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SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

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FORM 10-Q

(Mark One)

|ý | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------

For the quarterly period ended June 30, 2002

or

|o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------

For the transition period from  to

Commission file number 1-16017

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ORIENT-EXPRESS HOTELS LTD.(Exact name of registrant as specified in its charter)

Bermuda(State or other jurisdiction of incorporation or organization)

98-0223493(I.R.S. Employer Identification No.)41 Cedar Avenue
P.O. Box HM 1179
Hamilton HMEX, Bermuda(Address of principal executive offices)

(Zip Code)


441-295-2244(Registrant's telephone number, including area code)

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Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes ý    No o

As
of July 31, 2002, 28,340,601 Class A common shares and 20,503,877 Class B common shares of Orient-Express Hotels Ltd. were outstanding, including
18,044,478 Class B shares owned by a subsidiary of Orient-Express Hotels Ltd. and 15,889,201 Class A shares and 2,459,399 Class B shares owned by Sea Containers Ltd.

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PART I

Orient-Express Hotels Ltd. and Subsidiaries

Consolidated Balance Sheets

|                                                                                    |                                                                        | June 30,
2002                       |         | December 31,
2001 |    
|----------------------------------------------------------------------------------- | ---------------------------------------------------------------------- | ----------------------------------- | ------- | ----------------- | ---
|
|Assets                                                                              |                                                                        |                                     |         |                   |    
|Cash and cash equivalents                                                           |                                                                        | $                                   | 43,941  |                   | $  
|Accounts receivable, net of allowances of $514 and $514                             |                                                                        |                                     | 58,685  |                   |    
|Inventories                                                                         |                                                                        |                                     | 19,961  |                   |    
|                                                                                    |                                                                        |                                     |         |                   |    
|Total current assets                                                                |                                                                        |                                     | 122,587 |                   |    
|Property, plant and equipment, less accumulated depreciation of $93,851 and $81,741 |                                                                        |                                     | 704,658 |                   |    
|Investments                                                                         |                                                                        |                                     | 77,748  |                   |    
|Intangible assets                                                                   |                                                                        |                                     | 29,529  |                   |    
|Other assets                                                                        |                                                                        |                                     | 2,991   |                   |    
|                                                                                    |                                                                        |                                     |         |                   |    
|                                                                                    |                                                                        | $                                   | 937,513 |                   | $  
|                                                                                    |                                                                        |                                     |         |                   |    
|Liabilities and Shareholders' Equity                                                |                                                                        |                                     |         |                   |    
|Working capital facilities                                                          |                                                                        | $                                   | 21,818  |                   | $  
|Accounts payable                                                                    |                                                                        |                                     | 17,678  |                   |    
|Accrued liabilities                                                                 |                                                                        |                                     | 39,127  |                   |    
|Deferred revenue                                                                    |                                                                        |                                     | 16,156  |                   |    
|Current portion of long-term debt                                                   |                                                                        |                                     | 56,328  |                   |    
|                                                                                    |                                                                        |                                     |         |                   |    
|Total current liabilities                                                           |                                                                        |                                     | 151,107 |                   |    
|Long-term debt                                                                      |                                                                        |                                     | 368,599 |                   |    
|Deferred income taxes                                                               |                                                                        |                                     | 5,301   |                   |    
|                                                                                    |                                                                        |                                     |         |                   |    
|                                                                                    |                                                                        |                                     | 525,007 |                   |    
|                                                                                    |                                                                        |                                     |         |                   |    
|Minority interest                                                                   |                                                                        |                                     | 3,753   |                   |    
|                                                                                    |                                                                        |                                     |         |                   |    
|Preferred shares $0.01 par value (30,000,000 shares authorized)                     |                                                                        |                                     |        |                   |    
|                                                                                    |                                                                        |                                     |         |                   |    
|Shareholders' equity:                                                               |                                                                        |                                     |         |                   |    
|                                                                                    | Class A common shares $0.01 par value (120,000,000 shares authorized): |                                     |         |                   |    
|                                                                                    |                                                                        | Issued28,340,601 (200128,340,601) |         |                   | 283
|                                                                                    | Class B common shares $0.01 par value (120,000,000 shares authorized): |                                     |         |                   |    
|                                                                                    |                                                                        | Issued20,503,877 (200120,503,877) |         |                   | 205
|Additional paid-in capital                                                          |                                                                        |                                     | 226,963 |                   |    
|Retained earnings                                                                   |                                                                        |                                     | 215,585 |                   |    
|Accumulated other comprehensive loss                                                |                                                                        |                                     | (34,102 | )                 |    
|Less: reduction due to class B common shares owned by a subsidiary18,044,478       |                                                                        |                                     | (181    | )                 |    
|                                                                                    |                                                                        |                                     |         |                   |    
|Total shareholders' equity                                                          |                                                                        |                                     | 408,753 |                   |    
|                                                                                    |                                                                        |                                     |         |                   |    
|Commitments                                                                         |                                                                        |                                     |         |                   |    
|                                                                                    |                                                                        |                                     |         |                   |    
|                                                                                    |                                                                        | $                                   | 937,513 |                   | $  
|                                                                                    |                                                                        |                                     |         |                   |    

See
notes to consolidated financial statements.

2

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Orient-Express Hotels Ltd. and Subsidiaries

Statements of Consolidated Operations

|Three months ended June 30,                        |                                     | 2002 |        | 2001   |  
|-------------------------------------------------- | ----------------------------------- | ---- | ------ | ------ | -
|
|Revenue                                            |                                     | $    | 76,725 |        | $
|Earnings from unconsolidated companies             |                                     |      | 2,369  |        |  
|                                                   |                                     |      |        |        |  
|                                                   |                                     |      | 79,094 |        |  
|                                                   |                                     |      |        |        |  
|Expenses:                                          |                                     |      |        |        |  
|                                                   | Depreciation and amortization       |      |        | 4,905  |  
|                                                   | Operating                           |      |        | 36,538 |  
|                                                   | Selling, general and administrative |      |        | 19,750 |  
|                                                   |                                     |      |        |        |  
|Total expenses                                     |                                     |      | 61,193 |        |  
|                                                   |                                     |      |        |        |  
|Earnings from operations before net finance costs  |                                     |      | 17,901 |        |  
|Interest expense, net                              |                                     |      | (5,024 | )      |  
|Interest and related income                        |                                     |      | 480    |        |  
|                                                   |                                     |      |        |        |  
|Net finance costs                                  |                                     |      | (4,544 | )      |  
|                                                   |                                     |      |        |        |  
|Earnings before income taxes                       |                                     |      | 13,357 |        |  
|Provision for income taxes                         |                                     |      | 1,793  |        |  
|                                                   |                                     |      |        |        |  
|Net earnings                                       |                                     | $    | 11,564 |        | $
|                                                   |                                     |      |        |        |  
|Net earnings per class A and class B common share: |                                     |      |        |        |  
|                                                   | Basic and diluted                   |      | $      | 0.38   |  
|                                                   |                                     |      |        |        |  

See
notes to consolidated financial statements.

