral recommendation on the stock.

Read the Full Research Report on WYN

Read the Full Research Report on MAR

Read the Full Research Report on OEH

Zacks Investment Research



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