3

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Orient-Express Hotels Ltd. and Subsidiaries

Statements of Consolidated Operations

|Six months ended June 30,                          |                                     | 2002 |         | 2001   |  
|-------------------------------------------------- | ----------------------------------- | ---- | ------- | ------ | -
|
|Revenue                                            |                                     | $    | 128,414 |        | $
|Earnings from unconsolidated companies             |                                     |      | 4,350   |        |  
|                                                   |                                     |      |         |        |  
|                                                   |                                     |      | 132,764 |        |  
|                                                   |                                     |      |         |        |  
|Expenses:                                          |                                     |      |         |        |  
|                                                   | Depreciation and amortization       |      |         | 9,250  |  
|                                                   | Operating                           |      |         | 61,321 |  
|                                                   | Selling, general and administrative |      |         | 38,957 |  
|                                                   |                                     |      |         |        |  
|Total expenses                                     |                                     |      | 109,528 |        |  
|                                                   |                                     |      |         |        |  
|Earnings from operations before net finance costs  |                                     |      | 23,236  |        |  
|Interest expense, net                              |                                     |      | (9,848  | )      |  
|Interest and related income                        |                                     |      | 481     |        |  
|                                                   |                                     |      |         |        |  
|Net finance costs                                  |                                     |      | (9,367  | )      |  
|                                                   |                                     |      |         |        |  
|Earnings before income taxes                       |                                     |      | 13,869  |        |  
|Provision for income taxes                         |                                     |      | 1,865   |        |  
|                                                   |                                     |      |         |        |  
|Net earnings                                       |                                     | $    | 12,004  |        | $
|                                                   |                                     |      |         |        |  
|Net earnings per class A and class B common share: |                                     |      |         |        |  
|                                                   | Basic and diluted                   |      | $       | 0.39   |  
|                                                   |                                     |      |         |        |  

See
notes to consolidated financial statements.

4

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Orient-Express Hotels Ltd. and Subsidiaries

Statements of Consolidated Cash Flows

|Six months ended June 30,                        |                                                                                     | 2002                                    |         | 2001    |       
|------------------------------------------------ | ----------------------------------------------------------------------------------- | --------------------------------------- | ------- | ------- | ------
|
|Cash flows from operating activities:            |                                                                                     |                                         |         |         |       
|                                                 | Net earnings                                                                        |                                         | $       | 12,004  |       
|                                                 |                                                                                     |                                         |         |         |       
|                                                 | Adjustments to reconcile net earnings to net cash provided by operating activities: |                                         |         |         |       
|                                                 | Depreciation and amortization                                                       |                                         |         | 9,250   |       
|                                                 | Undistributed earnings of affiliates and other non-cash items                       |                                         |         | (395    | )     
|                                                 | Change in assets and liabilities net of effects from acquisition of subsidiaries:   |                                         |         |         |       
|                                                 |                                                                                     | Increase in accounts receivable         |         |         | (1,893
|                                                 |                                                                                     | Increase in inventories                 |         |         | (837  
|                                                 |                                                                                     | (Decrease)/increase in accounts payable |         |         | (5,854
|                                                 |                                                                                     |                                         |         |         |       
|                                                 | Total adjustments                                                                   |                                         |         | 271     |       
|                                                 |                                                                                     |                                         |         |         |       
|Net cash provided by operating activities        |                                                                                     |                                         | 12,275  |         |       
|                                                 |                                                                                     |                                         |         |         |       
|Cash flows from investing activities:            |                                                                                     |                                         |         |         |       
|                                                 | Capital expenditures                                                                |                                         |         | (27,612 | )     
|                                                 | Acquisitions and investments, net of cash acquired                                  |                                         |         | (50,068 | )     
|                                                 | Proceeds from sale of fixed assets and other                                        |                                         |         | 748     |       
|                                                 |                                                                                     |                                         |         |         |       
|Net cash used in investing activities            |                                                                                     |                                         | (76,932 | )       |       
|                                                 |                                                                                     |                                         |         |         |       
|Cash flows from financing activities:            |                                                                                     |                                         |         |         |       
|                                                 | Working capital facilities and redrawable loans drawn                               |                                         |         | 13,767  |       
|                                                 | Issuance of long-term debt                                                          |                                         |         | 49,920  |       
|                                                 | Principal payments under long-term debt                                             |                                         |         | (13,647 | )     
|                                                 |                                                                                     |                                         |         |         |       
|Net cash provided by financing activities        |                                                                                     |                                         | 50,040  |         |       
|                                                 |                                                                                     |                                         |         |         |       
|Total cash flows                                 |                                                                                     |                                         | (14,617 | )       |       
|Effect of exchange rate changes on cash          |                                                                                     |                                         | 695     |         |       
|                                                 |                                                                                     |                                         |         |         |       
|Net increase in cash                             |                                                                                     |                                         | (13,922 | )       |       
|Cash and cash equivalents at beginning of period |                                                                                     |                                         | 57,863  |         |       
|                                                 |                                                                                     |                                         |         |         |       
|Cash and cash equivalents at end of period       |                                                                                     | $                                       | 43,941  |         | $     
|                                                 |                                                                                     |                                         |         |         |       

See
notes to consolidated financial statements.

5

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Orient-Express Hotels Ltd. and Subsidiaries

Statements of Consolidated Shareholders' Equity

|(Dollars in thousands)   |                                              | Class A
Common
Shares
at Par
Value |     | Class B
Common
Shares
at Par
Value |   | Additional
Paid-In
Capital |  | Retained
Earnings |         | Accumulated
Other
Comprehensive
Income (Loss) |   | Common
Shares
Owned by
Subsidiaries |        | Total
Comprehensive
Income (Loss)
|------------------------ | -------------------------------------------- | ---------------------------------- | --- | ---------------------------------- | - | -------------------------- |  | ----------------- | ------- | --------------------------------------------- | - | ----------------------------------- | ------ | ---------------------------------
|Balance, January 1, 2002 |                                              | $                                  | 283 |                                    | $ | 205                        |  | $                 | 226,963 |                                               | $ | 203,581                             |        | $                                
|Comprehensive income:    |                                              |                                    |     |                                    |   |                            |  |                   |         |                                               |   |                                     |        |                                  
|                         | Net earnings on common shares for the period |                                    |     |                                    |   |                            |  |                   |         |                                               |   |                                     | 12,004 |                                  
|                         | Other comprehensive income                   |                                    |     |                                    |   |                            |  |                   |         |                                               |   |                                     |        |                                  
|                         |                                              |                                    |     |                                    |   |                            |  |                   |         |                                               |   |                                     |        |                                  
|                         |                                              |                                    |     |                                    |   |                            |  |                   |         |                                               |   |                                     |        |                                  
|                         |                                              |                                    |     |                                    |   |                            |  |                   |         |                                               |   |                                     |        |                                  
|Balance, June 30, 2002   |                                              | $                                  | 283 |                                    | $ | 205                        |  | $                 | 226,963 |                                               | $ | 215,585                             |        | $                                
|                         |                                              |                                    |     |                                    |   |                            |  |                   |         |                                               |   |                                     |        |                                  

See notes to consolidated financial statements.

6

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Orient-Express Hotels Ltd. and Subsidiaries    Notes to Consolidated Financial Statements

1.    Basis of financial statement presentation

Orient-Express Hotels Ltd. (the "Company") is a majority-owned subsidiary of Sea Containers Ltd. ("SCL"). The Company and its
subsidiaries are referred to collectively as "OEH".

For
a description of significant accounting policies and basis of presentation, see Notes 1 and 13 to the consolidated financial statements in the 2001 Form 10-K
annual report.

In
the opinion of management, all adjustments necessary for a fair statement of the results of operations for the six months ended June 30, 2002 and 2001, which are all of a
normal recurring nature, have been reflected in the information provided.

The number of shares used in computing basic and diluted earnings per share was as follows (in thousands):

|Six months ended June 30, |  | 2002   |  | 2001  
|------------------------- |  | ------ |  | ------
|Basic                     |  | 30,800 |  | 30,900
|Effect of dilution        |  |       |  | 6     
|                          |  |        |  |       
|Diluted                   |  | 30,800 |  | 30,906
|                          |  |        |  |       

For
the six months ended June 30, 2002, the anti-dilutive effect of stock options on 15,857 class A common shares was excluded from the computation of diluted
earnings per share.

|Three months ended June 30, |  | 2002   |  | 2001  
|--------------------------- |  | ------ |  | ------
|Basic                       |  | 30,800 |  | 30,900
|Effect of dilution          |  | 2      |  | 1     
|                            |  |        |  |       
|Diluted                     |  | 30,802 |  | 30,901
|                            |  |        |  |       

The Company adopted Statement of Financial Accounting Standards ("SFAS") No. 142, Goodwill and Other Intangible Assets, effective January 1, 2002.
Under SFAS No. 142, goodwill is no longer amortized but reviewed for impairment annually, or more frequently if certain indicators arise. The Company has completed the initial step of a
transitional impairment test which has indicated no impairment, and is to complete the final step of the transitional impairment test by the end of the fiscal year. Any subsequent impairment losses
will be reflected in operating income or loss in the consolidated statements of operations.

7

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Components
of intangible assets are as follows (dollars in thousands):

|                                        |                   | June 30,
2002 |        | December 31,
2001
|--------------------------------------- | ----------------- | ------------- | ------ | -----------------
|Goodwill                                |                   | $             | 2,918  |                  
|Other intangibles with indefinite lives |                   |               | 32,504 |                  
|                                        |                   |               |        |                  
|                                        |                   |               | 35,422 |                  
|                                        |                   |               |        |                  
|Accumulated amortization:               |                   |               |        |                  
|                                        | Goodwill          |               |        | 774              
|                                        | Other intangibles |               |        | 5,119            
|                                        |                   |               |        |                  
|                                        |                   |               | 5,893  |                  
|                                        |                   |               |        |                  
|Total net intangibles                   |                   | $             | 29,529 |                  
|                                        |                   |               |        |                  

Other
intangibles consist primarily of trademarks associated with acquired businesses.

The
following proforma information reconciles the net earnings and earnings per share reported for the three months and six months ended June 30, 2001 to adjusted net earnings and
earnings per share which reflect the adoption of SFAS No. 142 (dollars in thousands, except per share amounts):

|Period ended June 30, 2001                    |  | Three
months                                                                                                       |        | Six
months
|--------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------ | ------ | ----------
|Reported net earnings on common shares        |  | $                                                                                                                  | 14,415 |           
|Add:                                          |  | Amortization of goodwill and other intangible assets with indefinite lives, net of tax                             |        |           
|                                              |  |                                                                                                                    |        |           
|Adjusted net earnings                         |  | $                                                                                                                  | 14,639 |           
|                                              |  |                                                                                                                    |        |           
|Reported basic and diluted earnings per share |  | $                                                                                                                  | 0.47   |           
|Add:                                          |  | Amortization of goodwill and other intangible assets with indefinite lives, net of tax per sharebasic and diluted |        |           
|                                              |  |                                                                                                                    |        |           
|Adjusted basic and diluted earnings per share |  | $                                                                                                                  | 0.47   |           
|                                              |  |                                                                                                                    |        |           

As reported in Note 1(t) to the financial statements in the Form 10-K annual report for the year ended
December 31, 2001, the Company adopted with effect on January 1, 2001, SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, as amended by SFAS
No. 137 and No. 138. The initial adoption of SFAS No. 133 resulted in an unrealized loss of $1,333,000 in accumulated other comprehensive income/(loss) as of January 1,
2001. For the six months ended June 30, 2002 and 2001, the change in the fair market value of derivative instruments resulted in a credit to other comprehensive income/(loss) of $1,248,000 and
$261,000, respectively.

The
components of comprehensive income/(loss) are as follows (dollars in thousands):

|Six months ended June 30,          |                                                                                              | 2002 |        | 2001  |  
|---------------------------------- | -------------------------------------------------------------------------------------------- | ---- | ------ | ----- | -
|Net earnings on common shares      |                                                                                              | $    | 12,004 |       | $
|Other comprehensive income/(loss): |                                                                                              |      |        |       |  
|                                   | Foreign currency translation adjustments.                                                    |      |        | 2,914 |  
|                                   | Cumulative effect of change in accounting principle (SFAS 133) on other comprehensive income |      |        |      |  
|                                   | Changes in fair value of derivatives                                                         |      |        | 1,248 |  
|                                   |                                                                                              |      |        |       |  
|Comprehensive income/(loss)        |                                                                                              | $    | 16,166 |       | $
|                                   |                                                                                              |      |        |       |  

8

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2.    Acquisitions and investments

In February 2002, OEH acquired the hotel La Residencia in Mallorca, Spain and the hotel Le Manoir aux Quat'Saisons in Oxfordshire, England and a 50%
interest in a group of four restaurants called Le Petit Blanc in England, all for approximately $40,000,000. The price was paid largely with bank mortgage finance.

In
March 2002, OEH acquired for approximately $7,500,000 a 75% share interest in Maroma Resort and Spa near Cancun, Mexico. The purchase price was paid in cash, with $1,000,000
payable in March 2003 which is recorded in other liabilities at June 30, 2002.

These
acquisitions have been accounted for as a purchase in accordance with SFAS No. 141, Business Combinations. The results of these operations have been included in the
consolidated financial results of OEH from the date of acquisition. The proforma impact on results, had these acquisitions occurred on January 1, 2002, is not material.

3.    Property, plant and equipment

The major classes of real estate and other fixed assets are as follows (dollars in thousands):

|                                        |  | June 30,
2002 |         | December 31,
2001
|--------------------------------------- |  | ------------- | ------- | -----------------
|Freehold and leased land and buildings  |  | $             | 588,236 |                  
|Machinery and equipment                 |  |               | 117,035 |                  
|Fixtures, fittings and office equipment |  |               | 77,028  |                  
|River cruiseship                        |  |               | 16,210  |                  
|                                        |  |               |         |                  
|                                        |  |               | 798,509 |                  
|Less: accumulated depreciation          |  |               | 93,851  |                  
|                                        |  |               |         |                  
|                                        |  | $             | 704,658 |                  
|                                        |  |               |         |                  

At
June 30, 2002, the balance under capital lease for land and buildings was $9,097,000 (December 31, 2001$8,574,000), for machinery and equipment $1,938,000
(December 31, 2001$1,675,000), and for fixtures and fittings $743,000 (December 31, 2001$716,000). Accumulated depreciation related to assets under capital
lease at June 30, 2002 was $794,000 (December 31, 2001$520,000).

4.    Long-term debt

Long-term debt consists of the following (dollars in thousands):

|                                                                                                                                                                                                        |  | June 30,
2002 |         | December 31,
2001
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------- | ------- | -----------------
|Loans from banks secured by property, plant and equipment payable over periods of 1 to 12 years, with a weighted average interest rate of 4.21 and 4.72 percent, respectively, primarily based on LIBOR |  | $             | 405,901 |                  
|Loan secured by a river cruiseship payable over 5 years, with a weighted average interest rate of 3.69 and 3.57 percent, respectively, based on LIBOR                                                   |  |               | 4,500   |                  
|Obligations under capital lease                                                                                                                                                                         |  |               | 14,526  |                  
|                                                                                                                                                                                                        |  |               |         |                  
|                                                                                                                                                                                                        |  |               | 424,927 |                  
|Less: current portion                                                                                                                                                                                   |  |               | 56,328  |                  
|                                                                                                                                                                                                        |  |               |         |                  
|                                                                                                                                                                                                        |  | $             | 368,599 |                  
|                                                                                                                                                                                                        |  |               |         |                  

9

---

Certain credit agreements of OEH have restrictive covenants. At June 30, 2002, OEH was in compliance with these covenants.

The
following is a summary of the aggregate maturities of long-term debt, including obligations under capital leases, at June 30, 2002 (dollars in thousands):

|Year ending December 31, |  |  
|------------------------ |  | -
|2003                     |  | $
|2004                     |  |  
|2005                     |  |  
|2006                     |  |  
|2007 and thereafter      |  |  
|                         |  |  
|                         |  | $
|                         |  |  

The
interest rates on substantially all of OEH's long-term debt are adjusted regularly to reflect current market rates. Accordingly, the carrying amounts of OEH's
long-term debt also approximate fair value.

5.    Income taxes

Income taxes provided by OEH relate principally to its foreign subsidiaries as pre-tax income is primarily foreign. The provision for income taxes
consists of the following (dollars in thousands):

|Six months ended June 30, 2002 |  | Current |       | Deferred |   | Total
|------------------------------ |  | ------- | ----- | -------- | - | -----
|United States                  |  | $       | 545   |          | $ | 586  
|Other foreign                  |  |         | 1,028 |          |   | (294 
|                               |  |         |       |          |   |      
|                               |  | $       | 1,573 |          | $ | 292  
|                               |  |         |       |          |   |      

|Six months ended June 30, 2001 |  | Current |       | Deferred |   | Total
|------------------------------ |  | ------- | ----- | -------- | - | -----
|United States                  |  | $       | 1,187 |          | $ | 158  
|Other foreign                  |  |         | 2,024 |          |   | (991 
|                               |  |         |       |          |   |      
|                               |  | $       | 3,211 |          | $ | (833 
|                               |  |         |       |          |   |      

The
Company is incorporated in Bermuda, which does not impose an income tax. OEH's effective tax rate is entirely due to the income taxes imposed by jurisdictions in which OEH conducts
business other than Bermuda.

Deferred
income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for
income tax purposes. The following represents OEH's net deferred tax liabilities (dollars in thousands):

|                             |  | June 30,
2002 |         | December 31,
2001 |  
|---------------------------- |  | ------------- | ------- | ----------------- | -
|Gross deferred tax assets    |  | $             | 55,359  |                   | $
|Less: Valuation allowance    |  |               | (35,356 | )                 |  
|                             |  |               |         |                   |  
|Net deferred tax assets      |  |               | 20,003  |                   |  
|Deferred tax liabilities     |  |               | (25,304 | )                 |  
|                             |  |               |         |                   |  
|Net deferred tax liabilities |  | $             | (5,301  | )                 | $
|                             |  |               |         |                   |  

The
deferred tax assets consist primarily of operating loss carryforwards. The deferred tax liabilities consist primarily of differences between the tax basis of depreciable assets and
the adjusted basis as reflected in the financial statements.

10

---

6.    Supplemental cash flow information

(Dollars in thousands):

|Six months ended June 30, |              | 2002 |   | 2001 
|------------------------- | ------------ | ---- | - | -----
|Cash paid for:            |              |      |   |      
|                          | Interest     |      | $ | 9,427
|                          | Income taxes |      | $ | 3,011

In
conjunction with the acquisition of Bora Bora Lagoon Resort in April 2001 and the acquisitions in 2002 (see Note 2), liabilities were assumed relating to non-cash investing and
financing activities as follows:

Non-cash
investing and financing activities:

|                              |  |   |         |   |  
|----------------------------- |  | - | ------- | - | -
|Fair value of assets acquired |  | $ | 59,264  |   | $
|Cash paid                     |  |   | (47,500 | ) |  
|                              |  |   |         |   |  
|Liabilities assumed           |  | $ | 11,764  |   | $
|                              |  |   |         |   |  

7.    Commitments

Outstanding contracts to purchase fixed assets were approximately $18,500,000 at June 30, 2002 (December 31, 2001$6,100,000).

8.    Information concerning financial reporting for segments and operations in different geographical areas

As reported in the Company's 2001 Form 10-K annual report, OEH has two business segments, (i) hotels and restaurants and
(ii) tourist trains and cruises. Financial information regarding these business segments is as follows, with net finance costs appearing net of capitalized interest and interest and related
income (dollars in thousands):

11

---

|Six months ended June 30,                          |                            | 2002 |         | 2001    |  
|-------------------------------------------------- | -------------------------- | ---- | ------- | ------- | -
|Revenue:                                           |                            |      |         |         |  
|                                                   | Hotels and restaurants     |      | $       | 110,790 |  
|                                                   | Tourist trains and cruises |      |         | 17,624  |  
|                                                   |                            |      |         |         |  
|                                                   |                            | $    | 128,414 |         | $
|                                                   |                            |      |         |         |  
|Earnings from unconsolidated companies:            |                            |      |         |         |  
|                                                   | Hotels and restaurants     |      | $       | 3,372   |  
|                                                   | Tourist trains and cruises |      |         | 978     |  
|                                                   |                            |      |         |         |  
|                                                   |                            | $    | 4,350   |         | $
|                                                   |                            |      |         |         |  
|Depreciation and amortization:                     |                            |      |         |         |  
|                                                   | Hotels and restaurants     |      | $       | 8,060   |  
|                                                   | Tourist trains and cruises |      |         | 1,190   |  
|                                                   |                            |      |         |         |  
|                                                   |                            | $    | 9,250   |         | $
|                                                   |                            |      |         |         |  
|Earnings from operations before net finance costs: |                            |      |         |         |  
|                                                   | Hotels and restaurants     |      | $       | 26,608  |  
|                                                   | Tourist trains and cruises |      |         | 1,766   |  
|                                                   |                            |      |         |         |  
|                                                   |                            |      | 28,374  |         |  
|Central selling, general and administrative costs  |                            |      | (5,138  | )       |  
|                                                   |                            |      |         |         |  
|                                                   |                            |      | 23,236  |         |  
|Net finance costs                                  |                            |      | (9,367  | )       |  
|                                                   |                            |      |         |         |  
|Earnings before income taxes                       |                            |      | 13,869  |         |  
|Provision for income taxes                         |                            |      | 1,865   |         |  
|                                                   |                            |      |         |         |  
|Net earnings                                       |                            | $    | 12,004  |         | $
|                                                   |                            |      |         |         |  
|Capital expenditure:                               |                            |      |         |         |  
|                                                   | Hotels and restaurants     |      | $       | 26,952  |  
|                                                   | Tourist trains and cruises |      |         | 660     |  
|                                                   |                            |      |         |         |  
|                                                   |                            | $    | 27,612  |         | $
|                                                   |                            |      |         |         |  

|                     |                            | June 30, 2002 |         | December 31, 2001
|-------------------- | -------------------------- | ------------- | ------- | -----------------
|Identifiable assets: |                            |               |         |                  
|                     | Hotels and restaurants     |               | $       | 839,971          
|                     | Tourist trains and cruises |               |         | 97,542           
|                     |                            |               |         |                  
|                     |                            | $             | 937,513 |                  
|                     |                            |               |         |                  

12

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Financial
information regarding geographic areas based on the location of properties is as follows (dollars in thousands):

|Six months ended June 30, |                   | 2002 |         | 2001  
|------------------------- | ----------------- | ---- | ------- | ------
|Revenue:                  |                   |      |         |       
|                          | Europe            |      | $       | 56,727
|                          | North America     |      |         | 42,513
|                          | Rest of the world |      |         | 29,174
|                          |                   |      |         |       
|                          |                   | $    | 128,414 |       
|                          |                   |      |         |       

|                                 |                   | June 30, 2002 |         | December 31, 2001
|-------------------------------- | ----------------- | ------------- | ------- | -----------------
|Long-lived assets at book value: |                   |               |         |                  
|                                 | Europe            |               | $       | 314,023          
|                                 | North America     |               |         | 258,154          
|                                 | Rest of the world |               |         | 239,758          
|                                 |                   |               |         |                  
|                                 |                   | $             | 811,935 |                  
|                                 |                   |               |         |                  

9.    Related party transactions

For the six months ended June 30, 2002, OEH paid subsidiaries of SCL $2,994,000 (2001$2,851,000) for the provision of various services under a
shared services agreement between OEH and SCL. These amounts have been settled in accordance with the shared services agreement and are included in selling, general and administrative expenses.

SCL
has guaranteed an aggregate principal amount of $154,404,000 of bank loans to OEH outstanding at June 30, 2002 (December 31, 2001$171,401,000), including a
$2,000,000 bank loan to Eastern & Oriental Express Ltd. in which OEH has a minority shareholder interest.

10.  Subsequent event

On July 22, 2002, under the Amended and Restated Share Owning Subsidiaries Restructuring Agreement described in Note 9(d) to the Financial
Statements in the Company's 2001 Form 10-K annual report, a subsidiary of the Company exercised its purchase option to acquire from SCL 18,044,478 class B common shares of
the Company at an aggregate price of $180,445. These shares remain outstanding and may be voted by the subsidiary although they are disregarded for purposes of calculating OEH's earnings per share
while the shares are owned by the subsidiary. On the same date under the Agreement, an SCL subsidiary exercised its purchase option to acquire from four OEH subsidiaries 12,900,000 class B
common shares of SCL at an aggregate price of $129,000. As a result of these transactions, voting control of the Company passed from SCL to the Company's subsidiary, and OEH no longer owns any shares
of SCL.

13

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Management's Discussion and Analysis of Financial Condition  and Results of Operations

Results of Operations

OEH's operating results for the three months ended June 30, 2002 and June 30, 2001, expressed as a percentage of revenue, were as follows:

|Three months ended June 30,                   |                                     | 2002 |    | 2001
|--------------------------------------------- | ----------------------------------- | ---- | -- | ----
|
|Revenue:                                      |                                     |      |    |     
|                                              | Hotels and restaurants              |      | 83 |     
|                                              | Tourist trains and cruises          |      | 17 |     
|                                              |                                     |      |    |     
|                                              |                                     | 100  |    | 100 
|Expenses:                                     |                                     |      |    |     
|                                              | Depreciation and amortization       |      | 6  |     
|                                              | Operating                           |      | 46 |     
|                                              | Selling, general and administrative |      | 25 |     
|Net finance costs                             |                                     | 6    |    | 6   
|                                              |                                     |      |    |     
|Earnings before income taxes                  |                                     | 17   |    | 21  
|Provision of income taxes                     |                                     | 2    |    | 2   
|                                              |                                     |      |    |     
|Net earnings as a percentage of total revenue |                                     | 15   |    | 19  
|                                              |                                     |      |    |     

The
revenues and earnings before interest, tax, depreciation and amortization ("EBITDA") of OEH's operations for the three months ended June 30, 2002 and June 30, 2001 are
analyzed as follows (dollars in millions):

|Three months ended June 30, |                            | 2002              |      | 2001 |     
|--------------------------- | -------------------------- | ----------------- | ---- | ---- | ----
|Revenue:                    |                            |                   |      |      |     
|                            | Owned Hotels:              |                   |      |      |     
|                            |                            | Europe            |      | $    | 31.1
|                            |                            | North America     |      |      | 14.2
|                            |                            | Rest of the world |      |      | 11.9
|                            | Hotel management interests |                   |      | 3.6  |     
|                            | Restaurants                |                   |      | 5.0  |     
|                            | Tourist trains and cruises |                   |      | 13.3 |     
|                            |                            |                   |      |      |     
|Total                       |                            | $                 | 79.1 |      | $   
|                            |                            |                   |      |      |     
|EBITDA:                     |                            |                   |      |      |     
|                            | Owned Hotels:              |                   |      |      |     
|                            |                            | Europe            |      | $    | 11.3
|                            |                            | North America     |      |      | 3.6 
|                            |                            | Rest of the world |      |      | 1.8 
|                            | Hotel management interests |                   |      | 3.6  |     
|                            | Restaurants                |                   |      | 1.4  |     
|                            | Tourist trains and cruises |                   |      | 3.7  |     
|                            | Central overheads          |                   |      | (2.6 | )   
|                            |                            |                   |      |      |     
|Total EBITDA                |                            | $                 | 22.8 |      | $   
|                            |                            |                   |      |      |     

14

---

Operating
information for OEH's owned hotels for the three months ended June 30, 2002 and June 30, 2001 is as follows:

|Three months ended June 30,     |                   | 2002 |     | 2001 |     |  |  | 
|------------------------------- | ----------------- | ---- | --- | ---- | --- |  |  | 
|Average Daily Rate (in dollars) |                   |      |     |      |     |  |  | 
|                                | Europe            |      | 380 |      | 380 |  |  | 
|                                | North America     |      | 295 |      | 314 |  |  | 
|                                | Rest of the world |      | 174 |      | 184 |  |  | 
|                                | Worldwide         |      | 291 |      | 300 |  |  | 
|Rooms Sold (in thousands)       |                   |      |     |      |     |  |  | 
|                                | Europe            |      | 49  |      | 48  |  |  | 
|                                | North America     |      | 30  |      | 32  |  |  | 
|                                | Rest of the world |      | 38  |      | 37  |  |  | 
|                                |                   |      |     |      |     |  |  | 
|                                | Worldwide         |      | 117 |      | 117 |  |  | 
|RevPAR (in dollars)             |                   |      |     |      |     |  |  | 
|                                | Europe            |      | 268 |      | 294 |  |  | 
|                                | North America     |      | 195 |      | 223 |  |  | 
|                                | Rest of the world |      | 80  |      | 93  |  |  | 
|                                | Worldwide         |      | 172 |      | 195 |  |  | 

|                               |                   |  |     |  |     | Change % |    
|------------------------------ | ----------------- |  | --- |  | --- | -------- | ---
|
|Same Store RevPAR (in dollars) |                   |  |     |  |     |          |    
|                               | Europe            |  | 266 |  | 286 |          | (7 
|                               | North America     |  | 198 |  | 221 |          | (10
|                               | Rest of the world |  | 69  |  | 74  |          | (7 
|                               | Worldwide         |  | 169 |  | 184 |          | (8 

Average
daily rate is the average amount achieved for the rooms sold. RevPAR is revenue per available room, that is the rooms department revenue divided by the number of available rooms
for each night of operation. Same store RevPAR is a comparison based on the operations of the same units in each period, such as by excluding the effect of any acquisitions or major refurbishments.

15

---

OEH's
operating results for the six months ended June 30, 2002 and June 30, 2001, expressed as a percentage of revenue, were as follows:

|Six months ended June 30,                     |                                     | 2002 |    | 2001
|--------------------------------------------- | ----------------------------------- | ---- | -- | ----
|
|Revenue:                                      |                                     |      |    |     
|                                              | Hotels and restaurants              |      | 86 |     
|                                              | Tourist trains and cruises          |      | 14 |     
|                                              |                                     |      |    |     
|                                              |                                     | 100  |    | 100 
|Expenses:                                     |                                     |      |    |     
|                                              | Depreciation and amortization       |      | 7  |     
|                                              | Operating                           |      | 46 |     
|                                              | Selling, general and administrative |      | 30 |     
|Net finance costs                             |                                     | 7    |    | 7   
|                                              |                                     |      |    |     
|Earnings before income taxes                  |                                     | 10   |    | 16  
|Provision of income taxes                     |                                     | 1    |    | 2   
|                                              |                                     |      |    |     
|Net earnings as a percentage of total revenue |                                     | 9    |    | 14  
|                                              |                                     |      |    |     

The
revenues and EBITDA of OEH's operations for the six months ended June 30, 2002 and June 30, 2001 are analyzed as follows (dollars in millions):

|Six months ended June 30, |                            | 2002              |       | 2001 |     
|------------------------- | -------------------------- | ----------------- | ----- | ---- | ----
|Revenue:                  |                            |                   |       |      |     
|                          | Owned Hotels:              |                   |       |      |     
|                          |                            | Europe            |       | $    | 41.4
|                          |                            | North America     |       |      | 30.8
|                          |                            | Rest of the world |       |      | 26.4
|                          | Hotel management interests |                   |       | 6.0  |     
|                          | Restaurants                |                   |       | 9.6  |     
|                          | Tourist trains and cruises |                   |       | 18.6 |     
|                          |                            |                   |       |      |     
|Total                     |                            | $                 | 132.8 |      | $   
|                          |                            |                   |       |      |     
|EBITDA:                   |                            |                   |       |      |     
|                          | Owned Hotels:              |                   |       |      |     
|                          |                            | Europe            |       | $    | 10.9
|                          |                            | North America     |       |      | 9.1 
|                          |                            | Rest of the world |       |      | 6.4 
|                          | Hotel management interests |                   |       | 6.0  |     
|                          | Restaurants                |                   |       | 2.3  |     
|                          | Tourist trains and cruises |                   |       | 2.9  |     
|                          | Central overheads          |                   |       | (5.1 | )   
|                          |                            |                   |       |      |     
|Total EBITDA              |                            | $                 | 32.5  |      | $   
|                          |                            |                   |       |      |     

16

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Operating
information for OEH's owned hotels for the six months ended June 30, 2002 and June 30, 2001 is as follows:

|Six months ended June 30,       |                   | 2002 |     | 2001 |     |  |  | 
|------------------------------- | ----------------- | ---- | --- | ---- | --- |  |  | 
|Average Daily Rate (in dollars) |                   |      |     |      |     |  |  | 
|                                | Europe            |      | 323 |      | 318 |  |  | 
|                                | North America     |      | 338 |      | 346 |  |  | 
|                                | Rest of the world |      | 178 |      | 199 |  |  | 
|                                | Worldwide         |      | 270 |      | 282 |  |  | 
|Rooms Sold (in thousands)       |                   |      |     |      |     |  |  | 
|                                | Europe            |      | 75  |      | 74  |  |  | 
|                                | North America     |      | 60  |      | 67  |  |  | 
|                                | Rest of the world |      | 88  |      | 83  |  |  | 
|                                |                   |      |     |      |     |  |  | 
|                                | Worldwide         |      | 223 |      | 224 |  |  | 
|RevPAR (in dollars)             |                   |      |     |      |     |  |  | 
|                                | Europe            |      | 211 |      | 227 |  |  | 
|                                | North America     |      | 235 |      | 259 |  |  | 
|                                | Rest of the world |      | 93  |      | 112 |  |  | 
|                                | Worldwide         |      | 163 |      | 185 |  |  | 

|                               |                   |  |     |  |     | Change % |    
|------------------------------ | ----------------- |  | --- |  | --- | -------- | ---
|
|Same Store RevPAR (in dollars) |                   |  |     |  |     |          |    
|                               | Europe            |  | 201 |  | 219 |          | (8 
|                               | North America     |  | 238 |  | 264 |          | (10
|                               | Rest of the world |  | 89  |  | 103 |          | (13
|                               | Worldwide         |  | 161 |  | 179 |          | (10

17

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Three Months Ended June 30, 2002 Compared To Three Months Ended June 30, 2001

Revenue

Total revenue, including earnings from unconsolidated companies, increased by $2.4 million, or 3%, from $76.7 million in the three months ended
June 30, 2001 to $79.1 million in the three months ended June 30, 2002. Hotels and restaurants revenue increased by $1.8 million, or 3%, from $64.0 million in the
three months ended June 30, 2001 to $65.8 million in the three months ended June 30, 2002, and tourist trains and cruises increased by $0.6 million, or 5%, from
$12.7 million for the three months ended June 30, 2001 to $13.3 million for the three months ended June 30, 2002.

The
revenue increase for hotels and restaurants was due to an increase at OEH's owned hotels of $1.5 million, or 3%, from $55.7 million in the three months ended
June 30, 2001 to $57.2 million in the three months ended June 30, 2002. Excluding the effect of acquisitions, the revenue decreased by $6.5 million, or 12%, from
$55.7 million in the three months ended June 30, 2001 to $49.2 million in the three months ended June 30, 2002. The revenue decrease at the hotels was mainly due to the
lingering effect on travel and tourism following September 11, 2001 and the impact of the weakened world economy, although underlying trends have shown a significant recovery over the fourth
quarter of 2001 and first quarter of 2002. Overall on a comparable basis, OEH's REVPAR at its owned hotels declined by 8% in U.S. dollars in the three months ended June 30, 2002. This is a
substantial improvement over the 17% decline experienced in the three months ended December 31, 2001 and 12% decline in the three months ended March 31, 2002. The revenue increase for
hotel management interests was $0.3 million, or 9%, from $3.3 million in the three months ended June 30, 2001 to $3.6 million in the three months ended June 30,
2002. The revenue at OEH's restaurants was flat in the three months ended June 30, 2002 compared with the three months ended June 30, 2001 at $5.0 million.

The
change in revenue at owned hotels is analyzed on a regional basis as follows:

Europe.Revenue increased by $3.4 million, or 12%, from $27.7 million for the three months ended
June 30, 2001 to $31.1 million for the three months ended June 30, 2002. The acquisitions of La Residencia in Mallorca, Spain and Le Manoir aux Quat' Saisons in
Oxfordshire, England during the
first quarter of 2002 accounted for $6.2 million of this increase. Excluding the effect of these acquisitions, revenue declined by $2.8 million. REVPAR on a comparable basis decreased by
8% in local currencies in the three months ended June 30, 2002 compared to the three months ended June 30, 2001. The seasonal reopening of the Villa San Michele was delayed for major
rooms addition and the Hotel Cipriani due to major works, and there were less customers arriving from the U.S. to the Italian properties.

North America.Revenue decreased by $2.1 million, or 13%, from $16.3 million in the three months ended
June 30, 2001 to $14.2 million in the three months ended June 30, 2002. The acquisition of a 75% interest in Maroma Resort and Spa in March 2002 accounted for
$0.9 million. REVPAR on a comparable basis for the North American region declined by 10% in the three months ended June 30, 2002 compared to the three months ended June 30, 2001.
The Inn at Perry Cabin was closed during the quarter for a major rooms addition.

Rest of the World.Revenue remained flat in the three months ended June 30, 2002 compared with the three months ended
June 30, 2001 at $11.8 million. The acquisition of the Miraflores Park Hotel accounted for $1.0 million of revenue in the three months ended June 30, 2002. Excluding the
effect of this acquisition, revenue decreased by $1.0 million. The REVPAR on a comparable basis for the rest of the world region decreased by 4% in local currencies in the three months ended
June 30, 2002 compared to the three months ended June 30, 2001. The majority of the revenue decline was at the Copacabana Palace Hotel in Brazil due to less business travel to South
America reflecting economic concerns in the region.

18

---

Depreciation and Amortization

Depreciation and amortization increased by $0.8 million, or 20%, from $4.1 million in the three months ended June 30, 2001 to
$4.9 million in the three months ended June 30, 2002, primarily due to acquisitions.

Operating Expenses

Operating expenses increased by $2.4 million, or 7%, from $34.1 million in the three months ended June 30, 2001 to $36.5 million in
the three months ended June 30, 2002. Excluding the effect of acquisitions, operating expenses reduced by $1.1 million. The decrease was primarily due to reduced occupancy at the hotels.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased by $2.0 million, or 11%, from $17.8 million in the three months ended June 30, 2001 to
$19.8 million in the three months ended June 30, 2002. Excluding the effect of acquisitions, selling, general and administrative expenses were in line with 2001.

Earnings from Operations

Earnings from operations decreased by $2.9 million, or 14%, from $20.8 million in the three months ended June 30, 2001 to
$17.9 million in the three months ended June 30, 2002. Earnings from operations represent total revenue less depreciation and amortization, operating expenses and selling, general and
administrative expenses.

Net Finance Costs

Net finance costs decreased by $0.1 million, or 2%, from $4.6 million in the three months ended June 30, 2001 to $4.5 million in the
three months ended June 30, 2002 primarily due to lower interest, notwithstanding the increases in debt relating to capital expenditures and acquisitions financed in 2001 and 2002.

Taxes on Income

The provision for income taxes increased by $0.1 million, or 6%, from $1.7 million in the three months ended June 30, 2001 to
$1.8 million in the three months ended June 30, 2002. The Company is incorporated in Bermuda, which does not impose an income tax. Accordingly, the entire income tax provision was
attributable to income tax charges incurred by subsidiaries operating in jurisdictions that impose an income tax.

Net Earnings

Net earnings decreased by $2.8 million, or 19%, from $14.4 million in the three months ended June 30, 2001 to $11.6 million in the
three months ended June 30, 2002. Net earnings represent earnings from operations less net finance costs and provision for income taxes.

Six Months Ended June 30, 2002 Compared To Six Months Ended June 30, 2001

Revenue

Total revenue, including earnings from unconsolidated companies, decreased by $1.8 million, or 1%, from $134.6 million in the six months ended
June 30, 2001 to $132.8 million in the six months ended June 30, 2002. Hotels and restaurants revenue decreased by $1.1 million, or 1%, from $115.3 million in the
six months ended June 30, 2001 to $114.2 million in the six months ended June 30, 2002, and tourist trains and cruises decreased by $0.7 million, or 4%, from
$19.3 million for the six months ended June 30, 2001 to $18.6 million for the six months ended June 30, 2002.

19

---

The
revenue decrease for hotels and restaurants was due to a decrease at OEH's owned hotels of $1.1 million, or 1%, from $99.7 million in the six months ended
June 30, 2001 to $98.6 million in the six months ended June 30, 2002. Excluding the effect of acquisitions, the revenue decrease was $12.3 million, or 12%, from
$99.7 million in the six months ended June 30, 2001 to $87.4 million in the six months ended June 30, 2002. The revenue decrease at the hotels was mainly due to the
lingering effect on travel and tourism following September 11, 2001 and the impact of the weakened world economy. Overall on a comparable basis, OEH's REVPAR at its owned hotels declined by 10%
in U.S. dollars in the six months ended June 30, 2002. The revenue increase for hotel management interests was $0.1 million, or 2%, from $5.9 million in the six months ended
June 30, 2001 to $6.0 million in the six months ended June 30, 2002. The revenue decrease at OEH's restaurants was $0.1 million, or 1%, from $9.7 million in the six
months ended June 30, 2001 to $9.6 million in the six months ended June 30, 2002.

The
change in revenue at owned hotels is analyzed on a regional basis as follows:

Europe.Revenue increased by $4.6 million, or 13%, from $36.8 million for the six months ended June 30,
2001 to $41.4 million for the six months ended June 30, 2002. The acquisitions of La Residencia in Mallorca, Spain and Le Manoir aux Quat' Saisons in Oxfordshire, England during the
first quarter of 2002 accounted for $8.4 million. Excluding the effect of these acquisitions, revenue declined by $3.8 million. REVPAR on a comparable basis decreased by 8% in local
currencies in the six months ended June 30, 2002 compared to the six months ended June 30, 2001.

North America.Revenue decreased by $4.8 million, or 13%, from $35.6 million in the six months ended
June 30, 2001 to $30.8 million in the six months ended June 30, 2002. REVPAR on a comparable basis
for the North American region declined by 10% in the six months ended June 30, 2002 compared to the six months ended June 30, 2001.

Rest of the World.Revenue decreased by $0.9 million, or 3%, from $27.3 million in the six months ended
June 30, 2001 to $26.4 million in the six months ended June 30, 2002. The acquisition of the Miraflores Park Hotel accounted for $1.9 million of revenue in the six months
ended June 30, 2002. Excluding the effect of this acquisition, revenue decreased by $2.8 million. The REVPAR on a comparable basis for the rest of the world region decreased by 6% in
local currencies in the six months ended June 30, 2002 compared to the six months ended June 30, 2001.

Depreciation and Amortization

Depreciation and amortization increased by $1.3 million, or 16%, from $8.0 million in the six months ended June 30, 2001 to
$9.3 million in the six months ended June 30, 2002, primarily due to the effect of acquisitions.

Operating Expenses

Operating expenses increased by $1.0 million, or 2%, from $60.3 million in the six months ended June 30, 2001 to $61.3 million in the
six months ended June 30, 2002. Excluding the effect of acquisitions, operating expenses reduced by $4.2 million. The decrease was primarily due to reduced occupancy at the hotels.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased by $4.2 million, or 12%, from $34.8 million in the six months ended June 30, 2001 to
$39.0 million in the six months ended June 30, 2002. Excluding the effect of acquisitions, selling, general and administrative expenses increased by $1.2 million.

20

---

Earnings from Operations

Earnings from operations decreased by $8.2 million, or 26%, from $31.4 million in the six months ended June 30, 2001 to $23.2 million
in the six months ended June 30, 2002.

Net Finance Costs

Net finance costs decreased by $0.4 million, or 4%, from $9.7 million in the six months ended June 30, 2001 to $9.3 million in the six
months ended June 30, 2002 primarily due to lower interest rates, notwithstanding the increases in debt relating to capital expenditures and acquisitions financed in 2001 and 2002.

Taxes on Income

The provision for income taxes decreased by $0.5 million, or 22%, from $2.4 million in the six months ended June 30, 2001 to
$1.9 million in the six months ended June 30, 2002. The decrease was mainly due to the reduced profitability of some of OEH's taxpaying subsidiaries.

Net Earnings

Net earnings decreased by $7.3 million, or 38%, from $19.3 million in the six months ended June 30, 2001 to $12.0 million in the six
months ended June 30, 2002.

21

---



LIQUIDITY AND CAPITAL RESOURCES

Working Capital

OEH had cash and cash equivalents of $43.9 million at June 30, 2002, $13.9 million less than the $57.9 million at December 31,
2001. At June 30, 2002 and December 31, 2001, the undrawn amounts available to OEH under its short-term lines of credit were $29.0 million and $30.9 million,
respectively. In addition OEH has a further $31.0 million under a committed facility, bringing its total cash and availability to $104.0 million at June 30, 2002.

Current
assets less current liabilities, including the current portion of long-term debt, resulted in a working capital deficit of $28.5 million at June 30,
2002, a decrease in the working capital of $17.9 million from a deficit of $10.6 million at December 31, 2001. The overall decrease in working capital was comprised of the
following:



OEH's
business does not require the maintenance of significant inventories or receivables and, therefore, working capital is not regarded as the most appropriate measure of liquidity.

Cash Flow

Operating Activities.Net cash provided by operating activities decreased by $11.9 million to $12.3 million
cash deficit for the six months ended June 30, 2002, from cash provided by operating activities of $24.2 million for the six months ended June 30, 2001. The decrease was primarily
attributable to reduced earnings.

Investing Activities.Cash used in investing activities increased by $20.9 million to $76.9 million for the six
months ended June 30, 2002, compared to $56.0 million for the six months ended June 30, 2001. The principal components of this increase were a $11.2 million increase in
expenditure on acquisitions and investments during the current period from $38.0 million to $50.1 million.

Financing Activities.Cash provided by financing activities for the six months ended June 30, 2002 was
$50.0 million as compared to cash provided by financing activities of $51.0 million for the six months ended June 30, 2001, a decrease of $1.0 million. In the six months
ended June 30, 2002, OEH had proceeds from borrowings under long-term debt of $49.9 million as compared to proceeds of $75.6 million for the six months ended
June 30, 2001. The proceeds of long-term debt were used to fund acquisitions, investments and capital expenditures during the period.

Capital Commitments.There were $18.5 million of capital commitments outstanding as of June 30, 2002.

Indebtedness

At June 30, 2002, OEH had $425.0 million of long-term debt secured by assets ($381.0 million net of cash), including the current
portion, which is repayable over periods of one to 12 years with a weighted average interest rate of 4.21%. See Note 4 to the Financial Statements regarding the maturity of
long-term debt.

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Approximately
44% of the outstanding principal was drawn in European euros and the balance primarily in U.S. dollars. At June 30, 2002, OEH had the equivalent of
$113.0 million of floating rate
euro debt which had been swapped in to fixed rate euro debt that will convert back to floating rates in September 2002. At June 30, 2002, all other borrowings of OEH were in floating
interest rates.

Liquidity

OEH plans to increase its capital expenditures over the next few years by the expansion of existing hotel properties and the acquisition of additional properties
consistent with its growth strategy. At June 30, 2002, OEH had capital commitments of $18.5 million overall relating to a number of projects.

OEH
expects to have available cash from operations and appropriate debt finance sufficient to fund its working capital requirements, capital expenditure, acquisitions and debt service
for the foreseeable future.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

OEH is exposed to market risk from changes in interest rates and foreign currency exchange rates. These exposures are monitored and managed as part of its overall
risk management program, which recognizes the unpredictability of financial markets and seeks to mitigate material adverse effects on consolidated earnings and cash flows. OEH does not hold market
rate sensitive financial instruments for trading purposes.

The
market risk relating to interest rates arises mainly from the financing activities of OEH. Earnings are affected by changes in interest rates on borrowings, principally based on U.S.
dollar LIBOR and EURIBOR, and on short-term cash investments. In September 2000, OEH entered into an interest rate swap, which exchanged floating rate euro debt for fixed rate euro
debt in respect of the equivalent of euro 117 million ($113.0 million at June 30, 2002). If interest rates increased by ten percent, with all other variables held constant, annual
net finance costs of OEH would have increased by approximately $1.3 million based on borrowings at June 30, 2002. The interest rates on substantially all of OEH's long-term
debt are adjusted regularly to reflect current market rates. Accordingly, the carrying amounts approximate fair value. The fair value of the interest rate swap agreement at June 30, 2002 was a
liability of $0.5 million.

The
market risk relating to foreign currencies and its effects have not changed materially during the first quarter of 2002 from those described in the Company's 2001
Form 10-K annual report.

RECENT ACCOUNTING PRONOUNCEMENTS

For a discussion of OEH's adoption of recent accounting pronouncements, see Note 1 to the Financial Statements.

ACCOUNTING POLICIES AND ESTIMATES

During the six months ended June 30, 2002, there were no significant changes in accounting policies.

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PART II

ITEM 1.    Legal Proceedings

During the quarter ended June 30, 2002, there was no material development in the previously reported litigation involving alleged holders of publicly
traded senior notes of Sea Containers Ltd. Other than this litigation, the Company is involved in no material legal proceedings, other than ordinary routine litigation incidental to its
business.

ITEM 4.    Submission Of Matters To A Vote Of Security Holders

The Company convened and held an annual general meeting of shareholders on June 5, 2002. The holders of Class A and B common shares, voting
together, (i) duly elected John D. Campbell, James B. Hurlock, J. Robert Lovejoy, Daniel J. O'Sullivan, James B. Sherwood and Simon M.C. Sherwood as Directors of the Company effective
immediately and Georg R. Rafael as a seventh Director effective October 1, 2002 and (ii) duly appointed Deloitte & Touche LLP as the Company's independent auditor. The number of
votes on each matter was as follows:



|                |  | For        |  | Authority Withheld
|--------------- |  | ---------- |  | ------------------
|J.D. Campbell   |  | 23,061,803 |  | 19,300            
|J.B. Hurlock    |  | 23,061,803 |  | 19,300            
|J.R. Lovejoy    |  | 23,067,543 |  | 13,560            
|D.J. O'Sullivan |  | 23,061,803 |  | 19,300            
|G.R. Rafael     |  | 23,067,303 |  | 13,800            
|J.B. Sherwood   |  | 23,062,043 |  | 19,060            
|S.M.C. Sherwood |  | 23,062,043 |  | 19,060            



ITEM 5.    Other Information

In August 2001, the Company registered with the Commission (Registration Statement No. 333-67268) a public secondary offering by Sea
Containers Ltd. of up to 5,000,000 existing class A common shares of the Company. Sea Containers has advised the Company that, during the six months ended June 30, 2002, it sold
975,800 of the shares at market prices prevailing at the times of sale, realizing net proceeds of about $18,667,000, and that the sales were made in ordinary broker transactions at normal brokerage
commissions through Salomon Smith Barney Inc. Sea Containers is bearing all costs and expenses of this offering, and the Company will receive none of the sale proceeds.

ITEM 6.    Exhibits and Reports on Form 8-K

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.

| |  | ORIENT-EXPRESS HOTELS LTD.
| |  | --------------------------
| |  | By:                       

Dated:
August 9, 2002

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EXHIBIT INDEX

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Exhibit 99.1

ORIENT-EXPRESS HOTELS LTD.

Certification

The undersigned hereby certify that this Form 10-Q quarterly report of Orient-Express Hotels Ltd. for the quarter ended June 30, 2002 fully complies
with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in this report fairly presents, in all material respects, the financial
condition and results of operations of the Company as of and for the periods presented in the report.

|/s/J.B. SHERWOODJames B. Sherwood Chairman
(Co-Chief Executive Officer) |  | /s/J.G. STRUTHERSJames G. Struthers Vice
PresidentFinance
and Chief Financial Officer
|----------------------------------------------------------------------- |  | --------------------------------------------------------------------------------------

|/s/S.M.C. SHERWOODSimon M.C. Sherwood President
(Co-Chief Executive Officer) |  |  |  | 
|---------------------------------------------------------------------------- |  |  |  | 

Dated:
August 9, 2002

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